Central District of California

          SANTA ANA, California – A federal grand jury has returned an indictment charging a Huntington Beach man with child exploitation offenses, including the possession, distribution and production of child pornography, the Justice Department announced today.

          Mark Phillip Oster, 61, who served as a referee and a coach in the American Youth Soccer Organization from 2015 through 2021, was named in a four-count indictment filed Wednesday. The indictment charges Oster with two counts of producing child pornography, one count of distributing child pornography and one count of possessing child pornography.

          Oster has been in federal custody since July 30, when FBI agents arrested him pursuant to a criminal complaint that charged him with possession of child pornography.  

          During this investigation, the FBI uncovered evidence indicating Oster engaged in illegal conduct with minor victims.

          Anyone who has information regarding the case against Oster or who may know someone victimized by the defendant is requested to contact the FBI’s Los Angeles Field Office at (310) 477-6565 or through the FBI online tip portal. Identified victims may be eligible for certain services and rights under federal and/or state law.

          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.

          Oster is scheduled to be arraigned on the indictment in United States District Court in Santa Ana on September 7.

          If he were to be convicted of the four counts in the indictment, Oster would face a statutory maximum sentence of 100 years in federal prison. Additionally, each count production of child pornography carries a mandatory minimum sentence of 15 years in federal prison.

          Assistant United States Attorney Andrew Beshai of the Santa Ana Branch Office and Trial Attorney Kyle Reynolds of the Department of Justice’s Child Exploitation and Obscenity Section are prosecuting this case. 

          LOS ANGELES – A former music teacher in Southern California who contracted with several schools to teach music to children was sentenced today to 183 months in federal prison for producing child pornography.

          John Edward Zeretzke, 62, of Ventura, was sentenced by United States District Judge Fernando M. Olguin.

          Zeretzke pleaded guilty in August 2020 to one count of production of child pornography. He previously pleaded guilty in Orange County Superior Court to six state counts of committing lewd or lascivious acts with minors under the age of 14 years old. He was sentenced in July 2020 in the state court case to 18 years in state prison, a sentence that will run concurrently with his federal prison sentence.

          From December 2016 to February 2017, Zeretzke used a computer and the internet to communicate with a female minor and coerced her into producing child pornography. The victim did not live in California at the time.

          “[Zeretzke] preyed on young, impoverished girls in Third World countries and used his Flutes Around the World program as a means to contact and sometimes take advantage of those girls,” prosecutors wrote in a sentencing memorandum.

          This case is a part of Project Safe Childhood, the Justice Department’s ongoing initiative to combat the plague of child exploitation crimes.

          The United States Postal Inspection Service and the Los Angeles County Sheriff’s Department investigated this matter.

          Assistant United States Attorney Catharine A. Richmond of the Violent and Organized Crime Section prosecuted this case.

          LOS ANGELES – A disbarred personal-injury lawyer was found guilty by a federal jury today of 22 felonies for stealing the majority of a multimillion-dollar settlement that should have been paid to a car accident victim, as well as cheating on his federal income taxes.

          Philip James Layfield, a.k.a. “Philip Samuel Pesin,” 48, of Las Vegas and formerly of Coto de Caza, was found guilty of 19 counts of wire fraud, one count of mail fraud, one count of tax evasion, one count of failure to collect and pay over payroll taxes, and one misdemeanor charge of failure to file a tax return. Following the jury verdicts, Layfield was remanded into federal custody.

          According to evidence presented at his 13-day trial, Layfield owned and operated law firms, including Layfield & Barrett (L&B), which, at various times, maintained offices in Irvine; Los Angeles; El Segundo; Park City, Utah; and Scottsdale, Arizona.

          After he had misappropriated millions of dollars from clients’ settlements, Layfield relocated to Costa Rica. Just before getting on a flight to Costa Rica, Layfield borrowed $700,000 from a business lender by providing misleading information and failing to disclose material information. Then he used substantial portions of the loan proceeds for personal expenses, including buying a horse and shipping horses to Costa Rica.

          In 2016, Layfield entered into an agreement to represent an individual who was struck by an automobile in Orange County and suffered significant injuries. After negotiating a $3.9 million settlement related to the accident, Layfield misappropriated most of the money owed to the victim – approximately $2 million for personal and business uses, including to pay clients whose settlement proceeds Layfield had earlier misappropriated. The car accident victim received only $25,000 of the settlement proceeds.

          Layfield also failed to file a federal income tax return for the tax year 2016, despite receiving more than $3 million, including embezzled client settlement money. Layfield also caused his law firm to not pay approximately $120,976 in payroll taxes to the United States government for the second quarter of 2017.

          United States District Judge Michael W. Fitzgerald has scheduled a November 8 sentencing hearing, at which time Layfield will face a statutory maximum sentence of more than 200 years in federal prison.

          The State Bar of California disbarred Layfield in October 2018. Layfield also was a certified public accountant, but his CPA license expired in July 2019, according to the California Board of Accountancy.

          Homeland Security Investigations, IRS Criminal Investigation and the FBI investigated this matter.

          Assistant United States Attorneys Mark R. Aveis and Carolyn S. Small of the Major Frauds Section and Ian V. Yanniello of the International Narcotics, Money Laundering and Racketeering Section are prosecuting this case.

          LOS ANGELES – SuperCare Health, Inc., a Downey-based provider of home respiratory services and durable medical equipment, has agreed to pay $3,315,308 to resolve allegations that it defrauded public health care programs by billing for ventilator services that were not medically necessary or reasonable, the Justice Department announced today.

          SuperCare entered into a settlement agreement with the United States and two states – California and Nevada – in a federal False Claims Act case that a federal judge unsealed today.

          The allegations in this case stem from SuperCare providing non-invasive ventilators, also known as NIVs, for home use by respiratory patients in California and Nevada. Medicare and Medicaid provide a monthly reimbursement for a patient’s rental of an NIV, so long as the NIV is necessary or reasonable for the patient’s treatment.

          Between May 2013 and October 2019, according to the lawsuit, SuperCare submitted, or caused others to submit, bogus claims to Medicare and Medicaid.  SuperCare allegedly billed public health programs for NIV rentals even when patients no longer needed the NIVs or were no longer using them.

          The settlement resolves allegations brought in a 2018 lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act by Benjamin Martinez Jr., a respiratory therapist who worked for SuperCare. These provisions permit private parties to sue on behalf of the government for false claims for government funds and to share in any recovery. Mr. Martinez will receive more than $612,000 from the federal government as his share of the settlement amount.

          The U.S. Department of Health and Human Services, Office of Inspector General investigated this case.

          Assistant United States Attorney Ross M. Cuff of the Civil Division’s Civil Fraud Section negotiated the settlement for the government.

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

          LOS ANGELES – Nine new defendants and a series of previously uncharged murders are included in a federal grand jury indictment unsealed today that significantly expands a wide-ranging racketeering indictment targeting an arm of the MS-13 transnational street gang.

          The 18-count Third Superseding Indictment, which was unsealed following the arrests of four defendants this week, alleges that members and associates of MS-13 murdered 11 people, five of whom were hacked to death with machetes or knives in the Angeles National Forest. The indictment, which was filed on August 5, adds nine defendants to the previous version of the indictment and nearly doubles the number of charged murders.

          Mara Salvatrucha was formed in Los Angeles in the mid-1980s, and the street gang is now comprised of tens of thousands of individuals in at least 10 states and several Central American countries, notably El Salvador. In the mid-1990s, Mara Salvatrucha became associated with the Mexican Mafia and added the number 13 to its name (“M” is the 13th letter of the alphabet). To become a new member of a Mexican Mafia-affiliated gang, an individual underwent a 13-second beating by other members of the gang.

          This case focuses on MS-13 Los Angeles’ Fulton clique, a particularly violent subset of MS-13 that operates in the San Fernando Valley and has been bolstered by an influx of young immigrants from Central America.

          “In 2016, the Fulton clique decided to break from MS-13’s traditional program in Los Angeles in favor of a traditional Salvadoran Mara Salvatrucha program,” according to the new indictment. “The key difference between MS-13’s traditional Los Angeles program and MS-13’s Salvadoran program was that the Salvadoran program required a prospective member to have committed at least one homicide before becoming a homeboy,” or full-fledged member.

          In addition to murders previously charged in this case – including one in which the victim was dismembered – the new indictment charges the January 2019 murder of a man who was fatally shot in a remote area near Santa Clarita and whose remains were not recovered until the Tick Fire burned the area 10 months later.

          Of the 11 murders alleged in the indictment, five victims allegedly were killed with machetes or knives, while six allegedly were shot to death. All 11 murders are alleged to have been committed “for the purpose of gaining entry to and maintaining and increasing position in MS-13 Los Angeles.”

          The 111-page Third Superseding Indictment names 31 defendants, 21 of whom are charged with conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act. The RICO charge alleges nearly 300 “overt acts,” including acts involving murder, drug trafficking and extortion.

          The new indictment was unsealed just before scheduled arraignments for three new defendants who were taken into custody in the Los Angeles area. The fourth new defendant was arrested in Colorado. Two new defendants were already in federal custody, and three new defendants were already in state custody.

          The RICO case is the product of an investigation by the Federal Bureau of Investigation, the Los Angeles Police Department, and the Los Angeles County Sheriff’s Department.

          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.

          This case is being prosecuted by Assistant United States Attorney Joanna Curtis, Chief of the Violent and Organized Crime Section, and Special Assistant United States Attorney Eric W. Siddall, a Deputy District Attorney for the Los Angeles County District Attorney’s Office.

          This case is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

          LOS ANGELES – A federal jury today found six corporate entities guilty of participating in a wide-ranging conspiracy to defraud the United States via a wire-and-customs fraud scheme in which huge amounts of aluminum – disguised as “pallets” to avoid $1.8 billion in customs duties – were exported to the United States and were “sold” to fraudulently inflate a China-based company’s revenues and deceive investors worldwide.

          The jury found the following two aluminum businesses and four warehousing companies – all of which were related to one another – guilty of one count of conspiracy, nine counts of wire fraud and seven counts of passing false and fraudulent papers through a customhouse:

• Perfectus Aluminium Inc., an Ontario-based business;
• Perfectus Aluminium Acquisitions LLC, a subsidiary of Perfectus Aluminium formed in 2014 to oversee several companies that received aluminum pallets shipped to the United States after duties were imposed on Chinese aluminum in 2011;
• Scuderia Development LLC, which owns a warehouse in Riverside;
• 1001 Doubleday LLC, which owns a warehouse in Ontario;
• Von Karman – Main Street LLC, which owns a warehouse in Irvine;
• 10681 Production Avenue LLC, which owns a warehouse in Fontana.

          The two Perfectus companies also were found guilty of seven additional counts of international promotional money laundering.

          According to evidence presented at the nine-day trial, China Zhongwang Holdings Ltd., Asia’s largest manufacturer of aluminum extrusions, Zhongtian Liu, the company’s former president and chairman, several individual defendants and the corporate defendants found guilty today lied to U.S. Customs and Border Protection to avoid paying the United States $1.8 billion in anti-dumping and countervailing duties (AD/CVD) that were imposed in 2011 on certain types of extruded aluminum imported into the United States from China.

          The aluminum sold to United States-based companies controlled by Liu was simply aluminum extrusions that were spot-welded together to make them appear to be functional pallets. In fact, there were no customers for the 2.2 million pallets imported by the Liu-controlled companies between 2011 and 2014, and no pallets were ever sold.

          The vast majority of the pallets were imported through the Ports of Los Angeles and Long Beach and then stockpiled at four large warehouses in Southern California, all of which were purchased at Liu’s direction.

          Liu and his co-defendants orchestrated the bogus sales of aluminum to Liu-controlled companies in Southern California to falsely inflate China Zhongwang’s value. Liu was the majority owner of China Zhongwang, which has been listed on the Stock Exchange of Hong Kong since a 2009 initial public offering that raised $1.26 billion.

          After the AD/CVD duties were put in place in 2011, the company’s annual reports falsely claimed that there was a robust demand for the aluminum pallets in the United States. Although the annual reports asserted that the aluminum pallets were being sold to independent third parties, and defendants used these reported “sales” to inflate China Zhongwang’s reported sales volume and purported volume of exports to the United States, in fact the aluminum was being stockpiled by Liu-controlled entities in more than 2 million square feet of warehouse space owned by the warehouse defendants in Southern California, as well as at Liu’s New Jersey facility.

          Since there was no actual demand for the pallets, defendants Liu and China Zhongwang arranged for aluminum melting facilities to be built and acquired, which were to be used to reconfigure the aluminum imported as pallets into a form with commercial value.

          The defendants facilitated their schemes by laundering hundreds of millions of dollars through shell companies to the U.S.-based aluminum companies controlled by Liu. The funds were then transferred to China Zhongwang and the other shell companies as payments for the aluminum.

          United States District Judge R. Gary Klausner has scheduled a December 13 sentencing hearing in this case.

          The remaining four defendants charged in the 2019 federal grand jury indictment in this case have yet to appear in court in the United States to face the criminal charges in this matter:

• Zhongtian Liu, 57, a billionaire Chinese citizen who is a former Tustin resident, and who is the former president and former chairman of the board of China Zhongwang Holdings Ltd.;
• China Zhongwang Holdings Ltd., a publicly traded aluminum company based in Liaoyang City that at the time of the indictment was the largest aluminum extrusion manufacturer in Asia and the second largest in the world;
• Zhaohua Chen, 62, a Chinese national who allegedly was a close friend of Liu and a key player in the scheme; and
• Xiang Chun Shao, a.k.a. “Johnson Shao,” 60, most recently of Irvine, who allegedly managed a collection of Southern California businesses that pretended to be independent third parties importing the Chinese aluminum.

          In 2017, the United States Attorney’s Office filed civil forfeiture actions against the four Southern California warehouses used by Perfectus to store the pallets. In 2018, the government filed a fifth civil forfeiture complaint against “approximately 279,808 Aluminum Structures in the Shape of Pallets,” about half of which were seized in early 2017 at the Ports of Los Angeles and Long Beach, and the other half were seized from three other warehouses Perfectus was using to store the pallets. Those civil asset forfeiture cases have been stayed pending the completion of the criminal prosecution, in which the government is seeking the criminal forfeiture of the warehouses and seized aluminum.

          Homeland Security Investigations and IRS Criminal Investigation investigated this matter.

          Assistant United States Attorneys Poonam G. Kumar and Roger A. Hsieh of the Major Frauds Section and Gregory D. Bernstein of the General Crimes Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan, Chief of the Asset Forfeiture Section, is handling the asset forfeiture-related portion of this case.

          LOS ANGELES – A Pomona man who stole a military Humvee from the Army Reserve Center in Upland and briefly led police on a chase through Pomona’s residential streets pleaded guilty today to a federal criminal charge.

          Armando Garcia, 30, pleaded guilty to one count of theft of government property. At the time of the offense, Garcia was on parole after being convicted in 2019 in state court on theft and burglary charges.

          According to court documents, on November 9, 2020, Garcia stole a militarized High Mobility Multipurpose Wheeled Vehicle – commonly known as a Humvee – that had been secured by a padlock at the Reserve Center in Upland.

          Soon after Garcia drove off with the semi-armored combat vehicle with a turret mount, Pomona Police officers saw the Humvee and attempted to make a traffic stop of the unlicensed vehicle, according to a complaint affidavit previously filed in this case.

          “During the pursuit, which lasted approximately four minutes, the Humvee traveled at excessive speeds, drove on the wrong side of the street (in the direction of oncoming traffic), failed to stop at multiple red lights and stops signs, and failed to signal for turns,” according to the affidavit. Garcia stopped the Humvee in front of a home on a residential street in Pomona and was arrested at the scene.

          Inside the Humvee, police found a large pair of bolt cutters and an Army-approved padlock that appeared to have been cut, according to the complaint, which notes the padlock had secured a steel wire put in place to prevent the turning of the steering wheel inside the vehicle.

          United States District Judge John A. Kronstadt has scheduled a December 2 sentencing hearing, at which time Garcia will face a statutory maximum sentence of 10 years in federal prison.

          The FBI’s San Gabriel Valley Safe Streets Task Force investigated this matter. The Pomona Police Department is the sponsoring agency of the Task Force and has hosted the task force since its inception in 2008.

          Assistant United States Attorney Juan M. Rodríguez of the General Crimes Section is prosecuting this case.

          RIVERSIDE, California – A federal grand jury this afternoon returned an indictment charging a Hemet man with sexual exploitation offenses alleging he convinced a preteen girl to send him sexually explicit photos of herself and a younger relative.

          John Mathew Piecuch, 61, was named in a three-count indictment that charges him with attempted enticement of a minor to engage in criminal sexual activity, production of child pornography, and receipt of child pornography.

          Piecuch posed as a 13-year-old boy on an online gaming platform, where he met a 12-year-old girl in late 2020, according to court documents. After moving their conversation to a text message system, Piecuch requested sexually explicit photos from the girl, who also sent sexually explicit photos of a 5-year-old relative, according to a criminal complaint filed earlier this month.

          The mother of the 12-year-old girl saw some of the text messages between her daughter and Piecuch on one of the girl’s mobile devices, which prompted her to contact authorities, the complaint states.

          Special agents with the FBI arrested Piecuch on August 4 pursuant to the criminal complaint. At his first court appearance that afternoon, he was ordered jailed without bond pending trial.

          Piecuch is scheduled to be arraigned in this matter on August 24 in United States District Court in Riverside.

          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 he were convicted of the three counts in the indictment, Piecuch would face a statutory maximum sentence of life in federal prison. Each of the three charges carries a mandatory minimum sentence, with the mandatory minimum sentence for production of child pornography being the longest at 15 years in prison.

          The FBI is conducting the investigation in this matter in conjunction with the Carroll County (Maryland) Sheriff’s Office.

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

          LOS ANGELES – A San Luis Obispo County man was sentenced today to 15 years in federal prison after pleading guilty to two child pornography offenses and admitting that some of images in his collection depicted the sexual abuse of very young victims.

          James Davolt, 53, of Templeton, was sentenced after pleading guilty on June 4 to receipt of child pornography and distribution of child pornography.

          United States District Judge Virginia A. Phillips imposed the 180-month sentence and further ordered that, once he completes his sentence, Davolt be under supervised release for the rest of his life.

          When he pleaded guilty, Davolt admitted that he used email to receive and share child pornography. When special agents with the FBI examined his computers and email accounts, they uncovered approximately 738 images and 204 videos depicting child pornography, including videos involving the sexual abuse of toddlers and infants.

          In seeking a 15-year sentence, prosecutors argued that some of images depicted children under the age of 2 being used for sexual acts, and other images portrayed sadistic or masochistic sexual conduct involving children.

          In addition to the images and videos, FBI agents discover chat messages, some dating back to 2009, in which Davolt chatted with women in the Philippines and not only “explicitly requested child pornography videos, but also directed the sexual exploitation of children via webcam,” according to a sentencing memorandum filed by prosecutors. “Even more troubling, [Davolt] bragged about how he previously had sex with children while visiting the Philippines (which defendant, in fact, traveled to on 12-13 occasions) and made plans to have sex with children in an upcoming visit.”

          In a victim impact statement submitted to the court and excerpted in the sentencing memorandum, the mother of one victim said her daughter suffered from “prolonged major trauma” that will affect “her mind for the rest of her life.”

          The FBI conducted the investigation in this case.

          Assistant United States Attorney Amy E. Pomerantz of the Violent and Organized Crime Section prosecuted the case.

          LOS ANGELES – A High Desert physician remains in federal custody today after his arrest Wednesday on charges of illegally dispensing prescriptions for often-abused controlled substances – including opioid-based medications – during telemedicine sessions with “patients” from across the United States.

          Dr. Raphael Tomas Malikian, 36, who resides in Llano and Palmdale and called his medical practice Happy Family Medicine, was arrested Wednesday afternoon by special agents with the Drug Enforcement Administration.

          An indictment naming Malikian was unsealed at his arraignment Thursday evening, when Malikian entered not guilty pleas and a United States Magistrate Judge ordered him detained pending trial, which is currently scheduled for October 5.

          Malikian is charged in an 11-count indictment with illegally distributing narcotics “while acting and intending to act outside the usual course of professional practice and without a legitimate medical purpose.” The controlled substances that Malikian allegedly distributed are oxycodone, hydrocodone, alprazolam, promethazine and codeine.

          The DEA investigation was prompted by multiple reports in February 2020 of suspicious prescriptions issued by Malikian. The indictment alleges specific incidents in which Malikian prescribed controlled substances without a medical purpose after seven telemedicine consultations – including one conducted entirely via text message – starting in April 2020 and continuing through July 2020. None of the consultations involved any physical exam or diagnostic tests, and the appointments lasted as little as 2 minutes and 20 seconds.

          A federal judge on Thursday unsealed search warrants executed at Malikian’s residences in conjunction with his arrest. The affidavit in support of the search warrants outlines the DEA’s investigation, which included various undercover operations in which agents from the DEA and California DOJ posed as patients and received the prescriptions that form the basis of the indictment. The DEA agent who authored the affidavit concluded that Malikian “effectively sells prescriptions for controlled substances to patients upon request, and does so without obtaining a patient’s medical history or conducting a physical examination.”

          According to the affidavit, an independent medical expert reviewed the interactions between Malikian and the undercover agents and “concluded that Malikian ‘did not thoroughly evaluate his patients’ before prescribing ‘potent and potentially deadly medications,’ and had done so ‘without any regard to what is required of conscientious physicians in the United States before proceeding with controlled medications.’”

            A DEA investigator also reviewed patient records maintained by Malikian, which showed that Malikian saw patients across the United States and that about 43 percent of them shared common addresses, email addresses, “caregivers” or phone numbers with other patients. According to the affidavit, one of those patients was a convicted narcotics trafficker and another was stopped at Los Angeles International Airport while carrying over $19,000 in cash and approximately 1,764 Hydrocodone and Alprazolam pills.

          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 charges alleged in the indictment carry different statutory maximum sentences. Seven of the counts allege the illegal distribution of opioids, such as oxycodone, and those charges carry a maximum possible penalty of 20 years in federal prison.

          The DEA is conducting an ongoing investigation in this case. The California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse provided substantial assistance.

          Assistant United States Attorney Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.

          RIVERSIDE, California – The former mayor of Adelanto was arrested today by special agents of the FBI on a federal grand jury indictment alleging he accepted more than $57,000 in bribes and kickbacks in exchange for approving ordinances authorizing various types of commercial marijuana activity within the city, and ensuring his co-schemers obtained city licenses or permits authorizing certain commercial marijuana activities.

          Richard Allen Kerr, 64, of Adelanto, was taken into federal custody without incident this morning. He is charged with seven counts of honest services wire fraud and two counts of bribery.

          Kerr, who served as Adelanto’s mayor from 2014 to 2018, is expected to make his initial appearance this afternoon in United States District Court in Riverside.

          According to the indictment returned on August 11, as part of his official duties, Kerr voted on ordinances governing zoning regulations in the city and served on Adelanto’s Cannabis Dispensary Permit Committee, which determined the number of dispensary permits that would be issued and which applicants would receive them.

          As mayor, Kerr supported marijuana legalization, voted in favor of an ordinance authorizing marijuana cultivation in the city, voted in favor of an ordinance authorizing the operation of medical marijuana dispensaries, and voted to authorize the distribution, transportation and testing of medical marijuana, among other commercial marijuana activities. At the same time, Kerr secretly used his official position to enrich himself and his co-schemers by passing these same ordinances, according to the indictment.

          Kerr allegedly also drafted zones for commercial marijuana activities to include locations used by his co-schemers, and he ensured they obtained the licenses and permits they sought – in exchange for bribes, kickbacks and gifts.

          Kerr’s alleged co-schemers were a lawyer who specialized in plaintiffs’ tort litigation – identified in the indictment as “Person A” – and two individuals – labeled “Person C and “Person D” – who had business interests in the city, including those involving marijuana cultivation.

          The bribes and kickbacks were disguised by Kerr and his co-schemers as gifts, donations to a charitable fund, donations to Kerr’s election campaign, or advance payments for the proceeds of planned litigation associated with a motorcycle accident.

          In exchange for the bribes and kickbacks, Kerr provided favorable official action on behalf of the city to Person A, Person C, and other co-schemers with business interests in the city by authorizing various types of commercial marijuana activities, ensuring his supporters obtained the licenses or permits they sought, and interfering with enforcement activities by city officials.

          For example, on November 29, 2016, the Adelanto City Council held a public discussion related to an ordinance, including discussion of “overlay zones” within which medical marijuana dispensaries would be located. The initial proposal included two zones, neither of which included a former restaurant – purchased two months earlier by Person A and his spouse.

          During the discussion, Kerr requested a change in the boundaries of the second overlay zone, which expanded the zone to include Person A’s business. The plans for the business initially called for the building to be an attorney’s office, although they included items such as “elongated sales counters,” a “dispensing room,” “cashier,” and “security room,” the indictment alleges.

          On December 5, 2016, Kerr deposited a $5,000 check – dated November 29, 2016 – from Person A’s real estate trust account into his bank account, and the check’s memorandum line read, “ADV XMAS FUND.”

          In May 2017, Kerr voted twice in favor of a city ordinance that included Person A’s business in the marijuana dispensary overlay zone. In February, June and August of 2017, Kerr deposited three $10,000 checks from Person A’s law firm, with the memorandum lines of each check stating, “ADVANCE.”

          In total, Kerr accepted at least $57,500 in bribes and kickbacks from Person A, Person C and other co-schemers.

          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 of all charges, Kerr would face a statutory maximum sentence of 160 years in federal prison.

          The FBI investigated this matter.

          Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office is prosecuting this case.

          LOS ANGELES – A San Bernardino County man was sentenced today to 12 months and one day in federal prison for continuing to act as a bankruptcy petition preparer (BPP) – despite court orders and injunctions barring him from doing so – and then repeatedly lying to bankruptcy courts about it.

          Richard Allen Mease, 63, of Victorville, was sentenced by United States District Judge John F. Walter, who also ordered him to pay $84,005 in restitution split among 30 victims. Mease pleaded guilty on May 20 to one felony count of making a false statement during a bankruptcy proceeding.

          In June 2010, a bankruptcy court imposed a $4,000 fine on Mease for violating a federal law concerning individuals who negligently or fraudulently file bankruptcy petitions. The court also ordered Mease to pay $2,000 to the debtor in that case. In May 2011 the court further issued an injunction barring him from preparing or assisting in preparing bankruptcy petitions in the Central District of California until he had paid the fine and the $2,000 he owed to the debtor. The injunction was never lifted because Mease never complied with the court’s June 2010 order.

          In November 2013, in a separate bankruptcy proceeding, Mease was held in civil contempt for continuing to act as a BPP in violation of the May 2011 injunction. Mease then proceeded to circumvent the injunction by falsely representing in bankruptcy petitions his involvement as a BPP.

          For example, in May 2018, Mease willfully caused a false declaration and statement under penalty of perjury to be made in a bankruptcy case pending in the Central District of California. Mease caused to be submitted an official form which stated “No” to the question, “Did you pay or agree to pay someone who is not an attorney to help you fill out your bankruptcy forms?” In fact, Mease was the BPP for the bankruptcy petition in that case.

          From November 2011 to May 2018, Mease prepared at least 10 bankruptcy petitions in this manner.

          Mease sometimes charged debtors between $300 and $500 to prepare their bankruptcy petitions, and, in some cases, charged debtors between $1,000 and $3,000 to do so – despite a court injunction barring him from working as a BPP. Under applicable law and regulations, a BPP is permitted to charge fees of up to $200 to prepare and file a bankruptcy petition.

          The FBI investigated this matter. The Office of the United States Trustee provided substantial assistance.

          Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office prosecuted this case.

A federal jury convicted a California man today for attempting to bomb a rally in Long Beach for the purpose of causing mass casualties.

According to court documents and evidence presented at trial, Mark Steven Domingo, 28, of Reseda, was found guilty of providing material support to terrorism and attempting to use of a weapon of mass destruction. The investigation into Domingo was prompted by his online posts and conversations in an online forum in which he expressed support for violent jihad, a desire to seek retribution for attacks against Muslims and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.

As part of the plot, Domingo asked a confederate – who was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.

Leading up to the attack, Domingo called for another event like the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.

Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but were inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.

Domingo was convicted of providing material support to terrorism and attempting to use a weapon of mass destruction. He is scheduled to be sentenced on Nov. 1 and faces a statutory maximum sentence of life in federal prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI’s Joint Terrorism Task Force, Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department investigated the case.

Assistant U.S. Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section of the U.S. Attorney’s Office for the Central District of California and Trial Attorneys Lauren Goddard and Joshua Champagne of the National Security Division's Counterterrorism Section are prosecuting the case.

          LOS ANGELES – At the end of a re-trial prompted by appellate court reversal, a federal jury today convicted a retired Marine Corps captain who traveled to Cambodia in 2005 for the purpose of engaging in illicit sexual conduct with minors.

          Michael Joseph Pepe, 67, a former resident of Oxnard who has been in federal custody since 2007, was found guilty of four felony offenses – two counts of traveling in foreign commerce with the intent to engage in illicit sexual conduct and two counts of aggravated sexual abuse of a child.

          United States District Judge Dale S. Fischer is scheduled to sentence Pepe on December 6, at which time he will face a statutory maximum sentence of life in federal prison. The two counts of aggravated sexual abuse of a child each carry mandatory minimum sentences of 30 years in prison.

          During the seven-day trial, jurors heard testimony from eight minor victims who were as young as 9 when they were sexually abused. Each of the victims testified that Pepe sexually abused them, and several explained that Pepe drugged, bound, beat and raped them.

          Prosecutors also presented evidence corroborating the victims’ testimony, including homemade child pornography.

          Pepe was initially charged in this case in 2006. After being brought to the United States in early 2007, he was subsequently tried, convicted and sentenced to prison. The U.S. 9th Circuit Court of Appeals overturned the conviction in 2018, and prosecutors decided to retry the defendant.

          The investigation in this case was conducted by Homeland Security Investigations and the Cambodian National Police.

          Chief Assistant United States Attorney Stephanie S. Christensen, AUSA Damaris Diaz of the Violent and Organized Crime Section, and AUSA Lynda Lao of the General Crimes Section are prosecuting this case.

          LOS ANGELES – A federal jury this afternoon convicted a San Fernando Valley man for attempting to bomb a rally in Long Beach for the purpose of causing mass casualties.

          Mark Steven Domingo, 28, of Reseda, was found guilty of providing material support to terrorism and attempting to use of a weapon of mass destruction.

          As a result of today’s guilty verdicts, Domingo faces a statutory maximum sentence of life in federal prison. Domingo, who has been in federal custody since his arrest in April 2019, is scheduled to be sentenced by United States District Judge Stephen V. Wilson on November 1.

          The investigation into Domingo was prompted by his online posts and conversations in an online forum in which he expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.

          As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.

          Leading up to the attack, Domingo called for another event similar to the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.

          Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but were actually inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.

          This matter is the product of an investigation by the FBI’s Joint Terrorism Task Force. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department, and the Long Beach Police Department.

          This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section, and Trial Attorneys Lauren Goddard and Joshua Champagne of the Department of Justice’s Counterterrorism Section.

          LOS ANGELES – A Santa Barbara man was charged today with taking his two young children to Rosarito, Mexico and killing them.

          Matthew Taylor Coleman, 40, allegedly killed the 2-year-old boy and 10-month-old girl on Monday. A federal criminal complaint filed today charges Coleman with foreign murder of United States nationals.

          Coleman is expected to make his initial court appearance this afternoon in United States District Court in downtown Los Angeles.

          An affidavit in support of the criminal complaint outlines the investigation that started on Saturday when Coleman’s wife contacted the Santa Barbara Police to report that her husband had left the couple’s residence in a Sprinter van and she did not know where they had gone.

          The next day, Coleman’s wife filed a missing persons report. Using a computer application, Coleman’s wife was able to determine that Coleman’s phone had been in Rosarito on Sunday afternoon, the affidavit states.

          The same phone-locating service was used on Monday and showed that Coleman’s phone was near the San Ysidro Port of Entry at the U.S.-Mexico border, according to the affidavit. The FBI dispatched colleagues in San Diego to contact Coleman, who entered the United States in the Sprinter van without the children. When the children were not found, FBI agents contacted law enforcement officials in Rosarito and learned that Mexican authorities that morning had recovered the bodies of two children matching the description of Coleman’s children.

          After further investigation, FBI agents took Coleman into custody.

          A criminal complaint 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, United States Customs and Border Protection, the Santa Barbara Police Department, and the Secretaría de Seguridad Pública Municipal de Rosarito are investigating this matter. The Santa Barbara County District Attorney’s Office provided substantial assistance throughout the investigation.

          Assistant United States Attorneys Kevin Butler of the Violent and Organized Crime Section and Joanna Curtis, Chief of the Violent and Organized Crime Section, are prosecuting this case.

Note: View the Spanish translation of this press release here.

          LOS ANGELES – The Justice Department announced today that it has reached an agreement to resolve a lawsuit alleging that Filomeno Hernandez, a property manager of residential apartment buildings near MacArthur Park in Los Angeles, violated the federal Fair Housing Act by sexually harassing female tenants since at least 2006.

          Today’s settlement also resolves claims against Ramin Akhavan, Bonnie Brae Investments LLC and Westlake Property Services LLC, which managed or owned the rental properties where the harassment took place.

          Under the consent decree, which still must be approved by a federal judge in Los Angeles, the defendants are required to pay a total of $105,000, which includes $100,000 in monetary damages to women who were harmed as a result of the sexual harassment, and a $5,000 civil penalty. The consent decree also bars future discrimination, prevents Hernandez from participating in the rental or management of residential properties in the future, requires that Hernandez vacate the premises and leave his post as on-site property manager, mandates Fair Housing Act training, and requires extensive monitoring and reporting regarding property management activities and compliance with the terms of the consent decree.

          The Justice Department’s 2020 lawsuit alleged that, for more than a decade, Hernandez subjected female tenants to harassment that included unwanted sexual touching, including sexual assault; frequent unwelcome sexual advances and comments; offers to reduce rent or excuse late or unpaid rent in exchange for sex; and unannounced visits to the homes of female tenants without their consent to make sexual advances.

          “The right to be free from sexual harassment in one’s own home is a vital federal civil right,” said Acting United States Attorney Tracy L. Wilkison. “This settlement shows our commitment to vigorously enforcing federal civil rights laws and holding accountable those who discriminate against others in violation of the Fair Housing Act.”

          “Sexual harassment of vulnerable tenants is an egregious violation of the Fair Housing Act,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “The Justice Department is committed to pursuing predatory landlords and property managers and to ensuring that no individual is subject to housing discrimination because of their sex.”

          The apartment buildings that Hernandez managed are located at 729 South Bonnie Brae Street and 720 Westlake Avenue in Los Angeles, near MacArthur Park.

          The Justice Department enforces the federal Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. The department’s Sexual Harassment in Housing Initiative is led by the Civil Rights Division, in coordination with U.S. Attorney’s Offices across the country. The goal of the department’s initiative is to address and raise awareness about sexual harassment by landlords, property managers, maintenance workers, loan officers or other people who have control over housing. Since launching the initiative in October 2017, the Department of Justice has filed 21 lawsuits alleging sexual harassment in housing and recovered over $3.9 million for victims of such harassment.

          Individuals may report sexual harassment in housing or other forms of housing discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-800-896-7743, e-mailing the Justice Department at fairhousing@usdoj.gov, or submitting a report online.

          Individuals in the Central District of California also may file a complaint about housing discrimination or other civil rights violations with the Civil Rights Section, Civil Division of the U.S. Attorney’s Office by calling (213) 894-2879, emailing USACAC.CV-CivilRights@usdoj.gov or completing and submitting this form (English) (Spanish). 

          Reports also may be made by contacting the U.S. Department of Housing and Urban Development at 1-800-669-9777 or by filing a complaint online.

          More information about the Civil Rights Division and the laws it enforces is available at http://www.justice.gov/crt. More information about the Civil Rights Section, Civil Division of the United States Attorney’s Office for the Central District of California is available at https://www.justice.gov/usao-cdca/civil-division/civil-rights.

          LOS ANGELES – Five alleged members of street gangs based in Altadena and Duarte have been arrested on federal charges of being felons in possession of firearms or ammunition during a shootout in Ontario that investigators say was part of an ongoing dispute with a rival gang, the Justice Department announced today.

          According to the affidavit in support of the criminal complaint, all five defendants used firearms during the February 17 incident, which occurred during a funeral party for a suspected member of the Altadena Bloc Crips (ABC). Investigators with the Ontario Police Department believe the shooting was the result of an attack by the Pasadena Denver Lane Bloods (PDL), which has been in a long-running gang war with ABC and its allies in the Duarte-based Duroc Crips, the affidavit states.

          Surveillance video from the house where the shooting took place “showed that once the PDL members fired the initial shots, at least five subjects from the ABC funeral party ran from the home’s backyard into the front yard and began firing recklessly toward the unidentified PDL members,” according to the affidavit by an ATF special agent, which notes that bullets struck several homes and vehicles in the neighborhood.

          The defendants charged in the criminal complaint, all suspected members of the ABC or Duroc Crips gangs, are:

• Tristan Jon Taylor, 32, of Ontario, who was arrested Wednesday on a charge of illegally possessing a .38 special revolver;
• Daniel Corey Roach, 41, of Altadena, who was arrested Wednesday on a charge of illegal possession of ammunition;
• Dejon Thomas Nunley Sr., 32, of Adelanto, who was arrested Monday on a charge of illegally possessing a 9mm handgun;
• Lionel Roberts, 32, of Altadena, who was arrested Wednesday on a charge of illegally possessing a small revolver and is expected to make his first court appearance later today; and
• Shawn Terrell Lyndolph, 30, of Rialto, who was arrested Wednesday on a charge of illegally possessing a semiautomatic handgun.

          During court appearances on the day of their arrests, Lyndolph was ordered held without bond, Taylor was ordered jailed pending a detention hearing scheduled for August 10, and both Roach and Nunley were released on bond. Arraignments for the defendants in this case are scheduled for later this month.

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

          The charge of felon in possession of a firearm or ammunition carries a statutory maximum sentence of 10 years in federal prison.

          This case is the product of a joint investigation between ATF and the Ontario Police Department. The United States Marshals Service provided substantial assistance.

          The investigation used intelligence developed by the Los Angeles Crime Gun Intelligence Center and the National Integrated Ballistics Information Network (NIBIN). NIBIN is the only national network that allows the capture and comparison of ballistic evidence to aid in solving and preventing violent crimes involving firearms.

          NIBIN, which is used to link incidents by determining when there is a common firearm, produced multiple intelligence leads during this investigation. The affidavit states that NIBIN linked multiple shooting incidents between October 2020 and the February shoutout, including homicides in Ontario and San Bernardino. As of now, all the incidents are the subjects of open and active investigations, according to the affidavit.

          Assistant United States Attorneys John A. Balla and Peter H. Dahlquist of the Riverside Branch Office are prosecuting this case.

          The ongoing federal investigation is part of the Firearms Trafficking Strike Force launched last month by the Department of Justice.

          LOS ANGELES – A West Hollywood man was sentenced today to 152 months in federal prison for orchestrating a real estate fraud scheme that victimized more than 2,000 homeowners, involved fraudulent filings that affected the title to properties across the country and caused more than $7 million in losses.

          Patrick Joseph Soria, 35, was sentenced by United States District Judge Dale S. Fischer, who called Soria “a skillful conman who created a very sophisticated scheme.” Judge Fischer also stated, “This is not the largest case I have presided over in terms of dollars, but it is the most brazen and heartless.”

          A restitution hearing is scheduled for October 25. Soria pleaded guilty on March 2 to one count of conspiracy to commit wire fraud and one count of contempt of court.

          From January 2015 to June 2018, Soria stole money from homeowners and would-be home buyers through a two-pronged scheme.

          Firstly, Soria hijacked title to properties through fraudulent title filings done at county recorders’ offices around the country. He faked the filings to make it appear that he owned the properties, and then “sold” the properties to victims who thought they were buying the homes from the true owner. In fact, Soria never owned the homes, and he instead used the victims’ “purchase” money for his own personal expenses, including escort services, stays at luxury hotels, and Bentley and Lamborghini car rentals.

          In the second part of the scheme, Soria convinced homeowners that he could help them with their mortgages, either by assisting them with a loan modification or by taking over their mortgage from their lender, with the promised result, either way, of reducing their mortgage payments. He told them that he had achieved success in this area in the past, and he convinced them that he was trying to help them, often befriending them to gain their trust and give them hope. But as Judge Fischer stated at today’s hearing, “Mr. Soria turned their hopes into a nightmare.”

          After gaining the victims’ trust, Soria convinced homeowners to stop paying their real lender and to start paying him. Through yet more fraudulent filings, Soria deceived his victims into believing he had taken over their mortgages. He also falsely lulled victims into doing nothing to protect themselves when they started receiving foreclosure and eviction notices. Many of the homeowners targeted in the scheme lost their homes.

          As part of the fraud, Soria used company names such as HBSC US and Deutsche Mellon National Asset LLC, designed to trick homeowners into thinking that these companies were real. He also took advantage of the complex mix of lenders, trustees, beneficiaries, and servicers in the mortgage market, and the assignments of mortgage loans between entities, to confuse homeowners and to make it seem as if he did in fact own the properties and mortgages.

          More than 2,000 individuals were victimized through this scheme. Soria admitted in court documents that losses totaled more than $7.6 million. In addition to causing losses to individual homeowners, the fraud scheme also victimized numerous lenders who held mortgages on, or other interests in, properties targeted in the scheme.

          The targeted properties were located nationwide, including in Texas, New York, Nevada, and in the California cities of Vernon, Beverly Hills, Santa Ana, Yorba Linda, Anaheim and elsewhere.

          In a related matter, Soria committed numerous acts of contempt of court in a related civil case before Judge Fischer, Nationstar Mortgage LLC v. Patrick Soria, et al., 18-cv-03041-DSF-RAO (C.D. Cal.), including willfully spending funds subject to an asset freeze. The contempt resulted in his incarceration in 2018, and criminal charges filed by the Court in 2019 by way of an Order to Show Cause.

          This matter was investigated by the FBI and the Federal Housing Finance Agency – Office of Inspector General, with assistance from the Los Angeles Police Department; the Beverly Hills Police Department; the Los Angeles County Sheriff’s Department; the San Joaquin County District Attorney’s Office, the Ventura County District Attorney’s Office; and the Orange County District Attorney’s Office.

          Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section prosecuted this case.

          RIVERSIDE, California – The former CEO of a La Quinta-based communication services company was sentenced today to 27 months in federal prison for fraudulently obtaining $5 million in bank loans by submitting sham financial documents that overstated his company’s net worth.

          Richard Loren Lewis, 67, of La Quinta, was sentenced by United States District Judge John W. Holcomb, who also ordered him to pay $3,414,064 in restitution. Lewis pleaded guilty on May 7 to one count of bank fraud and one count of making a false statement to a financial institution.

          From April 2013 to April 2016, Lewis, who was the CEO of Blue Wave Media Inc., schemed to defraud Silicon Valley Bank, a Santa Clara-based commercial bank that funds start-up technology companies.

          Lewis submitted false financial documents to Silicon Valley Bank that misrepresented Blue Wave Media’s net worth, liquidity and revenue so the bank would lend millions of dollars to his company. The false financial statements claimed that Blue Wave Media had millions of dollars in cash deposits and millions of dollars more in revenue streams. In truth, Blue Wave Media had little to no cash on hand and little to no incoming revenue. Lewis’s misrepresentations caused the bank to approve four loans totaling $5 million.

          Lewis executed the scheme by willfully causing a loan and security agreement to be signed with Silicon Valley Bank in April 2013 to secure a $500,000 loan. In January 2014, he submitted an amendment to the agreement to the bank to secure an additional $500,000 loan. In June 2014, Lewis willfully caused another amendment to the agreement to secure a $1 million loan, and, in April 2015, Lewis signed a third amendment to the agreement with the bank to secure a $3 million loan.

          As a result of Lewis’s criminal activity, Silicon Valley Bank sustained actual losses of approximately $3,414,064.

          The FBI investigated this matter.

          Assistant United States Attorney Robert S. Trisotto of the Riverside Branch Office prosecuted this case.

          LOS ANGELES – A federal grand jury indictment unsealed this week alleges an elaborate scheme to steal more than $1.1 million from a businessperson attempting to finance the construction of a school for children in Qatar – and the subsequent laundering of illicit proceeds through bank accounts around the world.

          The three-count indictment returned on April 29 and unsealed Monday charges three U.S.-based defendants who were arrested last week – as well as three defendants believed to be in Africa – with conspiracy to commit wire fraud, conspiracy to engage in money laundering, and aggravated identity theft.

          The criminal complaint that initiated the prosecution in February was also unsealed Monday, revealing that Ramon Olorunwa Abbas – also known by his social media handle of “Ray Hushpuppi” – was initially charged in this case. Court documents ordered unsealed today show that Abbas, a 37-year-old Nigerian national, pleaded guilty on April 20. A version of Abbas’ plea agreement filed late Tuesday outlines his role in the school-finance scheme, as well as several other cyber and business email compromise schemes that cumulatively caused more than $24 million in losses.

          “The defendants allegedly faked the financing of a Qatari school by playing the roles of bank officials and creating a bogus website in a scheme that also bribed a foreign official to keep the elaborate pretense going after the victim was tipped off,” said Acting United States Attorney Tracy L. Wilkison. “Mr. Abbas, who played a significant role in the scheme, funded his luxurious lifestyle by laundering illicit proceeds generated by con artists who use increasingly sophisticated means. In conjunction with our law enforcement partners, we will identify and prosecute perpetrators of business email compromise scams, which is a massive and growing international crime problem.”

          “Mr. Abbas, among the most high-profile money launderers in the world, has admitted to his significant role in perpetrating global BEC fraud, a scheme currently plaguing Americans,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “His celebrity status and ability to make connections seeped into legitimate organizations and led to several spin-off schemes in the U.S. and abroad. Today’s announcement deals a crucial blow to this international network and hopefully serves as a warning to potential victims targeted with this type of theft.”

          According to the indictment, Abbas allegedly conspired with Abdulrahman Imraan Juma, a.k.a. “Abdul,” 28, of Kenya, and Kelly Chibuzo Vincent, 40, of Nigeria, to defraud the Qatari businessperson by claiming to be consultants and bankers who could facilitate a loan to finance construction of the planned school. Juma allegedly posed as a facilitator and consultant for the illusory bank loans, while Abbas played the role of “Malik,” a Wells Fargo banker in New York, according to court documents. Vincent, in turn, allegedly provided support for the false narratives fed to the victim by, among other things, creating bogus documents and arranging for the creation of a fake bank website and phone banking line.

          Yusuf Adekinka Anifowoshe, a.k.a. “AJ,” 26, of Brooklyn, New York, allegedly played a role in the fraud, assisting Abbas with a call to the victim posing as “Malik.” Special agents with the FBI arrested Anifowoshe in New York on July 22.

          The conspirators allegedly defrauded the victim out of more than $1.1 million.

          The proceeds of the fraud allegedly were laundered in several ways. According to the indictment, Abbas was assisted in laundering the proceeds of the fraud by Rukayat Motunraya Fashola, a.k.a. “Morayo,” 28, of Valley Stream, New York, and Bolatito Tawakalitu Agbabiaka, a.k.a. “Bolamide,” 34, of Linden, New Jersey. These two defendants also were arrested on July 22 by FBI agents.

          Approximately $230,000 of the stolen funds allegedly were used to purchase a Richard Mille RM11-03 watch, which was hand delivered to Abbas in Dubai and subsequently appeared in Hushpuppi’s social media posts. Other illicit proceeds from the scheme were allegedly converted into cashier’s checks, including $50,000 in checks that were used by Abbas and a co-conspirator to fraudulently acquire a St. Christopher and Nevis citizenship, as well as a passport for Abbas obtained by creating a false marriage certificate and then bribing a government official in St. Kitts.

          Court documents outline a dispute among members of the conspiracy, which allegedly prompted Vincent to contact the victim and claim that Abbas and Juma were engaged in fraud. After this contact, Abbas allegedly arranged to have Vincent jailed in Nigeria by Abba Alhaji Kyari, 46, of Nigeria. According to the affidavit, Kyari is a highly decorated deputy commissioner of the Nigeria Police Force who is alleged to have arranged for Vincent to be arrested and jailed at Abbas’ behest, and then sent Abbas photographs of Vincent after his arrest. Kyari also allegedly sent Abbas bank account details for an account into which Abbas could deposit payment for Vincent’s arrest and imprisonment.

          Anifowoshe, Fashola and Agbabiaka were arrested in New York and New Jersey on July 22, and they are expected to be arraigned in Los Angeles in August. All three are currently free on bond.

          A criminal complaint and an indictment contain allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          Both conspiracy counts alleged in the indictment carry a statutory maximum sentence of 20 years in federal prison. Aggravated identity theft carries a mandatory two-year prison term.

          The FBI is investigating this matter as part of Operation Top Dog. The FBI thanks the government of the United Arab Emirates and the Dubai Police Department for their substantial assistance in this matter. The FBI also thanks the Kenyan Office of Attorney General, Office of the Director of Public Prosecutions, and Directorate of Criminal Investigations for their substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section. The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.

          LOS ANGELES – Federal prosecutors today filed a criminal information charging a San Luis Obispo man with bribery for paying a county supervisor approximately $32,000 – most of that in cash – in exchange for the supervisor’s votes and influence on other votes affecting his cannabis business interests.

          Helios Raphael Dayspring, a.k.a. “Bobby Dayspring,” 35, was charged in federal court with one count of bribery and one count of subscribing to a false 2018 income tax return that deliberately failed to report millions of dollars in income to the IRS. 

          Federal prosecutors today also filed a plea agreement in which Dayspring agreed to plead guilty to both felony offenses, pay $3.4 million in restitution to the IRS, and cooperate in the government’s ongoing investigation.

          According to the court documents, Dayspring owned, operated, and/or had a controlling interest in multiple farms that grew cannabis in San Luis Obispo County. He also had ownership interests in businesses that sold marijuana to the public, including in Grover Beach. To further his interests in the farms that grew cannabis in San Luis Obispo County, Dayspring began paying bribes to a San Luis Obispo County supervisor in the fall of 2016 and continued doing so through November 2019.

          In total, Dayspring paid the late Third District supervisor multiple bribes in cash and money orders totaling $32,000. In exchange, the supervisor voted on matters affecting Dayspring’s farms, including voting multiple times in favor of legislation that permitted Dayspring’s farms to operate before it had obtained final permitting approvals.

          In addition to bribing the San Luis Obispo County supervisor, Dayspring admitted in his plea agreement that he and his business associate attempted to bribe the then-mayor of Grover Beach in exchange for two dispensary licenses in that city. The attempted $100,000 bribe took place during a dinner meeting in September 2017. The mayor did not respond to the offer, and Dayspring did not pay the bribe.

          Dayspring also admitted that he substantially underreported his personal income on his federal tax returns for the years 2014 through 2018, which resulted in the IRS losing more than $3.4 million in tax revenue. 

          Dayspring has agreed to surrender in this case and make his first appearance in United States District Court in Los Angeles on August 25. Once he pleads guilty to the bribery and tax charges, Dayspring will face a statutory maximum penalty of 13 years in federal prison.

          The FBI and IRS Criminal Investigation investigated this matter, which is part of an ongoing public corruption investigation in San Luis Obispo County.        

          Any member of the public who has information related to this case or any other public corruption matter in San Luis Obispo County is encouraged to send information to the FBI’s tip line at tips.fbi.gov or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.

          Assistant United States Attorney Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section is prosecuting this case.

          LOS ANGELES – A West Hollywood man was found guilty by a federal jury today of nine felonies, including that he provided fatal doses of methamphetamine to two men who died at his apartment after being injected with the drug.

          Edward Buck, 66, was found guilty of two counts of distribution of methamphetamine resulting in death, four counts of distribution of methamphetamine, one count of maintaining a drug-involved premises, and two counts of enticement to travel in interstate commerce for prostitution.

          According to evidence presented at his nine-day trial, beginning no later than 2011 and continuing through September 2019, Buck engaged in a pattern of “party and play,” or soliciting men to consume narcotics that he provided and perform sexual activities at his apartment. In these party-and-play sessions, Buck distributed drugs, including methamphetamine, and, in some instances, injected victims with drugs intravenously in a practice known as “slamming.”

          Buck solicited his victims in various ways, including using social media platforms, dating and escort websites, or via referrals from his prior victims, including individuals he hired to do other work for him, offering a finder’s fee for referrals.

          Buck exerted power and control over his victims, typically targeting individuals who were destitute, homeless or struggling with drug addiction. He exploited the wealth and power balance between them by offering his victims money to use drugs and to let Buck inject them with narcotics.

          Once the men were at his apartment, Buck prepared syringes containing methamphetamine, sometimes personally injecting the victims with or without their consent. Buck also injected victims with more narcotics than they expected and sometimes injected victims while they were unconscious.

          If a victim was not interested in using drugs, or used less than Buck wanted him to use, Buck refused to pay the person or reduced the person’s pay. Ultimately, if a victim refused to use methamphetamine too many times, Buck would lose interest and would no longer hire the person to party and play.

          On two occasions, Buck’s party-and-play fetish turned lethal. Gemmel Moore died on July 27, 2017, and Timothy Dean died on January 7, 2019. Both victims suffered fatal methamphetamine overdoses in Buck’s apartment.

          These deaths failed to deter Buck from continuing to distribute methamphetamine, and he continued distributing the drug to additional victims, including a man who overdosed twice in Buck’s apartment but survived after receiving immediate medical treatment.

          Buck also enticed individuals to travel to California from other states for the purpose of engaging in prostitution through party-and-play sessions. Buck purchased a plane ticket for Moore, who had moved to Texas, so Moore could travel to Los Angeles in July 2017 to party and play at Buck’s apartment. In September 2018, Buck similarly purchased a plane ticket for another victim to fly from Iowa to Los Angeles.

          United States District Judge Christina A. Snyder will schedule a sentencing hearing at a later date, at which time Buck will face a mandatory minimum sentence of 20 years in federal prison and a statutory maximum sentence of life in federal prison. Buck is currently in federal custody in this case.

          The Drug Enforcement Administration, the FBI and the Los Angeles County Sheriff’s Department investigated this matter.

          Assistant United States Attorneys Chelsea Norell of the Violent and Organized Crime Section and Lindsay Bailey of the International Narcotics, Money Laundering and Racketeering Section are prosecuting this case.

          LOS ANGELES – A noted art dealer was arrested today on federal charges accusing him of embezzling more than $260,000 from the bankruptcy estate of Ace Gallery, a Miracle Mile-based art gallery, while acting as the estate’s trustee and custodian.

          Douglas J. Chrismas, 77, of the Mid-Wilshire area of Los Angeles, surrendered without incident this morning to special agents of the FBI. A federal grand jury charged Chrismas via indictment with three counts of embezzlement against a bankruptcy estate. Chrismas was ordered released on $50,000 bond. He has pleaded not guilty to the charges and a September 21 trial date has been scheduled in this matter.

          According to the indictment returned on March 16 and unsealed today, Chrismas was the president and CEO of Art and Architecture Books of the 21st Century, which did business as Ace Gallery and was located on the Miracle Mile in the City of Los Angeles.

          In February 2013, Ace Gallery filed a Chapter 11 bankruptcy petition in Los Angeles and continued to operate as a bankruptcy estate with Chrismas acting as the gallery’s president, trustee, custodian and overseer of its operations. In this role, Chrismas also had access to the gallery’s property. Chrismas remained in control over Ace Gallery until April 2016, when an independent bankruptcy trustee was appointed to run the bankruptcy estate and Chrismas was removed as trustee and custodian.

          In late March and early April of 2016, Chrismas allegedly embezzled approximately $264,595 that belonged to the Ace Gallery bankruptcy estate, including a $50,000 check that Chrismas signed, was drawn against the estate and was paid to a separate corporation that Chrismas owned and controlled.

          Chrismas allegedly also embezzled $100,000 owed to Ace Gallery by a third party for the purchase of artwork but the funds instead were paid – at his direction – to his separate corporation. Finally, Chrismas embezzled approximately $114,595 owed to the gallery by a third party that purchased artwork, but which he instead had paid to a creditor of his separate corporation, 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 of all charges, Chrismas would face a statutory maximum sentence of 15 years in federal prison.

          The FBI’s Art Crime Team and the Office of the United States Trustee investigated this matter.

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

          LOS ANGELES – Interface Rehab (Interface), headquartered and operating in Orange County, has agreed to pay $2 million to resolve allegations that it violated the False Claims Act by causing the submission of claims to Medicare for rehabilitation therapy services that were not reasonable or necessary.

          The settlement resolves allegations that, from January 1, 2006, through October 10, 2014, the Placentia-based Interface knowingly submitted or caused the submission of false claims for medically unreasonable and unnecessary “Ultra High” levels of rehabilitation therapy for Medicare Part A residents at 11 Skilled Nursing Facilities. These facilities include Colonial Care Center, Covina Rehabilitation Center, Crenshaw Nursing Home, Green Acres Lodge, Imperial Care Center, Laurel Convalescent Hospital, Live Oak Rehabilitation Center, Longwood Manor Convalescent Hospital, Monterey Care Center, San Gabriel Convalescent Center, and Whittier Pacific Care Center.

          In July 2020, the Department of Justice announced that Longwood Management Corporation and 27 affiliated skilled nursing facilities agreed to pay $16.7 million to the United States to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for rehabilitation therapy services that were not reasonable or necessary. The settlement announced today resolves Interface’s role in that alleged conduct.

          During the relevant time period, Medicare reimbursed skilled nursing facilities at a daily rate that reflected the skilled therapy and nursing needs of qualifying patients. The greater the patient’s needs, the higher the level of Medicare reimbursement. The highest level of Medicare reimbursement for skilled nursing facilities was for “Ultra High” therapy patients, who required a minimum of 720 minutes of skilled therapy from two therapy disciplines (e.g., physical, occupational, or speech therapy), one of which had to be provided five days a week.

          The United States contends that Interface pressured therapists to increase the amount of therapy provided to patients in order to meet pre-planned targets for Medicare revenue. These alleged targets could only be achieved by billing for a high percentage of patients at the “Ultra High” level without regard to patients’ individualized needs.

          “The claims that patients required ultra-high levels of care appear to be driven solely by a desire to send ultra-high bills to Medicare,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “This case is further proof that the government will vigorously pursue those who attempt to cheat the taxpayer-funded system that pays for medical care for millions of Americans, sometimes with the help of whistleblowers who shine a light on fraud.”

          “This settlement reflects our continuing efforts to protect patients and taxpayers by ensuring that the care provided to beneficiaries of government-funded health care programs is dictated by clinical needs, not a provider’s fiscal interests,” said Acting Assistant Attorney General Brian M. Boynton for the Department of Justice’s Civil Division. “Rehabilitation therapy companies provide important services to our vulnerable elderly population, but they will be held to account if they provide therapy services based on maximizing revenue rather than the interests of their patients.”

          “Our agency will continue to aggressively investigate health care providers that attempt to boost their profits by falsely billing federal health care programs for medically unnecessary services,” said Special Agent in Charge Timothy B. DeFrancesca of the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “We will not tolerate such fraud schemes, which undermine medical decision-making and the public's trust in the health profession.”

          “This multi-million dollar settlement agreement signifies an important conclusion to the government's investigation into Interface Rehab’s dubious business practices that tainted the integrity of federal healthcare programs, including the Department of Defense's TRICARE program, by unnecessarily inflating costs, ” said Paul K. Sternal, Deputy Director of the Defense Criminal Investigative Service (DCIS). “DCIS is committed to working with its law enforcement partners to protect the healthcare interests of our military service members, their families, and American taxpayers.”

          This civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act by Keith Pennetti, a former Director of Rehab at Interface. Under those provisions, a private party can file an action on behalf of the United States and receive a portion of any recovery. Mr. Pennetti, will receive $360,000 of the settlement proceeds. The qui tam case is captioned United States ex rel. Pennetti v. Interface Rehab, et al., No. CV-14-4133 (C.D. Cal.).

          The resolution obtained in this matter was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section, and the U.S. Attorney’s Office for the Central District of California with assistance from the U.S. Department of Health and Human Services Office of Inspector General and the Defense Criminal Investigative Service.

          The investigation and resolution of this matter illustrates the government’s emphasis on combating health care 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 matter was investigated by Assistant United States Attorney John E. Lee of the Civil Division’s Civil Fraud Section and Justice Department Trial Attorney Amy Likoff.

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

          LOS ANGELES – A member of the San Fernando Valley-based Vineland Boys street gang was sentenced today to 372 months in federal prison for committing multiple felonies, including the attempted murders of three rival gangsters.

          Jesus Gonzalez Jr., 28, “Lil Chito,” “Gunner” and “Chuy,” of Sun Valley, was sentenced by United States District Judge Michael W. Fitzgerald.

          Gonzalez pleaded guilty on January 22 to five felonies: one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, two counts of violent crime in aid of racketeering, one count of conspiracy to distribute controlled substances, and one count of discharging a firearm in furtherance of a crime of violence.

          According to court documents, to consolidate control over their “territory” in Sun Valley, North Hollywood and Burbank, the Vineland Boys shot and brutally assaulted rival gang members, controlled and conducted drug and firearms trafficking activity, and extorted money in the form of “taxes” from drug dealers, and trafficked narcotics.

          Gonzalez conspired with Vineland Boys members and associates to engage in acts of racketeering in the form of attempted murder and drug trafficking. Gonzalez admitted that he was involved in multiple gang-related shootings, including a December 2015 shootout in South Los Angeles with rival gang members.

          In early April 2016, Gonzalez shot and severely wounded one victim and injured others in a drive-by shooting outside a party in Sun Valley after Gonzalez believed the victim had insulted the Vineland Boys gang. A few weeks later, Gonzalez stalked and shot a rival gang member on Lankershim Boulevard in North Hollywood, firing several shots at close range at the victim, who survived. In May 2016, Gonzalez and other Vineland Boys members drove next to a vehicle in North Hollywood near Lankershim Boulevard, and Gonzalez confronted and shot the other vehicle’s passengers because he believed they were rival gang members.

          Gonzalez also sold methamphetamine and illegally sold numerous firearms, including an AR-style rifle bearing no serial number – commonly known as a “ghost gun” – that he sold in May 2016 outside a McDonald’s restaurant in San Fernando.

          In January 2019, a federal grand jury indicted 31 Vineland Boys members and associates. So far, prosecutors in this case have secured 17 convictions and multiple prison sentences exceeding 10 years.

          The FBI, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, IRS Criminal Investigation and the Los Angeles Police Department investigated this matter. This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

          Assistant United States Attorneys Jennifer Chou and Sara Milstein of the Violent and Organized Crime Section prosecuted this case.

A California man was arrested today in Los Angeles on criminal charges related to his alleged bank fraud, false statements in a loan application and money laundering arising from the submission of fraudulent applications for Paycheck Protection Program (PPP) funds.

According to court documents, Robert Benlevi, 52, of Encino, submitted 27 bank loan applications to four banks between April and June 2020 on behalf of eight companies solely owned by Benlevi. In the applications, Benlevi allegedly sought a total of $27 million in forgivable PPP loans guaranteed by the Small Business Administration (SBA) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. In his fraudulent applications, Benlevi allegedly represented that each of his companies had 100 employees and average monthly payroll of $400,000, even though he knew that the companies did not have any employees or payroll expenses. Benlevi also submitted fabricated IRS documents falsely stating that each of the companies had an annual payroll of $4,800,000.

The indictment alleges that based on Benlevi’s fraudulent loan applications, three of Benlevi’s companies — 1Stellar Health LLC, Bestways2 Health LLC, and Joyous-Health4U LLC — obtained $3 million in PPP funds. Although Benlevi falsely represented that the funds sought through the PPP loan applications would be used to pay payroll and certain other business expenses, he instead used them for personal expenses, including cash withdrawals, payments on his personal credit cards, and transfers to other personal and business accounts he controlled, the indictment alleges. In a single day, Benlevi withdrew from the Bestways2 Health account $248,000 of PPP funds in cashier’s checks, which were deposited into other accounts that Benlevi controlled.

Benlevi is charged with six counts of bank fraud, six counts of false statements in a loan application and four counts of money laundering. Each count of bank fraud and false statements in a loan application carry a maximum penalty of 30 years in federal prison, and the money laundering counts each carry a maximum penalty of 10 years. 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; Acting U.S. Attorney Tracy L. Wilkison for the Central District of California; Assistant Director in Charge Kristi Koons Johnson of the FBI’s Los Angeles Field Office; Special Agent in Charge Jeffrey D. Pittano of the Federal Deposit Insurance Corporation Office of Inspector General (FDIC OIG); and Special Agent in Charge Weston King of the SBA OIG Western Region made the announcement.

The FBI, SBA OIG and FDIC OIG are investigating the case. 

Trial Attorneys Emily Culbertson and Helen Lee of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at:  https://www.justice.gov/criminal-fraud/ppp-fraud.

The CARES Act, which was enacted on March 29, 2020, was designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic. One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP. In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1%. PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within eight weeks of receipt and use at least 75 percent of the forgiven amount for payroll.

On May 17, 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 https://www.justice.gov/coronavirus.

Anyone with information about allegations of fraud related to 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.

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 – A former union president was sentenced today to 28 months in federal prison for abusing her leadership position to embezzle union funds – corrupt behavior that depleted the union’s bank accounts and led her to double the due paid by union members.

          Aja Ann Jasmin, 42, of Glendora, was sentenced by United States District Judge Michael W. Fitzgerald, who said she committed “a very serious crime” that required “a huge amount of planning and cunning.” Judge Fitzgerald also ordered Jasmin to pay $185,000 in restitution.

          Jasmin, the former president of the International Chemical Workers Union Council Local 350C, pleaded guilty on February 11 to one count of wire fraud and one count of aggravated identity theft.

          From 2013 to August 2018, Jasmin used her position as union president to embezzle union funds by forging the signatures of other union officers on union checks to herself and by electronically transferring union funds to pay her credit card and other bills.

          To hide her embezzlement, Jasmin falsified union bank account statements, so they showed greater balances than in fact remained. When the balances of the union bank accounts were insufficient to cover its checks, Jasmin falsely told the union’s members’ employer, Southern California Gas Co., that the union had voted to double the union dues it had to deduct from union members’ paychecks – from $21 to $42 per pay period – in order to replenish the union’s funds.

          Jasmin also sought and obtained compensation from the union by falsely representing that time she spent on union business prevented her from getting her hourly wage at Southern California Gas Co. In fact, the union paid her for hours when she was also receiving pay while on disability leave.

          In total, Jasmin defrauded her union out of approximately $190,000.

          “[Jasmin] betrayed her fellow union members to enable her conspicuous consumption, which included an equestrian lifestyle, driving a Maserati, cosmetic medicine, and shopping at luxury retailers like Van Cleef & Arpels,” prosecutors wrote in their sentencing memorandum. “[She] tried to work as little as possible while collecting the most money, generally through fraud.”

          The United States Department of Labor – Office of Labor-Management Standards, and the Department of Labor’s Office of Inspector General investigated this matter.

          Assistant United States Attorney Andrew Brown of the Major Frauds Section prosecuted this case.

          LOS ANGELES – An electrical engineer who schemed to illegally obtain integrated circuits with military applications that were exported to China without the required filing of electronic export information was sentenced today to 63 months in federal prison.

          Yi-Chi Shih, 66, of Hollywood Hills, was sentenced by United States District Judge John A. Kronstadt, who also ordered him to pay $362,698 in restitution to the IRS and fined him $300,000.

          After a seven-week jury trial that concluded in July 2019, Shih was convicted of one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), and the Export Administration Regulations (EAR). Shih also was convicted of four counts of mail fraud, two counts of wire fraud, one count of conspiracy to gain unauthorized access to a protected computer to obtain information, one count of making false statements to an FBI agent, three counts of subscribing to a false tax return, and four counts of making false statements to the IRS about his foreign assets.

          Shih defrauded a United States company that manufactured broadband, high-powered semiconductor chips known as monolithic microwave integrated circuits (MMICs) out of its confidential and proprietary business information that was part of its MMIC manufacturing services, according to trial evidence. As part of the scheme, Shih accessed the victim company’s web portal after obtaining that access through an associate who posed as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States. In this way, Shih concealed his true intent to export the U.S. company’s MMICs to the People’s Republic of China.

          The victim company’s semiconductor chips have several commercial and military applications. MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications. The MMICs Shih exported to China were intended for AVIC 607, a state-owned entity in the PRC.

          Shih was the President of Chengdu GaStone Technology Company (CGTC), a Chinese company that was building a MMIC manufacturing facility in Chengdu. In 2014, CGTC was placed on the Commerce Department’s Entity List, according to court documents, “due to its involvement in activities contrary to the national security and foreign policy interest of the United States – specifically, that it had been involved in the illicit procurement of commodities and items for unauthorized military end use in China.”

          Shih used a Hollywood Hills-based company he controlled – Pullman Lane Productions, LLC – to funnel funds provided by Chinese entities to finance the manufacturing of the MMICs by the victim company. Pullman Lane received financing from a Beijing-based company that was placed on the Entity List the same day as CGTC “on the basis of its involvement in activities contrary to the national security and foreign policy interests of the United States,” according to court documents.

          Shih’s associate, Kiet Mai, pleaded guilty in December 2018 to one felony count of smuggling and was sentenced to 18 months’ probation and a $5,000 fine.

          The FBI, the United States Department of Commerce – Bureau of Industry and Security Office of Export Enforcement, and IRS Criminal Investigation investigated this matter with the assistance of the Royal Canadian Mounted Police.

          This case was prosecuted by Assistant United States Attorneys Judith A. Heinz of the National Security Division; Melanie Sartoris, Chief of the General Crimes Section; Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section; William M. Rollins of the Terrorism and Export Crimes Section; James C. Hughes of the Major Frauds Section; and Daniel G. Boyle of the Asset Forfeiture Section; with assistance from Elizabeth Cannon, Deputy Chief of the National Security Division’s Counterintelligence and Export Control Section.

      LOS ANGELES – The U.S. Department of Justice today launched five cross-jurisdictional strike forces to help reduce gun violence by disrupting illegal firearms trafficking in key regions across the country. One of the strike forces will be in the Central District of California, where the Los Angeles-based United States Attorney’s Office will coordinate strike force efforts.

      Leveraging existing resources, the regional strike forces will better ensure sustained and focused coordination across jurisdictions and help stem the supply of illegally trafficked firearms from source cities, through other communities, and into five key market regions: Los Angeles, New York, Chicago, the San Francisco Bay Area/Sacramento and Washington, D.C.

      Each strike force region will be led by local United States Attorneys, who will collaborate with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), state and local law enforcement partners in their district, and law enforcement partners in areas where illegally trafficked guns originate. These law enforcement partners will use the latest data, evidence, and intelligence from crime scenes to identify patterns, leads and potential suspects in violent gun crimes.

      “All too often, guns found at crime scenes come from hundreds or even thousands of miles away. We are redoubling our efforts as ATF works with law enforcement to track the movement of illegal firearms used in violent crimes. These strike forces enable sustained coordination across multiple jurisdictions to help disrupt the worst gun trafficking corridors,” said Attorney General Merrick B. Garland. “The Department of Justice will use all of its tools – enforcement, prevention, intervention, and investment – to help ensure the safety of our communities – the department’s highest priority.”

      According to gun trace data, a significant number of firearms recovered in the Los Angeles region come from other states and are illegally trafficked into Southern California. The new strike force will help ensure sustained and focused coordination between law enforcement and prosecutors in the greater Los Angeles region with their counterparts in locations where many of the firearms originate.

      “Reducing the flow of weapons into this region will have an impact in reducing violent crime,” said Acting United States Attorney Tracy L. Wilkison. “Because many of the firearms used in crimes come from states that also supply Northern California, our strike force will work closely with the law enforcement officials associated with the strike force based in Northern California, as well as our colleagues in San Diego.”

      “The goal of our Los Angeles strike force is to reduce the proliferation of firearms from the legal to illegal market by utilizing crime gun intelligence and working with our local, state and federal partners,” said ATF Los Angeles Field Division Special Agent in Charge Monique Villegas. “Through partnerships, ATF will target firearms traffickers to help reduce crime rates that have been steadily rising. ATF is dedicated to this sustained collaboration with the U.S. Attorney’s office to make our communities safer.”

      The strike forces represent one important, concrete step in implementing the Department’s Comprehensive Violent Crime Reduction Strategy, which was announced on May 26. The comprehensive strategy supports local communities in preventing, investigating and prosecuting gun violence and other violent crime – and requires U.S. Attorneys’ offices to work with federal, state, local and tribal law enforcement, as well as the communities they serve, to address the most significant drivers of violence in their districts. In guidance to federal agents and prosecutors as part of that comprehensive strategy, the Deputy Attorney General made clear that firearms traffickers providing weapons to violent offenders are an enforcement priority across the country.

          LOS ANGELES – A New York man is scheduled to be in federal court this afternoon after being arrested Monday on a kidnapping charge stemming from his alleged abduction of a 68-year-old woman with dementia at the West Los Angeles Veterans Affairs Medical Center.

          Johnny Ray Gasca, 51, of Bronx, New York, was charged in a federal criminal complaint filed today with one count of kidnapping, an offense that carries a statutory maximum penalty of life in federal prison.

          The FBI arrested Gasca on Monday afternoon outside a Hollywood motel. The victim was rescued at the same time.

          According to the affidavit in support of the criminal complaint, the victim was kidnapped at approximately 8:30 a.m. on Monday after attempting to obtain a medical appointment at the VA facility. The victim was accompanied by a long-time friend, and as the two of them “approached their car, Gasca appeared unexpectedly,” the affidavit states. “Gasca put his arms around [the victim] and pushed her toward a gold-colored pickup truck that was parked nearby. Gasca then picked [the victim] up and threw her into the rear portion of the truck’s passenger compartment.”

          After the Department of Veteran Affairs Police Department contacted the FBI later in the morning, the victim’s friend told agents she recognized Gasca, believed he previously was in some kind of relationship with the victim, and suspected Gasca may have taken some of [the victim’s] money from her bank and retirement accounts, according to the affidavit.

          The witness also reported that the victim previously noted she was missing some of her credit cards, and when the two went to the victim’s bank to review her accounts, bank records showed a $35,000 withdrawal from the victim’s retirement account, followed by a number of Venmo, MoneyGram and PayPal transactions that the friend believed the victim did not have “the knowledge or wherewithal” to conduct, the affidavit states.

          Within hours of beginning its investigation, the FBI located the victim’s phone at The Dixie Hollywood Hotel on Hollywood Boulevard, where agents converged. Soon after, Gasca and the victim exited the hotel, leading to Gasca’s arrest.

          During an interview recounted in the affidavit, Gasca described the victim as his girlfriend and told agents that, after leaving the VA facility, they stopped at a bank where the victim made a $15,000 withdrawal.

          A criminal complaint 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 investigated this matter and received substantial assistance from the VA Police Department.

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

            LOS ANGELES – One of the largest hospital systems in the nation and two of its doctors will pay $37.5 million to resolve violations of the False Claims Act and the California False Claims Act. The settlement – which resolved two cases, one of which the government today learned was unsealed – is a joint resolution with the U.S. Department of Justice and the California Department of Justice.

            The United States and California entered into a settlement agreement with the Prime Healthcare Services system; Prime’s founder and Chief Executive Officer, Dr. Prem Reddy; and interventional cardiologist Dr. Siva Arunasalam to resolve alleged violations of the False Claims Act and the California False Claims Act based on kickbacks paid by Prime to Arunasalam for patient referrals. Prime includes the Ontario-based Prime Healthcare Services Inc., Prime Healthcare Foundation Inc., Prime Healthcare Management Inc., High Desert Heart Vascular Institute (HDHVI), and Desert Valley Hospital Inc.

            Under the settlement agreement, Arunasalam will pay $2 million. Reddy has already paid $1,775,000, and Prime has paid $33,725,000. The United States will receive $35,463,057 of the settlement proceeds, and California will receive $2,036,943.

            In 2018, Prime and Reddy paid $65 million to settle unrelated allegations of false claims and overbilling.

            “Doctors have a sworn duty to do no harm and to put their patients’ interests first,” said Acting United States Attorney Tracy L. Wilkison. “Kickbacks designed to increase the number of patient referrals corrupt the doctor-patient relationship and needlessly waste this nation’s health care resources.”

            “Offering illegal financial incentives to physicians in return for patient referrals undermines the integrity of our health care system by denying patients the independent and objective judgment of their health care professionals,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates the department’s commitment to protect federal health care programs against such violations, as well as other efforts to defraud these important programs.”

            “In our cities and neighborhoods, hospitals are where we go for healing and care, which means they have to be a place that the people they serve can trust,” said California Attorney General Rob Bonta. “Today’s settlement should send a message that schemes like those alleged here, that put profits before people and seek to defraud our Medi-Cal program, will not be taken lightly.”

The settlement resolves allegations that:

           • Prime paid kickbacks when it overpaid to purchase Arunasalam’s physician practice and surgery center because the company wanted Arunasalam to refer patients to its Desert Valley Hospital in Victorville. The purchase price, which was substantially negotiated by Reddy, exceeded fair market value and was not commercially reasonable. Prime also knowingly overcompensated the doctor when HDHVI entered into an employment agreement with him that was based on the volume and value of his patient referrals to Desert Valley Hospital;

           • For approximately two years between 2015 and 2017, HDHVI and Arunasalam used Arunasalam’s billing number to bill Medicare and Medi-Cal for services that were provided by Dr. George Ponce, even though they knew Ponce’s Medicare and Medi-Cal billing privileges had been revoked, and that billing Ponce’s services under Arunasalam’s billing number was improper; and

           • Certain Prime hospitals billed Medi-Cal, the Federal Employees Health Benefits Program, and the U.S. Department of Labor’s Office of Workers’ Compensation Programs for false claims based on inflated invoices for implantable medical hardware. Arunasalam was not implicated in this conduct. 

            The Anti-Kickback Statute prohibits offering, paying, soliciting, or receiving remuneration to induce referrals of items or services covered by a federal healthcare program, such as Medicare, Medicaid or TRICARE. Claims submitted in violation of the Anti-Kickback Statute may give rise to liability under the False Claims Act.

            In connection with the settlement, Prime and Reddy entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Prime maintain a compliance program and hire an Independent Review Organization to review arrangements entered into by or on behalf of its subsidiaries and affiliates.

            “Federal healthcare funds are integral to the provision of necessary medical services to beneficiaries across the country,” said Special Agent in Charge Timothy B. DeFrancesca of the Office of Inspector General for the U.S. Department of Health and Human Services. “Therefore, we will address any actions, including those alleged in this case, that could compromise the system on which many patients rely. We will continue working with federal and state prosecutors to guard taxpayer funds that support these vital programs.”

            The civil settlement includes the resolution of claims brought under the qui tam, or whistleblower, provisions of the False Claims Act in two lawsuits filed in federal court in Los Angeles. One suit was filed by Martin Mansukhani, a former Prime executive. The second suit was filed by Marsha Arnold and Joseph Hill, who were formerly employed in the billing office at Shasta Regional Medical Center, a Prime hospital in Redding, California.

            Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. Although the United States did not intervene in these cases, it continued to investigate the whistleblowers’ allegations and helped to negotiate the settlement announced today. Mr. Mansukhani will receive $9,929,656 as his share of the federal government’s recovery.

            The cases are United States and the State of California ex rel. Martin Mansukhani v. Prime Healthcare Services, Inc., et al., CV18-371-RGK (C.D. Cal.); and United States and the State of California ex rel. Marsha Arnold and Joseph Hill v. Prime Healthcare Services, Inc., et al., CV18-2124-FLA (C.D. Cal.).

            The resolutions obtained in these matters were the result of a coordinated effort among the U.S. Attorney’s Office for the Central District of California; the Civil Division’s Commercial Litigation Branch, Fraud Section; the California Attorney General’s Office’s Division of Medi-Cal Fraud and Elder Abuse; and HHS-OIG. 

            The investigation and resolution of this matter illustrates the government’s emphasis on combating health care 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 cases were handled by Assistant U.S. Attorneys Jack D. Ross and Abraham C. Meltzer, and Senior Trial Counsel Marie V. Bonkowski of the Justice Department’s Civil Division.  

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

One of the largest hospital systems in the nation and two of its doctors will pay $37.5 million to resolve violations of the False Claims Act and the California False Claims Act. The settlement is a joint resolution with the U.S. Department of Justice and the California Department of Justice.

The United States and California entered into a settlement agreement with the Prime Healthcare Services system (Prime), Prime’s Founder and Chief Executive Officer Dr. Prem Reddy, and California interventional cardiologist Dr. Siva Arunasalam to resolve alleged violations of the False Claims Act and the California False Claims Act based on kickbacks paid by Prime to Dr. Arunasalam for patient referrals. Prime includes Prime Healthcare Services Inc., based in Ontario, California; Prime Healthcare Foundation Inc.; Prime Healthcare Management Inc.; High Desert Heart Vascular Institute (HDHVI); and Desert Valley Hospital Inc. Under the settlement agreement, Dr. Arunasalam will pay $2,000,000; Dr. Reddy paid $1,775,000; and Prime paid $33,725,000. The United States will receive $35,463,057 of the settlement proceeds, and California will receive $2,036,943. Prime and Dr. Reddy paid $65 million to settle previous unrelated allegations of false claims and overbilling in 2018.

“Offering illegal financial incentives to physicians in return for patient referrals undermines the integrity of our health care system by denying patients the independent and objective judgment of their health care professionals,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “Today’s settlement demonstrates the department’s commitment to protect federal health care programs against such violations, as well as other efforts to defraud these important programs.”

“Doctors have a sworn duty to do no harm and to put their patients’ interests first,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “Kickbacks designed to increase the number of patient referrals corrupt the doctor-patient relationship and needlessly waste this nation’s health care resources.”

“In our cities and neighborhoods, hospitals are where we go for healing and care, which means they have to be a place that the people they serve can trust,” said California Attorney General Rob Bonta. “Today’s settlement should send a message that schemes like those alleged here, that put profits before people and seek to defraud our Medi-Cal program, will not be taken lightly.”

The settlement resolves allegations that:

• Prime paid kickbacks when it overpaid to purchase Dr. Arunasalam’s physician practice and surgery center because the company wanted Dr. Arunasalam to refer patients to its Desert Valley Hospital in Victorville, California. The purchase price, which was substantially negotiated by Dr. Reddy, exceeded fair market value and was not commercially reasonable. Prime also knowingly overcompensated the doctor when HDHVI entered into an employment agreement with him that was based on the volume and value of his patient referrals to Desert Valley Hospital;
• For approximately two years between 2015 and 2017, HDHVI and Dr. Arunasalam used Dr. Arunasalam’s billing number to bill Medicare and Medi-Cal for services that were provided by Dr. George Ponce, even though they knew Dr. Ponce’s Medicare and Medi-Cal billing privileges had been revoked, and that billing Dr. Ponce’s services under Dr. Arunasalam’s billing number was improper; and
• Certain Prime hospitals billed Medi-Cal, the Federal Employees Health Benefits Program and the U.S. Department of Labor’s Office of Workers’ Compensation Programs for false claims based on inflated invoices for implantable medical hardware. Dr. Arunasalam was not implicated in this conduct.

The Anti-Kickback Statute prohibits offering, paying, soliciting or receiving remuneration to induce referrals of items or services covered by a federal health care program, such as Medicare, Medicaid or TRICARE. Claims submitted in violation of the Anti-Kickback Statute may give rise to liability under the False Claims Act.

In connection with the settlement, Prime and Dr. Reddy entered into a five-year Corporate Integrity Agreement (CIA) with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). The CIA requires, among other things, that Prime maintain a compliance program and hire an Independent Review Organization to review arrangements entered into by or on behalf of its subsidiaries and affiliates.

“Federal healthcare funds are integral to the provision of necessary medical services to beneficiaries across the country,” said Special Agent in Charge Timothy B. DeFrancesca of the Office of Inspector General for the U.S. Department of Health and Human Services. “Therefore, we will address any actions, including those alleged in this case, that could compromise the system on which many patients rely. We will continue working with federal and state prosecutors to guard taxpayer funds that support these vital programs.”

The civil settlement includes the resolution of claims brought under the qui tam or whistleblower provisions of the False Claims Act in two lawsuits filed in federal court in Los Angeles. One suit was filed by Martin Mansukhani, a former Prime executive. The second suit was filed by Marsha Arnold and Joseph Hill, who were formerly employed in the billing office at Shasta Regional Medical Center, a Prime hospital in Redding, California. Under the qui tam provisions of the False Claims Act, a private party can file an action on behalf of the United States and receive a portion of any recovery. Although the United States did not intervene in these cases, it continued to investigate the whistleblowers’ allegations and helped to negotiate the settlement announced today. Mr. Mansukhani will receive $9,929,656 as his share of the federal government’s recovery. The cases are United States and the State of California ex rel. Martin Mansukhani v. Prime Healthcare Services, Inc., et al., 5:18-cv-00371-RGK (C.D. Cal.); and United States and the State of California ex rel. Marsha Arnold and Joseph Hill v. Prime Healthcare Services, Inc., et al., 5:18-cv-02124-FLA (C.D. Cal.).

The resolutions obtained in these matters were the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch, Fraud Section; the U.S. Attorney’s Office for the Central District of California; the California Attorney General’s Office’s Division of Medi-Cal Fraud and Elder Abuse; and HHS-OIG. 

The investigation and resolution of this matter illustrate the government’s emphasis on combating health care 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 cases were handled for the United States by Senior Trial Counsel Marie V. Bonkowski of the Civil Division and Assistant U.S. Attorneys Jack D. Ross and Abraham C. Meltzer of the Central District of California.   

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

          LOS ANGELES – A New York man was sentenced today to 46 months in federal prison for participating in business email compromise (BEC) scams, including one in which $420,000 was stolen from a victim’s life insurance account, then deposited and laundered in various bank accounts set up in the names of other people.

          Sunday Anyika, 56, of Brooklyn, New York, was sentenced by United States District Judge John F. Walter, who also ordered him to pay $1,129,515 in restitution. Anyika pleaded guilty on January 26 to one count of conspiracy to commit mail fraud. At today’s hearing, Judge Walter called the BEC scheme “malicious and extensive” and stated it caused “huge losses to unsuspecting victims.”

          In January 2018, Anyika’s co-conspirators, using the victim’s life insurance policy number, Social Security number, and date of birth to verify the account, called a business – identified in court documents as “Company A” – to obtain details on a life insurance policy under a victim’s name. Later that month, Anyika, using a fake Liberian passport sent by his co-conspirators that bore his photograph, opened and maintained sole control over a TD Bank account that used the victim’s name.

          In February 2018, one of Anyika’s co-conspirators fraudulently and without authorization caused Company A to wire $420,000 from the victim’s life insurance policy account to the same TD Bank account under Anyika’s control. Within weeks, Anyika transferred the ill-gotten funds traceable to the victim’s life insurance account to other bank accounts that he controlled – including one in Hong Kong – that were opened using the names of other people.

          One of Anyika’s co-conspirators, in March 2018, fraudulently and without authorization, requested cancellation of the victim’s life insurance policy with Company A and directed that the remaining funds in the account be wired to the TD Bank account that Anyika had opened two months earlier, but mistakenly ordered the check to be sent to the victim. As a result of the co-conspirator’s fraudulent cancellation request, Company A cancelled the victim’s life insurance policy and mailed the victim a check for approximately $761,355 in an envelope addressed to the victim’s office in Bell.

          Anyika admitted in his plea agreement that his co-conspirators committed other BEC scams, including deceiving a law firm into wiring approximately $400,802 in client settlement money to a bank account under Anyika’s control. The wire was unable to be recalled and the law firm ended up losing the settlement money.

          Anyika further admitted to participating in other such scams, including bilking a toy company out of $135,125 when one of his co-conspirators sent the company a series of emails with specific instructions that tricked it into wiring invoice payments to a bank account Anyika controlled. The account had been opened by Anyika using the same fake Liberian passport he used previously.

          The co-conspirators further defrauded a construction company and a chemical distributor via fake emails masquerading as a subcontractor and supplier, respectively, that requested payments, according to court documents. The construction company was tricked into wiring approximately $158,113, and the chemical distributor was deceived into sending two payments totaling approximately $117,608 to bank accounts opened and controlled by Anyika.

          Anyika admitted to knowing that the funds deposited by his co-conspirators into accounts he controlled were obtained and sent to him as part of the fraudulent conspiracy. As his share of the proceeds of the conspiracy, Anyika personally retained at least approximately $150,000. The co-conspirators remain at large.

          The FBI investigated this matter.

          Assistant United States Attorney Scott Paetty of the Major Frauds Section prosecuted this case.

            LOS ANGELES – An Illinois man pleaded guilty today to a federal sex trafficking charge, admitting that he lured two victims – both of whom were 19 at the time – from Canada with promises of promoting their modeling careers, but instead used force, fraud and/or coercion to cause the victims engage in commercial sex acts.

            Jerome Terry Jr., 45, of Chicago, pleaded guilty before United States District Judge Otis D. Wright II to one count of conspiracy to engage in sex trafficking.

            In a plea agreement, Terry and federal prosecutors have agreed to a prison sentence of between seven and 15 years in federal prison.

            Terry admitted in court today that he and two co-conspirators set up a purported modeling management company called CanadianGirlzRock, Inc. to lure aspiring models to Los Angeles and other locations with the promise of modeling careers. In fact, Terry “intended and planned to recruit, entice, and transport the women to Los Angeles, or other locations, and to harbor, provide, obtain, and maintain the women to engage in commercial sex acts,” according to the plea agreement.

            After seeing photos of the first victim on social media, Terry contacted the woman, telling her she could come to Los Angeles to work as a model and event host. After the woman arrived in late April 2014, Terry used force, threats of force, fraud, and/or coercion to cause the victim to engage in commercial sex acts with four clients over approximately four days until Los Angeles Police officers rescued her.

            Terry contacted the second woman in late 2014 after seeing photos of her online and told her he would help with her modeling career. Terry told the victim she would need to perform acts of prostitution to make money to support her modeling career, but that the proceeds would be put toward her modeling or given to her to send to her family. After the woman traveled to Los Angeles in early 2015, Terry used means of fraud – including the false and deceptive promises that he would put money from B.E.’s prostitution toward her modeling career or make the money available for her to send to her family – to cause the victim to engage in commercial sex acts with numerous clients over approximately 10 days. When the victim asked Terry about the money, Terry became angry and broke her phone, according to the plea agreement.

            Terry has been in federal custody since his extradition from Canada in 2019.

            Judge Wright has scheduled a sentencing hearing for October 25.

            Two co-conspirators originally charged with Terry in this case have entered into diversion agreements.

            This matter was investigated by Homeland Security Investigations, with substantial assistance provided by the Los Angeles Police Department and the Royal Canadian Mounted Police.

            Assistant United States Attorneys Wilson Park of the Terrorism and Export Crimes Section, Devon Myers of the Cyber and Intellectual Property Crimes Section, and Maria Jhai of the General Crimes Section are prosecuting this case.

            LOS ANGELES – A Riverside County man who drove to a federal facility in downtown Los Angeles and attempted to enter with three firearms was charged late this afternoon with a federal firearms offense.

            A federal criminal complaint filed this afternoon charges Erik Christopher Younggren, 34, of Cherry Valley, with attempted possession of firearms and dangerous weapons in a federal facility, a misdemeanor offense that carries a sentence of up to one year in federal prison.

            Younggren, who currently is being held in federal custody, is expected to make his initial court appearance Friday afternoon in United States District Court.

            The complaint alleges that Younggren attempted to enter the employee parking lot under the Edward R. Roybal Federal Building and United States Courthouse Wednesday morning at approximately 9:30 a.m. When stopped by security at the entrance to the parking facility, Younggren initially stated that he was “a witness” who needed to enter the facility. When the security officer asked if he was armed, Younggren admitted to being in possession of a handgun and two rifles, according to the complaint.

            A subsequent search of his vehicle led to the discovery of two rifles, a .45-caliber semi-automatic firearm and approximately 565 rounds of ammunition. When he was detained by authorities, Younggren was wearing body armor with loaded magazines and knives attached, the complaint alleges.

            During an interview with Federal Protective Service, the FBI and Homeland Security Investigations, Younggren said he went to the Roybal building because he needed “protection…[and he] explained that he was purportedly a confidential informant assigned to a confidential federal task force,” according to the complaint.

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

            This matter is being investigated by Federal Protective Service. The Los Angeles Police Department; the FBI; Homeland Security Investigations; and the Bureau of Alcohol, Tobacco, Firearms and Explosives provided substantial assistance.

            Assistant United States Attorney Maria Elena Stiteler of the General Crimes Section is prosecuting this case.

          SANTA ANA, California – Law enforcement officials today arrested 12 defendants charged in a federal grand jury indictment with conspiring to distribute at least $2 million worth of heroin by operating two Orange County-based call centers that took telephone orders for deliveries of the drug.

          The 13-count indictment returned on May 26 and unsealed today charges a total of 19 defendants with narcotics- and money laundering-related offenses. The 12 defendants who were arrested by special agents with the FBI via “Operation Horse Caller” are expected to be arraigned this afternoon in United States District Court in Santa Ana. The seven remaining defendants are fugitives.

          According to the indictment, from March 2017 to April 2021, Julio Cesar Martinez, a.k.a. “Primo,” 43, of Riverside, and his brother, Victor Martinez, a.k.a. “Hector,” 44, of Hemet, owned and operated a heroin distribution organization in Orange County, obtaining the drug from suppliers in Mexico and the United States. Heroin was transported to the organization by couriers who concealed the drug, sometimes in their body cavities, to Orange County.

          Maricela Guerrero, a.k.a. “Carla,” 53, of Santa Ana, and Marla Portillo Cordova, a.k.a. “Yvette,” 34, also of Santa Ana, allegedly assisted in the daily operations of the distribution organization and, on an almost daily basis, accepted telephone orders for heroin. These four defendants allegedly directed other conspirators to deliver the heroin to buyers and collect payment in exchange for a cut of the proceeds.

          The organization allegedly distributed $2 million worth of heroin. To conceal the source of the income the organization generated, from September 2013 to May 2019, Julio Cesar Martinez and Victor Martinez allegedly caused the deposit of the heroin sales proceeds into bank accounts held by Cordova and other individuals. Cordova and others, at times, allegedly structured the deposits into the bank accounts to evade federal reporting requirements by depositing the money at different banks and by breaking the deposits up into amounts $10,000 and under.

          Victor Martinez allegedly directed Cordova and others to further conceal the heroin proceeds by transferring the money between various bank accounts held by family members. He also directed them to transfer heroin sales proceeds into an escrow account that was used to purchase property in Hemet for his benefit, according to the indictment.

          These four defendants, along with others, are charged with conspiracy to distribute heroin and conspiracy to commit money laundering. Victor Martinez also is charged with one count of possession with intent to distribute heroin, and, along with Cordova, is charged with four counts of engaging in monetary transactions in property derived from unlawful activity.

          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 charges of conspiracy to distribute heroin and distribution of heroin each carry a statutory maximum sentence of life imprisonment. The charges of money laundering conspiracy and engaging in monetary transactions in property derived from unlawful activity carry statutory maximum sentences of 20 years and 10 years in federal prison, respectively.

          The FBI and IRS Criminal Investigation investigated this matter. The Orange County Sheriff's Department, the Newport Beach Police Department, the Costa Mesa Police Department, the Huntington Beach Police Department, the Oxnard Police Department, the California Highway Patrol and March Air Reserve Base provided substantial assistance.

          Assistant United States Attorneys Joseph T. McNally and Kevin J. Butler of the Violent and Organized Crime Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section is handling the forfeiture portion of the case.

          This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

          RIVERSIDE, California – A former Department of Defense civilian official has pleaded guilty to two felony charges for taking tens of thousands of dollars in illegal cash payments from a private contractor to support the contractor’s effort to obtain $6.4 million from the government in connection with construction projects on a Navy base in the African nation of Djibouti, the Justice Department announced today.

          Nizar Farhat, 63, of Palm Desert, pleaded guilty on Monday to one count of being a public official who received an illegal gratuity and one count of being a public official who received compensation from a private party for government services.

          Farhat is a former construction manager who was based at the United States Marine Corps Air Ground Combat Center in Twentynine Palms.

          According to his plea agreement, in 2014 and 2015, Farhat was on assigned temporary duty at the United States Navy Base Camp Lemonnier in Djibouti, where he oversaw a private company’s $15 million contract to construct an aircraft hangar and a telecommunications facility. After the projects were completed, the company submitted to the Defense Department Requests for Equitable Adjustment (REAs) that sought $6.43 million in additional payments.

          Farhat admitted that, on four separate occasions between December 2015 and October 2017, he met with representatives of the company at hotels in Las Vegas and Palm Springs. During those meetings, Farhat took $15,000 in cash to help draft the REAs the company submitted to the Defense Department, and another $22,000 in cash to recommend that the Navy certify completion of the construction projects and approve the REAs. Following those meetings, Farhat urged the Defense Department to approve the majority of the REAs, without disclosing that defendant had received cash from the company in exchange for his recommendation.

          The majority of the REAs remain under review by the Defense Department.

          United States District Judge Jesus G. Bernal has scheduled an October 4 sentencing hearing, at which time Farhat will face a statutory maximum sentence of 10 years in federal prison.

          The FBI and the Naval Criminal Investigative Service investigated this matter.

          Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section and Justice Department Trial Attorney David Recker of the National Security Division’s Counterintelligence and Export Control Section are prosecuting this case.

            LOS ANGELES – A federal judge today imposed a prison sentence of nearly 20 years on a Whittier man who admitted exchanging child pornography – some of which involved infants and toddlers – with others on the internet.

            Fred Joseph Stecher Jr., 29, was sentenced to serve 235 months in a federal prison for distribution of child pornography. Once he completes his sentence, Stecher will be placed on supervised release for the rest of his life. United States District Judge R. Gary Klausner also ordered Stecher to pay a total of $55,000 in restitution to 11 victims.

            Stecher – who used several online aliases, including “smellyguy1991” and “little_tyke1991” – pleaded guilty in March to one count of distributing child pornography, which followed a prior conviction for possession of child pornography. “Despite multiple search warrants executed at his home, his probationary sentence, jail time, and completion of a sex offender treatment program, [Stecher] still committed the [latest] child exploitation offenses, demonstrating his lack of impulse control and his lack of respect for the law,” prosecutors argued in a sentencing memorandum.

            During the investigation into Stecher, authorities executed a search warrant on his Yahoo! email account and found 1,263 unique images and 65 unique videos containing child pornography.

            “Some of the videos and images depicted minor victims under the age of 12 being used for sexual acts, including infants and toddlers,” Stecher admitted in his plea agreement. “Some of the videos and images portrayed sadistic or masochistic sexual conduct, specifically bondage, involving minor children.”

            Stecher used his Yahoo! email account to distribute the child pornography he obtained on the internet. The sentencing memo notes how Stecher engaged in online chats with other individuals interested in child pornography, discussing the types of children he liked in lurid detail and at times pretending that the children pictured were his own.

            The case against Stecher was investigated by the FBI, Homeland Security Investigations, and the Los Angeles Police Department as part of the Los Angeles Internet Crimes Against Children Task Force.

            Assistant United States Attorney Kathy Yu of the Violent and Organized Crime Section prosecuted this case.

          LOS ANGELES – Two San Fernando Valley men who participated in an extensive scheme that produced and sold counterfeit identity documents – including United States passport cards, Social Security cards and driver’s licenses – each received federal prison sentences today.

          Carlos Ayala Hernandez, a.k.a. “Juan Juarez,” 45, of Granada Hills, was sentenced today to 30 months in federal prison by United States District Judge John F. Walter. Also today, Judge Walter sentenced Miguel Juarez Guerrero, 24, of Van Nuys, to 20 months in federal prison.

          Hernandez pleaded guilty on April 27 to one count of conspiracy to produce, transfer and possess false identification documents, and one count of being an illegal alien in possession of firearms. Guerrero pleaded guilty on May 3 to one count of conspiracy to produce, transfer and possess false identification documents, and one count of producing false identification documents.

          From January 2016 to January 2021, Hernandez, Guerrero and Nestor Perez, a.k.a. “Daniel Perez,” 32, of Van Nuys, operated an illegal business in which they manufactured and sold false identification documents. These counterfeit documents included U.S. passport cards, lawful permanent resident cards (more commonly known as “Green Cards”), employment authorization document cards, Social Security cards, and driver’s licenses purporting to be from multiple states.

          At the direction of – and in exchange for payment from – Hernandez and Guerrero, Perez manufactured the counterfeit identification documents at a Van Nuys apartment. Perez made the bogus documents using personal identifying information – including names, dates of birth and Social Security numbers – of real persons After manufacturing the phony documents, Perez provided them to Hernandez and Guerrero, who then sold the documents to others.

          In January 2021, law enforcement executed search warrants on Hernandez’s residence and the Van Nuys apartment. In Hernandez’s residence – where Guerrero also lived – law enforcement found firearms, assorted ammunition and $40,483 generated from the false identification document scheme.

          At the Van Nuys apartment, officers also found a robust counterfeit document lab, including approximately 243 completed false identification documents, approximately 1,000 fraudulent authentication seals, 14 printers, a scanner and an ultraviolet light used to test the security features on counterfeit ID documents.

          Hernandez, a Mexican national, admitted in his plea agreement that he knew he was an illegal alien in the United States, including during the times he possessed the firearms.

          Perez pleaded guilty on April 12 to one count of conspiracy to produce, transfer and possess false identification documents, and one count of producing false identification documents. His sentencing hearing is scheduled for July 19.

          Homeland Security Investigations and the Ventura County Sheriff’s Office investigated this matter.

          Special Assistant United States Attorney Matthew C. Chan and Assistant United States Attorney Gregory D. Bernstein, both of the General Crimes Section, are prosecuting this case.

          LOS ANGELES – Two cargo handling company employees who worked at Los Angeles International Airport each pleaded guilty today to a federal criminal charge for stealing four gold bars that were part of a larger shipment headed from Australia to New York.

          Marlon Moody, 38, and Brian Benson, 35, both of South Los Angeles, each pleaded guilty to one count of conspiracy to commit theft of an interstate or foreign shipment.

          United States District Judge Dale S. Fischer scheduled November 1 sentencing hearings for the defendants, at which time they each will face a statutory maximum sentence of five years in federal prison.

          According to their plea agreements, both men worked for Alliance Ground International, a company that provided ground handling services at LAX. On the evening of April 22, 2020, a shipment of gold bars arrived at LAX on Singapore Airlines. A total of 2,000 gold bars, each weighing one kilogram and valued at approximately $56,000, were being shipped at the direction of a Canadian bank. During a stopover at LAX, the gold was offloaded and secured, but an inventory that evening showed one box containing 25 gold bars was missing.

          Moody found the missing box of gold bars near the Singapore Airlines cargo warehouse on the morning of April 23, placed the box on a belt loader and drove that vehicle to a nearby location, where he removed four of the bars. Soon after, Benson arrived to pick up Moody in a company van, where they exchanged text messages about the gold bars because other employees were in the van. The two defendants later left the airport and went to a nearby parking lot, where Moody gave Benson one of the four gold bars.

          The lost box with the 21 remaining gold bars was discovered by other cargo handlers later on April 23, and authorities began an investigation that ultimately led to Moody and Benson.

          Moody gave one gold bar to a relative on May 4 “and directed the family member to exchange the gold bar for a vehicle and/or money,” according to court documents. Around this time, Moody buried the remaining two gold bars in the backyard of his residence.

          The FBI recovered all four gold bars about two weeks after they went missing from LAX.

          The FBI, the Federal Air Marshal Service, the Los Angeles Police Department, and the Los Angeles Airport Police investigated this matter.

          Assistant United States Attorney Lyndsi C. Allsop of the General Crimes Section is prosecuting this case.

          LOS ANGELES – An Orange County man is expected to be arraigned in federal court today on an indictment charging him with defrauding victims who paid for COVID-related medical protective equipment that was never delivered, causing nearly $3 million in losses.

          Christopher John Badsey, 60, of Lake Forest, was arrested by FBI agents on July 8 without incident. He is charged with four counts of wire fraud and two counts of money laundering. He is expected to be arraigned this afternoon in United States District Court in downtown Los Angeles.

          According to an indictment returned by a federal grand jury on July 7, Badsey falsely represented that he had access to millions of boxes of medical-grade 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 COVID-19 pandemic.

          Badsey allegedly entered into contractual agreements with victims, whom he required to provide a money deposit to inspect the gloves before delivery.

          After receiving the deposits, Badsey allegedly instructed victims to travel to the Los Angeles area, where he claimed the gloves were stored in a warehouse. But when victims attempted to visit the warehouse, Badsey and other FDI employees allegedly provided excuses as to why the gloves could neither be inspected, nor delivered, to the victims.

          Nitrile gloves were never provided to the victims, and Badsey is alleged to have absconded with the deposit money totaling nearly $3 million. After obtaining the victims’ wire deposits, Badsey and others are believed to have used those funds to make lavish purchases for their personal benefit.

          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 of all charges in the six-count indictment, Badsey would face a statutory maximum sentence of 100 years in federal prison.

          The FBI investigated this matter.

          Assistant United States Attorney Melissa S. Rabbani of the Santa Ana Branch Office is prosecuting this case.

          SANTA ANA, California – An Orange County man was sentenced today to 24 months in federal prison for conspiring to smuggle counterfeit Apple, Samsung, and Motorola cell phone components from China that were then sold to consumers in the United States, a scheme that generated tens of millions of dollars in revenue.

          Chan Hung Le, 46, of Laguna Hills, was sentenced by United States District Judge Josephine L. Staton, who also ordered him to pay a $250,000 fine.

          Le pleaded guilty in November 2020 to one count of conspiracy to defraud the United States, to intentionally traffic in counterfeit goods, and to illegally bring merchandise into the United States.

          From late 2011 to February 2015, Le conspired with other individuals to import from China cell phone parts and other electronic items bearing counterfeit marks. In furtherance of the conspiracy, Le set up and used mailboxes with virtual office service providers in Oklahoma and Texas using a fictitious business name, JV Trading Solutions. In furtherance of the conspiracy, Le also used the name and identity documents of one of his employees to set up the virtual offices and directed other conspirators to ship trademarked goods under Le’s employees’ or relatives’ names. Once the counterfeit products arrived, Le and his co-conspirators distributed the parts to the public through various online stores.

          “[Le]…orchestrated an elaborate scheme to deceive customs agents by creating covert shipping channels from Hong Kong and China to different U.S. states,” prosecutors wrote in their sentencing memorandum. “From this conduct, and this deception, [Le] generated millions of dollars in profit. [Le] enlisted numerous other parties in his conduct – including his romantic partner, his employees (witting or unwitting), other family members, and the unwitting virtual mailbox service companies. This was a sophisticated, long-standing, and highly profitable offense.”

          In 2016, one of Le’s suppliers, Hongwei “Nick” Du, pleaded guilty in United States District Court in San Diego to conspiring to traffic in counterfeit goods and related money laundering charges. In his plea agreement, Du admitted to selling Le at least $18,744,354 worth of cellular telephone and electronic components for resale from China into the United States and that about half of the goods were counterfeit items bearing the trademarks of Apple, Samsung, Motorola, and other companies. Du was sentenced to three years in federal prison.

          Homeland Security Investigations, United States Customs and Border Protection, and the Westminster Police Department investigated this matter.

          Assistant United States Attorney Cameron L. Schroeder, Chief of the Cyber and Intellectual Property Crimes Section, and Assistant United States Attorneys Lauren E. Restrepo and Victoria A. Degtyareva, also of the Cyber and Intellectual Property Crimes Section, prosecuted his case.

          SANTA ANA, California – A Stockton man pleaded guilty today to a federal criminal charge accusing him of transporting a teenage girl from Southern California to Nevada and Arizona so she could work as a prostitute for his financial benefit.

          Christian Alexander Augustus, 25, a.k.a. “Sir Ceeco,” pleaded guilty to one count of transportation of a minor in interstate commerce to engage in prostitution and criminal sexual activity.

          According to his plea agreement, in April 2019, Augustus willfully caused a teenage girl to be transported from Los Angeles County to Las Vegas with the intent that she would engage in prostitution and other criminal sexual activity.

          More specifically, from December 2018 to July 2019, Augustus directed the transportation of the victim from Los Angeles and Orange counties to locations – including Los Angeles, Las Vegas and Phoenix – in order for her to work as a prostitute to obtain money for him.

          Augustus admitted to forcing the victim to work on the streets and advertising her services on the internet. He also admitted that he collected the money the victim obtained by committing commercial sex acts.

          United States District Judge James V. Selna has scheduled a November 29 sentencing hearing, at which time Augustus will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.

          The Orange County Human Trafficking Task Force, which is comprised of local law enforcement agencies, including Homeland Security Investigations and the United States Attorney’s Office for the Central District of California, investigated this matter.

          Assistant United States Attorney Jake D. Nare of the Santa Ana Branch Office is prosecuting this case.

          The core mission of the Orange County Human Trafficking Task Force is using a victim-centered and trauma-informed approach toward the goal of combating human trafficking in Orange County, making the recovery of juvenile victims its top priority.

          SANTA ANA, California – The owner of trucking companies in the Inland Empire and elsewhere in California, who was out on bond awaiting trial in a separate federal criminal case, was arrested today on a criminal complaint alleging he fraudulently obtained more than $667,000 in Paycheck Protection Program (PPP) COVID-19 pandemic relief funds.

          Carl Bradley Johansson, 62, of Newport Beach, was arrested this morning and is charged with one count of bank fraud and one count of conspiracy to commit bank fraud. He is expected to make his initial court appearance this afternoon in United States District Court in Santa Ana.

          Johansson was on pretrial release in a separate case that remains scheduled to go on trial on September 14. In that matter, Johansson is alleged to have schemed to defeat federal transportation laws by ordering the illegal repair of an oil tanker that resulted in a fatal explosion in 2014, and to have unlawfully avoided the payment of at least $298,562 in federal income taxes from 2012 to 2017.

          According to an affidavit filed with the complaint unsealed today, in April 2020, under Johansson’s direction, the Ontario-based trucking company Western Distribution LLC applied for a PPP loan in the amount of $436,390. Johansson’s son was listed as the company’s owner on the loan application and the loan application was approved.

          Under Johansson’s direction, Western Distribution LLC immediately spent its PPP funds in May and June 2020, in large part on expenses unrelated to its payroll. Rather than use the funds to keep the company’s employees on staff, Johansson laid off most of the company’s employees, but rehired many of them in late 2020.

          Also in April 2020, a different Johansson-controlled trucking company – a Merced County-based business identified in the affidavit as “Company A” – applied to another federally insured bank for its own PPP loan in the amount of $286,505, according to the affidavit. Johansson’s 85-year-old mother was listed as Company A’s owner on its PPP loan application, which was approved in the amount of $286,500.

          To create the impression that Western Distribution LLC had spent more of its PPP loan on its payroll than it actually did, in September 2020 Johansson moved 21 of Company A’s employees onto Western Distribution LLC’s payroll, even though those employees never worked for Western Distribution, LLC, the affidavit alleges. This allegedly occurred just before the company’s 24-week window for spending its PPP funds closed.

          As a result of this ruse, Western Distribution LLC could falsely claim on its PPP loan forgiveness application in January 2021 that the company had met the requisite threshold of spending at least 60 percent of its PPP loan on payroll, according to the affidavit.

          In March 2021, Johansson allegedly caused Western Distribution LLC to repeat the same fraudulent representations concerning its employee lists and payroll numbers when the company submitted a second PPP loan application, this time for $231,527. The second loan application was approved.

          The total loss alleged in this case is approximately $667,917.

          A complaint 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 of both charges, Johansson would face a statutory maximum sentence of 70 years in federal prison.

          IRS Criminal Investigation and the Department of Transportation – Office of Inspector General investigated this matter.

          Assistant United States Attorneys Joseph O. Johns and Matthew W. O’Brien of the Environmental and Community Safety Crimes Section are prosecuting this case.

          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 https://www.justice.gov/coronavirus.

          Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud (NCDF) 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 South Bay man has been indicted on federal criminal charges alleging he committed a five-day armed robbery spree of nearly a dozen Los Angeles-area businesses, including four donut shops and the attempted robbery of a veterinarian’s office.

          Justin Washington, 32, of Gardena, was named in a 14-count federal grand jury indictment returned on July 6. He is charged with 11 counts of Hobbs Act robbery and three counts of using a firearm during a crime of violence. Washington’s arraignment is expected in the coming weeks. He is currently in custody on separate state charges.

          According to the indictment, between November 30 and December 4, 2020, Washington robbed and attempted to rob 10 businesses in the South Bay and in South Los Angeles. His alleged robbery spree began at the same Gardena grocery store, robbed on consecutive days on November 30 and December 1. From there, in Gardena, Washington allegedly robbed a 7-Eleven store, a donut shop and attempted to rob a veterinarian’s office. He allegedly then went on to rob a donut shop in Torrance, and, in South Los Angeles, a wireless phone store, a dry cleaner business, two additional donut shops and a Baskin-Robbins ice cream store.

          During the robberies, Washington allegedly held the stores’ employees against their will, including, as charged in three counts, at gunpoint.

          The total loss alleged in the indictment is approximately $5,679.

          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.

          A violation of the Hobbs Act carries a statutory maximum penalty of 20 years in federal prison. The offense of brandishing a firearm during a crime of violence carries a statutory maximum sentence of life in federal prison.

          The FBI; the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Torrance Police Department; the Gardena Police Department; the Los Angeles Police Department; and the Los Angeles County Sheriff’s Department investigated this matter.

          Assistant United States Attorney Sara B. Milstein of the Violent and Organized Crime Section is prosecuting this case.

            LOS ANGELES – A South Los Angeles man was arrested this afternoon on federal charges of illegally transporting tons of explosives he purchased in Nevada – including dangerous homemade devices that were detonated by police, leading to a massive explosion that destroyed a specially designed containment vehicle and injured 17 people.

            Arturo Ceja III, was arrested by ATF special agents pursuant to a criminal complaint filed late Friday that charges him with transporting explosives without a license. Ceja will remain in custody until an initial appearance expected on July 6 in United States District Court in Los Angeles.

            The complaint alleges that Ceja made several trips to Nevada in late June to purchase various types of explosives – including aerial displays and large homemade fireworks containing explosive materials – that he transported to his residence in rental vans. Most of the explosives were purchased at Area 51, a fireworks dealer in Pahrump, Nevada. The complaint notes that fireworks in California can be sold for as much as four times what purchasers pay for the fireworks in Nevada.

            Ceja told investigators that he purchased the homemade explosives – constructed of cardboard paper, hobby fuse and packed with explosive flash powder – from an individual selling the devices out of the trunk of a Honda in the Area 51 parking lot, according to the complaint.

            “Ceja did not possess an ATF explosives license or permit of any kind that would authorize him to transport either aerial display fireworks or homemade fireworks made with explosive materials, including but not limited to flash powder,” according to the complaint affidavit written by a special agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives.

            On Wednesday, after receiving a tip that fireworks were being stored in Ceja’s backyard, Los Angeles Police officers responded to his residence on East 27th Street. At the house, officers found over 500 boxes of commercial grade fireworks in large cardboard boxes. The initial investigation by local authorities estimated that approximately 5,000 pounds of fireworks were found; however, today the ATF determined that Ceja was storing approximately 32,000 pounds of fireworks in his backyard.

            “[T]he fireworks were stored outside and in an unsafe manner, namely under unsecured tents and next to cooking grills,” the complaint alleges. “None of the commercial fireworks or homemade fireworks, which contained explosive materials, were stored in an approved magazine.”

            In addition to the commercial fireworks, the initial search of Ceja’s residence led to the discovery of over 140 other homemade fireworks (typically referred to M devices of varying sizes), as well as explosives-making components, including hobby fuse that matched the fuse on a homemade mortar shell wrapped in tin foil that was discovered inside the residence, according to the affidavit.

            While the fireworks were being removed from Ceja’s residence, the LAPD Bomb Squad determined that some of the homemade fireworks containing explosive materials were not safe to transport due to risk of detonation in a densely populated area and therefore would be destroyed on scene using a total containment vessel (TCV), according to the affidavit. During the destruction of the devices, the entire TCV exploded, causing a massive blast radius, damaging homes in the neighborhood and injuring a total of 17 law enforcement personnel and civilians.

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

            The charge of transporting explosives without a license carries a statutory maximum sentence of 10 years in federal prison.

            The Bureau of Alcohol, Tobacco, Firearms and Explosives; the United States Department of Transportation, Office of Inspector General; and the Los Angeles Police Department are investigating this matter.

            Assistant United States Attorneys Amanda M. Bettinelli and Erik M. Silber of the Environmental and Community Safety Crimes Section are prosecuting this case.

          LOS ANGELES – Two Orange County men were charged today with conning thousands of investors into purchasing a cryptocurrency that purportedly provided exclusive access to a trading program that they falsely claimed was profitable, and then using most of the $1.8 million raised to enrich themselves.

          Jeremy David McAlpine, 25, of Fountain Valley, and Zachary Michael Matar, 28, of Huntington Beach, each were charged in a one-count information with securities fraud.

          McAlpine and Matar have agreed to plead guilty to the charge, according to plea agreements that also were filed today. The defendants are expected to plead guilty in United States District Court in the coming weeks.

          According to court documents, in 2017, McAlpine and Matar founded Dropil Inc., a Belize-based company operating out of Fountain Valley. Dropil provided and managed investments in digital assets such as cryptocurrency. The defendants primarily were responsible for the development of Dropil’s digital asset, called DROP tokens, as well as its digital asset trading program, an automated trading bot called “Dex.” Purchasers of DROPs had access to Dex, which could only be used with DROP tokens. Neither McAlpine, Matar nor Dropil was registered with the Securities and Exchange Commission (SEC) as a broker or dealer.

          McAlpine and Matar induced investors to purchase DROPs by making false claims about the functionality and profitability of Dex, which was said to provide an “expertly managed portfolio balancing algorithm [that] manages risk,” according to information published on Dropil’s website. The DROP tokens were said to “ensure privacy while also offering added value and exclusivity.” Dropil further promised that Dex’s trading would generate profits that would be distributed as additional DROP tokens every 15 days.

          Beginning in late 2017, McAlpine and Matar began an unregistered offer and sale of DROPS on Dropil’s website. In January 2018, the defendants launched an initial coin offering (ICO) for the sale of DROPs, again through Dropil’s website, which continued through March 2017. To induce investors to purchase DROPs, McAlpine and Matar made a series of false statements to investors in a “White Paper” published on Dropil’s website and on its Twitter account, promoting the cryptocurrency’s supposed success.

          The defendants also manufactured fake Dex profitability reports and made payments in the form of DROPs to Dex users, giving the false appearance that Dex was operational and profitable. McAlpine and Matar also made false statements about the volume and dollar amount of DROPs sold both during and after the ICO, stating Dropil had successfully raised $54 million from 34,000 investors both foreign and domestic. In fact, the ICO raised less than $1.9 million from fewer than 2,500 investors.

          In total, the defendants obtained approximately $1,896,657 from 2,472 investors through the sale of approximately 629 million DROPs. But McAlpine and Matar did not use at least $1.6 million of the invested money as promised, using it instead to fund disbursements to themselves and their associates.

          In conjunction with today’s announcement of the defendants’ agreement to plead guilty to securities fraud charges, the SEC has also announced that, in connection with a complaint filed in April 2020, Dropil, McAlpine and Matar have agreed to permanent injunctions barring further fraudulent conduct and prohibiting them from directly or indirectly participating in the offer, purchase, or sale of digital securities, with disgorgement, prejudgment interest, and civil penalties to be determined by the court.

          The FBI investigated this matter.

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

          SAN DIEGO – The CEO of several Southern California-based medical imaging companies was found guilty by a federal jury today of running a scheme in which more than $250 million in claims were fraudulently submitted through the state workers’ compensation system for medical services procured through bribes and kickbacks to physicians and others.

          Sam Sarkis Solakyan, 40, of Glendale, was found guilty of one count of conspiracy to commit honest services mail fraud and health care fraud, and 11 counts of honest services mail fraud.

          Solakyan was the CEO of several medical-imaging companies, including the Glendale-based Vital Imaging Inc., and San Diego MRI Institute. Solakyan operated diagnostic imaging facilities throughout California, including the Bay Area, Los Angeles and Orange counties, and San Diego.

          According to the evidence presented at the eight-day trial, from no later than mid-2013 to November 2016, Solakyan conspired with Steven Rigler, a Solana Beach-based chiropractor; Fermin Iglesias, the former CEO of MedEx Solutions, a patient-scheduling company; and others to perpetrate a scheme in which physicians were paid bribes and kickbacks in exchange for the referral of workers’ compensation patients. The compensation offered to the corrupt doctors consisted of either cash or referrals of new patients in what is known as a “cross-referral” scheme.

          The conspirators obscured the true nature of their financial relationships in order to conceal the bribes and kickbacks, including by entering into various sham agreements such as contracts for “marketing,” “administrative services,” and “scheduling,” when in fact the money Solakyan paid amounted to volume-based, per- magnetic resonance imaging (MRI) scan bribes and kickbacks to induce physicians to refer and continue referring patients to Solakyan’s companies.

          Solakyan’s recruiters required physicians to refer a minimum number of patients to receive “cross-referrals,” and those referrals stopped if the physicians failed to meet the minimum quota. Solakyan’s recruiters – Fermin Iglesias, 41 of Glendale, and Carlos Arguello, 39, of Bonita – were paid more than $8.6 million for obtaining MRI referrals, payments which were concealed from patients and health insurers.

          Solakyan concealed his cash payments to Rigler for patient referrals by calling them “reports,” and in March 2015 he asked Rigler if Solakyan could “send my driver with your reports,” then stated, “I’ll have him contact you then I’ll just send him with your reports, buddy,” according to a September 2018 federal grand jury indictment.

          In total, Solakyan submitted and caused to be submitted more than $250 million in claims for medical services procured through the payment of bribes and kickbacks.

          Rigler pleaded guilty in November 2015 to one count of conspiracy to commit honest services mail fraud and was sentenced to six months in federal prison.

          Iglesias pleaded guilty in December 2016 to conspiracy to commit honest services mail fraud and health care fraud and was sentenced in February 2019 to five years in federal prison.

          Arguello pleaded guilty in August 2016 to conspiracy to commit honest services mail fraud and health care fraud and was sentenced in April 2019 to four years in federal prison.

          United States District Judge Cynthia A. Bashant has scheduled an October 4 sentencing hearing, at which time Solakyan will face a statutory maximum sentence of 240 years in federal prison.

          The FBI and the California Department of Insurance, Fraud Division, investigated this matter.

          Assistant United States Attorney Faraz R. Mohammadi of the Santa Ana Branch Office and Assistant United States Attorney Adam P. Schleifer of the Major Frauds Section are prosecuting this case.

            LOS ANGELES – Southern California Permanente Medical Group and Kaiser Foundation Hospitals have agreed to resolve allegations that they violated the Americans with Disabilities Act (ADA) by failing to provide at one of their facilities a qualified sign language interpreter or other appropriate form of auxiliary aid or service to a deaf patient.

            The letter of resolution, which was signed this week by executives with the two Kaiser entities, ensures that individuals with disabilities at its Baldwin Park Medical Center receive appropriate auxiliary aids and services necessary for effective communication. Southern California Permanente Medical Group and Kaiser Foundation Hospitals have agreed to provide equipment and services free of charge to ensure that people who are deaf or hard of hearing have full and equal access to medical appointments, treatments and emergency visits at this medical center.

            The investigation in this matter was triggered by a complainant who alleged she was not provided effective communication before and after a surgical procedure in 2018.

            The entities, which fully cooperated with the government’s investigation, have agreed to:

• Provide appropriate auxiliary aids and services, including qualified interpreters, when necessary to ensure effective communication with patients who are deaf or hard of hearing and their companions;
• Advertise the availability of auxiliary aids and services;
• Provide training on auxiliary aids and services, including to qualified interpreters, the diversity coordinator, Medical Center personnel and telephone operators; and
• Pay compensation to the complainant and civil penalties to the United States.

            In February 2020, the U.S. Attorney’s Office, Southern California Permanente Medical Group, and Kaiser Foundation Hospitals entered into a settlement agreement to resolve allegations that the two entities failed to provide qualified sign language interpreters or other appropriate forms of assistant to a patient at their West Los Angeles Medical Center.

            The U.S. Attorney’s Office conducted the investigation as part of the Department of Justice’s Barrier-Free Health Care Initiative, through which U.S. Attorneys’ offices and the Department’s Civil Rights Division target their enforcement efforts on a critical area for individuals with disabilities – access to medical services and facilities.

            Assistant United States Attorney Acrivi Coromelas of the Civil Division’s Civil Rights Section handled this matter.

            For more information on the ADA, please call the toll-free ADA Information Line at (800) 514-0301 or (800) 514-0383 (TDD) or access the ADA website at http://www.ada.gov.