Central District of California

          LOS ANGELES – A San Dimas man pleaded guilty today to a federal criminal charge that he fraudulently obtained more than $500,000 in COVID-19-related unemployment benefits in the names of foreign nationals he falsely claimed were local real estate agents hit hard financially by the pandemic.

          Bonifacio Jastilana Marinas, 50, pleaded guilty to a single-count criminal information charging him with mail fraud.

          According to his plea agreement, from April 2020 to August 2020, Marinas took advantage of provisions in the CARES Act to file approximately 85 unemployment insurance claims with the California Employment Development Department (EDD) that falsely asserted that the named claimants were self-employed real estate agents in Los Angeles County whose jobs had been adversely impacted by the COVID-19 pandemic. Marinas often listed his own real estate business – Vintage Realty & Finance Inc., located in West Covina – as the purported workplace of the named claimants.

          In actuality, the named claimants resided in Saipan or the Philippines, were not registered as real estate agents in Los Angeles County, had no employment history in California, and were not eligible for the benefits Marinas claimed.

          Marinas listed his own residence as the mailing address for each of the named claimants, the plea agreement states. As a result, the debit cards used to distribute the unemployment benefits were mailed to Marinas, who then used them to withdraw the fraudulently obtained funds. In his plea agreement, Marinas admitted that his scheme caused losses to EDD and the United States Treasury of at least $516,244.

          The Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress and signed into law in March 2020, helped provide unemployment insurance benefits during the COVID-19 pandemic to people who did not otherwise qualify, including business owners, self-employed workers, independent contractors, and those with a limited work history.

          United States District Judge Fernando M. Olguin has scheduled a June 24 sentencing hearing, at which time Marinas will face a statutory maximum sentence of 20 years in federal prison.

          This matter was investigated by the Department of Labor Office of Inspector General, IRS Criminal Investigation; the United States Postal Inspection Service, and the United States Secret Service. EDD Investigations provided substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Ranee A. Katzenstein, Chief of the Major Frauds Section.

A venture capitalist and political fundraiser was sentenced today to 144 months in federal prison for falsifying records to conceal his work as a foreign agent while lobbying high-level U.S. government officials, evading the payment of millions of dollars in taxes, making illegal campaign contributions, and obstructing a federal investigation into the source of donations to a presidential inauguration committee.

Imaad Shah Zuberi, 50, of Arcadia, California, was sentenced by U.S. District Judge Virginia A. Phillips, who also ordered him to pay $15,705,080 in restitution and a criminal fine of $1.75 million.

In November 2019, Zuberi pleaded guilty to a three-count information charging him with violating the Foreign Agents Registration Act (FARA) by making false statements on a FARA filing, tax evasion, and making illegal campaign contributions. In June 2020, Zuberi pleaded guilty in a separate case to one count of obstruction of justice. His sentence today pertains to both cases.

“Zuberi turned acting as an unregistered foreign agent into a business enterprise,” said Assistant Attorney General for National Security John C. Demers. “He used foreign money to fund illegal campaign contributions that bought him political influence, and used that influence to lobby U.S. officials for policy changes on behalf of numerous foreign principals. He not only concealed his lucrative agreements with those foreign principals, but also made false statements about them in a FARA filing. After learning he was under investigation, Zuberi doubled down on his criminal conduct, obstructing justice by creating false records, destroying evidence, and attempting to purchase witnesses’ silence. This sentence should deter others who would seek to corrupt our political processes and compromise our institutions in exchange for foreign cash.”

“Mr. Zuberi flouted federal laws that restrict foreign influences upon our government and prohibit injecting foreign money into our political campaigns. He enriched himself by defrauding his clients and evading the payment of taxes,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “Today’s sentence, which also accounts for Mr. Zuberi’s attempt to obstruct an investigation into his felonious conduct, underscores the importance of our ongoing efforts to maintain transparency in U.S. elections and policy-making processes.”

"As Mr. Zuberi’s greed and wealth increased, his elaborate influence-peddling scheme collapsed,” said Assistant Director in Charge Kristi K. Johnson of the FBI's Los Angeles Field Office. “By lending a veneer of credibility through name dropping and flashing photos with high-level government officials, Zuberi was able to con foreign donors. Now that he’s been sentenced, he will be held accountable by the United States government which he so recklessly misrepresented.”

“Through myriad international contacts and business partners, Imaad Shah Zuberi was able to raise money and gain influence among the U.S.’s highest political circles. Zuberi used his status to solicit funds for lobbying, campaign contributions, and investments, but ultimately swindled his business partners and pocketed most of the funds for himself,” said Special Agent in Charge Ryan Korner of IRS-Criminal Investigation Los Angeles Field Office. “An opportunist at his core, Zuberi worked with political figures across the aisle, depending on who was in power, to lend an appearance of credibility to his political charades. At the end of the day, IRS Criminal Investigation worked closely with our partner federal agencies to ensure Zuberi’s criminal behavior would not pay off, and that he was held accountable for paying himself rather than using the funds he solicited for their original intended purpose.”

Zuberi operated Avenue Ventures LLC, a San Francisco-based venture capital firm, and solicited foreign nationals and representatives of foreign governments with claims he could use his contacts in Washington, D.C., to change U.S. foreign policy and create business opportunities for his clients and himself.

Clients gave Zuberi money for consulting fees, to make investments, or to fund campaign contributions. As part of his efforts to influence public policy, Zuberi hired lobbyists, retained public relations professionals, and made campaign contributions that gave him access to high-level U.S. officials, some of whom acted in support of his clients. As evidence of his access and influence, Zuberi distributed to his clients photographs of himself discussing policy with elected officials.

While Zuberi had a limited degree of success with some U.S. officials, most of his business efforts failed and his clients suffered significant financial losses. Many of the lobbyists, public relations consultants, and other subcontractors also suffered losses when Zuberi refused to pay them. Meanwhile, Zuberi became wealthy, largely through his theft of client funds and unlawful lobbying on behalf of foreign interests.

For example, Zuberi made efforts to convince the government of Bahrain to lift sanctions on a Bahraini citizen in order to allow the citizen to develop a large resort in that country. The scheme falsely created the appearance that Avenue Ventures had made a major investment in the resort project. Citing this purported investment, Zuberi lobbied members of Congress to apply political pressure on Bahrain to cease its interference in the project, claiming that it was adversely affecting him as a U.S. investor. At Zuberi’s urging, at least a dozen members of Congress sent letters to the government of Bahrain requesting that it stop interfering with the project. In fact, however, Zuberi designed these efforts to benefit the Bahraini citizen, who paid Zuberi consulting fees. Zuberi violated FARA by failing to register as an agent of the Bahraini citizen in connection with this scheme.

Zuberi also siphoned money invested in U.S. Cares, a company set up to export humanitarian aid to Iran. In 2013 and 2014, investors deposited approximately $7 million into U.S. Cares, but Zuberi used more than 90 percent of investor funds for his personal benefit, which included purchasing real estate, paying down debt such as mortgages and credit card bills, remodeling properties, investing in brokerage accounts, and donating $250,000 to a non-profit organization established by a former high-ranking elected official.

In addition, the government of Sri Lanka hired Zuberi in 2014 to rehabilitate the country’s image in the United States, which had suffered because of allegations that its minority Tamil population had been persecuted. Zuberi promised to make substantial expenditures on lobbying efforts, legal expenses, and media buys, which prompted Sri Lanka to agree to pay Zuberi a total of $8.5 million over the course of six months in 2014. Days after Sri Lanka made an initial payment of $3.5 million, Zuberi transferred $1.6 million into his personal brokerage accounts and used another $1.5 million to purchase real estate.

In total, Sri Lanka wired $6.5 million pursuant to the contract, and Zuberi used more than $5.65 million of that money to the benefit of himself and his wife. Zuberi paid less than $850,000 to lobbyists, public relations firms and law firms, and refused to pay certain subcontractors based on false claims that Sri Lanka had not provided sufficient funds to pay invoices.

Relatedly, Zuberi failed to report on his 2014 tax return millions of dollars in income he received from the Sri Lankan government. While his 2014 federal income tax return claimed income of $558,233, Zuberi failed to report more than $5.65 million he received in relation to the Sri Lanka lobbying effort. Zuberi’s tax evasion over the course of four years – 2012 through 2015 – caused tax losses ranging from $3.5 million to as much as $9.5 million.

Zuberi also violated the Federal Election Campaign Act in 2015 by making conduit contributions in the names of other people, reimbursing contributions made by others, and being reimbursed for contributions he made. Over a five-year period – 2012 through 2016 – he made or solicited more than $250,000 in illegal campaign contributions.        

The obstruction charge to which Zuberi pleaded guilty in June 2020 stemmed from a federal investigation into a $900,000 donation from Zuberi through his company to a presidential inaugural committee in late 2016. Some of the funds Zuberi donated to the committee came from other people, including one individual who gave him a $50,000 check.

After media reports that a federal grand jury in the Southern District of New York was investigating donations to the presidential inaugural committee, Zuberi met with the individual at a California restaurant on Feb. 25, 2019. During that meeting, the individual asked Zuberi to refund the $50,000, which Zuberi did, but backdated the check to Feb. 1, 2019, to make it appear the refund was sent before he learned of the federal investigation.

This matter was investigated by the FBI and IRS-Criminal Investigation.

This case was prosecuted by Assistant U.S. Attorneys Daniel J. O’Brien and Elisa Fernandez of the Public Corruption and Civil Rights Section, Assistant U.S. Attorney Judith A. Heinz of the National Security Division, and Trial Attorney Evan N. Turgeon of the Justice Department’s National Security Division, Counterintelligence and Export Control Section.

          LOS ANGELES – A venture capitalist and political fundraiser was sentenced today to 144 months in federal prison for falsifying records to conceal his work as a foreign agent while lobbying high-level U.S. government officials, evading the payment of millions of dollars in taxes, making illegal campaign contributions, and obstructing a federal investigation into the source of donations to a presidential inauguration committee.

          Imaad Shah Zuberi, 50, of Arcadia, was sentenced by United States District Judge Virginia A. Phillips, who also ordered him to pay $15,705,080 in restitution and a criminal fine of $1.75 million.

          In November 2019, Zuberi pleaded guilty to a three-count information charging him with violating the Foreign Agents Registration Act (FARA) by making false statements on a FARA filing, tax evasion, and making illegal campaign contributions. In June 2020, Zuberi pleaded guilty in a separate case to one count of obstruction of justice. His sentence today pertains to both cases.

          “Mr. Zuberi flouted federal laws that restrict foreign influences upon our government and prohibit injecting foreign money into our political campaigns. He enriched himself by defrauding his clients and evading the payment of taxes,” said Acting United States Attorney Tracy L. Wilkison. “Today’s sentence, which also accounts for Mr. Zuberi’s attempt to obstruct an investigation into his felonious conduct, underscores the importance of our ongoing efforts to maintain transparency in U.S. elections and policy-making processes.”

          “Mr. Zuberi’s entire business centered on acting as an unregistered foreign agent,” said Assistant Attorney General John C. Demers for the Department of Justice’s National Security Division. “He used foreign money to fund illegal campaign contributions that bought him political influence, and used that influence to lobby United States officials for policy changes on behalf of numerous foreign principals. He not only concealed his lucrative agreements with those foreign principals, but also made false statements about them in a FARA filing. After learning he was under investigation, Mr. Zuberi doubled down on his criminal conduct, obstructing justice by creating false records, destroying evidence, and attempting to purchase witnesses’ silence. This sentence should deter others who would seek to corrupt our political processes and compromise our institutions in exchange for foreign cash.”

          “As Mr. Zuberi’s greed and wealth increased, his elaborate influence-peddling scheme collapsed,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “By lending a veneer of credibility through name dropping and flashing photos with high-level government officials, Zuberi was able to con foreign donors. Now that he’s been sentenced, he will be held accountable by the United States government which he so recklessly misrepresented.”

          “Through myriad international contacts and business partners, Imaad Shah Zuberi was able to raise money and gain influence among the U.S.’s highest political circles. Zuberi used his status to solicit funds for lobbying, campaign contributions, and investments, but ultimately swindled his business partners and pocketed most of the funds for himself,” said IRS-Criminal Investigation L.A. Field Office Special Agent in Charge Ryan Korner. “An opportunist at his core, Zuberi worked with political figures across the aisle, depending on who was in power, to lend an appearance of credibility to his political charades. At the end of the day, IRS Criminal Investigation worked closely with our partner federal agencies to ensure Zuberi’s criminal behavior would not pay off, and that he was held accountable for paying himself rather than using the funds he solicited for their original intended purpose.”

          Zuberi operated Avenue Ventures LLC, a San Francisco-based venture capital firm, and solicited foreign nationals and representatives of foreign governments with claims he could use his contacts in Washington, D.C., to change U.S. foreign policy and create business opportunities for his clients and himself.

          Clients gave Zuberi money for consulting fees, to make investments, or to fund campaign contributions. As part of his efforts to influence public policy, Zuberi hired lobbyists, retained public relations professionals, and made campaign contributions that gave him access to high-level U.S. officials, some of whom acted in support of his clients. As evidence of his access and influence, Zuberi distributed to his clients photographs of himself discussing policy with elected officials.

          While Zuberi had a limited degree of success with some U.S. officials, most of his business efforts failed and his clients suffered significant financial losses. Many of the lobbyists, public relations consultants, and other subcontractors also suffered losses when Zuberi refused to pay them. Meanwhile, Zuberi became wealthy, largely through his theft of client funds and unlawful lobbying on behalf of foreign interests.

          For example, Zuberi made efforts to convince the government of Bahrain to lift sanctions on a Bahraini citizen in order to allow the citizen to develop a large resort in that country. The scheme falsely created the appearance that Avenue Ventures had made a major investment in the resort project. Citing this purported investment, Zuberi lobbied members of Congress to apply political pressure on Bahrain to cease its interference in the project, claiming that it was adversely affecting him as a U.S. investor. At Zuberi’s urging, at least a dozen members of Congress sent letters to the government of Bahrain requesting that it stop interfering with the project. In fact, however, Zuberi designed these efforts to benefit the Bahraini citizen, who paid Zuberi consulting fees. Zuberi violated FARA by failing to register as an agent of the Bahraini citizen in connection with this scheme.

          Zuberi also siphoned money invested in U.S. Cares, a company set up to export humanitarian aid to Iran. In 2013 and 2014, investors deposited approximately $7 million into U.S. Cares, but Zuberi used more than 90 percent of investor funds for his personal benefit, which included purchasing real estate, paying down debt such as mortgages and credit card bills, remodeling properties, investing in brokerage accounts, and donating $250,000 to a non-profit organization established by a former high-ranking elected official.

          In addition, the government of Sri Lanka hired Zuberi in 2014 to rehabilitate the country’s image in the United States, which had suffered because of allegations that its minority Tamil population had been persecuted. Zuberi promised to make substantial expenditures on lobbying efforts, legal expenses, and media buys, which prompted Sri Lanka to agree to pay Zuberi a total of $8.5 million over the course of six months in 2014. Days after Sri Lanka made an initial payment of $3.5 million, Zuberi transferred $1.6 million into his personal brokerage accounts and used another $1.5 million to purchase real estate.

          In total, Sri Lanka wired $6.5 million pursuant to the contract, and Zuberi used more than $5.65 million of that money to the benefit of himself and his wife. Zuberi paid less than $850,000 to lobbyists, public relations firms and law firms, and refused to pay certain subcontractors based on false claims that Sri Lanka had not provided sufficient funds to pay invoices.

          Relatedly, Zuberi failed to report on his 2014 tax return millions of dollars in income he received from the Sri Lankan government. While his 2014 federal income tax return claimed income of $558,233, Zuberi failed to report more than $5.65 million he received in relation to the Sri Lanka lobbying effort. Zuberi’s tax evasion over the course of four years – 2012 through 2015 – caused tax losses ranging from $3.5 million to as much as $9.5 million.

          Zuberi also violated the Federal Election Campaign Act in 2015 by making conduit contributions in the names of other people, reimbursing contributions made by others, and being reimbursed for contributions he made. Over a five-year period – 2012 through 2016 – he made or solicited more than $250,000 in illegal campaign contributions.

          The obstruction charge to which Zuberi pleaded guilty in June 2020 stemmed from a federal investigation into a $900,000 donation from Zuberi through his company to a presidential inaugural committee in late 2016. Some of the funds Zuberi donated to the committee came from other people, including one individual who gave him a $50,000 check.

          After media reports that a federal grand jury in the Southern District of New York was investigating donations to the presidential inaugural committee, Zuberi met with the individual at a California restaurant on February 25, 2019. During that meeting, the individual asked Zuberi to refund the $50,000, which Zuberi did, but backdated the check to February 1, 2019, to make it appear the refund was sent before he learned of the federal investigation.

          This matter was investigated by the FBI and IRS Criminal Investigation.

          This case was prosecuted by Assistant United States Attorneys Daniel J. O’Brien and Elisa Fernandez of the Public Corruption and Civil Rights Section, Assistant United States Attorney Judith A. Heinz of the National Security Division, and Trial Attorney Evan N. Turgeon of the Justice Department’s National Security Division, Counterintelligence and Export Control Section.

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Note: Audio and Transcript of the February 17, 2021 press call is available on our videos page.

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A federal indictment unsealed today charges three North Korean computer programmers with participating in a wide-ranging criminal conspiracy to conduct a series of destructive cyberattacks, to steal and extort more than $1.3 billion of money and cryptocurrency from financial institutions and companies, to create and deploy multiple malicious cryptocurrency applications, and to develop and fraudulently market a blockchain platform.

A second case unsealed today revealed that a Canadian-American citizen has agreed to plead guilty in a money laundering scheme and admitted to being a high-level money launderer for multiple criminal schemes, including ATM “cash-out” operations and a cyber-enabled bank heist orchestrated by North Korean hackers.

“As laid out in today’s indictment, North Korea’s operatives, using keyboards rather than guns, stealing digital wallets of cryptocurrency instead of sacks of cash, are the world’s leading bank robbers,” said Assistant Attorney General John C. Demers of the Justice Department’s National Security Division. “The Department will continue to confront malicious nation state cyber activity with our unique tools and work with our fellow agencies and the family of norms abiding nations to do the same.”

“Today's unsealed indictment expands upon the FBI’s 2018 charges for the unprecedented cyberattacks conducted by the North Korean regime,” said the FBI Deputy Director Paul Abbate. “The ongoing targeting, compromise, and cyber-enabled theft by North Korea from global victims was met with the outstanding, persistent investigative efforts of the FBI in close collaboration with U.S. and international partners. By arresting facilitators, seizing funds, and charging those responsible for the hacking conspiracy, the FBI continues to impose consequences and hold North Korea accountable for its criminal cyber activity."

“The scope of the criminal conduct by the North Korean hackers was extensive and long-running, and the range of crimes they have committed is staggering,” said Acting U.S. Attorney Tracy L. Wilkison for the Central District of California. “The conduct detailed in the indictment are the acts of a criminal nation-state that has stopped at nothing to extract revenge and obtain money to prop up its regime.”

“This case is a particularly striking example of the growing alliance between officials within some national governments and highly sophisticated cyber-criminals,” said U.S. Secret Service Assistant Director Michael R. D’Ambrosio. “The individuals indicted today committed a truly unprecedented range of financial and cyber-crimes: from ransomware attacks and phishing campaigns, to digital bank heists and sophisticated money laundering operations. With victims strewn across the globe, this case shows yet again that the challenge of cybercrime is, and will continue to be, a struggle that can only be won through partnerships, perseverance, and a relentless focus on holding criminals accountable.”

The hacking indictment filed in the U.S. District Court in Los Angeles alleges that Jon Chang Hyok (전창혁), 31; Kim Il (김일), 27; and Park Jin Hyok (박진혁), 36, were members of units of the Reconnaissance General Bureau (RGB), a military intelligence agency of the Democratic People’s Republic of Korea (DPRK), which engaged in criminal hacking. These North Korean military hacking units are known by multiple names in the cybersecurity community, including Lazarus Group and Advanced Persistent Threat 38 (APT38). Park was previously charged in a criminal complaint unsealed in September 2018. 

The indictment alleges a broad array of criminal cyber activities undertaken by the conspiracy, in the United States and abroad, for revenge or financial gain. The schemes alleged include:

• Cyberattacks on the Entertainment Industry: The destructive cyberattack on Sony Pictures Entertainment in November 2014 in retaliation for “The Interview,” a movie that depicted a fictional assassination of the DPRK’s leader; the December 2014 targeting of AMC Theatres, which was scheduled to show the film; and a 2015 intrusion into Mammoth Screen, which was producing a fictional series involving a British nuclear scientist taken prisoner in DPRK.
• Cyber-Enabled Heists from Banks: Attempts from 2015 through 2019 to steal more than $1.2 billion from banks in Vietnam, Bangladesh, Taiwan, Mexico, Malta, and Africa by hacking the banks’ computer networks and sending fraudulent Society for Worldwide Interbank Financial Telecommunication (SWIFT) messages.
• Cyber-Enabled ATM Cash-Out Thefts: Thefts through ATM cash-out schemes – referred to by the U.S. government as “FASTCash” – including the October 2018 theft of $6.1 million from BankIslami Pakistan Limited (BankIslami).
• Ransomware and Cyber-Enabled Extortion: Creation of the destructive WannaCry 2.0 ransomware in May 2017, and the extortion and attempted extortion of victim companies from 2017 through 2020 involving the theft of sensitive data and deployment of other ransomware.
• Creation and Deployment of Malicious Cryptocurrency Applications: Development of multiple malicious cryptocurrency applications from March 2018 through at least September 2020 – including Celas Trade Pro, WorldBit-Bot, iCryptoFx, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale – which would provide the North Korean hackers a backdoor into the victims’ computers.
• Targeting of Cryptocurrency Companies and Theft of Cryptocurrency: Targeting of hundreds of cryptocurrency companies and the theft of tens of millions of dollars’ worth of cryptocurrency, including $75 million from a Slovenian cryptocurrency company in December 2017; $24.9 million from an Indonesian cryptocurrency company in September 2018; and $11.8 million from a financial services company in New York in August 2020 in which the hackers used the malicious CryptoNeuro Trader application as a backdoor.
• Spear-Phishing Campaigns: Multiple spear-phishing campaigns from March 2016 through February 2020 that targeted employees of United States cleared defense contractors, energy companies, aerospace companies, technology companies, the U.S.Department of State, and the U.S. Department of Defense.
• Marine Chain Token and Initial Coin Offering: Development and marketing in 2017 and 2018 of the Marine Chain Token to enable investors to purchase fractional ownership interests in marine shipping vessels, supported by a blockchain, which would allow the DPRK to secretly obtain funds from investors, control interests in marine shipping vessels, and evade U.S. sanctions.

According to the allegations contained in the hacking indictment, which was filed on Dec. 8, 2020, in the U.S. District Court in Los Angeles and unsealed today, the three defendants were members of units of the RGB who were at times stationed by the North Korean government in other countries, including China and Russia. While these defendants were part of RGB units that have been referred to by cybersecurity researchers as Lazarus Group and APT38, the indictment alleges that these groups engaged in a single conspiracy to cause damage, steal data and money, and otherwise further the strategic and financial interests of the DPRK government and its leader, Kim Jong Un.

Money Launderer Charged in California and Georgia

Federal prosecutors today also unsealed a charge against Ghaleb Alaumary, 37, of Mississauga, Ontario, Canada, for his role as a money launderer for the North Korean conspiracy, among other criminal schemes. Alaumary agreed to plead guilty to the charge, which was filed in the U.S. District Court in Los Angeles on Nov. 17, 2020. Alaumary was a prolific money launderer for hackers engaged in ATM cash-out schemes, cyber-enabled bank heists, business email compromise (BEC) schemes, and other online fraud schemes. Alaumary is also being prosecuted for his involvement in a separate BEC scheme by the U.S. Attorney’s Office for the Southern District of Georgia.

With respect to the North Korean co-conspirators’ activities, Alaumary organized teams of co-conspirators in the United States and Canada to launder millions of dollars obtained through ATM cash-out operations, including from BankIslami and a bank in India in 2018. Alaumary also conspired with Ramon Olorunwa Abbas, aka “Ray Hushpuppi,” and others to launder funds from a North Korean-perpetrated cyber-enabled heist from a Maltese bank in February 2019. Last summer, the U.S. Attorney’s Office in Los Angeles charged Abbas in a separate case alleging that he conspired to launder hundreds of millions of dollars from BEC frauds and other scams.

Accompanying Mitigation Efforts

Throughout the investigation, the FBI and the Justice Department provided specific information to victims about how they had been targeted or compromised, as well as information about the tactics, techniques, and procedures (TTPs) used by the hackers with the goals of remediating any intrusion and preventing future intrusions. That direct sharing of information took place in the United States and in foreign countries, often with the assistance of foreign law enforcement partners. The FBI also collaborated with certain private cybersecurity companies by sharing and analyzing information about the intrusion TTPs used by the members of the conspiracy.

In addition to the criminal charges, the FBI and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, in collaboration with the U.S. Department of Treasury, today released a joint cybersecurity advisory and malware analysis reports (MARs) regarding North Korean cryptocurrency malware. The joint cybersecurity analysis and MARs highlight the cyber threat North Korea – which is referred to by the U.S. government as HIDDEN COBRA – poses to cryptocurrency and identify malware and indicators of compromise related to the “AppleJeus” family of malware (the name given by the cybersecurity community to a family of North Korean malicious cryptocurrency applications that includes Celas Trade Pro, WorldBit-Bot, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale). The joint cybersecurity advisory and MARs collectively provide the cybersecurity community and public with information about identifying North Korean malicious cryptocurrency applications, avoiding intrusions, and remedying infections.

The U.S. Attorney’s Office and FBI also obtained seizure warrants authorizing the FBI to seize cryptocurrency stolen by the North Korean hackers from a victim in the indictment – a financial services company in New York – held at two cryptocurrency exchanges. The seizures include sums of multiple cryptocurrencies totaling approximately $1.9 million, which will ultimately be returned to the victim.

Jon, Kim, and Park are charged with one count of conspiracy to commit computer fraud and abuse, which carries a maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison.

In relation to the case filed in Los Angeles, Alaumary has agreed to plead guilty to one count of conspiracy to commit money laundering, which carries a maximum sentence of 20 years in prison.

The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt.

The investigation of Jon, Kim, and Park was led by the FBI’s Los Angeles Field Office, which worked closely with the FBI’s Charlotte Field Office. The U.S. Secret Service’s Los Angeles Field Office and Global Investigative Operations Center provided substantial assistance. The FBI’s Cyber Division also provided substantial assistance.

The investigations of Alaumary were conducted by the U.S. Secret Service’s Savannah Field Office, FBI’s Los Angeles Field Office, and the U.S. Secret Service’s Los Angeles Field Office and Global Investigative Operations Center. The FBI’s Criminal Investigative Division also provided substantial assistance.

The case against Jon, Kim, and Park is being prosecuted by Assistant U.S. Attorneys Anil J. Antony and Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section, with substantial assistance from Trial Attorney Scott Claffee of the Department of Justice National Security Division’s Counterintelligence and Export Control Section.

Assistant U.S. Attorneys Antony and Shobaki are also prosecuting the case against Alaumary, in which the U.S. Attorney’s Office for the Southern District of Georgia and the Criminal Division’s Computer Crimes and Intellectual Property Section (CCIPS) provided substantial assistance. Assistant U.S. Attorneys Antony and Shobaki, along with Assistant U.S. Attorney Jonathan Galatzan of the Asset Forfeiture Section, also obtained the seizure warrants for cryptocurrency stolen from the financial services company in New York.

The Criminal Division’s Office of International Affairs provided assistance throughout these investigations, as did many of the FBI’s Legal Attachés, as well as foreign authorities around the world. Numerous victims cooperated and provided valuable assistance.

INDICTMENT

         LOS ANGELES – A federal indictment unsealed today charges three North Korean computer programmers with participating in a wide-ranging criminal conspiracy to conduct a series of destructive cyber-attacks, to steal and extort more than $1.3 billion of money and cryptocurrency from financial institutions and companies, to create and deploy multiple malicious cryptocurrency applications, and to develop and fraudulently market a blockchain platform.

          A second case unsealed today revealed that a Canadian-American citizen has agreed to plead guilty in a money laundering scheme and admitted being a high-level money launderer for multiple criminal schemes, including ATM “cash-out” operations and a cyber-enabled bank heist orchestrated by North Korean hackers.

          “The scope of the criminal conduct by the North Korean hackers was extensive and long-running, and the range of crimes they have committed is staggering,” said Acting U.S. Attorney Tracy L. Wilkison. “The conduct detailed in the indictment are the acts of a criminal nation-state that has stopped at nothing to extract revenge and obtain money to prop up its regime.”

          “As laid out in today’s indictment, North Korea’s operatives, using keyboards rather than masks and guns, are the world’s leading 21st century nation-state bank robbers,” said Assistant Attorney General John Demers of the Justice Department’s National Security Division. “The department will continue to confront malicious nation state cyber activity with our unique tools and work with our fellow agencies and the family of norms abiding nations to do the same.”

          The hacking indictment filed in United States District Court in Los Angeles alleges that Jon Chang Hyok (전창혁), 31; Kim Il (김일), 27; and Park Jin Hyok (박진혁), 36, were members of units of the Reconnaissance General Bureau (RGB), a military intelligence agency of the Democratic People’s Republic of Korea (DPRK), which engaged in criminal hacking. These North Korean military hacking units are known by multiple names in the cybersecurity community, including Lazarus Group and Advanced Persistent Threat 38 (APT38). Park was previously charged in a criminal complaint unsealed in September 2018.

          The indictment describes a broad array of criminal cyber activities undertaken by the conspiracy, in the United States and abroad, conducted for revenge or financial gain. The schemes alleged include:

• Targeting of and Cyber-attacks on the Entertainment Industry: The destructive cyber-attack on Sony Pictures Entertainment in November 2014 in retaliation for “The Interview,” a movie that depicted a fictional assassination of the DPRK’s leader; the December 2014 targeting of AMC Theatres, which was scheduled to show the film; and a 2015 intrusion of Mammoth Screen, which was producing a fictional series involving a British nuclear scientist taken prisoner in DPRK.
• Cyber-Enabled Heists from Banks: Attempts from 2015 through 2019 to steal more than $1.2 billion from banks in Vietnam, Bangladesh, Taiwan, Mexico, Malta and Africa by hacking the banks’ computer networks and sending fraudulent Society for Worldwide Interbank Financial Telecommunication (SWIFT) messages.
• ATM Cash-Out Thefts: Thefts through ATM cash-out schemes – referred to by the United States Government as “FASTCash” – including the October 2018 theft of $6.1 million from BankIslami Pakistan Limited (BankIslami).
• Ransomware and Cyber-Enabled Extortion: Creation of the destructive WannaCry 2.0 ransomware in May 2017, and the extortion and attempted extortion of victim companies from 2017 through 2020 involving the theft of sensitive data and deployment of other ransomware.
• Creation and Deployment of Malicious Cryptocurrency Applications: Development of multiple malicious cryptocurrency applications from March 2018 through at least September 2020 – including Celas Trade Pro, WorldBit-Bot, iCryptoFx, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale – which would provide the North Korean hackers a backdoor into the victims’ computers.
• Targeting of Cryptocurrency Companies and Theft of Cryptocurrency: Targeting of hundreds of cryptocurrency companies and the theft of tens of millions of dollars’ worth of cryptocurrency, including $75 million from a Slovenian cryptocurrency company in December 2017; $24.9 million from an Indonesian cryptocurrency company in September 2018; and $11.8 million from a financial services company in New York in August 2020 in which the hackers used the malicious CryptoNeuro Trader application as a backdoor.
• Spear-Phishing Campaigns: Multiple spear-phishing campaigns from March 2016 through February 2020 that targeted employees of United States cleared defense contractors, energy companies, aerospace companies, technology companies, the United States Department of State, and the United States Department of Defense.
• Marine Chain Token and Initial Coin Offering: Development and marketing in 2017 and 2018 of the Marine Chain Token to enable investors to purchase fractional ownership interests in marine shipping vessels, supported by a blockchain, which would allow the DPRK to secretly obtain funds from investors, control interests in marine shipping vessels, and evade U.S. sanctions.

          According to the allegations contained in the hacking indictment, which was filed on December 8, 2020, in United States District Court in Los Angeles and unsealed today, the three defendants were members of units of the RGB who were at times stationed by the North Korean government in other countries, including China and Russia. While these defendants were part of RGB units that have been referred to by cybersecurity researchers as Lazarus Group and APT38, the indictment alleges that these groups engaged in a single conspiracy to cause damage, steal data and money, and otherwise further the strategic and financial interests of the DPRK government and its leader, Kim Jong Un.

          “Today's unsealed indictment expands upon the FBI’s 2018 charges for the unprecedented cyber-attacks conducted by the North Korean regime,” said FBI Deputy Director Paul Abbate. “The ongoing targeting, compromise, and cyber-enabled theft by North Korea from global victims was met with the outstanding, persistent investigative efforts of the FBI in close collaboration with U.S. and foreign partners. By arresting facilitators, seizing funds, and charging those responsible for the hacking conspiracy, the FBI continues to impose risks and consequences on North Korea and hold them accountable for their criminal cyber activity.”

          “This global investigation showcases the remarkable dedication necessary to disrupt a sophisticated and far-reaching state-sponsored network of cyber criminals,” said Jesse Baker, Special Agent in Charge of the Los Angeles Field Office for the Secret Service. “Thanks to the perseverance of highly trained law enforcement partners around the globe, a broad range of malicious and destructive cyber-attacks was defeated and those responsible for the intrusions will be brought to justice.”

Money Launderer Charged in California and Georgia

          Federal prosecutors in Los Angeles also unsealed a case today against Ghaleb Alaumary, 37, of Mississauga, Ontario, Canada for his role as a money launderer for the North Korean conspiracy, among other criminal schemes. Alaumary agreed to plead guilty to conspiracy to engage in money laundering, a charge contained in a criminal information filed in the United States District Court in Los Angeles on November 17, 2020. Alaumary was a prolific money launderer for hackers engaged in ATM cash-out schemes, cyber-enabled bank heists, business email compromise (BEC) schemes, and other online fraud schemes. Alaumary is also being prosecuted for his involvement in a separate BEC scheme by the United States Attorney’s Office for the Southern District of Georgia.

          With respect to the North Korean coconspirators’ activities, Alaumary organized crews of coconspirators in the United States and Canada to launder millions of dollars obtained through ATM cash-out operations, including from BankIslami and a bank in India in 2018. Alaumary also conspired with Ramon Olorunwa Abbas, aka “Ray Hushpuppi,” and others to launder funds from a North Korean-perpetrated cyber-enabled heist from a Maltese bank in February 2019. Last summer, the U.S. Attorney’s Office in Los Angeles charged Abbas in a separate case alleging that he conspired to launder hundreds of millions of dollars from BEC frauds and other scams.

Accompanying Mitigation Efforts

          Throughout the investigation, the FBI and the Justice Department provided specific information to victims about how they had been targeted or compromised, as well as information about the tactics, techniques, and procedures (TTPs) used by the hackers with the goals of remediating any intrusion and preventing future intrusions. That direct sharing of information took place in the United States and in foreign countries, often with the assistance of foreign law enforcement partners. The FBI also has collaborated with certain private cybersecurity companies by sharing and analyzing information about the intrusion TTPs used by the members of the conspiracy.

          In addition to the criminal charges, the FBI and the Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency, in collaboration with the U.S. Department of Treasury, today released a joint cybersecurity advisory and malware analysis reports (MARs) regarding North Korean cryptocurrency malware. The joint cybersecurity analysis and MARs highlight the cyber threat North Korea – which is referred to by the U.S. government as HIDDEN COBRA – poses to cryptocurrency and identify malware and indicators of compromise related to the “AppleJeus” family of malware (the name given by the cybersecurity community to a family of North Korean malicious cryptocurrency applications that includes Celas Trade Pro, WorldBit-Bot, Union Crypto Trader, Kupay Wallet, CoinGo Trade, Dorusio, CryptoNeuro Trader, and Ants2Whale). The joint cybersecurity advisory and MARs collectively provide the cybersecurity community and public with information about identifying North Korean malicious cryptocurrency applications, avoiding intrusions, and remedying infections.

          The U.S. Attorney’s Office and FBI also obtained seizure warrants authorizing the FBI to seize cryptocurrency stolen by the North Korean hackers from a victim in the indictment – a financial services company in New York – held at two cryptocurrency exchanges. The seizures include sums of multiple cryptocurrencies totaling approximately $1.9 million, which will ultimately be returned to the victim.

          Jon, Kim and Park are charged with one count of conspiracy to commit computer fraud and abuse, which carries a statutory maximum sentence of five years in prison, and one count of conspiracy to commit wire fraud and bank fraud, which carries a maximum sentence of 30 years in prison.

          In relation to the case filed in Los Angeles, Alaumary has agreed to plead guilty to one count of conspiracy to commit money laundering, which carries a statutory maximum sentence of 20 years in prison.

          The charges contained in the indictment are merely accusations and the defendants are presumed innocent unless and until proven guilty.

          The investigation of Jon, Kim and Park was led by the FBI’s Los Angeles Field Office, which worked closely with the FBI’s Charlotte Field Office. The United States Secret Service’s Los Angeles Field Office and Global Investigative Operations Center provided substantial assistance. The FBI’s Cyber Division also provided substantial assistance.

          The investigations of Alaumary were conducted by the United States Secret Service’s Savannah Field Office, FBI’s Los Angeles Field Office, and the United States Secret Service’s Los Angeles Field Office and Global Investigative Operations Center. The FBI’s Criminal Investigative Division also provided substantial assistance.

          The case against Jon, Kim and Park is being prosecuted by Assistant United States Attorneys Anil J. Antony and Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section, with substantial assistance from DOJ Trial Attorney Scott Claffee of the National Security Division’s Counterintelligence and Export Control Section.

          Assistant United States Attorneys Antony and Shobaki are also prosecuting the case against Alaumary, in which the U.S. Attorney’s Office for the Southern District of Georgia and the Criminal Division’s Computer Crimes and Intellectual Property Section (CCIPS) provided substantial assistance. Assistant United States Attorneys Antony and Shobaki, along with Assistant United States Attorney Jonathan Galatzan of the Asset Forfeiture Section, also obtained the seizure warrants for cryptocurrency stolen from the financial services company in New York.

          The Criminal Division’s Office of International Affairs provided assistance throughout these investigations, as did many of the FBI’s legal attachés, as well as foreign authorities around the world. Numerous victims cooperated and provided valuable assistance.

          SANTA ANA, California – A Fullerton man was sentenced today to 46 months in federal prison for illegally importing bulk quantities of erectile dysfunction drugs that he marketed as herbal male sexual enhancement products in a scheme that earned him millions of dollars.

          Nam Hyun Lee, 62, a.k.a. “Daniel Lee,” a South Korean national illegally residing in the United States, was sentenced this morning by United States District Judge James V. Selna.

          Lee pleaded guilty in September to one count of smuggling misbranded drugs, in this case Sildenafil, the active ingredient in Viagra. Lee specifically admitted that in late 2016, he caused 21.4 kilograms of the drug to be imported into the United States from China. In his plea agreement, Lee admitted smuggling both Sildenafil and Tadalafil, the active ingredient in Cialis, that were illegally brought into the U.S. under descriptions such as “Acrylic Paint” and “Glass Bottles.”

          Lee used the Sildenafil and Tadalafil to manufacture pills he sold to distributors, who then sold the products to liquor, gas and convenience stores across the United States, according to court documents. Even though his products contained drugs that required a prescription, the labels on Lee’s products either stated that no prescription was necessary or failed to state one was needed – meaning the products were mislabeled.

          Over the course of about 2½ years – until his businesses were shut down by federal authorities in October 2018 – Lee sold at least $3.5 million worth of pills under numerous names, including “Rhino” and variations of that name.

          Lee “organized the importation of bulk active pharmaceutical ingredients into the United States from China under false pretenses,” prosecutors wrote in a sentencing memorandum. “He then used this bulk powder to sell counterfeit prescription drugs across the United States totaling millions in sales. At least one of the consumers of [Lee’s] drugs, Victim S.S., suffered a serious medical condition after taking [Lee’s] counterfeit pills.”

          Lee has been in federal custody since his arrest in this case on October 31, 2018.

          Lee has agreed to forfeit his $1.2 million residence in Fullerton, nearly $458,000 seized from eight bank accounts, $346,324 in U.S. currency, and a 2018 Cadillac Escalade.

          The investigation in this case was conducted by the United States Food and Drug Administration’s Office of Criminal Investigations, Homeland Security Investigations, the Los Angeles Police Department, U.S. Customs and Border Protection, and the FBI.

          This case was prosecuted by Assistant United States Attorney Jake Nare of the Santa Ana Branch Office. Assistant United States Attorneys Katie Schonbachler and Victor A. Rodgers of the Asset Forfeiture Section handled the forfeiture aspect of the case.

          SANTA ANA, California – An Orange County man was sentenced today to 120 months in federal prison for selling narcotics and illegally brokering the sale of firearms – including several “ghost guns.”

          Pedro Javier Villalobos, 24, of Santa Ana, was sentenced by United States District Judge David O. Carter. Villalobos pleaded guilty in October 2020 to one count of distributing methamphetamine and one count of engaging in the business of dealing in firearms without a license.

          In the summer of 2019, Villalobos, who was not a federally licensed firearms dealer, brokered the sale of firearms to a customer, who was in fact an undercover agent. From August 21, 2019 to September 18, 2019, Villalobos brokered the sale of 15 firearms, including three AR-type rifles and several Glock-type .40-caliber pistols bearing no serial numbers. Villalobos also facilitated the sale of two Mossberg 12-gauge shotguns to the buyer.

          Villalobos also sold a total of 367.8 grams of methamphetamine to a buyer on three occasions in August and September of 2019.

          Villalobos was the lead defendant in an 11-count federal grand jury indictment unsealed in October 2019 that charged seven defendants with federal firearms offenses.

          Prosecutors have secured five guilty pleas in this case so far. Frank Nerida, 50, of Garden Grove, was sentenced on January 25 to two years in federal prison. Jury trials are scheduled for February 23 and July 27, respectively, for the remaining two defendants – Jose Angel Vera, 28, of Santa Ana, and Kevan Ryan Perez, 33, also of Santa Ana.

          The Bureau of Alcohol, Tobacco, Firearms and Explosives, Homeland Security Investigations, and the Costa Mesa Police Department investigated this matter.

          Assistant United States Attorney Anne C. Gannon of the Santa Ana Branch Office prosecuted this case.

          LOS ANGELES – A West Los Angeles pharmacy and its owner pleaded guilty today to federal criminal charges stemming from a scheme in which millions of dollars in reimbursements for compounded drugs were generated through the payment of illegal kickbacks for patient referrals and by fraudulently paying patients’ copayments.

          Navid Vahedi, 41, of Brentwood, pleaded guilty to one count of conspiracy to commit health care fraud and payment of illegal remunerations. Vahedi today also entered a guilty plea to the felony offense on behalf of his business, Fusion Rx Compounding Pharmacy.

          Fusion Rx was a provider of compounded drugs, which are tailor-made products doctors may prescribe when the FDA-approved alternative does not meet the health needs of a patient. In their plea agreements, Vahedi and Fusion Rx admitted routing millions of dollars in kickback payments through the businesses of two marketers to steer prescriptions for compounded drugs to Fusion Rx. As part of the scheme, Vahedi and the two marketers provided physicians with preprinted prescription script pads that offered “check-the-box” options on the form to maximize the amount of insurance reimbursement for the compounded drugs. From May 2014 to at least February 2016, Fusion Rx received approximately $14 million in reimbursements on its claims for compounded drug prescriptions.

          As part of its contracts with various insurance networks, Fusion Rx was obligated to collect copayments from patients. Because the copayments might discourage patients from requesting expensive and potentially unnecessary compounded drug prescriptions, Fusion Rx did not collect copayments with any regularity and, in other instances, it provided gift cards to patients to offset the amount of the copayments, according to court documents. After an audit raised concerns that Fusion Rx’s failure to collect copayments would be discovered, Vahedi directed Fusion Rx funds to be used to purchase American Express gift cards, which were then used to make copayments for certain prescriptions without the patients’ knowledge. Fusion Rx then submitted claims on these prescriptions to various insurance providers, falsely representing that patients had paid the required copayments.

          Vahedi and Fusion Rx pleaded guilty before United States District Judge Christina A. Snyder, who scheduled a sentencing hearing on June 28, at which time Vahedi will face a statutory maximum sentence of five years in federal prison. Both defendants have agreed to pay restitution related to the copayment reimbursement part of the scheme, which is estimated to be $4,405,926. In addition to his obligation under the plea agreement to pay restitution, Vahedi also agreed to forfeit $1,338,511.

          Under the terms of the plea agreements, Fusion Rx has also agreed to pay a fine sufficient to divest itself of all its remaining assets, Vahedi has agreed to have his pharmacist license revoked, and both Vahedi and Fusion Rx will be excluded from federal health care programs such as Medicare and Medicaid going forward.

          The two marketers involved in the scheme – Joshua Pearson, 41, of St. George, Utah, and Joseph Kieffer, 40, of West Los Angeles – previously pleaded guilty in this case and are scheduled to be sentenced by Judge Snyder, respectively, on May 24 and June 28.

          This matter was investigated by the Defense Criminal Investigative Service, the FBI, the Amtrak Office of Inspector General, the Office of Personnel Management’s Office of Inspector General, and the Office of Inspector General for the United States Department of Health and Human Services.

          This case is being prosecuted by Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Jonathan S. Galatzan of the Asset Forfeiture Section.

          LOS ANGELES – A disbarred lawyer was sentenced today to 180 months in federal prison for stealing more than $4 million from his clients through a variety of means, including collecting fees for work he never performed.

          Shant Ohanian, 38, of Burbank, was sentenced by United States District Judge John A. Kronstadt, who stated that he intends at a future date to order Ohanian to pay restitution in an amount exceeding $2.5 million. Ohanian pleaded guilty in June 2019 to one count of wire fraud and has been in federal custody since the following month, when his bond was revoked because of allegations that he was continuing to defraud his clients.

          Ohanian was a licensed California lawyer from January 2012 until his disbarment in December 2017. During his legal career, Ohanian defrauded clients in need of his legal assistance in a variety of cases, including immigration applications, commercial disputes, divorce petitions and personal injury claims. In each case, Ohanian took no meaningful action on his clients’ behalf despite billing them for thousands of dollars or asking them to pay millions of dollars in litigation-related fees.

          In some cases, Ohanian’s deception caused his victim clients to lose their opportunities to obtain significant financial or legal remedies because of wrongs they suffered. One client, a woman who suffered serious injuries in a fall at South Coast Plaza mall in Orange County, saw the statute of limitations expire in her case before she realized Ohanian defrauded her. Ohanian admitted to sending the victim a phony settlement agreement from the mall and, after she threatened to report him to the State Bar of California, a check for $25,000 that later turned out to have been cancelled.

          In May 2012, two clients hired Ohanian to represent them in a business dispute, but he failed to take any steps to effectively litigate their claims despite telling them for six years that the case settled in their favor. Ohanian ultimately provided to them counterfeit checks totaling over $3.1 million to deceive them.

          Other clients defrauded by Ohanian had sought representation for immigration-related issues. Some of them were green card applicants, while others were caught in foreign war zones and sought refugee status in the United States. In every instance, Ohanian took their money, claimed he filed the appropriate paperwork, but did nothing.

          To cover his tracks for lying for years to one client who had hired Ohanian to help obtain a green card, Ohanian claimed to have sued the federal government for failure to produce the green card. Ohanian continued his deception by using counterfeit emails and court orders that included the forged signatures of a state court judge and multiple other government officials. Ohanian falsely told the client that the U.S. government had been ordered to pay over $13.5 million in damages.

          In other cases, Ohanian made multiple spoofed telephone calls to a client seeking recovery of a $500,000 deposit related to a failed commercial real estate transaction for an Ontario shopping center. In these calls, Ohanian pretended to be either bank officials or government officials. During that litigation, Ohanian falsely informed the victim that the victim had prevailed in the case and would receive $7.2 million in damages plus penalties.

          Ohanian’s victims suffered actual losses exceeding $4 million.

          In a related case, Ohanian’s wife, Silva Sevlian Ohanian, 33, of Burbank, has been charged with one count of wire fraud. She pleaded not guilty to the charge and is currently scheduled to go to trial on September 28.

          This matter was investigated by U.S. Immigration and Customs Enforcement Office of Professional Responsibility and the State Bar of California.

          This case was prosecuted by Assistant United States Attorneys Aron Ketchel and J. Jamari Buxton of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A San Bernardino County man was charged today with running an unlicensed company that exchanged tens of millions of dollars in Bitcoin and cash.

          Hugo Sergio Mejia, 49, of Ontario, was charged in a two-count information with operating an unlicensed money transmitting business and money laundering. In a plea agreement also filed today, Mejia agreed to plead guilty to these felony offenses. Mejia is expected to plead guilty to the information in United States District Court in March.

          According to his plea agreement, from May 2018 to September 2020, Mejia operated a virtual currency business that exchanged Bitcoin for cash, and vice versa, charging commissions for these transactions. Mejia admitted he never registered his business with the Financial Crimes Enforcement Network, a bureau with the United States Department of the Treasury that collects and analyzes information to combat financial crimes, including money laundering.

          During the nearly 2½-year period, according to the plea agreement, Mejia exchanged at least $13 million.

          Mejia also admitted he established companies to mask his true activity, including Worldwide Secure Communications LLC, World Secure Data, and The HODL Group LLC. Mejia advertised his business online and was referred to customers by word of mouth, communicating with them via encrypted messaging services, and meeting them in person at coffee shops, the plea agreement states.

          On several occasions between May 2019 and March 2020, Mejia met with a client, who was working with law enforcement, to exchange Bitcoin for tens of thousands of dollars in cash, according to the plea agreement. On March 12, 2020, Mejia met with the client at a coffee shop in Irvine and facilitated the exchange of 14.273 Bitcoin for $82,150 in cash plus fees. During this meeting, the client informed Mejia that his primary customer was a methamphetamine buyer in Australia who purchased methamphetamine every four to six weeks and sold it in Australia for five times more than the average price in the United States, according to the plea agreement.

          Mejia and the client who was working with law enforcement conducted five Bitcoin-cash transactions that cumulatively exceeded $250,000, the plea agreement states.

          Mejia further agreed to forfeit all assets derived from the illegal conduct, including $233,987 in cash seized from residences in Santa Ana and Ontario, silver coins and bars, and approximately $95,587 in various cryptocurrency seized.

          Once he pleads guilty to the two counts in the information, Mejia will face a statutory maximum sentence of 25 years in federal prison.

          This matter was investigated by IRS Criminal Investigation and Homeland Security Investigations, which received assistance from the Costa Mesa Police Department.

          This case is being prosecuted by Assistant United States Attorneys Puneet V. Kakkar and Brittney M. Harris of the International Narcotics, Money Laundering, and Racketeering Section. Assistant United States Attorney Brent A. Whittlesey of the Asset Forfeiture Section is handling the forfeiture aspect of the case.

         LOS ANGELES – Federal authorities have arrested an Inglewood man on a federal narcotics trafficking charge following an investigation that determined he ordered bulk quantities of at least one chemical used to make PCP and a search that led to the discovery over 2 kilograms of the drug, the Justice Department announced today.

         William Cless Hubbard Jr., 63, was arrested Thursday evening by special agents with the Drug Enforcement Administration. Federal prosecutors this morning filed a criminal complaint against Hubbard charging him with possession with intent to distribute phencyclidine (PCP).

         At his first court appearance late this afternoon in United States District Court, Hubbard was ordered detained pending trial. An arraignment in this case was scheduled on February 18.

         During a search at Hubbard’s residence on Thursday, authorities recovered a one-gallon jug containing amber liquid which tested presumptively positive for PCP, according to the affidavit in support of the complaint. During a related search at a business owned by Hubbard, law enforcement found 55-gallon drums containing precursor chemicals regulated under the Controlled Substances Act that can be used to manufacture PCP.

         The investigation into Hubbard began in October 2019 when authorities learned of a shipment of four drums of bromobenzene from China to a beauty supply company that Hubbard owned, the affidavit states. Bromobenzene has a number of applications, including being used in the manufacturing of PCP.

         After the bromobenzene was delivered to his business on West Manchester Boulevard in South Los Angeles in December 2019, Hubbard was under surveillance by law enforcement. On several occasions in 2020, authorities observed Hubbard distributing suspected chemicals to several locations, including a building in Long Beach where a clandestine PCP lab was discovered last May.

         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.

         If convicted of the narcotics charge alleged in the complaint, Hubbard would face a statutory maximum sentence of life in federal prison.

         This matter was investigated by the Drug Enforcement Administration, U.S. Customs and Border Protection and L.A. IMPACT (the Los Angeles Interagency Metropolitan Police Apprehension Crime Task Force).

         This case is being prosecuted by Assistant United States Attorney JohnPaul LeCedre of the General Crimes Section.

          LOS ANGELES – A hookah lounge owner was arrested today on a federal criminal complaint alleging that he illegally sold firearms – including several “ghost guns” – out of his business in downtown Los Angeles.

          Hovik Dagesian, 39, of Burbank, has been charged with one count of possession of an unregistered firearm. He is expected to make his initial appearance on Monday in United States District Court.

          According to an affidavit filed with the complaint on Thursday, on four occasions between October 30, 2020 and January 8, 2021, Dagesian illegally sold 10 firearms, including an AR-15-style short-barreled rifle with no serial number.

          Dagesian does not have a federal firearms license and does not have any firearms registered to him, according to the affidavit, which further alleges that Dagesian sold other AR-15-style ghost guns – firearms that are made from component parts and do not have serial numbers – as well as a semiautomatic shotgun, a Tec-DC9 pistol and a vintage “Tommy Gun.”

          Each of the illegal firearms sales allegedly occurred at Dagesian’s place of business, DTLA Hookah Lounge. During the execution of a search warrant today, law enforcement seized more than a dozen firearms from his business.

          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, Dagesian would face a statutory maximum sentence of 10 years in federal prison.

          This matter was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Los Angeles Police Department.

          This case is being prosecuted by Assistant United States Attorney Gregg E. Marmaro of the General Crimes Section.

         LOS ANGELES – A Mexican national charged with coordinating shipments for an international drug trafficking organization that planned to smuggle tens of millions of dollars’ worth of cocaine from Colombia to Mexico for eventual sale in the United States has been extradited from Canada and is scheduled to be arraigned today on federal narcotics charges.

         Miguel Hadad Facusseh, 37, a.k.a. “Greñas” and “Barbas,” arrived in Los Angeles on Wednesday evening and is expected to make his initial appearance in United States District Court this afternoon.

         Hadad is one of 15 defendants charged in an indictment that describes an organization that smuggled large quantities of cocaine on aircraft, using clandestine airstrips and corrupt air traffic control officials in Colombia to avoid detection. As one of the key members of the organization, Hadad allegedly was responsible for coordinating operations from Mexico, including financing flights, supplying pilots, and setting up clandestine airstrips, according to the indictment that was filed in 2019.

         Despite the corrupt air traffic controllers and former law enforcement officials in Colombia who were responsible for ensuring that aircraft coming from Mexico could enter Colombian airspace and retrieve cocaine shipments, the indictment outlines a November 5, 2017 incident in which the Colombian Air Force intercepted a plane coming from Mexico, forced it to land, and then destroyed it with machine gun fire. Near the site of the plane’s wreckage, Colombian law enforcement officers found approximately 515 kilograms (1,135 pounds) of packaged cocaine that was ready to be loaded onto the plane.

         In addition to Hadad, three other defendants named in the indictment were extradited from Colombia in late 2020 – Tomas Visbal Blanco, 67; Rafael Enrique Noguera Abello, 45; and Enrique Rafael Noguera Ramirez, 38. The indictment alleges that these defendants handled logistics for the organization, including managing a stash location for the cocaine, maintaining a clandestine airstrip where the plane from Mexico was to retrieve the cocaine shipment in November 2017, and preparing for the aircraft’s refueling upon its arrival. The three Colombian nationals have pleaded not guilty to the charges in the indictment, and they are scheduled to go on trial on October 12.

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

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

         This case is being prosecuted by Assistant United States Attorneys Alexander B. Schwab of the Major Frauds Section and Chelsea Norell of the Violent and Organized Crime Section.

          LOS ANGELES – A San Bernardino County man was sentenced today to 18 months in federal prison for blackmailing female friends and acquaintances on Facebook by threatening to publish nude photographs and videos of them unless they complied with his demands of sending him additional sexually explicit images.

          Jorge Esteban Sanchez Ramos, 24, of Ontario, who used a series of online aliases, including “Jose Gonzalez,” “George Sanchez” and “Jorge Ramirez,” was sentenced by United States District Judge Dolly M. Gee, who said, he “inflicted harm in a sadistic manner.” Sanchez Ramos pleaded guilty in June 2020 to one count of stalking.

          From April 2016 to May 2018, Sanchez Ramos used multiple aliases and Facebook accounts to mask his identity while he contacted his victims, who were friends, and acquaintances from high school. The purpose of establishing these accounts was to extort nude images and videos from the victims using explicit images of the victims that Sanchez Ramos previously obtained.

          Sanchez Ramos’ anonymous communications took on a variety of forms, but their substance was the same: a threat to publish nude or sexually explicit photographs of the women if they did not send him more nude photographs or videos of themselves.

          On certain occasions, when the victims resisted his demands, Sanchez Ramos followed through on his threats and published sexually explicit photos of the victims on social media. If a victim blocked the Facebook account Sanchez Ramos was using to contact her, he then would create a new Facebook account and mock the victim for attempting to block him. He also threatened to rape one of the victims if she did not comply with his demands, according to court documents.

          “[Sanchez Ramos] engaged in a pattern of activity spanning over two years in which he terrorized young women acquaintances,” prosecutors wrote in a sentencing memorandum. “[He] preyed upon their insecurities, convincing them to send explicit images of themselves to [him].”

          The FBI and the Pomona Police Department investigated this matter.

          Assistant United States Attorney Aron Ketchel of the Public Corruption and Civil Rights Section prosecuted this case.

         LOS ANGELES – A former Baldwin Park city councilmember has pleaded guilty to accepting tens of thousands of dollars in bribes – including $20,000 in cash – from a Baldwin Park Police officer working at the FBI’s direction, in exchange for the councilmember’s political support of the Baldwin Park Police Association’s contract with the city, the Justice Department announced today.

         Ricardo Pacheco, 58, of Baldwin Park, who was elected to the City Council in 1997 and served as mayor pro tempore in 2018, pleaded guilty on June 15 to a federal bribery charge. On Tuesday, federal prosecutors unsealed a criminal information against Pacheco, as well as portions of a plea agreement in which Pacheco agreed to fully cooperate in ongoing public corruption investigations. The unsealed plea agreement contains a redacted statement of facts to protect the integrity of ongoing aspects of those investigations.

         In the documents unsealed this week, Pacheco admitted to soliciting and receiving a total of $37,900 in bribes from a Baldwin Park police officer from January  through October 2018 to support and vote for the Police Association’s contract, which was worth at least $4.4 million over three years. The police officer who made the payments did so at the direction of the FBI after another officer and he approached the FBI and agreed to assist in its ongoing corruption investigation. In exchange for the payments, Pacheco voted in favor of the Police Association contract in March 2018.

         The payments to Pacheco included a $20,000 cash bribe in October 2018, which the police officer provided to him in an envelope in a Baldwin Park coffee shop.  Pacheco also solicited and received $17,900 in checks that he directed be made out to his church and sham political action committees he had set up using other individuals’ names but which he controlled.   

         As part of his plea agreement, Pacheco agreed to resign from his City Council seat, which he did in June. Pacheco also agreed to forfeit $83,145 in cash proceeds seized by the FBI, which included $62,900 that Pacheco said he had buried in his backyard in two locations.

         Pacheco pleaded guilty before United States District Judge Otis D. Wright II. Pacheco is scheduled to be sentenced on August 2, at which time he will face a statutory maximum sentence of 10 years in federal prison.

         The case against Pacheco was investigated by the FBI. This case is related to public corruption investigations being conducted by the FBI, IRS Criminal Investigation, and the United States Attorney’s Office.

         Any member of the public who has information related to this or any other public corruption matter in Los Angeles 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.

         The case against Pacheco is being prosecuted by Assistant United States Attorney Thomas F. Rybarczyk of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A Santa Clarita Valley man pleaded guilty today to a federal criminal charge that he fraudulently obtained more than $1 million in Paycheck Protection Program (PPP) loans for his sham companies by submitting fake tax documents and fraudulent employee information.

          Raymond Magana, 40, of Santa Clarita, pleaded guilty to one count of fraud in connection with major disaster or emergency benefits.

          According to his plea agreement, in May and June 2020, Magana submitted to banks applications for PPP loans that contained false statements about the number of employees and the amount of payroll expenses. Specifically, on June 3, 2020, Magana submitted a PPP loan application to Customer’s Bank for $940,416 for The Building Circle LLC, a company registered in his name. In that application, Magana falsely listed that the company’s average monthly payroll was $376,167, and it employed 40 workers. Magana admitted to submitting fraudulent tax documents that reported $4,402,000 in annual wages paid to 40 employees in 2019 and $852,000 paid in employee wages during the first quarter of 2020.

          Both IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to an affidavit filed with a criminal complaint in this case.

          Investigators later determined that the Pico Rivera address given as The Building Circle’s headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, the loan application was approved and $940,416 was funded to Magana’s shell company on June 4, 2020, the affidavit states.

          Magana also admitted that he applied for and received a PPP loan of $360,415 for Forward Builders LLC, another shell company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.

          When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he told the bank “We have all the documents, we got approved,” and he refused to agree to return the improperly obtained PPP funds, the affidavit states. The bank nonetheless kept the $940,416 in defendant’s bank account frozen and defendant could not access it, the plea agreement states.

          The actual loss from the two loans that were approved and disbursed was $360,415, according to the plea agreement.

          United States District Judge Stanley Blumenfeld Jr. has scheduled a May 11 sentencing hearing, at which time Magana will face a statutory maximum sentence of 30 years in federal prison.

          The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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 more than $300 billion in additional PPP funding. In December 2020, Congress authorized $250 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 percent. Businesses must use PPP loan proceeds for 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 a set period and use at least a certain percentage of the loan towards payroll expenses.

          In December 2020, Steven R. Goldstein, 36, of Northridge, Magana’s business partner, pleaded guilty to a single-count information charging him with fraud in connection with major disaster or emergency benefits. Goldstein admitted that he fraudulently obtained $655,000 in PPP loans for his companies by submitting false tax documents and fake employee information. Goldstein’s sentencing hearing is scheduled for March 30.

          IRS Criminal Investigation and the Small Business Administration Office of Inspector General investigated this case.

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

         LOS ANGELES – Former Los Angeles City Councilmember Mitchell Englander was sentenced this morning to 14 months in federal prison for his conduct surrounding his obstruction of a public corruption investigation into his acceptance of gifts – including $15,000 in cash – from a businessman during trips to Las Vegas and Palm Springs in 2017.

         Englander, 50, of Santa Monica, was sentenced this morning by United States District Judge John F. Walter, who noted that Englander’s “elaborate and clandestine scheme” to cover up his conduct has “undermined the public trust.” In declining Englander’s request for probation, Judge Walter stated that “justice [was] owed to society.” In addition to the prison term, Judge Walter ordered Englander to pay a $15,000 fine.

         At the conclusion of this morning’s two-hour hearing, Englander became the first person to be sentenced in relation to Operation “Casino Loyale,” the ongoing corruption investigation into Los Angeles City Hall that has also led to criminal charges against former City Councilmember Jose Huizar and 10 other defendants. Englander, who represented Los Angeles City Council District 12 in the San Fernando Valley for more than seven years before resigning at the end of 2018 with almost two years left on his term, pleaded guilty last July to one count of scheming to falsify material facts.

         Englander schemed to cover up cash payments, expensive meals, escort services and other gifts offered to him from an individual identified as Businessperson A, who sought to increase his business opportunities in the city. From August 2017 until December 2018, Englander knowingly and willfully falsified and concealed material facts pertaining to the federal public corruption investigation. Specifically, Englander covered up facts that he had accepted items of value during June 2017 trips to Las Vegas and Palm Springs and that he directed a witness to lie to and mislead federal investigators.

         Englander, while serving as a city councilmember and a reserve officer with the Los Angeles Police Department, “illicitly cashed in on his status as a purported public servant in casino bathrooms and through VIP bottle service, luxury dinners, and behind hotel room doors,” prosecutors wrote in a sentencing memorandum. “Over numerous incidents of escalating corruption and self-preservation, [Englander] sold out both oaths, cheaply and repeatedly.”

         During the trip to Las Vegas, Englander accepted from Businessperson A an envelope with $10,000 in cash, a hotel room, $1,000 in casino gambling chips, $34,000 in bottle service at a nightclub, and a $2,481 group dinner. Businessperson A also paid for two female escorts to arrive at their hotel and later instructed one of the escorts to go to Englander’s room.

         At a golf tournament in Palm Springs, Englander accepted an envelope containing $5,000 in cash from Businessperson A. Shortly after the trips, Englander arranged for Businessperson A to pitch his business to a friend of Englander’s who was a developer.

         After learning about the federal investigation into his conduct, Englander sent a reimbursement check to Businessperson A, backdating the check “to give the impression he intended to reimburse the expenses before the FBI reached out to request an interview,” prosecutors noted in the sentencing memorandum.

         On at least three occasions, Englander attempted to coordinate statements he made to the FBI and federal prosecutors with Businessperson A, and Englander counseled Businessperson A how to lie to and mislead the FBI agents and federal prosecutors conducting the public corruption investigation.

         Englander also made false statements to the FBI and federal prosecutors on three separate occasions in 2017 and 2018.

         Englander “was motivated by plain old-fashioned greed, selfishness, and a desperate desire to cling to his status as a wealthy and powerful City official,” prosecutors argued in the sentencing memorandum, which notes that the corrupt conduct has “cause[d] lasting civic damage by undermining the City’s faith in its public servants.”

         Englander was the first person to be charged in relation to Casino Loyale, the ongoing corruption investigation being conducted by the FBI and the United States Attorney’s Office that has focused on a wide-ranging “pay-to-play” scheme in which developers bribed Los Angeles city officials to secure official acts to benefit their real estate projects. A total of nine individuals and two businesses have now been charged as a result of this investigation, including Huizar, who is the lead defendant in a sweeping racketeering indictment that alleges he agreed to accept at least $1.5 million in illicit financial benefits while serving as the leader of a criminal enterprise. A jury trial for Huizar and several other defendants is currently scheduled for June 22 before Judge Walter.

         In addition to Englander, several individuals charged in the investigation have pleaded guilty and await sentencing later this year. Two corporate entities have entered into non-prosecution agreements and collectively have paid $2.25 million.

         Any member of the public who has information related to this or any other public corruption matter in the City of Los Angeles 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.

         This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Melissa E. Mills of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A former Comerica bank branch manager was sentenced today to 41 months in federal prison for stealing more than $1 million from an elderly customer with dementia, and then using it for her own personal benefit, including to finance her gambling.

          Marie Fulle, 38, of Newport Beach, was sentenced via videoconference by United States District Judge Virginia A. Phillips, who also ordered her to pay $1,091,230 in restitution. Fulle pleaded guilty in September 2019 to two counts of bank fraud.

          While she was a branch manager of a Comerica bank in Tustin, Fulle cultivated an exclusive banking relationship with an elderly customer with dementia from February 2013 to April 2014. During this period, Fulle opened various bank accounts with the victim and used those accounts to create a confusing web in which she could hide unauthorized transfers, according to the plea agreement, in which Fulle also admits she fraudulently obtained funds by cashing cashier’s checks drawn on the victim’s accounts.

          Between February 2013 and May 2013, Fulle embezzled approximately $43,400 over the course of six transactions. In its sentencing memorandum, the government argued that Fulle lost an anticipated promotion at work in May 2013 and thereafter began embezzling larger amounts of the victim’s money, unilaterally changing the address for one of the victim’s accounts, which prevented the bank statements from being delivered to the victim and his bookkeeper. Fulle also conducted much of the victim’s banking activities in private, one-on-one meetings, away from the view of other bank personnel or security cameras.

          In addition to gambling trips to Las Vegas, during the course of the scheme Fulle treated herself to Tiffany jewelry, at least one Louis Vuitton bag, fancy dinners and spa days for herself and her then-boyfriend, prosecutors said in court documents.

          After hearing arguments from both sides, Judge Phillips said that the motivation for the crime was “overwhelmingly…the gambling addiction” cited by the defense. However, the court added, “the harm to the vulnerable victim was the same, whatever the motivation.”

          Comerica fired Fulle in April 2014 for embezzling money from her cash drawer. When Comerica subsequently discovered the fraud Fulle committed against the victim, it reimbursed the victim nearly $1.3 million for disputed transactions that Fulle processed, lost interest and attorneys’ fees. The total loss that Fulle caused to the victim was $1,057,230. The restitution amount includes the victim’s attorneys’ fees.

          This matter was investigated by the FBI.

          This case was prosecuted by Assistant United States Attorney Kimberly D. Jaimez of the Major Frauds Section.

         LOS ANGELES – A man who recently moved to an apartment only blocks from the West Los Angeles Veterans Affairs Medical Center was arrested this morning on a federal stalking charge that alleges a longtime harassment campaign targeting two female doctors at the hospital, as well as three other victims who work at the VA’s Loma Linda facility.

         Gueorgui Hristov Pantchev, 49, of West Los Angeles, was arrested without incident this morning by FBI special agents. Pantchev is expected to make his initial appearance this afternoon in United States District Court in downtown Los Angeles.

         Pantchev was charged in a criminal complaint unsealed today that details his conduct that began in 2011 with numerous threatening communications sent to West L.A. VA doctors identified as Victim #1 and Victim #2. As a result of this harassment, Pantchev was charged by the Los Angeles County District Attorney’s Office and was convicted in 2014 of nine counts of stalking and witness intimidation. After serving a state prison sentence, Pantchev was paroled in 2017 and he was barred from the West L.A. VA Medical Center. Pantchev then began seeking medical services at the VA’s Loma Linda facility, where he “started stalking, harassing, and intimidating Victims #3, #4, and #5,” according to the affidavit in support of the complaint.

         Notwithstanding the parole conditions that prohibited him from going to the West L.A. facility, Pantchev last year sought care there and began sending intimidating communications to colleagues of Victims #1 and #2.

         “Pantchev has now deluged Victims #1 and #2 and their colleagues with hundreds of lewd, sexually explicit, and false fliers bearing large pictures of Victim #1 and Victim #2 that Pantchev has distributed around West Los Angeles day after day,” this affidavit states. “Some of these fliers include inflammatory, racist language that Pantchev falsely attributes to Victims #1 and #2 along with their contact information and requests the reader to ‘Get rid of them, PLEASE.’”

         The criminal complaint contains specific examples of communications sent to the victims, all of whom felt threatened and took actions to have no contact with Pantchev. VA Police officials took action to restrict Pantchev’s access to the two medical facilities by requiring him to have an escort when arriving for an appointment. The affidavit notes that there are more than 40 police reports since 2018 that contain “detailed instances of him being loud, disruptive, rude, and demanding” at the Loma Linda VA campus.

         Pantchev began returning to the West L.A. campus last March, even though it was in direct violation of his parole, according to the complaint. After his parole ended in September, he visited the facility three times, one of which resulted in his arrest for trespassing and battery on a police officer for allegedly spitting in his face.

         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.

         If convicted of the stalking charge alleged in the complaint, Pantchev would face a statutory maximum sentence of five years in federal prison.

         Members of the public who have information about Pantchev’s activities or believe they may be victims are encouraged to contact the FBI at (310) 477-6565.

         This matter is being investigated by the FBI and the United States Department of Veterans Affairs.

         This case is being prosecuted by Assistant United States Attorneys Devon Myers and Khaldoun Shobaki of the Cyber and Intellectual Property Crimes Section.

          LOS ANGELES – A member of the San Fernando Valley-based Vineland Boys street gang pleaded guilty today to five felonies, including the attempted murder of three rival gangsters, drug trafficking and illegal firearms sales, including a “ghost gun.”

          Jesus Gonzalez Jr., 27, a.k.a. “Lil Chito,” “Gunner” and “Chuy,” of Sun Valley, pleaded guilty to 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 possess with intent to distribute controlled substances, and one count of discharging a firearm in furtherance of a crime of violence.

          As alleged in a superseding indictment returned by a federal grand jury in November 2019, 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.

          According to his plea agreement, 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 believed to have killed a member of the Vineland Boys.

          In early April 2016, Gonzalez shot and severely wounded a victim in a drive-by shooting outside a party in Sun Valley where Gonzalez and other Vineland Boys members had gotten in a fistfight with the victim and others. 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 confronted and shot passengers in a vehicle he believed were rival gang members.

          Gonzalez further admitted to selling methamphetamine and illegally selling 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.

          United States District Judge Michael W. Fitzgerald has scheduled an April 29 sentencing hearing, at which time Gonzalez will face a statutory maximum sentence of life imprisonment and a mandatory minimum sentence of 20 years in federal prison.

          In January 2019, a federal grand jury indicted 31 Vineland Boys members and associates. So far, prosecutors in this case have secured 14 convictions and several prison sentences exceeding 10 years.

          This matter was investigated by the FBI, the Los Angeles Police Department and IRS Criminal Investigation.

          This case is being prosecuted by Assistant United States Attorneys Jennifer Chou and Sara Milstein of the Violent and Organized Crime Section.

          LOS ANGELES – A Calabasas-based real estate developer has been indicted in a bankruptcy fraud case that also alleges he laundered funds through shell companies in order to hide them from his creditors.

          Mark Handel, 66, was charged in a nine-count indictment unsealed today with one count of making a false statement in a bankruptcy case, two counts of concealing assets belonging to a bankruptcy estate, one count of falsely testifying under oath at a bankruptcy proceeding, and five counts of money laundering.

          Handel’s arraignment is scheduled for February 16 in United States District Court in downtown Los Angeles.

          According to the indictment, Handel worked as a developer of commercial and residential real estate for more than 30 years. In April 2015, Handel filed a chapter 11 petition in United States Bankruptcy Court in Woodland Hills and subsequently made a series of false statements to avoid debts exceeding $10 million that he owed to creditors, including California Bank and Trust (CBT), the indictment alleges.

          The indictment further alleges that Handel formed multiple corporations and limited liability companies to conceal his income and his involvement in real estate development projects. Handel purposely failed to put his name on the corporations and entities in order to conceal and disguise his business activities and to deceive his creditors, the indictment alleges. Handel allegedly used his wife – who had no real estate business experience – and others as nominee partners, managers and owners of the LLCs that he in fact controlled.

          One such corporation – DTMM, which Handel told his friends and business associates stood for “Don’t Touch My Money” – allegedly was used by Handel to conceal the proceeds of his unlawful activity. Handel caused DTMM to be registered in his wife’s name, but he used the corporation for all his personal expenses, according to the indictment.

          On his initial and amended bankruptcy petitions, as well as during a creditors’ hearing and at other proceedings, Handel willfully made materially false statements under penalty of perjury, the indictment alleges.

          Throughout the bankruptcy case, Handel allegedly lied by stating that he was unemployed, had been unemployed for many years, and had no business or income. In reality, Handel maintained a financial interest in properties in Los Angeles, Orange, and Alameda counties and, from 2008 to 2016, he received $4,644,529 in income as “kickbacks” on an easement as part of a real estate deal, 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, Handel would face a statutory maximum sentence of 120 years in federal prison.

          This matter was investigated by the FBI and IRS Criminal Investigation, with assistance from the Office of the United States Trustee.

          This case is being prosecuted by Assistant United States Attorneys Ruth C. Pinkel and Agustin D. Orozco of the Public Corruption and Civil Rights Section. The forfeiture portion of the case is being handled by Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section.

          SANTA ANA, California – An Orange County man was sentenced today to 292 months in federal prison for travelling out of state to sexually abuse minors – including a 6-year-old girl – and for inducing minors to send him sexually explicit videos of themselves.

          Daniel Seibert, 29, of Lake Forest, was sentenced by United States District Judge James V. Selna.

          Seibert pleaded guilty in March 2020 to a three-count information charging him with production of child pornography, traveling to engage in illicit sex, and using a facility of commerce to induce a minor to engage in criminal sexual activity.

          In the spring of 2019, Seibert traveled from California to Michigan to engage in illicit sexual conduct with a victim who was 6 years old. The victim’s mother attempted to render the victim unconscious by using over-the-counter drugs before having Seibert engage in sex acts with the victim, according to court documents. Images later recovered during a search depicted his abuse of the victim. The victim’s mother is facing multiple child sexual abuse charges in Oregon state court.

          Seibert traveled to Utah in December 2018 and again in May 2019 to engage in illicit sexual conduct with a 14-year-old victim that he had met on the internet, he admitted in a plea agreement.

          One victim recounted that Seibert asked her to send sexually explicit material, knowing she was a minor. She did so, and law enforcement later found in Seibert’s possession about 160 images and eight videos of child exploitation material of the victim.

          This matter was investigated by Homeland Security Investigations.

          This case was prosecuted by Assistant United States Attorneys Daniel H. Ahn and Jake D. Nare of the Santa Ana Branch Office.

         LOS ANGELES – A Mexican national who pleaded guilty to a federal racketeering offense and admitted participating in a scheme to launder drug trafficking proceeds – which included attempting to purchase a bank to facilitate the money laundering – was sentenced today to 87 months in federal prison.

         Pablo Hernandez, 80, of Tijuana, was sentenced by United States District Judge Otis D. Wright II after pleading guilty in November to conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act.

         Hernandez was one of 16 defendants named in a federal grand jury indictment unsealed in 2015 that alleged a series of money laundering schemes, some of which involved the Westminster-based Saigon National Bank (now known as California International Bank). Hernandez and a second defendant, Emilio Herrera, had a series of conversations and meetings with a purported money launderer – who actually was a confidential source – which included discussions about regular cash deposits in the U.S. that would then be wired to Mexico, court documents state. During negotiations with the confidential source, Hernandez and Herrera also asked the confidential source about moving money to other countries, but they discounted a proposal to send wire transfers to Panama because associates had lost $100 million in drug money that was confiscated there.

         After an account at Saigon National Bank that was used to launder funds was closed, Hernandez, Herrera and then-bank president Tu Chau “Bill” Lu discussed “the possibility of buying Saigon National Bank for the purpose of laundering money,” according to court documents.

         In his plea agreement, Hernandez admitted having discussions with the confidential source “about laundering cash for the Sinaloa cartel for a fee,” prosecutors wrote in a sentencing memorandum. “[Hernandez’s] involvement in drug trafficking and associated money laundering activity is confirmed by a separate investigation by the California Department of Justice in 2014 in which defendant was identified as a drug broker and money launderer for a drug trafficking organization considered to be an extension of the Sinaloa Cartel.”

         As a result of this investigation – Operation “Phantom Bank” – a total of 25 defendants were named in six indictments. So far, prosecutors have secured the conviction of 15 defendants.

         Herrera died after being indicted in this case. The charges against Lu are still pending.

         The Phantom Bank investigation was conducted by the FBI, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and IRS Criminal Investigation.

         These cases are being prosecuted by Assistant United States Attorneys Kim Meyer and Joseph D. Axelrad of the Violent and Organized Crime Section.

          LOS ANGELES – An Orange County man who led police on a high-speed car chase after they attempted to pull him over with approximately 75 pounds of cocaine in his vehicle pleaded guilty today to a federal narcotics charge.

          Anthony Martinez, 40, of La Habra, pleaded guilty to one count of possession with intent to distribute cocaine.

          In February 2020, a federal grand jury charged Martinez and seven other defendants in a superseding indictment alleging a narcotics trafficking conspiracy in which large quantities of cocaine were stored in stash houses in Baldwin Park and Covina, then delivered to buyers in Southern California.

          According to his plea agreement, on July 25, 2019, in Whittier, Martinez received two boxes from co-defendant Ryan Alexander Fischer, 23, a.k.a. “Flaco,” of Covina, that contained 75.2 pounds (34.1 kilograms) of cocaine, placed the boxes in his car and drove off. When Whittier Police officers attempted to pull Martinez over, he initially pulled over, then sped away, refusing to stop, and led police on a car chase in which Martinez veered into oncoming traffic and drove on the wrong side of the road, the plea agreement states. When police finally pulled Martinez over for good in Fullerton, they discovered the box of cocaine.

          Martinez further admitted that, simultaneously, he possessed 132.6 pounds (60.2 kilograms) of cocaine, separately wrapped in one kilogram “bricks” located in a storage locker, and 52.9 pounds (23.98 kilograms) of cocaine located inside a duffel bag.

          In total, Martinez admitted to possessing 260.6 pounds (118.2 kilograms) of cocaine.

          United States District Judge Michael W. Fitzgerald scheduled a May 17 sentencing hearing, at which time Martinez will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life imprisonment.

          This case’s lead defendant, Jesus Manuel Landeros-Cisneros, 50, of Covina, pleaded guilty in August 2020 to one count of conspiracy to distribute cocaine. His sentencing hearing is scheduled for February 11.

          The case’s other defendants – Fischer; Manuel Angel Landeros-Lopez, 43, of Covina; David Elgrably, 51, of Suisun City, California – are scheduled to go on trial on July 27. Three defendants – Harnidhan Bhangu, 30; Harmanjot Singh, 28; and Gurpreet Chahal, 41; all Canadian nationals – are fugitives.

          The Drug Enforcement Administration and Homeland Security Investigations investigated this matter and was conducted with the support of the Organized Crime Drug Enforcement Task Force (OCDETF). As to this seizure, substantial assistance was provided by the South Gate Police Department, the Brea Police Department, and the West Covina Police Department.

          This case is being prosecuted by Assistant United States Attorney Kathy Yu of the Violent and Organized Crime Section.

          LOS ANGELES – A Rancho San Pedro street gang member who oversaw the group’s daily operations, arranged sales of oxycodone and heroin, and reported to incarcerated Mexican Mafia members about the gang’s activities, was sentenced today to 120 months in federal prison.

          Robert “Stretch” Messersmith, 34, of San Pedro, was sentenced by United States District Judge Stephen V. Wilson. Messersmith pleaded guilty in September 2020 to one count of conspiracy to distribute and possess with intent to distribute controlled substances.

          The Rancho San Pedro street gang operates in the San Pedro area of the City of Los Angeles, according to court documents. It operates under the control of the Mexican Mafia and often engages in violence and intimidation to protect its territory. The gang collects “taxes” from drug transactions, and this money was funneled to three Mexican Mafia members who are currently serving lengthy sentences in state prisons for murder convictions.

          In furtherance of the conspiracy, from August 2017 to May 2018, Messersmith sold dozens of oxycodone pills, discussed and arranged the sale of heroin and methamphetamine, and planned the smuggling of heroin and other narcotics into a prison. During one recorded telephone conversation in May 2018, Messersmith discussed a recent successful narcotics transaction, stating, “That’s a touchdown like Peyton Manning.”

          Messersmith is the lead defendant in a 26-count federal grand jury indictment returned in June 2019 that alleges various narcotics and firearms offenses were committed by 13 Rancho San Pedro members and associates. The indictment’s remaining defendants are scheduled to go to trial on April 27.

          This matter was investigated by the Drug Enforcement Administration and the Los Angeles Police Department. The Bureau of Alcohol, Tobacco, Firearms, and Explosives provided substantial assistance.

          This case is being prosecuted by Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section.

          LOS ANGELES – A Hollywood man pleaded guilty today to a federal criminal charge that he recklessly operated a drone that crashed into and damaged the fuselage of a Los Angeles Police Department helicopter.

          Andrew Rene Hernandez, 22, pleaded guilty to one misdemeanor count of unsafe operation of an unmanned aircraft.

          According to his plea agreement, on September 18, 2020, at approximately 12:18 a.m., Hernandez heard police vehicles driving near his residence and a police helicopter flying overhead. Curious about the commotion, Hernandez launched a drone that he owned toward the police activity and in the helicopter’s direction.

          An LAPD helicopter operated by two police officers was flying towards a reported emergency at a pharmacy in Hollywood. As the helicopter approached the pharmacy, the pilot saw the drone and attempted to evade the unmanned aircraft.

          Despite the evasive efforts, the drone stuck the helicopter, forcing the pilot to initiate an emergency landing. According to an affidavit filed with a criminal complaint in this case, “if the drone had struck the helicopter’s main rotor instead of the fuselage, it could have brought the helicopter down.”

          LAPD officers located parts of the drone near the pharmacy and discovered a vehicle damaged by the drone as it fell from the sky. Further investigation, including a review of the drone’s camera and secure digital (SD) card, led to the identification of Hernandez as the drone’s operator, according to court documents.

          United States District Judge George H. Wu scheduled an April 12 sentencing hearing, at which time Hernandez will face a statutory maximum sentence of one year in federal prison.

          The investigation in this matter was conducted by the FBI’s Joint Terrorism Task Force and the LAPD, with the assistance of the Federal Aviation Administration. This conviction is believed to be the nation’s first criminal conviction for the unsafe operation of an unmanned aircraft.

          This case is being prosecuted by Assistant United States Attorney Reema M. El-Amamy of the Terrorism and Export Crimes Section.

          SANTA ANA, California – A former Orange County social worker pleaded guilty today to a federal criminal charge that he distributed computer video files that contained sexually explicit videos depicting children, including infants and toddlers.

          Carlos Castillo, 62, of Santa Ana, pleaded guilty via videoconference to a single-count information charging him with distribution of child pornography.

          According to his plea agreement, Castillo worked at Orange County’s Social Services Agency from May 2002 to January 2020. Beginning in August 2007, Castillo was a placement senior social worker whose responsibilities included assessing applicants’ suitability to provide care of children who are in protective custody, completing a home and grounds environment assessment, and placing children into homes.

          In November 2019, Castillo knowingly distributed child pornography consisting of three video files, the plea agreement states. Castillo admitted that he, using the screen name “Ratster12” as a member of a child pornography group that used the LiveMe application, posted a link to another webpage containing three videos depicting prepubescent children, including infants and toddlers, who were being sexually assaulted by adults and other children.

          Castillo also admitted that in January 2020 he possessed a Dell computer, two flash drives and an Apple iPhone that contained at least 1,027 videos and 914 images of child pornography. Castillo further admitted that he possessed videos of minors undressing that Castillo had recorded from LiveMe. In addition, he admitted to possession of pictures of minors in public without the authorization or knowledge of the minors or their parents.

          United States District Judge Cormac J. Carney has scheduled an April 19 sentencing hearing, at which time Castillo will face a mandatory minimum sentence of five years in federal prison and a statutory maximum sentence of 20 years in federal prison.

          The FBI investigated this matter.

          Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office is prosecuting this case.

         LOS ANGELES – A former employee of the Orange Unified School District was sentenced today to 72 months in federal prison for distributing child pornography, specifically sending image and video files of explicit sexual conduct involving young children via the Kik instant messaging application.

         Mike Barry Brior, 43, of Riverside, who was an 18-year employee of the school district, where he worked for a time directly with children as a teacher’s assistant, was sentenced by United States District Judge George H. Wu. Once he completes the six-year prison term, Brior will be under supervised release for 20 years, and he will be required to register as a sex offender. Judge Wu also ordered Brior to pay $12,000 in restitution and special assessments that will go to victims in this case.

         Brior pleaded guilty in November to one count of distribution of child pornography. According to court documents, Brior sent at least 10 video files to two message groups in less than three weeks in 2018, and prosecutors believe at least some of these uploads occurred while he was at school during work hours.

         The sentencing memorandum filed by prosecutors summarizes the content of the videos and notes that the victims were both boy and girls, some of them appearing to be as young as 3.

         Citing a U.S. Senate report in the sentencing memorandum, prosecutors wrote that Brior “was actively expanding the marketplace for child pornography by regularly putting it in the hands of others. The marketplace for child pornography incentivizes other individuals to produce such content and harms some of the most vulnerable members of society: children.”

         This matter was investigated by Homeland Security Investigations.

         This case was prosecuted by Assistant United States Attorney Eli A. Alcaraz of the Riverside Branch Office.

          LOS ANGELES – A San Gabriel Valley man was sentenced today to 120 months in federal prison for fraudulently obtaining $147 million from tens of thousands of investors around the world in a massive investment scam where a multinational company issued a phony digital currency purportedly backed by billions of dollars’ worth of amber and other gemstones.

          Steve Chen, 63, a.k.a. “Li Chen” and “Boss,” of Bradbury, was sentenced by United States District Judge John F. Walter, who found that Chen’s “litany of lies” promoted a scam of “epic proportions.” Chen pleaded guilty in June 2020 to one count of conspiracy to commit wire fraud and one count of tax evasion.

          Chen was the owner and chief executive officer of U.S. Fine Investment Arts, Inc. (USFIA), and six other companies that used the same Arcadia address. From July 2013 until September 2015, Chen fraudulently promoted and solicited USFIA investments, and he ultimately obtained approximately $147 million from 72,000 victims, in one of the largest pyramid schemes ever prosecuted in this district.

          He falsely promoted USFIA as a successful multi-level marketing company that extracted amber and other gemstones from non-existent mines it “owned” in the United States, the Dominican Republic, Argentina and Mexico.

          Chen “promoted his Pyramid/Ponzi scam using a multi-level marketing program in which compensation for recruiting other investors primarily came from new USFIA investors’ payments,” prosecutors wrote in their sentencing memorandum. “Because the primary focus was on recruiting other investors, rather than selling USFIA products to retail customers, the vast majority of investors were destined to lose money – while making [Chen] very wealthy.”

          Investors were duped into buying USFIA investments in amounts ranging between $1,000 and $30,000 each. These “packages” purportedly comprised amber and other gemstones, as well USFIA “points,” which could be converted to USFIA shares when the company had its IPO. But Chen never intended for USFIA to go public.

          USFIA offered other bonuses – including cash, travel, luxury cars, homes in the Los Angeles area, and EB-5 visas for immigrant investors – to investors who recruited other people to purchase these “packages.”

          Beginning in September 2014, Chen and others altered the promotion by substituting quantities of “Gem Coins” instead of points. They falsely promoted these “coins” as a legitimate digital currency backed by the company’s gemstone holdings. Chen also falsely represented that these “coins” already were in wide circulation in the jewelry and finance industries.

          The company did not generate any significant revenue from its business operations, apart from sales of investment packages to victim-investors. The amber and other gemstones provided in the investment packages – including those displayed at USFIA’s Arcadia headquarters – were obtained from domestic and foreign commercial suppliers, assigned grossly inflated prices, and worth much less than what investors paid USFIA for them. “Gem Coins” had no circulation in any industry, were not accepted by any merchants, and had no economic value.

          Chen also committed tax evasion when he reported that his gross income for 2014 was $138,015, when in fact his income for that year was approximately $4,816,193, upon which Chen owed $1,885,094 – before interest and penalties.

          Judge Walter ordered Chen to pay restitution of $1,885,094 to the IRS on the tax evasion count and scheduled a July 16 restitution hearing for USFIA victim investors.

          Leonard Stacy Johnson, 54, of Huntington Beach, who worked at Chen’s direction in promoting USFIA and Gem Coins, pleaded guilty in July 2019 to one count of tax evasion and one count of making a false statement on an immigration document. Johnson is scheduled to be sentenced on May 24.

          The Securities and Exchange Commission successfully brought an enforcement action against Chen, USFIA, and 12 other Chen-controlled entities. A receiver has been appointed by a court in that matter, and maintains a website for victims at: http://usfiareceiver.com/.

          This matter was investigated by the FBI, IRS Criminal Investigation, and Homeland Security Investigations.

          This case was prosecuted by Assistant United States Attorneys Richard E. Robinson of the Major Frauds Section and Katherine A. Rykken of the U.S. Attorney’s Office for the District of Oregon.

The Justice Department announced today that three Sri Lankan citizens have been charged with terrorism offenses, including conspiring to provide material support to a designated foreign terrorist organization (ISIS).  The men were part of a group of ISIS supporters which called itself “ISIS in Sri Lanka.”  That group is responsible for the 2019 Easter attacks in the South Asian nation of Sri Lanka, which killed 268 people, including five U.S. citizens, and injured over 500 others, according to a federal criminal complaint unsealed today.

The complaint outlines the defendants’ roles in the conspiracy and the events that led to near-simultaneous suicide bombings in the Sri Lankan cities of Colombo, Negombo and Batticaloa on April 21, 2019.  One of the U.S. citizens killed was a Department of Commerce employee who had traveled to Sri Lanka on official business.

Two days after the attacks, ISIS claimed credit for the terrorist acts, attributing the murders to “Islamic State fighters.”  In late April 2019, the then-leader of ISIS praised the attackers for what he called a retaliation against “the West” for defeating ISIS the prior month in Baghuz, Syria.

“ISIS’s Easter attacks in Sri Lanka killed 268 people, including five Americans, many while they worshiped,” said Assistant Attorney General for National Security John C. Demers.  “Today, we charge these defendants with bearing their share of the responsibility for these deaths.  According to these charges, the defendants were committed supporters of ISIS, recruited others to ISIS’s violent cause, purchased materials for and made IEDs, helped to prepare and trained others who participated in the attacks, and murdered in the name of this deadly foreign terrorist organization.  They are in custody in Sri Lanka.  We fully support the Sri Lankan investigation and prosecution of these terrorists and will continue to work with the authorities there to pursue our shared goal of holding these defendants accountable for their crimes.  At the same time, these charges reflect that the U.S. justice system remains a powerful tool to bring to bear against those who harm our citizens abroad.  We will continue to pursue justice for the victims of these heinous attacks and for all American victims of terrorism.”

“This case clearly demonstrates that the United States will take decisive action to ensure terrorists face justice when they target Americans anywhere in the world,” said Nick Hanna, the U.S. Attorney for the Central District of California.  “The United States remains confident in the Sri Lankan authorities’ ability to bring the perpetrators to justice – and this complaint makes clear that we stand ready with these charges in the event the defendants attempt to evade justice.”

“The domestic charges announced today for an attack on foreign soil represent the FBI’s commitment to deliver justice to traveling American victims and to protect U.S. interests here and abroad,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office.  “For decades, and particularly since 9/11, the FBI has deployed agents to various parts of the world to establish an investigative foothold and to liaison with local counterparts with a shared goal of combating terror globally.  Our enduring hope is that criminal prosecution – whether domestic or foreign – will bring some peace to the hundreds of victims killed or injured in Sri Lanka as a result of this horrific attack.”

The criminal case filed on Dec. 11, 2020, in the U.S. District Court in Los Angeles is the result of a nearly two-year investigation by the FBI, which assisted Sri Lankan authorities in the wake of the suicide bombings that targeted Christian churches and luxury hotels frequented by Westerners.  The defendants named in the complaint, along with other suspects linked to the attacks, currently are detained in Sri Lanka, where a criminal investigation is ongoing.

According to the complaint, the three charged defendants and others involved in the conspiracy – including eight terrorists who died in the suicide bombings – conspired to provide, provided, and attempted to provide material support, including services and personnel, to ISIS through various actions, including: (1) creating, maintaining, and serving as members of a group of ISIS supporters in Sri Lanka devoted to ISIS, its ideology, and to planning and encouraging violent attacks to advance ISIS’s goals; (2) obtaining explosive materials and IED components; (3) manufacturing and testing IEDs, including the types of IEDs ultimately used in the attack; (4) recruiting other ISIS in Sri Lanka members; (5) using ISIS-created training materials to instruct and train the attackers and their co-conspirators in the use of firearms and explosives; (6) procuring safe houses for the group to prepare for attacks in the name of ISIS, including the Easter Attacks, while avoiding law enforcement detection; (7) following ISIS directives to use specific end-to-end encrypted messaging applications to conceal the criminal conspiracy; (8) murdering two Sri Lankan police offers to obtain the officers’ firearms; and (9) shooting a suspected police informant.

The three defendants named in the criminal complaint, all of whom pledged allegiance to ISIS, are:

• Mohamed Naufar, the “second emir” for the group of ISIS supporters that called itself “ISIS in Sri Lanka,” who allegedly led the group’s propaganda efforts, recruited others to join ISIS, and led a series of multi-day military-type trainings;
• Mohamed Anwar Mohamed Riskan, who allegedly helped manufacture the IEDs used in the Easter Attacks; and
• Ahamed Milhan Hayathu Moahmed, who allegedly executed a police officer in order to obtain the officer’s firearm, shot a suspected informant, and scouted a location for a separate terrorist attack.

All three defendants are charged with conspiring to provide, providing, and attempting to provide material support to a designated foreign terrorist organization.  Additionally, Naufar and Milhan are charged with aiding and abetting the receipt of military-type training from ISIS.

The FBI-led Joint Terrorism Task Force in Los Angeles, including personnel assigned responsibilities for extraterritorial matters, is leading the investigation.  This matter is being prosecuted by Assistant U.S. Attorneys Annamartine Salick, George E. Pence IV and Christine M. Ro of the Terrorism and Export Crimes Section, and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section.  The Criminal Division’s Office of International Affairs provided valuable assistance.

          LOS ANGELES – The Justice Department announced today that three Sri Lankan citizens have been charged with terrorism offenses, including conspiring to provide material support to a designated foreign terrorist organization (ISIS). The men were part of a group of ISIS supporters that called itself “ISIS in Sri Lanka” and allegedly was responsible for the 2019 Easter attacks in the South Asian nation of Sri Lanka, which killed 268 people, including five U.S. citizens, and injured over 500 others, according to a federal criminal complaint unsealed today.

          The complaint outlines the defendants’ roles in the conspiracy and the events that led to near-simultaneous suicide bombings in the Sri Lankan cities of Colombo, Negombo and Batticaloa on April 21, 2019. One of the U.S. citizens killed was a Department of Commerce employee who had traveled to Sri Lanka on official business.

          Two days after the attacks, ISIS claimed credit for the terrorist acts, attributing the murders to “Islamic State fighters.” In late April 2019, the then-leader of ISIS praised the attackers for what he called a retaliation against “the West” for defeating ISIS the prior month in Baghuz, Syria.

          “This case clearly demonstrates that the United States will take decisive action to ensure terrorists face justice when they target Americans anywhere in the world,” said United States Attorney Nick Hanna. “The United States remains confident in the Sri Lankan authorities’ ability to bring the perpetrators to justice – and this complaint makes clear that we stand ready with these charges in the event the defendants attempt to evade justice.”

          “ISIS’s Easter attacks in Sri Lanka killed 268 people, including five Americans, many while they worshiped,” said Assistant Attorney General for National Security John C. Demers. “Today, we charge these defendants with bearing their share of the responsibility for these deaths. According to these charges, the defendants were committed supporters of ISIS, recruited others to ISIS’s violent cause, purchased materials for and made IEDs, helped to prepare and trained others who participated in the attacks, and murdered in the name of this deadly foreign terrorist organization.  They are in custody in Sri Lanka. We fully support the Sri Lankan investigation and prosecution of these terrorists and will continue to work with the authorities there to pursue our shared goal of holding these defendants accountable for their crimes. At the same time, these charges reflect that the U.S. justice system remains a powerful tool to bring to bear against those who harm our citizens abroad. We will continue to pursue justice for the victims of these heinous attacks and for all American victims of terrorism.”

          The criminal case filed on December 11 in United States District Court in Los Angeles is the result of a nearly two-year investigation by the FBI, which assisted Sri Lankan authorities in the wake of the suicide bombings that targeted Christian churches and luxury hotels frequented by Westerners.

          “The domestic charges announced today for an attack on foreign soil represent the FBI’s commitment to deliver justice to traveling American victims and to protect U.S. interests here and abroad,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “For decades, and particularly since 9/11, the FBI has deployed agents to various parts of the world to establish an investigative foothold and to liaison with local counterparts with a shared goal of combating terror globally. Our enduring hope is that criminal prosecution – whether domestic or foreign – will bring some peace to the hundreds of victims killed or injured in Sri Lanka as a result of this horrific attack.”

          The defendants named in the complaint, along with other suspects linked to the attacks, currently are detained in Sri Lanka, where a criminal investigation is ongoing.

          According to the complaint, the three charged defendants and others involved in the conspiracy – including eight terrorists who died in the suicide bombings – conspired to provide, provided, and attempted to provide material support, including services and personnel, to ISIS through various actions, including: (1) creating, maintaining, and serving as members of a group of ISIS supporters in Sri Lanka devoted to ISIS, its ideology, and to planning and encouraging violent attacks to advance ISIS’s goals; (2) obtaining explosive materials and IED components; (3) manufacturing and testing IEDs, including the types of IEDs ultimately used in attack; (4) recruiting other ISIS in Sri Lanka members; (5) using ISIS-created training materials to instruct and train the attackers and their co-conspirators in the use of firearms and explosives; (6) procuring safe houses for the group to prepare for attacks in the name of ISIS, including the Easter attacks, while avoiding law enforcement detection; (7) following ISIS directives to use specific end-to-end encrypted messaging applications to conceal the criminal conspiracy; (8) murdering two Sri Lankan police offers to obtain the officers’ firearms; and (9) shooting a suspected police informant.

          The three defendants named in the criminal complaint, all of whom pledged allegiance to ISIS, are:

•          Mohamed Naufar, the “second emir” for the group of ISIS supporters that called itself “ISIS in Sri Lanka,” who allegedly led the group’s propaganda efforts, recruited others to join ISIS, and led a series of multi-day military-type trainings;

•          Mohamed Anwar Mohamed Riskan, who allegedly helped manufacture the IEDs used in the Easter Attacks; and

•          Ahamed Milhan Hayathu Moahmed, who allegedly executed a police officer in order to obtain the officer’s firearm, shot a suspected informant, and scouted a location for a separate terrorist attack.

          All three defendants are charged with conspiring to provide, providing, and attempting to provide material support to a designated foreign terrorist organization.  Additionally, Naufar and Milhan are charged with aiding and abetting the receipt of military-type training from ISIS.

          The FBI-led Joint Terrorism Task Force in Los Angeles, including personnel assigned responsibilities for extraterritorial matters, is leading the investigation.

          This matter is being prosecuted by Assistant U.S. Attorneys Annamartine Salick, George E. Pence IV and Christine M. Ro of the Terrorism and Export Crimes Section, and Trial Attorney Alicia Cook of the National Security Division’s Counterterrorism Section.

          The Criminal Division’s Office of International Affairs and the Los Angeles County Sheriff’s Department provided valuable assistance.

 

NON-PROSECUTION AGREEMENT

         LOS ANGELES – A San Francisco-based company has agreed to pay $1.2 million to resolve a federal criminal investigation that focused on the company’s relationship with former Los Angeles City Councilmember Jose Huizar, who voted to approve its 35-story project in the Arts District.

         CP Employer, Inc., formerly known as Carmel Partners, Inc., agreed to make the payment in a non-prosecution agreement (NPA) announced today by United States Attorney Nick Hanna and FBI Assistant Director in Charge Kristi Koons Johnson. The three-year NPA with CP Employer is the latest development in the ongoing investigation into a wide-ranging “pay-to-play” scheme in which developers bribed Los Angeles city officials to secure official acts to benefit their real estate projects.

         Under the NPA, CP Employer admitted and accepted responsibility for the actions of its employees and agents and agreed to fully cooperate with the FBI’s ongoing public corruption probe. The company made the $1.2 million payment last month.

         The United States Attorney’s Office agreed not to prosecute the company for three years, as long as it refrains from any criminal conduct, for a series of reasons detailed in the NPA. Those reasons include CP Employer’s acceptance of responsibility for its conduct, a demonstrated commitment to compliance, and cooperation with the government’s investigation. The NPA also notes the company has taken several remedial measures, including enhancing its compliance program, creating a “corporate policy against violations of all anti-bribery/anti-corruption laws” that will address political contributions and gifts to public officials, and terminating a consultant who later pleaded guilty to criminal charges stemming from the investigation.

         The statement of facts attached to the NPA outlines CP Employer’s conduct in relation to former Los Angeles City Councilmember Jose Huizar, who faces a trial in June on a 41-count racketeering indictment, and real estate development consultant Morris Goldman, who is scheduled to be sentenced in August after pleading guilty last year to brokering deals in which a CP Employer executive agreed to make $50,000 in political contributions in exchange for Huizar’s official actions on the company’s mixed-use project in the Arts District of downtown Los Angeles.

         In the statement of facts, CP Employer admits a series of facts, including:

• Goldman funneled a series of requests from Huizar that CP Employer make contributions to two political action committees for Huizar’s benefit;
• CP Employer made three of the four requested political contributions for a total of $75,000;
• the company official in charge of the Arts District project – “Executive M” – met with Huizar and agreed to assist with political fundraising efforts to benefit a Huizar relative running for his City Council seat and to obtain information on a person who was “causing problems for Huizar’s family”;
• while Executive M ultimately did not help with fundraising, the company official obtained the requested background report at company expense and without the knowledge of CP Employer’s Compliance Department or senior management;
• Executive M personally delivered the background report to Huizar, at which time Huizar solicited a $250,000 personal payment in exchange for reducing CP Employer’s public benefit payment – a request that Executive M did not act on, but which he withheld from his senior management and the company’s Compliance Department; and
• Huizar sought additional help from Executive M – background information on Huizar staffers and a potential job with CP Employer once he left the City Council – which Executive M did not act on, but again withheld this information from company management and its Compliance Department.

         The statement of facts also outlines how the City’s Planning Commission approved the project in June 2018 with a requirement that 11 percent of the housing units be reserved for “very low income” residents. But the Huizar-chaired Planning and Land Use Management (PLUM) Committee approved the project four months later and accepted the company’s request to reduce the affordable housing requirement. The PLUM Committee also voted to deny an appeal of the project that had been filed by a labor union.

         The NPA does not preclude or limit the investigation or prosecution of individuals, including any current or former CP Employer officer, employee or agent.

         The matter involving CP Employer and the criminal cases stemming from the investigation are being handled by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Melissa J. Mills, also of the Public Corruption and Civil Rights Section.

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

          LOS ANGELES – A former Mesa Airlines employee was sentenced today to 30 months in federal prison for conspiring to fraudulently obtain nearly 2,000 free flights for himself and others on Spirit Airlines and to manufacture counterfeit Mesa employee identification badges.

          Hubbard Bell, 32, of Houston, Texas, was sentenced by United States District Judge Michael W. Fitzgerald, who also ordered him to pay $150,000 in restitution to the victim, Spirit Airlines. Bell, this case’s lead defendant, pleaded guilty in September 2020 to one count of conspiracy to commit wire fraud.

          From June 2015 to October 2015, Bell worked at the Phoenix-based Mesa Airlines, a regional air carrier. While employed at Mesa, Bell was provided access to free Spirit Airlines tickets as a benefit he was permitted to use only while employed at Mesa. To book a free ticket on Spirit, a Mesa employee entered their personal identifying information and a unique verification code.

          After Mesa Airlines terminated Bell’s employment, from February 2016 to November 2017, he conspired with others to sell the stolen and unauthorized information of Mesa employees – including their names, dates of hire, and employee identification numbers – that were needed to book free flights on Spirit Airlines through Spirit’s web portal for themselves and others.

          Bell unlawfully used his Mesa employee information to book 34 free flights for himself on Spirit Airline, which allowed him to fly interstate, including into and out of Los Angeles International Airport, despite the fact Mesa Airlines no longer employed him. Bell also admitted he and his co-conspirators manufactured and sold fraudulent Mesa employee identification cards for use by the fraudulent travelers.

          In total, the investigation into Bell and his co-conspirators has identified 1,953 flights that were connected to this scheme, flights that were booked for someone that did not match the Mesa Airlines employee whose information was used to book the free flight. The court found the loss to Spirit Airlines was approximately $150,000.

          The case’s other defendants – Kamille Jemison, 28, a former Houston resident who subsequently relocated to the Beverly Grove district of Los Angeles; Alphonso Lloyd, 27, of Houston; Femi Felix-Ukwu, 40, of Hartford, Connecticut; Arnold Nichols, 32, of Houston; and Monique Ferguson, 32, of Houston – have pleaded not guilty to criminal charges in a superseding indictment returned in March 2019. They are scheduled to go on trial on April 13.

          The case was investigated by the FBI, who received substantial assistance from the Federal Air Marshal Service and the Transportation Security Administration.

          This case is being prosecuted by Assistant United States Attorneys Poonam G. Kumar of the Major Frauds Section and Joseph D. Axelrad of the Violent and Organized Crime Section.

          LOS ANGELES – The former president of a Colton-based labor union was sentenced today to 144 months in federal prison for stealing nearly $800,000 from the union’s health plan trust fund, which he used to pay for personal expenses including legal bills and a car loan for his son’s sports car.

          John S. Romero, 74, of Loma Linda, was sentenced by United States District Judge Virginia A. Phillips, who scheduled an April 5 hearing to determine the amount of restitution Romero owes to his victims.

          At the conclusion of a five-day trial in February, a jury found Romero guilty of one count of conspiracy, 12 counts of theft in connection with health care, and one count of making a false statement to a government agency.

          Romero appointed himself president of United Industrial Services Workers of America (UISWA) and trustee of the UISWA health plan trust fund. Money paid into the fund was supposed to be used exclusively for health care benefits of its participants. Instead, Romero stole the union’s health funds for the benefit of himself and his immediate family.

          In furtherance of his scheme, Romero appointed a sham trustee who had no prior experience with unions. He also actively misled the third-party administrators of the health plan into making improper payments from the trust fund.

          From 2008 to 2014, Romero embezzled health plan funds to pay a $110,000 personal civil judgment against himself and his son, John J. Romero, 55, also of Loma Linda. He also embezzled $40,000 to pay criminal defense lawyers who represented Romero in a separate case. Romero funneled more than $310,000 to himself by disguising the funds as rent payments on two properties he owned and held under a shell company.

          In addition, he stole more than $300,000 in union health plan money to make “salary” payments to his family, even though none of his family members ever worked for the plan. He also used plan funds to pay off a $25,000 loan on his son’s Ford Mustang Shelby GT500 sports car.

          Romero also filed a false financial report with the U.S. Department of Labor in which he concealed the existence of more than $100,000 in union receipts and disbursements that Romero held in a secret bank account and from which he made regular payments to his mistress.

          Romero advanced his scheme by appointing his son as the secretary and treasurer of the union. He later appointed his ex-wife, Evelyn Romero, 71, as the UISWA president and trustee in 2010, shortly before Romero began serving a two-year federal prison sentence for making false statements to federal officials while he was president of a different labor union. Romero’s son, ex-wife, and daughter, Danae Romero, 42, of Loma Linda, pleaded guilty to criminal charges in this case. Evelyn and Danae Romero each were sentenced to two years’ probation in this case. John J. Romero was sentenced to time served in prison, plus three years of supervised release.

          At a September 9 hearing, Judge Phillips ordered this case’s other defendants to pay restitution in the following amounts: Evelyn Romero – $316,502; John J. Romero – $273,350; and Danae Romero – $200,552.

          “To execute this scheme, (John S. Romero) manipulated others, including his own family members,” prosecutors wrote in their sentencing memorandum. “He employed sophisticated means in furtherance of the scheme, including by diverting trust money through a Nevada shell company to hide his theft. He lied to brokers and administrators. And he bullied and pressured those around him to get his way, thereby intimidating and abusing those who trusted him most.”

          This case was investigated by the U.S. Department of Labor, Office of Inspector General; the U.S. Department of Labor, Employee Benefits Security Administration; and the U.S. Department of Labor, Office of Labor Management Standards.

          This matter was prosecuted by Assistant United States Attorneys Susan S. Har and Aaron B. Frumkin of the General Crimes Section.

         LOS ANGELES – United States Attorney Nick Hanna announced today that he will resign his position as the chief federal prosecutor for the Central District of California. While serving as the top federal law enforcement officer in the Los Angeles-based district for the past three years, Mr. Hanna oversaw approximately 280 Assistant U.S. Attorneys who staff the largest Justice Department office outside of Washington D.C.

         Mr. Hanna tendered his resignation to the President and the Acting Attorney General today, and he will conclude his service as United States Attorney on January 8.

         “It has been the honor of a lifetime to serve the 20 million people in our district for the last three years,” Hanna said. “I have seen firsthand government at its best, with our talented lawyers and staff working side-by-side with our brave federal, state and local law enforcement partners in pursuit of justice. While we’ve had many significant accomplishments during my tenure, all of the credit for these successes belongs to these hardworking and dedicated professionals.  

         “The work we have done together has resonated throughout our district, across the nation and around the world. We have worked tirelessly to bring criminals to justice, provide recourse to people whose rights have been violated, and defend the United States and its citizens from adversaries both foreign and domestic. We’ve achieved this despite the challenges of the longest federal government shutdown in history, widespread social unrest, and a pandemic that has upended our lives. Over the past three years, our office has lived up to its proud legacy of pursuing justice without fear or favor, and I am profoundly humbled to have had the opportunity to lead one of the premier U.S. Attorney’s offices in the country.”

         Under Mr. Hanna’s leadership, attorneys in the office have brought and litigated some of the most sophisticated and impactful cases in the nation, dozens of attorneys have been hired to bring the office to its maximum staffing level, and relationships with law enforcement partners have been strengthened.

         Amid a string of important public corruption cases, federal prosecutors conducted an extensive investigation focusing on a pay-to-play scheme at Los Angeles City Hall, resulting in criminal charges against two former city councilmen, a former deputy mayor, and a billionaire real estate developer, among others.

         Fraud prosecutors brought a multi-faceted case against attorney Michael Avenatti, and they worked with lawyers in the office’s Civil Division to negotiate a $3 billion settlement with Wells Fargo to resolve allegations that the bank engaged in fraudulent sales practices for more than a decade.

         In response to the nation’s opioid crisis, the office helped stand up an Opioid Overdose Response Team, which targets narcotics traffickers who sell drugs that result in fatal overdoses. This program has resulted in approximately one dozen prosecutions, including the case against West Hollywood resident Ed Buck and those who allegedly provided the drugs that killed rapper Mac Miller.

         To combat violent crime, the office brought charges against more than 300 gang members, including alleged narcotics traffickers, gun runners and MS-13 members accused of committing a series of grisly murders.

         In the largest asset forfeiture in U.S. history, prosecutors seized more than $1 billion in assets related to the 1MBD Malaysian banking scandal. Prosecutors recently filed criminal charges against the captain of the Conception, a dive boat that burned and sank off the Santa Barbara coast in September 2019, killing 33 passengers and one crew member. And, an Orange County man is pending trial on charges of killing his ex-girlfriend when he allegedly planted a bomb that destroyed an Aliso Viejo day spa. The office also won a guilty verdict at trial against Ali Elmezayen, a Hawthorne man who drowned his two disabled children to fraudulently collect on insurance policies he had taken out on their lives.

         On the national security front, under Mr. Hanna’s leadership, the office helped shut down one of the world’s largest dark web marketplaces, convicted at trial a Chinese researcher on economic espionage charges, and indicted a suspected domestic terrorist who allegedly plotted to bomb a political rally at a Long Beach park. Prosecutors also brought charges against a North Korean operative who allegedly committed one of the most sophisticated nation-state cybercrimes in history – the hacking of Sony Pictures Entertainment and other high-profile targets.

         During Mr. Hanna’s tenure, the office hired nearly 100 new prosecutors, enhanced its technology and physical space, streamlined internal processes, and continued to invest significant time and effort to deepen relationships with our partners in federal, state and local law enforcement.

         Prior to the pandemic’s grip tightening in March 2020, the office increased the number of criminal defendants charged by more than 41 percent compared with 2017 levels. Over the last three years, the office has recovered nearly $4.5 billion in criminal penalties, civil recoveries, forfeited assets, and restitution. Since 2018, the office has returned more than $148 million in restitution to crime victims.

         Mr. Hanna was appointed interim United States Attorney in January 2018 by United States Attorney General Jeff Sessions. President Trump later nominated Mr. Hanna to be United States Attorney in February 2018, and he was confirmed by the Senate on April 26, 2018. 

         While serving as an Assistant United States Attorney in Los Angeles from 1990 to 1994, Mr. Hanna prosecuted major drug trafficking and money laundering organizations, as well as violent and economic crimes. From 1995 to 1998, Mr. Hanna served as an Assistant United States Attorney in San Diego, where he focused on investigating and prosecuting international drug cartels. For almost 20 years, until his appointment as United States Attorney, Mr. Hanna was a partner at the law firm of Gibson, Dunn & Crutcher LLP. Mr. Hanna received his B.A. from the University of California, San Diego, and his J.D., magna cum laude, from Georgetown University.

         Once Mr. Hanna’s resignation becomes effective, First Assistant United States Attorney Tracy L. Wilkison will serve as Acting United States Attorney.

         The Central District of California is comprised of the counties of Los Angeles, Orange, Riverside, San Bernardino, Ventura, Santa Barbara and San Luis Obispo. Approximately 20 million people live in the district, making it by far the largest federal district in the nation.

          LOS ANGELES – A Pomona woman who acted as a “señora” – or a high-level female associate for an imprisoned Mexican Mafia member – was sentenced today to 144 months in federal prison for using her power on the street to solicit a murder and for participating in a carjacking attempt that resulted in a shooting.

          Cheryl Perez-Castaneda, 58, was sentenced via videoconference by United States District Judge George H. Wu. She pleaded guilty in October 2020 to one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act and one count of using a firearm during a crime of violence.

          Perez-Castaneda was a high-level associate of a Mexican Mafia cell run by Michael Lerma, 63, a.k.a. “Pomona Mike” and “Big Mike.” Lerma exercised control over, and extorted drug proceeds from, Latino street gangs in and around Pomona, as well as from inmates at Calipatria State Prison in Imperial County, according to a federal grand jury indictment.

          Members of Lerma’s criminal enterprise also engaged in robberies, identity theft and fraud, drug trafficking, kidnapping, and other acts of violence, the indictment alleges. Lerma profited from these criminal activities when top-level female associates known as “señoras” deposited proceeds into his prison account, court documents state.

          One of those associates was Perez-Castaneda, who, from February 2012 to July 2016, engaged in the traditional and expected duties of a “señora” – collecting extortionate “taxes” from Pomona drug dealers; distributing the drug proceeds to the Mexican Mafia, including Lerma, who was incarcerated at Pelican Bay State Prison; and giving orders to others regarding the racketeering enterprise’s criminal activities.

          But Perez-Castaneda also used her power as Lerma’s voice on the street to solicit the murder of a Los Angeles County Jail inmate in July 2013 in retaliation for the shooting of her son. When Perez-Castaneda was informed that the victim had been stabbed, but not killed, she sought and obtained the approval of a Mexican Mafia member to have the victim placed on a “green light” list, marking him for murder.

          In July 2013, Perez-Castaneda also participated in the attempted theft of a Mercedes-Benz automobile owned by another jail inmate. When the car’s caretaker refused to hand over the vehicle, one of Perez-Castaneda’s co-defendants shot him, according to court documents. Perez-Castaneda later laughed about the shooting on a recorded telephone call.

          In March 2018, a federal grand jury charged Lerma and 12 other defendants with multiple felonies, including racketeering conspiracy, violent crimes in aid of racketeering, conspiracy to distribute controlled substances, and firearms offenses. So far, prosecutors have secured five guilty pleas in this case. Trial for the other defendants in this case, including Lerma and Jose Valencia Gonzalez, the alleged shooter in the July 2013 carjacking incident, is scheduled for May 11.

          This investigation was conducted by the FBI’s San Gabriel Valley Safe Streets Task Force, which is made up of agents and officers with the FBI, the Los Angeles County Sheriff’s Department, the Pomona Police Department, the El Monte Police Department, the Drug Enforcement Administration and the California Department of Corrections and Rehabilitation (CDCR). The Pomona Police Department is the sponsoring agency of the Task Force and has been the headquarters for the task force since its inception in 2008.

          This case was prosecuted by Assistant United States Attorneys Max B. Shiner of the Violent and Organized Crime Section, and Shawn J. Nelson and Keith D. Ellison of the International Narcotics, Money Laundering, and Racketeering Section.

          LOS ANGELES – A one-time resident of Santa Barbara County pleaded guilty today to a federal criminal charge for fatally shooting an elephant seal on a beach near San Simeon.

          Jordan Gerbich, 30, formerly of Santa Maria, now a resident of Utah, pleaded guilty via videoconference to a single-count information charging him with taking a marine mammal.

          Gerbich admitted in his plea agreement that he drove to an elephant seal viewing area adjacent to the Piedras Blancas Marine Reserve and Monterey Bay National Marine sanctuary near San Simeon on September 28, 2019. Gerbich brought a .45-caliber pistol and, aided with a flashlight, used the firearm to shoot and kill a northern elephant seal. The next day, the elephant seal was discovered on the beach with a bullet hole in its head.

          Northern elephant seals are a protected species under the Marine Mammal Protection Act. They live up and down North America’s Pacific coast and haul out on land in areas called rookeries. These rookeries are typically populated with elephant seals year-round, but populations vary throughout the year based on breeding and molting cycles.

          United States District Judge Dale S. Fischer has scheduled an April 12, 2021 sentencing hearing, at which time Gerbich will face a statutory maximum sentence of one year in federal prison.

          This matter was investigated by the National Oceanic and Atmospheric Administration’s Office of Law Enforcement with substantial assistance provided by the California Department of Fish and Wildlife.

          This case is being prosecuted by Assistant United States Attorney Heather C. Gorman of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – A Covina man pleaded guilty today to federal cyberstalking charges for his multiyear internet harassment campaign against two teenage girls who rejected his sexual advances.

          Carl De Vera Bennington, 34, pleaded guilty via videoconference to two counts of cyberstalking.

          According to his plea agreement, Bennington repeatedly sent one victim unsolicited online messages over a period of several years. When she blocked him from contacting her from one of her online accounts, Bennington created new online accounts and then continued sending her messages, including graphic messages between June and November 2019 in which he insulted the victim, demanded she engage in sex acts with him, and threatened to sexually assault her. When the victim demanded that Bennington stop harassing her, he threatened to kill her and her family.

          Bennington also admitted to harassing another victim, who deactivated her social media accounts in 2017 after he solicited her to engage in a sexual relationship with him. In August 2019, after she reactivated her social media accounts, Bennington sent her numerous online messages threatening to kill her unless she responded to his demands for sex acts.

          Neither victim ever met Bennington in person, according to an affidavit filed with a criminal complaint in this case. According to the complaint, Bennington frequently promoted incel (involuntarily celibate) ideology, which involves individuals who are unable to find a willing sex partner and promotes the view that women oppress men and have too much freedom to choose their own sexual partners. The ideology ranges in tone from expressing sadness and self-loathing to advocating the “absolute hatred” of women, according to court documents.

          United States District Judge Dolly M. Gee has scheduled an April 14, 2021 sentencing hearing, at which time Bennington will face a statutory maximum sentence of 10 years in federal prison.

          The FBI’s Joint Terrorism Task Force investigated this matter.

          Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section is prosecuting this case.

          LOS ANGELES – A Riverside County woman pleaded guilty today to a federal criminal charge for fraudulently obtaining more than $500,000 in COVID-related unemployment benefits for herself.

          Cara Marie Kirk-Connell, 32, of Menifee, pleaded guilty to a single-count information charging her with use of an unauthorized access device.

          According to her plea agreement, from May to October 2020, Kirk-Connell knowingly used approximately 50 unauthorized access devices. Specifically, she used stolen personal identifiable information, such as dates of birth and Social Security numbers, to apply for unemployment insurance benefits in the names of other people.

          Based upon Kirk-Connell’s false and fraudulent applications, she obtained from the California Employment Development Department (EDD) multiple debit cards that contained more than $500,000 in COVID-related unemployment benefits to which she was not entitled, the plea agreement states.

          Kirk-Connell admitted she knew people who access the “dark web” to purchase stolen identities that she used to then file fraudulent claims with EDD. She further admitted to watching YouTube videos that instructed viewers on how to commit EDD fraud.

          When Murietta police arrested Kirk-Connell on September 11 during a traffic stop, she possessed eight EDD debit cards in other people’s names and, the day before her arrest, Kirk-Connell used fraudulently obtained EDD debit cards to withdraw more than $1,000 in cash. When federal law enforcement arrested Kirk-Connell on October 9, she possessed in her purse four EDD debit cards in victims’ names, four additional debit cards in victims’ names in her car trunk, and approximately $10,000 in cash, according to the plea agreement.

          EDD records showed that the cards and identities that Kirk-Connell possessed had been used to apply for and authorize approximately $534,149 in COVID-related unemployment benefits from California’s EDD program, of which nearly $270,000 had already been spent, according to an affidavit filed with a criminal complaint in this case.

          The California EDD distributes unemployment benefits under the Coronavirus Aid, Relief, and Economic Security Act, passed by Congress in March. The CARES Act expanded unemployment benefits to cover those who were previously ineligible, including business owners, self-employed workers, and independent contractors, who were put out of business or significantly reduced their services because of the COVID-19 pandemic.

          United States District Judge André Birotte Jr. has scheduled an April 9, 2021 sentencing hearing, at which time Kirk-Connell will face a statutory maximum sentence of 10 years in federal prison.

          This investigation, which is a result of the Department of Justice’s National Unemployment Insurance Fraud Task Force, was conducted by the U.S. Department of Labor – Office of Inspector General, IRS Criminal Investigation, and the United States Postal Inspection Service. California EDD Criminal Investigations and the Murrieta Police Department provided substantial assistance.

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

          SANTA ANA, California – A Santa Ana Police officer was charged today with accepting $128,000 in bribes from a crime figure seeking to thwart law enforcement activities against his illegally operating businesses.

          Steven Lopez, 28, of Chino, was charged with bribery in a single-count information filed today in United States District Court. In a plea agreement also filed today, Lopez agreed to plead guilty to this felony offense. Lopez is expected to plead guilty to the offense in United States District Court in the coming weeks.

          According to his plea agreement, Lopez served as a police officer with the Santa Ana Police Department (SAPD) from April 2016 to November 2020. From August 2019 until November 2020, Lopez received approximately $128,000 in bribes from an individual – named in court documents as “Co-Schemer 1” – seeking to influence Lopez in the performance of his official duties as a police officer, the plea agreement states.

          Lopez admitted that he agreed to prevent or stop law enforcement compliance checks at businesses illegally operating under Co-Schemer 1’s control, law enforcement efforts to shut down those businesses, and law enforcement searches and seizures at those illegally operated businesses.

          In August 2020, Lopez accepted $16,000 in bribes from Co-Schemer 1, the plea agreement states. Lopez further admitted that in September 2020 he solicited a bribe payment of at least $5,000 from Co-Schemer 1, who met Lopez – who was on duty and wearing his police uniform – during the late evening of September 14, on the top floor of a parking structure located directly across the street from SAPD headquarters. During this meeting, Lopez accepted Co-Schemer 1’s bribe payment, according to the plea agreement.

          On the evening of November 2, Lopez – once again on duty, wearing his police uniform and driving an SAPD-marked vehicle – met Co-Schemer 1 at the corner of First and Fairview streets in Santa Ana, and accepted a $2,500 bribe payment.

          Upon entering his guilty plea, Lopez will face a statutory maximum sentence of 10 years in federal prison.

          This matter was investigated by the FBI, IRS Criminal Investigation, the United States Postal Inspection Service, the California Department of Justice, and the Santa Ana Police Department.

          This case is being prosecuted by Assistant United States Attorneys Daniel H. Ahn and Daniel S. Lim of the Santa Ana Branch Office. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section provided substantial assistance in this matter.

          LOS ANGELES – Federal authorities have arrested a former Department of Defense civilian official on charges that he took $34,000 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, who was a former construction manager based at the Marine Corps Air Ground Combat Center in Twentynine Palms, appeared this morning in United States District Court in Charleston, South Carolina, where a judge set his bond at $75,000. Farhat was arrested on Friday by FBI agents in Mount Pleasant, South Carolina, where he has been staying in recent months.

          Farhat is charged in a two-count indictment returned by a federal grand jury on December 4 that charges him with being a public official receiving an illegal gratuity and being a public official receiving compensation from a private party for government services.

          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.

          The indictment alleges that Farhat accepted $20,000 in cash from the company for performing official acts, specifically recommending that the Navy certify completion of the construction projects and pay the additional $6.43 million the company requested in the REAs. The indictment also alleges that Farhat took another $14,000 in cash from the company as compensation for advising the company and drafting the REAs submitted to the Defense Department.

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

          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 both charges, Farhat would face a statutory maximum sentence of seven years in federal prison.

          This matter was investigated by the FBI and Naval Criminal Investigative Service.

          This case is being prosecuted by Assistant United States Attorney David T. Ryan of the Terrorism and Export Crimes Section.

          LOS ANGELES – A former semiconductor engineer was sentenced today to 18 months in federal prison for committing insider trading when he obtained his publicly traded employer’s non-public financial results without authorization and then illegally used the confidential information to purchase large amounts of stock prior to the information’s release.

          Yuh-Yue Chen, 53, of Taiwan, was sentenced via videoconference by United States District Judge Percy Anderson, who also ordered Chen to pay a $6,000 fine. Chen pleaded guilty on October 1 to one count of securities fraud.

          Chen was an electrical engineer at Skyworks Solutions Inc., a publicly traded Woburn, Massachusetts-based semiconductor company with a branch office and design center in Irvine. During the spring and summer of 2014, Chen bought Skyworks stock and options based on confidential information not yet available to the public.

          Specifically, Chen used his employee security badge to gain unauthorized access to the company’s restricted office area for the accounting and financial staff. Once inside, Chen went through the desks and work areas to find the company’s non-public earnings reports. Using this confidential information, Chen bought large amounts of Skyworks securities. Once Skyworks released its earnings reports to the public, Chen sold his Skyworks securities for a profit.

          In September 2014, Chen left the United States for Taiwan five days after two Skyworks employees caught him rifling through company documents in the restricted accounting and finance office, according to court papers. Soon afterward, Skyworks fired him.

          Through this insider trading scheme, Chen received more than $700,000 in illegal profit.

          In a lawsuit brought by the Securities and Exchange Commission, Chen was ordered to pay a $739,959 judgment to the SEC stemming from his insider trading scheme while he was employed at Skyworks Solutions.

          In March 2019, law enforcement interviewed Chen at Los Angeles International Airport, where he admitted to committing insider trading, according to court documents.

          The FBI investigated this matter.

          Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office prosecuted this case.

          LOS ANGELES – A Pasadena man is scheduled to be arraigned today on federal charges alleging he used stolen identities to fraudulently obtain unemployment insurance benefits, which he later used to purchase a Maserati luxury SUV.

          A federal grand jury on November 17 named Robert Sloan Mateer, 30, in a five-count indictment charging him with possession of at least 15 or more unauthorized access devices with intent to defraud, aggravated identity theft, possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of ammunition.

          According to an affidavit in support of a criminal complaint filed in this case, during a traffic stop on October 1, Pasadena Police officers arrested Mateer and found inside his Maserati 17 unemployment benefits debit cards, several other credit and debit cards, approximately $197,711 in cash, more than 85 grams of methamphetamine, and a loaded firearm with no serial number.

          Evidence gathered during the investigation determined that at least 14 of the 17 debit cards were loaded with at least $133,000 in unemployment insurance benefits, later determined to have been issued under the Coronavirus Aid, Relief, and Economic Security (CARES) Act passed by Congress in March, and had been issued in the names of third-parties, including identity theft victims.

          The California Employment Development Department (EDD) distributes unemployment insurance benefits under the CARES Act, which expanded unemployment benefits to cover those who were previously ineligible, including business owners, self-employed workers, and independent contractors, who were put out of business or significantly reduced their services because of the COVID-19 pandemic.

          According to the affidavit, Mateer admitted to obtaining the unemployment benefits debit cards by using “thousands” of identity profiles in his possession, that each debit card was loaded with approximately $14,500, and that he used the fraudulently obtained unemployment benefits to purchase the Maserati automobile.

          Mateer also admitted that he withdrew the approximately $197,711 in cash found in his Maserati from ATMs across the Los Angeles area, the affidavit states. Mateer also allegedly withdrew approximately $13,840 from the EDD debit cards in his possession from September 19 to September 25.

          Mateer was taken into federal custody on October 21 and was ordered detained pending trial.

          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, Mateer would face a statutory mandatory minimum sentence of 17 years and a statutory maximum sentence of life in prison.

          This matter was investigated by United States Postal Inspection Service.

          Assistant United States Attorney Jason C. Pang of the International Narcotics, Money Laundering, and Racketeering Section and Anna P. Farias-Eisner of the General Crimes Section are prosecuting this case. Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section provided substantial assistance in this matter.

         LOS ANGELES – A federal grand jury has returned a 35-count indictment alleging that a Fashion District outfit was at the center of two schemes, one that avoided the payment of more than $10 million in customs duties on imported clothing, and a second “Black Market Peso Exchange” scheme in which the company laundered narcotics proceeds and failed to report on tax returns over $17 million derived from cash transactions.

         The schemes are outlined in a 49-page indictment, which was filed late Wednesday and is the latest case resulting from an operation in September 2014 when law enforcement authorities executed dozens of search warrants as part of an investigation into money laundering and other crimes at Fashion District businesses. During one of those searches at a downtown condominium linked to the defendants in this case, authorities seized more than $38.3 million in cash.

         The defendants named in the indictment are:

• C’est Toi Jeans, Inc. (CTJ), an importer of apparel from countries such as China, and exporter of clothing to customers in Mexico, Central America and South America;
• Si Oh Rhew, 67, of La Cañada Flintridge, the president of CTJ and a 75 percent owner of the company; and
• Lance Rhew, who is Si Oh Rhew’s son, 33, of downtown Los Angeles, a CTJ corporate officer and the owner of another company called GLLR, Inc. that did business as CTJ.

         The indictment contains charges of conspiracy; entry of goods falsely classified; entry of goods by means of false statements; passing false and fraudulent papers through customhouse; international promotional money laundering; failure to file reports of $10,000 currency transactions; and aiding, assisting, and procuring the filing of a false tax return.

         The first scheme outlined in the indictment allegedly involves the avoidance of customs duties and tariffs by purchasing garments from overseas manufacturers, including from China, but then submitting false information to U.S. Customs and Border Protection (CBP) that understated the true value of the items being imported in the U.S. As a result, the import duties owed on the shipments were lowered. The indictment alleges that the defendants sent 515 individual wire transfers totaling $137,156,726 to pay overseas suppliers for undervalued garments. Overall, according to the indictment, CTJ imported goods that were undervalued by more than $62 million, causing approximately $10,269,068 in unpaid tariffs and duties that should have been paid to CBP. Some of this conduct occurred prior to authorities executing search warrants at CTJ and GLLR in 2014, but the indictment alleges that undervaluation resumed in 2018 and lasted until at least July 2020.

         In the second scheme, the Rhews used CTJ “to receive large amounts of bulk United States currency, including from narcotics proceeds, as payment for outstanding merchandise orders from customers in Mexico and elsewhere,” according to the indictment. CTJ allegedly accepted large cash payments of up to $70,000 even after the law enforcement action targeted their businesses in 2014. The defendants failed to file currency transaction reports, which are required for any transaction involving more than $10,000 in cash, and they concealed the cash receipts from an accountant who prepared their taxes, which led the Rhews to fraudulently omit more than $17.6 million in gross sales from tax returns filed with the IRS, the indictment alleges.

         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 court will issue summons directing the three defendants to appear for arraignments in United States District Court on February 4.

         If convicted of the charges in the indictment, the Rhews would each face potential sentences of decades in federal prison, and CTJ could face fines of as much as $100 million.

         This case is the product of an ongoing investigation by Homeland Security Investigations (HSI), IRS Criminal Investigation, U.S. Customs and Border Protection, the Monterey Park Police Department, the El Segundo Police Department, LA IMPACT, the Long Beach Police Department, the Los Angeles Police Department, the Gardena Police Department, and the West Covina Police Department. This investigation was conducted with the support of the Organized Crime Drug Enforcement Task Force.

         This case was investigated under the aegis of the HSI-led El Camino Real Financial Crimes Task Force, which includes representatives from the United States Attorney’s Office, the Drug Enforcement Administration, the FBI and IRS Criminal Investigation. The task force is working to protect legitimate businesses in the financial sector by targeting criminal activity and encouraging companies to comply with import/export regulations.

         This matter is being prosecuted by Assistant United States Attorneys Puneet V. Kakkar and Lucy B. Jennings of the International Narcotics, Money Laundering and Racketeering Section.

          LOS ANGELES – Five Canadian men have been indicted on federal fraud charges alleging they ran a million-dollar telemarketing scam that deceived victims – many of them elderly Southern California residents – into paying off non-existent debts they purportedly owed from magazine subscriptions.

          A federal grand jury on Friday returned a 10-count indictment that charges the defendants with conspiracy and nine counts of wire fraud. Those charged are:

• Ahmad Eraif, 35, of Dollard-des-Ormeaux, Quebec;
• Mohamed Eraif, 37, of Pierrefonds, Quebec, who is Ahmad Eraif’s brother;
• Jonathan Massouras, 30, of Dollard-des-Ormeaux, Quebec;
• William Gampel, 29, of Dollard-des-Ormeaux, Quebec; and
• Kevin Gampel, 26, of Dollard-des-Ormeaux, Quebec, who is William Gampel’s brother.

          The indictment alleges that, from 2013 to September 2015, the defendants, from locations in Montreal and Toronto, contacted victims throughout the United States, claiming to be calling from companies such as “Magazine Readers,” “Global Readers,” and “American Reader Services.” During these telephone calls, the defendants allegedly claimed that the victims – many of whom were elderly – owed money for magazine subscriptions.

          Participants in the scheme allegedly told victims that if they paid the amount “owed” their purported debts would be satisfied and they would receive no future phone calls. However, victims’ personal information was collected and stored for the purposes of charging the victims’ financial accounts and for making repeated calls demanding payments, according to the indictment.

          In reality, the victims did not owe the money demanded by the callers. Even when they paid, the defendants and others acting at their direction often called the victims again, sometimes repeatedly, demanding additional payments for other purported debts related to magazine subscriptions, the indictment alleges.

          To further induce the victims to send money, the defendants allegedly threatened to damage the victims’ credit or bring legal action against them if the victims did not pay the amounts demanded.

          The indictment alleges specific telephone calls between telemarketers in Canada and victims in Garden Grove, Ventura, Beverly Hills and Granada Hills.

          The total losses in this case exceed $1 million, the indictment alleges.

          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.

          Each count in the indictment carries a statutory maximum sentence of 20 years in federal prison.

          This matter was investigated by the United States Secret Service and the Royal Canadian Mounted Police.

          This case is being prosecuted by Assistant United States Attorney Monica E. Tait of the Major Frauds Section.

          The U.S. Attorney’s Office in Los Angeles is one of six offices participating in the Transnational Elder Fraud Strike Force, a joint law enforcement effort that brings together the resources and expertise of federal law enforcement and non-governmental organizations to combat international fraud schemes that disproportionately affect American seniors.

          LOS ANGELES – A Northridge man pleaded guilty today to a federal criminal charge that he fraudulently obtained $655,000 in Paycheck Protection Program (PPP) loans for his companies by submitting fake tax documents and false employee information.

          Steven R. Goldstein, 36, pleaded guilty to a single-count information charging him with fraud in connection with major disaster or emergency benefits.

          According to his plea agreement, Goldstein knowingly submitted applications for PPP loans to banks that contained false statements about the number of employees and the amount of employee payroll expenses.

          On May 2, Goldstein submitted a $355,000 PPP loan application to Bank of America for a company called Beagle Real Estate Investments. On the application, Goldstein listed false information that the company’s average monthly payroll was $120,000 and it employed a total of 43 workers. Goldstein also submitted fabricated tax documents that falsely stated that Beagle Real Estate’s payments to its employees in 2019 totaled $1,704,000, and that the company reported $308,000 in wages paid to 13 employees during the first quarter of 2020. The fraudulent loan application was approved and, on May 4, Bank of America disbursed $355,000 of PPP loan proceeds to a bank account that Goldstein provided in his application.

          Goldstein further admitted to knowingly submitting at least one additional fraudulent PPP loan application, which resulted in Bank of America disbursing $300,000 to him. That loan application also contained similar false statements and fabricated tax documents. When law enforcement interviewed Goldstein in October, he admitted to submitting multiple PPP loan applications that contained false information about employees and payroll as well as fake tax documents.

          The actual loss from the two approved loans was $655,000, according to the plea agreement.

          United States District Judge Stanley Blumenfeld Jr. has scheduled a March 30, 2021 sentencing hearing, at which time Goldstein will face a statutory maximum sentence of 30 years in federal prison.

          Goldstein’s business partner, Raymond Magana, 39, of Santa Clarita, was charged in a criminal complaint in October with fraudulently obtaining PPP loans and is expected to surrender to federal authorities in the coming days.

          The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is 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, Congress authorized more than $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 percent. Businesses must use PPP loan proceeds for 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 a set time period and use at least a certain percentage of the loan towards payroll expenses.

          This matter was investigated by IRS Criminal Investigation and the Small Business Administration Office of Inspector General.

          This case is being prosecuted by Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office.

          RIVERSIDE, California – An Inland Empire man was sentenced this afternoon to 300 months in federal prison for producing dozens of sexually explicit images and videos of children, including videos that were recorded on his Snapchat and Facebook social media accounts.

          Chaunta A. Bashir, a.k.a. “taytheonly,” 27, of Chino, was sentenced by United States District Judge Jesus G. Bernal. Bashir pleaded guilty on July 15 to one count of production of child pornography.

          From June 2015 to October 2018, Bashir produced multiple images of child pornography. Specifically, in October and November 2017, he took sexually explicit images and videos of a 3-year-old victim, including of himself sexually abusing the child.

          In the spring and summer of 2018, Bashir produced additional sexually explicit images and videos of children ranging in age from 4 years to 14 years. Bashir recorded some of those videos on his Facebook and Snapchat social media accounts.

          During a search of Bashir’s home in October 2018, law enforcement officials recovered more than 600 images and videos from his electronic devices that depicted minors engaged in sexually explicit conduct.

          This matter was investigated by Homeland Security Investigations with assistance from the Chino Police Department.

          This case was prosecuted by Assistant United States Attorney Tritia L. Yuen of the Riverside Branch Office.

         LOS ANGELES – Three members of a Gardena street gang that operates in several states under the control of the Mexican Mafia, have been charged in federal court with violent crime in aid of racketeering for allegedly participating in a shooting that resulted in the death of a 29-year-old man who was gunned down in front of his home.

         One of the defendants, Jesus Francisco Hernandez, was taken into custody this morning by special agents with Homeland Security Investigations. Hernandez is scheduled to make his initial appearance this afternoon in United States District Court in Los Angeles.

         The three defendants are charged in a criminal complaint alleging they participated in the November 13 murder of the victim, who is identified in court papers as “E.C.” The charged defendants, all residents of Gardena, are:

• Jesus Hernandez, a.k.a. “Rowdy, 27;
• Antonio Yanez, a.k.a. “Tank,” 22, who is currently in state custody; and
• Justin Arteaga, a.k.a. “Hitta,” 20, who also is currently in state custody.

         A fourth man who allegedly participated in the attack – G. Hernandez, who is Jesus Hernandez’s older brother and who is described in court papers as a longtime documented gang member – was shot by E.C.’s father during the November 13 incident and later died at a hospital.

         According to the affidavit in support of the criminal complaint, E.C. and his brother were seated in parked car near their driveway when they were confronted by three men on foot – G. Hernandez, Yanez and Arteaga. E.C.’s brother told the men they were not affiliated with a gang and they were simply in front of their longtime home. As the men neared the parked car, E.C. stepped out of the vehicle while his brother texted their father, asking him to bring his gun outside because of the escalating situation.

         The affidavit alleges that G. Hernandez swung at E.C., who swung back, and all three assailants pulled out guns and began shooting. The father saw the text message and soon after heard approximately 15-20 gunshots. The father came out to the car and saw G. Hernandez approximately 50 yards down the street. G. Hernandez began shooting at the father, who returned fire and struck G. Hernandez. One of the other gunman also fired at the father after G. Hernandez fell to the ground.

         Police and paramedics responded to the scene, where they treated E.C., but he died soon after as a result of the 10 gunshot wounds he suffered. G. Hernandez, who was found lying on the street with gunshot wounds to his head and chest, was brought to a hospital, where he died several days later.

         Soon after the shooting, Gardena Police officers arrested J. Hernandez and Yanez in the backyard of a nearby residence. Responding officers also recovered four 9mm handguns, three of which were “ghost guns” with no serial numbers.

         Arteaga was arrested on November 17 at Los Angeles International Airport as he was preparing to board a one-way flight to Guadalajara, Mexico. He was wearing the same hat he was seen wearing on security video taken the night of the shooting, according to the affidavit.

         Yanez and Arteaga initially were charged by the Los Angeles County District Attorney’s Office, which has dismissed those charges in light of the federal racketeering case. Jesus Hernandez was not charged after he was detained by local authorities.

         The federal complaint alleges that the murder of E.C. was committed to further the power of the Gardena 13 street gang, which is described in the affidavit as a criminal enterprise that has documented membership in California, Nevada, Texas, Hawaii and Rosarito, Mexico. The Gardena Police Department believes the gang distributes narcotics, primarily methamphetamine, both locally and in Hawaii.

         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 violent crime in aid of racketeering offense alleged in the complaint carries a statutory maximum sentence of the death penalty or life in federal prison because victim E.C. was murdered.

         This matter is being investigated by Homeland Security Investigations, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Gardena Police Department.

         This case is being prosecuted by Assistant United States Attorney Joseph D. Axelrad of the Violent and Organized Crime Section.

         LOS ANGELES – The captain of the P/V Conception, a Santa Barbara-based dive boat that caught fire last year near Santa Cruz Island, resulting in the deaths of 33 passengers and one crew member, was indicted today by a federal grand jury on 34 counts of seaman’s manslaughter.

         Jerry Nehl Boylan, 67, of Santa Barbara, was named in the indictment returned this afternoon by a federal grand jury that alleges Boylan, as the captain and master of the vessel, “was responsible for the safety and security of the vessel, its crew, and its passengers.”

         Federal prosecutors informed Boylan’s attorneys of the indictment after it was filed, and the defendant is expected to self-surrender to federal authorities in the coming weeks.

         The indictment alleges that Boylan caused the deaths of 33 passengers and one crewmember “by his misconduct, negligence, and inattention to his duties.” The indictment cites three specific safety violations:

• failing to have a night watch or roving patrol, which was required by the Code of Federal Regulations (CFR) and for over 20 years was a requirement in the Conception’s Certificate of Inspection issued by the United States Coast Guard;
• failing to conduct sufficient fire drills, which are mandated in the CFR; and
• failing to conduct sufficient crew training, which was also required by the CFR.

         The Conception was a 75-foot, wood-and-fiberglass passenger vessel that docked in Santa Barbara Harbor. During a Labor Day weekend dive trip last year, the boat carried 33 passengers and six crew members, including Boylan. During the early morning hours of September 2, 2019, a fire broke out while the boat was anchored in Platt’s Harbor near Santa Cruz Island. The fire, which engulfed the boat and led to its sinking, resulted in the deaths of 34 people who had been sleeping below deck. Five crewmembers, including Boylan, were able to escape and survived.

         “As a result of the alleged failures of Captain Boylan to follow well-established safety rules, a pleasant holiday dive trip turned into a hellish nightmare as passengers and one crew member found themselves trapped in a fiery bunkroom with no means of escape,” said United States Attorney Nick Hanna. “The loss of life that day will forever impact the families of the 34 victims. With this indictment and our commitment to vigorously prosecute the case, we seek a small measure of justice for the victims and their loved ones.”

         “Nothing will ever replace the 34 lives that were lost in the Conception tragedy,” said Special Agent in Charge Kelly S. Hoyle of the Coast Guard Investigative Service – Pacific Region. “Our hearts remain with the families as the Coast Guard continues to work with our partners in the Department of Justice on this investigation.”

         “This tragedy forever altered the lives of so many families and loved ones, and it deeply affected members of the public who watched in horror. We continue to grieve with them,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The FBI provided extensive investigative and technical resources to the joint investigation, including expert divers and evidence recovery assets. Our hope is that this indictment leads to the prevention of boating accidents and the senseless destruction of lives through proper precautions and training.”

         “This was a devastating and tragic loss of 34 lives,” said Monique Villegas, the Special Agent in Charge of the ATF’s Los Angeles Field Division. “Our condolences continue to go out to all the families that have suffered from this tragedy. ATF remains committed to working closely with our partners to investigate complex fire scenes such as this by providing our technical expertise in the area of fire investigation.”

         Each charge of seaman’s manslaughter carries a statutory maximum penalty of 10 years in federal prison.

         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 ongoing investigation in this matter is being conducted by the FBI; Coast Guard Investigative Service; and the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).

         This case is being prosecuted by Assistant United States Attorneys Mark A. Williams, Joseph O. Johns and Diana Kwok of the Environmental and Community Safety Crimes Section.

 

FIRST SUPERSEDING INDICTMENT

         LOS ANGELES – In a superseding indictment unsealed today that adds new details to the criminal case alleging a widespread corruption scheme led by former Los Angeles City Councilman Jose Huizar, a federal grand jury has added five defendants, including former Los Angeles Deputy Mayor Raymond Chan, to the racketeering case that accuses Huizar and his close associates of illegally obtaining financial benefits from developers who, in exchange, sought favorable treatment on pending real estate development projects.

         After being arrested in June pursuant to a criminal complaint, Huizar, 52, of Boyle Heights, was charged in July in a 34-count indictment that alleged a conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act in which Huizar agreed to accept at least $1.5 million in illicit financial benefits. That racketeering charge alleged 402 overt acts that Huizar and his co-conspirators committed to further their criminal enterprise, including bribery, honest services fraud, and money laundering. The 41-count superseding indictment unsealed today adds 50 overt acts to the RICO conspiracy count. The racketeering charge now also charges Chan, who formerly was the general manager of the Los Angeles Department of Building and Safety and, more recently, was the city’s deputy mayor of economic development.

         The five new defendants in the superseding indictment are:

• Raymond She Wah Chan, also known as “She Wah Kwong,” 64, of Monterey Park, identified in previous court filings as “Individual 1,” who is charged with RICO conspiracy, bribery, honest services fraud and lying to federal agents;
• Wei Huang, 55, a resident of Shenzhen, China, who also maintains a residence in San Marino, previously identified in court documents as “Chairman E,” who is the billionaire chairman and president of a global development company headquartered in China, and who faces charges of bribery, honest services fraud and Travel Act violations;
• Shen Zhen New World I, LLC, one of Huang’s U.S.-based companies, which acquired the L.A. Grand Hotel Downtown in 2011 for $90 million and planned to redevelop it into a 77-story tower, and which is named in the same counts as Huang;
• Dae Yong Lee, also known as “David Lee,” 56, of Bel Air, identified in prior court filings as “Developer C,” who is a developer with multiple properties in Los Angeles, and who is charged with bribery, honest services fraud and obstruction; and
• 940 Hill, LLC, a Lee-owned company that purchased a South Hill Street property in downtown Los Angeles in 2008 for $9 million and planned to redevelop it into a mixed-use development, and which is named in the same counts as Lee.

         In addition to the RICO conspiracy charge, the indictment charges 14 counts of honest services wire fraud, two counts of honest services mail fraud, four counts of traveling interstate in aid of racketeering, nine counts of bribery, five counts of money laundering, one count of structuring cash deposits to conceal bribes, one count of making a false statement to a financial institution, one count of alteration of records in a federal investigation, two counts of making false statements to federal law enforcement, and one count of tax evasion. Each of the defendants is charged in various counts. Huizar, for example, is charged in 34 of the 41 counts.

         “The scope of corruption outlined in this indictment is staggering,” said United States Attorney Nick Hanna. “As the indictment alleges, Huizar, Chan and their network of associates repeatedly violated the public trust by soliciting and accepting numerous cash bribes and other financial benefits, turning Huizar’s City Council seat into a money-making criminal enterprise. Powerful developers, operating through well-connected lobbyists, eagerly participated in the schemes to get preferential treatment for their downtown projects. This detailed indictment, which lays bare these backroom deals, should prompt a serious discussion as to whether significant reforms are warranted in Los Angeles city government.”

         “The charges announced today allege wholesale corruption and outline the way in which Huizar and Chan brokered their powerful positions to gain personally, politically and financially by selling to the highest bidders in a stunning betrayal of the Angelenos they swore an oath to serve,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the investigators and prosecutors who investigated this case and methodically uncovered – then dismantled – abject corruption in one of America’s largest cities, with the shared goal of restoring trust in city government.”

         The indictment alleges that Huizar and Chan operated the “CD-14 Enterprise,” named for City Council District 14, which Huizar represented from 2005 until this year. Other members of the conspiracy were George Esparza, Huizar’s former special assistant, and real estate development consultant George Chiang, each of whom pleaded guilty earlier this year to participating in the RICO conspiracy. The indictment adds overt acts to the RICO conspiracy alleging that CD-14 Enterprise members illegally solicited political contributions by foreign nationals to help maintain the enterprise’s political power.

         Among the numerous other corruption allegations, the indictment charges that Huizar illegally accepted more than $800,000 in benefits from Huang, mainly during luxury-laden gambling trips. In addition, at Huizar’s and Chan’s request, and after Huizar had helped save Chan’s city position by helping to prevent a planned merger that would have eliminated Chan’s department, Huang also provided $600,000 in collateral to fund a settlement of a sexual harassment lawsuit filed against Huizar by a former CD-14 staffer, allegations that threatened his 2015 re-election campaign, according to the indictment. At the time he provided these benefits, Huang was planning to redevelop the L.A. Grand Hotel into the tallest tower west of the Mississippi, which would require city approvals and Huizar’s help. When Chan was later interviewed by FBI agents about the lawsuit settlement, he allegedly lied about his participation in this secret payment arrangement and about his knowledge of Huang’s “asks” of Huizar.

         Chan is also charged with multiple counts of bribery and honest services fraud for agreeing to accept, while he was deputy mayor, more than $100,000 from Chiang for official acts to benefit a project by Chinese developer Shenzhen Hazens. Additionally, Chan is charged with facilitating a bribe agreement in which a Hazens domestic subsidiary, Jia Yuan USA Co., Inc., would make a $100,000 campaign contribution to a Huizar relative running for the CD-14 seat in exchange for Huizar’s votes to approve the project. Last month, Jia Yuan, which was seeking to redevelop the Los Angeles Luxe City Center Hotel, paid $1,050,000 to resolve the government’s investigation into its conduct related to this case, which included bribery and illegal campaign contributions. Jia Yuan entered into a non-prosecution agreement, agreed to cooperate with the government’s investigation, and admitted to providing benefits to Huizar and his associates before Huizar voted to approve the Luxe Hotel project when the matter came before the city’s Planning and Land Use Management Committee, which Huizar chaired, and the City Council.

         The indictment further alleges that Lee provided $500,000 in cash for Huizar and Esparza in exchange for Huizar’s help in resolving a labor organization appeal on the 940 Hill development project. Court documents allege that Lee provided bags of cash to Justin Jangwoo Kim, a Huizar fundraiser, to deliver to Huizar and Esparza. Kim admitted to facilitating the bribe from Lee and pleaded guilty to a federal bribery offense. Lee and 940 Hill are also charged with falsifying accounting and tax records to cover up the bribe.

          Huizar pleaded not guilty in August to the charges in the initial indictment. He is expected to be arraigned on the superseding indictment on December 7.

         Chan and Lee have been directed to surrender to federal authorities. Chan and Lee are expected to be arraigned on the superseding indictment Tuesday afternoon in United States District Court in downtown Los Angeles.

         940 Hill has been issued a summons to appear in United States District Court on Tuesday. Shen Zhen New World I has been issued a summons to appear December 7. Huang and his counsel have been notified that Huang has been named in the superseding indictment and that the United States government has issued a warrant for his arrest.

         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 RICO conspiracy, honest services fraud, obstruction, and money laundering charges each carry a statutory maximum sentence of 20 years in federal prison. The charge of making false statements to a financial institution has a statutory maximum sentence of 30 years in prison. The bribery charges each carry a statutory maximum sentence of 10 years in federal prison. The charges of tax evasion, structuring, making false statements to law enforcement, and interstate travel in aid of racketeering have five-year maximum prison sentences.

         Huizar is currently scheduled to go on trial on June 22.

         With the charges against Chan, Huang and Lee, a total of nine individuals have been charged as a result of Operation “Casino Loyale,” the ongoing corruption investigation into Los Angeles City Hall being conducted by the FBI and the United States Attorney’s Office. Shen Zhen New World I and 940 Hill are the first corporate entities to be formally charged.

         In addition to Esparza, Chiang and Kim, Morris Goldman, a longtime City Hall lobbyist, pleaded guilty to participating in a bribery scheme in which a developer agreed to make political donations in exchange for Huizar’s support of a project in the city’s Arts District. Goldman is scheduled to be sentenced on August 23. Esparza is scheduled to be sentenced on February 8, and sentencing hearings for Chiang and Kim are scheduled for February 22.

         Former Los Angeles City Councilman Mitchell Englander pleaded guilty in July to charges of scheming to falsify material facts related to trips he took to Las Vegas and Palm Springs, during which he accepted cash and other benefits from a businessperson. Englander’s sentencing hearing is scheduled for January 25.

         The cases against Huizar, Chan and their associates in the CD-14 Enterprise are being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section, and Assistant United States Attorneys Veronica Dragalin and Melissa Mills, also of the Public Corruption and Civil Rights Section.

         Any member of the public who has information related to this or any other public corruption matter in the City of Los Angeles 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.