Central District of California

          LOS ANGELES – A doctor who operates a medical clinic in West Hollywood where he specializes in treating HIV patients has been taken into custody pursuant to federal charges that allege he engaged in a long-running scheme to defraud health insurance companies in connection with the brand-name human growth hormone Serostim.

          James T. Lee, 71, of West Hollywood, was taken into custody on Tuesday afternoon after being escorted from Austria by federal law enforcement agents.

          After a federal grand jury returned a 10-count indictment on June 6, Lee was arrested in Vienna at the request of the United States. Lee subsequently waived extradition and agreed to return to the United States.

          The indictment against Lee charges him with one count of conspiracy to commit health care fraud, six counts of health care fraud, one count of making false statements relating to health care matters, and two counts of witness tampering.

          The indictment was unsealed this morning and Lee’s arraignment on the charges is scheduled for this afternoon in United States District Court in downtown Los Angeles.

          Lee allegedly engaged in a scheme to divert Serostim – an injectable human growth hormone that is FDA-approved for HIV-positive patients – from legitimate HIV patients to other people who purchased the drug for its purported anti-aging properties. The Food and Drug Administration has approved Serostim for use only by HIV patients with wasting or cachexia who are also receiving antiretroviral therapy.

          According to the indictment, from at least May 2011 until February 2019, Lee wrote prescriptions for Serostim to HIV patients, who obtained the drugs and used their Medicare Part D benefits to pay for the drugs. Lee then then illegally purchased the Sersotim back from patients, so that he could re-sell the Serostim. Lee allegedly re-sold the Serostim for a significant profit to other patients who were not HIV-positive, and who used the human growth hormone to build muscle and for other cosmetic purposes.

          The indictment alleges a second part of the scheme in which Lee allegedly submitted claims to health insurance companies for Serostim injections, claims that were fraudulent because Lee did not actually provide the Serostim injections to the patients at his office. According to the indictment, many of the patients did not receive the full amount of Serostim that Lee billed to the insurance companies, or they received Serostim that Lee had purchased from other patients.

          Lee allegedly twice engaged in witness tampering during meetings with a patient that were recorded without Lee’s knowledge. During those meetings, Lee encouraged the patient to provide false information to federal agents who were investigating the case. Lee coached the patient to lie about the Serostim scheme, including by falsely stating that kickback payments from Lee were merely overpayments from the insurance companies, according to the indictment.

          During the course of the conspiracy, Lee and his co-conspirators submitted at least $14.2 million in claims to the insurance companies for Serostim injections, which resulted in payments of approximately $5.9 million, according to the indictment. The scheme allegedly defrauded Health Net, which is a private health benefit plan, and the Government Employees Hospital Association, which is a health benefit plan that provides health insurance coverage to certain former United States government employees.

          Medicare paid at least $1.4 million based on Serostim prescriptions that were issued by Lee and filled by patients who sold at least some of the drugs to Lee.

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

          Each of the health care fraud counts charged in the indictment carries a statutory maximum sentence of 10 years in prison. The false statement counts carries a statutory maximum sentence of five years in prison. The witness tampering counts each carry a statutory maximum sentence of 20 years in prison. The indictment also contains criminal forfeiture allegations that seek the forfeiture of the ill-gotten gains derived from the criminal offenses.

          This case is being investigated by the Federal Bureau of Investigation; the Food and Drug Administration, Office of Criminal Investigations; and the Office of Personnel Management, Office of Inspector General.

          The case is being prosecuted by Assistant United States Attorney Alexander F. Porter of the Major Frauds Section.

          LOS ANGELES – A member of a street gang that operates in Santa Fe Springs and Whittier pleaded guilty today to federal criminal charges, including ones stemming from the April 2016 murder of a rival gangster outside a San Gabriel Valley restaurant.

          Leonardo Antolin, 25, of Whittier, pleaded guilty to five felonies before United States District Judge Virginia A. Phillips, who scheduled a September 23 sentencing hearing. In a plea agreement filed in this case, Antolin has agreed to serve a sentence of 33 to 40 years in federal prison.

          Antolin – a member of the Mexican Mafia-affiliated Canta Ranas gang – admitted in the plea agreement that on April 19, 2016, he executed a Mexican Mafia member whom prosecutors allege wanted to expand his influence and challenge the authority of other Mexican Mafia members in the San Gabriel Valley. During the incident at a restaurant in the San Gabriel Valley community of Bassett, the Mexican Mafia member was fatally shot, his bodyguard was severely wounded, and an innocent restaurant patron was shot six times in the abdomen, back, buttocks and legs. Antolin also admitted to aiding in the trafficking of methamphetamine on behalf of Canta Ranas.

          Antolin pleaded guilty to conspiracy to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, conspiracy to commit murder in aid of racketeering, assault with a dangerous weapon in aid of racketeering, conspiracy to traffic in controlled substances, and discharging a firearm during a violent crime.

          This guilty plea arose from a 2016 federal grand jury indictment charging 51 defendants that was the result of Operation Frog Legs. Prosecutors have secured more than 20 convictions so far in this matter. A trial for Jose Loza, 40, a Mexican Mafia member and Canta Ranas shot caller, and Ronald Sotello, 43, is scheduled to begin on July 30.

          Operation Frog Legs is the result of an investigation by the Southern California Drug Task Force, which is led by the Drug Enforcement Administration as part of the High Intensity Drug Trafficking Area (HIDTA) initiative. The Task Force members that participated in Operation Frog Legs were U.S. Immigration and Customs Enforcement’s Homeland Security Investigation, the Whittier Police Department, the Los Angeles County Sheriff’s Department, IRS Criminal Investigation, and the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit.

          This matter is being prosecuted by Assistant United States Attorney Carol Alexis Chen, Chief of the International Narcotics, Money Laundering, and Racketeering Section, and Assistant United States Attorneys Victoria A. Degtyareva and Kathy Yu, also of the International Narcotics, Money Laundering, and Racketeering Section.

          SANTA ANA, California – A Rancho Mirage woman who faces federal charges related to a scheme that fraudulently billed insurance companies $50 million for “medically necessary” cosmetic surgeries has been returned the United States after fleeing to Israel two years ago.

          Linda Morrow, 67, who fled the United States after being named in a 31-count federal grand jury indictment, arrived in Southern California on Monday morning after being deported by Israel, which had determined that she had entered that nation on a fraudulent Mexican passport.

          Linda Morrow appeared in United States District Court in Santa Ana on Tuesday afternoon and entered a not guilty plea to a separate grand jury indictment that charges her with contempt of court for fleeing while free on bond. During that hearing, she was ordered detained and a trial date in the contempt case was scheduled for August 27. She will make another court appearance later this month to discuss the status of the pending health care fraud case.

          Linda Morrow and her husband, David Morrow, 74, were arrested in Israel on June 16. David Morrow, who pleaded guilty in 2016 in the health care fraud case and was sentenced in absentia to 20 years in federal prison, is pending extradition proceedings in Israel. David Morrow also faces contempt of court charges for fleeing while he was pending sentencing.

          Linda Morrow, who was the executive director of The Morrow Institute (TMI) in Rancho Mirage, is charged with participating in a scheme to defraud health insurance companies by submitting bills for more than $50 million for procedures that were claimed as “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs,” breast augmentations and vaginal rejuvenation. The indictment outlines a scheme in which patients were lured to TMI with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. The indictment further alleges that some patients who underwent multiple surgeries at TMI suffered severe medical complications from the procedures.

          The victim health insurance companies included Anthem Blue Cross, Blue Cross/Blue Shield of California, Blue Cross/Blue Shield of Massachusetts, Regional Employer/Employee Partnership for Benefits, formerly known as Riverside Employer/Employee Partnership (REEP) and Cigna. When insurance companies refused to pay for the cosmetic procedures for patients who happened to be employed by public entities such as school districts, TMI made formal claims against those public entities, demanding payments totaling more than $15 million from the California Highway Patrol, the Desert Sands Unified School District, the Palm Springs Unified School District and the City of Palm Springs.

          The indictment naming Linda Morrow with conspiracy, 23 counts of mail fraud, six identity theft charges, and one count of misprision of a felony for allegedly failing to report the health care fraud scheme to authorities. If she were to be convicted, Linda Morrow would face a potential sentence of more than 500 years in federal prison.

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

          The investigation into the Morrows and TMI was conducted by the FBI, IRS Criminal Investigation and the California Department of Insurance. The FBI’s Legal Attaché in Tel Aviv and the Israeli National Police provided considerable assistance relative to the capture of Linda and David Morrow. The United States Marshals Service handled the transportation of Linda Morrow from Israel.

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

          LOS ANGELES – An electrical engineer has been found guilty of multiple federal criminal charges related to a scheme to illegally obtain integrated circuits with military applications that were exported to China without the required export license, the Justice Department announced today.

          Yi-Chi Shih, 64, a part-time Los Angeles resident, was found guilty on June 26 of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), a federal law that makes illegal, among other things, certain unauthorized exports. The jury also found Shih guilty of mail fraud, wire fraud, subscribing to a false tax return, making false statements to a government agency, and conspiracy to gain unauthorized access to a protected computer to obtain information. Shih was convicted of all 18 counts in a federal grand jury indictment.

          The guilty verdicts were announced today, one day after United States District Judge John A. Kronstadt discharged the jury that returned the guilty verdicts last week. That jury previously had been scheduled today to consider allegations in the indictment against Shih that seek the forfeiture of hundreds of thousands of dollars. Judge Kronstadt, who presided over a trial that spanned seven weeks, decided on Monday that he will later consider the forfeiture allegations.

          Judge Kronstadt will also schedule a sentencing hearing, where Shih will face a statutory maximum sentence of 219 years in federal prison.

          “This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns,” said United States Attorney Nick Hanna. “My office will enforce laws that protect our nation’s intellectual property from being used to benefit foreign adversaries who may compromise our national security.”

          “The Department’s China Initiative is focused on preventing and prosecuting thefts of American technology and intellectual property for the benefit of China,” said Assistant Attorney General for National Security John C. Demers. “The defendant has been found guilty of conspiring to export sensitive semiconductor chips with military applications to China. I would like to thank the prosecutors and agents, including those from the Royal Canadian Mounted Police, for their efforts in this successful investigation and prosecution.”

          “The FBI is committed to protecting institutions from adversaries who seek to steal sensitive American technology under the guise of research,” said Paul Delacourt, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “We will continue to work collaboratively with our federal partners to identify and hold accountable individuals who plunder our research or intellectual property at the expense of the American people and our national security.”

          According to the evidence presented at trial, Shih and co-defendant Kiet Ahn Mai, 65, of Pasadena, conspired to illegally provide Shih with unauthorized access to a protected computer of a United States company that manufactured wide-band, high-power semiconductor chips known as monolithic microwave integrated circuits (MMICs).

          Shih defrauded the U.S. company out of its proprietary, export-controlled items, including its design services for MMICs, according to trial evidence. As part of the scheme, Shih accessed the victim company’s computer systems via its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States. Shih used Mai to conceal his true intent to export the U.S. company’s MMICs to the People’s Republic of China. The MMICs that Shih sent to China required a license for national security reasons from the Commerce Department before being exported to China, and a license was never sought or obtained for this export.

          The victim company’s semiconductor chips have a number of commercial and military applications, and its customers include the Air Force, Navy, and the Defense Advanced Research Projects Agency. MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications.

          “This investigation demonstrates the Office of Export Enforcement’s strong commitment to enforcing our nation’s export control and public safety laws,” said Richard B. Weir, Special Agent in Charge of the U.S. Department of Commerce’s Office of Export Enforcement. “We will continue to work with our law enforcement partners to identify, deter, and keep the most sensitive U.S.-origin goods and technology out of the most dangerous hands.”

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

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

          “Today’s announcement serves as a reminder that the government will hold individuals accountable who intend to profit from the theft of United States protected technology and conceal the proceeds derived from this activity,” stated IRS Criminal Investigation Special Agent in Charge Ryan L. Korner. “The IRS plays an important role in tracing illicit funds through both domestic and international financial intuitions. Let this conviction serve as a warning to those who are considering similar conduct.”

          Shih and Mai were indicted in this case in January 2018. Mai pleaded guilty in December 2018 to one felony count of smuggling and is scheduled to be sentenced on September 19, at which time he will face a statutory maximum sentence of 10 years in federal prison.

          This case was investigated by the Federal Bureau of Investigation; the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and IRS Criminal Investigation, with assistance from the Royal Canadian Mounted Police.

          The matter is being prosecuted by Assistant United States Attorneys Judith A. Heinz, Melanie Sartoris, Khaldoun Shobaki and William Rollins of the National Security Division, Assistant United States Attorney James C. Hughes of the Major Frauds Section, Assistant United States Attorney John J. Kucera of the Asset Forfeiture Section, and Trial Attorney Matthew Walczewski of the Department of Justice’s National Security Division.

An electrical engineer has been found guilty of multiple federal criminal charges, including engaging in a scheme to illegally obtain integrated circuits with military applications that later were exported to China without the required export license.  Assistant Attorney General for National Security John C. Demers, U.S. Attorney Nicola T. Hanna for the Central District of California and Assistant Director in Charge Paul Delacourt of the FBI’s Los Angeles Field Office made the announcement.

After a six-week trial, Yi-Chi Shih, 64, a part-time Los Angeles resident, was found guilty on June 26 of conspiracy to violate the International Emergency Economic Powers Act (IEEPA), a federal law that makes illegal, among other things, certain unauthorized exports.  The jury also found Shih guilty of mail fraud, wire fraud, subscribing to a false tax return, making false statements to a government agency and conspiracy to gain unauthorized access to a protected computer to obtain information.  Shih was convicted of all 18 counts in a federal grand jury indictment.

United States District Judge Kronstadt, who presided over a trial that spanned seven weeks in Los Angeles, California, decided on Monday that he will later consider the forfeiture allegations in the indictment, where the government is seeking that Shih should forfeit hundreds of thousands of dollars.  Judge Kronstadt discharged the jury that previously had been scheduled today to consider forfeiture allegations against Shih. 

United States District Judge John A. Kronstadt will also schedule a sentencing hearing, where Shih faces a statutory maximum sentence of 219 years in federal prison.

“The Department’s China Initiative is focused on preventing and prosecuting thefts of American technology and intellectual property for the benefit of China,” said Assistant Attorney General Demers.  “The defendant has been found guilty of conspiring to export sensitive semiconductor chips with military applications to China.  I would like to thank the prosecutors and agents, including those from the Royal Canadian Mounted Police, for theirs efforts in this successful investigation and prosecution.”

“This defendant schemed to export to China semiconductors with military and civilian uses, then he lied about it to federal authorities and failed to report income generated by the scheme on his tax returns,” said United States Attorney Nick Hanna. “My office will enforce laws that protect our nation’s intellectual property from being used to benefit foreign adversaries who may compromise our national security.”

“The FBI is committed to protecting institutions from adversaries who seek to steal sensitive American technology under the guise of research,” said Assistant Director in Charge Delacourt.  “We will continue to work collaboratively with our federal partners to identify and hold accountable individuals who plunder our research or intellectual property at the expense of the American people and our national security.”

According to the evidence presented at trial, Shih and co-defendant Kiet Ahn Mai, 65, of Pasadena, California, conspired to illegally provide Shih with unauthorized access to a protected computer of a United States company that manufactured wide-band, high-power semiconductor chips known as monolithic microwave integrated circuits (MMICs).

Shih defrauded the U.S. company out of its proprietary, export-controlled items, including its design services for MMICs, according to trial evidence.  As part of the scheme, Shih accessed the victim company’s computer systems via its web portal after Mai obtained that access by posing as a domestic customer seeking to obtain custom-designed MMICs that would be used solely in the United States.  Shih and Mai concealed Shih’s true intent to transfer the U.S. company’s products to the People’s Republic of China.  The MMICs that Shih sent to China required a license from the Commerce Department before being exported to China, and a license was never sought or obtained for this export.

The victim company’s semiconductor chips have a number of commercial and military applications, and its customers include the Air Force, Navy and the Defense Advanced Research Projects Agency.  MMICs are used in missiles, missile guidance systems, fighter jets, electronic warfare, electronic warfare countermeasures and radar applications.

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

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

Shih and Mai were indicted in this case in January 2018.  Mai pleaded guilty in December 2018 to one felony count of smuggling and is scheduled to be sentenced on September 19, at which time he will face a statutory maximum sentence of 10 years in federal prison.

This case was investigated by the Federal Bureau of Investigation; the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement; and IRS Criminal Investigation, with assistance from the Royal  Canadian Mounted Police.

The matter is being prosecuted by Assistant United States Attorneys Judith A. Heinz, Melanie Sartoris, Khaldoun Shobaki and William Rollins of the National Security Division, Assistant United States Attorney James C. Hughes of the Major Frauds Section, Assistant United States Attorney John J. Kucera of the Asset Forfeiture Section, and Trial Attorney Matthew Walczewski of the Department of Justice’s National Security Division.

          LOS ANGELES – The Hazelden Betty Ford Foundation has entered into a settlement agreement with the United States in which it agrees to remove architectural barriers to access at the Betty Ford Center, a well-known drug and alcohol treatment facility it owns and operates in Rancho Mirage.

          The settlement agreement, which was finalized today, resolves allegations that the Betty Ford Center violated the Americans with Disabilities Act (ADA), which prohibits discrimination by places of public accommodation against individuals with disabilities. Hazelden, a Center City, Minnesota-based addiction treatment and advocacy organization, fully cooperated with the government’s investigation.

          “People should never be deterred or impeded from seeking treatment for drug or alcohol addiction because of a physical disability,” said United States Attorney Nick Hanna. “Our office will enforce the rights of individuals with disabilities to access healthcare without barriers. We commend Hazelden for taking steps to comply with the ADA to ensure that the Betty Ford Center is accessible to all.”

          Under the settlement agreement, Hazelden must:

• Remove existing barriers to access throughout the Betty Ford Center, including in-patient rooms, restrooms and common areas;
• Ensure that any new buildings constructed on the Betty Ford Center campus are accessible;
• Relocate equipment and furniture where necessary to provide equal access to facilities; and
• Modify practices, policies and procedures to ensure that people with disabilities have full and equal access to all of the services offered by the Betty Ford Center.

          Assistant United States Attorney Matthew Nickell of the Civil Division’s Civil Rights Section handled this matter in conjunction with the Disability Rights Section of the Justice Department’s Civil Rights Division.

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

          LOS ANGELES – A Montebello resident has been charged by a federal grand jury with providing a woman a fatal dose of the synthetic opioid fentanyl.

          Edwin Oliva, 28, was named Thursday in a superseding indictment with distribution of fentanyl resulting in death.

          Oliva has been in federal custody since his arrest in this case on March 6. He was subsequently charged in an indictment with three felonies: possession with intent to distribute more than four pounds of heroin, possession with intent to distribute fentanyl, and carrying a firearm during and in relation to and possessing a firearm in furtherance of a drug trafficking crime. The three counts in the initial indictment are included in the four-count superseding indictment.

          According to an affidavit in support of a criminal complaint filed in the case, Oliva told law enforcement officials that the victim was an acquaintance who arrived at his residence shortly after midnight on February 28. Oliva allegedly gave the victim drugs, which resulted in a fatal overdose. Oliva admitted to law enforcement that fentanyl was the drug he gave the victim, according to court documents. A pathologist employed by the Los Angeles County Medical Examiner-Coroner concluded the victim died as a result of the effects of fentanyl and alcohol.

          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.

          Oliva previously entered not guilty to the charges in the initial indictment. He will be arraigned early next month on the superseding indictment. United States District Judge André Birotte Jr. previously scheduled a trial date of November 5 for this case.

          If convicted of charge of distribution of fentanyl resulting in death, Oliva would face a mandatory minimum sentence of 20 years in federal prison and a statutory maximum sentence of life imprisonment. Additionally, the heroin-related offense carries a mandatory minimum 10-year sentence and a potential sentence of life in prison.

          This matter was investigated by the Drug Enforcement Administration and the Montebello Police Department.

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

          RIVERSIDE, California – Three San Bernardino County women were arrested today on federal charges that allege a scheme in which they fraudulently collected nearly $1 million in federal student aid for 235 “students” – the vast majority of whom never attended any classes.

          A 21-count indictment returned by a federal grand jury on June 5 charges the defendants with defrauding the United States Department of Education by falsely claiming the “students” would attend Fullerton College and other schools. Some of the applications for student aid were filed under the names of stolen identities and at least two were filed on behalf of inmates in California state prisons.

          The three defendants arrested this morning are:

• Sparkle Shorale Nelson, 32, of Highland;
• Shykeena Monique Johnson, 31, a.k.a. “Shy,” of Apple Valley; and
• Jerrika Eldrena Lashay Johnson, 37, a.k.a. “Muffin,” “Big Sis,” and “Jerrika Carter,” of Apple Valley.

          All three are scheduled to be arraigned this afternoon in United States District Court in Riverside.

          According to the indictment, the women and unindicted co-conspirators obtained personal identifying information, including names and Social Security numbers, that the defendants used to file the Free Application for Federal Student Aid (FAFSA), a form completed by prospective and current university students to determine their eligibility for financial aid.

          As a result of the applications filed in 2013 and 2014, the Department of Education approved financial aid for the “straw students.” After Fullerton College and other schools deducted student fees, the schools disbursed money to the “students” via debit cards that were mailed to the defendants and their co-conspirators, the indictment alleges.

          In August 2014, according to the indictment, Nelson submitted a FAFSA form online to the Education Department that used the personal identifying information of a straw student who in fact was a state prisoner. In September 2014, Nelson allegedly activated a debit card in the prisoner’s name and subsequently used the debit card to make a $370 payment to her Southern California Edison account.

          At least $1,089,856 in student aid funds were disbursed by the U.S. Department of Education to Fullerton College for the 235 straw students associated with this fraudulent scheme. The school then placed $977,792 on debit cards that were sent to the defendants and their associates.

          All three defendants are charged with one count of conspiracy to commit mail fraud and wire fraud, four counts of mail fraud, and 11 counts of wire fraud. Nelson, Johnson and Carter each face additional counts of aggravated identity theft and financial aid fraud.

          If convicted on all the charges in the indictment, all three defendants would face statutory maximum sentences of more than 300 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.

          This case was investigated by the Department of Education Office of the Inspector General and the United States Postal Inspection Service.

          This matter is being prosecuted by Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office.

          LOS ANGELES – As part of a joint federal-state law enforcement action targeting the Rancho San Pedro street gang, authorities this morning unsealed two federal grand jury indictments that charge 14 members and associates of the gang with narcotics and firearms offenses.

          The main federal indictment, which charges 13 defendants, outlines a narcotics trafficking conspiracy in which gang members and their associates allegedly distributed methamphetamine, heroin, cocaine and opioids, while using violence and firearms to maintain their drug trafficking territory. The drugs – including up to one-pound quantities of methamphetamine – allegedly were often sold out of a hotel and two bars on Pacific Avenue in San Pedro.

          During this morning’s takedown, four of the federal defendants were arrested. Seven other defendants were already in state custody, and federal prosecutors will seek to have them brought into federal court. Three defendants are fugitives. Another 10 members and associates of the gang were arrested this morning pursuant to local charges.

          The narcotics trafficking indictment alleges that the Rancho San Pedro street gang operates under the control of the Mexican Mafia and often engaged in violence and intimidation in an effort to protect its territory. The gang collected “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.

          The lead defendant in the drug trafficking indictment – 32-year-old Robert “Stretch” Messersmith – allegedly oversaw the day-to-day operations of the gang and communicated with the incarcerated Mexican Mafia members about gang business. Messersmith also directly participated in narcotics transactions, according to the indictment.

          The indictment specifically accuses the defendants of participating in a series of narcotics transactions in 2017 and 2018, including a half-dozen sales involving 1 to 2 ounces of methamphetamine. The indictment also alleges several sales involving from one-half pound to one pound of methamphetamine.

          Communications intercepted by law enforcement during the investigation link certain members of the gang to murders, attacks on rival gang members and the disciplining of fellow gang members, one of whom allegedly bragged on social media about engaging in gang-related violence.

          During the investigation into the gang, law enforcement seized approximately 45 firearms, including semi-automatic rifles and handguns.

          The narcotics-trafficking indictment contains 26 felony counts. All 13 defendants are charged in a conspiracy to possess and distribute controlled substances. Various defendants are charged with substantive narcotics-trafficking offenses, and three defendants are charged with being felons in possession of firearms. If they were to be convicted in the narcotics-trafficking conspiracy, all 13 defendants would face potential life sentences in federal prison.

          The second federal indictment charges one member of Rancho San Pedro – gang shot caller Alexander Gallardo, 31 – with possessing ammunition after being convicted of a domestic violence offense, a charge that carries a statutory maximum penalty of 10 years in federal prison.

          The four defendants taken into federal custody this morning are expected to be arraigned on the indictments this afternoon in United States District Court in downtown Los Angeles.

          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 two federal indictments and the local cases against members and associates of the Rancho San Pedro gang are the result of an investigation by the Los Angeles Police Department and the Drug Enforcement Administration. The Bureau of Alcohol, Tobacco, Firearms and Explosives provided substantial support during the investigation.

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

          RIVERSIDE, California – A Salvadoran national who was deported from the United States in 2003 after being convicted of sexually abusing a child was indicted today by a federal grand jury on charges that he illegally reentered the United States and then posted child pornography on Facebook.

          José Ramón Aguilar-Moreno, 50, who recently has been living in Fontana, has been charged with four felonies: distribution of child pornography, possession of child pornography, failure to register as a sex offender, and being an illegal alien found in the United States following deportation.

          Aguilar-Moreno was arrested on June 13 pursuant to a criminal complaint previously filed in this case. His arraignment is scheduled for July 5 in United States District Court in Los Angeles.

          Aguilar-Moreno illegally entered the United States in 1986 and in 1995 he applied for relief from removal and requested asylum in the United States, according to an affidavit filed with a criminal complaint in the case. In 2000, Aguilar-Moreno was granted relief from deportation and asylum in the United States by the Immigration and Naturalization Service, the affidavit states.

          In August 2002, Aguilar-Moreno was convicted in San Bernardino County Superior Court of committing lewd and lascivious acts on a minor, for which he was sentenced to one year in state prison. In 2003, Aguilar-Moreno was booked into federal custody and was removed from the United States to El Salvador.

          In June 2018, Aguilar-Moreno, then residing in Fontana, allegedly knowingly distributed three videos depicting child pornography. Aguilar-Moreno used an alias, “Abel Aguilar,” and posted the videos on Facebook, which later notified the National Center for Missing and Exploited Children, court documents allege.

          If convicted of all charges, Aguilar-Moreno faces a statutory maximum sentence of 80 years in federal prison. He faces a mandatory minimum sentence of 15 years in federal prison on the distribution of child pornography charge and a 10-year mandatory minimum sentence on the child pornography possession charge.

          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.

          This matter was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the United States Marshals Service.

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

          LOS ANGELES – A New York man has been sentenced to 144 months in federal prison for being a high-level promoter of a fraudulent company that solicited more than $200 million for a business that purported to market online children’s educational courses, but was in fact nothing more than a pyramid scheme.

          Daliang “David” Guo, 56, of Hyde Park, New York, was sentenced at a Monday hearing by United States District Judge Dale S. Fischer.

          After a seven-day trial in September 2018, Guo was found guilty by a federal jury of conspiracy to commit wire fraud, and nine counts of wire fraud for participating in the scheme that solicited investments primarily from members of Chinese-American communities in Los Angeles, San Francisco and New York City.

          Guo and his co-conspirators made false representations about the Hong Kong-based company – known as CKB 168, but also sometimes known as CKBMax and Cyber Kids Best Education Limited. The false representations included claims that it generated substantial revenues from the sale of web-based children’s educational courses, that investments could be quickly liquidated for significant returns, that investors would get pre-initial public offering shares of CKB, and that the company would go public through an IPO. In reality, the only way for investors to earn any meaningful returns was for them to actively recruit new investors.

          Guo and his co-conspirators promoted CKB through YouTube videos and other postings on the internet, as well as through meetings with prospective investors and live presentations about the purported investment opportunity.

          Between mid-2011 and January 2014, Guo and his co-conspirators solicited investments in increments of $1,380, which gave investors “Profit Reward Points” they claimed were worth $750 in cash, would only increase in value, and could be converted to pre-IPO shares of CKB. Guo and his co-conspirators collected money from new investors and simply pocketed the cash to pay themselves the “commission” they earned from CKB, and lulled investors by providing them with essentially worthless Profit Reward Points.

          Guo and his group of promoters collected approximately $142 million out of the more than $200 million raised by CKB from investors.

          Guo’s four other co-defendants in this case have pleaded guilty to federal criminal charges and been sentenced to federal prison:

• Wen Chen “Wendy” Lee, 57, formerly of Rowland Heights, was sentenced to 21 months in federal prison;
• Chih Hsuan “Kiki” Lin, 54, formerly of Los Angeles and Las Vegas, was sentenced to 37 months in federal prison; and
• Cheong Wha “Heywood” Chang, 48, and his wife, Toni Tong Chen, 47, both formerly of Hacienda Heights, were sentenced to 12 months and one day, and 20 months in federal prison, respectively.

          This case was investigated by the Federal Bureau of Investigation. The Securities and Exchange Commission provided valuable assistance.

          This matter is being prosecuted by Assistant United States Attorney Ashwin Janakiram of the Major Frauds Section.

          LOS ANGELES – A former deputy with the Los Angeles County Sheriff’s Department was sentenced today to 12 months in federal prison for lying to FBI agents about the beating of a handcuffed man that took place in 2011 at Men’s Central Jail in downtown Los Angeles.

          Byron Dredd, 37, was found guilty by a federal jury in January of making false statements to the FBI. He was sentenced by United States District Judge Dale S. Fischer, who said that Dredd’s conduct was egregious because it was part of a cover-up and supported false criminal charges against the victim.

          According to evidence presented at Dredd’s four-day trial earlier this year, Dredd and five other deputies were assigned to the Visiting Center at Men’s Central Jail. On February 26, 2011, the victim went to the jail to visit his brother, who was in custody. Deputies handcuffed the victim and brought him to an employee break room because they suspected he was in possession of a mobile phone. Deputies then beat the victim, who remained defenseless with his arms handcuffed behind his back the entire time. Dredd witnessed the unjustified beating through a window from an adjacent room. As a result of false reports authored by Dredd and other deputies, the victim was charged with several crimes, including resisting an officer and battery. These charges later were dismissed.

          After the FBI opened a civil rights investigation into the assault, Dredd lied to the FBI during an interview on July 17, 2012. Dredd falsely told the FBI that the victim was the aggressor, that he saw the victim take a swing at a deputy, that the victim tried to push past a deputy in an attempt to escape, and that he saw the victim punch a deputy in the chest.

          In a previous trial in 2016, a jury was unable to reach a unanimous verdict against Dredd on the false statements. At that trial, Dredd was also acquitted of conspiring to violate the victim’s civil rights and obstructing a federal investigation.

          Previously in this investigation, five deputies who participated in the beating and cover-up of the handcuffed victim were convicted and sentenced to prison, including former Sergeant Eric Gonzalez, who is serving an eight-year prison term after being found guilty of violating the victim’s civil rights and falsifying reports.

          This case was investigated by the FBI, and is the last in a series of cases resulting from a larger investigation into corruption and civil rights abuses at county jail facilities in downtown Los Angeles. A total of 22 members of the Los Angeles County Sheriff’s Department were convicted of federal charges.

          This matter was prosecuted by Assistant United States Attorneys Veronica Dragalin and Agustin D. Orozco of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A Downey-based attorney pleaded guilty this afternoon to a federal narcotics distribution charge for illegally selling more than 1,000 oxycodone pills after offering the opioid drugs for sale on Craigslist.

          Jackie Ferrari, 36, a resident of Downey, pleaded guilty to one count of illegally distributing oxycodone.

          According to court documents, Ferrari sold a law enforcement source 50 oxycodone pills for $1,200 during a transaction on January 10. Ferrari was arrested in this case on January 18 after agreeing to sell the source another 180 pills for $4,100.

          The investigation into Ferrari began after a 22-year-old woman died in August 2018 of a fentanyl overdose, and text messages on the victim’s phone initially indicated that she may have purchased the narcotics from a drug trafficker associated with Ferrari. While investigators did not link Ferrari to that overdose death, they opened an investigation “based on evidence…that she is a large-scale trafficker in opiates via the website Craigslist” and information developed by two local police departments tying Ferrari to drug trafficking activities in late 2017, according to an affidavit filed in this case.

          Court documents describe how Ferrari posted ads on Craiglist offering oxycodone and other drugs under coded names such as “foxy roxy dolls,” which referred to Roxicodone, a short-acting version of oxycodone. In her plea agreement, Ferrari admitted informing customers that they would be required to ingest a pill in her presence, to verify that they were not law enforcement.

          As a result of today’s guilty plea, Ferrari will face a statutory maximum sentence of 20 years in federal prison when she is sentenced on October 21 by United States District Judge Michael W. Fitzgerald.

          The investigation into Ferrari is being conducted by the High Intensity Drug Trafficking Area (HIDTA) Task Force, which operates under the direction of the Drug Enforcement Administration. The investigation is being led by DEA agents and deputies with the Los Angeles County Sheriff’s Department.

          The Costa Mesa Police Department and the Cypress Police Department provided substantial assistance in the investigation.

          The case against Ferrari is being prosecuted by Assistant United States Attorneys Benjamin Barron, Chief of the Santa Ana Branch Office, and A. Carley Palmer of the International Narcotics, Money Laundering & Racketeering Section.

          LOS ANGELES – A San Pedro resident was found guilty of being the gunman in the violent, takeover-style robbery of a Gardena credit union in which a credit union employee helped plan and execute the heist that netted $311,300.

          Toyrieon Sessions, 29, a.k.a. “Phat” and “PhatStax,” was found guilty of three felonies: conspiracy to commit armed bank robbery, armed bank robbery, and brandishing a firearm in furtherance of a crime of violence.

          According to evidence presented at his four-day trial, Sessions was the gunman in the robbery of Northrop Grumman Federal Credit Union (“NGFCU”) on April 21, 2017. In addition to Sessions, the robbery involved two conspirators who previously have been convicted for their roles in the robbery:

• Daronnie Thompkins, 31, of Los Angeles, who organized the robbery, recruited Sessions to be the gunman, and knew the layout of the credit union; and
• Iris Lester, 28, of Los Angeles, a NGFCU employee who was Thompkins’ girlfriend at the time.

          On the day of the robbery, Sessions entered the office building in which the credit union is located and walked past NGFCU’s main entrance, entering a side hallway directly to a men’s bathroom, according to trial evidence. Sessions waited in the men’s bathroom until Lester and another NGFCU employee exited the women’s bathroom. At that point, Sessions brandished a semi-automatic handgun and used it to force Lester, who was pretending to be a victim, and the other employee to provide access to the credit union’s vault room.

          Once inside the vault room, Lester and the other NGFCU employee realized they did not have the key to open the vault. According to the evidence, Sessions allowed Lester to exit the vault room – but, instead of escaping, Lester returned with another credit union employee who was supposed to have the vault key. Lester then left the room a second time and retrieved the keys, but did not hit any panic buttons.

          When Lester returned, Sessions forced her and the two other credit union employees onto their knees while pointing the handgun at each of them. Sessions stole a total of $311,300 from the credit union and placed the cash in a black trash bag before exiting the vault room and fleeing the scene in a silver Dodge Avenger.

          United States District Judge André Birotte Jr., has scheduled an October 4 sentencing hearing, where Sessions will face a statutory maximum sentence of life in federal prison.

          After a bench trial in August 2018, Thompkins was convicted of conspiracy and armed bank robbery. Judge Birotte later sentenced him to nine years in federal prison.

          Lester has pleaded guilty to criminal charges in the case. Her sentencing hearing is scheduled for October 25.

          This matter was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.

          This case is being prosecuted by Assistant United States Attorneys Jeffrey M. Chemerinsky and Bruce K. Riordan of the Violent and Organized Crime Section.

          SANTA ANA, California – A psychiatrist who practiced at a Santa Ana clinic has been sentenced to 57 months in federal prison for issuing prescriptions for dangerous and addictive narcotics, such as the opioid oxycodone, without a medical purpose, to a drug dealer in exchange for cash, knowing the drugs would be sold on the street.

          Dr. Robert Tinoco Perez, 57, of Westminster, was sentenced at a hearing on Monday afternoon by United States District Judge Andrew J. Guilford. Perez pleaded guilty on February 25 to one felony count of conspiracy to distribute controlled substances.

          Perez wrote prescriptions for “patients” he had never met or examined, including an undercover officer. Perez also created fictitious medical records for drug customers to provide justification for their prescriptions.

          Perez used bogus patient names to write the fraudulent prescriptions to co-defendant William Jason Plumley, 41, of Huntington Beach, who sold the prescribed drugs – and also heroin and methamphetamine – to an undercover law enforcement officer. Plumley now is serving a 70-month federal prison sentence for selling prescriptions written by Perez as well as the drugs filled from Perez’s prescriptions. Plumley pleaded guilty in October 2018 to one count of conspiracy to distribute controlled substances.

          The drugs prescribed illegally by Perez included oxycodone and hydrocodone (both opioid pain medications), amphetamine salts (sold primarily under the brand name Adderall), and alprazolam (sold primarily under the brand name Xanax).

          Perez admitted in his plea agreement that between December 2017 and January 2018, he wrote prescriptions for fictitious patients for 240 pills of Adderall, 300 pills of Roxicodone (oxycodone), and 250 pills of Norco (hydrocodone). Perez sold the prescriptions to Plumley for at least $1,400, according to Perez’s plea agreement.

          This case is part of Operation Hypocritical Oath, a series of investigations led by the Drug Enforcement Administration targeting medical professionals with criminal charges, search warrants, and administrative actions that have led to the revocation of DEA licenses.

          This case is the result of an investigation by the Drug Enforcement Administration and the Costa Mesa Police Department.

          The case is being prosecuted by Assistant United States Attorney Rosalind Wang of the Santa Ana Branch Office.

          SANTA ANA, California – An Irvine man who was part of a father-and-son crew that illegally distributed methamphetamine on one of the world’s largest dark-net marketplaces pleaded guilty today to a federal criminal drug charge, 11 days after a federal jury found his father guilty of drug charges.

          William Thomas Glarner IV, a.k.a. “Billy,” 34, pleaded guilty to one felony count of possession with intent to distribute methamphetamine. United States District Judge David O. Carter has scheduled a September 23 sentencing hearing, where Glarner will face a mandatory minimum sentence of 10 years in federal prison and a statutory maximum sentence of life in prison.

          Glarner admitted in his plea agreement that he used at least three monikers to obscure his true identity on the dark-net, including on the “Tor” dark-net browser, where he conducted more than 1,500 sales of controlled substances, including methamphetamine. The term “dark-net” refers to computer networks that utilize some of the Internet, but provide greater anonymity, allowing vendors to sell goods and services – such as illegal drug sales – often in exchange for virtual currency.

          Glarner obtained drugs from various sources, and along with others, mailed drugs to dark-net customers nationwide by using such services as the United States Postal Service and commercial couriers, according to the plea agreement. A search warrant executed at Glarner’s residence and on his car on March 14 resulted in law enforcement officials recovering 2.5 kilograms (5.5 pounds) of methamphetamine, court papers state. Glarner admitted that some of this methamphetamine was packaged for purposes of distribution for orders placed on the dark-net.

          On June 6, Glarner’s father, William Thomas Glarner III, 65, of Huntington Beach, who had been identified as part of the overall investigation into his son’s dark-net activity and charged separately, was found guilty by a jury of three methamphetamine distribution-related charges after a four-day trial. Glarner III was observed mailing packages of methamphetamine, including one to a dark-net customer, according to evidence presented at trial and in court papers. A search warrant executed on March 14 on Glarner III and his vehicle resulted in the seizure of over 1.4 kilograms (3.1 pounds) of methamphetamine, as presented during trial. He is scheduled to be sentenced on September 9, where he faces a statutory maximum sentence of life imprisonment and a mandatory minimum sentence of 10 years in federal prison.

          This case was investigated by U.S. Customs and Immigration Enforcement’s Homeland Security Investigations and the United States Postal Inspection Service. The La Habra Police Department assisted with the investigation as did the Costa Mesa Police Department, the Brea Police Department, the Cypress Police Department, and the Cass County Drug Task Force of North Dakota.

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

          LOS ANGELES – A Greek cargo ship operator and two chief engineers of one of its ships have been named in a five-count federal indictment charging them with failing to record the illegal dumping of oily waste into international waters and then obstructing justice by ordering the ship’s crew to lie about it.

          A federal grand jury returned the indictment on Thursday against:

• Capital Ship Management Corporation, a ship management company based in Piraeus, Greece;
• Ioan Luca, 54, a Romanian national and from October 2018 to January 2019 the chief engineer of the M/V CMA CGM Amazon, a Liberian-flagged container ship that is nearly 1,000 feet long and is managed by Capital Ship Management Corp.; and
• Ionel Surla, 60, a Romanian national and the chief engineer of the Amazon from May 2018 to October 2018, and who is believed to be in Romania.

          The defendants are charged with multiple felonies, including conspiracy to fail to maintain an accurate oil record book and to defraud the United States, failure to maintain an accurate oil record book, falsification of records in a matter of federal administration, witness tampering, and obstruction of justice.

          Pursuant to international treaties and U.S. law, all large ships, such as the Amazon, are required to use pollution-control technology, including an oily water separator, to remove oil from bilge water that is discharged into the ocean.

          The indictment alleges that Luca and, previously, Surla ordered crew members to use a portable pump and flexible hoses in the ship’s engine room to transfer oil-contaminated bilge water to a tank designed to hold clean water, then dispose of the water directly overboard into international waters, avoiding use of the oily water separator.

          Luca and Surla then failed to record such discharges in the ship’s oil record book, a document required by federal law. The Amazon’s ports of call include various ports in Asia, Egypt, and Canada, as well as the Port of Los Angeles, according to the indictment. While at the Port of Los Angeles on January 11, the ship presented the false oil record book to U.S. Coast Guard inspectors during an inspection, the indictment alleges.

          Capital Ship Management and Luca also have been charged with obstruction of justice and witness tampering for allegedly instructing crew members to lie to the Coast Guard about events that occurred on the ship while at sea. In conducting the investigation, Coast Guard personnel relied on the statements of the ship’s crew as well as documents, the indictment states.

          If convicted of all charges, Luca faces a statutory maximum sentence of 61 years in federal prison while Surla faces a statutory maximum sentence of 11 years in federal prison. Capital Ship Management and Luca, who was arrested last month and is free on bond, were previously named in a criminal complaint.

          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.

          In a related case, Marian Gavriluta-Strat, 37, a Romanian national and the Amazon’s second engineer, has agreed to plead guilty to an information charging him with failure and causing the failure to maintain an accurate oil record book. Gavriluta-Strat is scheduled to enter a guilty plea to the charges on June 19. He faces a statutory maximum sentence of six years in federal prison.

          This case was investigated by the United States Coast Guard Investigative Service.

          This matter is being prosecuted by Assistant United States Attorneys Heather C. Gorman, Erik M. Silber, and Paul G. Stern of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – An Inland Empire man who operated a series of companies that purported to provide debt-relief, primarily to distressed homeowners, has been found guilty of defrauding victims who paid thousands of dollars after attending seminars that promoted a “Free and Clear” program pitched by the defendant and his salespeople.

          James Ignatius Diamond, who went by the name “Jim Diamond,” 69, of Riverside, was found guilty of 30 fraud charges late Wednesday in United States District Court.

          “Between 2010 and 2013, [Diamond] sold fraudulent debt-elimination services to desperate victims thrown into financial crisis by the Great Recession,” according to court documents. Diamond owned and operated a number of businesses – including the Riverside-based Transmitting Assets, Inc., Operation Safe Haven, Buyer Beware, and Unlimited Logistics Corporation – that he claimed could wipe out the debts of homeowners behind on their mortgage payments, as well as other debts.

          The evidence presented to the federal jury over the course of six days showed that the “Diamond Home Reclamation Method” was pitched to solicit victims with false promises that Diamond’s methods would entirely eliminate their mortgages and allow people to own their homes “free and clear.”

          Relying on the false representations, victims paid substantial fees, including an upfront fee – typically $3,500, payable only in cash, money orders or cashier’s checks – periodic program fees, and inflated notary fees. After paying the upfront fee, victims were required to sign and notarize documents, which they were instructed to send to financial institutions and government agencies – documents prosecutors described in court documents as “fraudulent and nonsensical.”

          When victims of the scheme in 2011 began receiving mortgage default notices and lost their homes, Diamond launched another debt-elimination scam called the “EFT Program,” under which Diamond claimed to be able to eliminate victims’ debt with “EFT” checks. This scam required victims to pay Diamond 13 percent of the debt that was to be eliminated.

          Diamond knew that his methods did nothing to discharge debts. In fact, when FBI agents searched his business in 2013, they recovered hundreds of “rejection letters” from financial institutions indicating that documents submitted as part of the debt-elimination programs did nothing to help the victims. Diamond’s email accounts contained numerous complaints and refund requests from victims – all of which he ignored.

          Investigators have identified more than 500 victims. The victims’ total losses exceeded $1.6 million. Diamond spent victims’ money on luxury hotels, jewelry, alcohol and living expenses.

          After deliberating for about three hours, the jury convicted Diamond of 15 counts of mail fraud affecting a financial institution and 15 counts of wire fraud affecting a financial institution. Defendant was immediately remanded into custody upon conviction, with United States District Judge R. Gary Klausner citing defendant’s extremist anti-government views as a concern. As a result of the conviction, Diamond will face a statutory maximum sentence of 30 years for each of the 30 counts.

          Diamond is scheduled to be sentenced by Judge Klausner on September 9.

          Previously in this case, a Diamond associate – Tricia Mae Gruber, 43, of Riverside – pleaded guilty to conspiracy to commit mail fraud and admitted helping operate the scheme.

          This case was investigated by the Federal Bureau of Investigation.

          This matter is being prosecuted by Assistant United States Attorneys Marina A. Torres and Kevin B. Reidy of the General Crimes Section.

          RIVERSIDE, California – A former financial advisor with a lengthy disciplinary history was arrested today pursuant to a federal grand jury indictment charging him with running a $14.5 million real estate fraud scheme by inducing victims to invest in his businesses and then using their money for personal expenses, including the down payment on a home in Upland.

          Paul Ricky Mata, 56, a former resident of Upland who now lives in Oceanside, is scheduled to be arraigned on the indictment this afternoon in United States District Court in Riverside.

          Mata is named in a 17-count indictment that was returned by a federal grand jury on June 5. The indictment charges Mata with mail fraud, wire fraud, and making false statements in a bankruptcy proceeding, among other offenses. If convicted of all 17 counts, he would face a statutory maximum sentence of 295 years in federal prison.

          According to the indictment, from August 2008 to September 2015, Mata caused victims to invest in several of his businesses, including Secured Capital, Logos Real Estate and other ventures. Mata failed to disclose his disciplinary history to his victims, including his 2009 termination from Ameriprise Financial Services, Inc. for violating company policies, the indictment alleges. Mata also allegedly failed to disclose other disciplinary actions against him, including ones filed by the states of Nevada and California, and a one-year suspension and $10,000 fine imposed by the Financial Industry Regulatory Authority stemming as a result of his Ameriprise misconduct.

          As part of the alleged scheme to defraud, Mata induced his victims to invest their money in Secured Capital, a real estate investment program that purportedly invested in “government-backed tax liens,” “asset-backed deed certificates,” and distressed commercial and residential properties. Mata guaranteed investors that Secured Capital’s investment return generated annual rates of 5 percent to 10 percent, when in fact, investments in Secured Capital had significant loss risks and did not make a profit from 2011 onward, the indictment alleges.

          Instead of properly investing his clients’ money, Mata allegedly used Secured Capital investor funds to pay his personal expenses, including a $197,000 down payment on his personal residence, loans to himself and to other entities he created, and $370,000 that was transferred into his personal bank accounts.

          Mata also is charged with making false statements on bankruptcy court documents, and fraudulently concealing from the government and his creditors personal property, including a 2008 Mini Cooper and a 2001 Jeep.

          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.

          In 2015, the U.S. Securities and Exchange Commission filed a civil action against Mata and two business associates, alleging that they operated the real estate scam. Later that year, the SEC obtained a judgment against Mata that enjoined him from violating securities laws and ordered him to pay $11,748,831.

          This matter was investigated by the Federal Bureau of Investigation.

          This case is being prosecuted by Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office. Assistant United States Attorney Jonathan Galatzan is handling the asset forfeiture portion of the case.

          LOS ANGELES – A trucking company has been ordered to pay $3 million for illegally transporting more than 64 tons of hazardous, lead-contaminated plastic battery chips from the now-closed Exide Technologies battery recycling facility in Vernon to a company in Bakersfield.

          Wiley Sanders Truck Lines, Inc., which is based in Troy, Alabama, was ordered Monday to pay the money as part of a sentence that placed the company on probation for three years.

          United States District Judge Percy Anderson imposed the sentence, describing the company’s conduct as “an environmental disaster for Vernon and the surrounding area.”

          As part of the sentence, Judge Anderson ordered Wiley Sanders to pay a $1.5 million fine – the statutory maximum – and a $1.5 million community service payment to the Exide Residential Assistance Fund established by the Los Angeles County Department of Public Health to support residents affected by lead contamination near the facility.

          On February 25, the company pleaded guilty to three felony counts of illegal transportation of hazardous materials.

          At peak operation, Exide’s facility received approximately 40,000 lead-acid batteries per day, according to the government’s sentencing memorandum. During the battery recycling process at the facility, the batteries were crushed, broken apart in a hammer mill, then separated into their primary component streams – lead, acid and plastic. The lead and acid were dealt with separately, while the plastic chips were rinsed with water in an attempt to remove lead and other materials. Wiley Sanders then transported the wet battery plastic chips – usually 40,000 pounds at a time – to a facility in Bakersfield, where the chips were repurposed into resin-coated plastic pellets that could be used to manufacture new batteries and other products.

          Wiley Sanders specifically admitted in its plea agreement that, on three occasions between November 2013 and March 2014, it willfully and recklessly transported a total of 128,840 pounds (64.42 tons) of lead-contaminated plastic chips from Vernon to Bakersfield. The company also admitted knowing that the trailers it used to transport the battery plastic chips did not contain any lining or inner packing material to prevent liquids and semi-solids from leaking through cracks and other openings in the trailers.

          Because of its conduct, lead-contaminated residue leaked out of the trailers when Wiley Sanders drivers transported the battery chips from Vernon to Bakersfield. Wiley Sanders truck drivers occasionally transported the semi-trailers on public roads before the plastic chips had dried, despite the fact that the lead-contaminated chips and resulting lead-contaminated liquid residue would leak out of the trailers.

          There is no known safe level of lead in human blood.

          In 2015, Exide Technologies reached an agreement with the United States government that called for the battery manufacturing company to close its recycling facility in Vernon and pay an estimated $50 million to clean-up the site and surrounding neighborhoods which have been affected by environmental toxins for decades.

          This matter was investigated by the United States Environmental Protection Agency, Criminal Investigation Division and the United States Department of Transportation, Office of Inspector General. The California Department of Toxic Substances Control provided assistance.

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

          LOS ANGELES – Two owners and operators of a home health agency were sentenced to 10 years and 6½ years in federal prison on Monday for their roles in a scheme to bill Medicare for various items and services – including home health services, diagnostic testing, medical procedures and durable medical equipment – that were not medically necessary and/or were not provided.

          Angela Avetisyan, 43, of Glendale, was sentenced to 120 months in prison by United States District Judge Otis D. Wright II, who also ordered Avetisyan to pay $4,283,674 in restitution and to forfeit all right, title, and interest in $172,000 seized by the government in May 2014, as well as six real properties purchased with fraud proceeds. The Court ordered Avetisyan to make an immediate partial restitution payment of $10,000.

          Ashot Minasyan, 61, of North Hollywood, was sentenced to 78 months in prison by Judge Wright, who also ordered Minasyan to pay $4,283,674 in restitution and to forfeit all right, title, and interest in the same $172,000 and six real properties. The Court ordered Minasyan to make an immediate partial restitution payment of $100,000.

          Avetisyan and Minasyan were charged along with Robert Glazer, 73, and Marina Merino, 62, both of Los Angeles, in a second superseding indictment returned in June 2015. On June 7, 2019, co-defendants Glazer and Merino were found guilty after a seven-day trial of conspiracy to commit health care fraud and health care fraud.

          Avetisyan and Minasyan each pleaded guilty on Oct. 9, 2018, to one count of conspiracy to commit health care fraud. As part of their guilty pleas, Avetisyan and Minasyan admitted that, as co-owners and operators of the Los Angeles-based Fifth Avenue Home Health, they engaged in a conspiracy with Glazer, Merino and others to recruit Medicare patients to Glazer’s clinic so that Glazer could use those patients’ information to bill for medically unnecessary outpatient clinic services and refer those patients for medically unnecessary home health services from Fifth Avenue and other home health agencies. Avetisyan and Minasyan further admitted that they paid Merino and other patient recruiters illegal kickbacks to bring Medicare patients to the Glazer clinic.

          As found at sentencing by the Court, Avetisyan and Minasyan, along with their co-conspirators, submitted and caused to be submitted false and fraudulent claims for home health services that were medically unnecessary, for services that were not provided and for claims obtained by the payment of illegal kickbacks.

          This case was investigated by the United States Department of Health and Human Services, Office of Inspector General; the FBI; and IRS-Criminal Investigation.

          Justice Department Trial Attorneys Claire Yan, Robyn N. Pullio and Emily Z. Culbertson of the Criminal Division’s Fraud Section are prosecuting the case. The Asset Forfeiture Section of the U.S. Attorney’s Office for the Central District of California is handling the asset forfeiture aspects of the case.

          The Fraud Section leads the Medicare Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

Two owners and operators of a Los Angeles, California, home health agency were sentenced to 120 and 78 months in prison yesterday for their roles in a scheme to bill Medicare for various items and services, including home health services, diagnostic testing, medical procedures and durable medical equipment that were not medically necessary and/or were not provided.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Regional Office, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division and Special Agent in Charge Ryan Korner of the IRS Criminal Investigations’ (IRS-CI) Los Angeles Field Office made the announcement.

Angela Avetisyan, 43, of Glendale, California, was sentenced to 120 months in prison by U.S. District Judge Otis D. Wright II of the Central District of California, who also ordered Avetisyan to pay $4,283,674 in restitution and to forfeit all right, title, and interest in $172,000 seized by the government in May 2014, as well as six real properties purchased with fraud proceeds.  The Court ordered Avetisyan to make an immediate partial restitution payment of $10,000.

Ashot Minasyan, 61, of North Hollywood, California, was sentenced to 78 months in prison by Judge Wright, who also ordered Minasyan to pay $4,283,674 in restitution and to forfeit all right, title, and interest in the same $172,000 and six real properties.  The Court ordered Minasyan to make an immediate partial restitution payment of $100,000. 

Avetisyan and Minasyan were charged along with Robert Glazer, 73, and Marina Merino, 62, both of Los Angeles, in a second superseding indictment returned in June 2015.  On June 7, 2019, co-defendants Glazer and Merino were found guilty after a seven day trial of conspiracy to commit health care fraud and health care fraud.

Avetisyan and Minasyan each pleaded guilty on Oct. 9, 2018, to one count of conspiracy to commit health care fraud.  As part of their guilty pleas, Avetisyan and Minasyan admitted that as co-owners and operators of Fifth Avenue Home Health (Fifth Avenue), a home health agency located in Los Angeles, they engaged in a conspiracy with Glazer, Merino and others to recruit Medicare patients to Glazer’s clinic so that Glazer could use those patients’ information to bill for medically unnecessary outpatient clinic services and refer those patients for medically unnecessary home health services from Fifth Avenue and other home health agencies.  Avetisyan and Minasyan further admitted that they paid Merino and other patient recruiters illegal kickbacks to bring Medicare patients to the Glazer clinic. 

As found at sentencing by the Court, Avetisyan and Minasyan, along with their co-conspirators, submitted and caused to be submitted false and fraudulent claims for home health services that were medically unnecessary, for services that were not provided and for claims obtained by the payment of illegal kickbacks.   

This case was investigated by the HHS-OIG, the FBI and IRS-CI.  Trial Attorneys Claire Yan, Robyn N. Pullio and Emily Z. Culbertson of the Criminal Division’s Fraud Section are prosecuting the case.  The Asset Forfeiture Section of the U.S. Attorney’s Office for the Central District of California is handling the asset forfeiture aspects of the case.

The Fraud Section leads the Medicare Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

To learn more about the Health Care Fraud Prevention and Enforcement Action Team (HEAT), go to: www.stopmedicarefraud.gov.

          LOS ANGELES – An Irvine resident who sold narcotics on one of the dark-net’s largest marketplaces has been sentenced to 120 months in federal prison for illegally distributing drugs.

          Tyler Reeves, 29, who sold narcotics under the moniker “Platinum45,” was sentenced on Monday by United States District Judge James V. Selna. In addition to the 10-year prison term, Judge Selna ordered Reeves to pay a $15,000 fine.

          The 10-year sentence resulted from Reeves pleading guilty in March to distributing methamphetamine and money laundering.

          From mid-2017 until September 2018, Reeves illegally sold narcotics – including prescription painkillers, stimulants and sedatives, as well as methamphetamine – on the dark web marketplace that was known as Wall Street Market, a now-defunct online bazaar that was operated by three German nationals who currently face charges in the United States and in Germany.

          Reeves – who was one of the top five vendors on Wall Street Market – sold narcotics to nearly 300 customers around the globe and offered to sell as much as a kilogram of methamphetamine. Reeves’ customers included undercover law enforcement officers, who made six purchases from Platinum45, including one transaction in which Reeves shipped two ounces of methamphetamine in exchange for $2,230 in virtual currency, a sale that forms the basis of the first charge he admitted.

          The money laundering charge stems from Reeves accepting Bitcoin as payment and converting that cryptocurrency into fiat U.S. money.

          “On September 20, 2018, law enforcement executed a search warrant at defendant’s residence. At his residence, [Reeves] possessed not only illegal controlled substances, such as methamphetamine and oxycodone (prescribed to defendant), but he also possessed 13 unserialized firearms, and 14 unserialized silencers, which are used to suppress the sound of a gunshot,” prosecutors wrote in a sentencing memorandum. “Defendant purchased the parts for these firearms online and manufactured these silencers and firearms. In addition to the drugs and firearms, defendant possessed extensive computing equipment, a Trezor hardware wallet (used for storing cryptocurrency), and gold and silver bars.”

          This matter was investigated by the Drug Enforcement Administration, the Federal Bureau of Investigation, the United States Postal Inspection Service, and IRS – Criminal Investigation. The Irvine Police Department provided assistance.

          The case against Reeves was prosecuted by Assistant United States Attorneys Ryan White, Chief of the Cyber and Intellectual Property Crimes Section, and Puneet Kakkar of the International Narcotics, Money Laundering, and Racketeering Section.

          LOS ANGELES – A former West Covina resident was sentenced today to 300 months in federal prison for uploading images of child pornography to a Russian photo-sharing website and publishing an advertisement that sought to exchange sexually-explicit images of children.

          Christopher Clay Roman-Tuttle, 33, now of Spokane, Washington, who also uses the name Christopher Clay Tuttle, was sentenced by United States District Judge Percy Anderson. Once he completes the prison sentence, Tuttle will be required to register as a sex offender and will be on supervised release for the rest of his life.

          Roman-Tuttle pleaded guilty in March to one count of advertising child pornography, which carries a mandatory minimum penalty of 15 years in prison.

          When he pleaded guilty, Roman-Tuttle admitted that he created an online account in 2015 that he used to publish an advertisement seeking to receive, exchange and distribute child pornography. He further admitted that he posted two photo albums – one containing non-pornographic images of a minor known to him, and one of which contained images of unknown children being sexually exploited. Roman-Tuttle advertised these images and sought to obtain additional images in a statement, which read, in part: “Preteens and tween’s in diapers is cool too…. I’d love to meet up with a parent that wants to share their daughter (of course id make it worth their wile).”

          In response to the advertisement, Roman-Tuttle received numerous emails over the course of two days from dozens of individuals seeking to exchange child pornography with him, and many of these individuals sent him digital files of child pornography. Roman-Tuttle admitted sending child pornography to many of these individuals. In emails to some of these other individuals, Roman-Tuttle described his desire to sexually abuse children, including the minor known to him, whom he admitted to having sexually abused in the past, according to his plea agreement.

          “Based on defendant’s online activity, it is clear that defendant has a sexual interest in children, and used child pornography to seek out individuals who would allow him sexual access to other children,” prosecutors wrote in a sentencing memo filed with the court. “In aid of this quest, defendant treated images of sexually-exploited children as currency, offering to trade images and videos from his collection to obtain his preferred images of girls between five and eight years old.”

          In his plea agreement, Roman-Tuttle also admitted possessing more than 9,000 images and 330 videos of child pornography on his computer and on other devices, including images depicting the sexual abuse and exploitation of infants or toddlers. He also admitted to knowingly possessing a sexually explicit image of the minor known to him.

          This matter was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

          This case was prosecuted by Assistant United States Attorney Damaris Diaz of the Violent and Organized Crime Section.

          LOS ANGELES – Two men who formerly owned a T-Mobile retail store in Eagle Rock were arrested this morning on federal charges that allege a scheme to use stolen T-Mobile employee credentials to illegally infiltrate the mobile phone company’s internal computer systems to “unlock” cell phones so they could be used on any carrier’s network. The defendants were arrested pursuant to a 21-count grand jury indictment outlining the scheme that investigators believe earned the two men more than $25 million.

          Argishti Khudaverdyan, 41, of Burbank, and Alen Gharehbagloo, 40, of La Cañada Flintridge, are charged with multiple felonies, including conspiracy to commit wire fraud, wire fraud, bank fraud, computer fraud and money laundering. The indictment also seeks the forfeiture of more than $2.25 million seized from several bank accounts and residential properties allegedly purchased with ill-gotten gains.

          Khudaverdyan and Gharehbagloo are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          According to the indictment, for the first six months of 2017, Khudaverdyan and Gharehbagloo were co-owners of Top Tier Solutions, Inc., a T-Mobile premium retail store in the Eagle Rock Plaza in Northeastern Los Angeles. During this time, most cellular phone companies – including T-Mobile – “locked” their customers’ phones so they could be used only on the company’s network until the customers’ phone-purchase and service contracts had been fulfilled. If customers wanted to switch to a different carrier, their phones had to be “unlocked.”

          Khudaverdyan and Gharehbagloo allegedly conspired to fraudulently unlock T-Mobile phones, which would allow T-Mobile customers to stop using T-Mobile’s services and thereby deprive T-Mobile of revenue generated from customers’ service contracts and equipment installment plans. The defendants also allegedly conspired to “whitelist” or “clean” phones that had been reported lost or stolen so they could be activated again.

          Between August 2014 and January 2019, Khudaverdyan and Gharehbagloo allegedly advertised their unlocking services through brokers, email solicitations and websites such as unlocks247.com. The defendants falsely claimed they provided “official” T-Mobile unlocks.

          In order to gain unauthorized access to T-Mobile’s protected internal computers, Khudaverdyan obtained T-Mobile employees’ credentials through various means, including phishing emails that appeared to be legitimate T-Mobile correspondence. The fraudulent emails were used by Khudaverdyan to deceive T-Mobile employees to log in with their employee credentials so that Khudaverdyan could harvest the employees’ information and fraudulently unlock the phones, according to the indictment. Khudaverdyan and Gharehbagloo, assisted by a co-conspirator, allegedly used the Wi-Fi access points inside T-Mobile Stores to log onto the company’s internal network using compromised employee credentials.

          Investigators have determined that Khudaverdyan and Gharehbagloo obtained more than $25 million for these illicit activities. They allegedly used these illegal proceeds to pay for, among other things, real properties in Burbank, Northridge and La Cañada Flintridge.

          The indictment in this case was returned by a federal grand jury on June 6 and unsealed today.

          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 Khudaverdyan is convicted of all 17 counts in which he is charged, he would face a statutory maximum of 237 years in federal prison. If convicted of all 15 counts with which he is charged, Gharehbagloo would face a statutory maximum of 235 years in federal prison.

          This matter is being investigated by the United States Secret Service Electronic Crimes Task Force (ECTF) in Los Angeles and IRS Criminal Investigation’s Western Area Cyber Crime Unit. The ECTF includes representatives of the Secret Service, the Federal Bureau of Investigation, the Los Angeles Police Department, the Los Angeles District Attorney’s Office, and the California Highway Patrol.

          This case is being prosecuted by Assistant United States Attorney Jennie L. Wang of the Cyber and Intellectual Property Crimes Section and Special Assistant United States Attorney Ryan Waters of the Asset Forfeiture Section.

A federal jury found a Los Angeles doctor and patient recruiter guilty today for their roles in a $33 million Medicare fraud scheme in which Medicare was billed for clinic, home health, hospice services and durable medical equipment that patients did not need or did not receive.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Field Office and Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of the Inspector General’s (HHS-OIG) Los Angeles Regional Office and Acting Special Agent in Charge Ryan L. Korner of the IRS Criminal Investigations of the Los Angeles Field Office made the announcement.

Following a seven-day trial, Robert Glazer, M.D., 73, of Los Angeles, California, the owner and operator of the Glazer Clinic located in Los Angeles, California, was found guilty of one count of conspiracy to commit health care fraud and 12 counts of health care fraud.  Co-defendant Marina Merino, 62, of Los Angeles, California, a marketer who recruited patients in exchange for kickback payments, was convicted of one count of conspiracy to commit health care fraud and eight counts of health care fraud.  Glazer and Merino are expected to be sentenced on Sept. 9, 2019, by U.S. District Judge Otis D. Wright II of the Central District of California, who presided over the trial.

Glazer and Merino were charged in a June 2015 superseding indictment, along with Angela Avetisyan, the officer manager of Glazer Clinic and co-owner of Fifth Avenue Home Health located in Los Angeles, California (Fifth Avenue), and Ashot Minasyan, co-owner of Fifth Avenue.

According to the evidence presented at trial, Merino and other marketers received payments from Avetisyan and Minasyan to recruit Medicare beneficiaries to the Glazer Clinic.   Thereafter, Glazer billed Medicare for office services and tests that patients did not need or did not receive.  Glazer also referred Medicare patients for a variety of services, including home health and hospice services, as well as ordered durable medical equipment that patients did not need or did not receive.  Based on referrals from Glazer, Avetisyan and Minasyan billed Medicare for home health services that were not rendered or were not medically necessary through their company, Fifth Avenue.  Avetisyan, who worked as an office manager at the Glazer Clinic, also sold Glazer’s referrals to other home health and durable medical equipment agencies.  Together, the defendants and their co-conspirators submitted and caused to be submitted claims of approximately $33 million, of which Medicare paid approximately $22 million, the evidence showed. 

Avetisyan and Minasyan pleaded guilty in October 2018, and are awaiting sentencing.

The case was investigated by the FBI, HHS-OIG, the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California.  The case is being prosecuted by Trial Attorneys Claire Yan, Robyn Pullio, and Emily Culbertson of the Fraud Section.

The Fraud Section leads the Medicare Fraud Strike Force.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

          LOS ANGELES – A former California attorney has pleaded guilty to one felony count of wire fraud for falsely representing to his clients that he obtained favorable legal resolutions for them, and then perpetuating the scheme by delivering clients fraudulent documents, some with the forged signatures of judges, and by making disguised telephone calls to them.

          Shant Ohanian, 36, of Pasadena, entered his plea on Thursday before United States District Judge John A. Kronstadt, who scheduled a September 12 sentencing hearing. Ohanian faces a statutory maximum sentence of 20 years in federal prison.

          According to his plea agreement, Ohanian was a licensed California lawyer from January 2012 until he was disbarred in December 2017. Beginning in May 2012, Ohanian and his co-conspirator engaged in a scheme to defraud Ohanian’s clients by claiming he obtained favorable legal resolutions for them, when in fact the favorable resolutions had never been obtained, and, in many cases, Ohanian had never initiated a legal action, court papers state. In some cases, Ohanian’s deception caused his victim clients to entirely lose their opportunity to obtain significant financial or legal remedies as a result of wrongs suffered by them, according to court documents.

          Ohanian admitted in his plea agreement to defrauding multiple victims, including one victim who hired Ohanian in July 2013 to assist in the recovery of a $500,000 deposit related to a failed commercial real estate transaction for an Ontario shopping center. During the course of that litigation, Ohanian falsely informed the victim that the victim had prevailed in the case and would receive $1.2 million in damages plus penalties, the plea agreement states.

          In February 2016, Ohanian presented the victim with a counterfeit check for $1,925,477, which a bank later rejected, court papers state. Ohanian denied the check was counterfeit and in March 2016 he presented the victim with a check for $7,244,211, which also was rejected as counterfeit. Ohanian also falsely informed the victim that he was representing the victim in a parallel bankruptcy proceeding involving the Ontario shopping center, and he provided the victim phony bankruptcy court pleadings, including orders that contained the forged signature of a United States bankruptcy judge, according to court documents.

          Ohanian also admitted to making multiple spoofed telephone calls to the victim in which he claimed to be either bank officials or government officials. Ohanian also falsely informed the victim that he would acquire the Ontario shopping center at a discounted price in lieu of a cash settlement, and that the victim needed to make payments for back taxes and overdue mortgage payments in order to acquire the property, and to make “unpaid court fees” to Ohanian even though no such fees were owed, court documents state. Between March 2016 and September 2017, the victim paid Ohanian $2,839,875 based on Ohanian’s false representations that the money would be used to acquire the shopping center, according to court documents.

          Ohanian admitted to victimizing other clients, including a woman who suffered serious injuries in a fall at South Coast Plaza mall in Orange County, and for whom the statute of limitations had expired in the case before she realized Ohanian had 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 turned out to have been cancelled. He also falsely represented to clients seeking immigration relief that he had obtained important legal resolutions related to their ability to live and work in the U.S.

          Ohanian’s victims suffered actual losses of more than $4 million.

          Ohanian’s wife, Silva Sevlian Ohanian, has been charged with one count of wire fraud in a related case. She has pleaded not guilty to the charge and is currently scheduled to go to trial on July 16.

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

          This matter is being prosecuted by Aron Ketchel of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A federal jury has found an East Hollywood-based doctor and patient recruiter guilty today for their roles in a $33 million Medicare fraud scheme in which Medicare was billed for clinic, home health, hospice services and durable medical equipment that patients did not need or did not receive.

          Following a seven-day trial, Robert A. Glazer, of North Hollywood, the owner and operator of the East Hollywood-based Glazer Clinic, was found guilty of one count of conspiracy to commit health care fraud and 12 counts of health care fraud. Co-defendant Marina Merino, 62, of Los Angeles, a marketer who recruited patients in exchange for kickback payments, was found guilty of one count of conspiracy to commit health care fraud and eight counts of health care fraud.

          Glazer and Merino are scheduled to be sentenced on September 9 by United States District Judge Otis D. Wright II. Each defendant faces the possibility of decades in federal prison.

          Glazer and Merino were charged in a 2015 superseding indictment, along with Angela Avetisyan, the officer manager of Glazer Clinic and co-owner of Fifth Avenue Home Health located in East Hollywood, and Ashot Minasyan, co-owner of Fifth Avenue.

          According to the evidence presented at trial, Merino and other marketers received payments from Avetisyan and Minasyan to recruit Medicare beneficiaries to the Glazer Clinic. Thereafter, Glazer billed Medicare for office services and tests that patients did not need or did not receive. Glazer also referred Medicare patients for a variety of services, including home health and hospice services, as well as ordered durable medical equipment that patients did not need or did not receive. Based on referrals from Glazer, Avetisyan and Minasyan billed Medicare for home health services that were not rendered or were not medically necessary through their company, Fifth Avenue. Avetisyan, who worked as an office manager at the Glazer Clinic, also sold Glazer’s referrals to other home health and durable medical equipment agencies. Together, the defendants and their co-conspirators submitted and caused to be submitted claims of approximately $33 million, of which Medicare paid approximately $22 million, the evidence showed.

          Avetisyan and Minasyan pleaded guilty to conspiracy to commit health care fraud in October 2018, and are scheduled to be sentenced on June 10.

          The case was investigated by the FBI, HHS-OIG, the IRS, and was brought as part of the Medicare Fraud Strike Force, under the supervision of the Criminal Division’s Fraud Section and the U.S. Attorney’s Office for the Central District of California. The case is being prosecuted by Trial Attorneys Claire Yan, Robyn Pullio, and Emily Culbertson of the Fraud Section.

          The Fraud Section leads the Medicare Fraud Strike Force. Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion. In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with the HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

A Los Angeles, California-based dentist was sentenced to 40 months in prison today for his role in a $3.8 million health care fraud scheme in which he billed numerous dental insurance carriers for crowns and fillings that were never provided to patients. 

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Acting Assistant Director in Charge John P. Selleck of the FBI’s Washington, D.C. Field Office and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Field Office made the announcement.  

Benjamin Rosenberg, D.D.S., 59, of Los Angeles, was sentenced by U.S. District Judge John A. Kronstadt of the Central District of California, who also ordered Rosenberg to pay $1,414,011.59 in restitution.  Rosenberg pleaded guilty on Jan. 31, 2019, to one count of health care fraud. 

As part of his guilty plea, Rosenberg admitted that he submitted and caused to be submitted approximately $3,853,931 in false and fraudulent claims to various insurance companies for dental care that he knew had not been rendered.  Rosenberg further admitted that he submitted these false and fraudulent claims to Denti- Cal (California Medi-Cal Dental Program), Metlife, Anthem, Cigna, Delta Dental, Guardian, LMCO-DHA, United Healthcare and United Concordia (the carriers), which caused the carriers to pay Rosenberg approximately $1,415,011.

This case was investigated by the FBI.  Trial Attorney Emily Z. Culbertson of the Criminal Division’s Fraud Section is prosecuting the case. 

The Fraud Section leads the Medicare Strike Force, which is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

          LOS ANGELES – Opioid manufacturer Insys Therapeutics agreed to a global resolution to settle the government’s separate criminal and civil investigations, the Department of Justice announced today.

          As part of the civil resolution, Insys agreed to pay $195 million to settle allegations that it violated the False Claims Act. As part of the criminal resolution, Insys will enter into a deferred prosecution agreement with the government, Insys’s operating subsidiary will plead guilty to five counts of mail fraud, and the company will pay a $2 million fine and $28 million in forfeiture.

          Both the criminal and civil investigations stemmed from Insys’s payment of kickbacks and other unlawful marketing practices in connection with the marketing of Subsys. Insys’s drug Subsys is a sublingual fentanyl spray, a powerful, but highly addictive, opioid painkiller. In 2012, Subsys was approved by the Food and Drug Administration for the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy.

          In April 2018, the United States intervened in five qui tam lawsuits accusing Insys of violating the False Claims Act. In its complaint, the United States alleged that Insys, headquartered in Arizona, paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys for their patients. Many of these kickbacks took the form of speaker program payments for speeches to physicians that were, in fact, shams; jobs for the prescribers’ relatives and friends; and lavish meals and entertainment. The United States also alleged that Insys improperly encouraged physicians to prescribe Subsys for patients who did not have cancer, and lied to insurers about patients’ diagnoses in order to obtain reimbursement for Subsys prescriptions that had been written for Medicare and TRICARE beneficiaries.

          Today, an information charging Insys and its operating subsidiary with five counts of mail fraud was filed by the United States Attorney’s Office for the District of Massachusetts. According to the charging document, from August 2012 to June 2015, Insys began using “speaker programs” purportedly to increase brand awareness of Subsys through peer-to-peer educational lunches and dinners.

          However, the programs were actually used as a vehicle to pay bribes and kickbacks to targeted practitioners in exchange for increased Subsys prescriptions to patients and for increased dosage of those prescriptions. One practitioner targeted by Insys was a physician’s assistant who practiced with a pain clinic in Somersworth, New Hampshire. During the first year that Subsys was on the market, the physician’s assistant did not write any Subsys prescriptions for his patients. In May 2013, the physician’s assistant joined Insys’s sham speaker program knowing that it was a way to receive kickbacks for writing Subsys prescriptions. After joining the sham speaker program, the physician’s assistant wrote approximately 672 Subsys prescriptions for his patients – many of which were medically unnecessary – and in turn, received $44,000 in kickbacks from Insys.

          As part of the criminal resolution, Insys agreed to a detailed statement of facts outlining its criminal conduct with respect to the illegal marketing of Subsys. Insys will enter into a five-year deferred prosecution agreement with the government, while Insys’s operating subsidiary will plead guilty to five counts of mail fraud pursuant to the plea agreement that will be filed in the District of Massachusetts. According to the terms of the criminal resolution, Insys will pay a criminal fine of $2 million and forfeiture of $28 million. The Court has not yet scheduled the plea hearing. Last month, five former Insys executives were convicted after trial of racketeering conspiracy in connection with the marketing of Subsys. In total, eight company executives have now been convicted in Boston for crimes relating to the illegal marketing of Subsys.

          “Today’s settlement underscores our determination to hold opioid manufacturers accountable for pushing these highly addictive narcotics on the public via kickbacks to doctors and nurses, and other illegal means,” said United States Attorney for the Central District of California Nick Hanna. “Our goal is to bring about an end to the tragic epidemic of opioid addiction and to go after those who profit from that epidemic.”

          “The Department of Justice is committed to taking steps to address the opioid epidemic,” said Principal Deputy Associate Attorney General Claire Murray. “Illegal conduct by pharmaceutical manufacturers, especially in the midst of the opioid crisis, will not be tolerated. We will continue to investigate and vigorously prosecute these types of allegations and hold opioid manufacturers accountable under the law.”

          “The opioid epidemic is a plague that has devastated communities and ravaged families across this country,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice is committed to using the legal tools at our disposal to combat the illegal marketing and distribution of opioids, including fentanyl. Today’s settlement sends a strong message to pharmaceutical manufacturers that the kinds of illegal conduct that we have alleged in this case will not be tolerated. I want to assure the families and communities ravaged by this epidemic that the Department of Justice will continue to act forcefully to hold opioid manufacturers accountable for their actions.”

          “The first step towards holding this pharmaceutical company responsible for its role in fueling the opioid epidemic was the conviction of top Insys executives,” said United States Attorney for the District of Massachusetts Andrew E. Lelling. “The second step is holding the company itself accountable for prolonged, illegal conduct that prioritized profits over patient health. This global resolution is the culmination of years of work by prosecutors and agents, and these successful prosecutions and civil enforcement efforts should be a model for confronting Corporate America’s role in the opioid epidemic.”

          “The announced settlement is a vivid example of the Department of Defense's dogged efforts to protect the integrity of the U.S. military’s health care system and its beneficiaries” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office. “DCIS remains committed to working with its law enforcement partners and the U.S. Attorney’s Office to combat health care fraud, especially when pharmaceutical companies use taxpayers' dollars to induce physicians with bribes and kickbacks to prescribe their drugs for unauthorized off-label usage that may very well endanger the recipient's health and safety.”

          “I applaud the Department of Justice and the U.S. Attorney for their continued efforts to hold pharmaceutical companies accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The efforts of the Department of Justice safeguard the health care benefit for our service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate all those who participated in fraudulent practices.”

          “Paying bribes and providing other incentives to prescribe opioids with little regard to patient welfare surely signals a company is more concerned with profits than patients,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Today’s settlement reaffirms our commitment to ensuring that companies pay a very heavy price for attacking vital government health programs.”

          Insys entered into an unprecedented 5-year Corporate Integrity Agreement (CIA) and Conditional Exclusion Release with OIG. Because of the extensive cooperation provided by Insys in the prosecution of culpable individuals and its agreement to enhanced CIA requirements, OIG elected not to pursue exclusion of Insys at this time. The CIA includes several novel provisions, including enhanced material breach provisions, designed to protect Federal health care programs and beneficiaries. In addition, Insys admitted to a Statement of Facts and acknowledged that the facts provide a basis for permissive exclusion. OIG did not release its permissive exclusion authority, as it generally does for CIA parties in False Claims Act settlements. Instead, OIG will provide such a release only after Insys satisfies its obligations under the CIA.

          The allegations resolved by the settlement stem from five lawsuits that were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to bring suit on behalf of the United States for false claims and share in any recovery. The lawsuits are: United States, et al., ex rel. Guzman v. Insys Therapeutics, Inc., et al., 13-cv-5861; United States ex rel. Andersson v. Insys Therapeutics, Inc., 14-cv-9179; United States ex rel. John Doe and ABC, LLC v. Insys Therapeutics, Inc., et al., 14-cv-3488; United States ex rel. Erickson and Lueken v. Insys Therapeutics, Inc., 16-cv-2956; and United States ex rel. Jane Doe, et al. v. Insys Therapeutics, et al., 16-cv-7937. The whistleblowers’ share of the settlement announced today has not yet been determined.

          These matters were handled by the United States Attorney’s Office for the Central District of California; the Department of Justice’s Civil Division; the United States Attorney’s Office for the District of Massachusetts; and the Department of Health and Human Services, Office of Inspector General.

          Investigations were conducted by the Federal Bureau of Investigation, Boston Field Division; the Food and Drug Administration, Office of Regulatory Affairs; the Drug Enforcement Administration, New England Field Division; Department of Defense, Defense Criminal Investigative Service; U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office; U.S. Postal Inspection Service’s Boston Division; United States Postal Service, Office of Inspector General, Northeast Area Field Office; Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division; Office of Personnel Management, Office of Inspector General; and the Defense Health Agency.

Opioid manufacturer Insys Therapeutics agreed to a global resolution to settle the government’s separate criminal and civil investigations, the Department of Justice announced today. As part of the criminal resolution, Insys will enter into a deferred prosecution agreement with the government, Insys’s operating subsidiary will plead guilty to five counts of mail fraud, and the company will pay a $2 million fine and $28 million in forfeiture. As part of the civil resolution, Insys agreed to pay $195 million to settle allegations that it violated the False Claims Act. Both the criminal and civil investigations stemmed from Insys’s payment of kickbacks and other unlawful marketing practices in connection with the marketing of Subsys. Insys’s drug Subsys is a sublingual fentanyl spray, a powerful, but highly addictive, opioid painkiller. In 2012, Subsys was approved by the Food and Drug Administration for the treatment of persistent breakthrough pain in adult cancer patients who are already receiving, and tolerant to, around-the-clock opioid therapy. 

Today, the U.S. Attorney’s Office for the District of Massachusetts filed an Information charging Insys and its operating subsidiary with five counts of mail fraud. According to the charging document, from August 2012 to June 2015, Insys began using “speaker programs” purportedly to increase brand awareness of Subsys through peer-to-peer educational lunches and dinners. However, the programs were actually used as a vehicle to pay bribes and kickbacks to targeted practitioners in exchange for increased Subsys prescriptions to patients and for increased dosage of those prescriptions. One practitioner targeted by Insys was a physician’s assistant who practiced with a pain clinic in Somersworth, New Hampshire. During the first year that Subsys was on the market, the physician’s assistant did not write any Subsys prescriptions for his patients. In May 2013, the physician’s assistant joined Insys’s sham speaker program knowing that it was a way to receive kickbacks for writing Subsys prescriptions. After joining the sham speaker program, the physician’s assistant wrote approximately 672 Subsys prescriptions for his patients – many of which were medically unnecessary – and in turn, received $44,000 in kickbacks from Insys.

As part of the criminal resolution, Insys agreed to a detailed statement of facts outlining its criminal conduct with respect to the illegal marketing of Subsys. Insys will enter into a five-year deferred prosecution agreement with the government, while Insys’s operating subsidiary will plead guilty to five counts of mail fraud pursuant to the plea agreement that will be filed in the District of Massachusetts. According to the terms of the criminal resolution, Insys will pay a criminal fine of $2 million and forfeiture of $28 million. The Court has not yet scheduled the plea hearing. Last month, five former Insys executives were convicted after trial of racketeering conspiracy in connection with the marketing of Subsys. In total, eight company executives have now been convicted in Boston for crimes relating to the illegal marketing of Subsys.

In April 2018, the United States intervened in five qui tam lawsuits accusing Insys of violating the civil False Claims Act. In its Complaint, the United States alleged that Insys, headquartered in Arizona, paid kickbacks to induce physicians and nurse practitioners to prescribe Subsys for their patients. In addition to payments for sham speaker program speeches, the kickbacks also allegedly took the form of jobs for the prescribers’ relatives and friends,  and lavish meals and entertainment. The United States also alleged that Insys improperly encouraged physicians to prescribe Subsys for patients who did not have cancer, and lied to insurers about patients’ diagnoses in order to obtain reimbursement for Subsys prescriptions that had been written for Medicare and TRICARE beneficiaries.

“The Department of Justice is committed to taking steps to address the opioid epidemic,” said Principal Deputy Associate Attorney General Claire Murray. “Illegal conduct by pharmaceutical manufacturers, especially in the midst of the opioid crisis, will not be tolerated. We will continue to investigate and vigorously prosecute these types of allegations and hold opioid manufacturers accountable under the law.”

“The opioid epidemic has devastated communities and ravaged families across this country,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice is committed to using the legal tools at our disposal to combat the illegal marketing and distribution of opioids, including fentanyl. Today’s settlement sends a strong message to pharmaceutical manufacturers that the kinds of illegal conduct that we have alleged in this case will not be tolerated. I want to assure the families and communities ravaged by this epidemic that the Department of Justice will hold opioid manufacturers accountable for their actions.”

“This criminal resolution today with Insys, coupled with the convictions of the eight executives, shows this Office’s resolve to hold both corporations and individuals accountable for their crimes,” said United States Attorney for the District of Massachusetts Andrew E. Lelling.“For years, Insys engaged in prolonged, illegal conduct that prioritized its profits over the health of the thousands of patients who relied on it. Today, the company is being held responsible for that and for its role in fueling the opioid epidemic. This global resolution is the culmination of years of work by prosecutors and agents, and these successful prosecutions and civil enforcement efforts should be a model for confronting corporate criminal activity.”

“Today’s settlement underscores our determination to hold opioid manufacturers accountable for pushing these highly addictive narcotics on the public via kickbacks to doctors and nurses, and other illegal means,” said United States Attorney for the Central District of California Nick Hanna. “Our goal is to bring about an end to the tragic epidemic of opioid addiction and to go after those who profit from that epidemic.”

“Paying bribes and providing other incentives to prescribe opioids with little regard to patient welfare surely signals a company is more concerned with profits than patients,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Today’s settlement reaffirms our commitment to ensuring that companies pay a very heavy price for attacking vital government health programs.”

Insys entered into an unprecedented 5-year Corporate Integrity Agreement (CIA) and Conditional Exclusion Release with OIG. Because of the extensive cooperation provided by Insys in the prosecution of culpable individuals and its agreement to enhanced CIA requirements, OIG elected not to pursue exclusion of Insys at this time. The CIA includes several novel provisions, including enhanced material breach provisions, designed to protect Federal health care programs and beneficiaries. In addition, Insys admitted to a Statement of Facts and acknowledged that the facts provide a basis for permissive exclusion. OIG did not release its permissive exclusion authority, as it generally does for CIA parties in False Claims Act settlements. Instead, OIG will provide such a release only after Insys satisfies its obligations under the CIA.

“The announced settlement is a vivid example of the Department of Defense's dogged efforts to protect the integrity of the U.S. military’s health care system and its beneficiaries” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office. “DCIS remains committed to working with its law enforcement partners and the U.S. Attorney’s Office to combat health care fraud, especially when pharmaceutical companies use taxpayers' dollars to induce physicians with bribes and kickbacks to prescribe their drugs for unauthorized off-label usage that may very well endanger the recipient's health and safety.”

“I applaud the Department of Justice and the U.S. Attorney for their continued efforts to hold pharmaceutical companies accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The efforts of the Department of Justice safeguard the health care benefit for our service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate all those who participated in fraudulent practices.”

The allegations resolved by the settlement stem from five lawsuits that were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private citizens to bring suit on behalf of the United States for false claims and share in any recovery. The lawsuits are: United States, et al., ex rel. Guzman v. Insys Therapeutics, Inc., et al., 13-cv-5861; United States ex rel. Andersson v. Insys Therapeutics, Inc., 14-cv-9179; United States ex rel. John Doe and ABC, LLC v. Insys Therapeutics, Inc., et al., 14-cv-3488; United States ex rel. Erickson and Lueken v. Insys Therapeutics, Inc., 16-cv-2956; and United States ex rel. Jane Doe, et al. v. Insys Therapeutics, et al., 16-cv-7937. The whistleblowers’ share of the settlement announced today has not yet been determined.         

These matters were handled by the Department of Justice’s Civil Division, the United States Attorney’s Office for the District of Massachusetts, the United States Attorney’s Office for the Central District of California, and the Department of Health and Human Services, Office of Inspector General. Investigations were conducted by the FBI, Boston Field Division; the Food and Drug Administration, Office of Regulatory Affairs; the Drug Enforcement Administration, New England Field Division; Department of Defense, Defense Criminal Investigative Service; U.S. Department of Labor, Employee Benefits Security Administration, Boston Regional Office; U.S. Postal Inspection Service’s Boston Division; United States Postal Service, Office of Inspector General, Northeast Area Field Office; Department of Veterans Affairs, Office of Inspector General, Criminal Investigations Division; Office of Personnel Management, Office of Inspector General; and the Defense Health Agency. 

          LOS ANGELES – A Montecito man pleaded guilty today to one felony count of wire fraud for defrauding investors by making false promises to use their money purchase shares of Facebook and Twitter prior to the companies’ initial public offerings.

          Efstratios “Elias” Argyropoulos, 72, entered his plea before United States District Judge George Wu, who scheduled an August 26 sentencing hearing. Argyropoulos faces a statutory maximum sentence of 20 years in federal prison.

          As he admitted in his plea agreement, between October 2010 and October 2015, Argyropoulos operated Prima Ventures Corporation, a Santa Barbara-based financial services firm of which he was the president and sole shareholder. Argyropoulos represented to investors that he had access to “amazing” investment opportunities that would provide a high rate of return on any money invested, court papers state.

          Argyropoulos misrepresented to investors that he would pool their money to purchase pre-initial public offering shares of companies such as Facebook and Twitter, according to court documents. Argyropoulos also falsely told investors he had access to good investment opportunities in companies such as Alibaba, Etsy, and E-Waste, the plea agreement states. As he admitted, Argyropoulos also represented that he and Prima were licensed brokers, when in truth, neither he nor Prima was licensed by the Securities and Exchange Commission or any other regulatory authority to sell securities. Instead of purchasing the stocks, Argyropoulos diverted the investor funds for other uses, such as day-trading in stocks unrelated to the promised investments, and personal expenses, such as landscaping, utilities, and his legal expenses arising out of an investigation into his activities conducted by the SEC, the plea agreement states.

          Argyropoulos, who was charged in a 21-count federal grand jury indictment last year, admitted to causing at least $1,495,657 in uncompensated losses in connection with his schemes to defraud.

          Argyropoulos also admitted to willfully violating a January 2015 court order in a lawsuit brought by the Securities and Exchange Commission, which was based on the fraudulent Facebook and Twitter scheme. The injunction prohibited Argyropoulos from selling fraudulent investments and acting as an unlicensed broker.

          The case against Argyropoulos was investigated by the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorneys Scott Paetty and Adam Schleifer of the Major Frauds Section.

A member of the Big Hazard street gang was sentenced today to 156 months in federal prison for orchestrating and executing the nighttime firebombing of African-American families at the Ramona Gardens Housing Development in Boyle Heights in 2014 in order to force the residents out of their homes.

Jose Saucedo, 25, aka “Lil’ Moe,” of Boyle Heights area of Los Angeles, was sentenced by United States District Judge Christina A. Snyder, who described the incident as ‘a terribly violent crime,’ because the attack targeted particularly vulnerable victims and because the defendant had a leadership role.

Saucedo pleaded guilty in May 2018 to four felonies: conspiracy to violate civil rights, violent crime in aid of racketeering, interference with the Fair Housing Act, and attempted arson of federal property.

“The defendant violently attacked families sleeping peacefully in their homes, because of their race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Justice Department will vigorously prosecute these acts of hate.”

“Racially motivated crimes are among the most disturbing offenses inflicted on a community,” said U.S. Attorney Nick Hanna. “Today’s sentence shows that criminals who are fueled by racial hatred – such as this defendant, who participated in a firebombing attack on innocent families while they slept – will face severe consequences.”

"Violating the civil rights of others by engaging in racial violence is antithetical to our values as Americans," said Paul Delacourt, the Assistant Director in Charge of the FBI's Los Angeles Field Office.  "The lengthy sentence handed down today for defendant Saucedo should send a strong message that targeting innocent people because of their skin color will not be tolerated and that offenders will spend a significant time behind bars."

On the evening of May 11, 2014, which was Mother’s Day, Saucedo and seven other members of the Big Hazard street gang agreed to firebomb several apartments in the Ramona Gardens complex because the residents were African Americans. Each defendant was given a specific role in the attacks and was provided with items to be used, including masks to conceal their identities and a hammer to break windows.

The defendant gang members smashed the windows of four apartments to allow for cleaner entry and maximum damage of the firebombs, and then threw lit Molotov cocktails into the residences. Three of the four targeted apartments were occupied by African-American families, including women and children, who were sleeping at the time of the unprovoked attack. One of the victims was a Hispanic resident of Ramona Gardens whom the group mistakenly targeted.

Saucedo played a primary role in the attacks, collecting glass bottles to be used as Molotov cocktails, supervising one of the two groups of co-conspirators, and throwing a firebomb into one of the targeted units. After the firebombing, Saucedo continued to intimidate Ramona Gardens residents because of their race, threatening one mixed-race family by referencing the firebombing as an example of what would happen to them if they did not move out of the housing complex.

All of the seven defendants who were charged in this case in 2016 have pleaded guilty to federal hate crime and related offenses. All of those defendants also admitted that they participated in the firebombings because of the victims’ race and color and with the intent to force the victims to move away from the federally funded housing complex.

The investigation into the firebombing was conducted by agents and detectives with the FBI; the Los Angeles Police Department; the Los Angeles Fire Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section; Justice Department Trial Attorney Julia Gegenheimer of the Civil Rights Division’s Criminal Section; and Assistant United States Attorney MiRi Song of the General Crimes Section.

For more information about the Department of Justice’s work to combat and prevent hate crimes, visit www.justice.gov/hatecrimes: a one-stop portal with links to Department of Justice hate crimes resources for law enforcement, media, researchers, victims, advocacy groups, and other organizations and individuals.

          LOS ANGELES – A member of the Big Hazard street gang was sentenced today to 156 months in federal prison for orchestrating and executing the nighttime firebombing of African-American families at the Ramona Gardens Housing Development in Boyle Heights in 2014 in order to force the residents out of their homes.

          Jose Saucedo, 25, a.k.a. “Lil’ Moe,” of the Boyle Heights neighborhood of the City of Los Angeles, was sentenced by United States District Judge Christina A. Snyder, who described the incident as “a terribly violent crime” because the attack targeted particularly vulnerable victims and because the defendant had a leadership role.

          Saucedo pleaded guilty in May 2018 to four felonies: conspiracy to violate civil rights, violent crime in aid of racketeering, interference with the Fair Housing Act, and attempted arson of federal property.

          “Racially motivated crimes are among the most disturbing offenses inflicted on a community,” said United States Attorney Nick Hanna. “Today’s sentence shows that criminals who are fueled by racial hatred – such as this defendant, who participated in a firebombing attack on innocent families while they slept – will face severe consequences.”

          “The defendant violently attacked families sleeping peacefully in their homes, because of their race,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “The Justice Department will vigorously prosecute these acts of hate.”

          “Violating the civil rights of others by engaging in racial violence is antithetical to our values as Americans,” said Paul Delacourt, the Assistant Director in Charge of the FBI's Los Angeles Field Office. “The lengthy sentence handed down today for Jose Saucedo should send a strong message that targeting innocent people because of their skin color will not be tolerated and that offenders will spend a significant time behind bars.”

          On the evening of May 11, 2014, which was Mother’s Day, Saucedo and seven other members of the Big Hazard street gang agreed to firebomb several apartments in the Ramona Gardens complex because the residents were African Americans who lived there. Each defendant was given a specific role in the attacks and was provided with items to be used, including masks to conceal their identities and a hammer to break windows.

          Once the gang members located their targets, they smashed the windows of four apartments to allow for cleaner entry of the firebombs to maximize damage and threw lit Molotov cocktails into the residences. Three of the four targeted apartments were occupied by African-American families, including women and children, who were sleeping at the time of the unprovoked attack. One of the victims was a Hispanic resident of Ramona Gardens whom the group mistakenly targeted.

          Saucedo played a primary role in the attacks, collecting glass bottles to be used as Molotov cocktails, supervising one of the two groups of co-conspirators, and throwing a firebomb into one of the targeted units. After the firebombing, Saucedo continued to intimidate Ramona Gardens residents because of their race, threatening one mixed-race family by referencing the firebombing as an example of what would happen to them if they did not move out of the housing complex.

          All seven of the defendants who were charged in this case in 2016 have pleaded guilty to federal hate crime and related offenses. All of those defendants also admitted that they participated in the firebombings because of the victims’ race and color and with the intent to force the victims to move away from the federally funded housing complex. Saucedo, who was given four years credit for time served on a related offense, is the first defendant in this case to be sentenced. The other defendants will be sentenced at later dates.

          The investigation into the firebombing was conducted by agents and detectives with the Federal Bureau of Investigation; the Los Angeles Police Department; the Los Angeles Fire Department; and the Bureau of Alcohol, Tobacco, Firearms and Explosives.

          This case is being prosecuted by Assistant United States Attorney Mack E. Jenkins, Chief of the Public Corruption and Civil Rights Section; Justice Department Trial Attorney Julia Gegenheimer of the Civil Rights Division’s Criminal Section; and Assistant United States Attorney MiRi Song of the General Crimes Section.

          LOS ANGELES – Three South Korean nationals were charged today in a federal grand jury indictment with attempting to illegally export to Asia more than $600,000 in live Dudleya succulent plants that they had pulled out of the ground at remote state parks in Northern California.

          The two-count indictment charges each of the following defendants with conspiracy to knowingly export plants from the United States that had been taken in violation of California law, and attempting to export plants taken in violation of state law:

• Byungsu Kim, 44, who operates a nursery in Vista and is a fugitive;
• Youngin Back, 45, who also is a fugitive; and
• Bong Jun Kim, 44, who is in federal custody.

          According to the indictment, the defendants arrived at Los Angeles International Airport from their native South Korea in October 2018 to harvest wild Dudleya plants from coastal habitats in Northern California and ship them back to South Korea. Native Dudleya plants from coastal habitats in Northern California are particularly valuable in Asia due to their unique physical features, including the color and shape of their leaves. Because growing the plants in nurseries takes years, smugglers are known to harvest wild, living Dudleya plants from the ground in Northern California and export the live plants to Asia, where they are sold on the black market.

          Upon his October 2018 arrival in Los Angeles via a one-way ticket from South Korea, Byungsu Kim displayed records stating that his nursery had shipped 5,731 Dudleya plants (501 pounds) to South Korea on or about September 12, 2018, and that the purported “place of origin” of the plants was San Diego County. Since 2009, Byungsu Kim had traveled to the United States from South Korea more than 50 times, and in 2013 had 80 plants seized by U.S. Customs and Border Protection.

          After their October 2018 arrival in Los Angeles, the trio allegedly drove to various state parks where Dudleya plants grow, including DeMartin State Beach in Klamath, California, Del Norte Coast Redwoods State Park, and Russian Gulch State Park in Mendocino County. Law enforcement surveilling the defendants observed them pull the plants out of the ground and then transport the harvested Dudleya plants to a nursery that Byungsu Kim operated in Vista, located in San Diego County, court documents state. Prior to the plants’ shipment, Byungsu Kim scheduled an inspection with a county agriculture official at the Vista nursery and falsely told her the government-issued certificate necessary for the plants’ exportation should list 1,397 Dudleya plants (259 pounds) for export to South Korea and that the “place of origin” of the plants was San Diego County, the indictment alleges.

          The defendants then transported the plants to a commercial exporter in Compton, to whom Byungsu Kim intended to present the fraudulently obtained certificate so the Dudleya plants could be shipped to South Korea, the indictment alleges. The defendants were arrested in Compton last year and currently face state criminal charges in Del Norte County Superior Court. Law enforcement seized approximately 3,715 Dudleya plants (664 pounds) in 34 boxes at the Compton location and the value of the seized plants in Korea would be approximately $602,950, court papers state. Two of the defendants, Byungsu Kim and Youngin Back, have since fled the United States.

          If convicted on all counts, the defendants face a statutory maximum sentence 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.

          This matter was investigated by the California Department of Fish and Wildlife; the United States Fish and Wildlife Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; U.S. Customs and Border Protection;

          County of San Diego, Agriculture, Weights and Measures; U.S. Department of Agriculture, and California State Parks.

          This case is being prosecuted by Assistant United States Attorneys Matthew W. O’Brien and Dennis Mitchell of the Environmental and Community Safety Crimes Section.

          SANTA ANA, California – A Yorba Linda man who allegedly used more than 200 stolen identities to fraudulently collect nearly $600,000 in unemployment insurance benefits from the California Employment Development Department (EDD) was charged today with two counts of mail fraud.

          Jeffrey Silhanek, 39, was named in a criminal information filed in United States District Court.

          According to the information, Silhanek obtained stolen identities and used those names to open post office boxes. Silhanek then allegedly used the stolen identities and addresses to file unemployment insurance benefit claims, without the knowledge or permission of the identity theft victims. Silhanek represented that the claimants had been laid off and were entitled to unemployment insurance benefits. To ensure that he received the benefits, Silhanek instructed the EDD to send benefit checks and debit cards to the post office boxes he controlled.

          As a result of the claims that Silhanek filed, the EDD suffered losses of at least $586,000.

          The EDD is the administrator of the federally funded unemployment insurance benefit program for residents of the State of California.

          Silhanek is scheduled to be arraigned in this case on July 8.

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

          This case is being investigated by the United States Department of Labor, Office of Inspector General.

          This matter is being prosecuted by Assistant United States Attorney Daniel H. Ahn of the Santa Ana Branch Office.

          LOS ANGELES – Federal authorities this week arrested six defendants named in a federal indictment that alleges a large-scale, Mexico-based narcotics trafficking operation smuggled hundreds of pounds of narcotics into the United States.

          The arrests, which started Tuesday night and included one this morning in New York, were made as part of Operation Colombian Cargo, an investigation led by the Drug Enforcement Administration that targeted the transnational drug-trafficking and money-laundering network. Over the course of just 10 months during the investigation, authorities seized nearly 400 kilograms of cocaine, 225 kilograms of methamphetamine, 53 kilograms of fentanyl, 12 kilograms of heroin, and $4.7 million in drug money.

          Operation Colombian Cargo identified Mexican nationals who oversaw the movement of large quantities of narcotics, some of which originated in Colombia. According to the indictment, the narcotics were typically smuggled from Mexico into the United States by drug couriers who often used the San Ysidro Port of Entry and usually concealed the narcotics in hidden compartments in vehicles or in boxes that appeared to contain speakers. The couriers then delivered the contraband to stash houses in the Inland Empire and greater Los Angeles area. The narcotics were then distributed in kilogram quantities to customers in Los Angeles, Chicago, New York and other cities.

          The organization’s drug sales generated millions of dollars in sales, according to the indictment, which outlines a money laundering scheme that used a group of money couriers to collect the dollars in the United States and deliver pesos to leaders of the drug ring in Mexico.

          The defendants arrested this week are are:

• Jiaze Xia, 23, of Flushing, Queens, New York, allegedly a key player in the organization’s money laundering activities, who was arrested this morning in New York;
• Joshua Donovan Cortez, 31, of Rowland Heights, who allegedly operated a stash house, and who was arrested Wednesday;
• Jose Vargas, 61, of Huntington Park, who also allegedly operated a stash house and was taken into custody on Wednesday;
• Remigio Alvarez Herrera, 49, of Maywood, an alleged drug courier who was arrested on Wednesday;
• Alejandro Medrano, 20, of San Diego, an alleged drug courier who was arrested Tuesday night as he entered the United States through the San Ysidro Port of Entry; and
• Wei Chang “Ray” Gong, 30, of Chicago, who allegedly was part of the money laundering operation and possessed nearly $600,000 in cash that was seized by authorities in 2016, and who was arrested on Wednesday.

          Cortez, Vargas and Herrera were arraigned on the indictment Wednesday afternoon in United States District Court in Los Angeles, where they entered not guilty pleas and were ordered to stand trial on July 23. Xia, Medrano and Gong will be transported to Los Angeles and will be arraigned upon their arrival.

          The 24-count indictment, which was returned by a federal grand jury one year ago and unsealed Wednesday afternoon, charges a total of 25 defendants.

          Previously in this case, four defendants were arrested and their cases remain pending. They are:

• Rogelio Payan-Palma, 27, of Mexico City, one of the principals of the drug trafficking organization who worked with other leaders of the drug ring in Mexico;
• Guohua Luo, 35, a Chinese national who resides in Mexico City, another principal operative of the organization who helped coordinate the money laundering;
• Pierre Vincent Fuentes, 30, of San Diego, an alleged drug courier, and
• Jimmy Zhi Qiang Yu, 45, of Pasadena, who allegedly was a money courier.

          The indictment alleges wide-ranging conspiracies to distribute narcotics and to launder the illicit proceeds of the drug trafficking. All of the defendants are named in at least one of the two conspiracy counts, and most are named in both counts. The indictment also alleges that some of the defendants participated in a continuing criminal enterprise.

          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.

          If convicted of the drug-trafficking conspiracy, the 17 defendants named in that count would face mandatory minimum sentences of 10 years in federal prison and maximum sentences of life without parole.

          During the investigation, authorities in 2016 seized 236 pounds of methamphetamine in Cedar City, Utah and 88 kilograms of methamphetamine that had just entered the United States at San Ysidro. Seizures in 2017 included 275 kilograms of cocaine from Cortez’s residence across the street from a school in Bell, 21 kilograms of fentanyl in Chino, and another 32 kilograms of fentanyl in Sun Valley.

          Over the entire course of Operation Colombian Cargo, authorities have seized across the Americas approximately $16 million in United States currency, approximately five tons of cocaine, and 530 pounds of methamphetamine.

          This case was investigated by members of the Southern California Drug Task Force, which is led by the DEA. The following agencies provided substantial assistance to the investigation: the Hawthorne Police Department, the Torrance Police Department, the Montebello Police Department, the Fontana Police Department, and the Fullerton Police Department.

          This matter is being prosecuted by Assistant United States Attorneys A. Carley Palmer and Victoria Degtyareva of the International Narcotics, Money Laundering, and Racketeering Section.

          SANTA ANA, California – The owner of PRB Logics Corporation, an Orange County-based seller of electronic components, was sentenced today to more than three years in federal prison for selling counterfeit integrated circuits he obtained from China, some of which were purchased by defense contractors for military use.

          Rogelio Vasquez, 44, a.k.a. “James Harrison,” of Orange, was sentenced by United States District Judge Josephine L. Staton, who said, “Simply put, the scheme was endangering lives for the sake of illicit profit.” Judge Staton also ordered Vasquez to pay $144,000 in restitution.

          On January 17, Vasquez pleaded guilty to four felonies: one count of wire fraud, two counts of trafficking in counterfeit goods, and one count of trafficking in counterfeit military goods.

          From July 2009 until May 2016, Vasquez acquired old, used and/or discarded integrated circuits from Chinese suppliers that had been repainted and remarked with counterfeit logos. The devices were further remarked with altered date codes, lot codes or countries of origin to deceive customers and end users into thinking the integrated circuits were new, according to court documents. Vasquez knew that the integrated circuits he sold were old, used or discarded and that his Chinese suppliers had pulled the circuits off of discarded circuit boards in China, sanded off all of the markings, and then remarked them in a process commonly referred to as “blacktopping.” Vasquez then sold the counterfeit electronics to appear as new parts made by manufacturers such as Xilinx, Analog Devices and Intel.

          In furtherance of the scheme, in August 2012, Vasquez purchased counterfeit circuits from China and sold them to a defense subcontractor located in the United States, which, in turn, supplied the parts to a defense contractor. The counterfeit parts ended up in a classified weapon system used by the U.S. Air Force.

          Between November 2015 and May 2016, Vasquez, using the alias “James Harrison,” sold a total of 106 counterfeit integrated circuits to an undercover federal agent. Vasquez admitted in his plea agreement that in April 2016, he sold eight counterfeit integrated circuits that he believed would be used by the United States military in the B-1 Lancer Bomber military aircraft.

          Vasquez admitted he instructed his Chinese suppliers to remark ICs and also instructed a testing laboratory in China to provide two versions of its report – one of which accurately showed integrated circuit test results and the second of which was a “sanitized version” that did not contain results of “any visual inspection and permanency or other marking tests, which would have revealed that the ICs were used, remarked and/or in poor condition.”

          Vasquez has agreed to forfeit $97,362 in cash and 169,148 counterfeit integrated circuits that were seized during the investigation, according to the government’s forfeiture brief. Vasquez also admitted that over the course of seven years, he trafficked more than 9,000 integrated circuits with a total infringement value of $894,218.

          “This defendant obtained and sold counterfeit integrated circuits which ended up in systems used by the United States military,” said United States Attorney Nick Hanna. “The sentence imposed today is the direct result of Mr. Vasquez’s conduct, which was designed to line his pockets while potentially exposing members of our armed services to unnecessary risk from counterfeit electronic parts.”

          “America’s warfighters depend upon the reliability of Department of Defense weapons systems. The intentional substitution of counterfeit and defective parts in these systems impacts our national security, and places our military at risk,” said Special Agent in Charge, Michael Mentavlos, Defense Criminal Investigative Service, Southwest Field Office. “We will not tolerate this criminal behavior, and will aggressively bring to justice all those who would perpetrate these acts on our nation. Today’s sentencing serves as a stark reminder to those who would endanger our national security that DCIS, in concert with our partner agencies, HSI and NRO-OIG, will remain vigilant; ready at a moment’s notice to protect our warfighters.”

          “The National Reconnaissance Office, Office of Inspector General is committed to keeping counterfeit parts out of sensitive, high-technology systems relied upon by the NRO and other government agencies in support of national security priorities. Detecting counterfeit parts and bringing their producers to justice remains a priority for the NRO-OIG in light of the potential harm caused by this type of fraud,” said Eric Beatty, Assistant Inspector General for Investigations, National Reconnaissance Office, Office of Inspector General.

          “As this sentence makes clear, military procurement fraud is a serious crime that extends far beyond the financial losses to the DOD and U.S. taxpayers,” said Joseph Macias, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Los Angeles. “This defendant committed a crime that seriously threatens the safety and readiness of our nation’s warfighters simply to line his own pockets. HSI will continue to aggressively target and investigate those who knowingly jeopardize our nation’s security or the welfare of those devoted to protecting it.”

          The investigation into Vasquez and PRB Logics was conducted by U.S. Department of Defense, Office of Inspector General – Defense Criminal Investigative Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the National Reconnaissance Office, Office of Inspector General.

          This matter is being prosecuted by Assistant United States Attorneys Lisa E. Feldman of the Cyber & Intellectual Property Crimes Section and Steven R. Welk, Chief of the Asset Forfeiture Section.

          LOS ANGELES – Federal authorities this morning arrested eight people named in a federal grand jury indictment that alleges check-kiting schemes that used hundreds of altered Armenian passports to fraudulently open bank accounts and steal nearly $1.5 million from Bank of America and Wells Fargo. A ninth defendant in this case is currently being sought by authorities.

          The investigation led by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations found that the defendants obtained genuine Armenian passports issued to other people, altered the passports to include the photos of the defendants, and used the fraudulent documents to obtain other identity documents and to open bank accounts at the victim banks.

          The 36-count indictment unsealed today alleges that the defendants used the bank accounts, which were opened in the names that appeared on the altered passports, to write bad checks to other fraudulently obtained bank accounts. The defendants allegedly exploited bank rules that allowed them to transfer money from one account to another, and then to immediately withdraw funds at ATMs in Las Vegas casinos and other locations before the checks bounced.

          The indictment alleges that the defendants used 331 fraudulently altered Armenian passports to steal, or attempt to steal, $1,556,336 from Bank of America. They actually obtained approximately $1.12 million.

          Three of the defendants were also charged with perpetrating a similar fraud scheme against Wells Fargo that resulted in a loss of approximately $370,000.

          The defendants arrested this morning are:

• Ara Malkhasyan, 48, of Winnetka;
• Smbat Khechumyan, 38, of North Hollywood;
• Sveta Khechumyan, 45, of Winnetka, who is Smbat’s sister and the wife of Malkhasyan;
• Harutyun Petrosyants, 30, of Van Nuys;
• Artur Harutyunyan, 34, of Encino;
• Khachatur Chobanyan, 38 of Van Nuys;
• Jivan Hakhnazaryan, 49, of Van Nuys; and
• Arman Grigoryan, 37, of North Hollywood.

          The ninth defendant in this case – Artak Okhoyan, 29, of Burbank – has agreed through his attorney to surrender to federal authorities tomorrow.

          The defendants arrested today are expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          The indictment charges all of the defendants with conspiracy to commit bank fraud, a charge that carries a statutory maximum penalty of 30 years in federal prison. Additionally, all of the defendants are charged in at least one substantive count of bank fraud and aggravated identity theft.

          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.

          During this investigation, Homeland Security Investigations received substantial assistance from the Los Angeles Police Department, the Los Angeles County Sheriff’s Department, and the Federal Bureau of Investigation.

          This matter is being prosecuted by Assistant United States Attorneys Katherine A. Rykken of the Major Frauds Section, and Lucy B. Jennings and Kevin Butler of the General Crimes Section.

A federal jury found a Brea, California, woman guilty yesterday of fraud charges for her role in a $6 million Medicare fraud scheme involving billing for occupational therapy services that were not medically necessary and not actually provided.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney Nicola T. Hanna of the Central District of California, Special Agent in Charge Christian J. Schrank of the U.S. Department of Health and Human Services Office of Inspector General’s (HHS-OIG) Los Angeles Region and Assistant Director in Charge Paul D. Delacourt of the FBI’s Los Angeles Division made the announcement.

After a five-day trial, Grace Hong, 53, was convicted of one count of conspiracy to commit health care fraud and three counts of health care fraud.  Sentencing has been scheduled for July 29, 2019 at 8:00 a.m. before U.S. District Judge George H. Wu of the Central District of California, who presided over the trial.

According to evidence presented at trial, from 2009 to 2012, Grace Hong and her husband, Simon Hong, 57, operated a therapy clinic in Walnut, California, known as JH Physical Therapy, Inc.  As part of the scheme, Grace Hong and her co-conspirators provided uncovered services like acupuncture and massage to Medicare beneficiaries.  Even though the beneficiaries did not receive actual occupational therapy, Grace Hong and her co-conspirators billed Medicare for physical and occupational therapy services that had not been provided, and then funneled most of the Medicare reimbursements to companies owned by Simon Hong.  Grace Hong also directed co-conspirator therapists in falsifying medical records to make it appear as if the services billed had been provided, the evidence showed.

Through this scheme, Grace Hong and her co-conspirators billed Medicare from October 2009 until December 2012 approximately $6,014,281 in false claims, and received approximately $3,981,014, the evidence showed.

Grace Hong was charged along with Simon Hong and Keith Canlapan, 40, of West Covina, California, in an indictment returned on June 16, 2016.  Charges against Henry Penaranda, 39, formerly of Pasadena, California, were added in a superseding indictment returned on July 11, 2017.  Simon Hong pleaded guilty to one count of conspiracy to commit health care fraud on Dec. 15, 2016, and was sentenced on March 6, 2017, to 63 months in prison.  Canlapan pleaded guilty on Oct. 24, 2016, to one count of health care fraud conspiracy and is awaiting sentencing. Penaranda is a fugitive.  In a related case, Roderick Concepcion, 44, of Anaheim, California, pleaded guilty to health care fraud on April 4, 2016, and is awaiting sentencing.         

This case was investigated by HHS-OIG and the FBI. Assistant Chief Niall M. O’Donnell and Trial Attorney Emily Culbertson of the Criminal Division’s Fraud Section are prosecuting the case. 

The Medicare Fraud Strike Force is part of a joint initiative between the Department of Justice and HHS to focus their efforts to prevent and deter fraud and enforce current anti-fraud laws around the country.  Since its inception in March 2007, the Medicare Fraud Strike Force, which maintains 14 strike forces operating in 23 districts, has charged nearly 4,000 defendants who have collectively billed the Medicare program for more than $14 billion.  In addition, the HHS Centers for Medicare & Medicaid Services, working in conjunction with HHS-OIG, are taking steps to increase accountability and decrease the presence of fraudulent providers.

          LOS ANGELES – A federal judge has sentenced a South Los Angeles man to more than 10 years in federal prison for receiving child pornography he obtained over a peer-to-peer computer network.

          Fernando Vasquez Garcia, 31, was sentenced on May 24 to 121 months in prison, which will be followed by a lifetime period of supervised release. In addition to the prison term, United States District Judge André Birotte Jr. ordered Garcia to pay $1,000 in restitution to one victim and a $5,000 special assessment pursuant to the Justice for Victims of Trafficking Act.

          Garcia pleaded guilty on February 22 to one count of receiving child pornography. When he pleaded guilty, Garcia admitted obtaining videos and still images from a peer-to-peer network that depicted, among other things, a 10-year-old being forced to have sex and children under the age of 2 being used for sex acts.

          When he was juvenile, Garcia had an adjudication for committing a lewd act on a child, according to court documents. Prosecutors argued that the juvenile offense, combined with the child pornography offense, demonstrated a “well-documented and lifelong sexual interest in, and obsession with, children.”

          The Federal Bureau of Investigation conducted the investigation into Garcia.

          This case was prosecuted by Assistant United States Attorney Kathy Yu of the International Narcotics, Money Laundering, and Racketeering Section.

          LOS ANGELES –Two men dubbed the “Cowboy Gun Bandits” by the FBI for using a large-caliber revolver during a series of robberies that targeted gas station convenience stores and a bank have been to serve federal prison sentences of at least 35 years.

          Dominic Dorsey, 51, of Hollywood, was sentenced late Friday by United States District Judge Christina A. Snyder to 40 years in federal prison.

          Reginald Bailey, 74, of the Jefferson Park neighborhood of Los Angeles, was ordered Friday afternoon to serve a 35-year sentence.

          In addition to the prison sentences, Judge Snyder ordered both men to pay restitution totaling $58,700.

          Following a two-week trial in July 2016, a federal jury found Dorsey and Bailey guilty of 11 felony counts – conspiracy to interfere with commerce in violation of the Hobbs Act, five specific Hobbs Act robberies and five counts of using a firearm during the robberies.

          The jury specifically found that Dorsey and Bailey committed five robberies:

• a September 24, 2013, robbery at a Shell gas station in Woodland Hills;

• an October 6, 2013, robbery at an ARCO gas station in Newhall;

• an October 18, 2013, robbery at a Chevron gas station in Woodland Hills;

• an October 25, 2013, robbery at an ARCO gas station in Encino; and

• a November 5, 2013, robbery of a Citibank branch in Glendale that netted more than $55,000.

          In addition to these robberies, the jury heard evidence in relation to the conspiracy count that Dorsey and Bailey also committed robberies at three other gas stations in October 2013.

          Documents filed by prosecutors in relation to the sentencings described “the violent, terroristic nature” of Dorsey and Bailey’s criminal conduct, and how they “repeatedly brandished and used a firearm to control and instill fear in innocent civilians in order to steal from them and their businesses.”

          Many of the robberies were captured by video surveillance, which allowed investigators to determine that one of the robbers was missing part of his ring finger on his left hand. The video evidence helped lead authorities to Bailey, whose left hand is missing a portion of his ring finger.

          The investigation into the string of robberies by the “Cowboy Gun Bandits” was conducted by the Los Angeles Metropolitan Task Force on Violent Crime, which is made up of investigators with the Federal Bureau of Investigation, the Los Angeles Police Department and the Los Angeles Sheriff’s Department. The Glendale Police Department provided substantial assistance during the investigation.

          This case was prosecuted by Assistant United States Attorneys Joseph D. Axelrad and Jeffrey M. Chemerinsky of the Violent and Organized Crime Section.

          LOS ANGELES – A federal grand jury has indicted a San Fernando Valley man for his role in planning to bomb a rally in Long Beach last month for the purpose of causing mass casualties.

          Mark Steven Domingo, 26, of Reseda, a former U.S. Army infantryman who was deployed to Afghanistan, was previously arrested on a criminal complaint in this case. The indictment returned today formally charges him with providing material support to terrorists and attempted use of a weapon of mass destruction. If convicted, he would face statutory maximum sentence of life in federal prison.

          Domingo, who has been in federal custody since his arrest last month, is scheduled to be arraigned on the indictment on May 31 in United States District Court.

          According to the affidavit filed with the criminal complaint, Domingo, in online posts and in conversations with an FBI source, expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach last month. As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to find a bomb-maker. Domingo then purchased and provided to the confederate and the bomb-maker, who actually was the undercover officer, several hundred nails to be used as shrapnel for the bombs.

          Leading up to the planned attack, Domingo called for another event similar to the October 2017 mass shooting in Las Vegas to give Americans “a taste of the terror they gladly spread all over the world,” the complaint states. Following an attack on Muslims in New Zealand on March 15, Domingo wrote in an online post, “there must be retribution,” according to the complaint.

          On April 26, Domingo received what he thought was a live bomb, but in fact was an inert explosive device that was delivered by an undercover law enforcement officer. According to the criminal complaint, after receiving the bomb, Domingo drove his confederate and the undercover officer to Long Beach to scout the location Domingo planned to attack. While there, Domingo discussed finding the most crowded areas in order to kill the most people. Domingo was arrested shortly after returning from scouting the intended attack location.

          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.

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

          This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section at the United States Attorney’s Office for the Central District of California and Trial Attorney Ranganath Manthripragada of the Counterterrorism Section at the Department of Justice’s National Security Division.

A federal grand jury has indicted a San Fernando Valley man for his role in planning to bomb a rally in Long Beach last month for the purpose of causing mass casualties.  Assistant Attorney General for National Security John C. Demers and U.S. Attorney Nicola T. Hanna for the Central District of California made the announcement.

Mark Steven Domingo, 26, of Reseda, California, a former U.S. Army infantryman who was deployed to Afghanistan, was previously arrested on a criminal complaint in this case.  The indictment returned today formally charges him with providing material support to terrorists and attempted use of a weapon of mass destruction.  If convicted, he would face a statutory maximum sentence of life in federal prison.

Domingo, who has been in federal custody since his arrest last month, is scheduled to be arraigned on the indictment on May 31 in United States District Court.

According to the affidavit filed with the criminal complaint, Domingo, in online posts and in conversations with an FBI source, expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach last month. As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to find a bomb-maker. Domingo then purchased and provided to the confederate and the bomb-maker, who was actually an undercover officer, several hundred nails to be used as shrapnel for the bombs.

Leading up to the planned attack, Domingo called for another event similar to the October 2017 mass shooting in Las Vegas to give Americans “a taste of the terror they gladly spread all over the world,” the complaint states. Following an attack on Muslims in New Zealand on March 15, Domingo wrote in an online post, “there must be retribution,” according to the complaint.

On April 26, Domingo received what he thought was a live bomb, but in fact was an inert explosive device that was delivered by the undercover law enforcement officer.  According to the criminal complaint, after receiving the bomb, Domingo drove his confederate and the undercover officer to Long Beach to scout the location Domingo planned to attack. While there, Domingo discussed finding the most crowded areas in order to kill the most people. Domingo was arrested shortly after returning from scouting the intended attack location.

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.

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

This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section at the United States Attorney’s Office for the Central District of California and Trial Attorney Ranganath Manthripragada of the Counterterrorism Section at the Department of Justice’s National Security Division.

          LOS ANGELES – Four members of the violent, Mexican Mafia-affiliated Canta Ranas street gang have received lengthy prison sentences for violating multiple federal laws, including participating in racketeering, drug trafficking, and money laundering conspiracies.

          Three defendants linked to Canta Ranas, a gang that operates primarily in Santa Fe Springs and Whittier, were sentenced on Monday by United States District Judge R. Gary Klausner. In two separate jury trials last year, they were convicted of conspiring to violate the Racketeer Influenced and Corrupt Organizations (RICO) Act, and other crimes.

          The defendants sentenced on Monday were:

• Donald Goulet, a.k.a. “Wacky,” 32, sentenced to 20 years in federal prison. Goulet was a foot soldier involved in drug trafficking, collecting extortionate “taxes,” and committing violent crimes on behalf of Canta Ranas such as a home invasion robbery, during which Goulet and a co-conspirator tied up victims with duct tape at gun point while they ransacked the victims’ home. Goulet was convicted of RICO conspiracy, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering.
• Emanuel Higuera, a.k.a. “Blanco,” 34, sentenced to 17 years in federal prison for drug trafficking on behalf of Canta Ranas, and who was found guilty of RICO conspiracy, conspiracy to distribute methamphetamine, and possession with intent to distribute methamphetamine.
• Monica Rodriguez, a.k.a. “Smiley,” 41, a “secretary” for Mexican Mafia member David Gavaldon, who is currently serving a life sentence in state prison for a murder conviction. Rodriguez, who was sentenced to 14 years in federal prison for her crimes, visited Gavaldon at Pelican Bay State Prison to order the death of another member of the organization. Rodriguez also drove her son to a gang meeting for the purpose of him receiving a disciplinary beating from other Canta Ranas gang members, according to evidence presented at trial. Rodriguez was convicted of RICO conspiracy, conspiracy to distribute methamphetamine, and conspiracy to commit money laundering.

          Earlier this month, another defendant, Enrique Holguin, a.k.a. “Boxer,” 56, was sentenced to 14 years in federal prison for RICO conspiracy and for committing a violent act in aid of racketeering (VICAR) for his role in the attempted assault of a fellow inmate at the Metropolitan Detention Center in downtown Los Angeles because the intended target was perceived to be an informant for law enforcement authorities.

          These convictions and sentencings arose from a 2016 federal grand jury indictment charging 51 defendants that was the result of Operation “Frog Legs.” Prosecutors have secured more than 20 convictions so far in this matter.

          Operation Frog Legs is the result of an investigation by the Southern California Drug Task Force, which is led by the Drug Enforcement Administration as part of the High Intensity Drug Trafficking Area (HIDTA) initiative. The Task Force members that participated in Operation Frog Legs were U.S. Immigration and Customs Enforcement’s Homeland Security Investigation, the Whittier Police Department, the Los Angeles County Sheriff’s Department, IRS Criminal Investigation, and the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit.

          The trial prosecutors for these matters were Assistant United States Attorneys Carol Alexis Chen, Victoria A. Degtyareva, Kathy Yu, and Chelsea Norell, who are all members of the International Narcotics, Money Laundering, and Racketeering Section.

          SANTA ANA, California – A man who broke into the Santa Ana Zoo after hours and stole North America’s oldest-living ring-tailed lemur in captivity to keep the endangered animal as a pet has agreed to plead guilty to a federal criminal charge.

          Aquinas Kasbar, 19, of Newport Beach, has agreed to plead guilty to one misdemeanor count of unlawfully taking an endangered species. The charge carries a statutory maximum penalty of one year in federal prison and a $100,000 fine. Kasbar’s initial court appearance has been scheduled for May 28 in United States District Court in Santa Ana.

          According to his plea agreement filed today, on July 27, 2018, Kasbar broke into the Santa Ana Zoo after it had closed for the day. While in the zoo, Kasbar used bolt cutters to cut a hole in the zoo’s enclosures for lemurs and capuchin monkeys, which enabled several of the animals to escape, though they were later recovered, according to court documents.

          Kasbar admitted in his plea agreement to stealing Isaac, a 32-year-old, ring-tailed lemur (lemur catta), and North America’s oldest ring-tailed lemur in captivity. (The life span of a lemur typically is 20 to 25 years.) The ring-tailed lemur is on a list of the 25 most endangered primates, and ring-tailed lemurs are endangered, in part, because of the illegal pet trade, according to the plea agreement.

          After stealing Isaac, Kasbar placed the animal in a plastic drawer that lacked ventilation holes, court papers state. The next day, Kasbar abandoned Isaac in front of a Newport Beach hotel, leaving him in the same plastic drawer with two notes placed on it, which read, “Lemur (with tracker)” and “This belongs to the Santa Ana Zoo it was taken last night please bring it to police,” the plea agreement states. Kasbar’s actions resulted in a loss to the Santa Ana Zoo of approximately $8,486, court papers state.

          This case is being investigated by the Federal Bureau of Investigation, the United States Fish and Wildlife Service, the Newport Beach Police Department, and the Santa Ana Police Department.

          This matter is being prosecuted by Assistant United States Attorneys Daniel H. Ahn of the Santa Ana Branch Office and Erik M. Silber of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – The former chief marketing officer at the now-defunct Mirae Bank was sentenced today to 70 months in federal prison for his role in a scheme that caused the Koreatown-based lender to issue more than $15 million in fraudulent loans, and ultimately caused the bank to suffer severe losses.

          Ataollah Aminpour, 60, of Beverly Hills, was sentenced today by United States District Judge Dale S. Fischer, who also ordered Aminpour to pay $7,519,084 in restitution. Judge Fischer then remanded Aminpour, who had been on bond, into federal custody to begin serving his sentence immediately.

          Aminpour, who is also known as John and Johnny Aminpour, pleaded guilty in December 2017 to one felony count of making a false statement to a financial institution.

          According to court documents, Aminpour held himself out as a successful businessman who could help people obtain financing for gas station and car wash businesses with little or no down payment. In some instances, Aminpour would identify a business for the borrower to purchase, and would negotiate the sales price. On the commercial loan applications that Aminpour would submit to the bank on behalf of the borrower, however, Aminpour would overstate the actual purchase price of the business, thereby causing the bank to issue inflated loan amounts that were not fully secured.

          From 2005 to 2007, Aminpour, along with other participants, submitted fraudulent commercial loan applications to Mirae Bank, a federally insured financial institution. In his role as a senior bank executive, Aminpour submitted and knowingly caused others to submit false information not only about the true purchase price of the business but also about the assets of the borrowers and the finances of the businesses being purchased. Aminpour also allowed borrowers to circumvent the bank’s down payment requirements by arranging for money to be transferred into escrow accounts so it would falsely appear to Mirae Bank that the borrowers were making large down payments. As a result, borrowers were able to acquire businesses with little to no money down, with Aminpour earning commissions as a result and, in some instances, with Aminpour misappropriating the excess loan proceeds for himself.

          For example, Aminpour made false statements to Mirae Bank in an application for a $4.2 million loan in connection with the purchase a car wash in Maywood. When he pleaded guilty, Aminpour admitted that, on the application, he falsely stated that the purchase price of the car wash was $6.65 million when the real purchase price was $3.25 million.

          In his plea agreement, Aminpour further admitted that his scheme involved false statements in six loan applications submitted between November 2005 and February 2007 for loans totaling $16.7 million, and that losses on those loans exceeded $7.5 million.

          In addition to the loans charged as part of the fraud in this case, Aminpour referred approximately $150 million in loans to Mirae Bank, and the losses on those loans played a significant role in the bank’s collapse in 2009, according to court documents.

          After the bank’s failure, the FDIC took over Mirae Bank as its receiver. FDIC and Wilshire Bank, which acquired Mirae Bank’s assets from FDIC, together suffered more than $33 million in losses on the Aminpour-referred loans. Wilshire Bank was subsequently acquired by, and now does business as, Bank of Hope.

          The case was investigated by the Federal Deposit Insurance Corporation’s Office of Inspector General, the Federal Bureau of Investigation, the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), and the Federal Housing Finance Agency’s Office of Inspector General.

          This matter is being prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

          LOS ANGELES – The former manager of CBS Employees Federal Credit Union pleaded guilty today to one felony count of bank fraud for embezzling $40 million from his employer over the course of 20 years – spending the money on gambling; homes in California, Nevada and Mexico; and travel by private jet – in a scheme that ultimately led to the credit union becoming insolvent.

          Edward Martin Rostohar, 62, of Studio City, entered his plea before United States District Judge Otis D. Wright II, who scheduled a sentencing hearing for September 16, where Rostohar will face a statutory maximum sentence of 30 years in federal prison.

          According to his plea agreement, Rostohar used his position as a manager at the credit union, a federally insured financial institution, to make online payments from the credit union to himself or by forging the signature of another credit union employee on checks made payable to himself. Prior to his three decades of employment at the credit union, Rostohar was a trained accountant and an examiner at the National Credit Union Administration (NCUA), a federal agency that regulates credit unions. During his approximately 20 years of embezzling from CBS Employees FCU, he used his senior position at the institution to falsify its records to hide his fraud and make credit union appear to be profitable despite it suffering more than $40 million in losses as a direct result of his scheme, the plea agreement states.

          Rostohar sometimes disguised his unauthorized payments, and hid the proceeds of the fraud, by directing the stolen funds to shell companies he controlled, court papers state. Rostohar also admitted to submitting credit union checks to make personal credit card payments.

          The scheme was exposed in March when a credit union employee, after discovering a $35,000 check payable to Rostohar, conducted an audit and discovered $3.8 million in checks made payable to Rostohar between January 2018 and March 2019. Rostohar told law enforcement he gambled away much of the money and spent the rest on traveling by private jet, buying expensive watches, and giving his wife a weekly allowance of $5,000, according to an affidavit filed with a criminal complaint in the case. Rostohar also started a coffee business in Reno, Nevada in December 2018, and he wrote tens of thousands of dollars’ worth of checks to himself to cover the business’s costs as well as to pay a $5,000 monthly mortgage on a home in Reno he recently purchased, according to court documents.

          Rostohar has agreed to forfeit his ill-gotten gains, including bank accounts in his name and the names of his shell companies, four automobiles, including a Porsche, a Tesla and a Lexus, homes in Studio City, Reno, and Mexico, expensive watches, and Tiffany jewelry.

          Rostohar’s long-running fraud resulted in the decision by the NCUA to liquidate the credit union and discontinue its operations after determining the Studio City-based CBS Employees was insolvent with no prospect of restoring viable operations on its own. In March, University Credit Union of Westwood assumed CBS Employees’ assets, loans, and all member shares. At the time of its liquidation and sale, CBS Employees served 2,798 members and had assets of $21,037,558, according to the credit union’s most recent Call Report.

          Rostohar has been in federal custody since his arrest on March 13.

          This case was investigated by the Federal Bureau of Investigation and the Los Angeles Police Department.

          This matter is being prosecuted by Assistant United States Attorneys Andrew Brown of the Major Frauds Section and Victor Rodgers, deputy chief of the Asset Forfeiture Section.

          LOS ANGELES – The founder and ex-chief executive officer of Celerity Educational Group, a Koreatown-based non-profit owner and operator of charter schools, was sentenced today to 30 months in federal prison for conspiring to misappropriate approximately $3.2 million in public education funds allocated to some of her company’s schools.

          Vielka Maritza McFarlane, 56, of Sylmar, was sentenced by United States District Judge R. Gary Klausner, who told her, “If you want to help your students, you can teach them that if they make mistakes, they have to pay the price and be responsible for their own actions.”

          McFarlane, who pleaded guilty on January 8 to one count of conspiracy to misappropriate and embezzle public funds, founded Celerity Educational Group in 2004 and served as its CEO until April 2015. Between April 2012 and April 2017, McFarlane also was CEO of Celerity Global Development, a non-profit California corporation, which provided various management services to the Celerity charter schools in exchange for a percentage of the schools’ revenues.

          From July 2009 to April 2017, McFarlane and her co-conspirators caused the Celerity charter schools and Celerity Educational Group to falsely certify to federal, state and local authorities that they were complying with all rules and regulations governing the use of public funds that they received. McFarlane used public funds – money that should have been spent on educational purposes at Celerity charter schools in Los Angeles, Compton and Pasadena – for a variety of personal expenses and improper expenditures.

          Those expenses included unauthorized first-class airfare and foreign travel, luxury items purchased from shops in Beverly Hills and Tokyo, expensive meals at high-end restaurants, airfare and lodging for herself, her family members, and others in January 2013 to attend President Barack Obama’s second inauguration, and customized recreational bicycles for the use of McFarlane and her spouse.

          “Every dollar defendant spent on herself and her family members, whether it was for alcoholic drinks at expensive restaurants or checked bags for her trip to Washington, D.C., for a presidential inauguration, was a dollar less for the underserved yet deserving children of the Celerity Charter Schools and an insult to the hardworking individuals of Los Angeles who pay their taxes to help fund these needed schools,” prosecutors wrote in the government’s sentencing papers.

          From late 2012 to June 2014, McFarlane also conspired to use approximately $3 million in public funds – a substantial portion of which came from the United States Department of Education – awarded to Celerity’s charter schools in Los Angeles to purchase and renovate an office building in Columbus, Ohio, where she oversaw the founding of a separate charter school.

          McFarlane also used public funds awarded to the Celerity charters schools in 2013 to pay $157,957 for the security deposit, monthly rent and renovations at a soundstage and recording studio in Canoga Park, which was rarely used by the Celerity charter schools. McFarlane pursued a proposal to allow a digital-production company to use the studio space in exchange for 200,000 shares in the digital-production company, which would have been issued to a separate for-profit media-production business called The Muse Collective.

          She admitted in her plea agreement that the payments for her personal use, the Ohio property purchase, and the Canoga Village studio were improper; she lacked authorization to make those payments and expenditures; and the payments violated rules, regulations and laws governing the use of public funds that the Celerity charter schools received.

          Grace Canada, another Celerity executive, has pleaded not guilty to a 23-count federal grand injury indictment alleging conspiracy and wire fraud, among other offenses. She is scheduled to go to trial on November 12.

          In June 2017, the U.S. Attorney’s Office entered into a Non-Prosecution Agreement with Celerity Educational Group, now known as ISANA Academies, in which ISANA recognized and acknowledged the misconduct committed by McFarlane, agreed to cooperate fully with the government’s investigation, and agreed to implement certain reforms designed to ensure that similar conduct does not occur again.

          By entering into the Non-Prosecution Agreement, the U.S. Attorney’s Office recognized that ISANA is responsible for educating thousands of students from underserved neighborhoods throughout Los Angeles County, and has demonstrated a strong commitment to its students and their academic achievement. The reforms now implemented by ISANA should allow it to continue serving its students and communities. The United States Attorney’s Office recognizes the cooperation of ISANA and its board of directors throughout its ongoing investigation.

          This case was investigated by the United States Department of Education, Office of Inspector General; the Federal Bureau of Investigation, the United States Postal Inspection Service; IRS Criminal Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, and the United States Secret Service. The Los Angeles Unified School District’s Office of Inspector General was also part of the investigative team and has played an instrumental role in the ongoing investigation.

          This case is being prosecuted by Assistant United States Attorneys Julian L. André and Valerie L. Makarewicz of the Major Frauds Section.

          SANTA ANA, California – A former engineer at Skyworks Solutions, Inc. surrendered to law enforcement today on a federal criminal complaint alleging he obtained his employer’s non-public financial results without authorization and then illegally used the confidential information to purchase large amounts of Skyworks securities prior to the information being made public.

          Yuh-Yue Chen, 52, of Taiwan, formerly of Irvine, has been charged with one felony count of insider trading. Chen is scheduled to make his initial court appearance this afternoon in United States District Court in Santa Ana.

          According to an affidavit filed with the criminal complaint, Chen worked as an electrical principal engineer from 2003 until his termination in September 2014 at Skyworks, a publicly traded, Woburn, Massachusetts-based semiconductor company with a branch office and design center in Irvine. As a Skyworks employee, Chen received regular warnings from the company against engaging in insider trading, and as an engineer he was barred from having access to the company’s non-public earnings reports before they were publicly released.

          On July 14, 2014, Chen ignored these warnings and gained unauthorized access to the Skyworks finance area on four occasions, according to the affidavit. On July 15, using non-public Skyworks financial information, Chen allegedly purchased 1,300 Skyworks $48 call options – which gives a securities buyer the right to buy certain stock within a specified time frame – at an average price of $1.90. On July 17, Skyworks, which closed at a price of $46.34 per share, released its quarterly earnings report after markets closed. On July 18, Skyworks shares opened at $50.11 per share – a per-share gain of $3.77 – in response to the earnings announcement. On the same day, Chen sold his Skyworks calls for an average price of $3.36, resulting in profits of approximately $484,645, the affidavit states.

          Shortly after 9 p.m. on September 15, 2014, two Skyworks employees – in the parking lot outside the company’s Irvine office – caught Chen rifling through documents in the restricted accounting and finance office, the complaint alleges. When one of the employees entered the building and asked Chen to stop, Chen allegedly ran out of the office through a side door and escaped, running through nearby bushes. Chen did not return to Skyworks after this encounter, the affidavit states.

          Five days later, Chen flew from Los Angeles International Airport to Taipei, Taiwan without informing anyone at Skyworks, court documents state. Chen was fired on September 30, 2014 for his actions 15 days earlier and after Skyworks had conducted an investigation where Chen was deemed to have been evasive. When Chen returned his work laptop computer by mail to Skyworks, the computer did not have any files or documents on it, the affidavit states.

          Law enforcement interviewed Chen at LAX on March 29, 2019, where he confessed to committing insider trading, the complaint states.

          If convicted, Chen faces a statutory maximum sentence of 20 years in federal prison.

          Chen also faces civil charges in a lawsuit filed last month by the Securities and Exchange Commission that alleges insider trading.

          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.

          This matter was investigated by the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office.