Central District of California

          LOS ANGELES – Operation Jungle Book, a law enforcement initiative led by the United States Fish and Wildlife Service that targeted wildlife smuggling, has resulted in federal criminal charges against 16 defendants who allegedly participated in the illegal importation and/or transportation of numerous animal species – including a tiger, monitor lizards, cobras, Asian “lucky” fish, turtles, exotic songbirds and several coral species.

          “We are combatting an ever-growing black market for exotic animals. An insatiable desire to own examples – both living and dead – of these vulnerable creatures is fueling this black market,” said Acting United States Attorney Sandra R. Brown. “This is a truly international problem that threatens the survival of iconic species and vulnerable animal populations. The United States Attorney’s Office is prosecuting a wide array of cases that highlight the pervasive problem of wildlife trafficking and the associated issues of invasive species, disease transmission and the extinction of certain species.”

          In conjunction with the announcement of the criminal cases filed by federal prosecutors based in Los Angeles, the United States Fish and Wildlife Service (USFWS) is holding a media event today to showcase the broad range of species that are being smuggled into the United States and recognize its law enforcement and community partners who provide substantial assistance in the fight against wildlife trafficking.

          “Wildlife trafficking does not stop at international borders, and it is our duty to protect imperiled species both at home and abroad,” said Ed Grace, USFWS Acting Chief of Law Enforcement. “I commend our special agents who worked collaboratively with our state and federal partners to investigate, arrest, and prosecute these criminals. I would also like to thank the zoos, sanctuaries, and educational centers that shelter, care for, and rehabilitate the live animals we seize. Together, we are saving imperiled animals while bringing to justice those who attempt to profit from the illegal wildlife trade.”

          At today’s media event, USFWS officials will be joined by representatives of the United States Attorney’s Office, U.S. Customs and Border Protection (CBP), U.S. Immigration and Custom Enforcement’s Homeland Security Investigations (HSI), and the California Department of Fish and Wildlife (DFW). Some of the animals that have been recovered are currently being cared for by the Los Angeles Zoo, the San Diego Zoo Global, the Turtle Conservancy, and the STAR Eco Station – organizations that will also be represented at today’s event.

          Over the past several months, prosecutors from the Environmental and Community Safety Crimes Section of the United States Attorney’s Office have filed and litigated a series of cases that demonstrate the scope of the underground market for protected wildlife. The cases further illustrate the various means used by traffickers to avoid detection in the harvesting and illegal smuggling of various species.

          The black market for protected wildlife increases the demand for wildlife and their parts, which threatens to decimate vulnerable species. The prosecution of these cases will educate the public about the laws protecting wildlife and deter future wildlife crimes.

Tiger

          A Florida man was arrested yesterday afternoon on charges of being involved in the illegal sale and transportation of a Bengal tiger that was seized from a residence in Ventura County.

          Nicholas Bishop, also known as “Nick the Wrangler,” 27 – who currently resides in Hollandale, Florida, but at the time of the offense lived in Henderson, Nevada – was named in a criminal complaint filed late last month that charges him with the federal felony offense of aiding and abetting the purchase of a prohibited wildlife species. The State of California also prohibits the possession of tigers and other large cats (certain licensed individuals and organizations have exceptions).

          According to the affidavit in support of the complaint, Bishop falsified documents used to purchase the tiger in March 2014 from an Indiana organization called Wildlife In Need, Wildlife Indeed. In a statement he later gave to investigators, Bishop said that he had purchased the tiger for Michael Ray Stevenson, a rapper who uses the stage name Tyga.

          The following month, the tiger was seen in a backyard in Ventura and reported to the DFW, which later located and seized the animal in Piru. The two individuals who possessed the tiger in Piru were convicted in state court. When it was recovered, the tiger weighed approximately 100 pounds; it now weighs well over 400 pounds.

          Bishop allegedly falsified purchase records and caused the interstate transport of the tiger without the necessary documentation and permits required by the USFWS and the United State Department of Agriculture.

          Bishop was taken into custody yesterday afternoon. He is expected to make his initial court appearance this afternoon in United States District Court in Fort Lauderdale, Florida. If he were to be convicted of the criminal charge, Bishop would face a statutory maximum sentence of five years in federal prison.

King cobras

          A Monterey Park man pleaded guilty last month to smuggling king cobras – reptiles that were illegally brought into the United States after being hidden in potato chip cans shipped from Hong Kong.

          Rodrigo Franco, 34, was arrested in July and charged with smuggling the cobras that were intercepted by CBP in March, along with Chinese albino soft-shelled turtles. At the time the cobras were seized, Franco was already under investigation because of a prior shipment of three protected turtles – two big-headed turtles and a pig-nosed turtle (or “Fly River” turtle) – that USFWS had intercepted in January.

          After the cobras were seized in March, USFWS agents searched Franco’s residence, where they found, in a child’s bedroom, a Morelet’s crocodile, five diamond back terrapins and various turtles – all of which are protected under the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES), a treaty among 183 nations that is designed to ensure that international trade in specimens of wild animals and plants does not threaten their survival.

          When he pleaded guilty, Franco admitted smuggling a total of 23 cobras that had a black market value of approximately $46,000. The three cobras seized by CBP in March were sent to the San Diego Zoo, where one ultimately died.

          Franco pleaded guilty on September 7 and is scheduled to be sentenced by United States District Judge George H. Wu on December 7, at which time he will face a statutory maximum sentence of 20 years in federal prison.

Monitor lizards

          An Inglewood man pleaded guilty last month to smuggling five monitor lizards into the United States – two of which died while they were being shipped.

          Gayle Simpson, 33, pleaded guilty on September 27 to one count of smuggling monitor lizards that were shipped from the Philippines.

          The case against Simpson stems from a package intercepted by CBP in April. The package, which was labeled as “speakers” and was addressed to Simpson’s son, contained five monitor lizards: three spiny-necked water monitor lizards, one Samar water monitor lizard, and one Palawan water monitor lizard. Two of the monitor lizards arrived dead, and a third had suffered a crushed foot. All five monitor lizards are protected under CITES. A subsequent search warrant executed by USFWS at Simpson’s residence resulted in the seizure of four yellow-headed water monitor lizards and two spiny-necked water monitor lizards.

          Simpson is scheduled to be sentenced by United States District Judge Manuel L. Real on November 20, at which time he will face a statutory maximum penalty of 20 years in federal prison.

          In another case involving monitor lizards, a Long Beach man is scheduled to be arraigned on November 7 after being charged earlier this month with smuggling two species that had been shipped from the Philippines.

          Bryan Cho, 41, allegedly was set to receive five monitor lizards in a package that was intercepted by USFWS October 2016. After a shipping company delivered the package, USFWS agents went to Cho’s business, where agents saw the same species of lizards in the store.

          In May, USFWS learned about another package from the Philippines that was sent to Cho’s business address in Long Beach. While the package was described as containing “Toy Cars,” Cho admitted to ordering two or three monitor lizards from the Philippines.

          If he convicted of the smuggling offense, Cho would face a statutory maximum penalty of 20 years in federal prison.

Arowana fish (“lucky” fish)

          A Westminster man who sold arowana fish – said to be the world’s most expensive aquarium fish – pleaded guilty yesterday to smuggling the protected fish thought to be symbols of luck and prosperity in parts of Asia, as well as various turtle species.

          Kevin Duc Vu, 45, pleaded guilty to a felony charge that carries a maximum sentence of 20 years in federal prison.

          In September 2016, CBP intercepted a package addressed to Vu’s wife that contained six arowanas and seven big-headed turtles. The intercepted package also contained seven four-eyed turtles, six Asian box turtles and one black-breasted turtle. Six of the turtles ultimately died as a result of the smuggling efforts.

          On October 5, 2016, USFWS agents searched Vu’s residence and recovered two black-breasted turtles and four dead arowanas that were concealed in a freezer.

          Evidence uncovered during the USFWS investigation revealed that Vu had previously ordered wildlife, including arowanas, from an overseas supplier. According to court documents, Vu sold arowanas for $1,900, big-headed turtles for $850, and a pair of black-breasted turtles for $2,000.

          Vu is scheduled to be sentenced by United States District Judge Christina A. Snyder on February 5.

          Arowanas are also at issue in a three-count indictment returned by a federal grand jury last month, which charges an Orange County man and a foreign national with conspiring to smuggle the protected fish into the United States.

          The indictment charges Shawn Naolu Lee, 29, of Garden Grove, and Mickey Tanadi, 21, of Jakarta, Indonesia, with conspiracy, smuggling protected fish into the United States and submitting a false record for wildlife intended for importation.

          According to court documents, Lee ordered eight arowanas from Tanadi, agreeing in January to pay $2,000 for the fish plus shipping costs. Tanadi put the fish into bags of water that were concealed in porcelain pots to evade detection, which he then allegedly shipped in February.

          A CBP officer noticed that a package labeled as “Porcelain Herbal Pots” was leaking water, and CBP intercepted the shipment. Following a controlled delivery of the shipment to Lee’s residence, USFWS agents recovered the arowanas. However, all eight fish ultimately died as a result of the smuggling scheme.

          Lee has pleaded not guilty to the charges in the indictment, and is scheduled to go on trial before United States District Judge Otis Wright II on November 14. Tanadi remains at large. If they are convicted of the three charges in the indictment, Lee and Tanadi would each face a statutory maximum penalty of 30 years in federal prison.

          A Florida man was charged earlier this month with a misdemeanor offense of engaging in the unlawful trade of arowana fish. Cory Pham, 43, of Sunrise, Florida, was named in a criminal complaint that alleges he brought five arowanas on a flight from Vietnam to Los Angeles International Airport on October 5.

          Pham allegedly concealed the fish in black bags that were hidden in a plastic container placed in his luggage. Pham did not declare the arowanas to customs officials, nor did he have any permits that would allow him to legally bring the fish into the United States.

          Pham is scheduled to be arraigned in this case on November 14. If he was convicted, Pham would face a maximum sentence of one year in federal prison.

Asian songbirds

          An Orange County man was ordered this week to serve one year in federal prison, and another six months in home detention, after pleading guilty to smuggling protected Asian songbirds into the United States.

          Kurtis Law, 50, of Fountain Valley, was sentenced by United States District Judge Manuel L. Real after pleading guilty last summer to smuggling and attempted entry of goods by means of false statements.

          Law was arrested in May after bringing 93 Asian songbirds, worth nearly $100,000, on a flight from Vietnam. All but eight of the birds died in transit or soon after arriving at Los Angeles International Airport.

          Earlier this week, a Westminster man pleaded guilty to conspiring to smuggle Asian songbirds – specifically, Chinese Hwamei – into the United States.

          Sonny Dong, 55, admitted hiring another man to illegally import the birds from Vietnam. The birds were smuggled by hiding them under clothes or in baggage on airline flights.

          Dong pleaded guilty before United States District Judge S. James Otero, who scheduled a sentencing hearing for May 14, 2018. Dong faces a statutory maximum sentence of five years in federal prison.

Feathers from protected birds

          A Santa Ana man is scheduled to go on trial December 12 on misdemeanor charges of illegally selling feathers on Facebook from protected migratory birds and bald eagles.

          Tyler Rene Vela, 27, could be sentenced to up to one year in prison if he is convicted of selling feathers from a bald eagle and up to six months in prison if convicted of selling feathers from a red-tailed hawk and a turkey vulture.

Corals

          Late last month, prosecutors obtained three indictments charging a total of three individuals and two companies with engaging in the unlawful trading of protected live corals. Arraignments for all of the defendants are scheduled for early November.

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

          The cases brought as part of Operation Jungle Book are being handled by Assistant United States Attorneys Erik M. Silber, Amanda Bettinelli, Dennis Mitchell and Heather Gorman of the Environmental and Community Safety Crimes Section.

          SANTA ANA, California – A certified public accountant who worked at a tax preparation firm in Irvine has pleaded guilty to federal charges resulting from her obstruction of a federal investigation into millions of dollars in tax refunds claimed in tax returns that were prepared by her firm.

          Antonia Rios, 52, of Irvine, who was a partner at Quick Rios & Associates, pleaded guilty late yesterday afternoon to one count of attempting to interfere with the administration of the internal revenue laws.

          During yesterday’s hearing, Rios admitted that Quick Rios had prepared federal tax returns for approximately 200 clients – including a number of Fortune 500 companies – that cumulatively sought more than $100 million in refunds based on the Telephone Excise Tax Refund – the so-called TETR – which was available to compensate individuals and businesses that paid excess telephone excise taxes from 2003 to 2006.

          Rios admitted that she submitted to the Internal Revenue Service altered documents related to TETR to support refunds claimed in the tax returns Quick Rios had prepared for its clients. Rios additionally admitted that, during an April 2011 meeting with IRS auditors, she had presented to IRS personnel a fake email she had fabricated in an attempt to show “proof” that Quick Rios was properly calculating the TETR credit. When the IRS questioned Rios and her business partner about the fake email, Rios and her business partner falsely blamed others at Quick Rios for fabricating the email, instead of admitting that she had done it.

          Rios admitted that under Quick Rios’ fee arrangements with its clients, she and her partner stood to make millions of dollars in fees if the IRS ultimately paid out the TETR-based tax refunds based on returns the firm prepared.

          By pleading guilty, Rios admitted that she attempted to obstruct the IRS investigation into the tax returns prepared by Quick Rios. Rios was not charged with filing false tax returns, although the IRS did negotiate settlements with many of the firm’s clients.

          As a result of her guilty plea, Rios faces a statutory maximum sentence of three years in federal prison when she is sentenced by United States District Judge Andrew J. Guilford on June 25, 2018.

          The case was investigated by IRS Criminal Investigation.

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

          RIVERSIDE, California – A San Bernardino County man who prepared and filed fraudulent tax returns for both his clients and himself that claimed false business losses has been sentenced to serve eight months in federal prison.

          Mervyn Gucilatar, 46, of Yucaipa, was sentenced yesterday afternoon by United States District Judge Jesus G. Bernal. In addition to the prison term, Judge Bernal ordered Gucilatar to pay $573,440 in restitution to the Internal Revenue Service.

          Gucilatar, who operated his tax preparation business under the name JM Tax Solutions, pleaded guilty in February to one count of aiding and assisting in the preparation of a false tax return and one count of making and subscribing to a false tax return.

          According to the plea agreement filed in the case, while working with another unidentified return preparer, Gucilatar prepared fraudulent tax returns that claimed false partnership losses to which his clients were not entitled. The false partnership losses related to a limited liability corporation that was created with no legitimate purpose.

          The fraudulent tax returns included personal expenses and fictitious expenses for the partnerships that had no business purpose other than to create a loss. The false losses to the partnerships were passed through to the personal tax returns of Gucilatar’s clients, thereby reducing their income tax liability.

          Gucilatar prepared at least 35 sets of fraudulent partnership and individual income tax returns on behalf of clients resulting in a total tax loss of $678,873 for the 2012 tax year.

          Prior to working with the unidentified return preparer, Gucilatar was his client.  Using the other return preparer, Gucilatar filed amended 2009, 2010 and 2011 tax returns that used the same LLC scheme and claimed false partnership losses. Gucilatar also filed a fraudulent 2012 tax return using the LLC scheme on his own behalf, which created an additional tax loss. The total tax loss associated with the 2009-2012 returns filed in the name of Gucilatar and his wife is $95,882.

          In the plea agreement, Gucilatar agreed to the entry of a civil injunction, which will bar him for life from aiding in the preparation of tax returns for anyone other than himself and his wife. He will also be barred from representing other individuals before the IRS.

          This case is the product of an investigation by IRS Criminal Investigation.

          The case was prosecuted by Assistant United States Attorney Sean D. Peterson of the Riverside Branch Office.

          SANTA ANA, California – The owner and operator of a financial services company that provided accounting, tax and bookkeeping services to small businesses was sentenced today to 63 months in federal prison for embezzling more than $1.5 million from her clients.

          Elizabeth Jane Mulder, who also goes by “Lizzie,” a 34-year-old resident of San Juan Capistrano, was sentenced this morning by United States District Judge David O. Carter. Noting that Mulder used the money for “personal aggrandizement,” Judge Carter said the victims in this case represented “a vulnerable section of society because small business is the backbone of our country.”

          Mulder, who was the owner of Mulder Financial Consulting, pleaded guilty in June to wire fraud and subscribing to a false income tax return for failing to report the misappropriated funds to the Internal Revenue Service.

          According to documents filed in United States District Court, from July 2009 until this past spring, Mulder obtained money from small business clients by gaining the trust of their owners, some of whom allowed her to control their financial accounts.

          Mulder convinced nearly all of her victims to make checks payable to “Income Tax Payments” with false promises that the money would be used to satisfy the clients’ past and future tax obligations. Mulder then deposited these checks into the bank account of a fictitious business she created called “Income Tax Payments” and converted the funds for her own personal use.

          Mulder, who was personal friends with most of the victims, used a variety of means to defraud the victims, including creating false personas and fraudulent bank accounts. Using fictitious email accounts, Mulder posed as a potential buyer for one business, obtained a power-of-attorney over that business’ accounts and emptied the business’ accounts claiming the funds were being used for expenses associated with the sale of the company. In reality, Mulder had used the business’ money for her own personal expenses.

          Mulder’s fraudulent scheme resulted in the theft of approximately $1,538,771 from several Orange County-based businesses, including JAC Wines in San Clemente, Kurtz-Ahlers & Associates in San Juan Capistrano and Andra Builders, Inc. in Costa Mesa.

          Mulder used the money obtained from her fraudulent scheme for a variety of personal expenses, including a rental home in Laguna Beach, cosmetic surgery, vacations and an Arabian horse.

          “By developing and continuing personal friendships with the victims, [Mulder] was able to assume responsibilities for their small business accounting needs and then proceeded to steal from them,” prosecutors wrote in a sentencing memorandum filed with the court. “[Mulder]’s conduct resulted in various levels of financial loss and emotional distress to the victims, many of whom were required to drain their personal bank accounts or retirement funds in an attempt to avoid bankruptcy.”

          In addition to the prison term, Judge Carter ordered Mulder to pay $1,538,781 in restitution to seven victims, including the IRS.

          This case was investigated by the Federal Bureau of Investigation; IRS Criminal Investigation; and the Laguna Beach Police Department, Investigations Division.

          The case is being prosecuted by Assistant United States Attorney Scott Tenley and Paul C. LeBlanc of the Santa Ana Branch Office.

          RIVERSIDE, California – An Inland Empire man pleaded guilty late this afternoon to a federal child exploitation offense after coercing at least six boys around the nation to send him sexually explicit videos – some of which were posted on the internet when victims refused to send additional images and videos.

          Francisco Javier Soledad, 25, of Eastvale, pleaded guilty today to one count of using the internet to induce a minor to engage in criminal sexual activity.

          In a plea agreement filed in United States District court, Soledad admitted victimizing six boys between the ages of 12 and 15 over the course of several months in 2016. Soledad found the victims – who lived across the nation, from California to Georgia – on social media sites he accessed under the handle “linkinparkrocks.” Soledad pleaded guilty to one count related to a victim in Illinois, but he admitted engaging in similar conduct with at least five other boys he communicated with via Snapchat, text messages and email.

          According to court documents, Soledad assumed different personas – sometimes a 13-year-old boy, and other times an adult woman – to convince the victims to send him explicit photographs and videos. When several of the victims refused demands to send additional images, Soledad threatened to publish the previously sent images on social media platforms. In at least one instance, Soledad published one of the victim’s nude images on Twitter along with the victim’s Twitter handle.

          Soledad further admitted in his plea agreement that he possessed on his digital devices more than 5,000 images and videos of child pornography and child erotica. The majority of the child pornography images appear to have been produced by the children depicted. Law enforcement is reviewing the thousands of images and is continuing to try to identify all of the children Soledad appears to have victimized.

          Soledad pleaded guilty before United States District Judge Jesus G. Bernal, who scheduled a sentencing hearing on January 22.

          The charge of enticing a minor to engage in criminal sexual activity carries a mandatory minimum sentence of 10 years in prison and a maximum possible sentence of life. In the plea agreement, prosecutors have agreed not to seek a sentence of longer than 14 years.

          Once he completes any prison sentence he receives, Soledad will be required to register as a sex offender, and he will be prohibited from having unsupervised contact with minors and going to places to where young people congregate.

          This case is being prosecuted by Special Assistant United States Attorney Teresa K.B. Beecham of the Riverside Branch Office.

          SANTA ANA, California – A one-time sales representative for AFLAC was sentenced today to 10 years in federal prison after being convicted of federal fraud charges related to a scheme that used bogus disability claims to bilk the insurance company out of more than $4 million.

          Patricia Diane Smith Sledge, 61, of Redlands, was sentenced today by United States District Judge James V. Selna. In addition to the prison term, Judge Selna ordered Sledge to pay $4,166,063 in restitution.

          Following a two-week jury trial late last year, Sledge was found guilty of six counts of mail fraud, as well as two counts of witness tampering.

          The fraud scheme involved fictitious employers and bogus employees who falsely claimed to have suffered injuries that prevented them from working.

          The evidence presented at trial showed that Sledge – who was residing in Irvine while working for the company formally known as American Family Life Assurance Company – sold disability insurance policies to bogus companies and people who supposedly worked for those companies. Sledge then orchestrated the filing of fraudulent disability claims and directed the purported employees to doctors that would sign off on the fake injury claims.

          Sledge made money both from the commissions related to the sale of the fraudulent insurance policies and from kickbacks she received from the supposedly injured “employees.”

          Sledge exploited her knowledge of AFLAC’s internal policies and underwriting procedures to further the scheme. For example, Sledge and others involved in the scheme listed artificially inflated incomes on the applications for insurance because the amount AFLAC paid on disability claims was based on the policyholder’s income.

          Sledge was also found guilty of witness tampering for encouraging potential witnesses to lie to federal investigators and discouraging them from cooperating in the investigation. One of these crimes was committed while she was on bond in this case.

          Three others have been prosecuted for acting as fake employers and fake employees in this scheme.

          The case against Sledge and the others involved in the scheme is the result of an investigation by United States Department of Labor – Office of Inspector General, the Federal Bureau of Investigation, and California’s Department of Insurance. 

          This case is being prosecuted by Assistant United States Attorney Vibhav Mittal of the Santa Ana Branch Office and Assistant United States Attorney Joshua O. Mausner of the Violent and Organized Crime Section.

          LOS ANGELES – The United States Attorney’s Office, the FBI, and a coalition of other law enforcement agencies and community organizations are hosting the 9th Annual Cyber Crime Prevention Symposium on Monday, October 16. More than 450 educators, parents, and middle and high school students are expected to attend the daylong conference at the California Endowment Center for Healthy Communities in Los Angeles.

          The Symposium will address a wide range of Internet-related security and safety issues. Speakers will address and lead discussions on topics that include child exploitation, cyberbullying, the implications of digital communication on teen health, digital reputation, navigating peer pressure, social media, sexting and sextortion. This year’s Symposium will feature a youth panel presentation on social media, a SnapChat geotag and a surprise appearance during the lunch break by celebrity guests from Disney.

          “The internet and social media are a core component of our everyday lives. Because the internet is such an integral part of their relationships, young people must have tools to understand the online environment, the responsibilities they have to themselves and others, and the perils of reckless behavior,” said Acting United States Attorney Sandra R. Brown. “This Symposium will provide young people with important information that will help them avoid danger while engaging with others online.”

          “I’m proud that the FBI has been part of this annual event for nine years, during which we’ve seen the rules associated with the internet and cyber security evolve dramatically,” said Danny Kennedy, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “In 2017, our children must deal with traditional challenges such as peer pressure and bullying, but we also expect them to navigate their way through the latest technology. A byproduct of this event has always been that the FBI learns a great deal from the students too, as we endeavor to teach them the latest tools that can make a difference in their lives.”

          As part of this year’s event, theater students from California State University, Northridge will perform a cyber-related skit for students and interact with the audience in a “Write-Around” exercise addressing current issues such as sexting and cyberbullying.

          Student teams from each of the schools attending this year’s Symposium will also be invited to participate in the annual Cyber Safety Challenge. Participating students will be asked to develop a cyber safety program for their respective schools to educate the entire student body on the various risks associated with cyber crime. The contest promotes good online etiquette by challenging students to create cyber safety programs. Students participating in this challenge will have their contest entries judged by a panel of experts, and the winning school will be awarded prizes in May 2018.

          “The cyber world can be a wonderfully enlightening place, but it can also be a dangerous one, especially for children,” said Los Angeles City Attorney Mike Feuer. “My office is proud to work with our law enforcement partners to find ways to make the web safer.”

          Organized under the aegis of the Inter-Agency Council on Child Abuse and Neglect (ICAN), law enforcement agencies participating in tomorrow’s conference include the United States Attorney’s Office, the Federal Bureau of Investigation, the Los Angeles City Attorney’s Office, the Los Angeles County Sheriff’s Department, and the Los Angeles Police Department’s Internet Crimes Against Children Task Force (ICAC). The Cyber Crime Prevention Symposium is hosted this year by the Archdiocese of Los Angeles, and the planning committee also includes participation by Santa Monica-UCLA Medical Center, the Anti-Defamation League, Fox Entertainment Group, the Walt Disney Company, and Warner Bros. Entertainment.

          “Children who are growing up in this high-tech age are being targeted by online predators at an alarmingly high rate,” said Deanne Tilton Durfee, Executive Director for the ICAN. “Each year, this Symposium provides participants with resources and tools to help children learn how to protect themselves and be safe in the cyber world, while enjoying all of the benefits of the fast-growing technologies.”

          RIVERSIDE, California – A Mexican national who was previously designated as an important target because of his links to international drug trafficking was indicted today by a federal grand jury on narcotics charges related to a meth lab in Hesperia where multiple pounds of methamphetamine were seized.

          Adrian Ulises Garcia-Ruiz, 37, a native of Michoacán, Mexico, was named in a two-count indictment that alleges he supplied liquid methamphetamine that was turned into crystal meth at the San Bernardino County drug lab.

          The indictment names a second defendant – Carlos Miguel Gallardo-Valdovinos, also a Mexican national – who allegedly converted the narcotics into crystalline form.

          According to the indictment, Garcia-Ruiz coordinated shipments of liquid methamphetamine into the United States, where it was converted into crystalline form for distribution. Gallardo-Valdovinos allegedly purchased acetone which he used to convert the liquid methamphetamine into crystalline form at the Hesperia lab.

          In May 2014, authorities executed a search warrant at the Hesperia drug lab, where they seized approximately six gallons of liquid methamphetamine, more than nine pounds of crystal methamphetamine and $60,000 in U.S. currency.

          The indictment links Garcia-Ruiz to Gallardo-Valdovinos through a series of intercepted communications, some of which indicate that Gallardo-Valdovinos had received six gallons of methamphetamine prior to the seizure.

          Garcia-Ruiz had been placed on the Consolidated Priority Organization Target (CPOT) List by the Organized Crime Drug Enforcement Task Force. The CPOT list targets those who participate in the “command and control” of the most prolific international drug trafficking and money laundering organizations.

          Garcia-Ruiz was arrested at Dallas/Fort Worth International Airport on September 20, the day after prosecutors at the United States Attorney’s Office filed a criminal complaint against him. A federal Magistrate Judge in Dallas detained Garcia-Ruiz, and he currently is being transported to Southern California by the United States Marshals Service. Once Garcia-Ruiz arrives in Southern California, he will be arraigned on the indictment.

          The indictment charges Garcia-Ruiz and Gallardo-Valdovinos with two counts: conspiracy to manufacture, possess with intent to distribute, and distribute methamphetamine; and possession with intent to distribute methamphetamine.

          Each count carries a mandatory minimum penalty of 10 years in federal prison and a statutory maximum sentence of life.

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

          Today’s indictment is the result of an ongoing investigation being conducted by the Drug Enforcement Administration.

          This case is being prosecuted by Assistant United States Attorney Tritia L. Yuen and Special Assistant United States Attorney Paul Levers of the Riverside Branch Office.

          WASHINGTON – The United States filed a civil complaint against Michel Cordon Bleu Inc. of Los Angeles, California, and its owner and President Michel G. Blanchet to prevent the distribution of adulterated seafood products in violation of federal law, the Department of Justice announced today.

          Michel Cordon Bleu Inc. (Michel Cordon Bleu) prepares, processes, packs, holds, and distributes vacuum-packed, ready-to-eat cold and hot smoked fish and fishery products.  The complaint, filed in the U.S. District Court for the Central District of California, alleges that Michel Cordon Bleu and Michel G. Blanchet adulterated seafood products by preparing, packing, or holding them under insanitary conditions whereby the seafood may have become contaminated with filth or may have been rendered injurious to health. 

          The Department filed the complaint at the request of the U.S. Food and Drug Administration (FDA).

          “The Department of Justice is committed to ensuring that seafood processors comply with laws designed to protect consumers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively with the FDA to ensure that consumers are protected from potentially unsafe food.”

          According to the complaint, FDA inspected Michel Cordon Bleu’s facility on numerous occasions, including two times in 2016.  The complaint alleges that defendants failed to comply with the seafood Hazard Analysis and Critical Control Point (HACCP) regulations by, among other deficiencies, failing to adequately control the risk of Listeria monocytogenes (L. mono) and Clostridium botulinum (C bot.) toxin formation in their vacuum-packed fish or fishery products.

          The seafood HACCP regulations require every fish and fishery product processor to conduct, or have conducted for it, a hazard analysis to determine whether there are food safety hazards that are reasonably likely to occur during the processing of each kind of fish or fishery product that it processes.

          According to the complaint, FDA’s analysis of environmental samples collected during its January-February 2016 inspection revealed the presence of L. mono contamination in multiple locations throughout the Michel Cordon Bleu facility.  The complaint also alleges that FDA’s analysis of environmental samples collected during its subsequent inspection in July-August 2016 also revealed the presence of L. mono contamination in multiple locations throughout the company’s facility. 

          According to the complaint, FDA noted deficiencies at each of its two 2016 inspections at the Michel Cordon Bleu facility.  As alleged in the complaint, FDA noted that defendants failed to manufacture, package and store foods under conditions and controls necessary to minimize the potential for growth of microorganisms and contamination; failed to monitor sanitation conditions and practices with sufficient frequency to assure conformance with current good manufacturing practices; and failed to take corrective action that ensured affected product was not entered into commerce and the cause of the deviation was corrected.

          “When we find contaminants that can harm public health at a food manufacturing facility, we must take action to protect consumers,” said FDA Associate Commissioner for Regulatory Affairs, Melinda K. Plaisier.  “When necessary, we will seek legal action to ensure that manufacturers take steps to comply with food safety laws and regulations.”

          The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch, with the assistance of the U.S. Attorney’s Office for the Central District of California and the Associate Chief Counsel for Enforcement Roselle Oberstein of the FDA, Office of General Counsel, Department of Health and Human Services.

          A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

          Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.

          LOS ANGELES – Un Hag Baeg, 58, of Marina del Rey, a Korean national currently living in the United States, pleaded guilty yesterday afternoon to conspiring to defraud the United States government by evading federal excise taxes due on 143 million cigarettes sold domestically but which the co-conspirators claimed were destined for cargo vessels sailing out of the ports of Los Angeles and Long Beach.

          In the United States, cigarettes are subject to a federal excise tax of $50.33 per one thousand cigarettes. This tax is generally paid by the manufacturer, but may be avoided if the cigarettes are properly transferred to a bonded warehouse in order to be exported or consumed outside of the United States. Untaxed cigarettes sold for this purpose are known as “export-only” cigarettes. When export-only cigarettes are diverted from their proper destination, and instead sold in the United States, federal and state taxing authorities suffer lost excise taxes.

          According to court documents, between 2012 and 2015, Baeg and others conspired to divert approximately 143 million export-only cigarettes from an export warehouse near the Port of Los Angeles. Baeg purchased the cigarettes under the pretext that the cigarettes would be provided to various ships sailing out of the United States from the ports. In fact, the cigarettes were sold in the United States resulting in millions of dollars in lost federal and state excise taxes. Baeg and his co-conspirators subsequently hid their fraud by preparing false paperwork indicating that the cigarettes had been delivered to the various ships. In order to give this paperwork the appearance of legitimacy, the conspirators would stamp the paperwork with false rubber stamps bearing the names of the subject cargo vessels.

          The conspiracy resulted in the evasion of federal excise taxes totaling $7,260,203.16 and California state excise taxes totaling $5,986,458.00.

          United States District Judge S. James Otero set Baeg’s sentencing for January 29, 2018.

          The case was investigated by the Alcohol and Tobacco Tax and Trade Bureau, Internal Revenue Service Criminal Investigation Division, Department of Homeland Security - Immigration and Customs Enforcement - Homeland Security Investigations, and the Bureau of Alcohol, Tobacco, Firearms, and Explosives. The case is being prosecuted by Assistant United States Attorney James Hughes and Department of Justice - Tax Division Trial Attorney Christopher Strauss.

The United States filed a civil complaint against Michel Cordon Bleu Inc. of Los Angeles, California, and its owner and President Michel G. Blanchet to prevent the distribution of adulterated seafood products in violation of federal law, the Department of Justice announced today.

Michel Cordon Bleu Inc. (Michel Cordon Bleu) prepares, processes, packs, holds, and distributes vacuum-packed, ready-to-eat cold and hot smoked fish and fishery products.  The complaint, filed in the U.S. District Court for the Central District of California, alleges that Michel Cordon Bleu and Michel G. Blanchet adulterated seafood products by preparing, packing, or holding them under insanitary conditions whereby the seafood may have become contaminated with filth or may have been rendered injurious to health. 

The Department filed the complaint at the request of the U.S. Food and Drug Administration (FDA).

“The Department of Justice is committed to ensuring that seafood processors comply with laws designed to protect consumers,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.  “The Department of Justice will continue to work aggressively with the FDA to ensure that consumers are protected from potentially unsafe food.”

According to the complaint, FDA inspected Michel Cordon Bleu’s facility on numerous occasions, including two times in 2016.  The complaint alleges that defendants failed to comply with the seafood Hazard Analysis and Critical Control Point (HACCP) regulations by, among other deficiencies, failing to adequately control the risk of Listeria monocytogenes (L. mono) and Clostridium botulinum (C bot.) toxin formation in their vacuum-packed fish or fishery products.

The seafood HACCP regulations require every fish and fishery product processor to conduct, or have conducted for it, a hazard analysis to determine whether there are food safety hazards that are reasonably likely to occur during the processing of each kind of fish or fishery product that it processes.

According to the complaint, FDA’s analysis of environmental samples collected during its January-February 2016 inspection revealed the presence of L. mono contamination in multiple locations throughout the Michel Cordon Bleu facility.  The complaint also alleges that FDA’s analysis of environmental samples collected during its subsequent inspection in July-August 2016 also revealed the presence of L. mono contamination in multiple locations throughout the company’s facility. 

According to the complaint, FDA noted deficiencies at each of its two 2016 inspections at the Michel Cordon Bleu facility.  As alleged in the complaint, FDA noted that defendants failed to manufacture, package and store foods under conditions and controls necessary to minimize the potential for growth of microorganisms and contamination; failed to monitor sanitation conditions and practices with sufficient frequency to assure conformance with current good manufacturing practices; and failed to take corrective action that ensured affected product was not entered into commerce and the cause of the deviation was corrected.

“When we find contaminants that can harm public health at a food manufacturing facility, we must take action to protect consumers,” said FDA Associate Commissioner for Regulatory Affairs, Melinda K. Plaisier.  “When necessary, we will seek legal action to ensure that manufacturers take steps to comply with food safety laws and regulations.”

The government is represented by Trial Attorney Monica Groat of the Civil Division’s Consumer Protection Branch, with the assistance of the U.S. Attorney’s Office for the Central District of California and the Associate Chief Counsel for Enforcement Roselle Oberstein of the FDA, Office of General Counsel, Department of Health and Human Services.

A complaint is merely a set of allegations that, if the case were to proceed to trial, the government would need to prove by a preponderance of the evidence.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch. For more information about the U.S. Attorney’s Office for the Central District of California, visit its website at https://www.justice.gov/usao-cdca.

LOS ANGELES – The owner-operator of a Burbank medical clinic was sentenced today to 37 months in federal prison on federal healthcare fraud charges for participating in a scheme to defraud Medicare by prescribing unnecessary services and equipment, which often were not even provided.

          Knarik Vardumyan, 53, of Burbank, who formerly owned and operated the medical clinic, was sentenced by United States District Judge Dale S. Fischer who also ordered Vardumyan to pay $1,711,789 in restitution to the Centers for Medicare & Medicaid Services.

          Vardumyan pleaded guilty in April to two counts of federal healthcare fraud.

          According to court documents, Vardumyan admitted that she knowingly and unlawfully participated in a scheme to defraud Medicare by billing Medicare for “medically unnecessary office visits and diagnostic tests,” and by arranging “for the issuance of . . . prescriptions and orders for medically unnecessary durable medical equipment” and “home health services.” Vardumyan further admitted, “many, if not all” of the people who visited her clinic “were brought . . . by co-schemers known as ‘marketers,’ who offered promises of free, medically unnecessary [equipment] or food” to those Medicare beneficiaries who were willing to attend Vardumyan’s clinic.

          In documents filed in relation to today’s sentence, the government noted that Medicare paid $1,711,789 as a result of this fraudulent scheme, and that a 37-month term of imprisonment appropriately reflects the nature and circumstances of the offense, as well as the need for the sentence to “promote respect for the law and afford adequate deterrence against this kind of serious fraud against our healthcare system and the public fisc.”

          The case against Vardumyan was investigated by the Federal Bureau of Investigation and Assistant United States Attorneys Kristen Williams, Cathy J. Ostiller, and Julian André of the Major Frauds Section and prosecuted by Assistant United States Attorney Adam P. Schleifer.

          SANTA ANA, California – An Orange County man was sentenced to 97 months in federal prison Friday for fraudulently taking $2.2 million from distressed homeowners based on false promises that he could help them avoid foreclosure by obtaining modifications to their mortgages.

          Kevin Frank Rasher, 45, who has been in custody since his arrest at his Coto de Caza residence over a year ago, pled guilty to 12 counts of mail fraud in May. Rasher was sentenced by United States District Judge Josephine L. Staton who also ordered him to pay $2.24 million in restitution to his victims.

          According to court documents, Rasher admitted that, between 2011 and March 2016, he falsely told distressed homeowners that he was an employee of the U.S. Department of Housing and Urban Development and/or an attorney, and that the homeowners had been approved for a reduced mortgage payment or interest rate. Rasher then instructed the homeowners to mail their mortgage payments to one of his businesses, claiming that he would forward the money to the homeowners’ mortgage lenders. Instead of forwarding the money to the mortgage lenders, Rasher deposited the money into his bank accounts and used it to pay his own personal expenses.

          Rasher admitted that he fraudulently obtained approximately $2.24 million from more than 500 victims.

          This case was investigated by the U.S. Department of Housing and Urban Development, Office of the Inspector General; the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); the United States Postal Inspection Service; the Federal Housing Finance Agency’s Office of the Inspector General; and the Federal Bureau of Investigation.

          The case against Rasher was prosecuted by Assistant United States Attorneys Rosalind Wang and Robert J. Keenan of the Santa Ana Branch Office.

          LOS ANGELES – A former director of South Korea’s Earthquake Research Center at the Korea Institute of Geoscience and Mineral Resources (KIGAM) has been sentenced to 14 months in federal prison for using a Southern California bank account to launder bribes he received from two seismological companies, including one based in Pasadena.

          Heon-Cheol Chi, 59, of South Korea, was sentenced today by United States District Judge John F. Walter on one count of engaging in financial transactions with criminally derived property stating that this sentence “should send a clear message that this will not be tolerated by the law."  Chi was convicted in July of the money laundering charge following a four-day jury trial in United States District Court. According to the evidence presented at trial, Chi laundered the proceeds of bribes he had accepted in violation of South Korea law. In addition to the prison term, Chi was ordered to pay a $15,000 fine and to serve one year of supervised release following the completion of his term in federal custody.

          According to trial testimony, from at least 2009 through 2015, Chi abused his official position at KIGAM to demand and receive over $1 million in bribes from two seismological companies in exchange for providing them with unfair business advantages in the South Korean seismological market. The trial evidence showed that Chi advocated the purchase and use of equipment from these two companies by KIGAM and other South Korean customers. He also provided these companies with market intelligence and inside information, including confidential information about their competitors and the KIGAM bidding process.

          The evidence showed that Chi directed that his bribe payments be paid in cash or wired to his personal account at a Bank of America branch in Glendora. Chi transferred approximately half of the bribe payments sent to that account to an investment account he held in New York City, and spent approximately 70 percent of the remaining funds in South Korea, where he resided and worked.

          In addition to his use of cash payments and the U.S. banking system, the trial evidence showed that Chi took a number of steps to conceal his bribery scheme, including instructing representatives of the companies to delete or not respond to his emails, requesting that these company representatives not inform his colleagues at KIGAM of his illegal arrangements with these companies, and by sending fictitious invoices listing a false address in New Jersey.

          The evidence at trial included numerous emails in which Chi admitted that he was acting illegally and that he accepted bribes that exceeded his legitimate income from KIGAM by a substantial margin.

          The case against Chi is part of an ongoing investigation by the FBI’s International Corruption Squad in Los Angeles. Assistant United States Attorney Poonam Kumar of the Major Frauds Section, and Trial Attorneys David Fuhr and Anna Kaminska of the Criminal Division’s Fraud Section, prosecuted the case.

          The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.

          LOS ANGELES – A Compton man with a lengthy criminal history was sentenced today to 156 months in federal prison for firearms offenses, including dealing firearms without a license.

          Francisco Juantonio Hilt, 39, of Compton, was sentenced by United States District Court Judge R. Gary Klausner after a jury found him and Sean Ronaldo Alexander, 37, of South Los Angeles, guilty in March of seven illegal gun transactions involving a total of 30 guns, including military-style weapons and stolen firearms. The evidence at trial showed that the men believed they were supplying guns to the Armenian Mafia and the “Mexican Cartel,” and Hilt believed the buyer was a convicted felon. Both Hilt and Alexander were found guilty of conspiracy and engaging in the business of dealing in firearms without a license. Hilt was also convicted of several counts of being a felon in possession of firearms and sale of a firearm to a convicted felon.

          On July 12, 2017, Judge Klausner sentenced Alexander to 24 months’ imprisonment.

          A third con-conspirator – Jamie Maurice Thomas, 38, of South Los Angeles – pleaded guilty in November 2016 to conspiracy and selling a firearm to a convicted felon.  Judge Klausner sentenced Thomas to 63 months in federal prison in March.

          The three defendants were charged as part of an operation last year by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) targeting the sale of guns in and around Compton and Mona Park in the Willowbrook area of Los Angeles. During the course of the year-long investigation, authorities took more than 100 illegally trafficked firearms off the streets, and 14 defendants were charged in federal and state court.

          The case against Hilt, Alexander, and Thomas was investigated by ATF and was prosecuted by Assistant United States Attorney Veronica Dragalin of the General Crimes Section and Assistant United States Attorney Bryant Yang of the Organized Crime Drug Enforcement Task Force Section.

          LOS ANGELES – A Garden Grove preschool has entered into a voluntary civil settlement agreement with the United States to resolve allegations that it violated the Americans with Disabilities Act (ADA) by failing to agree to provide EpiPen injections when required and requested at its facility.

          OC Kids Infant and Preschool agreed last week to modify its policies to allow its staff to administer emergency EpiPen injections to children experiencing severe allergic reactions.

          The agreement with the United States Attorney’s Office resolves allegations that OC Kids was violating Title III of the ADA, which prohibits discrimination by places of public accommodation, including day care facilities, against individuals with disabilities.

          “Children with disabilities, including severe food allergies, must be given equal opportunities to attend day care,” said Acting United States Attorney Sandra R. Brown.  “I want to thank OC Kids for acknowledging its responsibility to comply with the Americans with Disabilities Act. The policies and changes that OC Kids has agreed to implement should serve as a guide for other day care centers to ensure that their admissions policies and practices do not discriminate against children with disabilities.”

          Under the terms of the voluntary settlement agreement, OC Kids has agreed to:

• not discriminate against any individual on the basis of disability;
• revise its policies to allow for reasonable modifications for children with disabilities, including children who have food allergies; and
• provide appropriate training for its staff.

          This matter was handled by Assistant U.S. Attorney Katherine M. Hikida with the Civil Division’s Civil Rights Section. For more information on the ADA, including access to publications to assist entities with ADA compliance, please visit www.ADA.gov or call the Department of Justice’s toll-free ADA Information Line at 800-514-0301 or 800-514-0383 (TTY).

          SANTA ANA, California – A Rancho Mirage cosmetic surgeon who has been on the run for four months after pleading guilty in a scheme that duped health insurance companies into paying tens of millions of dollars for cosmetic procedures that were not medically necessary was sentenced in absentia this afternoon to 20 years in federal prison.

          Dr. David M. Morrow, 72, a former Rancho Mirage resident whose current whereabouts are unknown, was sentenced this afternoon by United States District Judge Josephine L. Staton.

          Judge Staton imposed the sentence after Morrow pleaded guilty last year to conspiracy to commit mail fraud and filing a false tax return.

          During today’s hearing, Judge Staton noted that Morrow’s “greed knew no bounds,” and that he showed an “utter disregard for patients’ well-being and safety.” As part of the sentencing, Judge Staton found that the intended loss from Morrow’s scheme was $44,265,211.

          “This defendant was a successful doctor who owned a medical clinic and multiple valuable residences, yet he engaged in a scheme designed to steal tens of millions of dollars from insurance companies by tricking them into paying for cosmetic surgery,” said Acting United States Attorney Sandra R. Brown. “After admitting guilt, he went on the lam in the hopes of avoiding the punishment that was sure to come. When he is taken into custody – and he will definitely be captured – he will serve the lengthy sentence he deserves as a result of his greed and fraud.”

          Morrow, a dermatologist-turned-cosmetic-surgeon who was the owner of the Morrow Institute (TMI) in Rancho Mirage, specifically admitted that he submitted millions of dollars in claims for procedures that he certified were “medically necessary” – but in fact were cosmetic procedures such as “tummy tucks,” “nose jobs” and breast augmentations. In some cases, according to court documents, patients underwent procedures they did not want in exchange for promises from Morrow that he would perform the cosmetic procedures that they really wanted. In other cases, Morrow performed procedures on certain patients who had not given informed consent, which “has resulted in ongoing medical problems or disfigurement.” Evidence presented during today’s hearing also showed that Morrow had paid a patient for undergoing surgeries that were billed to insurance. All of the procedures led to fraudulent bills being submitted to insurance companies by Morrow and TMI.

          In court papers, prosecutors argued that Morrow’s “insurance billing scheme was a completely fraudulent business.” Morrow and TMI submitted more than $80 million in claims to insurance companies, which made payments of more than $20 million to Morrow and TMI.

          When he pleaded guilty in March 2016, Morrow admitted participating in a health care fraud scheme, which included submitting altered documents to private insurance companies that claimed various procedures were “medically necessary” to induce insurers to pay for them. The guilty pleas followed a grand jury indictment two years ago that alleged Morrow, his wife, and TMI lured patients to the Coachella Valley surgery center with promises that cosmetic procedures would be paid for by their union or PPO health insurance plans. 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.

          To trick insurance companies into paying for the cosmetic procedures, Morrow and others at TMI completely fabricated diagnoses. According to court documents, they also falsified medical records by listing fabricated test results and non-existent symptoms in order to cover up the actual medical procedures being performed. For example, tummy tucks were fraudulently billed as hernia repair or abdominal reconstruction surgeries, rhinoplasties (“nose jobs”) were fraudulently billed as deviated septum repair surgeries, and breast lifts and augmentations were fraudulently billed as “tuberous breast deformity.”

          Morrow also altered existing medical records after-the-fact to conceal that cosmetic surgery had actually been performed. Morrow admitted that on one patient’s medical record sent to an insurance company, he changed “Abdominoplasty” (tummy tuck), which was originally written in the procedure section, by covering up the word and handwriting “umbilical & ventral hernias” on top of it.

          Morrow also pleaded guilty to filing a false 2008 tax return, admitting that he failed to report to more than $100,000 of income on his 2008 tax return and more than $1.5 million on his 2009 tax return.

          Morrow and his wife are believed to have fled in May 2017. Prior to becoming fugitives, they failed to report to court officials, among other things, the sale of their $9.45 million home in Beverly Hills. Last month, prosecutors filed notice with the court that Morrow had breached his plea agreement by becoming a fugitive.

          Charges against Morrow’s wife, Linda Morrow, 65, are currently pending.

          The investigation into the Morrows and TMI was conducted by the Federal Bureau of Investigation, IRS - Criminal Investigation, and the California Department of Insurance.

          Law enforcement authorities continue to search for the Morrows. Anyone with information about their whereabouts is encouraged to call their local FBI office. The FBI’s Los Angeles Field Office can be reached at (310) 477-6565.

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

          LOS ANGELES – A former employee of the Glendale City Attorney’s Office has been charged with embezzling $609,764 she illegally obtained by creating documents to make it appear the money was being used to pay civil claims against the city.

          Cassandra Alexander, 53, who resides in the Winnetka district of Los Angeles, was charged yesterday with one count of theft from an organization receiving federal funds. In a plea agreement also filed yesterday, Alexander agreed to plead guilty to the felony offense.

          Alexander was a claims and litigation support supervisor at the Glendale City Attorney’s Office, where she was responsible for assembling “Settlement Packets” that were used to resolve claims against Glendale for personal injury or property damage. Each Settlement Packet contained approval of the settlement by a member of the City Attorney’s and the City Council, as well as authorization for the city’s Finance Department to issue a check to the claimant.

          Alexander, who had unlimited authority to sign documents directing the Finance Department to issue checks, was responsible for picking up the checks and providing them to claimants’ attorneys.

          Beginning in July 2001, and continuing through March 2017, Alexander created and submitted fraudulent Settlement Packets that caused the Finance Department to issue 30 checks to her family members and acquaintances, according to the plea agreement. Alexander created bogus settlement agreements and fake minutes of City Council meetings.

          After the Finance Department prepared the checks, Alexander took possession of the checks and provided them to the payees, who cashed them and transferred the money to Alexander, she admitted in the plea agreement. The Glendale Police Department seized from Alexander a check for $82,500, which was payable to a family member, before she was able to have it cashed.

          Alexander will receive a summons directing her to appear in United States District Court for an arraignment in the coming weeks.

          The charge of theft from an organization receiving federal funds carries a statutory maximum penalty of 10 years in federal prison.

          This case was investigated by the Federal Bureau of Investigation, which received substantial assistance from the Glendale Police Department and the full cooperation of other city departments.

          This case is being prosecuted by Assistant United States Attorney Patricia A. Donahue of the Public Corruption and Civil Rights Section.

          LOS ANGELES – A Lynwood woman who dropped out of law school – but who later allegedly stole the identity and bar license number of a New York attorney – surrendered herself last night on federal charges that accuse her of filing immigration petitions on behalf of foreign nationals who believed she was a legitimate lawyer.

          Jessica Godoy Ramos, 36, was taken into custody pursuant to a criminal complaint that charges her with mail fraud and aggravated identity theft. Ramos is expected to make her initial appearance this afternoon in United States District Court.

          According to the criminal complaint, Ramos accepted thousands of dollars from several dozen aliens who sought her services in an attempt to obtain legal status in the United States. The complaint affidavit alleges that Ramos filed immigration petitions on the behalf of some aliens, but in other cases she never performed any services for her clients. In at least one instance, Ramos created counterfeit immigration parole documents which a client was able to use to enter the United States.

          According to the complaint, Ramos’ clients initially believed she was a legitimate immigration attorney, but several became suspicious when Ramos directed them to appear at U.S. Citizenship and Immigration Services (USCIS) offices for interviews – but they did not have any scheduled appointments.

          “The crimes alleged in this case victimized dozens of immigrants who were attempting to realize the American dream by paying someone they thought was a lawyer,” said Acting United States Attorney Sandra R. Brown. “This type of scam, which unfortunately targets new immigrants too often, undermines our immigration system and can shatter dreams of obtaining legal status to remain in the United States.”

          "Unscrupulous immigration practitioners not only exploit the trust of their often-unwitting victims, but by filing fraudulent immigration applications they create a security vulnerability and potentially rob deserving immigrants of benefits they rightfully deserve,” said Joseph Macias, Special Agent in Charge for U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Los Angeles. “As these charges makes clear, HSI, in collaboration with its federal partners, is committed to targeting such scams and ensuring that those responsible are held accountable.”

          Federal authorities began investigating Ramos in February after the HSI-led Document and Benefit Fraud Task Force received a tip from USCIS about five of Ramos’ clients who went to USCIS offices in downtown Los Angeles expecting to pick up their non-existent “Green Cards.”

          “People who wish to file for benefits with U.S. Citizenship and Immigration Services have a right to proper representation,” said USCIS Los Angeles District Director Donna Campagnolo. “This case is a good example of all agencies involved working together to ensure that the integrity of the program is preserved and individuals are able to retain proper representation to aide them through the process.”

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

          If she were to be convicted, Ramos would face a statutory maximum penalty of 20 years in federal prison for the mail fraud count and a mandatory consecutive sentence of two years for the aggravated identity theft charge.

          During the investigation into Ramos, HSI received substantial assistance from USCIS’ Fraud Detection and National Security Directorate and the San Gabriel Police Department.

          This case is being prosecuted by Assistant United States Attorney Andrew Brown of the Major Frauds Section.

          LOS ANGELES – The Justice Department announced today that two Los Angeles-based consumer finance companies have agreed to pay a total of $760,788 to resolve allegations that the companies violated the Servicemembers' Civil Relief Act (SCRA) by repossessing 70 vehicles owned by SCRA-protected servicemembers without first obtaining the required court orders.

          Westlake Services, LLC and its subsidiary, Wilshire Consumer Capital, LLC, agreed to pay the settlement in an agreement finalized today.

          The agreement resolves the claims made in the United States’ civil complaint against Westlake and Wilshire filed today in federal court in Los Angeles. The parties will stipulate to the dismissal of the lawsuit once Westlake and Wilshire deposit the funds required by the settlement agreement into an escrow account and pay the civil penalty to the United States.

          Westlake, which does business as Westlake Financial Services, is an auto financing company that specializes in purchasing and servicing subprime and near-subprime retail installment sales contracts. Wilshire, which does business as Wilshire Consumer Credit, originates and services vehicle title loans. Both companies target junior enlisted servicemembers for their loans and products.

          During its investigation, the Justice Department found that Westlake and Wilshire had failed to adopt policies and procedures necessary to ensure that their motor vehicle repossessions complied with the SCRA.

          “The women and men who serve in the armed forces protect our country from danger every day,” said Acting United States Attorney Sandra R. Brown. “Given the enormous sacrifice they make for all of us, we have a responsibility to ensure that their rights are protected. Westlake and Wilshire did not live up to this responsibility. But the settlement we have reached will fix the lending practices that led to violations and vindicate the rights of the servicemembers affected.”

          “The members of our armed forces should be able to devote their full attention to their duties without having to worry about whether their legal rights will be violated by creditors,” said Acting Assistant Attorney General John M. Gore. “We honor all servicemembers for their sacrifice and service to our nation, and this settlement signals our ongoing commitment to protecting the rights of our men and women in uniform.”

          The settlement agreement requires Westlake and Wilshire to provide $10,000 in compensation to each of the 70 affected servicemembers, plus any lost equity in the vehicle with interest.

          Westlake and Wilshire also must repair the credit of all affected servicemembers, pay a $60,788 civil penalty to the United States and determine, in the future, whether any vehicle it is planning to repossess is owned by an SCRA-protected servicemember. If so, Westlake and Wilshire will not repossess the vehicle without first obtaining a court order or valid waiver of SCRA rights. The agreement also contains provisions ensuring that all eligible servicemembers will receive the benefit of the SCRA’s 6 percent interest rate cap on their auto loans.

          Westlake and Wilshire will contact servicemembers to be compensated through this settlement in the upcoming months. They will locate victims and distribute payments at no cost to servicemembers.

          This matter came to the attention of the Justice Department in 2016, when the Consumer Financial Protection Bureau’s Office of Servicemember Affairs notified the Department that it had received a complaint that Westlake and Wilshire were conducting motor vehicle repossessions in violation of the SCRA.

          The SCRA protects servicemembers against certain civil proceedings that could affect their legal rights while they are in military service. It requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service. The court may delay the repossession or require the lender to refund prior payments before repossessing. The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember.

          By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, Westlake and Wilshire prevented servicemembers from obtaining a court’s review of whether their repossessions should be delayed or adjusted to account for their military service.

          The Justice Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section, often in partnership with local United States Attorney’s Offices. Housing and Civil Enforcement Section attorneys worked jointly with the Civil Rights Section within the Civil Division of the United States Attorney’s Office to obtain the settlement with Westlake and Wilshire.

          Since 2011, the Justice Department has obtained over $450 million in monetary relief for servicemembers through its enforcement of the SCRA. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance and income tax payments. For more information about the department’s SCRA enforcement, please visit www.servicemembers.gov.

          Servicemembers and their dependents who believe that their rights under SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil.

          LOS ANGELES – A federal grand jury today returned an indictment that alleges the former head of Santa Monica-based ServiceMesh, Inc. paid bribes to former IT executives at Commonwealth Bank of Australia to approve millions of dollars in contracts that inflated ServiceMesh revenues and fraudulently caused Computer Sciences Corporation (CSC) to pay a nearly $100 million incentive bonus as part of CSC’s purchase of the cloud software company.

          The 15-count indictment details a bribery and kickback scheme that developed over several years and involved two shell corporations.

          The indictment charges Eric Pulier – the founder, CEO and largest shareholder of ServiceMesh – with orchestrating the international fraud scheme involving his payment of approximately $2.5 million in bribes to two senior technology executives at Commonwealth Bank of Australia (CBA). In exchange for the bribes, the indictment alleges, the IT executives facilitated $10.4 million in contracts for the sale of software from ServiceMesh to CBA in late 2013 and January 2014. The CBA contracts triggered an “Earnout” payment as part of a sale agreement with CSC that caused CSC to pay an additional $98 million to ServiceMesh shareholders, about $30 million of which went directly to Pulier.

          The indictment also charges Jon Waldron, a former IT manager at CBA, with participating in the scheme by facilitating the approval of contracts with ServiceMesh in exchange for approximately $1.9 million in bribes, most of which was paid to him through a shell company in New Zealand.

          Warrants for the arrest of Pulier, 50, of Los Angeles, and Waldron, 47, of Sydney, Australia, have been issued. Pulier is expected to surrender to authorities in the coming days. Waldron remains in Australia facing related charges brought by Australian authorities.

          The 42-page indictment details an elaborate scheme in which Pulier agreed to pay bribes to Waldron and another CBA IT executive, Keith Hunter, in exchange for their assistance in facilitating contracts to help boost ServiceMesh revenue. The contracts were needed to push ServiceMesh revenues over $20 million – the threshold that triggered CSC paying the incentive bonus. As a result, CSC paid ServiceMesh shareholders, of which Pulier was the largest, an Earnout payment of $98 million in March 2014.

          A portion of Pulier’s ServiceMesh shares were held by a company called TechAdvisors. The indictment alleges that after TechAdvisors received its Earnout payment, Pulier caused TechAdvisors to transfer $4.8 million to a purported nonprofit company named Ace, Inc., which was later renamed The Ace Foundation. Ace was headed by a childhood friend of Pulier, who transferred $2.5 million to accounts held by Waldron and Hunter in Australia, New Zealand and the United States.

          The indictment filed today charges Pulier and Waldron with conspiracy to commit securities fraud and wire fraud, one count of securities fraud and four counts of wire fraud.

          Pulier alone is further charged with six counts of interstate travel and use of interstate facility in aid of commercial bribery, obstruction of justice, and two counts of filing a false tax return. The obstruction of justice charge relates to Pulier’s alleged effort to influence a former ServiceMesh executive to provide false information to the FBI and Grand Jury about payments made by Pulier through TechAdvisors. The tax fraud charges relate to charitable deductions taken by Pulier for payments by Ace made to Waldron, Hunter, and others.

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

          The statutory maximum penalties for the charges in the indictment are: 25 years in federal prison for the conspiracy and securities fraud counts, 20 years for each count of wire fraud, five years for each count of interstate travel in aid of commercial bribery, 10 years for the obstruction of justice count, and three years for each of the filing false tax return charges.

          Hunter was previously charged in a two-count information with conspiracy to commit securities fraud and wire fraud.

          The United States Securities and Exchange Commission today filed a civil action against Pulier and Waldron that charges them with securities fraud.

          The criminal case stemming from the ServiceMesh fraud scheme is being investigated by the Federal Bureau of Investigation and IRS Criminal Investigation.

          The United States Attorney’s Office expressed appreciation to the New South Wales Police Force, Fraud and Cybercrime Squad, for their assistance in this investigation.

          This case is being prosecuted by Stephen A. Cazares and Scott Paetty of the Major Frauds Section.

          LOS ANGELES – A Walnut resident has been arrested on federal charges of making a hoax threat by falsely reporting to airline and law enforcement officials that an acquaintance of his planned to blow up an airplane and posed a threat to the United States.

          Dino Ninku, 36, of Walnut, was arrested Friday at his residence without incident by FBI Agents. Appearing before a United States Magistrate Judge Friday afternoon, Ninku was ordered held without bond pending trial.

          Ninku was charged in a criminal complaint filed last week in United States District Court in Los Angeles with providing false information, a felony offense that carries a statutory maximum penalty of five years in federal prison.

          According to the affidavit in support of the complaint, a person later identified as Ninku called the Asiana Airlines reservations center in Los Angeles on August 5 and reported a passenger scheduled to travel from Asia to the United States on August 18 posed a terrorist threat and was threatening to blow up the plane. Ninku, who also told the Asiana representative that the passenger had been recruiting other people in the U.S., provided details about the passenger’s flight itinerary and said that the attack would happen either on a flight from China to South Korea or a flight from South Korea to Los Angeles.

          Asiana Airlines reported the information to law enforcement authorities in the United States, China and South Korea. Multiple law enforcement agencies also investigated the threat, including the FBI, which received a similar report via the internet. A report to the Department of Homeland Security also provided details of the alleged threat, adding that the passenger planned to “take out public locations in the U.S. mainland” through the passenger’s “network.” A report was also made to LAPD’s iWatch Program, according to court documents.

          As part of the ensuing investigation, the victim of Ninku’s hoax threat became the subject of national security interest, and the United States State Department revoked the victim’s student visa. Further investigation revealed that the victim is a legitimate student pursuing an education, is not a member of a terrorist organization, and does not pose any known threat to the United States.

          According to the criminal complaint, Ninku ultimately admitted during an interview with an FBI agent that the victim did not make terrorist threats and does not pose a credible threat to the United States.

          At Ninku’s initial court appearance last Friday, he was ordered to appear for a preliminary hearing on October 6 and an arraignment on October 13.

          The investigation in this case is being conducted by the FBI, the United States Secret Service and the Federal Air Marshal Service.

          The case is being prosecuted by Assistant United States Attorney Michael G. Freedman of the General Crimes Section.

          LOS ANGELES – A federal grand jury has returned three indictments charging a total of three individuals and two companies with engaging in the unlawful trading of live corals that are protected by an international treaty known as the Convention on the International Trade of Endangered Species of Wild Fauna and Flora (CITES).

          The indictments allege the defendants violated various federal statutes, including smuggling laws, The Endangered Species Act and a conservation statute known as The Lacey Act.

          “The mountains, plains and oceans of this planet are under constant assault from those who would harvest these resources without end,” said Acting United States Attorney Sandra R. Brown. “The corals in these cases were being trafficked for the sole purpose of decorating fish tanks. We will enforce federal laws that control the trafficking of wildlife to ensure the ongoing survival of plants and animals that all serve an important role in the environment.”

          “Special agents of the U.S. Fish and Wildlife Service investigated a complex scheme where live coral were illegally ripped from coral reefs, hidden in air cargo shipments and imported at odd hours in an attempt to smuggle them into the United States,” said USFWS Special Agent in Charge Jill Birchell. “This case highlights that wildlife smuggling is a transnational crime that often decimates not only wild populations of animals and fish, but, as in the case of smuggled live coral, the very habitat that imperiled wildlife depend on for survival. We will continue to work closely with our federal, international, and state partners to investigate and prosecute individuals who exploit protected wildlife for financial gain.”

          The three indictments outlined below were returned by a grand jury on September 20.

• Renaissance Aquatics, Inc. and Lim Aqua-Nautic Specialist, Inc. – both located in Inglewood – and Chet Bryant, 37, of Houston, were charged with unlawfully importing live, CITES-protected corals from Vietnam and submitting false records to conceal their unlawful activity on seven occasions over a five-month period.  According to court documents in this case, the corals were hidden from view in shipments containing other wildlife. The indictment also charges Renaissance and Bryant with conspiracy and attempting to unlawfully export live coral.

• Jose Torres, 42, of Gardena, was charged with unlawfully attempting to export to Mexico 20 varieties of live, CITES-protected corals. The indictment also alleges that Torres submitted false records to the USFWS that omitted the corals and understated the size of the shipment.

• Jorge Vazquez, 39, of Garden Grove, was charged with unlawfully attempting to export live, CITES-protected corals. Transportation Security Administration officers found the corals hidden in Pringles potato chip cans during a baggage inspection at Los Angeles International Airport. Vazquez later admitted that he packed the corals into the Pringles cans, then placed the cans in his mother’s luggage for her to transport to Mexico.

          The five defendants will be summoned to appear for arraignment in the United States District Court in the coming weeks.

          Each of the three indictments alleges multiple federal charges, including attempting to export wildlife contrary to law, a charge that carries a statutory maximum penalty of 10 years in federal prison. Bryant is charged with seven counts of wildlife smuggling, each of which carries a statutory maximum penalty of 20 years of imprisonment.

          These cases were investigated by the United States Fish and Wildlife Service.

          The cases are being prosecuted by Assistant United States Attorneys Heather C. Gorman and Dennis Mitchell of the Environmental and Community Safety Crimes Section.

          SANTA ANA, California – A former clerk of the Orange County Superior Court was sentenced today to 135 months in federal prison for orchestrating a scheme in which he was paid approximately $420,000 dollars in bribes to “fix” criminal cases and traffic offenses on terms favorable to hundreds of defendants without the knowledge of prosecutors or judges.

          Jose Lopez Jr., 36, of Anaheim, was sentenced this morning after pleading guilty in March to one count of conspiring to violate the federal Racketeer Influenced and Corrupt Organizations Act (RICO).

          Lopez was sentenced by United States District Judge Josephine L. Staton, who said Lopez created, led and profited from the scheme. 

          “This [criminal conduct] was not an aberration from his character – this was his character,” the judge said.

          Lopez admitted that he was at the center of a scheme in which bribes as high as $8,000 were paid to co-conspirators to fraudulently resolve cases for hundreds of defendants. The co-conspirators were middlemen who recruited individuals with pending cases to pay money that was given to Lopez to resolve their cases without the authorization of the court.

          “People who were facing their second drunk driving offense were able to bribe their way out of mandatory jail sentences,” said Acting United States Attorney Sandra R. Brown. “Mr. Lopez led a long-running scheme that brought him well over $400,000 and caused untold damage to the operations and reputation of the criminal justice system in Orange County.”

          According to court documents, Lopez improperly resolved approximately 1,034 cases, including 69 misdemeanor driving under the influence cases, 160 other misdemeanor cases and 805 traffic-related infraction cases.

          Over the course of more than five years, Lopez “resolved” cases by entering information into the court’s computers to make it appear that a defendant had pleaded guilty, paid required fees or had performed community service. In some cases, Lopez fraudulently created records that made it appear drunk driving charges had been dismissed or defendants had served mandatory jail time.

          In addition to taking the bribes and falsifying court records, Lopez forged the signature of a prosecutor with the Orange County District Attorney’s Office.

          The conspiracy ended in the spring of 2015 when the Orange County Superior Court learned about the misconduct and took steps to reopen the cases that Lopez tampered with.

          “Because of [Lopez]’s corrupt actions, the Orange County Superior Court audited each and every case that [Lopez] handled,” prosecutors wrote in a sentencing memorandum filed with the court. “The state court recalled the cases where fraud was found to restore the integrity of its records.” According to a victim impact statement submitted by the Orange County Superior Court, Lopez’s corruption scheme cost the Orange County Superior Court about $170,000 to clean up.

          Lopez used the money he received as part of the scheme to pay for, among other things, international vacations, trips to Las Vegas and the opening of a restaurant in Garden Grove.

          “Defendant Lopez was entrusted with protecting the interests of justice but instead made a lucrative income operating an underground business for clients seeking a pass on criminal activity,” said Danny Kennedy, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “The successful investigation and prosecution of Mr. Lopez and his many co-conspirators is a result of a collaborative effort by multiple agencies and should serve as a warning to public officials who use their access to benefit personally.”

          “Mr. Lopez used his public position of trust to enrich himself and undermined public safety,” stated IRS Criminal Investigation’s Acting Special Agent in Charge Aimee Schabilion. “IRS Criminal Investigation will continue to use our financial investigative expertise to combat public corruption and hold officers of the court accountable for their actions.”

          Lopez is one of a dozen defendants who have been convicted of participating in the racketeering conspiracy. The other 10 defendants who have pleaded guilty before Judge Staton are:

• Ricardo Quinones, 33, of Santa Ana, who was sentenced to 15 months in federal prison;

• Juan C. Rosas Santillana, 33, of Chino Hills, who is scheduled to be sentenced on October 13;

• Ramon Salvador Vasquez, 28, of Santa Ana, who was sentenced to two years in prison;

• Manuel Galindo Jr., 27, of Santa Ana, who was sentenced to one year and one day in prison;

• Gibram Rene Lopez, also known as “Ivan,” 27, of Anaheim, who was also sentenced today to 15 months in prison;

• Agustin Sanchez Jr., 33, of Santa Ana, who was sentenced to one year and one day in prison;

• Luis Alberto Flores Guillen, also known as “Bills,” 27, of Santa Ana, who was sentenced last Friday to 10 months (five months in jail and five months of home confinement);

• Oscar Centeno, also known as “Mosquito,” 27, of Santa Ana, who is scheduled to be sentenced on November 17;

• Jeff Reynes Fernandez, also known as “Lean,” 25, of Fullerton, who was sentenced last Friday to one year and one day in prison ; and

• Jesus Saldana, 29, of Garden Grove, who was sentenced to 10 months (five months in jail and five months of home confinement).

          The twelfth defendant, Javed Asefi, also known as “Joey,” 44, of Ladera Ranch, was found guilty by a federal jury earlier this month and is scheduled to be sentenced on December 8.

          Prior to the 12-defendant indictment being returned by a federal grand jury last fall, three other recruiters pleaded guilty to federal bribery charges, including Rebeca Sarai Rosell, who worked at a Santa Ana bail bonds company and funneled a bribe to Lopez so a second-time drunk driving offender could avoid serving his mandatory 60-day jail sentence.

          This case was investigated by special agents with the Federal Bureau of Investigation and IRS Criminal Investigation.

          This case was prosecuted by Assistant United States Attorney Vib Mittal of the Santa Ana Branch Office.

          LOS ANGELES – A Riverside woman who was the controller at a Fontana-based metal forging company pleaded guilty this morning to federal charges stemming from her embezzlement of $1.5 million from her employer.

          Jacquelin Dyer, 67, who was the controller and co-general manager at Pacific Forge, Inc., appeared this morning before United States District Judge George H. Wu and pleaded guilty to one count of mail fraud.

          As the controller, Dyer was responsible for all aspects of accounting at Pacific Forge, and she was authorized to sign corporate checks for amounts up to $5,000. According to court documents, over the course of approximately 10 years, Dyer used Pacific Forge corporate checks to pay her personal bills. Dyer printed and signed corporate checks under $5,000 that she made appear would be used to pay Pacific Forge vendors, but in reality were mailed to pay her personal expenses.

          Dyer pleaded guilty to a mail fraud charge related to a $4,752 check that she mailed to American Express on January 11, 2013 to pay her personal credit card bill. Dyer made false entries in the Pacific Forge books to make this check appear to be a payment to a vendor.

          “Utilizing this scheme, defendant [Dyer] made approximately $1,115,526.34 worth of payments towards her personal American Express credit card between 2006 and 2016,” Dyer admitted in a plea agreement filed in United States District Court. “Defendant used approximately $160,000 of the fraudulent proceeds to make payments towards the mortgage on her personal real property.”

          In total, Dyer embezzled approximately $1,525,556 of Pacific Forge funds to pay for her mortgage, personal tax payments, and vehicle repair expenses.

          As part of the plea agreement, Dyer agreed to forfeit the $160,000 she used to pay for her residence.

          As a result of today’s guilty plea, Dyer faces a statutory maximum sentence of 20 years in federal prison when she is sentenced by Judge Wu on January 18.

          This case was investigated by the Federal Bureau of Investigation.

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

          SANTA ANA, California – A federal jury has convicted a physician assistant who worked at a Fountain Valley medical clinic on federal drug trafficking charges for writing prescriptions for dangerous and addictive narcotics without a medical purpose.

          Kaitlyn Phuong Nguyen, 32, of San Jose, California, was found guilty yesterday of 10 counts related to the illegal distribution of oxycodone, methadone and alprazolam. The trial jury heard evidence that four “patients” died of drug overdoses after obtaining prescriptions from Nguyen.

          On the eve of Nguyen’s trial last week, the doctor who oversaw the clinic was sentenced to 70 months in prison after pleading guilty to two counts of illegal distribution of a controlled substance by a practitioner.

          When he pleaded guilty earlier this year, Dr. Victor Boon Huat Siew admitted illegally prescribing oxycodone, methadone and alprazolam from his clinic from the beginning of 2009 through early 2015.

          Siew, 66, of Laguna Beach, was sentenced by United States District Judge James V. Selna, who presided over Nguyen’s trial.

          According to court documents and evidence presented during Nguyen’s trial, Siew and Nguyen issued prescriptions without a medical purpose in exchange for cash and insurance payments. “Many of the patients…had ‘red flags’ in their patient files, indicating that they were abusing their pain medication and should not have been given prescriptions,” according to a brief filed in relation to Nguyen’s trial.

          Nguyen, who worked at the clinic in 2012, performed only cursory examinations on most “patients” prior to prescribing them narcotics. “Despite having a license to write prescriptions herself, defendant [Nguyen] usually used a prescription pad pre-signed by Siew (which was not a lawful practice) to prescribe addictive substances such as oxycodone, methadone and alprazolam,” according to the trial brief.

          The most common drugs prescribed by Siew and his employees were oxycodone (best known under the brand name OxyContin), methadone (a synthetic opioid often used as a treatment for addiction to opioids such as heroin), and alprazolam (sold primarily under the brand name Xanax).

          The jury found Nguyen guilty of conspiring to distribute controlled substances and nine counts of distribution of controlled substances. As a result of yesterday’s convictions, Nguyen will face a statutory maximum penalty of 140 years in federal prison when she is sentenced by Judge Selna on January 22.

          A third defendant in the case – physician assistant Thanh Nha T. Pham, 31, of Fountain Valley, pleaded guilty to conspiracy to distribute controlled substances and is scheduled to be sentenced by Judge Selna on January 29.

          This case is the result of an investigation by the Drug Enforcement Administration, the Fountain Valley Police Department and the California Department of Justice.

          The case is being prosecuted by Assistant United States Attorneys Ann Luotto Wolf and Rosalind Wang of the Santa Ana Branch Office.

          LOS ANGELES – A Hermosa Beach man was sentenced this afternoon to six years in federal prison for filing fraudulent tax returns with the Internal Revenue Service that sought millions of dollars in refunds and using bogus financial instruments in an attempt to pay off debt. His wife was also sentenced today to two years in federal prison.

          Sean David Morton, 59, was sentenced by United States District Judge Stephen V. Wilson, who further ordered Morton to pay $480,322 in restitution to the IRS.

          Sean Morton’s sentencing follows a four-day trial in April in which he was found guilty by a federal jury of one count of conspiracy to defraud the United States, two counts of filing false claims against the United States, and 26 counts of passing false or fictitious financial instruments. Sean Morton was originally scheduled to be sentenced in June, but he failed to appear for that hearing and was a fugitive for over two months.

          Melissa Ann Morton, 51, also of Hermosa Beach, who was convicted of conspiracy, two counts filing false claims and 25 counts of passing false or fictitious financial instruments, was also ordered to pay $480,322 in restitution to the IRS.

          The Mortons operated a “redemption” scheme, which is the most common scheme used across the nation by tax defiers and “sovereign citizens.” Proponents of this scheme falsely claim that the United States government controls bank accounts – often referred to as “U.S. Treasury Direct Accounts” – for U.S. citizens that can be accessed by submitting paperwork with state and federal authorities. Individuals promoting this scam frequently cite bogus legal theories and may refer to the scheme as “Redemption” or “Strawman.” This scheme, which repeatedly has been rejected by courts, predominately uses fraudulent financial documents that appear to be legitimate.

          “This is a case where the defendants clearly engaged in a systematic effort to impede the tax system, undermine the efforts of prosecutors, and, in the case of Sean Morton, avoid sentencing after being convicted by a jury of his peers,” said Acting United States Attorney Sandra R. Brown. “This case sends a clear message that we will spare no effort to preserve the integrity of this nation’s institutions. The lengthy sentences also demonstrate that illegal efforts to use bogus legal theories in an effort to defraud fellow taxpayers will not be tolerated.”

          “The Mortons’ blatant disrespect for the law will now cost them years of valuable freedom,” stated IRS Criminal Investigation Special Agent in Charge R. Damon Rowe. “Today’s sentencing shows how seriously the courts take those individuals who attempt to lead others down a perilous financial and legal path, in addition to devising illegal tax schemes to obtain refunds to which they are not entitled.”

          The evidence presented at trial showed that the Mortons filed income tax returns with the IRS that falsely claimed they had income from various banking institutions reported on Forms 1099-OID. As part of the scheme, the Mortons falsely reported large withholdings and claimed they were owed refunds from the IRS.

          As a result of the scheme, the IRS erroneously issued a refund of $480,322.55 to Sean Morton for a 2008 income tax return. On the same day the refund was deposited into the Mortons’ joint bank account, the couple took immediate steps to conceal the money, which included opening two new accounts, transferring over $360,000 to the two new accounts, and withdrawing $70,000 in cash.

          When the IRS took steps to collect the erroneous refund, the Mortons began a campaign to thwart the government’s collection efforts. Specifically, when the IRS placed a levy on the couple’s joint bank account, the couple repeatedly sent letters to the IRS that falsely claimed it was Melissa Morton’s sole and separate account.

          When the IRS attempted to collect the erroneous refund from the Mortons, the Mortons presented to the IRS various “coupons” and “bonds” that purported to pay off their debt with the IRS. The Mortons created and submitted these bogus documents to the IRS, instructing the agency to draw upon funds with the United States Treasury to satisfy their debt.

          The Mortons also sold the bond scheme to others who were in debt to governmental organizations, such as the IRS and the State of California, and private bank institutions for mortgage or credit card debt. The Mortons charged their clients thousands of dollars to prepare and file useless UCC-1 documents declaring their clients’ “strawman” status, and to prepare and send false bonds to the government or banks which purported to pay off the clients’ debt. “The total amounts of the check/bonds [the Mortons] made and passed are astronomical – the principal amounts of said instruments range from $50,000 to $10 million,” according to court documents.

          In sentencing briefs filed with the court, prosecutors said Sean Morton “touted he was a ‘paper terrorist’ when giving seminars regarding his schemes,” and he harassed and burdened the “courts with mountains of frivolous paperwork…in an effort to degrade the court system over time and make it more difficult to efficiently resolve cases, especially tax cases.”

          While sentencing Sean Morton today, Judge Wilson said his conduct “caused a serious disruption” to the tax system and “caused others to engage in fraudulent conduct.”

          “The scheme, while outrageous, was also calculated,” Judge Wilson said.

          Sean Morton was originally scheduled to be sentenced on June 19, but he failed to appear in court and was a fugitive for 61 days. During that time, Sean Morton “flagrantly flouted the law, appeared on social media, his radio program, and YouTube to brag about his status as a fugitive,” according to court papers filed by prosecutors. Soon after her husband fled, Melissa Morton was ordered not to have any contact with her husband.

          The Mortons were arrested on August 21 while observing the solar eclipse poolside at a hotel in Desert Hot Springs. The following day, a United States Magistrate Judge found that they had violated the terms of their release on bond and ordered them detained.

          The investigation of the Mortons was conducted by IRS Criminal Investigation.

          This case is being prosecuted by Assistant United States Attorneys Valerie Makarewicz and James C. Hughes of the Tax Division.

          LOS ANGELES – An engineer who worked for a defense contractor was sentenced this morning to 60 months in federal prison for selling sensitive satellite information he stole from his employer to a person he believed to be an agent of a Russian intelligence service.

          Gregory Allen Justice, 50, of Culver City, who worked as an engineer on military and commercial satellite programs, was sentenced this morning by United States District Judge George H. Wu.

          In imposing the sentence, Judge Wu said it was “extremely troubling” that Justice was willing to sell the secrets to the Russians because it is well known that their government “is not friendly to this country.”

          Justice pleaded guilty in May to two counts – attempting to commit economic espionage, and attempting to send restricted information out of the United States in violation the Arms Export Control Act and the International Traffic in Arms Regulations. When he pleaded guilty, Justice admitted that he stole proprietary trade secrets from his employer and provided them to a person he believed to be a Russian agent – but who in fact was an undercover FBI employee.

          In exchange for providing the trade secrets during a series of meetings over six months in 2016, Justice received $3,500 in cash. Justice “understood that the information he provided would be sent ‘back to Moscow and they will review this,’” according to court documents.

          During one meeting with the undercover operative, Justice and the undercover agent discussed developing a relationship like one depicted on the television show “The Americans,” and during their final meeting, Justice offered to take the undercover agent on a tour of his employer’s production facility, and the putative Russian intelligence officer could wear glasses that would allow him to photograph the facility, according to court documents.

          In court documents filed in relation to today’s sentencing, prosecutors said Justice sent most of the money he received from the undercover operative – and thousands of dollars more – to an “online paramour” he had never met.

          “This defendant sold out his employer and betrayed his country in exchange for a few thousand dollars,” said Acting United States Attorney Sandra R. Brown. “His actions posed an imminent threat to our national security. By virtue of the excellent work of the FBI, there was no damage to our security interests, and a person who was willing to sell important information to a foreign power will now serve a considerable amount of time in a federal prison.”

          “Unlike a reality television series, selling secrets to a foreign government is not entertaining, but in the wrong hands, threatens national security and puts American lives at risk,” said Danny Kennedy, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the undercover work of our agents and the partnership with the Air Force OSI, cleared defense contractors and the United States Attorney’s Office that led to the elimination of the threat Mr. Justice posed to the United States.”

          The case against Justice was investigated by the FBI and the Air Force Office of Special Investigations.

          Prosecutors from the Terrorism and Export Crimes Section of the United States Attorney’s Office and the National Security Division’s Counterintelligence and Export Control Section prosecuted this case.

          SANTA ANA, California – A convicted sex offender from Long Beach was sentenced this morning to 10 years in federal prison after pleading guilty to attempted sex trafficking of a child for responding to an online advertisement that offered sex with a 15-year-old girl in exchange for $200.

          Victor James Sporman, 47, was sentenced by United States District Judge James V. Selna. Once he completes the prison sentence, Sporman will be on supervised release for the rest of his life.

          The case against Sporman is the result of an undercover operation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI). Authorities were conducting an anti-sex trafficking operation in Long Beach and posted an advertisement on the Craigslist website that was designed to attract individuals interested in engaging in sex acts with minors.

          On October 26, 2016 Sporman responded to the advertisement via e-mail and subsequently engaged in a series of text messages with an undercover agent he thought was a 15-year-old girl, according to court documents. Sporman agreed to pay $200 to engage in sex with the “girl.” Sporman repeatedly texted photographs of himself, money and his genitals. In preparation for the encounter on December 6, Sporman purchased condoms. When Sporman arrived at the hotel to have the sexual encounter with the girl, Sporman had approximately $200 in his possession, as well as two condoms. He was arrested at the scene.

          Sporman engaged in nearly identical conduct in 2008 when he was caught in an undercover sting attempting to have sex with a 13-year-old girl.

          Sporman “was given every opportunity to address his sexual attraction to children, and he did nothing,” prosecutors wrote in a sentencing memorandum. “Instead, he continued to troll the internet looking for additional victims.”

          The case against Sporman is the product on an investigation by HSI’s Los Angeles Human Smuggling and Trafficking Group, which received substantial assistance from the Long Beach Police Department.

          The case was prosecuted by Assistant United States Attorney Lana Morton-Owens of the Violent and Organized Crime Section. Assistant United States Attorney Terrence Mann of the Santa Ana Branch Office handled today’s sentencing hearing.

          LOS ANGELES – A Laguna Hills man pleaded guilty today to charges of selling misbranded veterinary medications without a prescription, some of which were not approved for use in the United States.

          Sean Gerson, 49, the owner Vaccination Services, Inc. in Lake Forest, pleaded guilty in a scheme that netted him at least $2.5 million over the past 15 years.

          Gerson pleaded guilty to smuggling, introduction into interstate commerce misbranded animal prescription drugs with the intent to defraud and mislead the United States Food and Drug Administration, and a misdemeanor charge of distribution and sale of an unregistered pesticide. Vaccination Services also pleaded guilty today to the same federal charges.

          The misbranded drugs – meaning they were sold without a valid prescription from a veterinarian – were Comfortis, an anti-flea medication, and Ciprofloxacin, a powerful antibiotic commonly called “Cipro” that can be used in dogs and cats to treat skin, respiratory and urinary tract infections.

          According to court documents, Gerson sold Comfortis that was designed for the South African market and was not approved for distribution in the United States. Federal law prohibits the importation and sale of veterinary medicines that have not been approved by the FDA and Environmental Protection Agency for use in this country.

          Gerson used several websites – including fleastuff.com, mydoghasfleas.xyz and fleaandtickstuff.com – to market prescription animal products to buyers without valid prescriptions.

          In a plea agreement filed in United States District Court, Gerson admitted that he “knowingly distributed, transported and sold the prescription animal drugs Comfortis and Ciprofloxacin in interstate commerce” to an undercover law enforcement officer in Missouri in August 2016. Gerson at the time knew that the drug had been smuggled into the United States “because the drugs were foreign-market branded and not approved by the U.S. FDA for entry into the United States.”

          Gerson also admitted that he sold foreign market pesticides – animal flea and tick products not approved for sale and distribution in the United States – to an undercover law enforcement officer in Washington in June 2012.

          Gerson pleaded guilty today before United States District Judge R. Gary Klausner, who is scheduled to sentence Gerson and his company on December 11.

          In the plea agreement, prosecutors and Gerson have agreed that the appropriate sentence in this case is 30 months in federal prison and a fine of $200,000. The final sentence will be determined by Judge Klausner, and if the judge decides to deviate from the agreed-upon sentence both parties have the right to withdraw from the plea agreement and proceed to trial.

          In addition to the prison sentence and criminal fine, Gerson has agreed to the entry of a $2.5 million forfeiture judgment which will require Gerson to forfeit the proceeds of his long-running scheme.

          In its plea agreement, Vaccination Services has agreed to pay a $300,000 fine and to be placed on probation for a period of five years. This stipulated sentence is also subject to the approval of Judge Klausner.

          Gerson was previously convicted of charges related to the illegal sale of pet medications and products. According to documents previously filed in the federal case in Los Angeles, Gerson pleaded guilty in Texas in 2014 to state charges of delivery of a dangerous drug, specifically a prescription drug called Clenbuterol.

          In a related case, Judge Klausner in June ordered a South African veterinarian to pay a fine of $5,000 and forfeit to the United States $145,000 after pleading guilty to a charge of making false statements in relation to unapproved pet medications he shipped to Gerson. Craig Mostert sent the foreign-market drugs to Gerson, and significantly understated the value of the products in a series of shipments between 2008 and 2017.

          The case against Gerson and Vaccination Services is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations, the Food and Drug Administration’s Office of Criminal Investigations, and the Environmental Protection Agency.

          This case is being prosecuted by Assistant United States Attorney Joseph O. Johns, Chief of the Environmental and Community Safety Crimes Section.

          LOS ANGELES – The fifth and final defendant charged with using credit and debit cards obtained from a series of cyberattacks on U.S. companies that resulted in an estimated $5 million in losses – and caused one victim company to go out of business – was sentenced today to 33 months in federal prison.

          Dmitry Fedoseev, 34, a Russian national who resides in Koreatown, was sentenced after pleading guilty in March to possession of unauthorized access devices (credits cards and debit cards) and aggravated identity theft.

          Fedoseev was sentenced today by United States District Judge Stephen V. Wilson.

          Three other Russian nationals and another Eastern European immigrant who monetized the information obtained from the cyberattacks by making fraudulent purchases, selling the purchased goods and transferring money to others involved in the fraudulent scheme were previously sentenced to federal prison. They are:

• Siarhei Patapau, 26, of the Miracle Mile District of Los Angeles, a native of Belarus, who was sentenced to 30 months in prison;

• Timur Safin, 29, of Burbank, who was sentenced to three years;

• Kristina Gerasimova, 22, of the Miracle Mile District of Los Angeles, who was sentenced to one year and one day in prison; and

• Fedoseev’s ex-wife, Irina Fedoseeva, 33, who was sentenced to 14 months.

          All five defendants admitted to helping make fraudulent purchases with credit and debit cards obtained as a result of cyberattacks on two healthcare administrators in December 2015 and February 2016. Due to their federal felony convictions, all five defendants have or will be deported from the United States.

          According to court documents filed in two separate cases, the five defendants conspired with computer hackers, some of whom are believed to be in Russia. The hackers staged attacks that included:

• a July 2014 intrusion into an airline’s computer system in which the hackers fraudulently funded pre-paid credit cards in the amount of $900,000;

• a December 2015 hack into the system of a healthcare administrator that allowed the cybercriminals to reactivate a dormant dependent care account and order the production of numerous debit cards that were used to make approximately $550,000 in fraudulent purchases; and

• a February 2016 attack on another healthcare administrator that allowed the intruders to order the production of debit cards linked to reactivated accounts that were used to make approximately $3.5 million in fraudulent purchases.

          The computer hackers directed the pilfered debit and credit cards to be sent to the five defendants charged in Los Angeles and other co-conspirators. Members of the conspiracy then used the unauthorized cards to make cash withdrawals, purchase money orders and make purchases at retail outlets such as Apple, Best Buy, Home Depot and Target.

          For example, Safin admitted in court that he used a number of the pre-paid credit cards to withdraw approximately $5,074 at ATMs throughout Los Angeles County and to purchase money orders totaling $19,420. He used debit cards obtained from the healthcare administrators to make at least $225,000 in fraudulent purchases.

          When they were arrested last year, Fedoseev and Fedoseeva possessed more than 519 unauthorized credit, debit and gift cards and $29,300 in cash. Patapau was found with approximately 525 credit and debit cards in other people’s names.

          The investigation that led to the two cases filed in Los Angeles was conducted by the Federal Bureau of Investigation.

          The two criminal cases are being prosecuted by Assistant United States Attorney Bryant Yang of the Organized Crime and Drug Enforcement Task Force.

          SANTA ANA, California – A former member of the Planning Commission for the City of Westminster has been convicted of a federal bribery charge for soliciting and receiving a $15,000 bribe to help a person obtain a liquor license.

          Dave Vo, 43, of Westminster, was found guilty by a federal jury late yesterday afternoon of one count of bribery in a program receiving federal funds.

          Vo, who is an attorney, served as a Planning Commissioner in the Orange County city from early 2009 through early 2013. As a Planning Commissioner, Vo had influence over the issuance of conditional use permits.

          In 2011, Vo solicited a $15,000 bribe from a confidential informant. The informant reported to the FBI that Vo had solicited a bribe in relation to the issuance of a liquor license. During August 2011, over the course of four meetings, Vo received cash payments that totaled $15,000 in exchange for pushing the liquor license through the city’s approval process.

          During the three-day trial, the jury heard audio recordings of Vo soliciting the bribe, and then saw video recordings of the payments being made.

          The bribery charge carries a statutory maximum penalty of 10 years in federal prison.

          Vo, who is free on bond, is scheduled to be sentenced by United States District Judge James V. Selna on January 8.

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

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

          SANTA ANA, California – A federal jury has returned four guilty verdicts against the final defendant charged in a racketeering scheme that paid over $250,000 to a clerk in the Orange County Superior Court in exchange for him resolving hundreds of criminal cases and traffic violations without the knowledge of judges or prosecutors.

          Javed Asefi, also known as “Joey,” 44, of Ladera Ranch, was found guilty late yesterday afternoon of conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and paying bribes. At the conclusion of a six-day trial, Asefi was also convicted of lying on a citizenship application and violating the terms of his pretrial release by sending an associate to find out if a co-defendant was cooperating against him.

          The evidence presented at trial showed that Asefi participated in the scheme by providing information on 15 traffic infractions and at least one driving-under-the influence case to a middleman, who provided the data to a Superior Court clerk. With Asefi’s assistance, 11 people saw the dismissal of their traffic tickets.

          The clerk at the center of the bribery scheme changed court records to falsely show that the cases had been dismissed or, in the case of the DUI charges, had been “pleaded down” to lesser charges. Asefi and others who benefited from the official actions paid bribes to the clerk through middlemen.

          “At least one of the bribes collected and paid by [Asefi] was in the amount of $5,000 to $6,000 and was in exchange for pleading down a driving under the influence charge to a ‘wet-reckless’ charge,” according to court documents.

          Asefi is scheduled to be sentenced by United States District Judge Josephine L. Staton on December 8. At sentencing, Asefi will face a statutory maximum sentence of 45 years in federal prison.

          The former Superior Court clerk – Jose Lopez Jr., 37, of Anaheim – pleaded guilty in March to a RICO conspiracy charge. The bribes paid to Lopez’s middlemen were as high as $8,000 to “fix” cases.

          When he pleaded guilty, Lopez admitted the he “improperly resolved approximately 1,034 cases, including 69 misdemeanor driving under the influence cases, 160 other misdemeanor cases and 805 traffic-related infraction cases.”

          Over the course of more than five years, Lopez “resolved” cases by entering information into the court’s computers to make it appear that a defendant had pleaded guilty, paid required fees or had performed community service. In some cases, Lopez fraudulently created records that made it appear drunk driving charges had been dismissed or defendants had served mandatory jail time.

          In addition to taking more than $250,000 in bribes and falsifying court records, Lopez forged the signature of a prosecutor with the Orange County District Attorney’s Office.

          The conspiracy ended in the spring of 2015 when the court learned about the misconduct and took steps to correct the cases that Lopez tampered with.

          Lopez is scheduled to be sentenced by Judge Staton on September 22, at which time he will face a statutory maximum sentence of 20 years in federal prison.

          Yesterday’s guilty verdicts against Asefi came exactly one year after the unsealing of a 38-count indictment that outlined the bribery scheme. With Asefi’s conviction, all 12 defendants who participated in the racketeering scheme have been found guilty. Three other people who funneled bribes to Lopez pleaded guilty prior to the indictment.

          Five of the defendants have been sentenced and have received terms of imprisonment of up to two years in federal prison.

          This case was investigated by special agents with the Federal Bureau of Investigation and IRS Criminal Investigation.

          U.S. Citizenship and Immigration Services, the Orange County Superior Court, Irvine Police Department, Homeland Security Investigations, and the Orange County District Attorney’s Office provided assistance during the investigation.

          The case is being prosecuted by Assistant United States Attorneys Vib Mittal and Bradley E. Marrett of the Santa Ana Branch Office.

          BATON ROUGE, LA - The National Center for Disaster Fraud reminds the public to be aware of and report any instances of alleged fraudulent activity related to relief operations and funding for victims. Unfortunately, criminals can exploit disasters, such as Hurricane Harvey, for their own gain by sending fraudulent communications through email or social media and by creating phony websites designed to solicit contributions.

          Tips should be reported to the National Center for Disaster Fraud at (866) 720-5721. The line is staffed 24 hours a day, seven days a week. Additionally, e-mails can be sent to disaster@leo.gov, and information can be faxed to (225) 334-4707.

          The U.S. Department of Justice established the National Center for Disaster Fraud to investigate, prosecute, and deter fraud in the wake of Hurricane Katrina, when billions of dollars in federal disaster relief poured into the Gulf Coast region. Its mission has expanded to include suspected fraud from any natural or manmade disaster. More than 30 federal, state, and local agencies participate in the National Center for Disaster Fraud, which allows the center to act as a centralized clearinghouse of information related to disaster relief fraud.

          The public should remember to perform due diligence before giving contributions to anyone soliciting donations or individuals offering to provide assistance to those affected by the tornadoes. Solicitations can originate from social media, e-mails, websites, door-to-door collections, flyers, mailings, telephone calls, and other similar methods.

          Before making a donation of any kind, consumers should adhere to certain guidelines, including:

• Do not respond to any unsolicited (spam) incoming e-mails, including clicking links contained within those messages, because they may contain computer viruses.

• Be skeptical of individuals representing themselves as members of charitable organizations or officials asking for donations via e-mail or social networking sites.

• Beware of organizations with copy-cat names similar to but not exactly the same as those of reputable charities.

• Rather than follow a purported link to a website, verify the legitimacy of nonprofit organizations by utilizing various Internet-based resources that may assist in confirming the group’s existence and its nonprofit status.

• Be cautious of e-mails that claim to show pictures of the disaster areas in attached files because the files may contain viruses. Only open attachments from known senders.

• To ensure contributions are received and used for intended purposes, make contributions directly to known organizations rather than relying on others to make the donation on your behalf.

• Do not be pressured into making contributions; reputable charities do not use such tactics.

• Be aware of whom you are dealing with when providing your personal and financial information. Providing such information may compromise your identity and make you vulnerable to identity theft.

• Avoid cash donations if possible. Pay by credit card or write a check directly to the charity. Do not make checks payable to individuals.

• Legitimate charities do not normally solicit donations via money transfer services. Most legitimate charities’ websites end in .org rather than .com.

          LOS ANGELES – The leader of a narcotics-distribution ring pleaded guilty this morning to federal drug trafficking charges and admitted importing a powerful synthetic opioid from China that was used to produce homemade pills that were distributed in bulk across the nation.

          Gary Resnik, 32, of Long Beach, led a conspiracy that imported acetylfentanyl, a drug very similar to fentanyl, a powerful and highly addictive opioid. Acetylfentanyl, which is many times more potent than heroin, is not approved for any use in the United States.

          Resnik pleaded guilty to two felony offenses – conspiracy to manufacture and distribute narcotics (including acetylfentanyl and ecstasy), and possession with the intent to distribute acetylfentanyl.

          In a plea agreement filed in federal court, Resnik admitted importing from China bulk chemicals that were used to manufacture narcotics, including acetylfenatnyl. The drug organization also obtained pill presses from China that were used illegally to make tablets in labs in Long Beach and Baldwin Park. Resnik acknowledged that DEA agents seized over 9 kilograms of acetylfentanyl from the organization.

          During the course of an investigation by the Drug Enforcement Administration, authorities seized narcotics – including opiate pills containing acetylfentanyl, Xanax pills, and ecstasy pills – from a man who had just purchased the drugs from members of the drug trafficking organization.

          Resnik is scheduled to be sentenced by United States District Judge S. James Otero on February 26. At the time of sentencing, Resnik will face a statutory maximum penalty of 20 years in federal prison for each of the two counts.

          This case is being prosecuted by Assistant United States Attorneys Michael G. Freedman and David Ryan of the General Crimes Section.

          SANTA ANA, California – A Palm Desert man who is accused of running a stock investment scheme that allegedly defrauded more than 90 victims out of more than $1 million has been arrested on federal fraud charges.

          Robert Mark Seibert, 64, was arrested in Bermuda Dunes Wednesday afternoon by FBI agents.

          The arrest of Seibert was announced today by Acting United States Attorney Sandra R. Brown and Danny Kennedy, the FBI’s Acting Assistant Director in Charge of the Los Angeles Field Office.

          Seibert, who allegedly used the alias “John Grey” when communicating with his victims, was arrested pursuant to a 16-count indictment returned by a federal grand jury on August 16.

          Seibert had an initial appearance yesterday afternoon in United States District Court in Santa Ana, where a United States Magistrate Judge ordered him held without bond. Seibert pleaded not guilty to the charges in the indictment, and a trial was scheduled for October 17.

          According to the indictment, Seibert operated his scheme through a series of businesses, including Universal Stock Transfer, National Discount Marketers, and New Global Productions. Seibert allegedly offered to sell victims stock in other companies – Intertech Solutions; Radio Shack; New Global Energy; SnackHealthy, Inc.; Uranium Energy Group; and Organovo Holdings – often at a discount from current market prices. After victims made investments, Seibert issued certificates as evidence of stock ownership and advised that if they did not earn a profit, he would return their money within 30 days.

          The indictment alleges that Seibert did not hold or control any stock in other companies for sale, the victims’ money was not used to purchase stock, and they did not receive their money back after 30 days – or any time thereafter.

          Investigators allege that Seibert defrauded at least 90 victims, who collectively sent more than $1 million to the defendant. According to the indictment, victims either mailed or wired amounts ranging from $2,000 to $21,000 to the companies operated by Seibert.

          The indictment charges Seibert with 14 counts of mail fraud and two counts of wire fraud.

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

          The maximum statutory penalty for each of the 16 counts in the indictment is 20 years in federal prison.

          This investigation is being conducted by the Federal Bureau of Investigation.

          The case is being prosecuted by Assistant United States Attorney Gregory W. Staples of the Santa Ana Branch Office.

On Aug. 21, Judge R. Gary Klausner of the U.S. District Court for the Central District of California entered an order that revoked the naturalized U.S. citizenship of a fraudster and immigration-officer impersonator, restrained and enjoined her from claiming any rights, privileges, or advantages of U.S. citizenship, and ordered her to immediately surrender and deliver her Certificate of Naturalization and any other indicia of U.S. citizenship to federal authorities, the U.S. Department of Justice, U.S. Immigration and Customs Enforcement (ICE) and U.S. Citizenship and Immigration Services (USCIS) jointly announced.

“The Justice Department is committed to preserving the integrity of our nation’s immigration system and the propriety of the government’s adjudication of immigration benefits,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division. “We will aggressively pursue the denaturalization of individuals who lie on their naturalization applications, especially in a circumstance like this one, which involved an alien who masqueraded as an immigration officer and was convicted of defrauding nine aliens of thousands of dollars in exchange for false promises of facilitating immigration benefits.”

Araceli Martinez aka Maria Araceli Ramos de Martinez, 53, a native of Mexico, pleaded guilty in September 2012 to Obtaining Money, Labor or Property by False Pretense in violation of California Penal Code § 532(a) in the Superior Court of the State of California for the County of Los Angeles. Between June 2011 and March 2012, Martinez engaged in a scheme in which she impersonated a U.S. immigration officer. Martinez falsely represented that undocumented immigrants could hire her to assist them in obtaining legal status, defrauding her victims of thousands of dollars without ever submitting any paperwork on their behalf. Martinez applied to naturalize and become a U.S. citizen in the midst of engaging in her fraudulent scheme. While under oath during her naturalization interview, Martinez stated that she had never committed a crime or offense for which she was not arrested. Relying on this answer, USCIS granted her naturalization application and Martinez became a U.S. citizen later that year. When the Department of Justice filed a complaint in federal court to initiate denaturalization proceedings in April 2017, Martinez was incarcerated in the Mendocino County jail in Ukiah, California, serving a two-year sentence for a December 2015 conviction for felony grand theft.

“This order sends a clear message to individuals who commit fraud during the naturalization process – we will investigate you and seek you out to ensure that justice is done,” said Acting ICE Director Thomas Homan. “ICE will continue to work with our partners at the Justice Department’s Office of Immigration Litigation – District Court Section to hold individuals responsible for their fraudulent conduct, especially those pretending to be government officials.”

“I congratulate the trial team for bringing Araceli Martinez to justice,” said USCIS Acting Director James McCament. “Ms. Martinez fraudulently obtained her citizenship and then made false representations that exploited other immigrants. By doing so, she threatened to undermine the hard work our officers do every day to protect the integrity of the immigration system. USCIS is glad to see her held accountable.”

This case was investigated by ICE Homeland Security Investigations Los Angeles Document and Benefit Fraud Task Force and the Civil Division’s Office of Immigration Litigation, District Court Section (OIL-DCS). The case was prosecuted by Deputy Chief Tim Belsan of OIL-DCS’s National Security and Affirmative Litigation Unit, with support from ICE Senior Attorney Jillian Woods.

          LOS ANGELES – A Diamond Bar man who illegally imported the active ingredients used in erectile dysfunction drugs such as Viagra and Cialis and repackaged the drugs for sale as herbal sexual enhancement products was sentenced today to three months in federal prison followed by six months of home detention.

          Joseph Jinn, also known as Tzong Hwan Jinn, 60, was sentenced this afternoon by United States District Judge Christina A. Synder for conspiring to bring the drugs into the United States by means of false statements. Judge Snyder agreed with the government that a custodial sentence was warranted because of the problem posed by the importation of the pharmaceuticals from China, which defendant brought into the U.S. marketplace undetected and unregulated.

          According to court documents, Jinn admitted being part of a scheme that imported Tadalafil, Sildenafil and Dapoxetine – the active ingredients in pharmaceutical medications such as Viagra and Cialis – by means of false claims to customs officials that the multi-kilogram shipments were “cooked powder and tools,” “Chinese bread baking mixture,” and other innocuous materials. U.S. Customs and Border Protection officers intercepted some of the shipments, which had a cumulative value of nearly $550,000.

          Jinn admitted in court that he and his co-conspirators repackaged and sold the illegally imported drugs as “herbal supplement sexual enhancers.” The products were sold without the necessary prescriptions required by regulations enforced by the U.S. Food and Drug Administration, which had previously warned Jinn’s company that it was engaged in illegal sales.

          According to the plea agreement, the FDA “issued public warnings regarding these sexual supplements because they contain ingredients that can interact with other drugs in dangerous ways and may lower blood pressure to unsafe levels.”

          The products marketed by Jinn and his co-conspirators were sold in storefronts and over the internet.

          As part of his plea agreement, Jinn agreed to forfeit to the United States approximately $105,000 that was seized from three bank accounts during the investigation.

          The FDA has warned consumers about numerous over-the-counter products that claim to be “herbal,” but in fact contain hidden active ingredients.

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

          The case was prosecuted by Assistant United States Attorneys Vicki Chou and Jennie L. Wang of the Cyber and Intellectual Property Crimes Section.

A California man was sentenced to prison today for his role as the mastermind of a $1.66 million mass mailing scam aimed at trademark holders.  The former manager of a Wells Fargo branch in Glendale, California, and his associate were also sentenced to prison today for their roles in laundering the scam’s proceeds.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Sandra R. Brown of the Central District of California, Inspector in Charge Nichole Cooper of the U.S. Postal Inspection Service’s (USPIS) Los Angeles Division and Special Agent in Charge Damon Rowe of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office made the announcement.  The sentences were issued by U.S. District Court Judge Stephen V. Wilson.

Artashes Darbinyan, 37, of Glendale, was sentenced to 96 months in prison and was ordered to pay $1,557,979 in restitution.  Orbel Hakobyan, 42, of Glendale, was sentenced to 24 months in prison and was ordered to pay $1,218,024 in restitution.  Albert Yagubyan, 37, of Burbank, California, was sentenced to 18 months in prison and was ordered to pay $1,048,069 in restitution.  In December 2016, Darbinyan pleaded guilty to one count of mail fraud and one count of conspiracy to launder monetary instruments, and Hakobyan pleaded guilty to one count of conspiracy to launder monetary instruments.  Following a jury trial in March 2017, Yagubyan was convicted of one count of conspiracy to launder monetary instruments, four counts of concealment money laundering and one count of false bank entries.

As part of his guilty plea, Darbinyan admitted that from September 2013 to September 2015 he ran a mass mailing scam under the names Trademark Compliance Center (TCC) and Trademark Compliance Office (TCO), which targeted small businesses that had recently applied for trademark protection with the U.S. Patent & Trademark Office.  The scam involved fraudulent offers of a service in which TCC and TCO promised to monitor an applicant’s trademark for infringing marks and to register the trademark with U.S. Customs and Border Protection (CBP), which offers a real service that screens imports for possibly infringing trademarks.  The offers were made via mail solicitations and claimed the services would be provided for $385.  Darbinyan never monitored or registered, nor ever intended to monitor or register, any of the trademarks with CBP for the customers who paid the fee, he admitted.

Darbinyan also admitted to concealing his control over the scam through elaborate measures in which he illegally used the identities of other people to open accounts at virtual office centers in the Washington, D.C., area, which received and then forwarded victims’ payments to other virtual office centers in the Los Angeles area.  Using those same illicit identities, Darbinyan then, with co-conspirators’ assistance, opened bank accounts at Wells Fargo through which he laundered the proceeds of the scam.  To further avoid detection, Darbinyan paid virtual office fees with money orders; used bogus email accounts, which he would only log into using prepaid wireless modems; and regularly changed cell phone numbers.

As part of his guilty plea, Hakobyan admitted to helping launder the proceeds of the trademark scam.  Specifically, Hakobyan deposited victims’ checks into bank accounts at Wells Fargo that had been opened under false names.  Hakobyan misrepresented his identity to withdraw funds from the accounts at Wells Fargo in the form of cash and cashier’s checks, which he then used to purchase gold, he admitted.  In total, he admitted to helping launder approximately $1.29 million of the scam’s proceeds.

According to evidence presented at Yagubyan’s trial, from June 27, 2014 to Sept. 18, 2015, Yagubyan, in his role as manager of a large Wells Fargo branch in Glendale, helped launder victims checks paid to the TCC and TCO.  Yagubyan laundered the illegal funds by instructing subordinates at the bank to open bogus bank accounts, into which the illicit proceeds of the TCC and TCO scam were deposited, and to process fraudulent withdrawals, wire transfers and cashier’s checks for co-conspirators Darbinyan and Hakobyan, the evidence showed.  The cashier’s checks and wire transfers were made out to gold dealers, turning the victims’ checks into cash and gold that the co-conspirators could spend without being traced back to their fraud scheme.  The bank accounts were opened using the identities of individuals from Eastern Europe who were not in the U.S. at the time the accounts were opened.  The evidence at trial further showed that Darbinyan paid Yagubyan a percentage of the laundered proceeds and that Yagubyan, in turn, made payments and promises of promotion to subordinates to induce them to conduct the fraudulent transactions.

In total, according to Darbinyan’s guilty plea and the evidence presented at trial, the trademark scam defrauded approximately 4,446 victims of $1.66 million.

USPIS and IRS-CI investigated the case.  Trial Attorneys William E. Johnston and Alison L. Anderson of the Fraud Section of the Justice Department’s Criminal Division are prosecuting the case.

          LOS ANGELES – An Orange County woman who worked at a local credit union in Hawthorne and her online boyfriend have been named in a superseding indictment that alleges a conspiracy in which the woman secretly opened more than 30 fraudulent lines of credit for her boyfriend, who was able to draw down approximately $1.1 million before the scheme was discovered.

          The indictment returned yesterday afternoon by a federal grand jury charges Indira Mohabir, 41, of La Habra, and Phillip Cook, 50, who appears to have recently resided in Ohio and Georgia.

          Mohabir was initially charged in the case last year, and Cook was arrested in Ohio on July 28 after federal prosecutors filed a criminal complaint in this case. Mohabir, who is free on bond, is currently scheduled to go on trial on October 31. Cook, who has been ordered held without bond, is being transported to Los Angeles by the United States Marshals Service.

          The 15-count superseding indictment charges the two defendants with conspiracy to commit financial institution fraud, eight counts of unauthorized issuance of credit union obligations and six counts of financial institution fraud.

          Mohabir, who worked as a business loan processor at Western Federal Credit Union, entered into an online relationship with Cook in November 2014 and agreed soon after to open lines of credit without the necessary oversight and approval from the credit union, according to the indictment. The scheme lasted about three months, from late 2014 to early 2015, but the majority of the credit lines allegedly were established – or were doubled – over just a few days in January 2015.

          In exchange for opening the lines of credit and concealing them from the credit union, Cook promised to take Mohabir on trips, and sent her a $50,000 check and flowers, according to court documents.

          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 charges in the indictment, Mohabir and Cook each would face a statutory maximum penalty of five years in federal prison on the conspiracy count and up to 30 years for each of the substantive fraud charges.

          This case is the result of an ongoing investigation being conducted by the FBI and the Federal Deposit Insurance Corporation, Office of Inspector General. The Hawthorne Police Department provided substantial assistance.

          The case against Cook and Mohabir is being prosecuted by Assistant U.S. Attorneys Kerry L. Quinn and Scott Paetty of the Major Frauds Section.

          LOS ANGELES – A gang member who helped manage a coalition of three rival street gangs in Northeast Los Angeles that were brought together by orders issued by a member of the Mexican Mafia pleaded guilty today to federal charges and admitted being a primary supplier of narcotics to the criminal enterprise.

          Santos Zepeda, also known as “Slim,” 33, of Glendale, a senior member of the Frogtown gang, pleaded guilty this morning to conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and conspiring to traffic methamphetamine.

          Zepeda was among 22 defendants named two years ago in a federal racketeering indictment that outlined how Mexican Mafia member Arnold Gonzales ordered the unification of three street gangs that were traditional rivals. The “peace treaty” imposed by Gonzales in 2010 brought together the Frogtown, Toonerville and Rascals gangs, which worked together to control the narcotics trade and other illegal activities in an area that ran along the Los Angeles River from Elysian Park nearly to Burbank.

          Because he was incarcerated in Pelican Bay State Prison after being convicted of murder, Gonzales appointed another Frogtown gang member, Jorge Grey, to be his emissary on the streets, according to the indictment. Zepeda served as Grey’s top lieutenant, provided narcotics to the racketeering enterprise, and coordinated the collection of “taxes” imposed on street-level drug dealers.

          Zepeda pleaded guilty this morning before United States District Judge Philip S. Gutierrez, who is scheduled to sentence the defendant on January 22.

          As a result of the guilty pleas entered today, Zepeda faces a mandatory minimum sentence of 10 years in federal prison and a statutory maximum penalty of life without parole.

          The RICO indictment targeting the Arnold Gonzales Organization is the result of Operation “Gig ‘em,” an investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives, Violent Crime Impact Team; the California Department of Corrections and Rehabilitation, Office of Correctional Safety, Special Service Unit; the Glendale Police Department; and the Los Angeles Police Department.

          After Gonzales took control of the three gangs, he exercised his authority through Grey and criminal associates that included Zepeda, according to the indictment. The organization generated revenue through extortion, specifically the imposition of taxes on the gangs and others who distributed narcotics in the territory controlled by the criminal enterprise. Members of the racketeering conspiracy allegedly implemented Gonzales’ orders, imposed discipline on those who attempted to violate the orders or contest the power of the enterprise, and collected firearms that were used to enforce their authority.

          The indictment details numerous transactions involving narcotics and firearms, and also contains charges related to two shootings allegedly committed against individuals who defied the rules imposed by Gonzales and his associates.

          Out of the 22 defendants named in the indictment, 11 have pleaded guilty. The remaining 11 defendants, including Grey, are scheduled to go on trial on March 5, 2018.

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

          This case is being prosecuted by Assistant United States Attorneys Carol Alexis Chen and Alexander B. Schwab of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – One of the leaders of the Hazard street gang – a Mexican Mafia-controlled criminal enterprise that has been responsible for criminal activity in and around the Ramona Gardens housing complex in Boyle Heights for decades – was sentenced today to 15 years in prison for his conviction on federal racketeering and drug trafficking offenses.

          Victor Barrios, 43, a Mexican national who most recently resided in Boyle Heights, was sentenced by United States District Judge Christina A. Snyder.

          Barrios pleaded guilty on April 26 to conspiring to violate the federal Racketeer Influenced and Corrupt Organizations (RICO) Act and conspiring to traffic narcotics. When he pleaded guilty, Barrios admitted he played “a leadership role for the gang’s criminal activities,” which included overseeing drug sales, the collection of extortionate “tax” payments from area drug dealers, and plots to commit acts of violence.

          Barrios was one of 27 defendants named in a racketeering indictment unsealed in December 2014. The 110-page indictment outlined a wide range of criminal activity, including dozens of drug deals, acts of intimidation and violence against people believed to have cooperated with law enforcement, illegal weapons sales, and threats made against African-American residents of Ramona Gardens. Barrios is one of 18 defendants who have pleaded guilty. The remaining nine defendants are scheduled to go on trial on November 28.

          The investigation into the Hazard gang was conducted by the Federal Bureau of Investigation; the Los Angeles Police Department; the Bureau of Alcohol, Tobacco, Firearms and Explosives; and IRS Criminal Investigation, which worked in conjunction with the Los Angeles County Sheriff’s Department and the Alhambra Police Department.

          The case is being prosecuted by Assistant United States Attorneys Benjamin Barron and Christopher Kendall of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – A Beverly Hills man who has a long history of swindling investors and admitted most recently to participating in a scheme involving bogus gold contracts – and giving fake gold bars as “collateral” to victims – has been sentenced to 96 months in federal prison.

          Mark Ross Weinberg, 63, was sentenced on Monday by United States District Judge Manuel Real. In addition to the prison term, Judge Real ordered Weinberg to pay $2,982,181 in restitution to his victims.

          The sentencing followed Weinberg’s guilty pleas in May to conspiracy and wire fraud charges.

          A second man charged in relation to the scheme – Dale Washam Talbert, 63, also of Beverly Hills – was sentenced by Judge Real in June to five years in federal prison, which was the statutory maximum sentence for the conspiracy count to which he pleaded guilty.

          The victim who sustained the largest losses in the scheme, a lifelong friend of Talbert, was induced to invest $2.4 million and lost nearly all of that money. After this victim referred the scheme to the FBI, which seized some of the defendants’ assets, Weinberg and Talbert solicited the other six victims in the Los Angeles area and convinced them to invest more than $645,000.

          Weinberg and Talbert, whose scheme ran from mid-2013 through the end of 2015, participated in a scheme in which they claimed to be traders of gold options in an account maintained in Japan. The two men told victims that they would use invested funds on a short-term basis to lock in and liquidate gold trading contracts they had previously acquired. Investors were promised substantial returns on their investments, after being shown fabricated account statements that falsely reflected multi-million balances and given gold bullion bars as collateral that were in fact fake. These and other claims made by Weinberg and Talbert – such as their being represented by an international law firm and major accounting firm – simply were false.

          During the time of the gold investment scam, Weinberg was on supervised release after serving a 33-month federal prison sentence stemming from his 2006 conviction for defrauding investors by using counterfeit bank checks. Weinberg’s criminal history also includes California and Nevada state convictions and prison sentences resulting from his defrauding investors in the 1990s.

          This case was investigated by the Federal Bureau of Investigation.

          This matter was prosecuted by Assistant United States Attorney Richard E. Robinson of the Major Frauds Section.

          LOS ANGELES – The operators of seven sham medical clinics were among 12 defendants taken into custody this morning on federal drug trafficking charges that allege they diverted at least 2 million prescription pills – including oxycodone and other addictive and dangerous narcotics – to the black market.

          Two indictments returned late last month by a federal grand jury alleges that members of the conspiracy profited from illicit prescriptions that were issued without any legitimate medical purpose through a series of clinics that periodically opened and closed in a “nomadic” style. The fraudulent prescriptions allegedly allowed the conspirators to obtain bulk quantities of prescription drugs that were sold on the street.

          Those arrested this morning include Minas Matosyan, an Encino man also known as “Maserati Mike,” who is charged with leading the scheme and controlling six of the sham clinics. Matosyan allegedly hired corrupt doctors who allowed the conspirators to issue fraudulent prescriptions under their names in exchange for kickbacks.

          “The two indictments charge 14 defendants who allegedly participated in an elaborate scheme they mistakenly hoped would conceal a high-volume drug trafficking operation,” said Acting United States Attorney Sandra R. Brown. “In addition to generating illicit profits, this scheme helped drive the prescription drug epidemic that is causing so much harm across our nation.”

          “This investigation targeted a financially motivated racket that diverted deadly and addictive prescription painkillers to the black market,” said DEA Special Agent in Charge David Downing. “Today’s arrests underscore our resolve – DEA and its law enforcement partners will not tolerate criminal enterprises that fuel and exploit the opioid epidemic.”

          The indictments unsealed today and search warrants executed this morning describe how Matosyan would “rent out recruited doctors to sham clinics.” Matosyan allegedly supplied corrupt doctors in exchange for kickbacks derived from proceeds generated when the other sham clinics created fraudulent prescriptions or submitted fraudulent bills to health care programs. In one example described in the court documents, Matosyan provided a corrupt doctor to a clinic owner in exchange for $120,000. When the clinic failed to pay the money and suggested instead that Matosyan “take back” the corrupt doctor, Matosyan demanded his money and said, “Doctors are like underwear to me. I don’t take back used things.”

          In a recorded conversation described in court documents, Matosyan discussed how one doctor was paid “for sitting at home,” while thousands of narcotic pills were prescribed in that doctor’s name and Medicare was billed more than $500,000 for purported patient care.

          The conspirators also allegedly stole the identities of doctors who refused to participate in the scheme. In an intercepted telephone conversation described in court documents, Matosyan offered a doctor a deal to “sit home making $20,000 a month doing nothing.” When the doctor refused the offer, the conspirators nevertheless created prescription pads in the doctor’s name and allegedly began selling fraudulent prescriptions for oxycodone without the doctor’s knowledge or consent.

          According to court documents, the conspirators also issued prescriptions and submitted fraudulent billings in the name of a doctor who at the time was hospitalized and later died.

          “The defendants in this scheme heartlessly lined their pockets with cash from the sale of thousands of addictive prescription drugs sold through the black market,” stated IRS Criminal Investigation’s Special Agent in Charge, R. Damon Rowe. “IRS Criminal Investigation, along with our law enforcement partners, will continue to aggressively pursue those who seek to profit from the sale and distribution of illegitimate prescription narcotics creating a drug crisis of epic portions in our country.”

          “For the sake of mere profit, the operators of these medical clinics spewed deadly prescription drugs onto our streets. The opioid epidemic gripping this country is well documented and our communities in the Los Angeles area have been impacted,” said Christian J. Schrank, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “Too often those ill-gotten gains came at the expense of innocent Americans. It has been a pleasure working with our law enforcement colleagues to bring these people to justice.”

          “Today’s enforcement actions, and the long-term multiagency investigation that preceded them, have dealt a major blow to a sophisticated healthcare fraud and identity theft scheme that posed a double threat. Not only did the defendants in this case use physicians’ names to write fraudulent prescriptions and fleece Medicare out of millions of dollars, but they’re also accused of funneling large quantities of dangerous prescription opiates, including oxycodone and hydrocodone, into the community,” said Joseph Macias, special agent in charge for Homeland Security Investigations in Los Angeles. “In collaboration with our law enforcement partners, HSI will continue to aggressively target those who compromise the integrity of our healthcare system and public safety to satisfy their own greed.”

          The indictment also charges Matosyan and others – including Glendale-based criminal defense attorney Fred Minassian – with obstruction of justice for allegedly creating fraudulent medical records in an effort to deter the investigation.

          After a load of Vicodin was seized from one of the conspiracy’s major customers, Matosyan allegedly oversaw the creation of fake medical paperwork in an effort to make it appear the drugs had been legitimately prescribed. The indictment describes intercepted conversations in which Minassian strategized on how to deceive law enforcement, which included a plan to bribe a doctor to lie to authorities.

          The 12 defendants arrested this morning are:

• Minas Matosyan, 36, of Encino, who is accused of leading the scheme by recruiting corrupt doctors, overseeing the theft of other doctors’ identities, and negotiating the sale of fraudulent prescriptions and narcotic pills;

• Armen Simonyan, 52, of Burbank, who allegedly managed the operations at some of the fraudulent clinics;

• Grisha Sayadyan, 66, of Burbank, who allegedly managed the operations at various clinics and sold oxycodone and Vicodin pills directly to black market customers;

• Sabrina Guberman, 45, of Encino, who, while working at the sham clinics, allegedly lied to pharmacies seeking to verify the fraudulent narcotic prescriptions, which included creating and sending fake medical paperwork;

• Frederick Manning Jr., 47, of Santa Ana, allegedly one of the major drug customers of the clinics, who is charged with agreeing to purchase as many as 1,000 pills per week of narcotics from Matosyan;

• Fred Minassian, 50, of Glendale, the criminal defense attorney who allegedly spearheaded the scheme to lie to law enforcement by making it falsely appear that Vicodin seized from Freddie Manning Jr. had been legitimately prescribed by a doctor;

• Ralph Manning, 49, of North Hills (no relation to Frederick Manning Jr.), who is charged with being one of the principal couriers Matosyan used to deliver fraudulent prescriptions and “bulk quantities” of narcotic pills;

• Hayk Matosyan, 30, of Granada Hills, Matosyan’s brother, who allegedly filled fraudulent narcotic prescriptions at pharmacies and sold the resulting narcotics pills to black-market customers.

• Marisa Montenegro, 54, of West Hills, who allegedly filled fraudulent prescriptions;

• Elizabeth Gurumdzhyan, 25, of Hollywood, who allegedly filled fraudulent prescriptons;

• Anait Guyumzhyan, 27, of Hollywood, who allegedly filled prescriptions for oxycodone and returned the drugs to Matosyan-operated clinics in exchange for cash payment; and

• James Wilson, 54, of Venice, who alone is charged in the second indictment with illegally selling oxycodone prescriptions out of a Long Beach clinic that he controlled.

          The 12 defendants arrested this morning are expected to be arraigned on the indictment this afternoon in United States District Court.

          Authorities are continuing to seek two defendants named in the main indictment. Those fugitives are: Gary Henderson, 62, of Lancaster, who allegedly purchased fraudulent oxycodone prescriptions from Matosyan; and an unidentified conspirator known only by the name “Cindy.”

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

          All of the defendants face significant terms in federal prison if they are convicted. For example, if convicted of the nine counts in which he is charged, Matosyan would face a statutory maximum sentence of 165 years in prison.

          The investigation in this case was conducted by the Drug Enforcement Administration; IRS Criminal Investigation; the U.S. Department of Health and Human Services - Office of Inspector General; the Ventura County Sheriff’s Office, Pharmaceutical Crimes Unit; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

          The primary investigative agencies received substantial assistance from the Los Angeles County Sheriff’s Department, the Los Angeles Police Department, the California Department of Justice, and the Orange Police Department.

          The case is being prosecuted by Assistant United States Attorneys Benjamin Barron and Jamie Lang of the Organized Crime Drug Enforcement Task Force.

          LOS ANGELES – A former staffer for a member of the United States Congress was arrested today on federal extortion and bribery charges after allegedly taking $5,000 with promises of helping to prevent the closure of a Compton marijuana shop.

          Michael Kimbrew, 44, of Carson, was arrested without incident this morning by special agents with the FBI.

          Kimbrew was arrested pursuant to a two-count indictment that was returned by a federal grand jury on July 21 and unsealed this afternoon. Kimbrew is charged with one count of attempted extortion and one count of receiving a bribe.

          At his arraignment this afternoon, Kimbrew pleaded not guilty and was ordered freed on a $15,000 bond. He was ordered to stand trial on September 26.

          According to the indictment, Kimbrew approached an employee of the marijuana shop, told him the store was violating the law, and said the shop would be shut down – unless the owners reached an agreement with him.

          Kimbrew subsequently met with the owners of the marijuana shop inside Compton City Hall. The indictment alleges that Kimbrew claimed to be working with the FBI, and he could “make things happen” by ensuring the store had the appropriate permits in exchange for $5,000.

          According to the indictment, an undercover FBI agent posing as a business partner met with Kimbrew, who reiterated his claims he could prevent the shutdown of the shop in exchange for $5,000. In a second meeting between Kimbrew and the undercover agent, Kimbrew allegedly accepted the $5,000 bribe.

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

          If convicted of the two counts in the indictment, Kimbrew would face a statutory maximum sentence of 18 years in federal prison.

          This case is being investigated by the Federal Bureau of Investigation.

          The prosecution is being handled by Assistant United States Attorney Lindsey Greer Dotson of the Public Corruption and Civil Rights Section.

          LOS ANGELES – The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.

          The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.

          The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:

• slopes and ramps that are too steep for safe passage by persons with mobility disabilities;

• door thresholds that are too tall for wheelchairs to roll over;

• steps that prohibit access to common areas;

• kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;

• sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;

• pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and

• insufficient numbers of accessible parking spaces in garages and lots.

          “Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting United States Attorney Sandra R. Brown. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”

          “The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

          The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.

          By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.

          The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.

          The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, 5 percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional 2 percent will be accessible to people with visual and auditory impairments.

          The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.

          The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in United States District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before United States District Judge Philip S. Gutierrez.

          The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.

          This matter was investigated by Assistant United States Attorney Lisa A. Palombo of the Civil Fraud Section, the Commercial Litigation Branch of the Justice Department’s Civil Division, and the HUD Office of Inspector General.

          The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.

The United States late yesterday filed a complaint in intervention against the City of Los Angeles and the CRA/LA (formerly the Community Redevelopment Agency of the City of Los Angeles) alleging that together they fraudulently obtained millions of dollars in housing grants from the U.S. Department of Housing and Urban Development (HUD) by falsely certifying that the money was being spent in compliance with federal accessibility laws.

The complaint in intervention – which replaces a complaint previously filed on behalf of the United States by a “whistleblower” – alleges the city and CRA/LA received federal money by falsely promising to create accessible housing for people with disabilities. Instead of creating accessible housing, they used the money to create inaccessible housing that deprived people with disabilities an equal opportunity to find housing of their choice.

The city repeatedly certified its compliance with federal accessibility laws to obtain the federal funds without taking the required steps to ensure it complied, according to the complaint, which further alleges that many of the HUD-assisted apartment buildings failed to meet minimal accessibility requirements. The city allegedly approved the design and construction of inaccessible buildings, with, among other things:

• slopes and ramps that are too steep for safe passage by persons with mobility disabilities;
• door thresholds that are too tall for wheelchairs to roll over;
• steps that prohibit access to common areas;
• kitchen cabinets, shelves and surfaces that are outside of the accessible reach ranges of persons who use wheelchairs;
• sinks, grab bars, mailboxes and circuit breakers mounted beyond the reach of wheelchair users;
• pipes below sinks and lavatories that are not insulated, thereby posing a physical threat of burns to people who use wheelchairs; and
• insufficient numbers of accessible parking spaces in garages and lots.

“The complaint filed yesterday underscores the Department’s commitment to ensure that people with disabilities are provided equal access to federally-funded public housing, as required by law,” said Acting Assistant Attorney General Chad A. Readler of the Justice Department’s Civil Division.

“Despite the federal government investing hundreds of millions of dollars in Los Angeles to create housing for everyone, the City of Los Angeles instead created housing only for some,” said Acting U.S. Attorney Sandra R. Brown for the Central District of California. “For 17 years, the city falsely certified that it had complied with federal law and covered up its repeated disregard of historic and important civil rights laws.”

The city and the CRA/LA allegedly violated Section 504 of the Rehabilitation Act, the Americans with Disabilities Act and the Fair Housing Act, as well as failed to fulfill their duty to affirmatively further fair housing. Congress passed these accessibility laws to ensure people with disabilities have an opportunity to live in an integrated society, achieve independent living, and have the same opportunities for economic and social self-sufficiency as other citizens.

By law, the city and the CRA/LA are required to comply with the federal accessibility laws. They could not – neither directly, nor through contractual or other arrangements – deny people with disabilities the opportunity to benefit from housing services or subject them to discrimination based on disability.

The accessibility laws require recipients of federal funds to operate their housing programs in a manner that is accessible to people with disabilities. Among other things, they must have a system in place to ensure compliance with the laws. They are required to develop non-discriminatory policies and practices, hire a coordinator knowledgeable about accessibility, and implement a grievance procedure that allows for just resolution of complaints. They also must maintain a publicly available list of accessible units and their accessibility features so that people who require those features are able to find housing.

The federal accessibility laws also require that recipients of federal monies have a method in place to avoid giving accessible units needed by people with disabilities to people who do not need accessibility features. The laws also require that recipients of federal monies monitor apartment buildings to ensure they are designed, constructed and altered in compliance with the law so that, among other things, five percent of all units in certain multifamily housing will be accessible to people with mobility impairments, and an additional two percent will be accessible to people with visual and auditory impairments.

The United States’ lawsuit alleges that the city and CRA/LA failed to meet these legal obligations.

The lawsuit, United States ex rel. Ling, et al. v. City of Los Angeles, et al., CV11-974-PG, was originally filed in U.S. District Court by whistleblowers Mei Ling, a resident of Los Angeles who uses a wheelchair, and the Fair Housing Council of San Fernando Valley, a nonprofit civil rights advocacy group. The United States elected to intervene in the lawsuit and take over the litigation, which prompted the unsealing of the whistleblowers’ complaint in June. The case is pending before U.S. District Judge Philip S. Gutierrez.

The lawsuit was filed under the qui tam – or whistleblower – provisions of the False Claims Act, which permit private parties to sue on behalf of the United States when they believe that a party has submitted false claims for government funds, and to receive a share of any recovery.

This matter was investigated by the Civil Division’s Commercial Litigation Branch, the U.S. Attorney’s Office for the Central District of California and the HUD Office of Inspector General.

The claims asserted against the City of Los Angeles and the CRA/LA are allegations only; there has been no determination of liability.

          SANTA ANA, California – The chief executive officer of an Orange County check-cashing business was arrested this morning on federal charges that accuse him of procuring and illegally exporting rifle scopes, laser boresighters and other tactical equipment from the United States to Syria in violation of the International Emergency Economic Powers Act (IEEPA).

          Rasheed Al Jijakli, 56, of Walnut, is expected to be arraigned this afternoon in the United States District Court on a three-count indictment that was returned by a federal grand jury on July 14. The indictment was unsealed this morning after Jijakli was taken into custody without incident by law enforcement authorities.

          The indictment accuses Jijakli of violating IEEPA, which authorizes the president to impose economic sanctions on a foreign country in response to an unusual or extraordinary threat to the national security, foreign policy or economy of the United States. In accordance with that authority, the president issued an executive order that included broad restrictions on exports to Syria. The Department of Commerce subsequently issued corresponding regulations restricting exports to Syria of items subject to the Export Administration Regulations.

          Jijakli also faces charges of conspiring to violate IEEPA and smuggling.

          From January 2012 through March 2013, Jijakli and three other individuals purchased and smuggled export-controlled items to Syria without obtaining licenses from the Department of Commerce. Jijakli and others allegedly hand-carried the items through Istanbul, Turkey and provided them to fighters in Syria. Those items allegedly included day- and night-vision rifle scopes, laser boresighters (tools used to adjust sights on firearms for accuracy when firing), flashlights, radios, a bulletproof vest and other tactical equipment.

          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 he is convicted of all three charges in the indictment, Jijakli would face a statutory maximum penalty of 50 years in prison.

          This case is the result of an ongoing investigation being conducted by the FBI, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Department of Commerce’s Office of Export Enforcement, and IRS Criminal Investigation.

          The case against Jijakli is being prosecuted by Assistant U.S. Attorney Mark Takla of the Terrorism and Export Crimes Section and Trial Attorney Christian Ford of the Counterintelligence and Export Control Section of the Justice Department’s National Security Division.

          LOS ANGELES – A Yorba Linda man who owns a Gardena company that contracted with the U.S. Army to overhaul linear actuators used on Apache helicopters pleaded guilty to violating his contract with the military by making unauthorized repairs to motors inside the part.

          Bahram Bordbar, 62, the owner of Prototype Engineering and Manufacturing, Inc., pleaded guilty today to a federal charge of making false statements involving aircraft. Bordbar admitted that his fraudulent conduct led to him improperly receiving approximately $320,000 from the Army.

          Prototype had a contract to overhaul and repair linear actuators that were used on the Army’s AH-64-A Apache helicopter. Prototype was not authorized to repair DC motors used in the linear actuators unless the company received specific authorization from the Army.

          According to a plea agreement filed in United States District Court, Prototype used an outside contractor to repair 105 DC motors when those repairs had not been approved by the military. Those repaired motors were installed into overhauled linear actuators which were delivered to the Army.

          Bordbar also pleaded guilty to one count of aiding and abetting in the filing of a false tax return related to an employee’s tax return. Bordbar paid the employee $100,000, but told the employee the money was a gift and that he would pay the taxes, which prompted the employee to not report the money as income on a federal tax return. Bordbar has agreed to pay the Internal Revenue Service more than $28,000 to pay the employee’s back taxes.

          Bordbar pleaded guilty before United States District Judge John F. Walter, who is scheduled to sentence the defendant on October 16. At sentencing, Bordbar will face a statutory maximum sentence of 13 years in federal prison.

          In a parallel civil investigation under the False Claims Act, Bordbar in June agreed to pay over $900,000 after the government determined that he had caused Prototype to submit false claims to the U.S. Army. The civil investigation found that, in addition to improperly installing repaired DC motors, Prototype also installed cheaper replicas of a jacket-and-nut assembly component, rather than purchasing that component from the original manufacturer. As part of the civil settlement, Prototype agreed to cease doing business and dissolve, and Bordbar agreed that he will no longer solicit, accept or perform any federal government or military contract.

          This case was investigated by the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; the U.S. Army Criminal Investigation Command; the Federal Bureau of Investigation; and IRS Criminal Investigation.

          The criminal case was handled by the Major Frauds Section. The civil settlement was handled by Assistant United States Attorney Donald W. Yoo of the Civil Fraud Section.

          LOS ANGELES – A Murietta man has been sentenced to 17 years in federal prison after pleading guilty to enticing a girl who lived in the Seattle area to engage in sexually explicit activity that resulted in the production of child pornography.

          Curtis Audun Larssen, 33, was sentenced yesterday by United States District Judge S. James Otero to 210 months in prison.

          Larssen pleaded guilty in June 2017 to one count of using the internet to induce a minor to engage in criminal sexual activity.

          According to court documents, Larssen directed a girl, who is described as being no older than 13, to have sexual contact with adult men. Larssen encouraged the victim to allow him to watch the sexual conduct, and to take photos and videos to send to Larssen. In one case, the girl sent Larssen a photo showing her engaged in sexual activity with a 35-year-old man.

          In a plea agreement, Larssen admitted that he used a peer-to-peer network to trade child pornography. During a search of his residence in 2014, authorities found in his possession approximately 470 videos depicting child pornography.

          Once he completes his prison sentence, Larssen will be on supervised release for the rest of his life.

          Larssen was one of 11 defendants arrested in April 2016 as part of Operation Wide Net, an investigation conducted by the Los Angeles Internet Crimes Against Children (ICAC) Task Force. ICAC includes special agents with the Federal Bureau of Investigation, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the United States Postal Inspection Service. These federal law enforcement agencies work with local law enforcement partners, including the Los Angeles Police Department and the Los Angeles Sheriff's Department.

          The case against Larssen was prosecuted by Assistant United States Attorney Jennifer Chou of the Violent and Organized Crime Section.