Eastern District of California

SACRAMENTO, Calif. — A federal grand jury returned an indictment today against John Brewer, 47, of San Francisco; Brent Vinch, 47, of Manorville, New York; and Loraine Dixon, 55, of Granite Bay, charging them with a bid-rigging conspiracy involving state contracts, U.S. Attorney Phillip A. Talbert announced.

According to court documents, Brewer and Vinch were the owners of and senior executives for a company called Expert Network Consultants, which submitted bids to the State of California for various government contracts. From 2008 through early 2012, it is alleged that Brewer, Vinch and Dixon conspired with each other and others to rig the State’s competitive bidding process by creating inflated bids for submission by co-conspirators to state contracting agencies in an effort to ensure that Expert Network Consultants received the contracts.

This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the California Attorney General’s Office. Assistant U.S. Attorneys Jared C. Dolan and Matthew M. Yelovich are prosecuting the case.

If convicted, Brewer, Vinch, and Dixon face a maximum statutory penalty of 10 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Mark Corum, 60, of Sacramento, was arraigned today in Sacramento on an indictment charging him with distribution of child pornography, U.S. Attorney Phillip A. Talbert announced.

According court documents, on June 23, 2016, Corum transmitted images of prepubescent children engaged in sexually explicit conduct to another person via the internet.

This case was investigated by the Sacramento Internet Crimes Against Children (ICAC) Task Force, a federally and state-funded task force managed by the Sacramento Sheriff’s Department with agents from federal, state, and local agencies. The Sacramento ICAC investigates online child exploitation crimes, including child pornography, enticement, and sex trafficking. Assistant U.S. Attorney Katherine T. Lydon is prosecuting the case.

Corum is in custody and is scheduled to appear before U.S. District Judge Kimberly J. Mueller on January 25, 2017 at 9:00 a.m.

If convicted, Corum faces a maximum statutory penalty of 20 years in prison and a maximum statutory fine of $250,000. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.

SACRAMENTO, Calif. — A federal grand jury returned a two-count indictment today against Tion Makeise Foster, 21, and Monica Merlin Morales, 25, both of Point Arena, charging them with sex trafficking a minor and conspiracy to traffic a minor, U.S. Attorney Phillip A. Talbert announced.

According to court documents, the defendants transported a 16-year-old female victim to various places in the Eastern District of California and the Bay Area in August 2016 so that she could engage in commercial sex acts for their financial benefit. They subsequently conspired to traffic her again in November and December.

This case is the product of an investigation by the Federal Bureau of Investigation with assistance from the Yuba County Sheriff’s Office. Assistant U.S. Attorney Michele Beckwith is prosecuting the case.

If convicted, Foster and Morales face a maximum statutory penalty of life in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. —Phillip A. Talbert, U.S. Attorney for the Eastern District of California, announced today that his office collected $49 million in criminal and civil enforcement actions in Fiscal Year 2016 (the 12 months ending September 30, 2016), and an additional $3 billion in cases pursued jointly with other U.S. Attorney’s Offices and components of the U.S. Department of Justice.

“Our office is committed to aggressively pursuing monetary compensation in both criminal and civil matters from those who cause harm to the public,” said U.S. Attorney Talbert. “Each year we collect more money for victims and taxpayers than it costs to operate our office. This year’s financial recoveries are no different, and they reflect the strength of our commitment to ensuring that the public does not bear the costs of those who commit criminal and civil violations in our district.”

The office’s largest civil collections were from affirmative civil enforcement cases in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals or corporations for violations of federal health, safety, civil rights, or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.

Multiple major recoveries arose from allegations of procurement fraud and grant fraud. Menlo Worldwide Services LLC, Con-way Inc. and their subsidiaries Estes Forwarding Worldwide LLC and Estes Express Lines, paid $13 million to resolve allegations under the False Claims Act that they overcharged the government in part by billing the cost of moving freight by air when it was actually shipped by ground. Bard College paid $4 million to resolve allegations of False Claims Act violations regarding the receipt and disbursement of federal student aid funds. E&A Protective Services-Bravo LLC and Eris Security Inc. paid $340,000, plus all net proceeds from the liquidation of their assets, to resolve allegations that they submitted false claims in connection with a contract to provide armed security guard services at IRS facilities in Fresno, California and Ogden, Utah.

Mary’s Gone Crackers Inc., a natural food company based in Gridley, paid $1.5 million and agreed to establish a corporate compliance program following an investigation into potential criminal violations of federal immigration laws.

The office also had multiple major recoveries arising from investigations of health care fraud and Controlled Substances Act violations. In June, Marshall Medical Center paid $5.5 million to settle allegations that it violated the False Claims Act through billing improprieties. CRC Health Group paid $1 million to settle claims that it violated the Controlled Substances Act. An oncologist and his wife who was theoffice administrator paid $300,000 to settle allegations that they improperly billed Medicare for chemotherapy drugs purchased from an unlicensed foreign pharmaceutical distributor. The owner of the Script Life Pharmacy in Clovis paid $200,000 to settle civil claims for multiple violations of the Controlled Substances Act.

The office collected over $7.5 million this year for damages caused by wildfires in the Eastern District of California.

By far, the largest recovery through joint efforts with other arms of the Justice Department was $2.96 billion paid by Goldman Sachs Group Inc. in settlement of claims arising from Goldman’s marketing, underwriting, issuing, and selling residential mortgage-backed securities in the years leading up to the financial crisis.

In addition, working with partner law enforcement agencies, the office collected over $11 million in asset forfeiture actions in FY 2016. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

The office also worked with the department’s other litigating divisions to enforce and collect criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

Attorney General Loretta E. Lynch announced on December 14, 2016, that the Justice Department collected nearly $15.4 billion in civil and criminal actions in Fiscal Year 2016. Those collections are more than five times the appropriated budget for all 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period (approximately $2.93 billion).

“Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch. “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment. I want to thank the prosecutors and trial attorneys who made this year's collections possible, and I want to emphasize that the Department remains committed to the well-being of our people and our nation.”

FRESNO, Calif. — Veronica Rosales-Capitaine, 49, of Fresno, was sentenced today by Chief U.S. District Judge Lawrence J. O’Neill to 14 months in prison for conspiracy to produce, transfer, possess, and sell false identification documents, U.S. Attorney Phillip A. Talbert announced.

According to court documents, between June 2015 and June 2016, Rosales-Capitaine conspired with others to manufacture fraudulent identification documents, including social security cards and alien registration receipt cards, for customers who placed orders and paid as much as $150 for a set of the fraudulent documents. In March 2010, Rosales-Capitaine was convicted of the same offense and sentenced to six months in prison, admitting that between January 2009 and October 2009, she conspired with others to manufacture fraudulent identification documents.

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) and the California Department of Motor Vehicles, Investigations Division. Assistant U.S. Attorney Christopher D. Baker is prosecuting the case.

On June 16, 2016, Rosales-Capitaine and five co-defendants were arrested for the scheme. On December 5, 2016, co-defendant Francisco Javier Hidalgo-Flores was sentenced to 15 months in prison. Charges are pending against the remaining co-defendants.

FRESNO, Calif. — Jose Soto, 36, of Lamont, pleaded guilty today to possession with intent to distribute methamphetamine, United States Attorney Phillip A. Talbert announced.

According to court documents, on May 5, 2016, at his residence, Soto possessed over two pounds of methamphetamine that he intended to sell. At the time of his arrest, Soto was on Kern County Mandatory Supervision for a prior narcotics trafficking offense.

This case is the product of an investigation by the Drug Enforcement Administration and the Kern County Probation Department. Assistant United States Attorney Angela Scott is prosecuting the case.

Soto is scheduled to be sentenced on March 6, 2017, by U.S. District Judge Dale A. Drozd. Soto faces a maximum statutory penalty of life in prison and a $10 million fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — A federal grand jury returned an 11-count indictment Thursday against Anthony Lazzarino, 66, former Chief of Podiatry for the VA’s Northern California Health Care System, and Peter Wong, 58, founder and CEO of Sunrise Shoes and Pedorthic Service, charging them with health care fraud, conspiracy to pay and receive kickbacks on medical referrals, and conspiracy to commit wire fraud, United States Attorney Phillip A. Talbert announced.

According to court documents, between March 2008 and February 2015, Lazzarino and Wong engaged in a scheme to defraud the VA by billing the Veterans Health Administration for custom work and services that were prescribed but not supplied in shoes delivered to veterans. In addition, Lazzarino referred patients directly to Sunrise in violation of VA policy, and agreed with Wong to offer kickbacks in return for such referrals. Finally, Lazzarino, Wong, and Jai Aing Chen, who separately pleaded guilty on December 6, 2016, agreed to make materially false statements and omissions to the VA regarding where the shoes were manufactured, in the course of applying for an estimated $59 million contract.

This case is the product of an investigation by the Department of Veterans Affairs, Office of Inspector General, the Department of Veterans Affairs Police Service, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorney Matthew M. Yelovich is prosecuting the case.

If convicted, Lazzarino and Wong face a maximum statutory penalty of 10 years in prison and a $250,000 fine for each health care fraud count, and five years in prison and a $250,000 fine for each of the two conspiracy counts. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Mark McLeod Wygant, 46, of Chico, pleaded guilty today to transportation of child pornography, U.S. Attorney Phillip A. Talbert announced.

According to court documents, from early 2011 to early 2012, Wygant surreptitiously filmed a child on numerous occasions using a hidden cellphone and hidden “spy cameras” that he had purchased for that purpose. He then transported those videos and photos from a location in Butte County to South Lake Tahoe. Wygant has been in custody since his arrest on January 29, 2015.

This case is the product of an investigation by the Federal Bureau of Investigation and the South Lake Tahoe Police Department. Assistant U.S. Attorney Matthew G. Morris is prosecuting the case.

Wygant is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on March 3, 2017. Wygant faces a minimum of five years and a maximum statutory penalty of 20 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

FRESNO, Calif. — A federal grand jury returned a one-count indictment today against Michael Mathison, 26, of Selma, charging him with being a felon in possession of a firearm and ammunition, U.S. Attorney Phillip A. Talbert announced.

According to court documents, a Fresno police officer assigned to the Fresno County Probation Adult Compliance Team arrested Mathison after an encounter in late November. According to the complaint, Mathison attempted to flee when the officer approached him and allegedly threw a gun into a nearby yard. After officers caught Mathison, they searched the yard and found a firearm. Mathison is prohibited by law from possessing a firearm because he has previously been convicted of multiple felonies.

This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Fresno County Probation Adult Compliance Team, and the Fresno Police Department. Assistant U.S. Attorney Ross Pearson is prosecuting the case.

If convicted, Mathison faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case was brought as part of Project Safe Neighborhoods (PSN), an initiative that brings together federal, state and local law enforcement to combat gun and gang crime. At the core of PSN is increased federal prosecution to incapacitate chronic violent offenders as well as to communicate a credible deterrent threat to potential gun offenders.

FRESNO, Calif. — A federal grand jury in Fresno returned an indictment today against Emil Vladimirov Babadjov, 31, of San Francisco, charging him with distributing fentanyl and heroin, United States Attorney Phillip A. Talbert announced. Babadjov was arrested and made his initial court appearance on December 14, 2016, in San Francisco.

According to the complaint filed on December 9, 2016, Babadjov, using the vendor names “Blime-Sub” and “BTH-Overdose,” was a heroin, fentanyl, and methamphetamine distributor on the dark web marketplace AlphaBay. The reverse order of the word “Blime” is “Emil B.” Dark web marketplaces are operated on computer networks designed to conceal the true Internet Protocol (IP) address of the computers accessing the network. Dark web marketplaces allow for payments to be made only in the form of digital currency, most commonly in Bitcoin.

According to the complaint, Babadjov accepted orders for heroin, fentanyl, and methamphetamine on AlphaBay, and then mailed the narcotics from a post office in San Francisco to customers throughout the United States. Babadjov received payment for the narcotics in Bitcoin. On October 20, 2016, law enforcement made an undercover purchase of heroin from “Blime-Sub,” which was delivered to a post office box in the Eastern District of California. The parcel contained a mixture of fentanyl and heroin.

This case is a product of an investigation by the Central California Darknet Strike Force, an inter-agency task force dedicated to combating the use of dark web marketplaces and digital currency to distribute narcotics and launder money. The lead agency on this case was the Drug Enforcement Administration, with assistance from the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Internal Revenue Service, Criminal Investigation, and the U.S. Postal Inspection Service. Assistant United States Attorneys Grant B. Rabenn and Ross Pearson are prosecuting the case.

Additionally, this case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.

If convicted, Babadjov faces a maximum statutory penalty of 20 years in prison and a $1 million fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Troy David Stratos, 50, formerly of Los Angeles, was sentenced today by United States District Judge Troy L. Nunley to 21 years and 10 months in prison for multiple counts of mail fraud, wire fraud, money laundering and obstruction of justice, United States Attorney Phillip A. Talbert announced.

U.S. Attorney Talbert stated, “The fraudulent schemes devised and orchestrated by Stratos were staggering in their scope and audacity. Stratos crafted multiple layers of lies and worked to obstruct his victims’ and the authorities’ ability to discover the truth. He preyed upon his victims to satisfy his own voracious greed and desire for a lavish lifestyle. The sentence today reflects the seriousness of his crimes and the harm done to his victims.”

“Despite the complexity of his lies to conceal his schemes, Troy Stratos is, quite simply, a common con artist. He exploited a life-long friendship to live luxuriously while draining the friend’s financial accounts. He also misrepresented himself to others to glean funds for stock shares that never existed to support his fraudulent lifestyle,” said Special Agent in Charge Monica M. Miller of the Federal Bureau of Investigation’s Sacramento field office. “The FBI will identify and investigate individuals who perpetrate such large-scale fraud to ensure they face justice for their crimes.”

According to court documents and evidence presented during the course of the case, between August 2005 and September 2007, Stratos devised and executed a scheme to defraud his targeted victim of money and property. He told her that he was wealthy and successful, and that, among other things, he had made substantial money from oil investments. Stratos promised that he would help manage the victim’s portion of the proceeds from her recent divorce, including real property in her name and cash assets. Stratos told her that she needed to create a trust allowing Stratos to have access and control over her assets and the trust.

Stratos falsely represented that he would invest the divorce proceeds overseas, including in Dubai and in the United Arab Emirates, where the proceeds would earn a high rate of return. Stratos also falsely represented that he would pay for her expenses from his own money because her money was purportedly invested overseas.

Stratos never invested any money overseas as he promised. Instead, he diverted substantial sums of money from the trust for his own personal use. He also used portions of the money to pay the victim=s expenses, misrepresenting to her that he was spending his own money to pay those expenses.

Further, between February 2007 and April 2007, Stratos was informed of a grand jury subpoena that his bookkeeper had received requiring the production of various financial records relating to Stratos, including documents relating to Stratos’ spending the victim’s money in casinos in Las Vegas. Stratos instructed the bookkeeper to not provide some of the records. In April 2010, the FBI executed a search warrant for a storage locker maintained by Stratos and located the records covered by the grand jury subpoena that were withheld at the direction of Stratos.

Thereafter, beginning in December 2010 and continuing through February 2012, Stratos engaged in a new scheme to defraud Tim Burns, a financial manager in Pennsylvania, of approximately $11,250,000 of investors’ money. Burns was in the market to buy Facebook stock, pre-IPO (initial public offering), for some of his clients in 2011. Stratos, who used the alias “Ken Dennis,” because his own name had numerous negative postings on the internet, told Burns that he represented Carlos Slim, one of the wealthiest individuals in the world. Stratos claimed that Carlos Slim was in the process of purchasing a large block of Facebook shares, and Stratos offered to sell to Burns favorably priced Facebook shares that were in excess of what Carlos Slim was purchasing. Stratos also claimed to be connected with insiders at Facebook, including Mark Zuckerberg, and Facebook’s CFO. Stratos promised increasingly larger amounts of Facebook stock starting at approximately two million shares and up to 40 million shares. Based on the representations by Stratos, Burns sent three wire transfers totaling $11,250,000 to purchase the Facebook stock. The first wire transfer was sent to the client-trust account at Venable LLP, which was the law firm that Stratos had retained. The subsequent wire transfers were sent to bank accounts that Stratos controlled.

Throughout the scheme, Stratos assured Burns that the deal would close at any moment, often promising that the “papers” were about to be signed. Alternatively, Stratos offered to refund to Burns his deposit, even within a few days, but warned Burns that he would regret missing the opportunity to make money.

On December 20, 2011, the Federal Bureau of Investigation arrested Stratos in Los Angeles for the earlier fraud scheme. Stratos, through text messages and a telephone call, continued to tell Burns that the deal was real and that he could refund Burns’ money. By this time, Stratos had spent nearly all of the $11.25 million.

At sentencing, the court found that Stratos also engaged in other fraudulent conduct. The United States has estimated that Stratos obtained in excess of $43 million in fraudulent proceeds between in 1996 and his arrest in 2011.

A hearing was held to determine restitution. The court took it under submission and will issue a written order.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorneys Todd Pickles and Jared Dolan prosecuted the case.

Stratos has remained in custody since his in arrest in 2011.

SACRAMENTO, Calif. — On Thursday, after a three-day trial, a federal jury found Antonio Nicholas Smith, 26, of Stockton, guilty of unlawfully possessing a firearm as a felon, U.S. Attorney Phillip A. Talbert announced. The trial was held before U.S. District Judge John A. Mendez.

According to evidence presented at trial, on March 6, 2016, Smith and another man were driving in the Bear Creek district in Stockton. A police officer tried to stop the car for a traffic violation, but the car failed to yield and instead led the officer on a high-speed chase through a residential area. The car lost control and crashed several blocks later. When it did, Smith fled from the passenger’s seat with a bag in his hands. Smith discarded the bag shortly afterwards and fled from the area. He was apprehended in a neighbor’s backyard several minutes later. Inside the bag, officers found a Glock 9mm pistol with a 50-round drum magazine attached. The gun was loaded with 43 rounds of ammunition and one live round in the chamber. Officers later determined that the gun had been modified to function in a fully automatic mode. Smith cannot lawfully possess firearms because he has previously been convicted of felony offenses.

This case is a product of an investigation by the Stockton Police Department and the United States Bureau of Alcohol, Tobacco, Firearms and Explosives. Assistant U.S. Attorney Justin L. Lee is prosecuting the case.

Smith is scheduled to be sentenced by Judge Mendez on March 14, 2017. Smith faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — U.S. District Judge Garland E. Burrell Jr. sentenced Sherry Taggart, 57, of El Dorado Hills, today to two years in prison and ordered her to pay $757,412 in restitution for conspiring to file false claims and filing false claims, U.S. Attorney Phillip A. Talbert announced. Taggart pleaded guilty to the charges on September 23, 2016.

According to court documents in 2010, Taggart joined a scheme initiated in 2008 and operated by her co-conspirator, Barbara Antonucci, an unlicensed tax preparer, to obtain false refunds by preparing and filing false claims on behalf of clients with the IRS. Together, the two conspired to prepare and file hundreds of false claims with the IRS between June 2012 and March 2014, seeking refunds totaling approximately $1.4 million. As a result of the conspiracy, the IRS issued more than $757,000 in illegitimate refunds. In total, including the period in which Antonucci operated the scheme by herself, the IRS issued more than $1.8 million in illegitimate refunds from more than $2.5 million illegitimate claims filed during the scheme.

The fraudulent returns Taggart and Antonucci prepared and caused to be filed reported false wages and dependents for their clients and, in many cases, qualified the clients for the refundable Earned Income Credit (EIC) when the client’s true wages or family situation would have qualified the client for no credit or a lower credit. Most of the fraudulent returns listed wages associated with self-employment not documented by a Form W-2, such as “housekeeper.” The defendants obtained the names, social security numbers, and other personal identifying information of minors and falsely listed those minors as dependents on tax returns for clients who were unrelated to those minors. Taggart and Antonucci also filed false claims on their own behalf. They filed the false federal tax returns with the IRS through the mail and via the internet from Sacramento, Yuba and Placer Counties.

“As we approach tax filing season next month it is important that this sentence represents adverse consequences for those tax return preparers who file false tax returns for their clients,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “It is important for tax return preparers to follow the law and guidance set forth by IRS on preparing tax returns. It is also very important for taxpayers to review their tax return with their tax return preparer to verify it has been prepared correctly before it is filed with the IRS and ask questions when they do not understand what has been prepared.”

San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated, “We are working closely with the U.S. Attorney’s Office and our partners in law enforcement to arrest and prosecute those responsible for complex Identity Fraud Schemes and to protect the public and their personal information from theft.”

Taggart was ordered to surrender to begin serving her sentence on February 17, 2017. Antonucci was sentenced on December 2, 2016, to three and a half years in prison.

This case was the product of an investigation by the IRS‑Criminal Investigation, the United States Postal Inspection Service, and the Sacramento County Sheriff’s Office. Assistant U.S. Attorney André M. Espinosa prosecuted the case.

SACRAMENTO, Calif. — Kevin Lee Co, 45, of Rocklin, pleaded guilty today to wire fraud and money laundering for embezzling approximately $4.8 million from his employer, United States Attorney Phillip A. Talbert announced.

According to court documents, Co was employed by Holt of California, where he served as the controller and managed the company’s accounting department. During his tenure at Holt, from May 2008 until March 2015, Co embezzled approximately $4.8 million from the company. Co used the money he embezzled to purchase, among other things, luxury cars, home furniture, and NFL football and NBA basketball season tickets. In addition, Co spent approximately $1 million on player fees for an online video game. Co also engaged in a money laundering scheme involving a portion of the embezzled funds, which was designed to conceal the origin of the money he embezzled.

This case is the product of an investigation by the IRS Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Brian A. Fogerty and Kevin C. Khasigian are prosecuting the case.

Co is scheduled to be sentenced by United States District Judge Troy L. Nunley on May 26, 2017. Co faces a maximum statutory penalty of 20 years in prison and a $250,000 fine for the wire fraud charge. For the money laundering charge, Co also faces a maximum statutory penalty of 20 years in prison and a fine of up to $500,000, or twice the value of the property involved in the money laundering transactions. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — A federal grand jury returned an indictment today against Silas Duane Boston, 75, charging him with two counts of first degree maritime murder, U.S. Attorney Phillip A. Talbert announced.

Boston was arrested last week in Paradise, California. He was arraigned today before U.S. Magistrate Judge Carolyn K. Delaney and entered a plea of not guilty.

According to court documents, between June and July 1978, Boston, a U.S. citizen, owned a sailboat named the Justin B., which he sailed throughout the western Caribbean Sea, sometimes taking tourists on various excursions in the area. The indictment alleges that Boston killed a 25-year-old man and a 25-year-old woman, both originally from Manchester, England, who had chartered his boat. Boston allegedly bound them, covered their heads with plastic bags, attached weights to their bindings, and pushed them overboard, drowning them. The bodies were found on about July 8, 1978, off the coast of Punta de Manabique, Guatemala. The investigation into their deaths stalled and eventually the case went cold.

U.S. Attorney Talbert stated: “This case is the product of diligent work by the Sacramento Police Department’s Cold Case Unit, the FBI, and the Greater Manchester Police Department. Kudos are especially due to the Sacramento Police Department’s Cold Case Unit, whose persistent investigative efforts made this prosecution possible. Nothing would have happened if the Sacramento Police Department had not thought to consult with this office about what could be done with a 38-year-old homicide in the Caribbean Sea. We look forward to working with them as the case continues.”

This case is the product of an investigation by the FBI and the Sacramento Police Department. Assistant U.S. Attorneys Matthew D. Segal, Heiko P. Coppola, and Jeremy J. Kelley are prosecuting the case.

If convicted, Boston faces a maximum statutory penalty of death or life in prison, but the United States is not seeking the death penalty in this case. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Rideout Health will pay the United States $2,425,000 to settle the federal claims of alleged violations of the Controlled Substances Act by three of Rideout Health’s facilities in Yuba and Sutter Counties: Rideout Memorial Hospital, Fremont Medical Center, and Feather River Surgery Center, United States Attorney Phillip A. Talbert announced today.

In addition, Rideout Health has agreed to a three-year compliance plan. The payment and plan resolve the United States= claims that the three Rideout Health facilities failed to properly record and maintain thousands of transactions involving controlled substances in violation of the Controlled Substances Act and its implementing regulations.

The settlement also resolves the United States’ contention that the system Rideout Health used during that time to distribute controlled substances between these facilities failed to provide sufficient security controls. This settlement arises from a Drug Enforcement Administration (DEA) investigation that began after DEA received information from the California State Board of Pharmacy that Fremont Medical Center’s DEA Registration had expired, and that from October 23, 2012, to October 23, 2014, pharmacy technicians at Rideout Memorial Hospital were transporting controlled substances between Rideout Health facilities with little or no security controls in place.

“Hospitals have a duty to ensure that controlled substances are not diverted for nonmedical use,” said U.S. Attorney Talbert. “When a pharmacy or hospital has record keeping problems, it is impossible to know exactly how many controlled substances are on hand. Without that knowledge, and without proper security controls, the potential for diversion into our community escalates and jeopardizes the public health and safety.”

“Healthcare providers are the gatekeepers of controlled substances in their possession,” said DEA Special Agent in Charge John J. Martin. “With prescription drug misuse rates alarmingly high, proper accountability and security reduces the opportunity for diversion to unintended users. DEA will continue to use every investigative tool available in response to the prescription drug epidemic.”

Since the investigation began, Rideout Health has worked with the DEA and the United States Attorney’s Office to develop a detailed compliance plan to address the deficiencies in Rideout Health’s handling of controlled substances. Rideout Health also took proactive steps to reorganize its Compliance Department to improve controls with respect to the purchase, storage and dispensing of controlled substances. The compliance plan with the DEA is designed to advance Rideout Health’s ability to meet its record keeping requirements and enhance its ability to detect and prevent drug diversion.

Assistant United States Attorneys M. Anderson Berry and Kurt A. Didier handled the case with assistance from Diversion Investigators from DEA’s Sacramento Field Office.

FRESNO, Calif. — Michael Brian Taylor, 60, of Tehachapi, pleaded guilty today to bank robbery, United States Attorney Phillip A. Talbert announced.

According to his plea agreement and other court documents, on May 24, 2016, at approximately 11:45 a.m., Taylor entered and robbed the Bank of the Sierra in Tehachapi, of approximately $34,000. Taylor entered the bank wearing a ski mask pulled down over his face and yelled loudly, “Hands in the air!” He approached the bank teller, demanded $200,000, and placed a black bag on the counter. Ultimately, he took approximately $34,000 given to him by the teller.

This case is the product of an investigation by the Tehachapi Police Department and the Federal Bureau of Investigation. Assistant United States Attorney Angela L. Scott is prosecuting the case.

Taylor is scheduled to be sentenced by Judge Lawrence J. O’Neill on March 20, 2017. Taylor faces a maximum statutory penalty of 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

FRESNO, Calif. — Kenneth William Kirkland, 48, of California City, was sentenced today by U.S. District Judge Dale A. Drozd to four years and nine months in prison for being a felon in possession of firearms, being a felon in possession of a destructive device, being a felon in possession of explosives, and possession of a destructive device not registered in the National Firearms Registry, U.S. Attorney Phillip A. Talbert announced.

Kirkland was convicted of these offenses in September 2016 after a three-day trial. According to court documents and evidence produced at trial, on October 11, 2015, officers from the California City Police Department executed a search warrant at Kirkland’s house and found a 5.56-caliber assault rifle that was loaded with a high-capacity magazine and one round in the chamber and a 7.62 x 54R-caliber rifle. When officers discovered detonators in a yellow metal container, they requested the assistance of the Kern County Sheriff’s bomb squad.

In addition to the detonators, several sticks of dynamite were found and a partially constructed improvised explosive device (IED) was found in a shoebox under Kirkland’s bed. Electrical components in a separate shoebox were also found. It was later determined that with either the insertion of batteries into a battery pack or the connecting of its wires directly to a battery, the partially constructed improvised explosive device could be readily assembled into a fully functional IED.

According to the indictment, on June 17, 1993, Kirkland was convicted in Kern County of burglary and was prohibited from possessing firearms or ammunition.

This case was the product of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the California City Police Department, and the Kern County Sheriff’s Office. Assistant U.S. Attorneys Angela L. Scott and Christopher Baker prosecuted the case.

BAKERSFIELD, Calif. — After a five-day trial, a federal jury in Fresno found Justin Cole Whittington, 25, of Bakersfield, guilty of federal hate crimes for firing a shotgun while yelling racist slurs at a Latino man, Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Phillip A. Talbert announced.

Whittington was convicted today of interfering with a person’s housing rights because of his race, color, or national origin by use of force or threat of force; use of a firearm during a crime of violence; and making a false statement to a special agent of the FBI. Whittington had earlier pleaded guilty to unlawful possession of a prohibited firearm in connection to the same crime.

According to court documents, on December 19, 2012, the victim, a Latino man, was standing in his front yard with his wife and son when a dark-colored PT Cruiser drove past slowly and came to a stop in front of his neighbor’s house. The victim thought this was unusual and paid close attention the car. Whittington, whom the victim had never seen before, got out of the front passenger seat of the car holding a sawed-off shotgun. Whittington used profanity and shouted a racial epithet as he fired one round toward the victim from about 15 yards away, and yelled that the victim should move out of Oildale. Whittington got back into the car and it drove away. Shortly thereafter, the shotgun was fired from the PT Cruiser at a nearby convenience store owned by a man of Middle Eastern descent. The blast left a large hole in the store’s glass door, and circles of missing paint on the metal gate in front of the store.

According to evidence presented at trial, the victim was able to describe Whittington and the car to Kern County Sheriff’s deputies, and they found Whittington nearby standing outside the PT Cruiser. The deputies recovered a sawed-off shotgun in the trunk of Whittington’s Crown Victoria, which was parked near the PT Cruiser.

Whittington was also found guilty of making false statements to an FBI agent when he falsely claimed that on the evening of the incident, he had been paid by someone to keep the sawed-off shotgun in the trunk of his car.

According to court documents and evidence presented at trial, the victim and his family no longer felt safe in their home, and as soon as they had the financial means to do so, they moved from the neighborhood.

“Whittington used violence to terrorize an innocent man and his family,” said Principal Deputy Assistant Attorney General Gupta. “The harm from hate crimes like this one extends beyond individuals and threatens the security, freedom and well-being of entire communities. No conviction can reverse that harm, but this verdict does provide a measure of justice for the victim, his family and his community.”

U.S. Attorney Talbert stated: “The Eastern District of California is a community of different races, ethnicities, and backgrounds. This defendant tried to strike at the diversity that enriches us by making a cowardly and unprovoked attack on a man who was simply standing in his front yard with his family. Hate crimes like this have profound effects not only on the victims, but on those in the victims’ communities, making them feel vulnerable and unsafe. Our office is committed to investigating and prosecuting those who violate the civil rights of others, and enforcing laws against hate crimes will remain one of the core missions of this office.”

This case is the product of an investigation by the Federal Bureau of Investigation and the Kern County Sheriff’s Office. Assistant U.S. Attorney Brian K. Delaney is prosecuting the case with the assistance of Trial Attorney Samantha Trepel of the Justice Department’s Civil Rights Division.

Whittington is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on February 27, 2017. Whittington faces a maximum statutory penalty of life in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Defendant Fired Shotgun Round Toward Victim and Shouted, “Move … Out of Oildale”

After a five-day trial, a federal jury found Justin Cole Whittington, 25, of Bakersfield, California, guilty of federal hate crimes for firing a shotgun while yelling racist slurs at a Latino man.

The conviction was announced by Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and U.S. Attorney Phillip A. Talbert of the Eastern District of California.

Whittington was convicted today of interfering with a person’s housing rights because of his race, color or national origin by use of force or threat of force; use of a firearm during a crime of violence; and making a false statement to a special agent of the FBI.  Whittington had earlier pleaded guilty to unlawful possession of a prohibited firearm in connection to the same crime.

“Whittington used violence to terrorize an innocent man and his family,” said Principal Deputy Assistant Attorney General Gupta.  “The harm from hate crimes like this one extends beyond individuals and threatens the security, freedom and well-being of entire communities.  No conviction can reverse that harm but this verdict does provide a measure of justice for the victim, his family and his community.”

“The Eastern District of California is a community of different races, ethnicities and backgrounds,” said U.S. Attorney Talbert.  “This defendant tried to strike at the diversity that enriches us by making a cowardly and unprovoked attack on a man who was simply standing in his front yard with his family.  Hate crimes like this have profound effects not only on the victims, but on those in the victims’ communities, making them feel vulnerable and unsafe.  Our office is committed to investigating and prosecuting those who violate the civil rights of others and enforcing laws against hate crimes will remain one of the core missions of this office.”

According to court documents, on Dec. 19, 2012, the victim, a Latino man, was standing in his front yard with his wife and son when a dark-colored PT Cruiser drove past slowly and came to a stop in front of his neighbor’s house.  Whittington, whom the victim had never seen before, got out of the front passenger seat of the car holding a sawed-off shotgun.  Whittington used profanity and shouted a racial epithet as he fired one round toward the victim from about 15 yards away, and yelled that the victim should move out of Oildale, California.  Whittington got back into the vehicle and drove off.  Shortly thereafter, the shotgun was fired from the car at a nearby convenience store owned by a man of Middle Eastern descent.  The blast left a large hole in the store’s glass door and circles of missing paint on the metal gate in front of the store.

According to evidence presented at trial, the victim was able to describe Whittington and the car to Kern County, California, Sheriff’s deputies, and they found Whittington nearby standing outside the PT Cruiser.  The deputies recovered a sawed-off shotgun in the trunk of Whittington’s Crown Victoria, which was parked near the PT Cruiser.

Whittington was also found guilty of making false statements to an FBI agent when he claimed that on the evening of the incident, he had been paid by someone to keep the sawed-off shotgun in the trunk of his car.

According to court documents and evidence presented at trial, the victim and his family no longer felt safe in their home and, as soon as they had the financial means to do so, they moved from the neighborhood.

Whittington is scheduled to be sentenced by U.S. District Judge Dale A. Drozd of the Eastern District of California on Feb. 27, 2017.  Whittington faces a maximum sentence of life in prison and a $250,000 fine.

This case was investigated by the FBI and the Kern County Sheriff’s Office.  The case is being prosecuted by Assistant U.S. Attorney Brian K. Delaney of the Eastern District of California and Trial Attorney Samantha Trepel of the Civil Rights Division’s Criminal Section.

SACRAMENTO, Calif. — After a four–day trial, a federal jury found Dianna F. Woods, 59, of Citrus Heights, guilty today of four counts of making false statements on loan applications, United States Attorney Phillip A. Talbert announced.

According to evidence presented at trial, Woods was a licensed real estate salesperson who worked at a company called VLD Realty, doing business as Trade House USA, in the Sacramento area. VLD built and sold houses in residential developments in Sacramento, Carmichael, and Copperopolis. As the housing market began to weaken from 2006 through 2008, VLD sought to sell the houses by offering incentives to buyers. VLD offered to pay the down payment or offered to give the buyers money after the sale, neither of which was disclosed to the lenders. For her part, Woods purchased two houses based on the undisclosed kickbacks. Further, for the purpose of obtaining loans to purchase the properties, Woods signed and submitted loan applications and other documents that contained false statements as to Woods’s income, employment, assets, the purpose of the property, the sales price, and whether the down payment was borrowed. Woods also assisted another buyer in making false statements to the lenders to get loans for the purchase of two properties in the housing developments and falsely verified his employment.

This case is the product of an investigation by the Federal Bureau of Investigation and Internal Revenue Service-Criminal Investigation. Assistant United States Attorneys Shelley Weger and Todd Pickles are prosecuting the case.

To date, six other defendants have been found guilty or have pleaded guilty in three related cases.

Woods is scheduled to be sentenced by United States District Judge William B. Shubb on February 27, 2017. Woods faces a maximum statutory penalty of 30 years in prison and a $1 million fine on each count. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

FRESNO, Calif. — On Friday, December 2, 2016, U.S. District Judge Dale A. Drozd sentenced two defendants for their involvement in a large-scale smokeable synthetic cannabinoid trafficking organization based in Millbrae and Stockton, United States Attorney Phillip A. Talbert announced.

Timothy New, 34, of Pensacola, Florida, was sentenced to two and a half years in prison and ordered to forfeit $50,053, and Natalie Middleton, 31, of Clovis, California, was sentenced to four months in prison and ordered to forfeit $11,236.

Smokeable synthetic cannabinoid products are synthetic drugs commonly known as “spice” or “K-2.” These products are falsely touted as legal alternatives to controlled substances. In some instances, however, they are far more lethal.

In May 9, 2016, New pleaded guilty to the fraudulent interstate shipment of misbranded drugs. On June 27, 2016, Middleton, a former manager of The Stuffed Pipe, a smoke shop with locations throughout the Central Valley, pleaded guilty to laundering the proceeds from the sale of synthetic drugs. Court documents indicate that from September 2012 to May 2013, New, Middleton, Douglas Jason Way, 41, of Evanston, Illinois; and Timothy Ortiz, aka Michael Fitton, 45, of Waukegan, Illinois, were involved in a drug trafficking enterprise that imported raw synthetic cannabinoids from China containing AM-2201 and XLR11 that they processed into a smokeable form. They distributed the drugs to smoke shops, including The Stuffed Pipe, adult novelty stores, gas stations, and other retail establishments throughout the United States.

At the time of the illicit enterprise, AM-2201 was a schedule I controlled substance under the Controlled Substances Act. XLR11 was scheduled as an illicit controlled substance in May 2013, after the Center for Disease Control and Prevention found that XLR11 can cause acute kidney damage. 

According to court documents, New, Middleton, and their co-defendants shipped at least 24 tons of misbranded drugs and generated in excess of $33 million as a result of the fraudulent sales. The drugs were manufactured by Zencense IncenseWorks, LLC, aka ZIW, LLC (dba Zencense), ZenBio, LLC (dba ZenBio), and Biozen, LLC (dba Biozen) and were sold under the brand names of Bizarro, Orgazmo, Headhunter, Defcon, Neutronium, Sonic Zero, Sonic Boom, Sonic Blast, Shockwave, Hampster, and Posh. The drugs were sold by the gram and marketed as “potpourri” or “herbal incense” and claimed they were “not for human consumption,” although they were fully intended to be used for intoxication.

This case is the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), with assistance from the Food and Drug Administration and the Fresno County Sheriff’s Office. The OCDETF Program was established in 1982 to mount a comprehensive attack against organized drug traffickers. This OCDETF investigation was also part of a nationwide law enforcement effort coordinated by the DEA’s Special Operations Division. Assistant United States Attorney Karen A. Escobar is prosecuting the case.

Charges against Way and Ortiz are pending. They are next scheduled to appear in court on December 12, 2016. If convicted, they face a maximum penalty of 20 years in prison and a fine of $10 million for drug trafficking offenses and drug misbranding charges. The charges against them are only allegations; Way and Ortiz are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — U.S. District Judge Garland E. Burrell Jr. sentenced Briant Benson, 59, of El Dorado Hills, today to 12 months and one day in prison for tax evasion, U.S. Attorney Phillip A. Talbert announced.

According to court documents, during the years 2004 through 2006, Benson failed to file tax returns or pay any personal income tax to the Internal Revenue Service, despite receiving at least $2 million dollars in income as the President and CEO of multiple medical device companies. Further, Benson used corporate funds to support his lavish lifestyle. He used corporate funds to purchase multimillion dollar homes, buy hundreds of thousands of dollars in jewelry and furniture, and pay for lavish travel accommodations such as luxury hotels, private jets, and limousines. Benson also used corporate funds to pay over half a million dollars in gambling debt. Nevertheless, when confronted by IRS officers, Benson denied using corporate funds for his personal use.

Benson’s failure to report his personal income and pay taxes due and owing on that income resulted in a tax loss of at least $249,000.

This case was the product of an investigation by the IRS Criminal Investigation. Assistant United States Attorneys Matthew D. Segal and Amy Schuller Hitchcock prosecuted the case.

SACRAMENTO, Calif. — Petr Kuzmenko, 38, of Loomis, was sentenced today by U.S. District Judge Garland E. Burrell Jr. to six and a half years in prison and ordered to pay $573,332 in restitution to the IRS for conspiracy to defraud the United States, U.S. Attorney Phillip A. Talbert announced.

According to court documents, Kuzmenko was engaged in a tax fraud scheme with four co-defendants, including his brother, who worked as a tax preparer at VK Tax Services in Citrus Heights in 2009. Between February 2009 and November 2009, Kuzmenko conspired with others to file approximately 90 fraudulent tax returns with the IRS. The tax returns fraudulently claimed the First-Time Homebuyer Credit, which was worth as much as $7,500. The refunds for the fraudulent claims were electronically deposited into various bank accounts controlled by Kuzmenko and his co-defendants. The fraudulent claims totaled approximately $695,724, of which the IRS paid approximately $573,000.

“We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “However, no one is entitled to defraud the government. Today’s sentencing sends a clear message to those who not only intentionally undermine our tax system, but help others so as well: You will not go undetected, and you will be held accountable.”

Kuzmenko was previously convicted in two mortgage fraud cases in this district and sentenced to a total of 21 years in prison for both cases. The sentence imposed in this case was ordered to run concurrent to those sentences.

This case is the product of an investigation by the IRS Criminal Investigation. Assistant United States Attorney Michele Beckwith is prosecuting the case.

Co-defendant Aleksandr Kuzmenko was sentenced to over two years in prison on October 28, 2016. Valeriy Nikitchuk pleaded guilty to conspiring to defraud the United States and is scheduled to be sentenced on December 16, 2016. Co-defendant Arsen Muhtarov has entered a plea of not guilty. The charges against him are only allegations, and he is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — U.S. District Judge Garland E. Burrell Jr. sentenced Barbara Antonucci, an unlicensed tax preparer, today to three years and six months in prison and ordered to pay $1,895,833 in restitution for conspiring to file false claims and filing false claims, United States Attorney Phillip A. Talbert announced.

According to court documents, Antonucci and her co-conspirator, Sherry Taggart, 56, of El Dorado Hills, prepared tax returns for clients seeking to maximize their refunds from the Internal Revenue Service. In 2008, Antonucci began a scheme to obtain false refunds by preparing and filing false claims on behalf of clients with the IRS. After May 2010, Taggart joined Antonucci’s scheme and together the two conspired to prepare and file hundreds of false claims with the IRS between June 2012 and March 2014, seeking refunds totaling approximately $1.4 million. As a result of the conspiracy, the IRS issued more than $757,000 in illegitimate refunds. In total, including the period in which Antonucci operated the scheme by herself, the IRS issued more than $1.8 million in illegitimate refunds from more than $2.5 million illegitimate claims filed during the scheme. On August 19, 2016, Antonucci pleaded guilty to conspiracy to file false claims and filing false claims.

The fraudulent returns Taggart and Antonucci prepared and caused to be filed reported false wages and dependents for their clients and, in many cases, qualified the clients for the refundable Earned Income Credit (EIC) when the client’s true wages or family situation would have qualified the client for no credit or a lower credit. Most of the fraudulent returns listed wages associated with self-employment not documented by a Form W-2, such as “housekeeper.” The defendants obtained the names, social security numbers, and other personal identifying information of minors and falsely listed those minors as dependents on tax returns for clients who were unrelated to those minors. Taggart and Antonucci also filed false claims on their own behalf. They filed the false federal tax returns with the IRS through the mail and via the internet from Sacramento, Yuba and Placer Counties.

“As we approach tax filing season next month it is important that this sentence represents adverse consequences for those tax return preparers who file false tax returns for their clients,” said Michael T. Batdorf, Special Agent in Charge, IRS Criminal Investigation. “It is important for tax return preparers to follow the law and guidance set forth by IRS on preparing tax returns. It is also very important for taxpayers to review their tax return with their tax return preparer to verify it has been prepared correctly before it is filed with the IRS and ask questions when they do not understand what has been prepared.”

San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated, “We are working closely with the U.S. Attorney’s Office and our partners in law enforcement to arrest and prosecute those responsible for complex Identity Fraud Schemes and to protect the public and their personal information from theft.”

Antonucci was ordered to surrender to begin serving her sentence on February 17, 2017. Taggart is scheduled to be sentenced on December 9, 2016.

This case is the product of an investigation by the Internal Revenue Service‑Criminal Investigation, the United States Postal Inspection Service, and the Sacramento County Sheriff’s Office. Assistant United States Attorney André M. Espinosa is prosecuting the case.

FRESNO, Calif. — Francisco Javier Hidalgo-Flores, 25, of Fresno, was sentenced today by Chief United States District Judge Lawrence J. O’Neill to 15 months in prison for conspiracy to produce and sell false identification documents, U.S. Attorney Phillip A. Talbert announced. Co-defendant Lizet Amairani Ramirez-Zazueta, 26, also of Fresno, was sentenced to time served for selling false identification documents. Both defendants have been in custody since their arrest on June 16, 2016.

According to court documents, Hidalgo-Flores manufactured fraudulent identification documents, including social security cards and alien registration receipt cards, for customers who placed orders and paid as much as $150 for a set of the fraudulent documents. Hidalgo-Flores and Ramirez-Zazueta also delivered fraudulent identification documents to customers and other co-conspirators.

This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Department of Motor Vehicles, Investigations Division. Assistant United States Attorney Christopher D. Baker is prosecuting the case.

“Counterfeit document traffickers will provide anyone with false documents for the right price,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “This poses a potential national security threat and opens the door for imposters to steal identities and wreak havoc on innocent victims” lives.”

On June 16, 2016, Hidalgo-Flores and Ramirez-Zazueta were arrested along with four other co-defendants for the scheme. Co-defendant Veronica Rosales-Capitaine is scheduled to be sentenced on December 19, 2016; charges are pending against the remaining co-defendants. The pending charges are only allegations; the remaining co‑defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

FRESNO, Calif. — Cristopher Santiago Sanchez-Becerra, 32, of Stockton, was sentenced today to 21 months in prison in connection with his role in a conspiracy to stage car accidents in order to defraud insurance companies, U.S. Attorney Phillip A. Talbert announced.

According to court documents, from October 2011 until August 2014, Sanchez-Becerra conspired with at least six other individuals to stage dozens of car accidents and submit false claims seeking compensation for the damage caused by the staged accidents. As part of the scheme, the defendants would often offer to repair the recruited individual’s vehicle at automobile repair shops that Sanchez-Becerra or a co-defendant owned, usually with less-than-complete repair work, and for a fee that was less than the payment from the insurance company. In all, Sanchez-Becerra caused at least $210,000 in false insurance claims to be paid as a result of the conspiracy to defraud.

In each staged accident, Sanchez-Becerra and other defendants utilized two or three vehicles and caused about $5,000 to $10,000 in damage to each vehicle. After each staged collision, the defendants submitted cover stories to the insurer that concealed the true cause of the accident. The cover story would commonly use aliases, false identities, and false addresses when describing the defendants. The defendants also used different vehicles in the staged collisions. They were able to do this by obtaining many different vehicles and using false identities to both register the vehicles with the Department of Motor Vehicles and obtain insurance policies for the vehicles. The defendants did this to avoid scrutiny by the insurer that reviewed the false claims. The defendants repeated the scheme in dozens of crashes by recruiting other individuals to participate in the staged collisions. These individuals would allow their vehicles to be damaged and would submit their own claim for damages. In many instances, false claims were submitted to the recruited individual’s insurance company.

This case is the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the California Department of Insurance, Fraud Division. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.

Co-defendants Victor Hugo Soriano-Villafan, 26, of Modesto, and Alfonso Apu, 47, of Modesto, have pleaded guilty and are awaiting sentencing. Charges are pending against co‑defendants Juan Ortiz Rivas, 39, of Ceres; Oscar Diaz Landa, 46, of San Jose; Liobigildo Vargas, 46, of Turlock; and Juan Marquez Cadenas, 30, of Patterson. The charges against them are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — United States Attorney Phillip A. Talbert announced today the resolution of federal False Claims Act allegations against Leatha Henderson for allegedly submitting false claims in connection with her participation as a landlord in the federal housing subsidy program.

The Housing Choice Voucher Program was enacted to assist low-income families in obtaining decent, safe, sanitary and affordable housing. The United States Department of Housing and Urban Development (HUD) administers the program through annual contribution contracts with local public housing agencies such as the Sacramento Housing & Redevelopment Agency (SHRA). This program is more commonly known as “Section 8.” Regulations implementing the Section 8 program provide that participating low-income tenants pay 30 to 40 percent of their adjusted monthly income toward their rent and utilities, and the federally funded program pays the balance.

Henderson contracted with SHRA in order to participate in the Section 8 program and receive government payments for her Sacramento rental property between June 2007 and May 2013. Under the terms of this Housing Assistance Payment Contract (HAP Contract), the United States paid between 62 and 68 percent of the rental rate stated in the HAP Contract (Federal Share), and the tenant paid the remaining 32 to 38 percent (Tenant Share). The HAP Contract restricted Henderson from charging rent to the tenant in excess of the Tenant Share as designated by SHRA based on the tenant’s income. Today’s settlement resolves allegations that Henderson falsely certified compliance with this rental payment restriction and fraudulently collected rental payments from both the United States and the tenant during the term of the tenancy.

 “Charging in excess of the agreed tenant rate frustrates a primary goal of this important program: to provide affordable housing to low-income families,” said United States Attorney Talbert. “Landlords participating in the Section 8 program will be strictly held to their obligations under the governing regulations.”

“A landlord’s participation in the Section 8 program is voluntary,” said HUD Regional Administrator Jon Gresley. “When they choose to participate, they agree to fulfill certain responsibilities, including charging tenants no more than what they must pay in rent so that their homes remain affordable. HUD will continue upholding this standard, as it safeguards the program’s integrity and secures the public’s trust.”

The allegations resolved by the settlement were first raised in a lawsuit filed against Henderson under the qui tam, or whistleblower, provisions of the False Claims Act by Sondra Madden, the tenant involved in the subject Section 8 tenancy. The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $13,500 of the recovery.

This case was the product of an investigation by HUD’s Office of Inspector General. Assistant United States Attorney Catherine J. Swann handled the case with the assistance of Ji Yoo, an attorney with HUD’s Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.

SACRAMENTO, Calif. — A federal grand jury returned a 12-count indictment Thursday against Nive Hagay, 31, of Los Angeles, charging him with operating an illegal gambling business, money laundering, and cocaine distribution, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, between approximately July 2011 and November 2016, Hagay, who also went by the name “Dino the Casino,” placed video slot machines in small businesses from Bakersfield to Sacramento. These machines allegedly generated an estimated $1.9 million in cash per year, in violation of California state law. Hagay then laundered proceeds from the illegal gambling business through clothing companies in Los Angeles, as well as by making large purchases with the cash proceeds, such as a $202,000 cash transaction for a 2014 Audi R8. Finally, Hagay is charged with distributing a substance testing positive for cocaine.

This case is the product of an investigation by the Federal Bureau of Investigation and the California Department of Justice – Bureau of Gambling Control. Assistant United States Attorney Matthew M. Yelovich is prosecuting the case.

If convicted, Hagay faces a maximum statutory penalty of five years in prison and a $250,000 fine for the gambling charge; 10 years in prison and a $250,000 fine or fine of twice the value of the property involved in the transaction for one of the money laundering charges; 20 years in prison and a $500,000 fine or a fine of twice the value of the property involved in the transaction for the remaining money laundering charges; and 20 years in prison and a $1 million fine for the cocaine distribution charge. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. —Mark F. Friend, 62, of Stockton, was sentenced today by U.S. District Judge Garland E. Burrell Jr. to two years and four months in prison and ordered to pay $1,889,379 in restitution for conspiracy to commit bank fraud in relation to a mortgage fraud scheme, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, between September 2006 and March 2007, while working for National City Mortgage, then a division of National City Bank, in Stockton, Friend arranged loans for borrowers that contained numerous falsehoods. He submitted false loan applications and other documents, and he made down payments on behalf of borrowers who did not have enough money, and then was repaid out of escrow after the loans were funded. The borrowers eventually stopped making payments on the loans, and National City Bank and other entities sustained losses amounting to $1,889,379.

Judge Burrell ordered Friend to self-surrender and begin his incarceration on January 13, 2017.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney John K. Vincent prosecuted the case.

SACRAMENTO, Calif. — Zargham Bukhari, 22, of Sacramento, pleaded guilty today to sex trafficking of children, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, between February and April of 2014, Bukhari transported a 14-year-old victim to various motels and other locations in and around Sacramento to have sex with men for money. Bukhari would then take the money from the victim. Bukhari also gave the victim methamphetamine while he trafficked her.  

This case is the product of an investigation by the Federal Bureau of Investigation Child Exploitation Task Force, a multijurisdictional task force composed of representatives from the FBI and the Sacramento Police Department. Assistant United States Attorney Michele Beckwith is prosecuting the case.

Bukhari is scheduled to be sentenced by U.S. District Judge Garland E. Burrell Jr. on February 10, 2017. Bukhari faces a maximum statutory penalty of life years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

SACRAMENTO, Calif. — A federal grand jury returned a five-count indictment today against Satish Kartan, 43, and his wife, Sharmistha Barai, 38, of Stockton, charging them with conspiracy to commit forced labor and the commission of forced labor. In addition, Kartan was charged with fraud in foreign labor contracting, and Barai was charged with benefiting from forced labor.

Acting U.S. Attorney Phillip A. Talbert and Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division announced the indictment.

According to court documents, between February 21, 2014, and October 3, 2016, Kartan and Barai hired workers from overseas to perform domestic labor in their homes in Albuquerque, New Mexico; Stockton and elsewhere in the United States. In advertisements seeking workers on the internet and India-based newspapers, the defendants made false claims regarding the wages and the duties of employment. Once the workers arrived at the defendants’ residences, Kartan and Barai forced them to work 18 hours a day with limited rest and nourishment. The defendants did not pay wages and used force, physical restraint and coercive conduct to get the workers to perform the labor and services.

The indictment alleges that Kartan and Barai struck one worker on multiple occasions, including one incident where Kartan grabbed her hands and caused them to be burned over the flames of a gas stove. Moreover, the indictment alleges that the defendants failed to pay another worker and told her that they would call the police if she tried to leave. When she was ultimately able to arrange to be picked up from the defendants’ house, Kartan refused to provide her with the access code to the gated community so that her ride could enter.

On October 21, 2016, the defendants were arrested on a criminal complaint and were released on bond with special conditions that prohibit them from hiring any nonrelatives to perform domestic services or child care work for them, and prohibit them from directly or indirectly contacting any of their prior domestic workers. Kartan and Barai are scheduled to be arraigned on November 21, 2016.

If convicted, each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the FBI, the State Department’s Diplomatic Security Service, and the Stockton Police Department. Special Assistant U.S. Attorney Josh Sigal and Assistant U.S. Attorney Nirav Desai are prosecuting the case, with the assistance of the Civil Rights Division’s Human Trafficking Prosecution Unit.

The Eastern District of California (Sacramento) is one of six districts designated through a competitive, nationwide selection process as a Phase II ACTeam, through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security, and Labor. ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.

SACRAMENTO, Calif. —Aleksandr Kovalev, 53, of Rocklin, pleaded guilty today to wire fraud involving financial institutions in connection with a mortgage fraud scheme involving the purchase of at least 31 properties, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, Kovalev was in the business of developing, building and selling property in Sacramento, Fairfield and Stockton. As the real estate market began to weaken, Kovalev offered to make incentive payments to purchasers, through “down payment assistance” or by making other payments to the buyers to be used in whatever manner the buyers wanted. Most of the payments to the buyers were out of escrow and were often paid through intermediaries, originating in Kovalev’s bank account. These payments were not disclosed to the lenders, and had the effect of substantially reducing the actual sales price below that was represented to the lenders. At least 31 properties were involved in Kovalev’s mortgage fraud scheme with substantial losses to the lenders.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorney Todd A. Pickles is prosecuting the case.

To date, five co-defendants have pleaded guilty and have been sentenced: Jannice Riddick, 34, of Sacramento (two years and 11 months in prison); Florence Francisco, 65, of Houston, Texas (one year in prison); Adil Qayyum, 34, of Rosele, Illinois (three years of probation); Elsie Pamela Fuller, 41, of Richmond (one year and nine months in prison); and Leona Yeargin, 49, of San Pablo (18 months in prison). Charges are pending against co-defendant Arthur Menefee, 45, of Stockton.

Two other defendants were charged separately for their involvement in the scheme. Valeriy Vasilevitsky, charged in U.S. v. Vasilevitsky, 2:12-cr-344 KJM, and Ruth Willis, charged in U.S. v. Willis, 2:13-cr-228 MCE, have also pleaded guilty and await sentencing.

Kovalev is scheduled to be sentenced by U.S. District Judge Morrison C. England Jr. on February 9, 2017. Kovalev faces a maximum statutory penalty of 30 years in prison and a fine of $1 million or twice the gross loss or gain. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Satish Kartan, 43, and his wife, Sharmistha Barai, 38, of Stockton, California, were indicted by a grand jury today for forced labor and conspiracy to commit forced labor.  Kartan was also charged with fraud in contacting foreign labor and Barai was also charged with benefiting from forced labor. 

Principal Deputy Assistant Attorney General Vanita Gupta, head of the Justice Department’s Civil Rights Division, and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California announced the indictment.  

According to court documents, between Feb. 21, 2014, and Oct. 3, 2016, Kartan and Barai hired workers from overseas to perform domestic labor in their homes in Albuquerque, New Mexico; Stockton and elsewhere in the United States.  In advertisements seeking workers on the internet and India-based newspapers, the defendants made false claims regarding the wages and the duties of employment.  Once the workers arrived at the defendants’ residences, Kartan and Barai forced them to work 18 hours a day with limited rest and nourishment.  The defendants did not pay wages and used force, physical restraint and coercive conduct to get the workers to perform the labor and services.

The indictment alleges that Kartan and Barai struck one worker on multiple occasions, including one incident where Kartan grabbed her hands and caused them to be burned over the flames of a gas stove.  Moreover, the indictment alleges that the defendants failed to pay another worker and told her that they would call the police if she tried to leave.  When she was ultimately able to arrange to be picked up from the defendants’ house, Kartan refused to provide her with the access code to the gated community so that her ride could enter.

On Oct. 21, 2016, Kartan and Barai were arrested on a criminal complaint and were released on bond with special conditions that prohibit them from hiring any nonrelatives to perform domestic services or child care work for them.  The defendants are also prohibited from directly or indirectly contacting any of their prior domestic workers.  Kartan and Barai are scheduled to be arraigned on Nov. 21, 2016.  

If convicted, each defendant faces a maximum sentence of 20 years in prison and a $250,000 fine.  An indictment is merely an allegation and the defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the FBI, the State Department’s Diplomatic Security Service and the Stockton Police Department.  Special Assistant U.S. Attorney Josh Sigal and Assistant U.S. Attorney Nirav Desai of the Eastern District of California are prosecuting the case, with the assistance of the Civil Rights Division’s Human Trafficking Prosecution Unit.

Sacramento is one of six districts designated through a competitive, nationwide selection process as a Phase II Anti-Trafficking Coordination Team, through the interagency ACTeam Initiative of the Departments of Justice, Homeland Security and Labor.  ACTeams focus on developing high-impact human trafficking investigations and prosecutions involving forced labor, international sex trafficking and sex trafficking by force, fraud or coercion through interagency collaboration among federal prosecutors and federal investigative agencies.

SACRAMENTO, Calif. — Albert Lee Mitchell, 69, of Sacramento, was sentenced today by U.S. District Judge Kimberly J. Mueller to 10 years in prison to be followed by a lifetime of supervised release, for receipt of child pornography, Acting U.S. Attorney Phillip A. Talbert announced.

A federal jury found Mitchell guilty after a five-day trial in June 2016. According to evidence presented at trial, on November 5, 2012, agents executed at a search warrant at Mitchell’s residence after they identified an IP address located there offering files of child pornography. At the time of the search, dozens of images of suspected child pornography were set to be downloaded from a file-sharing network on Mitchell’s computer. Mitchell admitted to ownership of the computer and to being its sole user. A forensic review of the computer and other devices found in Mitchell’s home office revealed a collection of thousands of depictions of child pornography.

Mitchell obstructed justice by lying under oath at trial and trying to blame a former friend for his crime. To bolster his defense, Mitchell testified about a computer password that he alleged his friend had stolen. Mitchell presented a defense suggesting that the password had then been found in a box containing his friend’s belongings.

“Not only did the defendant have no regard for his victims, but he also blatantly disrespected the judicial system. The sentence that was handed down was well deserved,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “HSI continues to work diligently with our law enforcement partners to pursue sexual predators who take advantage of innocent children.”

At sentencing, Judge Mueller found that Mitchell committed a serious crime and compounded it by presenting a perjured defense at trial. She commented that Mitchell had a right to go to trial, but that he “didn’t have the right to obstruct justice,” which she noted was a “significant aggravating factor.” Judge Mueller also found that the images had been carefully catalogued and arranged, indicating an “obsessive interaction” with the images.

This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant U.S. Attorneys Audrey B. Hemesath and Josh F. Sigal prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

FRESNO, Calif. — Gary Lee Ortiz, 41, of Auberry, pleaded guilty today to being a felon in possession of a handgun with an obliterated serial number, Acting United States Attorney Phillip A. Talbert announced.

According to the plea agreement, Ortiz will pay restitution to the U.S. Forest Service for damaging public land and natural resources as a result of marijuana cultivation activities near his residence in the Mill Creek area.

According to court documents, on June 8, 2015, Ortiz possessed the firearm at his residence when law enforcement officers located a marijuana cultivation operation on Ortiz’s property and also on adjacent land in the Sierra National Forest. Law enforcement officers eradicated the plants and seized a total of four firearms. One of the firearms was a Herbert Schmidt, model E 15, .22 LR caliber revolver with the serial number obliterated. At the time, Ortiz was a convicted felon and prohibited from possessing a firearm.

Ortiz is scheduled for sentencing on March 6, 2017, by U.S. District Judge Lawrence J. O’Neil. He faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

This case is the product of an investigation by the U.S. Forest Service, the Bureau of Alcohol, Tobacco Firearms and Explosives, the California Department of Fish and Wildlife, the Fresno County Sheriff’s Office, and the Fresno County Probation Department. Assistant United States Attorney Karen Escobar is prosecuting the case.

Fresno, Calif. —Anthony Lester, 53, of Fresno, was sentenced today by U.S. District Judge Dale A. Drozd to five years and four months for mail fraud and money laundering in connection with his embezzlement of $306,000 from a Fresno business, Acting U.S. Attorney Phillip A. Talbert announced.

On August 19, 2016, after a four-day trial, a jury found Lester guilty on all seven counts charged in the indictment. According to evidence at trial, between August 2010 and January 2012, Lester embezzled and stole money from his former employer. While an employee at Century Builders and Highlands Energy Services, he held supervising positions in the accounting department, including Chief Financial Officer. In those capacities, Lester had responsibilities regarding management of the companies’ finances and financial transactions and had access to and control over some of the companies’ checking accounts and credit cards. Lester used this access to defraud the companies. He also attempted to frame his predecessor and other employees of the companies by falsely associating them with the PayPal accounts.

According to court documents, Lester transferred money from one of the companies’ checking accounts into what purported to be the companies’ PayPal account. Then he transferred the money to one of his own personal PayPal accounts. Additionally, he transferred money from two of the companies’ credit cards to his personal PayPal account. Thereafter, he attempted to launder the proceeds of his fraudulent scheme and conceal his embezzlement by transferring money from his personal PayPal account to his personal bank accounts. None of these transactions were authorized by the companies, and none were for legitimate business purposes of the companies. In total, Lester embezzled approximately $306,000 from his former employer.

“Financial crimes are a concern in every type and size of business, and sadly it often involves the most trusted individuals,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “The crimes not only rob businesses of vital revenue, but they also undermine the trust of employees and customers alike.”

In addition to prison sentence, Lester was ordered to pay $306,319 in restitution to the companies.

This case was the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Fresno Police Department. Assistant United States Attorneys Patrick R. Delahunty and Patrick J. Suter prosecuted the case.

SACRAMENTO, Calif. — Alejandro Munoz Galvan, 39, of Lathrop, was sentenced today by United States District Judge Troy L. Nunley to 14 years in prison for conspiracy to distribute and possess with intent to distribute methamphetamine, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, between 2009 and March 2, 2012, Munoz Galvan was the leader of a group of individuals who distributed quarter-pound, half-pound and pound quantities of crystal methamphetamine in Solano County and elsewhere. Munoz Galvan received methamphetamine orders from smaller-scale drug traffickers and, to avoid personally possessing the drugs, employed multiple runners to deliver the drugs and stash house sitters to store the drugs. He hired lawyers for his runners and stash house sitters when they were arrested, so long as they refused to cooperate with law enforcement.

This case was the product of an investigation by the Federal Bureau of Investigation’s Violent Gang Task Force, the Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, the police departments of Vacaville, Fairfield, Vallejo, Suisun City, Dixon, San Jose, and Manteca; the sheriff’s offices of Solano County and Nevada County, and the Solano County District Attorney’s Office of Investigations. Assistant U.S. Attorney Richard Bender prosecuted the case.

Co-defendants Alejandro Pantoja and Jose Miguel Cruz-Solario were each sentenced to seven years and three months in prison in 2015.

This case was the result of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. The OCDETF Program was established in 1982 to conduct comprehensive, multilevel attacks on major drug trafficking and money laundering organizations. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking and money laundering organizations and those primarily responsible for the nation’s drug supply.

FRESNO, Calif. — A man who previously posed as an immigrant smuggler (also known as a “coyote”) pleaded guilty today to a scheme to detain Mexican citizens seeking to enter the U.S. without documentation, and hold them in order to compel their relatives who were U.S. residents to pay money for their release, Acting United States Attorney Phillip A. Talbert announced.

Martin Carranza-Sanchez, 45, of Mexico, pleaded guilty today to conspiracy to commit wire fraud. According to his plea agreement, between January 2010 and January 21, 2016, Carranza-Sanchez posed as an undocumented‑immigrant smuggler who falsely promised undocumented immigrants and their U.S.‑resident relatives that that he would deliver the immigrants into the United States for a fee. Carranza-Sanchez directed the U.S. residents to wire the fee to various bank accounts in the Eastern District of California, which he and his co-conspirators ultimately collected.

According to court documents, in an effort to obtain payment, Carranza-Sanchez instructed the immigrants to go to a location in Mexico where his co-conspirators seized and detained them against their will. The co-conspirators telephoned the U.S. residents and told them that the immigrants would soon be delivered to the United States or that they had safely crossed the border, and instructed the U.S. residents to wire the payment. On multiple occasions, Carranza-Sanchez and his co-conspirators threatened to harm the immigrants unless the U.S. residents paid immediately.

According to the plea agreement, Carranza-Sanchez never intended to facilitate the undetected entry of these immigrants into the United States. In many instances, once the relatives wired the fee, Carranza-Sanchez instructed the immigrants to cross the border, and the immigrants were immediately apprehended by United States Border Patrol.

The investigation revealed that Carranza-Sanchez and his co-conspirators defrauded U.S. residents of approximately $95,000 as a result of their scheme. The plea agreement obligates him to repay that amount to the victims of his crimes.

This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Angela L. Scott is prosecuting the case.

Carranza-Sanchez is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on February 6, 2017, at 10:00 a.m. Carranza-Sanchez faces a maximum statutory penalty of 20 years in prison. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

FRESNO, Calif. — Jonathan Cornelius Bourne, 59, of Mammoth Lakes, was sentenced Monday to two years of probation, a $40,000 fine, and $249,372 in restitution for felony violations of the Archeological Resources Protection Act, Acting U.S. Attorney Phillip A. Talbert announced. Additionally, Bourne is banned from entering federal public lands for recreational purposes while on probation.

On August 15, 2016, Bourne pleaded guilty to unauthorized transportation of archeological resources and unauthorized excavation, removal, damage, or defacement of archeological resources. According to court documents, Bourne had been collecting artifacts and archeological resources since 1994. He documented each item and has voluntarily turned over to the government an estimated 20,000 archeological items that he had collected from public lands.

According to the plea agreement, on October 14, 2010, Bourne altered a small prehistoric site, cremation site, and burial cairns in the Humboldt-Toiyabe National Forest in Nevada. He removed glass trade beads and transported them to his home in Mammoth Lakes. On January 10, 2011, Bourne altered a large prehistoric site in Death Valley National Park and removed a tool made from a bighorn sheep horn and three incised stone tablets, which were later found in Bourne’s home.

In sentencing Bourne, U.S. District Judge Lawrence J. O’Neill stated that the damage caused by Bourne could not be undone no matter what sentence was imposed. He further stated that this case highlighted the importance of educating others as to the significance of the sacred Native American cultural resources and the protection of the Native American cultural sites.

Death Valley National Park Superintendent Mike Reynolds said, “Death Valley is the homeland of the Timbisha Shoshone Tribe. Dr. Bourne didn't just steal their heritage; he stole from all Americans when he removed these artifacts from the park. I'm relieved that he has been sentenced and is paying restitution to help us curate the artifacts. I hope this will help deter other people from desecrating important cultural resources that help tell our nation's history. However, we've permanently lost information that could have been learned if the artifacts had never been moved.”

This case was the product of an investigation by the United States Forest Service, the National Park Service, and the Bureau of Land Management. Assistant United States Attorney Laurel J. Montoya prosecuted the case.

FRESNO, Calif. — An Arvin man was sentenced today to 15 years in prison for child pornography offenses related to the online sextortion of female minors, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California.

Brian Caputo, 27, pleaded guilty to receipt and distribution of child pornography on May 16, 2016. U.S. District Judge Lawrence J. O'Neill sentenced Caputo and also ordered him to serve 15 years of supervised release.

According to admissions made in connection with his guilty plea, between December 2008 and February 2014, Caputo received on his cell phone and by email at least one image of a minor engaging in sexually explicit conduct and distributed one or more of such images to another minor in order to coerce the minor to produce additional child pornography.

The FBI investigated the case with assistance from the El Paso Police Department and the FBI’s Violent Crimes Against Children Task Force. Assistant U.S. Attorney Michael Tierney and former Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.

 This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

A Sun Valley, California, man was sentenced today to life plus 60 years in prison for a 2013 shooting at Los Angeles International Airport (LAX) in which he murdered a Transportation Security Administration (TSA) officer.

Attorney General Loretta E. Lynch, Secretary Jeh C. Johnson of the Department of Homeland Security, U.S. Attorney Eileen M. Decker of the Central District of California and Assistant Director in Charge Deirdre Fike of the FBI’s Los Angeles Field Office made the announcement.

Paul Anthony Ciancia, 26, pleaded guilty on Sept. 6, 2016, to one count of murder of a federal officer; two counts of attempted murder of a federal officer; four counts of violence at an international airport; one count of discharging of a firearm during a crime of violence causing death; and three counts of discharging a firearm during a crime of violence.  U.S. District Judge Philip S. Gutierrez of the Central District of California imposed today’s sentence. 

“Today, justice was done on behalf of fallen TSA Officer Gerardo Hernandez, his wounded colleagues and all those who were terrorized by the wanton violence perpetrated by this defendant,” said Attorney General Lynch.  “This sentence reflects appropriate punishment for a heinous crime.  It ensures that the defendant can never again harm or murder innocent Americans.  And it sends a clear message that the Department of Justice will not tolerate calculated attacks on our nation’s law enforcement officers, and that those who do commit such crimes will be held accountable.”

“We are grateful to the FBI and the Department of Justice for their hard work in obtaining justice for Mr. Hernandez, his family, co-workers and the men and women of DHS,” said Secretary Johnson.

“The crimes that led to today’s sentence were vicious, horrific and senseless,” said U.S. Attorney Decker.  “After planning a mass murder, this defendant murdered a highly respected law enforcement officer, seriously wounded two other federal officers and a civilian and terrified hundreds of people who feared for their lives.  Those who target law enforcement and our nation's critical infrastructure will be held accountable.  As a result of today’s sentence, Mr. Ciancia will never again have a chance to harm other innocent people.”

“The defendant will spend the rest of his life behind bars for targeting airport officers with premeditated murder, but a just sentence cannot replace the loss of Officer Hernandez, nor remove the suffering of his victims, and his victims' families, friends and colleagues,” said Assistant Director in Charge Fike.  “The collaborative efforts by first responders and investigators on the day of the shooting and thoughout this investigation are commendable and aided prosecutors in ensuring that Mr. Ciancia can never again pose a threat.”

According to the plea agreement, in early 2013, Ciancia purchased a semiautomatic rifle, 500 rounds of ammunition and 10 magazines for the rifle.  On the morning of Nov. 1, 2013, Ciancia modified two pieces of luggage and zip-tied them together to conceal his loaded rifle inside.   

Ciancia admitted that later that morning, he entered LAX Terminal Three, removed the loaded rifle from his modified luggage and fired at and killed TSA Officer Gerardo Hernandez while he was checking passengers’ travel documents.  Ciancia admitted that he then went upstairs to a TSA checkpoint, by which time many TSA officers and passengers had fled the airport.  He fired his weapon at two TSA Officers as well as a civilian, he admitted, all of whom sustained serious injuries and required surgery but survived the attack.  According to the plea agreement, as Ciancia passed passengers hiding in or fleeing the terminal during the attack, he asked if they were TSA and when they said no, he passed without shooting at them.

The Los Angeles Joint Terrorism Task Force (JTTF) investigated the case.  The JTTF is led by the FBI and includes agents and officers from 45 other local, state and federal agencies.

The Los Angeles Airport Police; the Los Angeles Police Department; the Los Angeles County Sheriff's Department; TSA; the Federal Air Marshal Service; the Los Angeles Port Police; the Long Beach, California, Police Department; the Air Force Office of Special Investigations; the Bureau of Alcohol, Tobacco, Firearms and Explosives; U.S. Customs and Border Protection; the U.S. Secret Service; the Los Angeles Fire Department; Los Angeles International Airport Operations; the U.S. Marshals Service; the U.S. Postal Inspection Service; and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations provided substantial assistance in the investigation.

First Assistant U.S. Attorney Patrick R. Fitzgerald of the Central District of California, Assistant U.S. Attorney Melissa Mills of the Central District of California’s Terrorism and Export Crimes Section, Assistant U.S. Attorney Joanna M. Curtis of the Central District of California’s Violent and Organized Crime Section and Trial Attorney Michael S. Warbel of the Criminal Division’s Capital Case Section prosecuted the case.

An Arvin, California, man was sentenced today to 15 years in prison for child pornography offenses related to the online sextortion of female minors, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and Acting U.S. Attorney Phillip A. Talbert of the Eastern District of California.

Brian Caputo, 27, pleaded guilty to receipt and distribution of child pornography on May 16, 2016.  U.S. District Court Judge Lawrence J. O’Neill of the Eastern District of California sentenced Caputo and also ordered him to serve 15 years of supervised release.

According to admissions made in connection with his guilty plea, between December 2008 and February 2014, Caputo received on his cell phone and by email at least one image of a minor engaging in sexually explicit conduct, and distributed one or more of such images to another minor in order to coerce the minor to produce additional child pornography.

The FBI investigated the case with assistance from the El Paso Police Department and the FBI’s Violent Crimes Against Children Task Force.  Assistant U.S. Attorney Michael Tierney of the Eastern District of California and former Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) prosecuted the case.    

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice.  Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

SACRAMENTO, Calif. — William R. Stanley Jr., 31, of Sacramento, was sentenced on Thursday by United States District Judge Morrison C. England Jr. to four years and three months in prison for access device fraud and aggravated identity theft, Acting United States Attorney Phillip A. Talbert announced.

San Francisco Division Inspector in Charge Rafael Nunez of the U.S. Postal Inspection Service stated: “Postal Inspectors worked closely with the U.S. Attorney’s Office and our partners in law enforcement to arrest and prosecute those individuals responsible for thefts of mail and Identity theft crimes committed against the public.”

According to court documents, from February 17, 2015, until February 17, 2016, Stanley lived at the Tuscany Villas Apartment Complex in Davis and worked as the on-site property manager there and at three additional apartment complexes that were managed by the same property management company. During this time, Stanley used a stolen identity and a fraudulent California DMV license bearing his image but the personal identifying information of another person. He was known to the property management company and to tenants and rental applicants under this false identity.

According to the plea agreement, Stanley obtained personal identifying information from tenants and rental applicants and used the information to add himself as a user on victims’ financial accounts and to open new accounts in their names, with himself as an authorized user. Stanley also defrauded an 82-year-old victim by taking his wallet after the victim left it at a grocery store, and he used the victim’s personal information to open lines of credit with himself as an authorized user. According to the factual basis in the plea agreement, Stanley caused $24,442 in loss to the victims.

In addition to the prison sentence, Stanley will be directed to pay restitution. The amount will be determined by the Court.

This case was the product of an investigation by the United States Postal Inspection Service and the Davis Police Department. Assistant United States Attorneys Matthew D. Segal and Owen Roth prosecuted the case.

SACRAMENTO, Calif. — Frank W. Coon, 51, of Chico, was sentenced today by United States District Judge Garland E. Burrell Jr. to 17 years and six months in prison for receipt of child pornography, Acting United States Attorney Phillip A. Talbert announced.

A federal jury found Coon guilty of the charge on May 23, 2016, after a three‑day trial. After serving his prison sentence, Coon will be under supervision for an additional 20 years and will be required to register as a sex offender.

According to evidence presented at trial, when agents executed a search warrant in March 2012, they found Coon inside his apartment at the keyboard of a computer. That computer was later found to be filled with child pornography videos. It was ultimately determined that over the course of approximately seven months, Coon used peer-to-peer software to download 117 child pornography videos. Several videos involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of pre-pubescent minors.

“This defendant downloaded horrific sexual content involving small children for his own pleasure,” said Ryan L. Spradlin, special agent in charge of HSI San Francisco. “HSI will continue to work with our law enforcement partners to seek out these criminals and bring them to justice.”

At sentencing, Judge Burrell stated that Coon had committed perjury when he testified in his own trial and blamed others for his actions both before and during a law enforcement search of his home in 2012. Judge Burrell observed that 17 and a half years in prison is “a long time” and that the sentence was necessary in light of the facts that were presented at trial.

This case was the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorneys Matthew G. Morris and Rosanne Rust prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc. Click on the “resources” tab for information about internet safety.

FRESNO, Calif. — Following a year-long investigation conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives; the Federal Bureau of Investigation; the California Department of Justice’s Bureau of Investigation, Special Operations Unit; the Multi-Agency Gang Enforcement Consortium (MAGEC); and the Fresno Police Department, targeting local criminal street gangs in Fresno, 20 defendants were arrested today on federal charges and another eight defendants were arrested on state charges. The various charges include conspiracy to traffic illegally in firearms, illegal possession and sales of firearms, drug trafficking, and promoting prostitution.

Phillip A. Talbert Acting U.S. Attorney for the Eastern District of California; Jerry Dyer, Fresno Chief of Police; ATF Special Agent in Charge Jill Snyder; FBI Special Agent in Charge Monica M. Miller, and California Attorney General Kamala Harris made the announcement.

Acting U.S. Attorney Talbert stated: “The seven indictments and the arrests today are part of a strategic plan to maximize state and federal resources to reduce gun violence in Fresno and keep its streets safe.”

“Gangs cannot be allowed to operate with impunity, jeopardizing public safety and terrorizing communities in California," said California Attorney General Kamala D. Harris. "I thank our California Department of Justice Special Agents, as well as the Fresno Police Department, the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the California Highway Patrol for working diligently and collaboratively to keep our communities safe from violent crime.”

“Just as operation Dog Track served to dismantle the notorious Dog Pound gang, Operation Slide Lock will serve to cripple the Strother Boys gang,” said Chief Jerry Dyer. “I look forward to working with our local, state, and federal law-enforcement partners as we prepare to focus on the next targeted street gang.”

“Today’s arrests demonstrate the FBI’s commitment to helping make Fresno a safer place to live,” said FBI Special Agent in Charge Monica M. Miller. “The FBI will continue to work with its state, local and federal partners to aggressively pursue those who would traffic in illegal firearms in our neighborhoods.”

“Firearms trafficking is one of the most pressing issues today,” stated ATF Special Agent in Charge Jill Snyder. “At ATF, our highest priority is reducing violent crime within our communities. Firearms trafficking leads to guns getting into the hands of violent criminals, gangs, drug trafficking organizations and prohibited people. Operations, like the one conducted today, make our neighbors safer by stopping the drivers of violence in our communities. We would like to thank all of the agencies involved in this operation for their hard work and dedication that made today a success.”

The 17 federal defendants are charged as follows:

• Dejohn Wiley, 22, one count of conspiracy to engage in the business of dealing firearms without a license, one count of engaging in the business of dealing firearms without a license, two counts of possession of an unregistered firearm, 14 counts of being a felon in possession of a firearm, three counts of possession of a firearm in a school zone, and nine counts of distribution of methamphetamine;
• Chris Wiley, 24, one count of conspiracy to engage in the business of dealing firearms without a license, one count of being a felon in possession of a firearm, one count of possession of a firearm in a school zone, and two counts of distribution of methamphetamine;
• Anthony Latimore, 21, one count of conspiracy to engage in the business of dealing firearms without a license, one count of engaging in the business of dealing firearms without a license, four counts of being a felon in possession of a firearm, and one count of distribution of methamphetamine;
• Garry Sampson, 38, one count of conspiracy to engage in the business of dealing firearms without a license, one count of being a felon in possession of a firearm;
• Vonshay Robinson, 29, one count of conspiracy to engage in the business of dealing firearms without a license;
• Rashawn Alkobadi, 22, one count of conspiracy to engage in the business of dealing firearms without a license, one count of engaging in the business of dealing firearms without a license, five counts of possession of a firearm in a school zone, and two counts of distribution of methamphetamine;
• Federico Garcia, 24, one count of conspiracy to engage in the business of dealing firearms without a license, possession of a firearm in a school zone, and two counts of distribution of methamphetamine.
• Omar Gonzalez, 24, one count of possession with intent to distribute cocaine;
• Darien Hatcher, 26, one count of possession with intent to distribute cocaine;
• Charlie Stevenson, 31, one count of conspiracy to engage in the business of dealing firearms without a license, three counts of being a felon in possession of a firearm, and one count of possession with intent to distribute methamphetamine;
• Jamar Johnson, 21, one count of conspiracy to engage in the business of dealing firearms without a license, two counts of being a felon in possession of a firearm, and one count of use of a cellphone to promote prostitution;
• Khalif Campbell, 33, one count of conspiracy to distribute and possess with intent to distribute cocaine base;
• Raymond Jones, 60, one count of conspiracy to distribute and possess with intent to distribute cocaine base;
• Danny Valenzuela, 50, one count of conspiracy to distribute and possess with intent to distribute cocaine base;
• Anthony Thomas, 24, one count of being a felon in possession of a firearm;
• Devone Johnson, 30, one count of possession of a firearm after suffering a misdemeanor domestic violence conviction;

• Dione Singleton, 39, one count of being a felon in possession of a firearm, one count of possession of a firearm in a school zone, and one count of distribution of cocaine base.

  The following federal defendants were arrested today on criminal complaints: Stephen Hill, 26, and Rashad Halford, 29, are charged with using a cellphone to promote prostitution and using a cellphone to facilitate a drug trafficking offense. Jesus Velazquez, 23, is charged with conspiracy to engage in the business of dealing firearms without a license and possession of an unregistered firearm. Darien Hatcher and Charlie Stevenson who were indicted have also been charged by a criminal complaint along with Robert Gonzalez, 33, for conspiracy to distribute methamphetamine.

  These federal cases are the product of an investigation by the ATF, the FBI, the Fresno Police Department, MAGEC, the California Department of Corrections and Rehabilitation, the Fresno County District Attorney’s Office, and the California Department of Justice, the California Highway Patrol Special Operations Unit (SOU). The Special Operations Unit (SOU) is a collaborative investigative effort between the California Department of Justice and the California Highway Patrol (CHP) that provides statewide enforcement for combating violent career criminals, gangs, and organized crime groups, along with intrastate drug traffickers.

  Also assisting today was the Fresno County Sheriff’s Office, the Clovis Police Department, Fresno County Probation, and the California Highway Patrol.

  Assistant U.S. Attorneys Kimberly A. Sanchez and Christopher D. Baker are prosecuting the cases.

  If convicted the defendants face the following maximum sentences: five years in prison for conspiracy to engage in the business of dealing firearms without a license; five years in prison for engaging in the business of dealing firearms without a license; 10 years in prison for being a felon in possession of a firearm; 10 years in prison for possession of a firearm after suffering a misdemeanor domestic violence conviction; five years in prison for possession of a firearm in a school zone; 10 years in prison for possession of an unregistered firearm; 20 years to life in prison for conspiracy to distribute and possess with intent to distribute methamphetamine; 20 years to life in prison for distribution of methamphetamine; 20 years in prison for distribution of cocaine base; 20 years in prison for conspiracy to distribute and possess with intent to distribute cocaine base; 20 years in prison for possession with intent to distribute cocaine, and five years in prison for use of a cellphone to promote prostitution.

  Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — A federal grand jury returned a 16-count indictment today against Claudia Humphrey, 60, of American Canyon, charging her with theft of public money, obstruction of a federal audit, and falsifying records in a federal investigation, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, Humphrey was the executive director of LIFT3 Support Group Inc., a non-profit organization in Fairfield that offered transitional shelter assistance and other services to victims of sexual assault, domestic violence, and dating violence, primarily serving residents in Solano County. Humphrey, through LIFT3, sought and received federal grants from the Department of Justice, Office on Violence Against Women (OVW) in 2011 and 2012. Humphrey caused to be transferred over $270,000 in grant money that were to be used only for assisting victims of domestic violence into bank accounts that she controlled. Humphrey used over $50,000 of those victim funds on personal expenses such as travel, shopping, and payments to her family members, among other things.

According to court documents, between October 2014 and August 2015, in an effort to conceal her embezzlement of federal funds, Humphrey obstructed the efforts of the OVW audit of LIFT3. Humphrey falsified purchase documents showing that computers were purchased, and altered and falsified expense ledgers and time sheets.

This case is the product of an investigation by the Department of Justice Office of the Inspector General. Assistant United States Attorney Todd A. Pickles is prosecuting the case.

If convicted, Humphrey faces a maximum statutory penalty of 10 years in prison on each of the counts of theft of public money, five years in prison for obstruction of a federal audit, and 20 years in prison on each of the counts of falsifying a record in a federal investigation. Additionally, Humphrey faces a fine of $250,000 or twice the gross loss or gain. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — The City of Fairfield and the Fairfield Housing Authority (FHA) paid $680,000 to settle federal False Claims Act allegations that they received grants to fund two coordinator positions for a federal housing program but did not use the funds for that purpose, Acting United States Attorney Phillip A. Talbert announced today.

The FHA administers the Section 8 Housing Choice Voucher Program (HCV), the HCV Homeownership Program, and the Family Self-Sufficiency Program (FSS) for the City of Fairfield. Section 8 of the federal Housing Act of 1937 authorizes the payment of rental housing assistance to private landlords on behalf of low-income households. The HCV Program is the federal government’s major program for assisting very low-income families, the elderly, and the disabled to afford decent, safe, and sanitary housing in the private market. The FSS Program provides case management for Section 8 families who desire to improve their earning potential and move towards financial independence and homeownership.

According to court documents, the FHA, with the city’s approval, applied for and received federal grants from the Department of Housing and Urban Development (HUD) to fund two full-time FSS program coordinators from January 2012 through November 2014, but neither the city nor the FHA employed any full-time FSS program coordinators during that time. Court documents further allege that the FHA violated the False Claims Act by submitting data into HUD’s Voucher Management System, affirming that it was spending the grant funds on two full‑time FSS program coordinators, when no such coordinators were employed.

“Housing Authorities that receive HUD grants have a duty to help families in need,” said Acting U.S. Attorney Talbert. “When families try to become self-sufficient by applying to programs like Fairfield’s Family Self-Sufficiency Program, they deserve to be assisted at every step by dedicated and responsive professionals. This settlement helps to ensure that limited federal resources are used for that purpose.”

“HUD’s Family Self-Sufficiency program supports families living in public housing and those using Housing Choice Vouchers and working to increase their earned income,” said HUD Regional Administrator Jon Gresley. “With such limited resources available to help reduce household dependency on public subsidy, it is essential that the federal government steward these investments to maximize the benefit to eligible families in Fairfield and beyond. This agreement does that.”

The allegations resolved by the settlement were first raised in a lawsuit filed against the City of Fairfield and the FHA under the qui tam, or whistleblower, provisions of the False Claims Act by a former FHA employee. The False Claims Act allows private citizens with knowledge of fraud to bring civil actions on behalf of the government and to share in any recovery. The whistleblower in this matter will receive approximately $129,000 of the recovery.

This case was handled by Assistant United States Attorney M. Anderson Berry through a coordinated effort with the Department of Housing and Urban Development’s Eric Huhtala, Special Agent for the Office of Inspector General, and Ji Yoo, an attorney with the Office of General Counsel. The claims settled by this agreement are allegations only, and there has been no determination of liability.

FRESNO, Calif. — Colin Lovette Bosby, 49, of Bakersfield, was arraigned today on a three-count indictment charging him with receipt and distribution of child pornography and possession of child pornography, Acting U.S. Attorney Phillip A. Talbert announced.

According to court documents, Bosby used a computer to receive and distribute child pornography using a peer-to-peer file-sharing program. In addition, he possessed child pornography on two thumb drives. This case is the product of an investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Megan A. S. Richards is prosecuting the case.

If convicted, Bosby faces a mandatory minimum sentence of 15 years in prison and a statutory maximum of 40 years, and a $250,000 fine for receipt and distribution of child pornography.  He also faces a minimum 10-year and maximum 20-year sentence for each count of possession of child pornography. Any sentence, however, would be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

SACRAMENTO, Calif. — Aleksandr Kuzmenko, 33, of Loomis, was sentenced today by United States District Judge Garland E. Burrell Jr. to two years and three months in prison and ordered to pay $573,332 in restitution to the IRS for conspiracy to defraud the United States, Acting United States Attorney Phillip A. Talbert announced.

According to court documents, Kuzmenko worked as a tax preparer at VK Tax Services in Citrus Heights in 2009. Between February 2009 and November 2009, Kuzmenko conspired with others to file approximately 90 fraudulent tax returns with the Internal Revenue Service. The tax returns fraudulently claimed the First-Time Homebuyer Credit, which was worth as much as $7,500. The refunds for the fraudulent claims were electronically deposited into various bank accounts controlled by Kuzmenko’s co-defendants. The fraudulent claims totaled approximately $695,724, of which the IRS paid approximately $573,000.

This case was the product of an investigation by the Internal Revenue Service Criminal Investigation. Assistant United States Attorney Michele Beckwith prosecuted the case.

Co-defendants Peter Kuzmenko and Valeriy Nikitchuk have pleaded guilty to conspiring to defraud the United States and they are currently scheduled to be sentenced on December 2, 2016. Co-defendant Arsen Muhtarov has entered a plea of not guilty. The charges against him are only allegations, and he is presumed innocent until and unless proven guilty beyond a reasonable doubt.