Eastern District of California

SACRAMENTO, Calif. — Glenn Litton, 47, resident of Carson City, Nevada, was sentenced today by United States District Judge Morrison C. England Jr. to two years in prison for aggravated identity theft, United States Attorney Benjamin B. Wagner announced.

According to court documents, on November 19, 2014, Litton submitted an application for a U.S. passport to a passport acceptance officer in Sacramento. In the application, Litton used the identity of another individual, including that individual’s name, birthdate, and Social Security number. Litton also presented supporting documentation such as a birth certificate, a debit card, and employment ID card bearing the name of the individual whose identity he had assumed. As a result of the application, Litton was issued a U.S. passport in a false name.

This case was the product of an investigation by the U.S. State Department’s Diplomatic Security Service with assistance from the Federal Bureau of Investigation, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Nevada Department of Motor Vehicles. Assistant United States Attorney Shelley D. Weger prosecuted the case.

SACRAMENTO, Calif. — Miguel Sotelo, 41, of Sacramento, was sentenced today by United States District Judge Morrison C. England Jr. to 11 years in prison and a $25,000 fine for possessing methamphetamine with the intent to distribute it, United States Attorney Benjamin B. Wagner announced.

According to court documents, in April 2014, Sacramento County Sheriff’s detectives spotted a Honda Accord speeding northbound on Interstate 5 near Twin Cities Road in Sacramento County. Detectives stopped the car and spoke with the passenger, defendant Miguel Sotelo, who stated that the car belonged to his wife who was not present. Shortly afterward, a narcotic detection K9 unit alerted on the rear left wheel well. Officers later found more than 14 pounds of methamphetamine stored in two bags located in the car’s trunk. Officers also found $23,000 in cash.

Based on the amount of methamphetamine and currency found in the car, detectives executed a state search warrant at Sotelo’s business called “Sotelo’s Tree Care.” At the business, officers found about 266 grams of cocaine, a pistol and a digital scale.

This case was the product of an investigation by the Drug Enforcement Administration and the Sacramento County Sheriff’s Office. Special Assistant United States Attorney Josh F. Sigal prosecuted the case.

Sotelo has remained in custody since his arrest on April 9, 2014.

SACRAMENTO, Calif. — Today, United States District Judge Morrison C. England Jr. sentenced Anthony Salcedo, 34, of Fair Oaks, to five years and four months in prison for a mortgage fraud scheme. Salcedo was found guilty by a federal jury of one count of conspiracy and four counts of mail fraud after a five-day trial in June 2015.

According to court documents and evidence produced at trial, Anthony Salcedo worked in the real estate industry beginning in 2000 and was licensed as a real estate agent in 2004. He was licensed as a mortgage broker in 2006 and worked for two different mortgage lenders for five years. When selling his personal properties in 2005 and 2006, Salcedo worked with mortgage broker Sean McClendon, 49, of Fair Oaks, and Anthony Williams, 47, previously of Memphis, Tennessee, to find buyers. As an incentive to complete the sales transactions, Salcedo paid kickbacks to the buyers and to McClendon outside of escrow. Salcedo artificially inflated the value of his properties and paid the kickbacks out of the excess financing paid by the lenders who were deceived as to the true value of the purchases they were underwriting. The kickback payments were never disclosed to the lenders as part of the purchase and sale agreements, and the buyers’ income and assets were falsified in order to qualify for the loans.

In all, approximately $2.6 million in fraudulently obtained loans were involved in the scheme, while Salcedo and his family got out from under their $1.6 million in mortgage debt and made over $600,000 of profit at a time when Salcedo knew the real estate market was slowing down. Salcedo was remanded to the custody of the U.S. Marshals after the verdict, and has been awaiting sentencing in the Sacramento County Jail since that time.

According to a Sentencing Agreement on file with the Court, after trial the government’s continuing investigation indicated Salcedo might be hiding assets and manufacturing a drug problem in an effort to avoid restitution payments and influence the amount of time he ultimately served in prison. To resolve those issues, Salcedo agreed the Court need not consider his purported drug problem, which may have qualified him for a drug treatment program and a reduction of his sentence. He also agreed to repay the United States Federal Defenders for the costs of his defense, make a $300,000 payment toward a total restitution obligation of over $700,000, and pay a $50,000 fine before sentencing.

In sentencing Salcedo, Chief Judge England noted, “You really believed that you were going to beat the system. You’re not smarter than everyone else in the world.”

“Anthony Salcedo was a licensed real estate professional who decided to game the system so that he could profit in the midst of the then looming financial crisis, to which his actions contributed,” said U.S. Attorney Wagner. “We are gratified by the sentence imposed by the Court, which should serve as notice that mortgage fraud remains a serious offense for which there can and should be severe consequences.”

“Beyond the dishonesty and collusion involved, this is significant because of the exchange of money outside of escrow,” said Thomas McMahon, Acting Special Agent in Charge, IRS Criminal Investigation. “Through kickbacks, the defendant and his family managed to avoid $1.6 million in mortgage debt while a few buyers declared bankruptcy and not only lost their investment properties but also their homes. IRS-CI is committed to hold accountable those involved in these types of schemes.”

Co-defendant McClendon pleaded guilty and was sentenced on November 5, 2015, to 20 months in prison. He is expected to begin serving that sentence in January 2016. Co‑defendant Williams pleaded guilty, and is currently serving his sentence of two years and nine months in prison.

This case was the product of an investigation by the Internal Revenue Service‑Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Jean M. Hobler and Marilee Miller prosecuted the case.

SACRAMENTO, Calif. — Thomas Venable, 46, of Vacaville, pleaded guilty today to theft concerning programs receiving federal funds in connection with his operation of a sustained leave and false expenses scheme while he was a Major in the California Air National Guard, United States Attorney Benjamin B. Wagner announced.

According to court documents, between April 2008 and April 2010, Venable obtained nearly $195,528 from the California Air National Guard (CA ANG) in wages, benefits, and expense reimbursements to which he was not entitled. Venable was assigned to a detail with the California Emergency Management Authority (Cal-EMA) that was available only to active duty CA ANG members. At the same time, Venable was frequently deployed for training and duty with the U.S. Air Force, and he was employed full time by the University of California-San Francisco Police Department (UCSF-PD). While deployed on federal duty or while working for the UCSF-PD between April 2008 and April 2010, Venable intentionally failed to use required military or other leave and collected double compensation from the federal government and the state of California. During the same period, Venable also filed at least 19 false travel and expense reimbursement claims that were unrelated to his CA ANG work but that were paid as though they were legitimate.

Venable also admitted that, for more than a year, he concealed from his direct supervisors at the CA ANG that he had joined the Texas Air National Guard in February 2009, resulting in Venable’s discharge from the CA ANG and his ineligibility for employment with Cal-EMA.  In doing so, Venable affirmatively misrepresented his duty status to CA ANG staff.

This case is the product of an investigation by the United States Department of Defense, Defense Criminal Investigative Service, and the California Highway Patrol, Office of Internal Affairs. Assistant United States Attorney André M. Espinosa is prosecuting the case.

Venable is scheduled to be sentenced by U.S. District Judge John A. Mendez on February 16, 2016. Venable 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.

FRESNO, Calif. — After a three-and-a-half week trial, a federal jury in Fresno has found four defendants guilty of participating in a tax refund scheme claiming more than $33 million in federal tax refunds, United States Attorney Benjamin B. Wagner announced.

Fresno residents Gaylene Lynette Bolanos,58; and Leroy Donovan Combs, 74; Madera County resident Charles Wayne Uptergrove, 57; and Ladonna Lee Moon, 55, of Texas, were convicted of submitting false claims against the United States. Bolanos was also found guilty of conspiracy to defraud. The jury was unable to reach a verdict as to Rodney Edwin Moon, of Texas.

Prior to trial, co-defendants James Karam Schwartz, 60, and Louie Calles, 65, pleaded guilty to submitting false claims against the United States. Another co-defendant, Oswald Georgner, 66, of Fresno, pleaded guilty to the conspiracy to defraud. Each of the defendants is awaiting sentencing.

According to court documents and testimony at trial, between August 2008 and October 16, 2008, Bolanos and Georgner conspired to submit false claims for income tax refunds. Bolanos and Georgner worked with others, including Combs, Uptergrove, Calles, Schwartz, and Ladonna Lee Moon to submit false tax returns in an attempt to eliminate their debts and receive sizable tax refunds by submitting their tax returns with false claims of interest income and withholding citing IRS Form 1099-OID.

As part of the scheme, the defendants submitted false tax returns to the IRS seeking more than $33 million in fraudulent tax refunds. As a result of these fraudulent tax refund claims, the IRS issued approximately $400,000 in fraudulent refunds. The tax returns were fraudulent because the defendants listed their debts, bills, and other non-income items as interest income. The defendants then claimed that almost all of that interest income had been withheld and paid to the IRS, even though none of the purported interest income was ever withheld. Based on the reported withholdings, the defendants claimed they were owed millions of dollars in refunds by the IRS.

“These defendants went well beyond cheating on their taxes to avoid paying their fair share,” said U.S. Attorney Wagner. “They sought to steal millions in taxpayer funds meant to provide services for us all. We are pleased by the jury’s verdict and we will continue our efforts to bring to justice those who would plunder the public fisc.”

“Plain and simple, this was fraud,” said Acting Special Agent in Charge Thomas McMahon, IRS Criminal Investigation. “Today’s conviction should send a clear message that those involved in these schemes will not go undetected. It is more important than ever that the American people feel confident that everyone is playing by the rules and paying the taxes they owe.”

This case is the product of an investigation by the Internal Revenue Service‑Criminal Investigation. Assistant United States Attorneys Grant B. Rabenn and Henry Z. Carbajal III are prosecuting the case with assistance from Trial Attorney Karen J. Sharp, of the Department of Justice, Antitrust Division.

The four defendants convicted at trial are scheduled to be sentenced my United States District Judge Anthony W. Ishii on March 7, 2016. They face a maximum statutory penalty of five years in prison on each false claims charge. Bolanos and Georgner face a maximum statutory penalty of 10 years in prison for the conspiracy charge. The actual sentences, 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 jury found two defendants guilty today of mail fraud and making false statements on loan applications in a scheme that provided financial incentives to straw buyers to get them to purchase homes that developers were having difficulty selling, United States Attorney Benjamin B. Wagner announced.

Edward Khalfin, 58, of San Mateo, was found guilty of 12 counts of mail fraud and 11 counts of making false statements on loan applications. Robin Dimiceli, 53, of Brentwood, was found guilty of six counts of mail fraud and six counts of making false statements on loan applications.

According to court documents, from August 2006 through May 2008, two brothers, Volodymyr Dubinsky, 56, formerly of Folsom, and Leonid Doubinski, 50, formerly of Copperopolis, built, developed, and sold real estate in Carmichael, Sacramento, and Copperopolis. As the real estate market declined, the brothers recruited family members, employees, and associates with good credit to act as straw buyers for residential properties. The Dubinsky brothers have not been apprehended and are fugitives thought to be residing in Ukraine.

Khalfin was a licensed mortgage broker; his company was called Bay Financial Co.  Dimiceli was a licensed real estate salesperson and was self-employed at Trinity Mortgage Capital, which was affiliate with Windsor Mortgage Capital. Khalfin and Dimiceli assisted in the scheme by submitting the loan applications for the straw buyers. They allegedly prepared and submitted applications to lenders that falsely stated the straw buyers’ income, assets, and intent to occupy the homes as their primary residences. Dimiceli was a straw buyer for at least two properties involved in the scheme.

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

Three other indictments were brought relating to this scheme. Four defendants have pleaded guilty and are scheduled to be sentenced: Svetlana Dubinsky, 51, of Boca Raton, Fla.; Serge Doubinski, 32, of San Francisco; Zinayda Chekayda, 52, of Antelope, (docket # 2:12-cr-327 WBS); and Kory Schmidli, 37, of Linden (docket # 2:12-cr-330 GEB). A trial is pending for Diana Woods, 58, of Citrus Heights, on March 8, 2016 (docket # 2:12-cr-329). Volodymyr Dubinsky and Leonid Doubinski are fugitives. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Sentencing is set for Khalfin and Dimiceli for February 1, 2016, by United States District Judge William B. Shubb. The defendants face a maximum statutory penalty of up to 20 years in prison and a $250,000 fine for mail fraud and 30 years in prison and a $1 million fine for false statements on a loan or credit application. 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. — Michael David Wilson, 32, of Delano, was sentenced late Monday afternoon by Senior United States District Judge Anthony W. Ishii to six and a half years in prison for receiving and distributing child pornography, United States Attorney Benjamin B. Wagner announced.

According to court documents, between September 2012 and April 2013, Wilson received and distributed more than 1,400 images and video files depicting minors engaged in sexually explicit conduct. The illicit files also involved the portrayal of sadistic, masochistic, and other depictions of violence, and included depictions of prepubescent minors. On July 25, 2013, Wilson was charged with receiving and distributing child pornography, and he pleaded guilty to the charge on August 27, 2014.

“The actions of child predators cause irreparable harm to children across our nation,” said Ryan L. Spradlin, special agent in charge for HSI San Francisco. “The victims of these criminals deserve outcomes like today. With the tireless efforts made by HSI and our law enforcement partners, we will continue to hunt down predators and hold them accountable for their disturbing actions.”

This case was the product of an investigation by the Bakersfield office of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Brian W. Enos prosecuted the case.

FRESNO, Calif. — Larry Ramirez, 52, of Tulare, pleaded guilty today to stealing benefits paid by the United States Social Security Administration (SSA), United States Attorney Benjamin B. Wagner announced.

According to court documents, Ramirez failed to disclose income he had made from owning and operating an auto body repair business in numerous applications to the SSA for benefits. During the process of determining his benefits, he made a false statement to the SSA that he had not worked in over 15 years, which he knew to be false at the time. As a result, and over the course of approximately 15 years, Ramirez stole approximately $90,000 in SSA benefits.

This case is the product of an investigation by the U.S. Social Security Administration, Office of Inspector General. Assistant United States Attorneys Patrick R. Delahunty and Henry Z. Carbajal III are prosecuting the case.

Ramirez is scheduled to be sentenced by United States District Judge Anthony W. Ishii on March 28, 2016. Ramirez 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. — Matthew Luke Gillum, 32, of Meadow Vista, was sentenced today by United States District Judge Morrison C. England Jr. to nine years in prison for conspiring to distribute marijuana and avoiding a currency transaction reporting requirement, United States Attorney Benjamin B. Wagner announced.

According to court documents, Gillum, was the leader of a drug trafficking organization (DTO) that operated in the greater Sacramento area. The Gillum DTO shipped marijuana through the United States mail to various locations outside of California. In order to conduct his drug trafficking operation, Gillum solicited, hired, and utilized the services of at least five individuals to open post office boxes, collect drug trafficking proceeds, ship marijuana parcels, manufacture and supply marijuana, and facilitate the clandestine communications of the DTO.

The Gillum DTO solicited marijuana orders via the Silk Road website. Marijuana purchasers shipped cash payments to various post office boxes controlled by the Gillum DTO throughout the Sacramento region. Once payment was received, the Gillum DTO would ship the selected type and quantity of marijuana to the purchaser. Between August 2012 and July 2013, the Gillum DTO distributed at least 600 pounds of marijuana, much of it through Express Mail parcels sent from the Sacramento region to 16 different states. During the course of the investigation, the United States seized over $700,000 from a bitcoin account controlled by Gillum.

On February 27, 2013, Gillum purchased a diamond ring from Tiffany and Co. for $105,900 in cash. Because the transaction involved more than $10,000 in cash, Tiffany was required to file an IRS Form 8300 (Report of Cash Payments Over $10,000 Received in a Trade or Business) in Gillum’s name. However, although Gillum paid for the ring, he used a nominee to fill out the paperwork as if the nominee purchased the ring.

This case was the product of an investigation by the United States Postal Inspection Service, the Internal Revenue Service-Criminal Investigation, the Sacramento County Sheriff’s Office, the Central Valley HIDTA Task Force, CAL-MET, Placer County Special Investigations Unit, and Rocklin Police Department. Assistant United States Attorneys Justin Lee and Kevin Khasigian prosecuted the case.

SACRAMENTO, Calif. — A Yuba City man pleaded guilty today to producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Benjamin B. Wagner of the Eastern District of California, Special Agent in Charge Ryan Spradlin of the U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (ICE-HSI) San Francisco Field Division, and Chief of Police Robert D. Landon of the Yuba City Police Department.

Nathan Penner, 25, pleaded guilty today before United States District Judge Troy L. Nunley to one count of production of child pornography. The sentencing hearing is set for January 21, 2016.

In connection with his plea, Penner admitted that he produced sexually explicit photos and videos of a five-year-old girl in September and October of 2012. Penner further acknowledged that he had downloaded child pornography. Subsequent forensic analysis of Penner’s computer and digital media revealed both the child pornography that he produced and hundreds of other child pornography files.

This case is being investigated by HSI and the Yuba City Police Department. This case is being prosecuted by Trial Attorney Reginald E. Jones of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Special Assistant U.S. Attorney Josh F. Sigal of the Eastern District of California. CEOS’ High Technology Investigative Unit assisted with computer forensic analysis for the case.

Penner faces a maximum statutory penalty of 30 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 to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. 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 via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

SACRAMENTO, Calif. — As part of the ongoing effort by U.S. Attorney’s Office to prosecute mortgage fraud, three defendants were sentenced today for their roles in separate mortgage fraud schemes, United States Attorney Benjamin B. Wagner announced.

West Sacramento Man Sentenced for Mortgage Fraud (2:11-cr-353 MCE)

United States District Judge Morrison C. England Jr. sentenced Sean McClendon, 49, of Elk Grove, today to one year and eight months in prison. On October 18, 2012, McClendon pleaded guilty to a conspiracy to commit mail fraud for his involvement in a Sacramento area mortgage fraud scheme with Anthony Salcedo and Anthony Williams. According to court documents, McClendon and Williams recruited straw buyers to purchase four properties owned by Salcedo or his associates using kickbacks, false financial information for the buyers, and payments outside of escrow. All properties involved were foreclosed by the lenders, resulting in losses of over $1 million. In June 2015, a jury found Salcedo guilty of four counts of mail fraud and one count of conspiracy to commit mail fraud. He is scheduled to be sentenced on November 12, 2015. On January 29, 2015, Williams was sentenced to two years and nine months in prison.

This case is the product of an investigation by the Internal Revenue Service – Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Jean M. Hobler and Marilee Miller are prosecuting the case.

Mortgage Broker Sentenced for False Statements on a Loan Application (2:13-cr-131 MCE)

United States District Judge Morrison C. England Jr. sentenced Valeri Kalyuzhnyy, 44, of Citrus Heights, to two years in prison. On June 25, 2015, Kalyuzhnyy pleaded guilty to making a false statement on a loan application. According to court documents, Kalyuzhnyy, while working as a mortgage broker, bought two homes using the credit information of a straw buyer. The loan applications that were used to secure the properties contained numerous false statements regarding the buyer’s intent to occupy the property, employer, occupation, and monthly income. In order to support the inflated monthly income listed on the loan application, fraudulent tax returns were submitted. On July 17, 2007, Kalyuzhnyy gave the straw buyer a check for $29,000.

This case was the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant United States Attorney Jared C. Dolan prosecuted the case.

San Joaquin County Man Sentenced for Mortgage Fraud Scheme (2:11-cr-468 TLN)

United States District Judge Troy L. Nunley sentenced Stephen Pirt, 37, of Mountain House, to two years and one month in prison for his participation in a large-scale mortgage fraud scheme. According to evidence presented at the trial for co-defendant Erik Hermann Green, 33, of Roseville, Pirt and Green defrauded the New Century Mortgage Company by submitting false documentation about borrowers’ employment, income and assets, including fraudulent loan applications and other altered bank documents. On September 19, 2013, Stephen Pirt pleaded guilty to wire fraud.

Judge Nunley told Pirt, “You were an organizer and leader of the scheme, and you need to be punished for that.” The judge also explained the need for a proper deterrent effect.

Green is scheduled to be sentenced by Judge Nunley on November 19, 2015. Green faces 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 is the product of an investigation by the Internal Revenue Service – Criminal Investigation and the Alameda County District Attorney’s Office. Assistant United States Attorney Michael D. Anderson and Special Assistant United States Attorney Josh F. Sigal are prosecuting the case.

SACRAMENTO, Calif. — A Sacramento couple was sentenced today by United States District Judge Troy L. Nunley for a smash and grab vehicle burglary in South Sacramento, United States Attorney Benjamin B. Wagner announced.

Keo Seng Saechao, 33, was sentenced to 21 months in prison, and his wife Pang Shoua Xiong, 33, was sentenced to 30 months in prison.

According to court documents, on September 26, 2012, a postal vehicle was burglarized in South Sacramento. The back window of the vehicle was smashed in with a tire iron and all of the mail in the truck was stolen. At the time of the burglary, 531 postal customers were left on the route. Saechao was driving the car during the burglary and Xiong was in the front seat.

On October 11, 2012, California Probation officers and CHP officers conducted a probation search of the defendants’ home as part of an unrelated investigation. They found evidence linking the couple to the postal vehicle burglary, as well as numerous other instances of mail theft in the South Sacramento area. A second search turned up large piles of stolen mail from the addresses that would have been in the vehicle in South Sacramento on September 26, 2012. A search of the computers in the apartment showed false IDs with the defendants’ pictures superimposed on it, “Check Designer” software that allows users to create and print checks, and the names and account numbers associated with several of the fraud victims whose identifiers were found on papers in the apartment.

On July 30, 2015, Saechao and Xiong pleaded guilty to theft of the mail.

This case is the product of an investigation by the U.S. Postal Inspection Service. Assistant United States Attorney Matthew Morris prosecuted the case.

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 to arrest and prosecute the individuals responsible for the theft of U.S. Mail and damage to Postal property and equipment.

SACRAMENTO, Calif. — Gregory Scott Baker, 48, of Newcastle, pleaded guilty today to conspiring commit mail and wire fraud, conspiring to launder monetary instruments, and filing a false tax return, United States Attorney Benjamin B. Wagner announced.

In August 2012, Baker, Bart Wayne Volen, 54, of San Diego and Haiku, Hawaii, and Darrell Patrick Hinz, 48, of Cameron Park, were charged with conspiring to commit mail and wire fraud and various money laundering charges as part of a scheme to defraud the United Auburn Indian Community (UAIC) of more than $17 million. In April, 2013, the government filed a superseding indictment which additionally charged Baker with filing false tax returns from 2006 through 2009 in connection with the fraud.

According to court documents, in October 2006, the UAIC hired Volen, a developer, to finish construction on four tribal buildings – a school, a community center, and administrative offices – on UAIC-owned property in Auburn. Volen submitted false and inflated invoices to the UAIC knowing that Baker and Hinz, both UAIC employees, would approve the fraudulent invoices based on an agreement the three men had reached earlier. Volen supported his invoices with inflated cost proposals from his general contractor’s company, Sequoia Pacific Builders (SPB), and, at times, inflated invoices from various subcontractors. At Volen’s direction, over 160 SPB cost proposals were fraudulently inflated.

Baker was the UAIC tribal administrator, and his duties included overseeing the Indian Hills Office Project. Hinz was a contract employee hired by the UAIC to manage the construction at the Indian Hills Office Project site. Both Baker and Hinz were required to approve all invoices before the UAIC tribal council would pay for work done on the Project. The indictment alleges that during the scheme to defraud the tribe, Baker engaged in conduct to insure that the tribal council would pay for the inflated and fraudulent invoices submitted by Volen. He was aware of what Volen was doing and was later paid by Volen for his participation in the scheme. According to court documents, a total of over $17 million was ultimately stolen from the UAIC, and Baker received over $1.4 million for his participation.

With regard to the tax offense, according to court documents, Baker filed tax returns contained a Schedule C in which Baker failed to report the income he derived from the scheme. As a result, the United States suffered a tax loss of between $250,000 and $550,000.

This case is the product of an investigation by the Internal Revenue Service, Criminal Investigation. Assistant United States Attorneys Michael M. Beckwith, John K. Vincent and Kevin C. Khasigian are prosecuting the case.

Hinz is scheduled for trial in Sacramento on February 29, 2016. The charges against him are only allegations; Hinz is presumed innocent until and unless proven guilty beyond a reasonable doubt.

Baker is scheduled to be sentenced by United States District Judge Troy L. Nunley on March 17, 2016. Volen previously pleaded guilty to similar charges in this case on June 12, 2014. Chris W. Eatough, the owner of Sequoia Pacific Builders, previously pleaded guilty to a felony related to this case on June 20, 2013, in case number 2:13-cr-214 TLN. Volen and Eatough are scheduled to be sentence by Judge Nunley on April 28, 2016 and March 17, 2016, respectively. Both Baker and Volen have agreed to pay at least $17 million in restitution to the United Auburn Indian Community.

Baker faces a maximum sentence of 20 years in prison and a $250,000 fine, or twice the value of the gross gain or loss for conspiring to commit mail and wire fraud. The maximum statutory penalty for conspiring to launder monetary instruments is 20 years in prison and a $500,000 fine or twice the value of the laundered money Any sentence imposed in this case, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — Leticia A. Roque, 48, of Vallejo, pleaded guilty today to conspiring to submit false claims against the United States and aggravated identity theft, United States Attorney Benjamin B. Wagner 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 partner in law enforcement on this investigation and will continue to protect the public and the U.S. Mail against all forms of misuse.”

“IRS Criminal Investigation has made investigating refund fraud and identity theft a top priority,” said Acting Special Agent in Charge Thomas McMahon, IRS-Criminal Investigation. “Filing fraudulent tax returns in the names of other individuals may result in significant harm to those individuals whose identities were stolen, as well as a monetary loss against the U.S. Treasury.”

According to court documents, between January 7, 2012, and May 19, 2012, Roque along with co-defendants Marcus A. Cooper, 29, and Tiana E. Naples, 28, also of Vallejo, submitted at least 60 fraudulent tax returns to the Internal Revenue Service. The returns were filed in other people’s names and contained false representations about those persons’ income, employer, tax credits, and tax withholding. The returns were filed without the permission or knowledge of the taxpayers. The 60 tax returns requested approximately $209,713 in tax refunds, of which approximately $102,521 was sent to the defendants in the form of prepaid debit cards.

This case is the product of an investigation by the United States Postal Inspection Service and the Internal Revenue Service – Criminal Investigation. Assistant United States Attorney Matthew G. Morris is prosecuting the case.

Roque is scheduled to be sentenced on February 9, 2016, by United States District Judge John A. Mendez. She faces a maximum statutory penalty of 10 years in prison and a $250,000 fine for the false claim conviction and a mandatory consecutive two-year term for aggravated ID theft. 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.

Cooper and Naples are scheduled to appear in court for a status conference on December 8, 2015. The charges against them are only allegations; they are presumed innocent until and unless proven guilty beyond a reasonable doubt.

FRESNO, Calif. — United States District Judge Anthony W. Ishii sentenced the final two defendants on Monday for a conspiracy to sell multiple pounds of methamphetamine to a confidential source, United States Attorney Benjamin B. Wagner announced.

On Monday, Veronda Creasy, 32, was sentenced to five years in prison, and Juventino Galindo, 41, was sentenced to eight years and nine months in prison for conspiracy to distribute and possess with intent to distribute methamphetamine.

On October 19, 2015, Touch Peang, 35, was sentenced to 12 years in prison for conspiracy to distribute methamphetamine and marijuana. Bruce Hunt, 60, was sentenced on October 13, 2015, to four years in prison for using a telephone to facilitate the commission of a felony. All defendants pleaded guilty in July and August 2015.

According to court documents, on April 29, 2014, Creasy and Hunt arranged to sell methamphetamine to a confidential source who wanted to purchase 10 pounds. Creasy sought the assistance of Galindo to obtain the substantial quantity of methamphetamine and Galindo arranged for Peang to sell the methamphetamine. On May 1, 2014, Hunt called the confidential source to notify him that the methamphetamine was available. Galindo, Creasy and Hunt led the confidential source to Peang’s place of employment, where Peang showed the methamphetamine to him. Shortly thereafter, officers of the Fresno Police Department executed a search warrant at the location, resulting in the arrest of the defendants and the seizure of eight pounds of methamphetamine, 13 pounds of marijuana, and two firearms.

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 at the Fresno Police Department on this investigation and will continue to protect the public and the U.S. Mail against all forms of criminal misuse.”

This case was the product of an investigation by the United States Postal Inspection Service and the Fresno Police Department. Assistant United States Attorney Melanie L. Alsworth prosecuted the case.

SACRAMENTO, Calif. — The Office of the United States Attorney for the Eastern District of California announced today that it is seeking applications for two Reentry and Prevention Outreach Coordinators to work in the Sacramento and Fresno offices to help in the development and implementation of the U.S. Department of Justice’s Smart on Crime initiative.

The selected applicants will focus on reentry and prevention efforts as part of the office’s implementation of the Smart on Crime Initiative. Supporting effective crime prevention strategies and working to reduce recidivism among persons who have paid their debt to society and are rehabilitating and reintegrating back into their communities are key components of the initiative. Recidivism rates for offenders leaving prison are high. A reduction in the recidivism rate of even one or two percentage points can create long-lasting benefits for formerly incarcerated individuals and their communities.

“This office’s main function is, and will remain, the prosecution of serious and violent offenders,” said U.S. Attorney Wagner. “But prosecutions alone will not ensure public safety over the long term. This office has been increasing its involvement in community-based crime prevention and reentry strategies. I am very pleased that we are now hiring dedicated professionals to help lead these efforts. When hired, these persons should bring new expertise to this office, increasing our capacity to assist in prevention and reentry, while minimizing the impact on our prosecutorial resources.”

In 2013, then Attorney General Eric Holder launched a comprehensive review of the criminal justice system in order to identify reforms that would ensure federal laws are enforced more fairly and more efficiently. This review was part of the Department of Justice’s Smart on Crime Initiative, which has five principal goals: 1) ensuring that finite federal resources are devoted to the most important law enforcement priorities; 2) promoting fairer enforcement of the laws and alleviating disparate impacts of the criminal justice system; 3) ensuring just punishments for low-level, nonviolent convictions; 4) bolstering reentry and prevention efforts to deter crime and reduce recidivism; and 5) strengthening protections for vulnerable populations.

Since the initiative’s announcement, the U.S. Attorney’s Office for the Eastern District has worked with our federal, state, and local law enforcement partners to focus our federal prosecutions on those crimes and criminals in our district that pose the greatest threats to our citizens and involve clear federal interests. To support the implementation of the reentry and prevention aspects of the initiative, the office sought and was awarded funding for two specialist positions. The Reentry and Prevention Outreach Coordinators will help the office to engage with youth and with at-risk populations to help prevent criminal activity, and they will also work with other agencies to support programs and strategies to facilitate the reentry of convicted persons into our communities in ways that maximize their chances of becoming productive citizens. It is anticipated that one coordinator will be based in the Sacramento office and one in the Fresno office.

The job postings for the Reentry and Prevention Outreach Coordinator positions can be found at: https://www.usajobs.gov/GetJob/ViewDetails/420327700 for Sacramento and https://www.usajobs.gov/GetJob/ViewDetails/420328700 for Fresno.

Additional information on the Department of Justice’s Smart on Crime initiative can be found at: http://www.justice.gov/sites/default/files/ag/legacy/2013/08/12/smart-on-crime.pdf.

The President, appearing in Newark, New Jersey today, announced a range of actions to promote rehabilitation and reintegration of formerly incarcerated persons. That announcement can be found at: https://www.whitehouse.gov/the-press-office/2015/11/02/fact-sheet-president-obama-announces-new-actions-promote-rehabilitation.

The United States Government does not discriminate in employment on the basis of race, color, religion, sex, national origin, political affiliation, sexual orientation, marital status, status as a parent, genetic information, disability, age, membership or nonmembership in an employee organization, or on the basis of personal favoritism.

FRESNO, Calif. —Uriel Silva-Garcia (Silva), 24, of Turicato, Michoacán, Mexico, pleaded guilty today to conspiring to manufacture, distribute and possess with intent to distribute marijuana and possessing firearms in furtherance of a large-scale cultivation operation located near Little Poso Creek in the Sequoia National Forest, United States Attorney Benjamin B. Wagner announced.

According to court documents, Silva was paid to plant and tend about 8,596 marijuana plants on public land. To facilitate the cultivation activities, Silva possessed a loaded rifle and handgun. The cultivation caused extensive damage to the land and natural resources. Native trees and plants were cut down and steep hillsides were terraced to plant the marijuana. Pesticides, including malathion, fertilizer, water lines, trash, clothing and camping equipment were scattered throughout the site. Silva has agreed to reimburse the U.S. Forest Service for the cleanup costs.

Co-defendant Antonio Garcia-Villa, 46, pleaded guilty on October 26, 2015. Both defendants are scheduled to be sentenced on January 19, 2016, by Senior U.S. District Judge Anthony W. Ishii. They face a maximum statutory penalty of 20 years in prison and a $1 million fine for the drug conspiracy and a mandatory minimum consecutive term of five years in prison for the firearm charge. The actual sentences, however, will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. They also face deportation to Mexico upon completion of any prison term imposed.

This case is the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), and the Kern County Sheriff’s Office. Assistant United States Attorney Karen Escobar is prosecuting the case.

FRESNO, Calif. — A federal grand jury returned a four-count indictment today against Armando Arnoldo Martinez-Tinoco, 36; his brother, Juan Carlos Martinez-Tinoco, 41; and Luis Enrique Flores, 23, all of Mexico; and Ivan De Jesus Jimenez, 30, of La Puente, California, charging them with a conspiracy to cultivate marijuana on public land, cultivating and possessing marijuana with intent to distribute, and damaging public land and natural resources, United States Attorney Benjamin B. Wagner announced.

According to court documents, on October 17, 2015, law enforcement officers entered the marijuana cultivation site that was near The Needles, a series of massive granite spires atop a ridge in the Sequoia National Forest in Tulare County. The defendants fled the grow site, but were later found in the Kernville and Weldon areas. Agents removed 2,608 marijuana plants from the site and found highly toxic chemicals, fertilizer, and trash strewn throughout. The cultivation activities caused extensive damage to the land and natural resources. Native trees and plants were cut down to make room for the marijuana. Water was diverted from a spring that supports a dwindling breed of indigenous trout, the Kern River Rainbow Trout.

This case is the product of an investigation by the U.S. Forest Service, the U.S. Drug Enforcement Administration, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the California Department of Fish and Wildlife, the Tulare County Sheriff’s Office, and the Kern County Sheriff’s Office. Assistant United States Attorney Karen Escobar is prosecuting the case.

The defendants are scheduled for arraignment on November 2, 2015, in Fresno. If convicted of the drug offenses, the defendants face a maximum statutory penalty of 20 years in prison and a $1 million fine. If convicted of the environmental crime, the defendants face a maximum statutory penalty of 10 years in prison, a $250,000 fine, and restitution. 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. —Martin Wayne Flanders, 51, formerly of Roseville, was sentenced today by United States District Judge Troy L. Nunley to six years and five months in prison for a scheme that targeted distressed homeowners, United States Attorney Benjamin B. Wagner announced.

In February 2015, Flanders and his wife Ligia Sandoval Spafford (Sandoval), 48, of Roseville, pleaded guilty to mail fraud for their participation in the fraud scheme.

According to court documents, between 2008 and 2010, Flanders charged clients advance fees in exchange for a number of financial services, including loan modifications, mortgage loan audits, credit repair, debt relief, bankruptcy filings, and a program to sell homes to “investors” with a rent-to-own option. Flanders and Sandoval marketed these services to economically distressed homeowners with particular emphasis on those who were Spanish speakers. During a radio program aired twice weekly by a Bay Area Spanish‑language Christian radio station, Radio Luz, Sandoval promoted the services she and Flanders offered. Flanders also advertised on a Spanish-language television station, Univision, and in Spanish-language magazines. About 98 percent of the defendants’ clients were of Hispanic descent, some of whom spoke little to no English. Sandoval speaks Spanish, Flanders does not.

Flanders and Sandoval made numerous false statements to investors as to the success of the programs being offered or refunds that would be available if the programs were not successful. “Ghost offers” – i.e., fictitious offers to purchase the victim’s property through short sale – and “skeleton bankruptcies” – i.e., sham bankruptcy petitions that were quickly dismissed by the bankruptcy court – were also used by Flanders or Sandoval to try to stall the foreclosure process. At least 25 to 30 individuals paid for services and did not receive them or did not receive refunds when the programs failed to deliver as promised. The total loss to the victims is at least $125,000. Some homeowners who were not able to obtain relief were foreclosed upon by their lenders.

“By targeting people in financial distress with limited English proficiency, Flanders sought to enrich himself on the backs of those who could least afford it,” said United States Attorney Wagner. “We are gratified by the sentence imposed by the Court, and we will continue to focus our efforts on the prosecution of such predatory fraud schemes.”

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Todd A. Pickles and Shelley Weger are prosecuting the case.

Flanders has been detained since his arrest in October 2012. Sandoval is currently out of custody. Sandoval is scheduled to be sentenced by Judge Nunley on March 3, 2016.  She faces 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.

FRESNO, Calif. — James Steven Harris, aka Steve Harris, 45, of Loma Linda, was sentenced today to two years and six months in prison for his involvement in smuggling smokeable synthetic cannabinoids, commonly known as “spice,” “K2, or “incense,” to his brother who was then an inmate of Taft Correctional Institution, United States Attorney Benjamin B. Wagner announced.

On August 10, 2015, Steve Harris sentence pleaded guilty to two counts of making false statements under penalty of prosecution on Federal Bureau of Prisons visitor forms that he was not in possession of contraband, knowing that he was in possession of smokeable synthetic drugs containing XLR11. According to court documents, on one occasion Steve Harris successfully smuggled 15.5 grams of XLR11 into TCI for his brother Tracy McArthur Harris, aka Trey Harris, 42, and later attempted to smuggle 34.3 grams of XLR11, along with four packages of rolling papers, into the prison. At the time, XLR11 was a controlled substance analogue, which has since been made a Schedule I controlled substance.

At sentencing, United States District Judge Anthony W. Ishii stated: “The serious nature of smuggling contraband into a federal prison has serious consequences.”

Tracy Harris was subject to a prison disciplinary proceeding that added more time to his current 11-year prison term that he is currently serving for a drug conspiracy conviction. He was also sentenced in May to a consecutive one-year prison term for his involvement in obtaining the synthetic drugs from his brother. Court documents indicate that Tracy Harris, in turn, distributed the drug to other inmates at Taft.

A report by the Office of the Inspector General of the U.S. Department of Justice found that drugs reach federal prisoners primarily through inmate visitors.

This case was the product of an investigation by the Federal Bureau of Investigation and the Special Investigative Supervisor’s Office of Taft Correctional Institution. Assistant United States Attorney Karen A. Escobar prosecuted the case.

FRESNO, Calif. — Johnny Alexander Quenga, 28, of Fresno, Calif., entered a guilty plea today to aiming the beam of a laser pointer at Air 1, a Fresno Police helicopter, United States Attorney Benjamin B. Wagner announced.

In pleading guilty, Quenga acknowledged that he repeatedly struck Air 1 with a powerful green laser attached to an airsoft rifle. As a result, the airmen experienced visual interference, flash blindness, after-imaging, a persistent headache lasting several hours, and dizziness. Two Fresno Police officers, who were responding to calls to assist in the investigation of the laser incident, were also seriously hurt when their patrol vehicle was broadsided at a busy intersection in northeast Fresno.

Quenga is scheduled for sentencing before Senior U.S. District Judge Anthony W. Ishii on January 19, 2016. He faces a maximum statutory penalty of five 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. At his change of plea hearing, Quenga was remanded to the custody of the U.S. Marshals Service for failing to comply with conditions of his pretrial release.

Reports of laser attacks have increased dramatically in recent years as powerful laser devices have become more affordable and widely available to the public. In 2014, the Federal Aviation Administration received 3,894 reports of incidents involving laser strikes on aircraft. In the Eastern District of California, which encompasses 34 counties in the eastern portion of California, there were 150 reported incidents, with the majority in Bakersfield, Fresno, and Modesto. Lasers can completely incapacitate pilots who are trying to fly safely to their destination, endangering their crew members, passengers and people on the ground.

The case against Quenga was investigated by the Federal Bureau of Investigation and Fresno Police Department. Assistant U.S. Attorney Karen A. Escobar is prosecuting the case.

FRESNO, Calif. — Two men from Michoacán, Mexico faced court action today for their involvement in growing marijuana in national forests, United States Attorney Benjamin B. Wagner announced.

In the first case, Jose Antonio Reyna-Chavez (Reyna), 20, of was sentenced today to six years in prison for conspiring to manufacture, distribute, and possess with intent to distribute marijuana and possessing a firearm in furtherance of a drug trafficking crime. Upon completion of his prison term, Reyna is subject to deportation to Mexico.

On August 10, 2015, Reyna pleaded guilty to his involvement in the cultivation of 1,539 marijuana plants in the Blue Canyon area of the Sierra National Forest. He also acknowledged that he possessed a firearm in furtherance of the drug conspiracy. The cultivation operation was close to recreation areas. According to court documents, law enforcement officers found growing plants, processed marijuana, an AK-47 style assault rifle with a loaded high-capacity magazine, and a 12 gauge pump-action shotgun. The marijuana cultivation caused significant damage to the land and natural resources of the forest. Six large helicopter-net loads of material and debris, including fertilizer, propane tanks, and poisons, were removed from the forest. Reyes was ordered to pay $10,093 to the U.S. Forest Service to compensate it for the cleanup costs.

This case was the product of an investigation by the U.S. Forest Service, the California National Guard, and Fresno County Sheriff’s Office.

In the second case, Antonio Garcia-Villa (Garcia), 46, pleaded guilty today to conspiring to manufacture, distribute and possess with intent to distribute marijuana and possessing firearms in furtherance of a large-scale cultivation operation.

According to court documents, Garcia was paid to tend and water about 8,596 marijuana plants near Little Poso Creek in the Sequoia National Forest. To facilitate the cultivation activities, Garcia possessed a loaded rifle and handgun. The cultivation activities caused extensive damage to the land and natural resources. Native trees and plants were cut down and steep hillsides were terraced to plant the marijuana. Pesticides, including malathion, fertilizer, water lines, trash, clothing and camping equipment were scattered throughout the site. Garcia has agreed to reimburse the U.S. Forest Service for the cleanup costs.

Garcia is scheduled for sentencing on January 19, 2016, before Senior U.S. District Judge Anthony W. Ishii. Garcia faces a maximum statutory penalty of 20 years in prison and a $1 million fine for the drug conspiracy and a mandatory minimum consecutive term of five years in prison for the firearm charge. The actual sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. Garcia also faces deportation to Mexico upon completion of any prison term imposed.

This case is the product of an investigation by the U.S. Forest Service, Kern County Sheriff’s Office, and the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). Assistant United States Attorney Karen Escobar is prosecuting both cases.

SACRAMENTO, Calif. — Arturo Alcazar-Tapia, 22, of Eureka, was sentenced today to seven years and three months in prison and ordered to pay $17,000 in restitution for conspiring to manufacture and possess with intent to distribute marijuana and for depredation of public lands and resources, United States Attorney Benjamin B. Wagner announced.

According to court documents, Arturo Alcazar-Tapia and his brother, Isidro Alcazar‑Tapia, 26, of Eureka, conspired to grow more than 20,000 marijuana plants at two sites in the Shasta-Trinity National Forest in Trinity County. The marijuana was packaged for distribution at a house in Eureka. On August 4, 2014, law enforcement executed a search warrant at the defendants’ home in Eureka and found 33 pounds of processed marijuana divided into one-pound packages and more than $6,000 in cash. At a cultivation site at Big French Creek, agents located and destroyed approximately 7,980 marijuana plants and arrested co‑defendant Ricky Martin Huerta, 21, of Eureka. At a site at Hobo Gulch Road, agents located and destroyed approximately 13,642 marijuana plants. The marijuana cultivation caused significant damage to the land and natural resources of the forest that provides habitat for several threatened and endangered animal species.

At the Big French Creek site, agents observed hundreds of holes dug in the dirt containing soluble fertilizer, bags of trash, empty fertilizer bags, propane tanks, and water lines diverting water from a stream into the marijuana garden. Analysts estimate that cleaning the Big French Creek site will cost the U.S. Forest Service more than $4,000. Agents observed similar destruction at the Hobo Gulch Road site. Analysts estimate that cleaning the Hobo Gulch Road site will cost the U.S. Forest Service approximately $13,000.

All three defendants pleaded guilty in January 2015. On June 16, 2015, Judge Garland E. Burrell Jr. sentenced Ricky Martin Huerta to two years and eight months in prison, and on August 7, 2015, Judge Burrell sentenced Isidro Alcazar-Tapia to 87 months in prison and ordered restitution of $17,000. A fourth defendant, Victor Manuel Alvarez‑Contreras is currently a fugitive.

This case was the product of an investigation by the U.S. Forest Service, the Humboldt County Drug Task Force, the North State Marijuana Team, and the Trinity County Sheriff’s Office. Assistant United States Attorney Christiaan Highsmith prosecuted the case.

SACRAMENTO, Calif. —Neil A. Van Dyck, 64, of Roseville, pleaded guilty today to health care fraud, United States Attorney Benjamin B. Wagner announced.

According to court documents, Van Dyck was a California-licensed podiatrist who operated a podiatry practice in Roseville called Placer Podiatry. Van Dyck offered “spa”-like treatments and performed routine foot care at his practice. Between 2009 and 2014, however, Van Dyck submitted over $2.8 million in fraudulent claims for reimbursement to Medicare, Medi-Cal, Tricare and private insurers. He falsely claimed that he performed more expensive procedures than he actually performed, or that the routine foot care that was provided was justified because of illness or symptoms that were not present. Often times the treatments were performed by unlicensed staff sometimes when Van Dyck was not present at his practice. Additionally, Van Dyck altered a single-use skincare patch by cutting it into pieces and billed Medicare for multiple applications. In response to a request for documents from an investigator for Medicare, Van Dyck altered patients’ medical records to justify his fraudulent bills. Medicare, Medi-Cal, Tricare, and the private insurers paid Van Dyck over $1 million for his fraudulent claims.

“Providers overbilling and charging for phantom treatments are picking the pockets of taxpayers and assaulting government health program integrity,” said Gerald T. Roy, Special Agent in Charge, Office of Inspector General for the U.S. Department of Health and Human Services. “Working in close coordination with our law enforcement partners we will tirelessly investigate and bring these criminals to justice.”

“Dr. Van Dyck engaged in health care fraud schemes designed to financially benefit himself without regard for the impact his actions had on his patients,” said Supervisory Special Agent David Hanzal of the FBI’s Sacramento field office. “He fraudulently billed health insurance programs and compromised the integrity of Medicare billing and medical history records of patients, potentially impacting the affected patients’ future medical benefits. The FBI, in coordination with our law enforcement partners, continues to investigate providers who prey on unsuspecting patients and defraud public and private health insurance programs.”

This case is the product of an investigation by the Office of Inspector General for the U.S. Department of Health and Human Services and the Federal Bureau of Investigation. Assistant United States Attorney Todd A. Pickles is prosecuting the case.

Van Dyck is scheduled to be sentenced by Judge Garland E. Burrell Jr. on January 15, 2016. Van Dyck faces a maximum statutory penalty of 10 years in prison and a fine of $250,000 or twice the 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.

FRESNO, Calif. — Christopher James Harp, 58, was arraigned today in Fresno after a federal grand jury returned an indictment on Thursday, charging him with depredation of public lands, United States Attorney Benjamin B. Wagner announced. Harp entered a plea of not guilty at today’s arraignment.

According to court documents, on September 6, 2015, an archaeologist with the United States Forest Service reported graffiti of numerous boulders at a location known as Rabbit Island, a large rock outcropping in the Sequoia National Forest in Kern County that was once the site of a large Tubatulabal Indian village. Agents found black asphalt sealer sprayed on rocks over about 100 yards, including damage to a prehistoric petroglyph of a bighorn sheep on the face of a large boulder.

This case is the product of an investigation by the United States Forest Service. Assistant United States Attorney Michael S. Frye is prosecuting the case.

If convicted, Harp 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.

FRESNO, Calif. — After a three–day trial, a federal jury found Shannon Lester Sorrells, 37, of Dinuba, guilty Thursday of five counts of bank fraud, one count of possession of stolen mail, and one count of aggravated identity theft, United States Attorney Benjamin B. Wagner announced. The trial was held before United States District Judge Lawrence J. O'Neill.

According to court documents, Sorrells was indicted in July 2014 and charged with theft of mail from neighborhood delivery collection boxes. He was released on his own recognizance and a trial date was set for August 4, 2015. While awaiting trial, Sorrells committed new offenses and was arrested for violating the conditions of his release. A grand jury brought a superseding indictment charging him with bank fraud, possession of stolen mail, and aggravated ID theft, all committed while Sorrells was on pretrial release.

According to evidence presented at trial, Sorrells passed numerous altered and forged checks at federally insured banking institutions in the Central Valley. In some cases, he presented altered checks using his own identity. In other cases, he used the identity of others. In February 2015, while Sorrells was on pretrial release, agents conducted a search warrant at his residence and recovered stolen mail, counterfeit checks and account information on an account he had opened using the identity of a victim.

San Francisco Division Inspector in Charge Rafael Nuñez of the U.S. Postal Inspection Service stated, “Protecting the U.S. Mail from theft and criminal misuse is a critical component of our agency's mission. We are proud to work closely with the U.S. Attorney’s Office and our law enforcement partners to fully investigate and prosecute anyone who dares to steal the mail.”

This case is the product of an investigation by the United States Postal Inspection Service, the Visalia Police Department and the Tulare County Sheriff’s Office. Assistant United States Attorneys Megan A.S. Richards and Jeffrey A. Spivak are prosecuting the case.

Sorrells is scheduled to be sentenced by Judge O'Neill on January 11, 2016. Sorrells faces a maximum statutory penalty of 40 years in prison and a $1 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. — Today, United States District Judge John A. Mendez sentenced Peter Kuzmenko, 37, of West Sacramento, to 19 years in prison; Aaron New, 41, of Sacramento, to 11 years and three months in prison; Nadia Kuzmenko, 36, formerly of Loomis, to eight years in prison; and Edward Shevtsov, 51, of North Highlands, to eight years in prison for their involvement in a mortgage fraud scheme that cost financial institutions approximately $16 million, United States Attorney Benjamin B. Wagner announced.

On February 13, 2015, after a 21-day trial, a federal jury found the four defendants guilty of multiple counts of mail and wire fraud associated with their involvement in the mortgage fraud scheme. In addition, Peter Kuzmenko, Edward Shevtsov, and Aaron New were found guilty of money laundering associated with the scheme, and Nadia Kuzmenko was found guilty of witness tampering.

According to the evidence presented at trial, from late 2006 through 2007, the defendants engaged in a mortgage fraud scheme involving more than 35 properties in the Sacramento area. The defendants were responsible for securing more than $26 million in residential mortgage loans on over 35 homes purchased through straw buyers. Records introduced at trial showed each of the defendants personally received hundreds of thousands or millions of dollars.

Judge Mendez, in sentencing the defendants, said in this case there was “overwhelming evidence of the defendants’ guilt” and that this was a “significant fraud.”

Nadia Kuzmenko was a licensed real estate sales person who created fraudulent loan applications on behalf of the straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. The loan paperwork also hid from lenders millions of dollars in payments that went to the defendants. With respect to the witness tampering count, the evidence showed that after she learned the FBI was investigating her, Nadia Kuzmenko told various witnesses to lie to the FBI and blame a dead woman for the fraud.

Aaron New was a licensed real estate broker who submitted the fraudulent loan applications to lending institutions and convinced home sellers to sign off on fraudulent invoices to divert money out of escrow and to the defendants. New also served as a straw buyer himself.

Peter Kuzmenko and Edward Shevtsov recruited straw buyers and helped create fraudulent loan paperwork. They also controlled shell accounts in which millions of dollars were diverted out of escrow based on fraudulent invoices and false representations made to lenders. Peter Kuzmenko was also a straw buyer himself. Peter Kuzmenko is currently in custody and Edward Shevtsov was remanded into custody upon sentencing.

“These defendants were important players in a network of fraudsters responsible for millions of dollars in losses associated with dozens of inflated property sales using multiple straw buyers,” said U.S. Attorney Benjamin B. Wagner. “The sentences demonstrate that mortgage fraudsters will not escape accountability for their crime by blaming others. Our enforcement efforts in this area are far from done.”

“Today’s sentencing serves as a warning for would-be fraudsters and represents years of dedicated, collaborative investigation,” said Supervisory Special Agent Dan Bryant of the FBI’s Sacramento field office. “The FBI is committed to work with its partners to ensure thorough, comprehensive investigations of such large, complex financial fraud schemes, especially when such crimes victimize a community and damage the regional economy.”

“Mortgage fraud is an incredibly destructive crime that leaves many victims in its wake,” said Thomas McMahon, Acting Special Agent in Charge, IRS-Criminal Investigation. “The impact on homeowners and communities is devastating. While nothing can reverse the damage caused by these defendants, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”

 The case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special Assistant U.S. Attorney David J. Ward are prosecuting the case.

Co-defendants Vera Kuzmenko and Rachel Siders will be tried on November 2, 2015. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

Three other mortgage fraud defendants have been sentenced this week. On Monday, Bakersfield residents Lucia Yolanda Chavez, 37, was sentenced to four years in prison, and Joseph Chavez, 41, was sentenced to three years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud and were ordered to pay $1.8 million and $1.44 million in restitution respectively. Today in Sacramento, Hubert Rotteveel, 52, of Dixon, was sentenced to three years and four months in prison for mail fraud.

SACRAMENTO, Calif. — Hubert Rotteveel, 52, of Dixon, was sentenced today by Senior United States District William B. Shubb to three years and four months in prison for one count of mail fraud, United States Attorney Benjamin B. Wagner announced.

In September 2014, Rotteveel was found guilty by a federal jury of one count of mail fraud relating to 13 properties in Dixon. According to evidence produced at trial, Rotteveel acted as a real estate salesperson for the 13 properties, with over $7 million in loans authorized for just two buyers in seven months. He inflated the values of the properties and worked with loan officers to provide false information to lenders about the income and liabilities of the buyers to induce the lenders to fund loans for the properties. Rotteveel surreptitiously made the down payments on the homes, instead of the buyers, and got that money (and usually more) back from the lenders at closing. For most of the transactions, when the sales closed, the escrow officer distributed funds to a bank account in the name of Windmill Properties, a company owned by Rotteveel, without disclosing these payments to the lenders. All 13 properties were used as rentals, with Rotteveel collecting the rents through Windmill Properties. He netted over $300,000 through the sales in just seven months, and the lenders lost more than $3 million when all 13 properties underwent foreclosure.

U.S. Attorney Wagner stated: “Hubert Rotteveel used his knowledge of the real estate market in Dixon to defraud lenders of over $7 million, resulting in losses of over $3 million after each of the homes went into default and a foreclosure sale was held. Today’s sentence is one step in the continuing effort to hold real estate professionals responsible for their role in the mortgage meltdown.”

“This prosecution should serve as a warning to those who abuse their position of trust,” said Thomas McMahon, Acting Special Agent in Charge, IRS-Criminal Investigation. “Mr. Rotteveel manipulated the MLS listings for properties, failed to disclose his true role in the transactions and made numerous misrepresentations to lenders.  Although this sentence cannot reverse the damage caused by Mr. Rotteveel, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”

This case was the product of an investigation by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant United States Attorneys Jean M. Hobler and Justin L. Lee prosecuted the case.

SACRAMENTO, Calif. —Keith Joseph Banning, 59, of Magalia, was sentenced today to 15 years in prison for receiving and distributing child pornography, United States Attorney Benjamin B. Wagner announced.

According to court documents, an undercover investigation revealed that in June through August of 2012, an Internet user at Banning’s home address was using a peer-to-peer file-sharing network to share pictures and videos depicting the sexual exploitation of children, including a number of videos involving children under the age of 10. A search warrant executed at Banning’s home revealed that his computers contained hundreds of videos depicting the sexual abuse of children, and that at various times many of those videos were made available to others over the Internet through a file-sharing network. Banning was caught in another state living under a false name, and had rebuilt his collection of child pornography while living on the run.

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

SACRAMENTO, Calif. — On Saturday, October 17, the United States Attorney’s Office, in partnership with the California Office of Emergency Services, held a Community Resilience Exercise (CREX) at the central library at California State University, Fresno. The day-long event, involving about 50 participants, brought together representatives of law enforcement and other government agencies with representatives of Muslim communities in the Fresno and Madera areas.

Law enforcement participants included the U.S. Attorney, Fresno Office Chief Mark E. Cullers, Assistant Director David Fukutomi of CalOES, Fresno Sheriff Margaret Mims, Fresno Police Chief Jerry Dyer, Fresno State Police Chief David Huerta, and others including school resource officers, FBI agents, and mental health professionals from the Fresno County Department of Behavioral Health. Muslim community representatives included religious leaders from several congregations such as Masjid Fresno, Masjid Madera, Badr Islamic Center, Masjid Al-Aqabah, and Islamic Cultural Center of Fresno; business, academic and civil leaders; representatives of the Muslim Society of Central California; and students.

ISIS and other violent extremist organizations are adept at using modern communication channels to recruit and radicalize young people. The CREX is a scenario‑based exercise, facilitated by professionals from the National Counterterrorism Center, designed to strengthen relationships between Muslim communities and government and to help both community leaders and local law enforcement focus on local resources and strategies to protect young people and their communities from these groups.

“We in law enforcement must work hand-in-hand with people of all faiths in order to effectively protect children and our communities. No one is more concerned about these issues than people in the communities that are targeted for recruitment by extremists,” said U.S. Attorney Wagner. “Our exercise this weekend is just one example of how various Muslim communities throughout our district are committed to helping address this problem. I am honored to work with them in carrying out this very important work.”

Cal OES Assistant Director David Fukutomi stated: “The Governor’s Office of Emergency Services (Cal OES) is proud to be a co-sponsor of this important effort. We appreciate the participation of the local community leaders as we seek to build lasting relationships that will have lasting benefit to our families and communities.”

Over 250 U.S. citizens or residents have traveled or attempted to travel to Syria and Iraq since early 2014 to join militant groups, mostly ISIS. Many of them are minors, including young girls. Approximately 28 have been arrested by federal authorities while attempting to travel overseas to join extremist groups.

FRESNO, Calif. — Today, United States District Judge Lawrence J. O'Neill sentenced three defendants in two cases for trafficking methamphetamine, United States Attorney Benjamin B. Wagner announced.

In the first case, Jose Mojarro Cruz, aka Shyboy, 28, of Bakersfield was sentenced to 15 years and nine months in prison for conspiring to distribute and possess with intent to distribute methamphetamine and heroin. He pleaded guilty on April 21, 2015. Co-defendant Arnoldo Delgado Garcia (Delgado), aka Fabricio Rene Delgado-Perea, 35, a Mexican national, was sentenced to 11 years and four months in prison. On May 11, 2015, he pleaded guilty to conspiring to distribute and possess with intent to distribute methamphetamine and heroin.

According to court documents, from May 2013 through January 2014, the defendants regularly distributed methamphetamine and heroin to various drug dealers and users in Kern County. The defendants admitted to distributing between 15 and 45 kilograms of methamphetamine and over 1,000 grams of heroin. Co-defendant Erik Gesus Rivera, 28, of Bakersfield, pleaded guilty to possession with intent to distribute methamphetamine, and on September 21, 2015, was sentenced to two years in prison.

This case was the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Drug Enforcement Administration, Kern County Sheriff’s Office, and the Southern Tri-County High Intensity Drug Trafficking Area Task Force. Assistant United States Attorney Brian K. Delaney prosecuted the case.

In the second case, Judge O’Neill sentenced Juan Lascano Jr., 32, of Bakersfield, to 10 years in prison. On July 27, 2015, Lascano pleaded guilty to distribution of methamphetamine.

According to court documents, Lascano and his co-defendants conspired to distribute pound-quantities of methamphetamine in the Bakersfield area. On September 21, 2015, co-defendant Guillermo Magallanes, 36, of Bakersfield, pleaded guilty to conspiracy to distribute methamphetamine, and co-defendant Pasqual Gonzales Magallanes, 44, of Bakersfield, pleaded guilty to distribution of methamphetamine.

Sentencing for the two co-defendants is scheduled for December 14, 2015. Guillermo Magallanes faces a maximum statutory penalty of life in prison and a $5 million fine, and Pasqual Gonzales Magallanes faces a maximum statutory penalty of 40 years in prison and a $2 million fine. The actual sentences, 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.

In addition to the criminal charges, the United States is seeking the forfeiture of $31, 242, a 2014 Lexus IS250 F Sport, and a 2012 Acura TL sedan as proceeds of the illegal drug trafficking activity.

This case is the product of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation by the Drug Enforcement Administration, the Federal Bureau of Investigation, the Kern County Sheriff’s Office, and the Bakersfield Police Department. Assistant United States Attorney Brian K. Delaney is prosecuting the case.

FRESNO, Calif. — Ezequiel Armas-Ortiz (Armas), 49, of Michoacán, Mexico, pleaded guilty today to conspiracy and to manufacturing and possessing with intent to distribute marijuana in connection with a large-scale cultivation operation in the Brush Creek drainage in the Sequoia National Forest in Tulare County, United States Attorney Benjamin B. Wagner announced.

According to court documents, Armas and two other men charged with him were responsible for watering 2,719 marijuana plants at the grow site. The marijuana cultivation activities caused extensive damage to the land and natural resources. Trees and plants, newly generated following the 2002 McNally Fire, were cut down to make room for the marijuana. Water was diverted from a nearby stream that supports trout. Armas also agreed to make restitution to the U.S. Forest Service for the damage caused by his wrongful conduct.

Armas is scheduled for sentencing on January 19, 2016. He faces a maximum statutory penalty of 20 years in prison and a $1 million fine. The actual sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables. Armas is also subject to deportation to Mexico after serving any term of imprisonment imposed.

This case is the product of an investigation by the U.S. Forest Service, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the California National Guard, the California Department of Fish and Wildlife, and Tulare County Sheriff’s Office. Assistant United States Attorney Karen Escobar is prosecuting the case.

FRESNO, Calif. — United States District Court Judge Lawrence J. O’Neill sentenced Tryvell Powell, 34, of Fresno, today to 10 years and 10 months in prison for sex trafficking of a minor, United States Attorney Benjamin B. Wagner announced.

According to court documents, Powell communicated with a 16-year-old girl on Facebook and persuaded her to leave Modesto where she was living and travel to Fresno. She then engaged in sex acts with strangers at Powell’s request for his monetary benefit. A relative of the girl reported seeing pictures of the teen in an online advertisement for prostitution. Fresno detectives used the advertisements to contact the girl and arrested Powell.

This case was the product of an investigation by the Federal Bureau of Investigation and the Fresno Police Department. Assistant United States Attorney Michael Frye 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. — Two Bakersfield residents were sentenced Tuesday by Senior United States District Judge Anthony W. Ishii in connection with a mortgage fraud scheme in Bakersfield, United States Attorney Benjamin B. Wagner announced.

Lucia Yolanda Chavez, 37, was sentenced to four years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud, and was ordered to pay $1.8 million in restitution. Joseph Chavez, 41, was sentenced to three years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud, and was ordered to pay $1.44 million in restitution. Lucia Chavez was also ordered to forfeit her interest in approximately $110,000 seized from a bank account, and to pay a personal forfeiture money judgment of $1.6 million. Joseph Chavez was ordered to pay a personal forfeiture money judgment of $3 million.

According to court documents, from 2007 to 2010, the Chavez defendants conspired with other co-defendants to use straw buyers to purchase residential properties in Bakersfield developed by Pershing Partners LLC (Pershing Partners), owned by Lucia Chavez, and by Jara Brothers Investments (JBI), owned by co-defendants Eliseo Jara and Sergio Jara. The conspirators paid straw buyers to purchase the properties from Pershing Partners and JBI, and funded the purchases using loans they obtained for the straw buyers from lenders based on false and fraudulent loan applications. The conspirators used Paragon Home Mortgage to obtain and process loans in furtherance of the conspiracy. Lucia Chavez had also been employed at Paragon Home Mortgage since approximately August 2006, and acquired ownership of Paragon Home Mortgage from co-defendants Eliseo Jara Jr. and Sergio Jara in 2007. Joseph Chavez was employed as a loan officer and office manager at Paragon Home Mortgage from approximately June 2006 to October 2007. Joseph Chavez and Lucia Chavez pleaded guilty on April 10, 2015.

The loan applications in the names of straw buyers frequently contained false statements concerning the straw buyers’ employment status, income, assets, intent to occupy the properties as their personal residences, and source of down payments for the purchase of the properties. The conspirators concealed from the lenders that the property developers funded certain of the straw buyers’ down payments. The conspirators also submitted false supporting documentation to lenders such as false and altered bank account statements purporting to show that straw buyers had high bank account balances, false verifications of the straw buyers’ bank account funds, false verifications of rent purporting to be from straw buyers’ landlords, false pay stubs, and false verifications of employment.

This case is the product of an investigation by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorneys Kirk E. Sherriff and Henry Z. Carbajal III prosecuted the case.

On October 13, 2015, co-defendants Eliseo Jara and Sergio Jara were each sentenced to six and a half years in prison, and co-defendant Melissa Jara was sentenced to five years on supervised release. Co-defendant Antonio Perez-Marcial was sentenced on May 12, 2014, to three years and 10 months in prison, and co-defendant Arlene Jeanette Mojardin was sentenced on May 18, 2015, to two and a half years in prison, for their roles in the conspiracy. Co-defendant Candace Gonzales previously pleaded guilty to conspiracy to commit bank fraud, mail fraud, and wire fraud, and her sentencing hearing is currently set for October 26, 2015. Co-defendant Ricardo Salinas previously pleaded guilty to bank fraud, and his sentencing is also currently set for October 26, 2015.

FRESNO, Calif. — A seven-count indictment has been unsealed, following the arrests of Haitham Eid Habash, aka Eddie Habash, 52, of Hawthorne; Zaid Elodat, 28, of Gardena; and Bakersfield residents Ramsey Jeries Farraj, 48, and Majed Bashir Akroush, aka Mike Akroush, 48, charging them with conspiring to manufacture, distribute, and possess with intent to distribute AB-Chminaca, AB-Pinaca, and XLR11, smokeable synthetic drugs that are Schedule I controlled substances, United States Attorney Benjamin B. Wagner announced.

Farraj is also charged with four separate counts of distributing the drugs. Akroush is charged with two counts of distributing AB-Chminaca, and Farraj and Elodat are charged with possessing AB-Chminaca and AB-Pinaca with intent to distribute. In addition, Farraj and Akroush are charged with conspiring to structure more than $3 million in proceeds derived from their Internet-based drug distribution businesses. The indictment also seeks to forfeit property and bank accounts owned by Habash, Akroush, and Farraj and the domain names of their drug distribution businesses, Blue Whale Store and World of Incense.

“Synthetic drugs are a serious public health threat and are endangering young people across the country,” said U.S. Attorney Wagner. “The chemicals in these drugs, usually manufactured in unsupervised factories in China, are not tested or approved for human consumption, and have led to psychotic episodes, seizures and deaths, even in small quantities. Stores should not sell them, and young people should not play Russian roulette by consuming them.”

DEA Acting Special Agent in Charge Bruce C. Balzano stated, “Synthetic drugs are dangerous, deadly poisons often marketed to attract teen and young adult use. These drugs are manufactured without quality controls and have unpredictable effects that can lead to grave consequences for the unsuspecting user. These arrests have dismantled a criminal network responsible for the manufacture and distribution of some very toxic drugs.”

The charges are part of a nationwide synthetic drug takedown in connection with Project Synergy Phase III that targeted the synthetic designer drug industry, including wholesalers, money launderers and other criminal facilitators. In connection with this case, federal law enforcement officers arrested the four defendants and executed 12 search warrants in Bakersfield and the Los Angeles area. Over 1,000 pounds of synthetic drugs, nearly a half a million dollars in cash and four firearms were seized.

The Drug Enforcement Administration (DEA), Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), Customs and Border Protection (CBP), along with other federal, state, and local law enforcement concluded a 15-month, nationwide drug interdiction effort that resulted in 151 arrests in 16 states. In addition to curbing the flow of synthetic drugs into the country, Project Synergy III continues to reveal the flow of millions of dollars in U.S. synthetic drug proceeds to countries of concern in the Middle East.

In May 2013, DEA placed XLR11 in Schedule I after the Centers for Disease Control and Prevention found that acute kidney injury is associated with its ingestion. AB-Pinaca and AB-Chminaca were placed into Schedule I at the beginning of this year based on a finding that these drugs pose an imminent hazard to the public.

This case is the product of an investigation by the U.S. Drug Enforcement Administration, the Internal Revenue Service-Criminal Investigation, and the California Highway Patrol, with assistance from the Federal Bureau of Investigation, the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); the U.S. Postal Inspection Service, the California Department of Motor Vehicles, the Kern County Probation, the Kern County Sheriff’s Office, the Bakersfield Police Department, and the Los Angeles County Sheriff’s Office. Assistant United States Attorneys Karen A. Escobar, Grant B. Rabenn, and Jeffrey A. Spivak are prosecuting the case.

This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multi-level 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 of the drug charges, the defendants face a maximum statutory penalty of 20 years in prison and a $1 million fine. The structuring conspiracy carries a maximum statutory penalty of five 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.

Habash is in custody, Farraj was released on bond. A detention hearing has been ordered for Elodat and Akroush. The next court date for all defendants is January 11, 2016, before U.S. Magistrate Judge Barbara A. McAuliffe in Fresno.

FRESNO, Calif. — A federal grand jury returned a 13-count indictment today against 14 individuals, charging them with conspiring to distribute methamphetamine, cocaine, and heroin, United States Attorney Benjamin B. Wagner announced.

Charged in the indictment are Olegario Trujillo, 29, of Fresno; Arnold Martinez Valencia, 39, of Woodlake; Edgar Valencia-Farias, of Tulare; Caesar Alejandro Gomez, 33, of Fresno; Gladys Ramos, 30, of Woodlake; Carlos Tafoya-Ramos, 22, of Woodlake; Marcos Diaz, 23, of Madera; Ramiro Salas Munoz, 37, of Lindsay; Arthur Allen Walker, 32, of Poplar; Francisca Torres-Guisar, 51, of Visalia; Pedro Delgado-Montenegro, 36, of Porterville; Jose Roberto Arreola-Serrato, 31, of Tulare; Gary Passmore, 65, of Washington state, and Jorge Martinez Jr., 23, of Tulare.

According to court documents, Olegario Trujillo was the leader of a large-scale drug trafficking organization, responsible for distributing methamphetamine, cocaine, and heroin in California and Washington. Pedro Delgado-Montenegro and Jose Arreola-Serrato supplied him with methamphetamine. Trujillo directed several of the other charged individuals to deliver drugs and instructed them as to the disposition of drug proceeds. Arnoldo Martinez Valencia worked with Trujillo, managing the drug distribution to Shelton, Washington. As the result of investigation, law enforcement seized a large amount of controlled substances, including 14 kilograms of methamphetamine, two kilograms of cocaine, and one kilogram of heroin.

This case was the product of a Central Valley High Intensity Drug Trafficking Area (HIDTA) investigation conducted by the Central Valley Marijuana Investigation Team (CVMIT). CVMIT is comprised of the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), California Department of Justice-Bureau of Investigation, California Fish and Wildlife, Tulare County Sheriff's Office, Kings County Sheriff's Office, and Fresno County Sheriff's Office. Assistant United States Attorney Kathleen Servatius is prosecuting the case.

If convicted, Trujillo faces a maximum statutory penalty of life in prison and a $10 million fine. The remaining defendants face 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 defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — A federal grand jury returned a 70-count indictment today against eight men, charging them with various firearms offenses involving manufacturing and dealing firearms without a license, United States Attorney Benjamin B. Wagner and ATF Special Agent in Charge Jill A. Snyder announced.

• Joseph Latu, 29, of Elk Grove, is charged with conspiracy to deal firearms without a license, dealing firearms without a license, conspiracy to manufacture and deal firearms without a license, possession of an unregistered short-barreled rifle, possession of an unregistered silencer, possession of an unserialized firearm.
• Algernon Tamasoa, 27, of Sacramento, is charged with conspiracy to deal firearms without a license, dealing firearms without a license, possession of an unserialized firearm, and distribution of MDMA.
• John Ortiz, 43, of Vallejo, and Keith White, 40, of Vallejo, are charged with conspiracy to deal firearms without a license, dealing firearms without a license, and possession of an unserialized firearm.
• Charles Tucker, 29, of Stockton, and Ionel Pascan, 28, of Riverbank, are charged with dealing firearms without a license, conspiracy to manufacture and deal firearms without a license, possession of an unregistered short-barreled rifle, possession of an unregistered silencer, and possession of an unserialized firearm.
• Daniel Bennett, 39, of Stockton, and David Bennett, 27, of Stockton, are charged with conspiracy to manufacture and deal firearms without a license.

According to court documents, between February 6 and September 28, 2015, on 24 occasions, the defendants, either individually or together, met with an undercover ATF agent and sold him a variety of firearms, including rifles, AR-15 type rifles, AR-15 type short-barreled rifles, revolvers, pistols, and silencers. In all, the sales involved 67 firearms and 38 silencers. Additionally, 71 firearms and 62 silencers were recovered during the arrest of certain defendants and ensuing execution of search warrants. In total, 238 firearms and silencers were recovered. Many of the firearms did not have a serial number or other identification markings and were manufactured from unfinished lower receivers, commonly known as “80 percent” lower receivers or “ghost guns.” None of the silencers had a serial number or other identification marking, as is required for firearms under the law. Further, many of the firearms were short-barreled rifles, which must be registered on the National Firearms Registration and Record. None of the short-barreled rifles sold to the undercover agent were registered to any of the defendants.

According to court documents, the firearms sold to the undercover agent were supplied by Latu, Tamasoa, White, Ortiz, Tucker, Pascan, Daniel Bennett, and David Bennett. Many of those firearms were manufactured from firearm parts by Tucker, Pascan, Daniel Bennett, and David Bennett. At the time he was manufacturing firearms, David Bennett worked as a San Joaquin County Sheriff correctional officer.

“High-capacity assault rifles, with silencers but without serial numbers, are some of the most lethal weapons that criminals can get their hands on,” said U.S. Attorney Wagner. “Manufacturing and selling these weapons for profit, without complying with federal licensing rules, is both a serious crime and a serious threat to public safety.”

“ATF's primary mission is to reduce violent crime and protect the public. With the seizure of 238 firearms and silencers, we have accomplished both,” said Special Agent in Charge Jill A. Snyder. “ATF will continue to pursue the individuals who chose to break the law and unlawfully traffic in firearms.”

Woodland Chief of Police Dan Bellini stated: “It was only through the collaboration of the various law enforcement agencies involved in this investigation that we were successful in bringing these charges.”

West Sacramento Chief of Police Tom McDonald stated: “This was a great example of mutual partnership between local and federal agencies in a coordinated effort to prevent crime and improve safety in our communities. The operation was successful in the interdiction of illegal firearms at their source before these firearms could reach the streets of our communities. Once again, I’d like to thank Woodland Police Chief Bellini and Resident Agent in Charge Graham Barlowe for this outstanding coordinated effort.”

According to complaints filed in the case, on several occasions in August and September, the undercover agent met with Latu, Tucker, and Pascan to discuss a large-scale purchase of AR-15 type rifles and silencers. Latu, Tucker, and Pascan agreed to manufacture 50 short-barreled AR-15 type rifles and 50 silencers, which would be sold to the undercover agent in early October.

On October 6, 2015, the undercover agent met with Latu, Tucker, and Pascan at the Yolo County Airport in Davis. Latu, Tucker, and Pascan brought 50 unmarked, unserialized short-barreled AR-15 type rifles and 50 unmarked, unserialized silencers, which they intended to sell to the undercover agent. After Latu, Tucker, and Pascan showed the undercover agent the firearms and silencers, a team of law enforcement officials arrested the three defendants. At the time of his arrest, Pascan had a handgun concealed in his waistband and a second handgun was under the front passenger seat of the vehicle. Later that day, law enforcement authorities arrested Tamasoa, White, and Ortiz. On October 14, 2015, authorities arrested Daniel Bennett and David Bennett.

In addition to the firearms charges, Tamasoa was also charged with selling MDMA to the undercover agent in a transaction on April 3, 2015. Tamasoa and Ortiz were separately indicted in an unrelated narcotics case on June 18, 2015. Both defendants were released on bond in that case. (Case # 2:15-cr-124 KJM)

This case is the product of an investigation by the U.S. Department of Justice Bureau of Alcohol, Tobacco, Firearms, and Explosives; the West Sacramento Police Department; the Woodland Police Department; with assistance from the Sacramento Police Department; the U.S. Drug Enforcement Administration; Vallejo Police Department; U.S. Customs & Border Protection’s (CBP) Air and Marine Operations (AMO); Yolo County Narcotics Enforcement Team; the Western States Information Network Inc., and the California Highway Patrol. Assistant United States Attorney Christiaan Highsmith is prosecuting the case.

If convicted, the defendants face maximum statutory penalties for the various charges as follows: the penalty for each count of conspiracy and each count of dealing firearms or manufacturing firearms without a license is five years in prison and a $250,000 fine, the penalty for each count of possessing a firearm without a serial number and each count of possessing an unregistered short-barreled rifle or silencer is 10 years in prison and a $10,000 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. The charges are only allegations; the defendants are presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — Federico Sandoval Aguilar, 43, of Biggs, was sentenced today by United States District Judge Kimberly J. Mueller to 17 and half years in prison for conspiring to distribute methamphetamine, United States Attorney Benjamin B. Wagner announced.

According to court documents, Aguilar was the head of a drug trafficking organization that was responsible for distributing pound-quantities of methamphetamine on a weekly basis in Butte County. Over a four-month period in 2013, Aguilar’s organization distributed over 49 pounds of methamphetamine. Aguilar was arrested at his residence in August 2013, where law enforcement officers found 15 cellphones, five guns, and $50,000 in cash concealed within a bathroom air vent.

This case was the product of an investigation by the Drug Enforcement Administration, the Butte Interagency Narcotics Task Force (BINTF), the Butte County Sheriff’s Office, the Butte County Probation Department, the Butte County District Attorney’s Office, the California Highway Patrol, the California Department of Justice Bureau of Gambling Control, the Chico Police Department, and the United States Marshals Service. Assistant United States Attorney Justin Lee prosecuted the case.

This case was part of an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was established in 1982 to conduct comprehensive, multi-level 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 former IRS employee was arraigned Wednesday in Fresno on an indictment charging her with conspiracy to defraud the United States, theft of public funds, and unauthorized access of computer information, United States Attorney Benjamin B. Wagner announced.

On October 8, 2015, a federal grand jury returned an indictment against Maria Mora, 55, of Fresno, and her ex-husband, Uriel Perez, 51, of Spring, Texas. Both defendants were arrested Wednesday. Mora pleaded not guilty, and a status conference is scheduled for December 14, 2015. Perez was charged with five counts of theft of public funds, and he will make his initial appearance in Texas.

According to court documents, Mora, an IRS employee since 1993, conspired with Perez to defraud the United States by falsely claiming Perez’s niece as a dependent on his tax returns in order to qualify for the Earned Income Credit. Mora prepared false tax returns for Perez for tax years 2008 through 2012. When the IRS did not issue the tax refunds for the 2008, 2009, and 2010 tax years, Mora prepared and submitted forged letters allegedly from Perez’s sister, claiming that his niece was Perez’s dependent. Mora also used her position as an IRS employee to access without authority tax records of Perez’s sister and brother to further the scheme to defraud the United States and steal funds. In total, Mora and Perez stole approximately $13,000 in tax refunds from the United States.

This case is the product of an investigation by the United States Treasury Inspector General for Tax Administration. Assistant United States Attorney Mia A. Giacomazzi is prosecuting the case.

If convicted, Mora faces a maximum statutory penalty of 10 years in prison and a $250,000 fine. She will also be precluded from being hired as an IRS employee in the future. 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.

FRESNO, Calif. — Three Bakersfield residents were sentenced Tuesday by Senior United States District Judge Anthony W. Ishii in connection with a mortgage fraud scheme in Bakersfield, United States Attorney Benjamin B. Wagner announced.

Eliseo Jara Jr., 36, was sentenced to six and a half years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud, and was ordered to pay $4.3 million in restitution. Sergio Jara, 34, was sentenced to six and a half years in prison for conspiracy to commit bank fraud, mail fraud, and wire fraud, and was ordered to pay $3,249,624 in restitution. Melissa Rochelle Jara, 34, was sentenced to time served and five years on supervised release for wire fraud, and was ordered to pay $271,171 in restitution. The Jaras were also ordered to forfeit their interests in six properties in Bakersfield, a 2007 Lexus, and approximately $110,419 seized from a bank account, and to pay personal forfeiture money judgments of $5,664,250 as to Eliseo Jara, $4,743,500 as to Sergio Jara, and $534,750 as to Melissa Jara. Prior to sentencing, Sergio and Melissa Jara also deposited approximately $148,000 with the Court toward their restitution obligations.

According to court documents, from 2007 to 2010, the Jaras conspired with other defendants to use straw buyers to purchase residential properties in Bakersfield developed by Jara Brothers Investments (JBI), owned by Eliseo Jara and Sergio Jara, and Pershing Partners LLC, owned by co-defendant Lucia Chavez. The conspirators paid straw buyers to purchase the properties from JBI and Pershing Partners, and funded the purchases using loans they obtained for the straw buyers from lenders based on false and fraudulent loan applications. Eliseo Jara and Sergio Jara owned and operated JBI, Paragon Home Mortgage, and Paragon Realty, and developed and sold residential real properties in the Bakersfield area using these companies. Melissa Jara was employed as a real estate broker at Paragon Realty and also owned and operated a limited liability company through which she sold a real property in furtherance of the scheme to defraud.

The loan applications in the names of straw buyers frequently contained false statements concerning the straw buyers’ employment status, income, assets, intent to occupy the properties as their personal residences, and source of down payments for the purchase of the properties. The conspirators concealed from the lenders that the property developers funded certain of the straw buyers’ down payments. The conspirators also submitted false supporting documentation to lenders such as false and altered bank account statements purporting to show that straw buyers had high bank account balances, false verifications of the straw buyers’ bank account funds, false verifications of rent purporting to be from straw buyers’ landlords, false pay stubs, and false verifications of employment.

This case is the product of an investigation by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation. Assistant U.S. Attorneys Kirk E. Sherriff and Henry Z. Carbajal III prosecuted the case.

Co-defendant Antonio Perez-Marcial was sentenced on May 12, 2014 to 46 months in prison, and co-defendant Arlene Jeanette Mojardin was sentenced on May 18, 2015 to 30 months in prison, for their roles in the conspiracy. Co-defendants Lucia Chavez, Joseph Chavez, and Candace Gonzales previously pleaded guilty to conspiracy to commit bank fraud, mail fraud, and wire fraud, and their sentencing hearings are set for October 19, 2015, as to Lucia and Joseph Chavez, and October 26, 2015, as to Candace Gonzales. Co-defendant Ricardo Salinas previously pleaded guilty to bank fraud, and his sentencing is also set for October 26, 2015.

A Colorado man was sentenced today to life in prison for kidnapping a toddler and producing child pornography, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Benjamin B. Wagner of the Eastern District of California and Special Agent in Charge Ryan L. Spradlin of ICE-HSI San Francisco Office.

Shawn McCormack, 31, of Colorado Springs, Colorado, was found guilty in April 2015 by a federal jury of four counts of sexual exploitation of a child and two counts of kidnapping.  Senior U.S. District Judge Anthony W. Ishii of the Eastern District of California presided over the trial and imposed the sentence. 

“McCormack’s depraved actions in this case are the stuff of nightmares.  While posing as a trusted friend and house guest, McCormack kidnapped his hosts’ toddler child and sexually abused the child in local motels and parked cars,” said Assistant Attorney General Caldwell.  “Through tireless efforts, law enforcement was able to rescue the victim from further abuse and ensure that McCormack never again will victimize another child.” 

“McCormack’s acts were both vile and heart-breaking, and they may have continued undetected for years but for the imaginative, dogged, and painstaking work of the investigators who brought him to justice,” said U.S. Attorney Wagner.  “We are gratified by the sentence McCormack received today, which is both severe and just, and while the harm that he inflicted cannot be undone, we can be assured that he will not be able to inflict further harm upon our most vulnerable.” 

“The sexual exploitation of children is a heinous crime that leaves lifelong emotional scars on young victims,” said Special Agent in Charge Spradlin.  “It is our duty to protect those who cannot protect themselves.  Together with our law enforcement partners, we will continue to pursue child predators and make them accountable for their dark and monstrous deeds.”

According to evidence presented at trial, McCormack, feigning to be a friend, traveled to a couple’s residence in Bakersfield, California, and stayed as an overnight guest on multiple occasions.  During several of the overnight stays, in the middle of the night, McCormack removed the couple’s toddler from the house and sexually abused the toddler in nearby motels and other locations, and then returned the toddler to the house before the parents awoke.  The evidence demonstrated that McCormack photographed and recorded the sexual abuse and distributed the images and videos to others online, including to an undercover officer with the Toronto Police Services.  McCormack also recorded his sexual abuse of a second toddler and distributed those images as well.

The trial evidence showed that, in 2010, during forensic analysis of the computer of another individual, Homeland Security Investigations (HSI) agents in Boston, discovered images and recordings distributed by McCormack.  After the agents identified the date, time and motel room in which one of the videos had been produced, they learned that McCormack had rented that motel room on the night when the recording was created. 

This case is part of an ongoing HSI-led investigation being conducted by U.S. Immigration and Customs Enforcement’s Field Offices in Bakersfield, California; Colorado Springs, Colorado; and Boston, Massachusetts; the Bakersfield Police Department; the Colorado Springs Police Department; Toronto Police Services and the FBI.  This case was prosecuted by Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorneys Patrick R. Delahunty and Megan A.S. Richards of the Eastern District of California.  

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.

FRESNO – Shawn McCormack, 31, of Colorado Springs, Colorado, was sentenced today by United States District Judge Anthony W. Ishii to life in prison for four counts of sexual exploitation of a child and two counts of kidnapping, announced Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Benjamin B. Wagner and Special Agent in Charge Ryan L. Spradlin of ICE-HSI San Francisco Office.

McCormack was found guilty in April 2015 by a federal jury of kidnapping and producing child pornography involving two toddlers. According to evidence presented at trial, McCormack, feigning to be a friend, traveled to a couple’s residence in Bakersfield, and stayed as an overnight guest on multiple occasions. During several of the overnight stays, in the middle of the night, McCormack snuck the couple’s toddlers out of the house and recorded his sexual abuse of them at a variety of locations, including a nearby motel, outdoors and in his truck. McCormack then returned the toddlers to the house before the parents awoke. The evidence demonstrated that McCormack distributed the images and videos of his abuse to others online, including an undercover officer with the Toronto Police Services.

Homeland Security Investigations agents in Boston found images and recordings distributed by McCormack on a separate defendant’s computer in Massachusetts. The agents were able to identify the date, time and specific hotel room where one of the videos had been produced. When agents visited that hotel, they learned that McCormack had rented that hotel room on the night when the recording was created. During the investigation, agents uncovered evidence that McCormack had recorded his abuse of both of the couple’s children.

The case is part of an ongoing HSI-led investigation that originated in Boston in 2010 when the U.S. Attorney’s Office of the District of Massachusetts and HSI Boston arrested and convicted Robert Diduca on child pornography production charges. Forensic analysis of Diduca’s computer led investigators to the Netherlands where a Dutch national was arrested and charged with production, distribution and possession of child pornography, as well as the sexual assault of 87 minors. Since that time, a worldwide network of child pornographers has been, and continues to be, unraveled, as multiple offenders are prosecuted, including McCormack. Defendants and victims continue to be identified around the world. To date, more than 140 children have been rescued and 43 perpetrators arrested worldwide as a result.

“McCormack’s depraved actions in this case are the stuff of nightmares. While posing as a trusted friend and house guest, McCormack kidnapped his hosts’ toddler child and sexually abused the child in local motels and parked cars,” said Assistant Attorney General Caldwell. “Through tireless efforts, law enforcement was able to rescue the victim from further abuse and ensure that McCormack never again will victimize another child.”

“McCormack’s acts were both vile and heart-breaking, and they may have continued undetected for years but for the imaginative, dogged, and painstaking work of the investigators who brought him to justice,” said U.S. Attorney Wagner. “We are gratified by the sentence McCormack received today, which is both severe and just, and while the harm that he inflicted cannot be undone, we can be assured that he will not be able to inflict further harm upon our most vulnerable.”

“The sexual exploitation of children is a heinous crime that leaves lifelong emotional scars on young victims,” said HSI Special Agent in Charge Spradlin. “It is our duty to protect those who cannot protect themselves. Together with our law enforcement partners, we will continue to pursue child predators and make them accountable for their dark and monstrous deeds.”

This case was the product of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) field offices in Bakersfield, California; Colorado Springs, Colorado; and Boston, Massachusetts; the Bakersfield Police Department; the Colorado Springs Police Department; and the Toronto Police Services. Assistant U.S. Attorneys Patrick R. Delahunty and Megan A.S. Richards of the Eastern District of California and Trial Attorney Maureen C. Cain of the Criminal Division’s Child Exploitation and Obscenity Section 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.

SACRAMENTO, Calif. — Denise Wasicki, 40, of Yuba City, was sentenced today by Chief U.S. District Judge Morrison C. England Jr. to two years and nine months in prison, to be followed by three years of supervised release, for two counts of mail fraud in a scheme to defraud a payroll staffing company out of more than $500,000, United States Attorney Benjamin B. Wagner announced.

According to court documents, Wasicki had been employed by a staffing and payroll services agency based in Hanover, Maryland to fill a temporary position at a hospital in Yuba City. When she was terminated by the hospital, Wasicki created a fictional company called Healthcare Quality Management Group (HQMG) with a fictional client that was purportedly a medical office in Yuba City. Posing as “Jackie Stemmons,” Wasicki engaged the staffing agency to provide staff for the medical office and gave them an alias she had used in the past, “Denise Erika Moutrey,” as the person who should be hired. Because Wasicki had been employed by the agency previously, posing as Moutrey, they were able to expedite her hiring and ultimately placed her in an office manager position.

Between July 28, 2009, and May 12, 2010, Wasicki sent time cards and requests for expense reimbursements to the agency for herself and for an assistant office manager at the fictional medical office. As part of the scheme, Wasicki sent the agency fraudulent checks to reimburse it for payroll services it provided, all of which were drawn on fictitious accounts and all of which bounced. As a result of her actions, the agency sustained a loss of approximately $400,000 and spent an additional $100,000 investigating the fraud.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney André M. Espinosa is prosecuting the case.

Wasicki is scheduled to self-surrender to begin serving her sentence on January 5, 2016.

FRESNO, Calif. — A federal grand jury returned a three-count indictment today against Rich Xiongpao, 42, of Fresno, charging him with conspiring to manufacture marijuana, manufacturing marijuana in connection with a large-scale cultivation operation in a national forest, and depredation of public lands and resources, United States Attorney Benjamin B. Wagner announced.

According to court documents, on September 29, 2015, Xiongpao was arrested after he was observed by U.S. Forest Service agents tending a marijuana site in the Sierra National Forest in Madera County. Agents removed approximately 428 marijuana plants from the site.

According to the criminal complaint filed in this case, the damage to the national forest land and resources caused by the marijuana cultivation operation will exceed $1,000. Throughout the site, multiple species of natural vegetation had been cut to accommodate the cultivation operation. Additionally, in order to water the marijuana cultivation, a water reservoir diverted the flow of pristine spring water from a riparian area to the site. A large amount of trash, numerous containers of chemicals, fertilizers, and unknown substances were found throughout the area.

This case is the product of an investigation by the U.S. Forest Service. Assistant United States Attorney Daniel Griffin is prosecuting the case.

Xiongpao is scheduled to be arraigned on the indictment on October 14, 2015, in federal court in Fresno. If convicted of the drug offenses, Xiongpao faces a minimum statutory penalty of five years and a maximum statutory penalty of 40 years in prison and a $5 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. — A former web producer for KTXL FOX40, a Tribune Company-owned television station in Sacramento, was convicted today for his role in a conspiracy to hack into the servers of the Los Angeles Times and the Tribune Company, following an eight-day trial before U.S. District Judge Kimberly J. Mueller, United States Attorney Benjamin B. Wagner and FBI Special Agent in Charge Monica M. Miller announced.

Matthew Keys, 28, of Vacaville, was found guilty by a federal jury in Sacramento of one count of conspiracy to make unauthorized changes to the Tribune Company’s websites, and damage its computer systems; one count of transmitting malicious code; and one count of attempted transmission of malicious code.

“Although this case has drawn attention because of Matthew Keys’ employment in the news media, this was simply a case about a disgruntled employee who used his technical skills to taunt and torment his former employer,” said U.S. Attorney Wagner. “Although he did no lasting damage, Keys did interfere with the business of news organizations, and caused the Tribune Company to spend thousands of dollars protecting its servers. Those who use the Internet to carry out personal vendettas against former employers should know that there are consequences for such conduct.”

“This case demonstrates the FBI’s commitment to identify and investigate those who harass former employers by using insider knowledge to intentionally exploit computer systems—whether directly or by proxy—to damage the reputation and operations of a business,” said Special Agent in Charge Monica M. Miller of the Federal Bureau of Investigation’s Sacramento field office. “Individuals who use ‘bully’ tactics to attack computer networks will face justice for their actions.”

According to evidence presented at trial, in December 2010, Keys provided members of the hacker group Anonymous with login credentials for a computer server belonging to FOX40’s corporate parent, the Tribune Company. Keys identified himself on an Internet chat forum as a former Tribune Company employee and provided members of Anonymous with a login and password to the Tribune Company server. After providing login credentials, Keys encouraged the Anonymous members to disrupt several Tribune companies and urged that the Los Angeles Times should be “demolished.” According to the evidence at trial, at least one of the computer hackers used the credentials provided by Keys to log in to the Tribune Company server and make changes to the web version of a Los Angeles Times news feature. In addition, according to the trial evidence, Keys changed the access credentials of FOX40 employees, interfering with their ability to access company servers, and obtained email addresses for FOX40 viewers, to whom he sent disparaging emails about the company. Keys’ actions caused the defaced story to be on the mobile version of the L.A. Times for a day, and resulted in thousands of dollars in costs for the Tribune Company in responding to the breach of its systems by shutting backdoor access credentials and assessing the full extent of the damage.

The case is the product of an investigation by the Federal Bureau of Investigation. Deputy Chief James A. Silver of the Criminal Division’s Computer Crime and Intellectual Property Section (CCIPS) and Assistant U.S. Attorneys Matthew D. Segal and Paul A. Hemesath of the Eastern District of California are prosecuting the case.

Keys is scheduled to be sentenced on January 20, 2016 by Judge Mueller. The sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — Cory Kasinger, 42, of Jackson, the Chief Operating Officer of Mariah Resources Inc., pleaded guilty today to one misdemeanor count of embezzling funds from a health care benefit program and agreed to pay $36,980 in restitution, United States Attorney Benjamin B. Wagner announced.

According to court documents, between March 1, 2010, and May 31, 2010, Kasinger withheld approximately $19,628 from the paychecks of Mariah Resources employees, which was to be applied towards the premiums of their health care benefit program. Instead of Kasinger paying the premiums, he returned these funds to the company’s general fund. As a result, the employees’ health care benefit program was terminated. The termination date was retroactive to March 1, 2010, which caused Mariah Resources employees to incur approximately $16,569 in out-of-pocket medical costs. Additionally, when the insurer sent $782 to Mariah Resources to reimburse former employees who were paying into the company’s COBRA program, Kasinger put the money into the general fund and did not pass it back to the former employees as he should have.

This case is the product of an investigation by the Department of Labor, Employee Benefits Security Administration. Special Assistant United States Attorney Elliot Wong is prosecuting the case.

Kasinger is scheduled to be sentenced on January 6, 2016 by United States Magistrate Judge Kendall J. Newman. Kasinger faces a maximum sentence of one year in prison, a fine of $100,000, and a one-year term of supervised release. The actual sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

SACRAMENTO, Calif. — The lead defendant in a shoplifting ring that stole over $2.5 million in retail goods and resold them on eBay was sentenced today to seven years in prison, United States Attorney Benjamin B. Wagner announced. A restitution hearing is set for December 1, 2015.

Jason Samuel Schroeder, 36, of Sacramento, is the sixth defendant sentenced to prison in this case. Kirk Arthell Sanderson, 37, of Walnut Creek, was previously sentenced to four years in prison; John Judah Young, 34, of Sacramento, was sentence to two and one half years in prison; and David Reed, 29, of Vacaville, was sentenced to one year in prison. Two others, Andrea Lynn Turner, 34, of Roseville, and Joshua Roy Payne, 30, of Vacaville, were also sentenced to two months in prison. Jason Nathaniel Reed, 36, of Portland, Oregon, is scheduled for sentencing later this year.

On March 3, 2015, Schroeder pleaded guilty to interstate transportation of stolen property. According to the plea agreement, in October 2012, a sporting goods company with retail stores in Sacramento called the FBI stating that an eBay account was listing items for sale it suspected were stolen. Follow-up investigation revealed that the account was controlled by Schroeder using co-defendant Young’s name, and since 2009, it listed more than 17,000 items for sale, including sporting goods, household items, recreational equipment and pet care products. Most of the items were listed as new or with tags. Virtually all of the items sold on the account were stolen by Schroeder, Young, or others, and were sold at a discount to buyers across the country.

The proceeds of the sales were deposited into a PayPal account also controlled by Schroeder and then laundered through ATM withdrawals, cash-back purchases, and the purchase of more than $600,000 in money orders. Surveillance of Schroeder revealed that he spent multiple hours a day traveling to different stores and appearing to steal a variety of items. Those items were later listed on his eBay account.

Wiretaps and surveillance also revealed the specific roles of other members of the conspiracy. According to court documents, David Reed assisted Schroeder with the packaging and shipment of the stolen merchandise. Sanderson assisted in moving items away from Schroeder’s residence when he learned of the federal investigation. Turner and Payne provided false statements to federal agents upon being interviewed regarding their assistance to Schroeder.

“This case is a result of a combined law enforcement effort against a criminal organization motivated by greed and profit,” said Thomas McMahon, Acting Special Agent in Charge, IRS Criminal Investigation. “These defendants stole millions of dollars from retailers, which ultimately got passed down to the American consumer. IRS Criminal Investigation will continue to provide its financial expertise as we work alongside our law enforcement partners to bring criminals to justice.”

“Schroeder—well known to the loss prevention professionals in California and other states—brazenly and habitually shoplifted from retailers for the sole purpose of selling the stolen merchandise to unsuspecting customers online. The ring’s impact was significant and forever changed how a variety of goods are displayed at retail locations in both states,” said Special Agent Brandon Simpson of the Federal Bureau of Investigation’s Sacramento field office. “We are thankful to IRS-Criminal Investigation, the United States Postal Inspection Service, and eBay for their partnership in this successful investigation.”

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 on this investigation and will continue to protect the public and the U.S. Mail against all forms of criminal misuse.”

This case is the product of an investigation by the Federal Bureau of Investigation, the Internal Revenue Service-Criminal Investigation, and the United States Postal Inspection Service. Assistant United States Attorney Jared C. Dolan is prosecuting the case.

FRESNO, Calif. — Jonathan Cornelius Bourne, 59, of Mammoth Lakes, was arraigned today after a federal grand jury returned a 21-count indictment against him, charging him with violations of the Archeological Resources Protection Act, United States Attorney Benjamin B. Wagner announced.

According to counts one through eight of the indictment, in 2010 and 2011, Bourne transported archeological resources from Nevada into California that were found on public lands and were over 100 years old. Among the items removed were obsidian biface tools, Steatite pendants, and glass beads allegedly removed from a tribal cremation and burial site. Counts nine through 14 charge Bourne with unauthorized excavation and removal damage or defacement of archaeological resources in Death Valley National Park, Inyo National Forest, and Sierra National Forest. The Native American cultural artifacts taken in 2010, 2011, and 2014, such as dart points, stone tablets, and a juniper bow stave were over 100 years old.

According to counts 15 through 20 in the indictment, Bourne willfully injured property of the United States by excavating, removing damaging and defacing cultural artifacts on land administered by the United States Forest Service and the National Park Service in the Counties of Mono, Inyo, and Fresno.

At the arraignment, Bourne pleaded not guilty to the charges and was released on his own recognizance. His next court hearing is a status conference before United States Magistrate Judge Sheila Oberto on December 7, 2015.

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

If convicted, Bourne faces a maximum statutory penalty of 98 years in prison and a $2,030,000 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.

SACRAMENTO, Calif. — Kimberly Jones, 50, of West Sacramento, pleaded guilty today to wire fraud and agreed to submit to a restitution order of at least $1.5 million, United States Attorney Benjamin B. Wagner announced.

According to court documents, from September 2001 through August 2011, Jones was employed as a Senior Claims Representative, or claims adjuster, at Gallagher Bassett Services Inc. in its Sacramento office. Gallagher Bassett was a third-party administrator that managed, among other things, workers’ compensation claims in California on behalf of Pennsylvania Manufacturers’ Association Insurance Group (PMA). Co-defendant Marcus Buckley, 42, of Weatherford, Texas, played professional football in the National Football League between 1993 and 2000 for seven seasons with the New York Giants. During this time period, the Giants had workers’ compensation insurance coverage through PMA.

In 2006, Buckley filed a worker’s compensation claim against the Giants for cumulative stress injuries sustained while playing football, in part, in California. In November 2010, the claim was settled for $300,000.

After his claims had been settled, however, between late 2010 and June 2011, Buckley prepared and filed numerous additional requests for reimbursement under his closed claim. He prepared fictitious invoices and statements from medical providers for medical services purportedly provided to him and fictitious credit collection notices from collection agencies purportedly seeking payment from Buckley for past due medical bills. Buckley sent the fictitious invoices, statements, and credit collection letters to Jones who had Gallagher Bassett checks made payable to Buckley. In total, Buckley received more than $1,588,000 to which he was not entitled.

This case is the product of an investigation by the Federal Bureau of Investigation. Assistant United States Attorney Michael M. Beckwith is prosecuting the case.

Jones is scheduled to be sentenced on January 7, 2016, by United States District Judge Troy L. Nunley. Jones faces a maximum sentence of 20 years in prison, a fine of $250,000 or twice the gross gain or loss in the case, and a three-year term of supervised release. The actual sentence will be determined at the discretion of the court after consideration of any applicable statutory sentencing factors and the Federal Sentencing Guidelines, which take into account a number of variables.

Charges against Buckley are pending. The charges are only allegations; he is presumed innocent until and unless proven guilty beyond a reasonable doubt.

SACRAMENTO, Calif. — A federal grand jury returned an indictment today against Matthew D. Muller, 38, of South Lake Tahoe, charging him with one count of kidnapping, United States Attorney Benjamin B. Wagner announced.

According to court documents, it is alleged that in the early morning hours of March 23, 2015, Muller broke into a residence in Vallejo, restrained the male occupant and kidnapped the female occupant. It is further alleged that he demanded a $15,000 ransom, held her for two days, and ultimately released her in Huntington Beach. Muller was identified as a suspect in the Vallejo kidnapping following an investigation and his arrest on residential home-invasion burglary charges that occurred in Alameda County on June 5, 2015.

“The bizarre circumstances of the events in Vallejo in March complicated the investigation of this matter,” said U.S. Attorney Wagner. “But the Vallejo Police Department, the FBI, and our law enforcement allies in Alameda County have done excellent work in recent months to bring this investigation to a conclusion.”

This case is the product of an investigation by the Federal Bureau of Investigation, the Alameda County Sheriff’s Office, the Alameda County District Attorney’s Office, the Dublin Police Services and the Vallejo Police Department. Assistant United States Attorney Matthew D. Segal and Heiko P. Coppola are prosecuting the case.

Muller is currently being held in the Sacramento County Jail. He is scheduled to be arraigned on Monday, October 5, 2015, before United States Magistrate Judge Kendall J. Newman at 2:00 p.m.

If convicted, Muller faces 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. The charges are only allegations; the defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.