Northern District of California

SAN FRANCISCO – A federal grand jury indicted Duane Kurt Makela on charges he committed five bank robberies in the San Francisco Bay Area, announced Adam A. Reeves, Attorney for the United States acting under authority conferred by 28 U.S.C. § 515, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. 

According to the indictment filed yesterday and unsealed this morning, between October 19, 2018, and February 4, 2019, Makela, 49, of Oakland, used force, violence, and intimidation, to rob a credit union and four banks.  The robberies, four of them armed, occurred on the following dates and locations:

• October 19, 2018 – Meriwest Credit Union in Mountain View, Calif.
• October 22, 2018 – Chase Bank in South San Francisco, Calif.
• November 5, 2018 – U.S. Bank in Alameda, Calif.
• December 23, 2018 – U.S. Bank in Castro Valley, Calif.
• February 4, 2019 – Wells Fargo Bank in Palo Alto, Calif. 

Makela allegedly stole a total of $33,301.00 from the credit union and banks.  With regard to the first four incidents, Makela was charged with armed bank robbery, in violation of 18 U.S.C. § 2113(a) and (d).  For the last incident, Makela was charged with bank robbery, in violation of 18 U.S.C. § 2113(a).   

An indictment merely alleges that crimes have been committed and Makela, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.  The defendant faces a maximum statutory penalty of 25 years in prison for each of the four armed bank robbery charges and 20 years in prison for the remaining bank robbery charge.  Additional fines, forfeitures, restitution, and special assessments may also be imposed.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.   

Makela appeared before U.S. Magistrate Sallie Kim today for his initial appearance and arraignment.  Magistrate Judge Kim ordered Makela to be held in federal custody pending the outcome of the case.  Makela’s next appearance is scheduled for May 23, 2019, at 1:30 p.m., before the Honorable William H. Orrick, U.S. District Judge. 

Assistant U.S. Attorney Nicholas Walsh is prosecuting the case with the assistance of Margoth Turcios.  The prosecution is the result of investigations by the FBI with assistance from the police departments of Mountain View, South San Francisco, Alameda, and Palo Alto, as well as the Alameda County Sheriff’s Office. 
 

SAN FRANCISCO- Jaray Simmons, Nakia Jones, and Siddiq Abdullah pleaded guilty today to their respective roles in a scheme to conduct home invasion robberies in California to obtain marijuana for resale on the East Coast, announced United States Attorney David L. Anderson and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The guilty pleas were accepted by the Honorable Edward M. Chen, U.S. District Judge.

According to the guilty pleas, Simmons, 29, of Winston-Salem, N.C., Jones, 23, of Richmond, Va., and Abdullah, 22 , of Richmond, Va., were three of eight codefendants who agreed to target houses in northern California they believed contained bulk quantities of marijuana and the cash proceeds of marijuana sales.  The eight codefendants agreed to conduct armed home invasion robberies of the targeted homes and to distribute for a profit on the East Coast the marijuana they were able to steal.  

In March of 2018, Simmons traveled by car with three codefendants from Winston-Salem to California to carry out the plan.  When the four codefendants reached Sacramento, they obtained multiple weapons and one of the codefendants purchased supplies including jackets, duffel bags, scissors, a vacuum sealer, and vacuum bags.  The codefendants purchased these items to package for shipment the marijuana stolen during the home invasion robberies. Meanwhile, Jones, Abdullah, and an additional two co-defendants traveled from Richmond to Washington, D.C., and then from Washington by plane to San Francisco.  After arriving in Northern California, the codefendants obtained a supply of firearms and ammunition.  

All eight defendants met in Novato, Calif., on March 12, 2019, and traveled in two cars from Novato to a residential street in Petaluma.  The plea agreements provide the following facts regarding the events of the evening:

A codefendant kicked open the front door of the residence and six of the coconspirators entered.  The residence was occupied by a man and a woman who were forced inside the bathroom and bound with duct tape.  At least one codefendant threatened to kill the victims if they did not cooperate, at least one codefendant pointed a firearm at the victims to threaten them into providing the location of marijuana and money, and at least one codefendant struck the male victim inside the bathroom in an effort to get him to disclose the location of marijuana and money.  The victims explained they did not have any marijuana and that the defendants were in the wrong house. 

Six of the defendants walked to a nearby second house.  The group separated into two smaller groups and broke into the second house through both the front door and a side door.  A codefendant grabbed a telephone from a woman occupant and threw it on the floor.  At least one codefendant questioned the female victim about the location of marijuana and money.  The woman was dragged by the hair and locked inside a closet.  The woman said there was no marijuana in the house but that she had money in a drawer.   

Two codefendants who were outside the second house encountered a neighbor.  They brought the neighbor into the second house, pointed a gun at the victim, tied him with an electrical extension cord, and repeatedly struck him while asking where the marijuana and money was located.  The male victim repeated that the defendants were in the wrong house.  

The defendants heard the police approaching and left the houses.  The defendants attempted to escape in the two vehicles in which they arrived.  The police gave chase.  Eventually, all the codefendants were apprehended, some as they abandoned their vehicle, others when they arrived at San Francisco International Airport later in the afternoon of March 12, 2018, and one defendant several days later.  

On April 26, 2018, a federal grand jury indicted Simmons, Jones, and Abdullah and the other five defendants charging all with conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); conspiracy to possess with intent to distribute marijuana, in violation of 21 U.S.C. § 846; two counts of attempted robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a) and 2; and possession or use of a firearm during and in relation to and in furtherance of a crime of violence and a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A)(i) and 2.  Simmons, Jones, and Abdullah all pleaded guilty to one count each of conspiracy to commit robbery affecting interstate commerce, conspiracy to possess with intent to distribute marijuana, and use or possession of a firearm.  

Judge Chen scheduled Jones’s sentencing hearing for July 31, 2019, Simmons’s sentencing hearing for August 7, 2019, and Abdullah’s sentencing hearing for August 14, 2019.  The maximum statutory penalties for conspiracy to commit robbery affecting interstate commerce is 20 years in prison and a $250,000 fine.  The maximum statutory penalties for conspiracy to possess with intent to distribute marijuana is 5 years in prison and a $250,000 fine.  The maximum statutory penalties for use or possession of a firearm during and in relation to a crime of violence is life in prison and a $250,000 fine.  Additional fines, forfeitures, and restitution also may be ordered; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Christiaan Highsmith is prosecuting the case with the assistance of Lance Libatique.  The prosecution is the result of an investigation by the FBI, the Sonoma County Sheriff’s Department, and the Santa Rosa Police Department.    
 

SAN JOSE – Kenneth Tam was sentenced to 45 months in prison for his role in a money laundering and witness tampering scheme related to the sale of stolen computer parts announced United States Attorney David L. Anderson and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Kareem Carter.  The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.

Tam, 59, formerly of San Jose, pleaded guilty to the charges on February 4, 2019.  According to the plea agreement, Tam admitted that from January 2006 through July 2010, he was an employee of a San Francisco Bay Area manufacturer of computer parts.  During that period, and until at least the end of 2010, Tam knowingly obtained stolen merchandise from his employer and sold it to his co-conspirator, Cuong Cao Dang.  Dang owned a company whose business was overwhelmingly that of buying and selling merchandise stolen from Tam’s employer.  Tam admitted that in most instances, he would take cash from Dang as payment for delivery of stolen computer parts.  Tam further admitted that he would deposit the proceeds from the stolen equipment into accounts owned by a foreign national who had given Tam power-of-attorney over the accounts.

Tam’s plea agreement describes various aspects of the money-laundering and witness tampering schemes.  For example, on February 3, 2010, Dang provided Tam with a check for $500,000 made out to a foreign national whose name Tam was using as the nominal owner of accounts Tam controlled.  The check was provided to Tam for payment of previously provided stolen parts, as well as in pre-payment for additional stolen parts that Tam planned to provide.  Nevertheless, Tam instructed Dang to write “loan” on the memo line of the check to disguise the true purpose of the payment.  Then, after Tam learned there was an investigation into Dang’s company, Tam gave Dang a backdated check for $500,000 to make it appear as though a loan was made and re-paid.  Also, Tam provided the foreign national with a false cover story to use if she were contacted by law enforcement agents investigating the accounts.

On October 26, 2017, a federal grand jury handed down a superseding indictment charging Tam with two counts of witness tampering, in violation of 18 U.S.C. § 1512(b)(1), as well as one count each of conspiracy to commit mail fraud, in violation of 18 U.S.C. 1349; money laundering, in violation of 18 U.S.C. § 1956; structuring financial transactions, in violation of 31 U.S.C. § 5324(a)(1) and (a)(3); making a false statement to government agents, in violation of 18 U.S.C. § 1001; and contempt, in violation of 18 U.S.C.§  401(3).  Tam pleaded guilty to the money laundering count and one count of witness tampering.  The remaining counts were dismissed.  

In addition to the prison term, Judge Davila sentenced Tam to serve two years of supervised release and to pay $3,475,958.14 in restitution.  Judge Davila ordered Tam to surrender on or before August 21, 2019, to begin serving his prison term.  

On December 11, 2015, Dang pleaded guilty for his role in the scheme and on October 31, 2017, Judge Davila sentenced Dang to 90 months in prison to be followed by three years of supervised release.              

Assistant United States Attorneys Amie Rooney and Robert Leach are prosecuting the case with the assistance of Lakisha Holliman and Elise Etter.  The prosecution is the result of an investigation by the IRS-CI and the Santa Clara REACT Task Force.   
 

SAN JOSE – Ariel Guizar-Cuellar pleaded guilty in federal court in San Jose today to sex trafficking of children and sexual exploitation of children, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The Honorable Beth Labson Freeman, U.S. District Judge, accepted the plea.

In pleading guilty, Guizar-Cuellar, 38, of San Jose, admitted that from approximately September of 2014 until approximately January of 2016, he and various co-conspirators operated an unlawful commercial sex venture in San Jose and Santa Clara that sold the sexual services of adult women and at least three minor girls.    

Guizar-Cuellar was the leader, primary facilitator, enforcer, and main financial beneficiary of the unlawful commercial sex venture.  He recruited the minors through social media networks.  He took pictures of the minors and caused those pictures to be posted in online advertisements for their sexual services on “backpage.com.”  He transported the minors to various hotels and motels in the Bay Area to facilitate their prostitution dates with adult customers.  He provided condoms for the minors to use during their prostitution dates and collected money from the minors after their dates.  He also admitted that he made a recording of one of the minors engaging in sexual activity during a prostitution date in Sunnyvale and gave methamphetamine to some of the minors to entice them to continue working for him.  He specifically told the minors to conceal their true ages.

On April 7, 2016, a federal grand jury indicted Guizar-Cuellar charging him with one count of conspiracy to commit sex trafficking of children, in violation of 18 U.S.C. § 371; three counts of sex trafficking of children, in violation of 18 U.S.C. § 1591(a)(1) and (b) as to each minor victim; and one count of sexual exploitation of children, in violation of 18 U.S.C. § 2251(a) and (e).  Guizar-Cuellar pleaded guilty to all counts charged in the indictment.

Guizar-Cuellar is currently in federal custody awaiting sentencing.  Judge Freeman scheduled his sentencing hearing for October 22, 2019.  The maximum statutory penalty for each violation of 18 U.S.C. § 1591 is life in prison with a mandatory minimum sentence of 10 years. The maximum statutory penalty for child exploitation is 30 years, with a mandatory minimum of 15 years in prison.  The maximum prison term for the conspiracy charge is five years in prison. Restitution is mandatory to all victims of sex trafficking.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Marissa Harris is prosecuting the case with the assistance of Tong Zhang.  The prosecution is the result of an investigation by the FBI, the San Jose Police Department, and the Santa Clara County District Attorney’s Office Bureau of Investigation, with assistance from the Santa Clara County Human Trafficking Task Force. 
 

SAN FRANCISCO – Ramesh Kris Nathan was indicted on charges related to an alleged investment fraud scheme, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  In an indictment filed January 17, 2019, and unsealed today, a federal grand jury charged Nathan with fraudulently obtaining investors for a company with no legitimate underlying business activities by promising their money would be used to fund research and develop prototype spacecraft, space-related propulsion systems, and related technologies.  

According to the indictment, between June 2016 and August 2017, Nathan, 37, a U.S. national whose last known address is in Chennai, India, created a Nevada corporation called Relativity Research Fund, Inc. (Relativity).  Relativity had no legitimate underlying business activities.  Instead, Nathan allegedly used the corporation to induce potential investors to provide funds for non-existent business enterprises.  Further, Nathan allegedly opened and maintained a bank account using the name and personal identification of an investor who did not authorize Nathan to do so.  

The indictment further describes how Nathan allegedly induced potential investors to provide funds by making false and misleading statements on Relativity’s website and in emails to potential investors.  For example, Nathan held out the company as being involved in the development of numerous technology-related enterprises including advanced robotics, space travel technology, and combustion-free propulsion systems.  Nathan also represented that the company had a $10,000,000 capital investment, had seven worldwide offices, employed 15,456 employees, generated gross revenue of $36.87 billion in the fourth quarter of 2016, and earned a profit of $29.8 billion in the fourth quarter of 2016.  In addition, Nathan represented that Relativity had completed all of the requirements for listing its shares on the Nasdaq Private Market, and that investors would be able to trade their Relativity shares on that market.  According to the indictment, none of these facts was true.  Further, Nathan allegedly either spent the investor funds on his own personal expenses or transferred investor funds to his overseas bank account, his mother, or his then-girlfriend.  

In sum, the indictment charges Nathan with six counts of wire fraud, in violation of 18 U.S.C. § 1343, two counts of money laundering, in violation of 18 U.S.C. § 1957; and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.   Nathan was arrested yesterday in Los Angeles and made his initial appearance today.  His next appearance has not be scheduled as of the time of this writing. 

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years in prison and a maximum $250,000 fine on each count of wire fraud as well as 10 years in prison and a $250,000 maximum fine for each count of money laundering.  Further, if convicted of the aggravated identity theft count, Nathan faces a mandatory two years in prison consecutive to any other sentence, and a maximum $250,000 fine.  In addition, the court also may order an additional term of supervised release, fines or other assessments, and restitution, if appropriate. However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Special Assistant U.S. Attorney Christopher Vieira is prosecuting this case with the assistance of Kimberly Richardson.  This prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

SAN JOSE – Antonio Cruz was sentenced today to 36½ years in prison and ordered to pay $324,915.59 in restitution for his role in a racketeering conspiracy that involved three murders, two attempted murders, one robbery affecting interstate commerce, and three armed bank robberies, announced United States Attorney David L. Anderson and FBI Special Agent in Charge John F. Bennett.  The sentence was handed down on May 1, 2019, by the Honorable Lucy H. Koh, U.S. District Judge.

Cruz, 32, of Salinas, pleaded guilty to the charges on October 3, 2018.  According to the plea agreement, Cruz admitted to being a member of the Salinas-based Norteño street gang clique known as “Santa Rita.”  Cruz also admitted to being a member of a larger racketeering enterprise known as the Salinas Norteños Enterprise (the “Enterprise”) consisting of several violent Norteño cliques in Salinas.  Cruz was a member of both groups from 2009 to 2011.  Santa Rita and other Norteño cliques in Salinas committed acts of violence for the benefit of the gang, including murder, attempted murder, and robbery.  Among other acts of violence, members of Santa Rita sought to attack and kill members of rival Sureño gang cliques, as well as members of other rival gangs.

The murders, attempted murders, and robberies to which Cruz pleaded guilty took place between December 2009 and January 2011.  On December 2, 2009, Cruz went to Lohman Street in Salinas to shoot an individual that he and his fellow Enterprise members selected as a target and believed was a rival Sureño gang member.  Cruz staked out the victim’s house in the early morning hours until the victim came out of his house and began warming up his car.  Cruz approached and shot the victim multiple times with a .380 caliber handgun.  The victim died as a result of Cruz’s attack.

On July 12, 2010, Cruz went to the Northgate apartment complex in Salinas with a fellow Enterprise member to shoot individuals they believed were Sureño gang members who had recently moved into the complex.  Cruz armed his fellow Enterprise member with a firearm that was used to shoot at two victims working on a car in the parking lot of the apartment complex.  The gunfire struck one of the victims in the lower back.  The .45 caliber pistol used in the shooting was later recovered from Cruz’s backpack when Cruz was arrested in 2012.

On August 17, 2010, Cruz and a fellow Enterprise member drove around Salinas hunting for a Sureño to shoot and kill.  When they spotted an individual they believed was a rival Sureño, Cruz stopped the car near the victim and Cruz’s passenger got out of the car and fired his gun at the victim multiple times.  The victim died as a result of the shooting.

On November 19, 2010, Cruz and other Enterprise members learned there was a house party at a residence the Enterprise had identified as a Sureño hang out.  A fellow Enterprise member conducted reconnaissance and confirmed that Sureños were having a party at the residence, and then patrolled the neighborhood in his car as a lookout for law enforcement.  Cruz drove two codefendants to shoot up the party and supplied one of the shooters with a .40 caliber Glock handgun with an extended magazine.  Cruz remained in his vehicle while the other two Enterprise members approached the house on foot.  When they got to the driveway, one of the gunmen fired more than 10 rounds, killing one victim and injuring another.  

Cruz also acted as the getaway driver in several armed robberies, including the June 2, 2010, robbery of the Zales jewelry store in Gilroy; the November 23, 2010 robbery of the Bank of the West in San Jose; the December 16, 2010 robbery of the Wells Fargo Bank in Watsonville; and the January 7, 2011 robbery of the Rabobank in Watsonville.  In each robbery, Enterprise members entered the establishment and brandished firearms to induce employees to turn over cash and jewelry.  The Enterprise stole jewelry with a retail value of more than $800,000, and cash proceeds estimated at more than $92,000.

On October 28, 2015, a federal grand jury indicted Cruz and eight other Salinas Norteño gang members.  According to the Superseding Indictment, all nine defendants committed crimes as part of Norteño gang activity.  The superseding indictment alleges that, over a two-year period, the defendants committed 12 murders, seven attempted murders, and numerous armed robberies of banks, financial institutions, and commercial establishments.  The following additional three defendants have pleaded guilty to crimes as part of the criminal RICO enterprise:

Name

Charges

Sentence

Julian Ruiz

Racketeering Conspiracy, 18 U.S.C. § 1962(d)

 

Use/Possession of Firearm in Furtherance of Crime of Violence, 18 U.S.C. § 924(c)(1)(A) and 2

 

Sentenced February 28, 2018, to 210 months in prison and 5 years supervised release

Anthony Lek

Racketeering Conspiracy, 18 U.S.C. § 1962(d)

 

Use/Possession of Firearm in Furtherance of Crime of Violence, 18 U.S.C. § 924(c)(1)(A) and 2

 

Robbery Affecting Interstate Commerce, 18 U.S.C. § 1951(a)

 

Use/Possession of Firearm in Furtherance of Crime of Violence, 18 U.S.C. § 924(c)(1)(A) and 2

 

Sentenced November 28, 2018, to 180 months ii prison and 5 years supervised release 

Robert Loera

Racketeering Conspiracy, 18 U.S.C. § 1962(d)

 

Accessory After the Fact

18 U.S.C. § 1959(a)(5) and 3

Sentenced on October 24, 2018, to 144 months in prison and 5 years supervised release

The investigation leading to the indictment was part of the FBI’s crackdown on Norteño gangs in Monterey County.

In sentencing Cruz, Judge Koh described Cruz’s crimes as “heinous.”  In addition to the prison term, Judge Koh sentenced Cruz to a five-year period of supervised release to commence after Cruz completes his prison sentence, and $324,915.59 in restitution.  Cruz is currently being held in the custody of the United States Marshals Service.  He has been in custody since June 2012 when he was arrested on a separate criminal charge.  

Assistant U.S. Attorneys Stephen Meyer and Christiaan Highsmith are prosecuting the case with the assistance of Nina Burney Williams and Lance Libatique.  The prosecution is the result of an investigation by the FBI and Salinas Police Department.

OAKLAND – Former Southwest Airlines baggage handler Keith Ramon Mayfield was sentenced today to thirty months in prison for entering an airport area in violation of security requirements, conspiring to distribute marijuana, and conspiring to launder money, announced United States Attorney David L. Anderson, Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Phyllis J. Hamilton, Chief U.S. District Judge.  

Mayfield, 38, of Oakland, pleaded guilty to the charges on February 21, 2018.  According to his plea agreement, Mayfield admitted that on at least 40 occasions between May of 2013 and March of 2015, he used his access as a baggage handler for Southwest Airlines at the Oakland International Airport to smuggle marijuana into the airport and distribute the marijuana to outbound passengers.  Mayfield admitted he smuggled luggage containing a total of at least 250 kilograms of marijuana around the TSA checkpoint to outbound passengers who had already cleared the security checkpoint.

Mayfield also admitted that he shipped at least 100 kilograms of marijuana in cargo shipments on Southwest Airlines to airports throughout the United States.  As part of the scheme, Mayfield’s co-conspirators traveled to airports, picked up the shipments of marijuana, and further distributed and sold the drugs.  

Moreover, Mayfield admitted he conspired with others to launder the proceeds of the marijuana sales.  Specifically, during 2012 and 2013, people deposited at least $50,000 of drug trafficking proceeds into bank accounts at branches located in Texas. Mayfield withdrew the funds in Northern California. Mayfield admitted that the purpose of the transactions was to funnel the narcotics trafficking proceeds from the points of sale to the point of origin in Northern California and to disguise and conceal the source and ownership of the narcotics trafficking proceeds.  

On January 16, 2018, Mayfield was charged in a superseding information with one count of conspiracy to distribute, and possess with intent to distribute, marijuana, in violation of 21 U.S.C. § 846; one count of entering an airport area in violation of security requirements, in violation of 49 U.S.C. §§ 46314(a) and 46314(b)(2); and one count of conspiracy to launder money, in violation of 18 U.S.C. § 1956(h).  Pursuant to this plea agreement, Mayfield pleaded guilty to all the charges in the superseding information.

In addition to the prison term, Chief Judge Hamilton sentenced the defendant to a four-year period of supervised release.  During this period of supervised release, Mayfield will be barred from seeking or obtaining employment with any commercial air carrier or airport.  The Court also ordered Mayfield to pay a forfeiture money judgment of $50,000.  Mayfield will begin serving the sentence on August 12, 2019.

Mayfield’s sentence brings to 11 the number of defendants sentenced as part of the scheme to violate airport security and distribute marijuana.  The other ten defendants sentenced include the following:

Defendant

Age, Residence

Charges

Status

Kenneth Wayne Fleming, Jr.

35, of Oakland

Conspiracy to distribute, and possess with intent to distribute, marijuana, 21 U.S.C. § 846;

 

Entering an airport area in violation of security requirements, 49 U.S.C. §§ 46314(a) and 46314(b)(2)

 

Conspiracy to launder money, 18 U.S.C. § 1956(h)

Sentenced on February 7, 2018, to 21 months in prison and 3 years supervised release.

Michael Herb Videau

30, of Oakland

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. § 841(a)(1)

 

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

November 9, 2016, to 15 months in prison and 3 years supervised release.

Major Alexander Session III

27, of Oakland

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. § 841(a)(1)

 

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

November 15, 2017, to 24 months in prison and 3 years supervised release.

Clyde Barry Jamerson

44, of Oakland

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

September 21, 2016, to 3 months in prison and 3 years supervised release.

Kameron Kordero Eldridge Davis

28, of Dublin, Calif.

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

June 29, 2016, to

6 months in prison and 3 years supervised release.

Ronnell Lamar Molton

39, of Oakland

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

August 10, 2016, to

3 months in prison and3 years of supervised release.

Sophia Cherise West

46, of Castro Valley

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. § 841(a)(1)

 

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

June 1, 2016, to

12 months and one day in prison and 3 years supervised release.

Donald Ray Holland II

44, of Discovery Bay

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. § 841(a)(1)

 

Entering an airport area in violation of security requirements,

49 U.S.C. §§ 46314(a) and 46314(b)(2)

Sentenced on

November 16, 2016, to 27 months in prison and 3 years supervised release.

Brandon Jarred Davillier

29, of Slidell, Louisiana

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. § 841(a)(1)

 

Sentenced on

August 3, 2016, to

24 months in prison and 3 years supervised release.

Travon Jahmal Franzwa Baker

25, of Oakland

Distribution and possession with intent to distribute, marijuana,

21 U.S.C. §§ 841(a)(1) and (b)(1)(D)

Sentenced on

May 4, 2016, to

10 months in prison and 3 years supervised release.

Assistant U.S. Attorney Garth Hire is prosecuting the case with the assistance of Kathleen Turner.  The prosecution is the result of an investigation by the FBI, the IRS-CI, and the Alameda County Sheriff’s Office.  This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

OAKLAND –Cardelle Divon Peter was sentenced to 80 months in prison for possessing a firearm and ammunition after having been previously convicted of a felony, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down today by the Honorable Jeffrey S. White, United States District Judge.

Peter, 23, of Pittsburg, Calif., pleaded guilty to the charge on January 8, 2019.  According to his plea agreement, on January 6, 2018, Peter, a convicted felon, possessed a Smith and Wesson .223 caliber AR-15 style semi-automatic assault rifle with a 30-round high capacity magazine.  The rifle was loaded with approximately seven rounds of ammunition.  Peter also possessed a box containing an additional 62 rounds of ammunition for a separate firearm.  According to court documents, law enforcement officers arrested Peter after someone placed a call to 911 and told the dispatcher that a person was threatening the occupants of a house with a rifle. 

On September 13, 2018, a federal grand jury indicted Peter charging him with one count of being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1).  Peter pleaded guilty to the charge.

In addition to the prison term, Judge White ordered Peter to serve a three-year term of supervised release to begin at the conclusion of his prison term.  Peter has been in custody since his arrest and will begin serving his prison term immediately.

Special Assistant United States Attorney Samantha Schott is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Richmond Police Department. 
 

SAN FRANCISCO –Roland Aujero was sentenced today to 60 months in prison for possession of child pornography, announced United States Attorney David L. Anderson.  The sentence was handed down by the Honorable Susan Illston, Senior U.S. District Judge.

Aujero, 49, formerly of San Francisco, pleaded guilty to the charge on November 30, 2018.  According to his plea agreement, for the past several years, Aujero worked as a substitute teacher in San Francisco, South San Francisco, Mill Valley, San Rafael, and San Diego.  As of April 26, 2017, he possessed approximately 20 videos and more than 300 photographic images depicting child pornography.  Further, Aujero used messenger services to engage in chats with juveniles as young as 8 years old; Aujero admitted he has requested to meet juveniles during the chats.  

On June 5, 2018, a federal grand jury indicted Aujero charging him with one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).  Aujero pleaded guilty to the charge.

In addition to the prison term, Judge Illston sentenced Aujero to a 5-year term of supervised release.  He has been remanded into custody since entering his guilty plea and will begin serving his sentence immediately.

Assistant United States Attorney Jonathan U. Lee is prosecuting the case with the assistance of Kimberly Richardson and Hector Lopez.  The prosecution is the result of an investigation by the San Francisco Police Department’s Special Victims Unit. 

The guardians of all known victims in this case have been contacted.  If you have additional information about this case or other suspected child sexual exploitation or missing children, please report the information to the National Center for Missing & Exploited Children via its toll-free 24-hour hotline, 1-800-THE-LOST.
 

SAN FRANCISCO –Joey Wong Hernandez was sentenced to 180 months in prison for production and possession of child pornography, announced United States Attorney David L. Anderson and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  The sentence was handed down by the Honorable Maxine M. Chesney, Senior U.S. District Judge.

Hernandez, 29, of San Francisco, pleaded guilty to the charges on November 14, 2018.  According to his plea agreement, Hernandez possessed hundreds of images and videos of child pornography.  Hernandez also produced a video of himself engaged in sex with a minor.  

Specifically, Hernandez admitted that prior to February 20, 2016, he met a minor female on an online dating website who he knew was between 12 and 16 years old.  On two occasions between February 20, 2016, and June 25, 2016, Hernandez convinced the minor female to engage in sexual activity with him and Hernandez recorded the sexual activity on his cellular telephone.  Hernandez also admitted that he used a laptop computer, two hard drives, and a cellular telephone to store more than 600 videos and images of minors engaged in sexually explicit conduct.  Hernandez acknowledged that some of the images depict minors under the age of 12—including infants and toddlers—and some are recordings of himself engaged in sexually explicit activity with minors.  Further, Hernandez admitted that on three occasions between October of 2015 and April of 2016 he used the internet to distribute images and videos of child pornography.    

On March 8, 2018, a federal grand jury indicted Hernandez charging him with three counts of production of child pornography, in violation of 18 U.S.C. § 2251(a); three counts of distribution of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b)(1); and one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).  Hernandez pleaded guilty to one count of production and one count of possession.  The remaining counts were dismissed.

In addition to the prison term, Judge Chesney sentenced Hernandez to a 10-year term of supervised release.  Hernandez currently is in federal custody and will begin serving his sentence immediately.

Assistant United States Attorney Sailaja M. Paidipaty is prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by HSI. 

If members of the public have any information relevant to suspected child predators or suspicious activity, they should contact Homeland Security Investigations through the toll-free Tip Line at 1-866-DHS-2-ICE or complete the online tip form at: https://www.ice.gov/webform/hsi-tip-form.  Both are staffed around the clock by investigators.  Suspected child sexual exploitation or missing children may also be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.
 

OAKLAND, Calif. – Marty Skyler Guillen pleaded guilty in federal court today to robbery affecting interstate commerce (Hobbs Act robbery), announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The plea was accepted by Jon S. Tigar, U.S. District Judge.

According to the plea agreement, Guillen, 22, of San Leandro, admitted that in four days during the month of October 2018, he committed six robberies of stores located throughout the East Bay and Daly City.  Guillen acknowledged that during each robbery, he brandished a BB gun and directed employees of the stores to hand over money or merchandise from the store.  Guillen stole the following items on the following dates:

DATE

TYPE OF STORE AND LOCATION

ITEMS OR AMOUNT STOLEN

October 12, 2018

Phone store in Hayward

two new iPhones

October 14, 2018

Phone store in Daly City

two new iPhones

October 24, 2018

Jewelry store in Hayward

three silver chain necklaces

October 24, 2018

Phone store in Oakland

$730.83 from a cash register

October 24, 2018

Phone store in Fremont

$1,000 from a cash register and $100 from an employee

October 25, 2018

Phone store in Castro Valley

$74 from a cash register

On November 29, 2018, a federal grand jury indicted both Guillen and his co-defendant, Elijah Kimani Crowder, 20, of Hayward, charging them with conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a), and additional counts of interference with interstate commerce by robbery, in violation of 18 U.S.C. § 1951(a).  Guillen pleaded guilty to two of the substantive robbery counts but admitted to additional robberies, and agreed to pay restitution for all robberies.  If he complies with the plea agreement, the conspiracy charge and the remaining robbery counts will be dismissed at sentencing.

Judge Tigar scheduled Guillen’s sentencing for August 2, 2019.   The maximum statutory penalties for each violation of 18 U.S.C. § 1951 are 20 years in prison and a $250,000 fine.  In addition, the court may order a term of supervised release, restitution, and fines.  However, any sentence following conviction will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

On March 22, 2019, Crowder pleaded guilty to one count of aiding and abetting robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a).  Judge Tigar scheduled Crowder’s sentencing for June 14, 2019.  

The prosecution is the result of an investigation by the FBI with the assistance of the Alameda County Sheriff’s Office, and the Daly City, Fremont, Hayward, Oakland, and San Leandro Police Departments.

SAN FRANCISCO – Jameel Collins was sentenced today to 100 months in prison on drug trafficking charges and for being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Susan Illston, Senior U.S. District Judge, following a three-day trial after which a federal jury convicted Collins of the charges.

The evidence at trial demonstrated that on February 25, 2016, law enforcement officers stopped Collins, 39, of Menlo Park, while he was driving a white Cadillac Deville with unlawfully tinted windows and expired registration tags.  Near the center console of the car was a bag of marijuana and in the passenger seat was a scale.  Collins was taken into custody and a subsequent search of the car resulted in recovery of heroin, cocaine, methamphetamine, a Glock Model 43 handgun, and two magazines loaded with a total of 13 rounds of ammunition.  These items all were found stowed in an air vent on the left side of the steering wheel.

On February 20, 2018, a federal grand jury handed down a superseding indictment charging Collins with four counts of possession with intent to distribute a controlled substance, in violation of 21 U.S.C. § 841(a)(1); one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1); and one count of possessing a firearm in furtherance of a drug trafficking crime and carrying a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c).  Collins was convicted of all but the last count.  

In addition to the prison term, Judge Illston sentenced Collins to serve four years of supervised release that will begin after his prison term has been served.  Collins has been in custody since his arrest and he will begin serving his sentence immediately.  

Assistant U.S. Attorneys Sailaja M. Paidipaty and Ravi T. Narayan are prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by the FBI.
 

SAN JOSE – Diego Alejandro Aguilar was sentenced today to 70 months in prison for possessing with the intent to distribute methamphetamine and selling firearms without a license, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree.  The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge.

Aguilar, 25, of Seaside, Calif., pleaded guilty to the charges on December 12, 2018.  According to his plea agreement, Aguilar admitted that between February 2018 and May 2018, he knowingly sold methamphetamine and engaged in the business of selling firearms in Seaside.  The plea agreement describes seven occasions on which Aguilar sold methamphetamine.  For example, on February 22, 2018, Aguilar sold approximately 108.5 grams of methamphetamine for $1,200 and on May 2, 2018, Aguilar sold approximately 82.3 grams of methamphetamine for $1,000.  During the same period, Aguilar also sold ammunition and two firearms—a .357 Ruger revolver and a Springfield Armory XD-9 9mm pistol.  In sum, Aguilar admitted he sold more than 535 grams of methamphetamine and received more than $7,500 for the guns and drugs.

On June 21, 2018, a federal grand jury indicted Aguilar, charging him with seven counts of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1), and one count of selling firearms without a license, in violation of 18 U.S.C. § 922(a)(1)(A).  Aguilar pleaded guilty to one count of each crime.  The remaining counts were dismissed.

In addition to the prison term, Judge Koh also sentenced Aguilar to serve three years of supervised release that will begin after his prison term has been served.  Judge Koh ordered Aguilar to surrender by June 12, 2019, to begin serving his prison term.

Assistant U.S. Attorney Jeff Nedrow is prosecuting the case with the assistance of Susan Kreider.  The prosecution is the result of an investigation by the ATF.
 

SAN FRANCISCO –Phillip LeBlanc was sentenced today to 48 months in prison for committing three bank robberies, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentenced was handed down by the Hon. Maxine M. Chesney, Senior U.S. District Judge.

LeBlanc, 36, of San Leandro, Calif., pleaded guilty to the charges on November 28, 2018.  In pleading guilty, LeBlanc admitted that on May 26, 2018, he robbed a Wells Fargo Bank in San Francisco of more than $7,500.  Similarly, on June 22, 2018, LeBlanc stole $1,949 from a Cathay Bank in San Francisco, and on June 23, 2018, he stole $1,517 from a Citibank in Oakland.  

On July 19, 2018, a federal grand jury indicted Leblanc charging him with three counts of bank robbery, in violation of 18 U.S.C. § 2113(a).  LeBlanc pleaded guilty to all three counts.

In addition to the prison term, Judge Chesney ordered LeBlanc to pay restitution in the amount of $11,118 and to serve three years of supervised release that will begin at the end of his prison term.  The defendant currently is in federal custody and will begin serving his sentence immediately.

Assistant U.S. Attorney Sailaja M. Paidipaty is prosecuting the case with the assistance of Marina Ponomarchuk. The prosecution is the result of investigations by the FBI, the Oakland Police Department, and the San Francisco Police Department.  
 

SAN JOSE – Sophann Pin was sentenced today to 45 months in prison for possessing with the intent to distribute methamphetamine announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.

Pin, 36, of San Jose, pleaded guilty to the charges on May 10, 2018.  According to his plea agreement, Pin admitted he possessed methamphetamine with the intent to sell it to other people.  The plea agreement describes three transactions in which Pin distributed drugs.  Pin admitted that on September 30, 2016, he agreed to meet two drug buyers in a parking lot on East Hamilton Avenue in Campbell, Calif.  After arriving at the parking lot with approximately 543 grams of a substance containing methamphetamine, Pin exchanged the drugs for $3,500.  Further, on November 15, 2017, Pin possessed one kilogram of methamphetamine he obtained from co-defendant Oscar Andrade, 32, from San Jose.  Pin also acknowledged that on January 19, 2017, he obtained two kilograms of methamphetamine from co-defendant Christian Urena, 32, from San Jose, and that he intended to sell the methamphetamine to another person.

On February 2, 2017, a federal grand jury indicted Pin, charging him with two counts of conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. § § 846, 841(a)(1), and 841(b)(1)(C), and three counts of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C).  Pin pleaded guilty to one count of possession with intent to distribute methamphetamine.  The remaining counts were dismissed.

In addition to the prison term, Judge Davila also sentenced Pin to serve 3 years of supervised release that will begin at after his prison term has been served.

Andrade and Urena also pleaded guilty to their respective roles in the scheme.  On January 14, 2019, Judge Davila sentenced Andrade to 160 months in prison and five years of supervised release for his role.  On March 4, 2019, Judge Davila sentenced Urena to 50 months in prison and three years of supervised release for his role.

Assistant U.S. Attorney Scott Simeon is prosecuting the case with the assistance of Tong Zhang.  The prosecution is the result of an investigation by the DEA.
 

SAN FRANCISO –Sunnyvale-based Fortinet, Inc. has agreed to a settlement valued at $545,000 to resolve allegations it violated the False Claims Act by falsely representing its products were in compliance with the Trade Agreements Act (TAA), 19 U.S.C. § 2501 et seq., announced United States Attorney David L. Anderson; Defense Criminal Investigative Service (DCIS) Special Agent in Charge Bryan D. Denny; General Services Administration Office of the Inspector General (GSA-OIG), Western Field Office, Special Agent in Charge Theresa Quellhorst; Director of the U.S. Army Criminal Investigation Command’s (USACIDC) Major Procurement Fraud Unit Frank Robey; and Department of Homeland Security Office of Inspector General (DHS-OIG) Special Agent in Charge Amanda Thandi.    

According to the settlement agreement made public today, Fortinet acknowledged that during the more than seven years between January of 2009 and the fall of 2016, a Fortinet employee responsible for supply chain management (the “Responsible Employee”) arranged to have labels on certain products altered to make the products appear to be compliant with the TAA.  A portion of the products were resold through distributors and subsequent resellers to U.S. government end users. 

“Today’s announcement illustrates the continuing commitment of the U.S. Attorney’s Office and our law enforcement partners to identify and prosecute fraudulent schemes relating to the sale of goods to the United States,” said U.S. Attorney Anderson.  

“Contractors that supply the U.S. Government with Chinese-made technology will be pursued and held accountable when violating the Trade Agreement Act,” said DCIS Special Agent in Charge Denny.  “The DCIS and its law enforcement partners are committed to combatting procurement fraud and cyber risk within U.S. Department of Defense programs.”

“This settlement displays the steadfast commitment of our agents and our federal law enforcement partners,” said USACIDC Director Robey. “This settlement is a clear signal to the supply community doing business with the Department of the Army—fraud will not be tolerated in any way, shape or form.” 

“Contractors who undermine American trade interest and pose a security risk by selling unauthorized foreign-made devices to the United States will be held accountable,” said DHS-OIG Special Agent in Charge Thandi.  “Contracting companies that conduct business with the federal government must uphold our trade laws; any misrepresentation during this process undercuts its integrity.”  

“This settlement reflects the GSA OIG’s commitment to work with our law enforcement partners to aggressively investigate and prosecute those who seek to fraudulently sell products to the federal government that do not meet the standards set by law,” said GSA OIG Special Agent in Charge Theresa Quellhorst.

The TAA generally prohibits certain government contractors from purchasing products that are not entirely from, or “substantially transformed” in, the United States or certain designated countries.  Fortinet sells network security devices, some of which may be sold through distributors and subsequent resellers to U.S. government end users.  In this case, Fortinet acknowledged the Responsible Employee directed certain employees and contractors to change product labels so that no country of origin was listed, or to include the phrases “Designed in the United States and Canada,” or “Assembled in the United States.”  Fortinet acknowledged that the Responsible Employee’s actions involved products sold to certain distributors that subsequently sold them to resellers, which in turn sold a portion of them to U.S. government end users.  The Responsible Employee has since been terminated from employment with Fortinet.

To settle the allegations, Fortinet has agreed to pay $400,000 and to provide the United States Marine Corps with additional equipment valued at $145,000.  

The lawsuit was filed by Yuxin “Jay” Fang under the qui tam provisions of the False Claims Act.  Under the act, private citizens can bring suit on or behalf of the government for false claims and share in any recovery.  The act also permits the United States to intervene in and take over a whistleblower suit, as was done here.  

This matter was investigated by the U.S. Attorney’s Office of the Northern District of California, along with the DCIS, GSA-OIG, Air Force Office of Special Investigations, USACIDC, DHS-OIG, the Department of the Navy, and the Coast Guard Investigative Service.  Fortinet cooperated in the government’s investigation, including by sharing the results of its internal investigation in this matter.  The settlement reflects Fortinet’s cooperation with the government in this and other matters.

Assistant U.S. Attorney Ellen London is handling the case with the assistance of Garland He, Jacqui Hollar, and Tina Louie.  
 

Sutter Health LLC, a California-based healthcare services provider, and several affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation, have agreed to pay $30 million to resolve allegations that the affiliated entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, which resulted in the plans and providers being overpaid, the Justice Department announced today.  Sutter Health is headquartered in Sacramento, California. 

“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not.”

Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (“MA Plans”) that are owned and operated by private Medicare Advantage Organizations (“MAOs”).  MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.  The Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary.  The adjustments are commonly referred to as “risk scores.”  In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary.

Sutter Health, a non-profit public benefit corporation that provides healthcare services through its affiliates, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans.  In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.  

Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated.  The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays.  The diagnosis codes were used in CMS’ calculation of a risk score for each beneficiary. 

The settlement announced today resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care.  These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid.

Earlier this month, the government filed a complaint against Sutter and a separate affiliated entity, Palo Alto Medical Foundation, alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. That case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.), and is still ongoing.  

“Misrepresenting patients’ risk results in higher payments and wasted Medicare funds,” said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the U.S. Department of Health and Human Services. “With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status.”

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG.      

The claims resolved by the settlement are allegations only, and there has been no determination of liability. 

SAN FRANCISCO – Sutter Health LLC, a California-based healthcare services provider, and several affiliated entities, Sutter East Bay Medical Foundation, Sutter Pacific Medical Foundation, Sutter Gould Medical Foundation, and Sutter Medical Foundation, have agreed to pay $30 million to resolve allegations that the affiliated entities submitted inaccurate information about the health status of beneficiaries enrolled in Medicare Advantage Plans, which resulted in the plans and providers being overpaid, the Justice Department announced today.  Sutter Health is headquartered in Sacramento, California.  

“The Medicare Advantage Program provides benefits to a significant portion of federal health care beneficiaries,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will help ensure that accurate information is supplied to the Medicare Advantage Program by plans and providers, and to pursue appropriate remedies when it is not.” 
   
Under Medicare Advantage, also known as the Medicare Part C program, Medicare beneficiaries have the option of enrolling in managed healthcare insurance plans called Medicare Advantage Plans (“MA Plans”) that are owned and operated by private Medicare Advantage Organizations (“MAOs”).  MA Plans are paid a capitated, or per-person, amount to provide Medicare-covered benefits to beneficiaries who enroll in one of their plans.  The Centers for Medicare and Medicaid Services (“CMS”), which oversees the Medicare program, adjusts the payments to MA Plans based on demographic information and the health status of each plan beneficiary.  The adjustments are commonly referred to as “risk scores.”  In general, a beneficiary with more severe diagnoses will have a higher risk score, and CMS will make a larger risk-adjusted payment to the MA Plan for that beneficiary. 

Sutter Health, a non-profit public benefit corporation that provides healthcare services through its affiliates, including hospitals and medical foundations, contracted with certain MAOs to provide healthcare services to California beneficiaries enrolled in the MAOs’ MA Plans.  In exchange, Sutter received a share of the payments that the MAOs received from CMS for the beneficiaries under Sutter’s care.   

Sutter submitted diagnoses to the MAOs for the MA Plan enrollees that they treated.  The MAOs, in turn, submitted the diagnosis codes to CMS from the beneficiaries’ medical encounters, such as office visits and hospital stays.  The diagnosis codes were used in CMS’ calculation of a risk score for each beneficiary.  

The settlement announced today resolves allegations that Sutter and its affiliates submitted unsupported diagnosis codes for certain patient encounters of beneficiaries under their care.  These unsupported diagnosis scores inflated the risk scores of these beneficiaries, resulting in the MAO plans being overpaid. 

In March 2019, the government filed a separate complaint against Sutter and its affiliated entity, Palo Alto Medical Foundation, alleging that they violated the False Claims Act by knowingly submitting unsupported diagnosis scores. That case is captioned United States ex rel. Ormsby v. Sutter Health, et al., Case No. 15-CV-01062-JD (N.D. Cal.), and is still ongoing.  

“Misrepresenting patients’ risk results in higher payments and wasted Medicare funds,” said Steven J. Ryan, Special Agent in Charge with the Office of Inspector General for the U.S. Department of Health and Human Services. “With some one-third of people in Medicare now enrolled in managed care Advantage plans, large health systems such as Sutter can expect a thorough investigation of claimed enrollees’ health status.”

The settlement was the result of a coordinated effort by the Civil Division’s Commercial Litigation Branch, the United States Attorney’s Office for the Northern District of California, and HHS-OIG. 
    
The claims resolved by the settlement are allegations only, and there has been no determination of liability.

This matter is being handled by Assistant United States Attorney Kimberly Friday and U.S. Department of Justice Trial Attorney Olga Yevtukhova, with assistance from Jonathan Birch and Tina Louie.
 

SAN FRANCISCO – Brian Gutierrez-Villasenor was sentenced today to 120 months in prison for possessing with the intent to distribute methamphetamine and transporting funds to promote unlawful activity announced United States Attorney David L. Anderson, Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin, and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez.  The sentence was handed down by the Honorable Susan Illston, U.S. Senior District Judge.

Gutierrez-Villasenor, 27, of San Francisco, pleaded guilty to the charges on November 13, 2018. According to his guilty plea, between 2014 and May of 2018, Gutierrez-Villasenor distributed cocaine and methamphetamine for a Darknet vendor site called JetSetLife.  JetSetLife operated on multiple Darknet marketplaces and used encryption technology to avoid interception and monitoring of its communications and transactions.  Gutierrez-Villasenor admitted that he provided his contact information to the operators of JetSetLife so they could wire him money from abroad to promote drug distribution.  Gutierrez-Villasenor delivered requested drug types and quantities to JetSetLife customers by mailing the drugs through the U.S. Postal Service.  For example, on March 23, 2015, an individual in Australia sent Gutierrez-Villasenor a $5,160 wire transfer to distribute drugs for JetSetLife.  Gutierrez-Villasenor retrieved the payment in San Francisco and used the money to buy drugs and supplies to fulfill JetSetLife customer orders, and to pay himself for distributing the drugs.  Gutierrez-Villasenor admitted that between October 2014 and April 2018, he received over $575,000 to distribute drugs for JetSetLife.     

On September 17, 2018, Gutierrez-Villasenor was charged by information with one count of possessing with intent to distribute over 50 grams of methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(viii), and one count of transporting monetary instruments or funds to promote unlawful activity, in violation of 18 U.S.C. §§ 1956(a)(2)(A) and 2. Gutierrez-Villasenor pleaded guilty to both counts.

In addition to the prison term, Judge Illston also ordered Gutierrez-Villasenor to pay a $40,000 fine and to serve an additional five-year term of supervised release to begin after his prison term.  Gutierrez-Villasenor has been in custody since his arrest on May 17, 2018, and will begin serving his sentence immediately.

This prosecution was the result of a coordinated national operation that used the first nationwide undercover action to target vendors of illicit goods on the Darknet.  The extensive operation, which culminated in four weeks of more than 100 enforcement actions around the country, resulted in the following:

• Federal arrests of more than 30 Darknet vendors who engaged in tens of thousands of sales of illicit goods;
• Execution of 70 search warrants, resulting in the seizure of massive amounts of illegal narcotics, including 333 bottles of liquid synthetic opioids, over 100,000 tramadol pills, 100 grams of fentanyl, 24 kilograms of Xanax, and additional seizures of Oxycodone, MDMA, cocaine, LSD, marijuana, and a psychedelic mushroom grow found in a residence;
• Seizure of more than 100 firearms, including handguns, assault rifles, and a grenade launcher;
• Seizure of five vehicles that were purchased with illicit proceeds and/or used to facilitate criminal activity;
• Seizure of more than $3.6 million in U.S. currency and gold bars;
• Seizure of nearly 2,000 Bitcoins and other virtual currencies, with an approximate value of more than $20 million;
• Confiscation of 15 pill presses, which are used to create illegal synthetic opioids; and
• Seizure of Bitcoin mining devices, computer equipment, and vacuum sealers.

Additional information on the operation can be obtained here.

Assistant U.S. Attorney Helen Gilbert is prosecuting the case with the assistance of Andy Ding.  The prosecution is the result of an investigation by the DEA, FBI, HSI, and USPIS.  This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.
 

OAKLAND – Michael Vicochea was sentenced to 15 years in prison, and Christian Vanleer was sentenced to 10 years in prison, for their respective roles in a drug distribution conspiracy and related crimes, announced United States Attorney David L. Anderson and Drug Enforcement Administration Special Agent in Charge Chris Nielsen.  The sentences were handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.

Vicochea, 26, of Tracy, Calif., pleaded guilty on August 20, 2018, to drug trafficking, weapons, and money laundering charges.  According to his plea agreement, Vicochea conspired with co-defendant Oscar Escalante and others to distribute heroin and multiple pounds of methamphetamine.  For example, Vicochea admitted that in July and August of 2016, Escalante supplied him with methamphetamine.  On August 24, 2016, Vicochea’s nephew, Christian Vanleer, 26, of Oakland, possessed a pound of the drugs that Vicochea acknowledged he was responsible for selling.  Vicochea also was responsible for giving to Escalante part of the proceeds of the sales after the drugs were sold.  Vicochea also admitted that beginning in September 2014, he operated an indoor marijuana grow at his house that resulted in about 80 plants per harvest every 60-72 days.  In addition, Vicochea admitted he assisted with the operations of other grow houses operated by his co-defendants and that he distributed marijuana from the operations in Alabama, Georgia, Tennessee, and Florida.  

With respect to the firearms charges, Vicochea admitted he possessed a red Sig Sauer P220 pistol in furtherance of the drug trafficking crimes.  He acknowledged that he possessed the firearm in order to protect himself and the marijuana grow at his house.

Further, Vicochea admitted he helped Escalante launder proceeds of the drug distribution.  For example, in December of 2015, he deposited $46,100 in cash to accounts controlled by Escalante.  To evade reporting requirements and to conceal that the funds were the proceeds of drug trafficking, Vicochea made deposits in amounts of $9,000 or less and at multiple bank branches in Tuscaloosa, Ala.  Vicochea acknowledged depositing more than $165,000 into various bank accounts in furtherance of the money laundering scheme.  

On December 15, 2016, a federal grand jury returned a Superseding Indictment charging Vicochea with the following crimes: conspiracy to manufacture, distribute and possess with intent to distribute 100 or more marijuana plants, in violation of 21 U.S.C. § 846; conspiracy to manufacture, distribute and possess with intent to distribute 100 grams or more of heroin and 50 grams or more of methamphetamine, in violation of 21 U.S.C. § 846; possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c); conspiracy to launder drug proceeds, in violation of 18 U.S.C. § 1956(h); possession and transfer of a machine gun, in violation of 18 U.S.C. § 922(o); distribution and possession with intent to distribute 50 grams or more of methamphetamine, in violation of 21 U.S.C. § 841(a)(1); and money laundering by concealment, in violation of 18 U.S.C. § 1956(a)(1).  Vicochea pleaded guilty to four counts and the remaining counts were dismissed.

Vanleer pleaded guilty to his role in the conspiracy on November 19, 2018, pursuant to a two-count Superseding Information, alleging conspiracy to distribute and possess with intent to distribute 100 grams or more of heroin, and 50 grams or more of a mixture or substance containing methamphetamine, in violation of 21 U.S.C. § 846; and possession of a firearm in furtherance of a drug trafficking crime, in violation of 18 U.S.C. § 924(c).  

According to his plea agreement, as early as December 2, 2015, and until August 24, 2016, Vanleer conspired with his codefendants to distribute cocaine, heroin, alprazolam, and methamphetamine.  His role was to engage in street-level sales, take his share of the proceeds, and transmit the remainder of the proceeds to his co-conspirators.  On August 24, 2016, law enforcement officers seized a pound of methamphetamine from a backpack Vanleer was carrying.  Vanleer acknowledged that he had allowed Vicochea to store the methamphetamine at Vanleer’s apartment in Oakland.  Vanleer further admitted that, along with the methamphetamine, he had a pistol in the backpack to protect himself and the drugs.  

In addition to the prison terms, Judge Gilliam also ordered Vicochea and Vanleer to serve 5 years and 4 years of supervised release, respectively.  Vanleer was ordered to pay a fine of $25,100 representing money paid to him by an undercover officer during controlled buy operations in 2016. 

In addition to Vicochea and Vanleer, Judge Gilliam has sentenced the following defendants in connection with the conspiracy: 
 

Defendant

Age

Charges

Sentence of Imprisonment

Oscar Escalante

43

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy; 21 U.S.C. §§ 846, 841(a)(1), (b)(1)(A)—Heroin and Methamphetamine Trafficking Conspiracy; 18 U.S.C. § 924(c) – Possession of a Firearm in Furtherance of Drug Trafficking; 18 U.S.C. § 1956(h) – Money Laundering Conspiracy  

235 months

David Vigil

46

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy; 21 U.S.C. §§ 846, 841(a)(1), (b)(1)(A) – Heroin and Methamphetamine Trafficking Conspiracy

121 months

Phillip Jiunti

43

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy; supervised release violation in separate 18 U.S.C. § 922(g)(1) – Felon in Possession of Firearm case

70 months

Daniel Medina

25

21 U.S.C. §§ 841(a)(1), (b)(1)(C) – Distribution of Heroin; 18 U.S.C. § 924(c) – Possession of a Firearm in Furtherance of Drug Trafficking

66 months

Oswaldo Escalante

46

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy; 18 U.S.C. § 1956(h) – Money Laundering Conspiracy  

65 months

Jorge Gomez

39

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy

60 months

Ignacio Gonzalez

31

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(C) – Marijuana Trafficking Conspiracy; 18 U.S.C. § 924(c) – Possession of a Firearm in Furtherance of Drug Trafficking

60 months

Adan Gonzalez

47

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy

60 months

James Hinkle

38

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy

12 months, 1 day

Claudia Munoz

37

21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B) – Marijuana Trafficking Conspiracy; 18 U.S.C. § 1956(h) – Money Laundering Conspiracy

Time served, 3 years supervised release

Melina Escalante

40

18 U.S.C. § 1956(h) – Money Laundering Conspiracy

Time served, 3 years supervised release

 

Assistant U.S. Attorneys Frank Riebli and Katherine Wawrzyniak are prosecuting the case with the assistance of Rebecca Shelton.  The prosecution is the result of an investigation by the DEA.  The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations. 

SAN FRANCISCO – Agusto Wosbeli Aguilar Meda, a/k/a Maza, was sentenced today to 60 months in prison for his role in a conspiracy to distribute and possess with intent to distribute methamphetamine in Marin County, announced United States Attorney David L. Anderson and U.S. Drug Enforcement Administration (“DEA”) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.

Meda, 36, a Guatemalan national, pleaded guilty to the charge on December 19, 2018.  In pleading guilty, Meda admitted that between June 8, 2018, and September 18, 2018, he conspired with others to distribute and possess with intent to distribute 50 grams or more of a substance containing methamphetamine.  Specifically, Meda admitted that he was the leader of a conspiracy to sell methamphetamine in San Rafael, and he arranged multiple narcotics transactions during the conspiracy.  On October 22, 2018, a federal grand jury handed down a superseding indictment charging Meda with one count of conspiracy to distribute and possess with intent to distribute 50 grams or more of methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1), and 841(b)(1)(B)(viii), as well as five counts of distribution of methamphetamine. Meda pleaded guilty to the conspiracy charge and the distribution charges were dismissed.  

In addition to the prison term, Judge Breyer sentenced Meda to a four-year period of supervised release to begin after he is released from prison.  

Meda’s co-defendant, Melvin Martinez, also pleaded guilty to his role in the conspiracy on December 19, 2018.  On April 3, 2019, Judge Breyer sentenced Martinez to 30 months in prison and a five-year term of supervised release.  

Assistant U.S. Attorney Ross Weingarten is prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by the DEA and the Marin County Major Crimes Task Force.
 

SAN FRANCISCO - A federal grand jury handed down a three-count felony indictment charging Jonathon Ortino with making false statements to a government agency, announced United States Attorney David L. Anderson, Department of Homeland Security, Office of Inspector General (DHS OIG) Special Agent in Charge Amanda Thandi, and U.S. Department of Labor, Office of Labor Management Standards (DOL OLMS) Supervisory Investigator Kenric Michel.

According to the indictment filed March 26, 2019, and unsealed earlier today, Ortino, 45, of San Bruno, CA, was the president of the National Treasury Employees Union, Chapter 165.  As the president of the union chapter, Ortino was required periodically to file documents with the U.S. Department of Labor disclosing financial information regarding the union, including loans and disbursements made to the union’s officers.  The indictment alleges Ortino filed documents that knowingly omitted loans, allowances, and disbursements made by the union, at least some of the proceeds of which he received.  The indictment charges Ortino with three counts of making false statements to a government agency, in violation of 18 U.S.C. § 1001(a)(2).

Ortino made his initial federal court appearance this morning before U.S. Magistrate Judge Jacqueline Scott Corley.  He was arraigned, pleaded not guilty to the charges, and was released on bond.  Ortino’s next appearance, a status conference before U.S. District Judge William Orrick, is scheduled for April 25, 2019.   

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a maximum term of imprisonment of 5 years for each count in the indictment.  However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson.  This case is brought as a result of an investigation by DHS OIG and the DOL OLMS. 
 

SAN JOSE - A federal grand jury indicted Kishore Dattapuram, Kumar Aswapathi, and Santosh Giri, charging the defendants in a visa fraud scheme, announced United States Attorney David L. Anderson and Department of Homeland Security, Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin. 

According to the indictment, Dattapuram, 49, of Santa Clara, Aswapathi, 49, of Austin, Texas, and Giri, 42, of San Jose, operated Nanosemantics, Inc., a Santa Clara-based consulting firm whose services included placing skilled foreign workers at software and technology companies in the Bay Area.  According to the indictment, the defendants worked together to submit fraudulent H-1B visa applications on behalf of foreign workers in order to gain a competitive advantage over competing firms.

The H-1B visa program allows foreign workers to obtain temporary authorization to live and work for employers in the United States.  In order to secure an H-1B visa, an employer or other sponsor must submit an “I-129” petition to the United States Citizenship and Immigration Services.  A petition and associated documentation must confirm the existence and duration of the job waiting for the worker, and describe key details including the wages associated with the position.  

In this case, the defendants allegedly used Nanosemantics to submit fraudulent I-129 petitions and obtain H-1B visas for workers that the defendants could later place at local companies.  By maintaining a group of available workers, the defendants would gain a competitive advantage over consultants that properly applied for paperwork only after matching a qualified worker to and available job.  According to the indictment, several of the I-129 petitions submitted by defendants stated that particular workers had specific jobs waiting for them at designated companies when, in reality, the defendants knew that these jobs did not exist.  Further, the defendants allegedly sought the cooperation of third parties to conceal their fraud.  For example, defendants allegedly orchestrated payments by Nanosemantics to at least one individual for permission to list his company as the employer for foreign workers even though Nanosemantics actually intended to place the workers elsewhere.  Further, defendants allegedly coached foreign workers and others, to respond to government inquiries in a way that would prevent the government from discovering the fraud.

In sum, the defendants all were charged with one count of conspiracy to commit visa fraud, in violation of 18 U.S.C. § 371, and ten counts of substantive visa fraud, in violation of 18 U.S.C. § 1546(a).  

The defendants were arrested yesterday in their respective towns of residence.  Dattapuram and Aswapathi made their initial appearances in federal court in San Jose and Austin, respectively.  Giri made his initial appearance today in federal court in San Jose.  All three defendants entered pleas of not guilty and were released on bonds.  Defendants are next scheduled to appear at 1:30 p.m. on May 13, 2019, for a status conference before the Honorable Judge Edward J. Davila, U.S. District Judge.  

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of ten years, and a fine of $250,000, plus restitution if appropriate for each violation of 18 U.S.C. § 1546(a) (visa fraud); and a maximum prison sentence of five years, and a fine of $250,000, plus restitution if appropriate for the conspiracy count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney John Bostic is prosecuting the case with the assistance of Tong Zhang.  The prosecution is the result of an investigation by U.S. Citizenship and Immigration Services and HSI. 
 

OAKLAND– Marques Romale McCutcheon was sentenced today to 120 months in prison for possession with intent to distribute crack cocaine, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge.

McCutcheon, 39, of Dublin, Calif., pleaded guilty to the charge on October 22, 2018.  According to his plea agreement, McCutcheon admitted that on May 18, 2017, he possessed approximately 83 grams of crack cocaine.  The cocaine was divided into twelve small plastic bags McCutcheon intended to sell.  Further, McCutcheon admitted he was arrested after police observed a transaction involving the sale of crack cocaine from a car McCutcheon occupied with other passengers while the car was parked in Oakland in the lot of a liquor store.  McCutcheon also admitted in his plea agreement that he had $887 in cash on his person at the time of his arrest, and that the cash was proceeds of narcotics trafficking. McCutcheon also admitted that he had previously been convicted of a violent felony and a drug trafficking felony.  

On July 21, 2018, a federal grand jury indicted McCutcheon for one count of possession with intent to distribute cocaine base in the form of crack cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(B)(iii).  McCutcheon pleaded guilty to the charge.

At sentencing, Judge Gilliam found that McCutcheon is a career offender as that term is defined by the United States Sentencing Guidelines.  Judge Gilliam concluded McCutcheon’s status as a career offender subjected him to a longer sentence under federal sentencing guidelines.  

In addition to the prison term, Judge Gilliam ordered McCutcheon to serve a 5-year term of supervised release that will begin at the conclusion of his prison term.

Assistant U.S. Attorney Tom Green is prosecuting the case with the assistance of Elyza Delgado.  The prosecution is the result of an investigation by the Berkeley Police Department with assistance from the FBI.
 

SAN JOSE – South Bay doctor Venkat Aachi pleaded guilty to distributing hydrocodone outside the scope of his professional practice and without a legitimate medical need, and to health care fraud, announced United States Attorney David L. Anderson, Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, U.S. Department of Health and Human Services Office of the Inspector General (HHS-OIG) Special Agent in Charge Steven J. Ryan, and the California Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse (BMFEA).  The guilty plea was accepted by the Honorable Edward J. Davila, U.S. District Judge.

According to the plea agreement, Aachi, 52, of Saratoga, was a licensed physician in the state of California who operated a pain clinic in San Jose.  He maintained a DEA registration number authorizing him to prescribe controlled substances.  Aachi admitted that from September 18, 2017, through July 2, 2018, he wrote hydrocodone-acetaminophen prescriptions that were outside the scope of his professional practice and not for a legitimate medical purpose.  The plea agreement describes transactions in which Aachi improperly distributed hydrocodone.  For example, in November of 2017, he wrote a prescription enabling a patient to receive 90 hydrocodone-acetaminophen pills.  Aachi did not conduct a physical examination of the patient nor discuss the patient’s pain or response to prior medication.  Aachi acknowledged that he knew the prescriptions were not for a legitimate medical purpose and that he did not write the prescriptions in the usual course of his professional practice.  

Further, Aachi admitted that on July 2, 2018, he falsely submitted to an insurance company a false and fraudulent claim for payment for healthcare benefits, items, and services.  Aachi admitted he acted with the intend to defraud the insurance company.

On October 9, 2018, a federal grand jury indicted Aachi and charged him with six counts of distributing drugs outside the scope of professional practice, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C), and one count of health care fraud, in violation of 18 U.S.C. § 1347. Aachi pleaded guilty to one count under each statute. 

Aachi remains free on bail pending sentencing.  Judge Davila scheduled Aachi’s sentencing hearing for July 1, 2019.   

Aachi faces a maximum sentence of 20 years in prison and a fine of $1,000,000 for the illegal distribution of hydrocodone count and 10 years in prison and a $250,000 fine for the health care fraud count.  Additional fines, restitution, and additional periods of supervised release also could be ordered at sentencing.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Shailika Kotiya is prosecuting the case with the assistance of Andy Ding.  This prosecution is the result of investigations by the DEA, FBI, HHS-OIG, and the BMFEA. Through the BMFEA, the California Department of Justice regularly works with other law enforcement agencies to investigate and prosecute fraud perpetrated on the Medi Cal program against a wide variety of healthcare providers, including doctors and pharmaceutical companies.  This case was investigated and prosecuted by member agencies of the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies. 
 

SAN FRANCISCO – A federal grand jury indicted Danhong “Jean” Chen, a/k/a Maria Sofia Taylor, and her business partner Jianyun “Tony” Ye in connection with an immigration visa fraud scheme, announced United States Attorney David L. Anderson, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, Securities and Exchange Commission Office of the Inspector General, Inspector General Carl Hoecker.  The 14-count indictment, filed March 7, 2019, and unsealed late yesterday, alleges the defendants committed visa fraud and related crimes to obtain immigration benefits for more than 100 foreign investors through the government’s Employment-Based Immigration Fifth Preference, or “EB-5,” visa program. 

According to the indictment, Chen, 54, of Atherton, was the sole partner at the Law Offices of Jean D. Chen, which held itself out as specializing in immigration law.  Ye, 51, also of Atherton, was formerly married to Chen and held himself out as the manager of Chen’s law office.  The indictment alleges Chen and Ye prepared and submitted to the United States Citizenship and Immigration Services (USCIS) fraudulent documents that contained false signatures and falsely described how applicants would qualify for the EB-5 program.    

Under the EB-5 program, foreign nationals may obtain permanent United States residency, commonly known as “green card” status, by investing in qualifying American businesses.  Alien investors who comply with program requirements initially receive a grant of conditional permanent residency status for a two-year period.  After two years, the alien investor can petition for permanent residency.  To obtain permanent residency status, the applicant’s investment must amount to $500,000 if made in certain geographical areas with low employment rates; if the investment is not in a designated low-employment area, the investment must amount to a minimum of $1,000,000.   In addition, under the EB-5 program, applicants may make use of “regional centers.”  Entrepreneurs seeking investments for American businesses may establish regional centers to promote investment opportunities and make such opportunities available to EB-5 applicants.  The regional centers generally promote investment opportunities within designated geographic areas.  The Law Offices of Jean D. Chen represented clients who invested a total of approximately $52,000,000 into projects under the EB-5 program. 

In this case, the indictment describes steps taken by Chen and Ye to fraudulently obtain immigration benefits through the EB-5 program on behalf of their clients.  First, the indictment alleges that Chen and Ye falsified documents to hide the true ownership and nature of a regional center.  Specifically, the indictment alleges that in 2014, Chen and Ye purchased the Golden State Regional Center and other entities, and almost immediately after the purchase, transferred ownership to a straw owner.  The person to whom the entity was transferred did not know she was being named as the owner.  Also, Chen and Ye filed papers with USCIS, requesting that the government continue to recognize Golden State Regional Center as a regional center qualified to promote EB-5 investment within the South Bay.  The papers contained false signatures of the purported straw owner.  Second, defendants prepared and submitted falsified EB-5 applications.  For example, visa applications contained false signatures of the purported straw owner, false statements about the extent to which the Law Offices of Jean D. Chen represented both the investor and Golden State Regional Center, and false statements about the manner in which investor funds would be used.  

The indictment also charges defendants with obstruction of justice related to investigations being conducted by the United States Securities and Exchange Commission (SEC) and the FBI.  On October 18, 2018, the SEC filed a civil complaint against Chen, Ye, and other individuals and entities, alleging, among other things, that Chen and Ye improperly solicited investments and committed other violations of law.  The indictment alleges that during the course of the SEC’s investigation, defendants made demands of the straw owner of Golden State Regional Center that she provide false answers to SEC investigators.  Further, the defendants allegedly logged onto someone else’s email account and deleted emails relevant to the FBI’s investigation into the visa fraud.   

In sum, Chen and Ye both are charged with ten counts of visa fraud, in violation of 18 U.S.C. § 1546(a); one count of obstruction of justice, in violation of 18 U.S.C. § 1505; one count of obstruction of justice, in violation of 18 U.S.C. § 1512(b)(3); and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  In addition, Ye is charged with one count of identity theft, in violation of 18 U.S.C. § 1018(a)(7).

An indictment merely alleges that crimes have been committed, and all defendants, including Chen and Ye, are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendants face the following maximum sentences:

DEFENDANT

STATUTE

CHARGE

MAXIMUM PENALTY

 

Chen and Ye

 

18 U.S.C. § 1546(a)

Visa Fraud

Maximum term of imprisonment: 10 years

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Restitution

Forfeiture

Chen and Ye

 

18 U.S.C. § 1505

Obstruction of Justice

Maximum term of imprisonment: 5 years

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Restitution

Forfeiture

Chen and Ye

 

18 U.S.C. § 1512(b)(3)

Obstruction of Justice

Maximum term of imprisonment: 20 years

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Restitution

Forfeiture

Chen and Ye

 

18 U.S.C. § 1028A

 

Aggravated Identity Theft

Maximum term of imprisonment: 2 years (to run consecutive to any other underlying felony)

Maximum fine: $250,000

Maximum term of supervised release: 1 years

Ye

18 U.S.C. § 1028(a)(7)

Identity Theft

Maximum prison sentence: 5 years

Maximum fine: $500,000 or twice the gross gain or loss, whichever is greater

Maximum term of supervised release: 3 years

Restitution

Ye made an appearance yesterday before United States Magistrate Judge Susan van Keulen.  He pleaded not guilty to the charges and was released on a $750,000 bond.  His next scheduled appearance is for a hearing before the Honorable Lucy H. Koh, U.S. District Judge, on May 15, 2019, for a trial setting.

Chen remains at large.  According to court documents, Chen became a naturalized citizen of Dominica in October 2018, approximately at the same time the SEC filed its complaint against her, and may be using the name Maria Sofia Taylor.  Chen left the United States immediately after the SEC filed its civil complaint.

Assistant United States Attorney Patrick R. Delahunty is prosecuting the case with the assistance of Susan Kreider.  The prosecution is the result of an investigation led by the FBI and the SEC Office of the Inspector General.

Jacqueline Ramos, aka Jackie Acosta, of Salinas, California, was sentenced to 60 months in prison on conspiracy and bank fraud charges, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and United States Attorney David L. Anderson.

According to court filings, Ramos conspired with her co-defendants to file false income tax returns seeking refunds from the Internal Revenue Service (IRS).  These returns reported fake wages and fraudulently claimed dependents, education expenses, and tax credits. Ramos and her co-conspirators directed the fraudulently obtained refunds into bank accounts they controlled. United States District Court Judge Lucy H. Koh determined that the returns sought more than $1.6 million in refunds from the IRS.

On July 13, 2017, a federal grand jury indicted Ramos, 49, and four of her co-conspirators, charging them with conspiring to submit false claims against the United States.  Ramos and her husband, Antonio Ahumada Rivas, were also each charged with two counts of bank fraud.  On Oct. 17, 2018, Ramos entered a guilty plea to the conspiracy count and two counts of bank fraud. On Nov. 14, 2018, co-defendant, Norma Morfin Mandujano was sentenced to 30 months in prison for conspiracy. Co-defendants Antonio Ahumada Rivas and Ana Bajo have sentencing dates of March 27th and April 10th respectively.

In addition to the 60-month sentence, Judge Koh ordered Ramos to pay $1,641,610 restitution to the United States. Judge Koh also ordered forfeiture in the amount of $736,592 and ordered Ramos to serve three years of supervised release. The defendant will begin serving the sentence on May 29, 2019.

Principal Deputy Assistant Attorney General Zuckerman and United States Attorney Anderson commended IRS-Criminal Investigation special agents, who investigated the case, and Assistant United States Attorney Michael Pitman and Trial Attorney Christopher Magnani, who are prosecuting the case. 

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

SAN JOSE – Jacqueline Ramos, also known as Jackie Acosta, was sentenced today to 60 months in prison, and ordered to pay $1,641,610 in restitution, for her role in a tax fraud conspiracy, announced United States Attorney David L. Anderson, and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter.  The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge. 

According to court filings, Ramos, 49, of Salinas, Calif., conspired with her codefendants to obtain the personal identifying information of others, and to use that information to file hundreds of fraudulent income tax returns with the IRS during 2011 and 2012.  The returns reported fake wages and fraudulently claimed dependents, education expenses, and tax credits.  Judge Koh determined that the returns sought more than $1.6 million in refunds from the IRS.  Ramos and her coconspirators directed the IRS to send some of the fraudulently obtained refunds to bank accounts they controlled.

On July 13, 2017, a federal grand jury indicted Ramos, charging her with one count of conspiracy to submit false claims, in violation of 18 U.S.C. § 286, and two counts of bank fraud, in violation of 18 U.S.C. § 1344(2).  She pleaded guilty to all three counts on October 17, 2018.

In addition to the prison term, Judge Koh also ordered Ramos to pay $1,641,610 in restitution to the United States.  Judge Koh also ordered forfeiture in the amount of $736,592, and ordered Ramos to serve three years of supervised release.  The defendant will begin serving the sentence on May 29, 2019.

Ramos’s codefendants Norma Morfin Manduhano, Ana Bajo, and Antonio Ahumada Rivas have pleaded guilty to their respective roles in the scheme.  On November 14, 2018, Judge Koh sentenced Mandujano to 30 months in prison.  Judge Koh has scheduled sentencing hearings for Ahumada Rivas and Bajo for March 27, 2019 and April 10, 2019, respectively.

Assistant United States Attorney Michael G. Pitman and Trial Attorney Christopher Magnani are prosecuting the case.  The prosecution is the result of an investigation by IRS-CI.
 

SAN FRANCISCO – Carlos Olivares Hernandez was sentenced today to 20 years in prison for his involvement in a methamphetamine and cocaine trafficking conspiracy, announced United States Attorney David L. Anderson and Drug Enforcement Administration Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable James Donato, U.S. District Judge.

Olivares Hernandez, 52, a citizen of Mexico and formerly of Turlock, Calif., pleaded guilty on May 24, 2018, to participating in a conspiracy to traffic methamphetamine and cocaine.  According to the plea agreement, Olivares Hernandez admitted he obtained bulk quantities of cocaine and methamphetamine; managed the storage and distribution of cocaine and methamphetamine; and managed the collection, storage, and transportation of bulk cash proceeds of drug sales.  Olivares Hernandez also admitted that he was the organizer or leader of the conspiracy, which involved five or more participants.

At sentencing, Judge Donato characterized Olivarez Hernandez as a “merchant of death and destruction” who had committed “heinous crimes.”  Judge Donato further described the “enormous” quantities of drugs distributed by Olivares Hernandez’s drug trafficking conspiracy and stated that Olivares Hernandez’s drug trafficking was responsible for “destroying communities.”  

Olivares Hernandez admitted that on numerous occasions in August, September, and October 2015, he spoke with his drug customers, drug and money stash house operators, and drug and money couriers to coordinate cocaine and methamphetamine sales, the arrival of cocaine and methamphetamine supplies, and the collection of cash proceeds of drug sales.  On September 5, 2015, for example, law enforcement intercepted a shipment of approximately 22 pounds of methamphetamine intended for Olivares Hernandez’s drug distribution network.  On October 11 and 12, 2015, Olivares Hernandez coordinated with his co-conspirators the collection and transportation of nearly $400,000 in cash.

On October 13, 2015, law enforcement authorities executed search warrants at multiple locations in connection with this case.  At one of Olivares Hernandez’s stash houses in Delhi, Calif., authorities seized approximately 25 pounds of cocaine, one-half pound of methamphetamine, and $157,230 in cash.  The same day, authorities seized approximately $201,790 in drug proceeds from Olivares Hernandez’s home, as well as approximately 31 pounds of cocaine, 2.9 pounds of methamphetamine, and $367,040 in cash from another of Olivares Hernandez’s stash houses in Ballico, Calif.  

As part of this investigation, authorities also executed search warrants at the homes of Olivares Hernandez’s drug customers.  From one customer, co-defendant Manuel Chavez, authorities seized approximately 3.5 pounds of methamphetamine, 9 pounds of cocaine, 11 pounds of heroin, $43,500 in cash, and multiple firearms.  From another co-defendant, Ismael Mendoza Rodriguez, authorities seized more than 10 pounds of methamphetamine, $34,455 in cash, and multiple firearms.

On November 19, 2015, a federal grand jury indicted Olivares Hernandez and twelve co-defendants for various crimes related to the drug trafficking scheme.  The grand jury charged Olivares Hernandez with conspiracy to distribute and possess with intent to distribute controlled substances, in violation of 21 U.S.C. §§ 846 and 841(a)(1), and with money laundering.   Gonzalez Chavez pleaded guilty to conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine.  

In addition to the 20-year prison term, Judge Donato sentenced Olivares Hernandez to a 10-year term of supervised release.  Olivares Hernandez has been in custody since his arrest on October 13, 2015.

Olivares Hernandez is the 13th and final defendant sentenced as part of the conspiracy to distribute and possess with intent to distribute controlled substances in this case.  All of Olivares Hernandez’s co-defendants have pleaded guilty.  During the course of this investigation, law enforcement seized more than 40 pounds of methamphetamine, more than 65 pounds of cocaine, more than 11 pounds of heroin, more than $1,200,000 in cash drug proceeds, and approximately twelve firearms. 

Defendant

Age/

Residence

Charges

Status

Jesus Guadalupe Rojas

32/

Turlock

Distribution of methamphetamine, 21 U.S.C. §§ 841(a)(1)

Sentenced on June 14, 2017, to 24 months in prison and 3 years supervised release.

 

Jose Armando Mendoza Linares

42/

Turlock

Conspiracy to distribute and possess with intent to distribute methamphetamine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on October 25, 2017, to 60 months in prison and 5 years supervised release.

Gabriel Estrada

41/

Compton

Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

Sentenced on December 13, 2017, to 70 months in prison and 3 years supervised release

 

Vanessa Valdez

31/ Chula Vista

Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

Sentenced on December 13, 2017, to 22 months in prison and 3 years supervised release.

 

Elias Dominguez

46/

Patterson

Conspiracy to distribute and possess with intent to distribute methamphetamine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on January 24, 2018, to 55 months in prison and 5 years supervised release.

 

Carlos Martinez

26/

Hayward

Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on February 21, 2018, to 30 months in prison and 3 years supervised release.

 

Ismael Mendoza Rodriguez

37/

Turlock

Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Possession of a firearm in furtherance of drug trafficking, 18 U.S.C. § 924(c)

Sentenced on February 21, 2018, to 200 months in prison and 5 years supervised release.

Michael Sherman

48/

Lathrop

Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on February 28, 2018, to 32 months in prison and 3 years supervised release.

Ruben Franco Lopez

48/

Turlock

Conspiracy to distribute and possess with intent to distribute cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on March 7, 2018, to 37 months in prison and 3 years supervised release.

Manuel Lara Andrade

64/

Delhi

Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on March 14, 2018, to 140 months in prison and 5 years supervised release.

Daniel Jimenez

48/

Ballico

Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on November 7, 2018, to 128 months in prison and 5 years supervised release.

Manuel Gonzalez Chavez

42/

Stockton

Conspiracy to distribute and possess with intent to distribute methamphetamine, heroin, and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Possession of a firearm in furtherance of drug trafficking, 18 U.S.C. § 924(c)

 

Sentenced on December 12, 2018, to 312 months in prison and 3 years of supervised release.

Carlos Olivares Hernandez

52/

Turlock

Conspiracy to distribute and possess with intent to distribute methamphetamine and cocaine, 21 U.S.C. §§ 846 & 841(a)(1)

 

Sentenced on March 20, 2019, to 20 years in prison and 10 years of supervised release.

Assistant U.S. Attorneys Christiaan Highsmith, Sheila Armbrust, Katie Burroughs Medearis, and Gregg Lowder are prosecuting the case with the assistance of Linda Love, and Lance Libatique.  The prosecution is the result of an investigation by the DEA, the Concord Police Department, and IRS Criminal Investigations.  The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.

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UPDATE

The original version of this press release identified Valery Kosmachov as a Russian national.  Based upon new information, he is now being identified as an Estonain national.

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SAN FRANCISCO— A federal grand jury handed down a 52-count indictment charging Valery Kosmachov with engineering a scheme to illegally procure sophisticated electronic components from the United States and to smuggle them into the Russian Federation, announced United States Attorney David L. Anderson; Department of Homeland Security, Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin; Department of Commerce, Bureau of Industry and Security Acting Special Agent in Charge Todd Harris; U.S. Customs and Border Protection Director of Field Operations Brian Humphrey; and U.S. Marshals Service Marshal Donald M. O’Keefe.  Kosmachov was extradited to the United States from Estonia to face the charges.

According to the indictment filed September 21, 2017, and unsealed this morning, Kosmachov, 66, is an Estonian national and resident of Tallinn, Estonia.  He served as owner of Adimir OU and co-owner of Eastline Technology OU, along with co-defendant and Russian national Sergey Vetrov, 66.  The indictment describes how Kosmachov and Vetrov used the Estonia-based companies as procurement “fronts” to obtain controlled U.S.-origin microelectronics, in part by misrepresenting that the end-users for the components were located in Estonia.  The components included dual-use programmable computer chips capable of operating in austere environments making them useful in both civilian and military applications.  Once in possession of the chips in Estonia, the co-defendants allegedly later smuggled them into the Russian Federation, in part by using laundered funds.  

In sum, Kosmachov, Vetrov, and their two companies are charged with one count of conspiracy to violate the International Emergency Economic Powers Act (IEEPA) and one count of conspiracy to commit international money laundering, in violation of 18 U.S.C. §§ 1956(a)(2)(A) and (h).  In addition, Kosmachov and Vetrov are charged with 12 substantive counts of violating the IEEPA, in violation of 50 U.S.C. § 1705, 19 counts of smuggling, in violation of 18 U.S.C. §§ 554 and 2; and 17 counts of international money laundering, in violation of 18 U.S.C. §§ 1956(a)(2)(A).

Kosmachov was arrested in Tallinn on September 12, 2018, and was extradited to the United States on March 14, 2019, to face prosecution.  Vetrov remains at large.  Kosmachov appeared this morning before Chief U.S. Magistrate Judge Joseph C. Spero, for a detention hearing.  He remains in federal custody pending his next court appearance.  Kosmachov is next scheduled to appear on March 28, 2019, before the Honorable William H. Orrick, U.S. District Judge, for further proceedings.  

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Kosmachov could face a maximum 20-year term of imprisonment for each IEEPA and money laundering-related count, and a maximum 10-year sentence for each count of smuggling.  Additional periods of supervised release, fines, and special assessments also could be imposed.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Philip J. Kearney of the Northern District of California United States Attorney’s Office, and Amy Larson, of the U.S. Department of Justice’s National Security Division, are prosecuting the case.  The prosecution is the result of an investigation by the U.S. Department of Homeland Security Investigations, the Department of Commerce’s Bureau of Industry and Security, U.S. Customs and Border Protection, the Internal Revenue Service, and the U.S. Marshals Service with assistance from the U.S. Department of Justice’s Office of International Affairs.
 

SAN JOSE— A federal jury convicted Fritz Kramer of wire fraud and commodities fraud today in connection with a fraudulent export scheme, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The guilty verdict follows a six-week jury trial before the Honorable Edward J. Davila, U.S. District Judge.

The jury found Kramer, 70, with a last known residence in Norway, guilty of eleven counts of wire fraud and one count of commodities fraud.  The evidence at trial showed that from December 2008 through July 2016, Kramer fraudulently solicited funds from investors, stating that he was a gold and diamond exporter.  Kramer told his victims that their money would be invested in an “export project” in which Kramer would purchase gold and diamonds from the Democratic Republic of Congo and have them exported to Europe, Asia, and the United States.  Kramer falsely promised investors that they would receive up to ten times the amount of money they invested and that the profits could be earned in as little as one month.  Based upon Kramer’s false representations, more than three dozen victims were convinced to send money, totaling millions of dollars, to entities purportedly operating the bogus export project.  The evidence at trial demonstrated that no return on investment was ever received by any of the investors.    

On July 12, 2018, a federal grand jury handed down a superseding indictment charging Kramer with eleven counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of commodities fraud, in violation of 18 U.S.C. § 1348.  The jury convicted Kramer on all counts.

The defendant is currently in custody pending sentencing.  Judge Davila scheduled Kramer’s sentencing hearing for July 15, 2019.  For each count of wire fraud, Kramer faces a maximum statutory penalty of 20 years in prison and a fine of $250,000, plus restitution.  Kramer also faces a maximum statutory penalty of 25 years in prison and a fine of $250,000, plus restitution, for the commodities fraud count.  In addition, Judge Davila may order Kramer to serve an additional term of supervised release.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorneys Maia Perez and Jeff Nedrow are prosecuting the case with the assistance of Susan Kreider and Nina Burney-Williams.  The prosecution is the result of an investigation by the FBI.       
 

OAKLAND –A federal grand jury handed down a superseding indictment charging Ali Mugalli Hassan, Mugalli Ahmed Hassan, and Ahmed Ahmed Hasan Dharahan with conspiracy to defraud the United States, benefits fraud, conspiracy to commit wire fraud, and wire fraud, announced United States Attorney David L. Anderson and United States Department of Agriculture Office of Inspector General (USDA-OIG) Western Region Special Agent-in-Charge Lori Chan.

According to the superseding indictment issued on March 14, 2019, and unsealed this morning, defendant Ali Mugalli Hassan, 29, of Alameda, Calif., owned and operated a convenience store on International Boulevard in Oakland.  Members of Ali Mugalli Hassan’s family served as cashiers at the store, including co-defendants Mugalli Ahmed Hassan, 48, and Ahmed Ahmed Hasan Dharahan, 38, both of Oakland.  The superseding indictment alleges the defendants defrauded the USDA by unlawfully trafficking federal benefits.  

The convenience store was an authorized vendor for the USDA’s Supplemental Nutritional Assistance Program (SNAP) (formerly known as the Food Stamp Program).  SNAP helps economically disadvantaged persons pay for essential food items for themselves and their families.  Program recipients receive their benefits via an electronic benefits transaction (EBT) card, which operates much like a debit card but limits purchases to program-eligible items.  The store conducted a high-volume of SNAP transactions, including redeeming over $2.3 million in SNAP benefits between August 2014 and November 2017.  According to the superseding indictment, the defendants purchased benefits from store customers for 50 cents on the dollar, thus enabling the customers to use the cash they received for any purpose.  The defendants then conducted fraudulent SNAP transactions through the convenience store and redeemed the full dollar value of the benefits from the USDA.  As part of the scheme, the defendants and others also kept customers’ EBT cards and used these cards at other stores to purchase items for themselves using the federal benefits.  

Each defendant was charged with one count of conspiracy to commit benefits fraud and to defraud the United States, in violation of 18 U.S.C. § 371; one count of benefits fraud, in violation of 7 U.S.C. § 2024(b); one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; and twelve counts of wire fraud and aiding and abetting, in violation of 18 U.S.C. § 1343 and 18 U.S.C. § 2.  

Defendants were arrested and made their initial appearance this morning in federal court in Oakland before U.S. Magistrate Judge Kandis A. Westmore.  Magistrate Judge Westmore arraigned the defendants and released them on bond.  The Court also scheduled appearances tomorrow for identification of counsel for Ahmed Ahmed Dharahan and Ali Mugalli Hassan, as well as further bond hearings for all three defendants.            

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendants face the following maximum statutory sentences:

Charge

Maximum Statutory Sentence

Conspiracy to Commit Benefits Fraud and to Defraud the United States

5 years of imprisonment

$250,000 fine

Benefits Fraud ($5,000 or more)

20 years of imprisonment

$250,000 fine

Conspiracy to Commit Wire Fraud

20 years of imprisonment

$250,000 fine

Wire Fraud  (each count)

20 years of imprisonment

$250,000 fine

In addition, the court may order up to three years of supervised release (for each count), additional assessments, and restitution, if appropriate.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Katie Burroughs Medearis is prosecuting the case with the assistance of Jessica Rodriguez Gonzalez.  The prosecution is the result of an investigation led by the USDA-OIG with the assistance of the Oakland Police Department, U.S. Marshals Service, and the Bureau of Alcohol, Tobacco, Firearms and Explosives. 

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On December 18, 2020, United States Attorney David L. Anderson issued the following statement:

On Friday, December 18, 2020, we moved to vacate the judgment and dismiss the superseding indictment against Job Torres Hernandez.  In this case, a jury concluded Mr. Torres Hernandez was guilty of multiple crimes, and the district court entered a criminal judgment against Mr. Torres Hernandez based upon that verdict.  During the pendency of Mr. Torres Hernandez’s appeal to the Ninth Circuit Court of Appeals, we learned of circumstances leading us to the firm conclusion that at this point only a dismissal would meet the interests of justice.  It is a serious step for the United States to dismiss criminal charges.  Likewise, it is the solemn duty of the United States to seek justice in all its cases, and to evaluate the appropriateness of its charges throughout the course of the proceedings.

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OAKLAND - A federal jury convicted Job Torres Hernandez of charges that he obtained forced labor from victims and harbored illegal aliens for commercial advantage or private financial gain, announced United States Attorney David L. Anderson and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent-in-Charge Ryan L. Spradlin.  The conviction follows a ten day trial before the Honorable Jeffrey S. White, U.S. District Judge.

The evidence at trial demonstrated that since at least May 2015, Torres, 38, of Hayward, Calif., owned construction companies in Northern California at which he employed workers to whom he paid little to nothing for their labor.  Torres recruited workers from Mexico to work for his construction companies and then refused to pay them the wages they had earned.  Further, Torres knew the workers had come to, entered, and remained in the United States in violation of the law; he kept the workers in squalid conditions and shielded them from detection while making them work as long as 24 consecutive hours at a time.  Many victims testified at trial, with the assistance of an interpreter, about how Torres treated them.  Witnesses testified that Torres paid them far less than what he had promised to pay them, and when they complained, Torres threatened them or their family members.  Specifically, the evidence demonstrated Torres warned his victims that if they reported him, then he would harm them physically, have associates in Mexico harm their family, and have them deported.  The evidence also demonstrated that Torres told his victims that if they went to police or filed suit against him, no one would believe them.  In addition, Torres housed dozens of workers on makeshift beds in a commercial warehouse in Hayward, Calif., and other properties including a garage in Hayward.  The workers had limited access to toilets and showers, and at times, the properties were locked, preventing the workers from leaving.  Torres harbored these individuals for the purpose of obtaining an advantage in the construction industry and for his private financial gain.  

On December 6, 2018, a federal grand jury handed down a superseding indictment, charging Torres with one count of harboring illegal aliens for commercial advantage or private financial gain, in violation of 8 U.S.C. §§ 1324(a)(1)(A)(iii) and (B)(i), and one count of forced labor, in violation of 18 U.S.C. § 1589(a).  The jury convicted Torres of both counts.

Judge White ordered the U.S. Marshals Service to take Torres into custody immediately, pending sentencing.  Judge White scheduled Torres’s sentencing hearing for June 25, 2019.  Torres now faces a maximum statutory penalty of 10 years in prison, and a fine of $250,000, for harboring illegal aliens, and 20 years in prison, and a fine of $250,000, for the forced labor violation.  In addition, the court may order Torres to serve an additional term of supervised release and to pay forfeiture and restitution, if appropriate.  However, any sentence following conviction will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorneys Ravi T. Narayan and Jonathan U. Lee are prosecuting the case with the assistance of Vanessa Quant, Jessica Rodriguez Gonzalez, and Kimberly Richardson.  The prosecution is the result of an investigation by the Department of Homeland Security’s Human Trafficking Unit; Department of Labor’s Wage and Hour Division; and the San Francisco Police Department’s Special Victims Unit.  
 

OAKLAND - Man Young Kim and Kyong Ja Kim, aka Angie Kim, pleaded guilty in federal court in Oakland today to conspiracy to defraud the United States, announced United States Attorney David L. Anderson and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter.  The guilty plea was accepted by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge.

According to the plea agreement, Man Kim, 64, and Angie Kim, 58, both of Dublin, Calif., admitted they failed to report on federal income tax returns the cash received from sales at their restaurants, Sushi Boat Oakridge, Sushi Boat Valley Fair, and Sushi Boat Westgate.  The Kims admitted they deposited funds from the restaurants’ credit card sales into a corporate bank account but did not deposit most of the cash.  Instead, the Kims used the cash to pay employee wages and to purchase other personal non-business-related items, including real property.  The Kims acknowledged they maintained detailed spiral notebooks that recorded daily credit card and cash sales.  Further, the Kims admitted they used a certified public accountant to prepare their tax returns, but provided the accountant with only the corporate bank account records, not the spiral notebooks that showed cash sales.  Man Kim also admitted he did not pay employment taxes on the cash wages he paid to the restaurant employees.  The total loss to the government resulting from the Kims’ income tax and employment tax scheme is $1,152,622.66.  

A federal grand jury indicted the Kims on June 29, 2017.  Both defendants were charged with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371.  Man Kim was also charged with three counts of filing a false tax return, in violation of 26 U.S.C. § 7206(1), and nine counts of willful failure to account for and pay employment taxes, in violation of 26 U.S.C. § 7202.  Angie Kim was also charged with three counts of aiding and assisting in the preparation of false tax returns, in violation of 26 U.S.C. § 7206(2).  The Kims both pleaded guilty to the conspiracy count.  If they comply with the plea agreement, the additional charges will be dismissed at sentencing. 

The Kims currently are released on bond, pending sentencing.  Judge Gonzalez Rogers scheduled their sentencing hearing for July 18, 2019.  The maximum statutory penalty for conspiracy in violation of 18 U.S.C. § 371 is 5 years in prison and a fine of $250,000, plus restitution, if appropriate.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Cynthia Stier is prosecuting the case with the assistance of Kathy Tat.  The prosecution is the result of an investigation by the IRS-CI.  
 

SAN JOSE– Sean Finn was sentenced to 72 months in prison for being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez.  The sentence was handed down by the Honorable Beth L. Freeman, United States District Judge.

Finn, 38, of San Jose, Calif., pleaded guilty to the charge on June 19, 2018.  According to the plea agreement, Finn admitted that on February 3, 2017, while in a department store in Santa Clara, he possessed a loaded Colt Mk IV .380 caliber semi-automatic firearm.  The firearm had an obliterated serial number.  Further, Finn admitted that on February 3, 2017, he was a convicted felon and was not eligible to possess a firearm.  According to court documents, Finn also possessed at the time a stolen vehicle and about 400 pieces of stolen mail.

On April 13, 2017, a federal grand jury indicted Finn, charging him with being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g), and being in possession of stolen matter, in violation of 18 U.S.C. § 1708.  Finn pleaded guilty to the first count and the second count was dismissed.  

In addition to the prison term, Judge Freeman ordered Finn to serve a three-year term of supervised release to begin at the conclusion of his prison term.  

Assistant United States Attorney Patrick Delahunty is prosecuting the case with the assistance of Susan Kreider.  The prosecution is the result of an investigation by the United States Postal Inspector Services and the Santa Clara Police Department.    
 

OAKLAND – Jeremy Orr pleaded guilty today in federal court in Oakland to wire fraud, announced United States Attorney David L. Anderson and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter.  The plea was accepted by the Honorable Jeffrey S. White, U.S. District Judge.

According to his guilty plea, Orr, 36, of Richmond, Calif., admitted he devised a scheme to attempt to defraud the IRS of hundreds of thousands of dollars by filing false federal income tax returns.  Orr obtained the personal identification information of individuals in and around the Bay Area and prepared false 2011 federal income tax returns in the names of those individuals.  The false tax returns reported false wages, false education expenses, or both, which generated a fraudulent income tax refund.  Orr electronically filed more than 200 false tax returns with the IRS resulting in claimed fraudulent tax refunds in the amount of $335,142.

A federal grand jury indicted Orr on January 15, 2015, charging him with four counts of wire fraud, in violation of 18 U.S.C. § 1343, and four counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  Today, Orr pleaded guilty to one count of wire fraud.  If Orr complies with the plea agreement, the remaining counts will be dismissed at sentencing.

Orr has been in federal custody since his arrest in May of 2018.  Judge White scheduled Orr’s sentencing hearing for May 28, 2019.  The maximum statutory penalty for wire fraud is 20 years in prison and a fine of $250,000, however, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorney José A. Olivera is prosecuting the case with the assistance of Larry Garland and Kathy Tat.  The prosecution is the result of an investigation by the IRS-CI.  
 

SAN FRANCISCO– Craig William Nitsche, II, was sentenced today to 84 months in prison for distributing methamphetamine and being a felon in possession of ammunition, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree.  The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge.

Nitsche, 35, of Redwood City, Calif., pleaded guilty to the charges on October 9, 2018.  According to his plea agreement, Nitsche admitted that on July 30, 2018, he was driving a beige pickup truck without license plates in Redwood City.  After Nitsche stopped at a gas station, law enforcement officers approached the car.  As they approached, Nitsche pulled a black handgun from his pants pocket, raised the handgun, and then dropped it on the ground.  The law enforcement officers took him into custody.  Nitsche admitted that he knew he had one round chambered in the handgun and twelve additional rounds in the magazine, and that he had 27.1 grams of methamphetamine in the center console of his pickup truck.  Nitsche also admitted he possessed the methamphetamine with the intent to distribute it by selling it to other people.

On August 21, 2018, a federal grand jury indicted Nitsche charging him with one count of being a felon in possession of ammunition, in violation of 18 U.S.C. § 922(g)(1); one count of being in possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C); and one count of using or carrying a handgun in furtherance of his possession with intent to distribute methamphetamine, in violation of 18 U.S.C. § 924(c).  Nitsche pleaded guilty to all three counts.

In addition to the prison term, Judge Seeborg ordered Nitsche to serve a three-year term of supervised release that will begin at the conclusion of his prison term.

Assistant U.S. Attorney Jonathan Lee is prosecuting the case with the assistance of Kimberly Richardson.  The prosecution is the result of an investigation by the ATF, the San Mateo County Sheriff’s Department, and the San Mateo Vehicle Theft Task Force.
 

Covidien LP has agreed to pay $17,477,947 to resolve allegations that it violated the False Claims Act by providing free or discounted practice development and market development support to physicians located in California and Florida to induce purchases of Covidien’s vein ablation products, the Department of Justice announced today.  

“Today’s settlement serves as an important reminder to those in the health care community that unlawful kickbacks come in many forms and are not limited to monetary payments to providers,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “Providing free or discounted services to health care providers to induce the use of certain items or services can lead to excessive and unnecessary treatments, and drive up health care costs for everyone.”

“Patients in federal health care programs deserve medical care that is free from improper financial incentives,” said U.S. Attorney David L. Anderson for the Northern District of California.  “As this case makes clear, companies must steer clear of violating the Anti-Kickback Statute or risk being pursued.”

The United States alleged that Covidien violated the Anti-Kickback Statute and, correspondingly, the False Claims Act by providing practice development and market development support to health care providers located in California and Florida from Jan. 1, 2011, through Sept. 30, 2014, to induce those providers to purchase ClosureFASTTM radiofrequency ablation catheters that were billed to Medicare and to the California and Florida Medicaid programs.  ClosureFastTMcatheters are used in procedures that treat venous reflux disease, a disease often marked by the presence of varicose veins.  The practice and market development support Covidien provided included customized marketing plans for specific vein practices; scheduling and conducting “lunch and learn” meetings and dinners with other physicians to drive referrals to specific vein practices; and providing substantial assistance to specific vein practices in connection with planning, promoting, and conducting vein screening events to cultivate new patients for those practices.

The Anti-Kickback Act prohibits the payment of remuneration to induce the referral or use of items or services paid for by federal health care programs.  Remuneration includes not only cash payments but also offers or payments made “in kind.” 

“The government contended that Covidien provided discounted or free services to health providers – and so hoped to evade kickback charges,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Companies seeking to buy clients through such arrangements can expect to pay a steep price.”

“Kickback schemes don’t just victimize those directly involved, they undermine the public’s trust in our healthcare system and drive up costs for everyone,” said FBI San Francisco Special Agent in Charge John F. Bennett, “This significant settlement sends a clear message: healthcare providers who engage in this kind of activity and put their own greed before the needs of their patients will be aggressively pursued by the FBI and our federal partners.”

Under the settlement agreement, Covidien will pay an additional $1,474,892 to California and $1,047,160 to Florida for claims settled by these state Medicaid programs.  The Medicaid program is a jointly funded federal and state program. 

The settlement resolves allegations contained in lawsuits filed by Erin Hayes and Richard Ponder (former sales managers for Covidien) and Shawnea Howerton (a former employee of one of Covidien’s customers), which are pending in federal court in San Francisco, California.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the United States for false claims and to share in any recovery.  Mr. Hayes and Mr. Ponder will receive $3,146,030 as their share of the federal recovery. 

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Northern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation, as well as the California Attorney General’s Office and the Florida Attorney General’s Office.  Covidien cooperated in the government’s investigation, including by sharing the results of its extensive internal investigation and by assisting in the development of a sophisticated damages model, and received credit for its cooperation.

The cases are captioned United States ex rel. Hayes, et al. v. Covidien, Inc., et al., Case No. C 14-1511-EDL (N.D. Cal.), and United States, et al. ex rel. Howerton v. Covidien, et al., Case No. C 15-0559-EDL (N.D. Cal.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability. 

SAN FRANCISCO – Covidien LP has agreed to pay $17,477,947 to resolve allegations that it violated the False Claims Act by providing free or discounted practice development and market development support to physicians located in California and Florida to induce purchases of Covidien’s vein ablation products, the Department of Justice announced today.   

“Patients in federal health care programs deserve medical care that is free from improper financial incentives,” said U.S. Attorney David L. Anderson for the Northern District of California.  “As this case makes clear, companies must steer clear of violating the Anti-Kickback Statute or risk being pursued.”

“Today’s settlement serves as an important reminder to those in the health care community that unlawful kickbacks come in many forms and are not limited to monetary payments to providers,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division.  “Providing free or discounted services to health care providers to induce the use of certain items or services can lead to excessive and unnecessary treatments, and drive up health care costs for everyone.”

The United States alleged that Covidien violated the Anti-Kickback Statute and, correspondingly, the False Claims Act by providing practice development and market development support to health care providers located in California and Florida from Jan. 1, 2011, through Sept. 30, 2014, to induce those providers to purchase ClosureFASTTM radiofrequency ablation catheters that were billed to Medicare and to the California and Florida Medicaid programs.  ClosureFastTM catheters are used in procedures that treat venous reflux disease, a disease often marked by the presence of varicose veins.  The practice and market development support Covidien provided included customized marketing plans for specific vein practices; scheduling and conducting “lunch and learn” meetings and dinners with other physicians to drive referrals to specific vein practices; and providing substantial assistance to specific vein practices in connection with planning, promoting, and conducting vein screening events to cultivate new patients for those practices.

The Anti-Kickback Act prohibits the payment of remuneration to induce the referral or use of items or services paid for by federal health care programs.  Remuneration includes not only cash payments but also offers or payments made “in kind.”  

“The government contended that Covidien provided discounted or free services to health providers — and so hoped to evade kickback charges,” said Steven J. Ryan, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.  “Companies seeking to buy clients through such arrangements can expect to pay a steep price.” 

“Kickback schemes don’t just victimize those directly involved, they undermine the public’s trust in our healthcare system and drive up costs for everyone,” said FBI San Francisco Special Agent in Charge John F. Bennett,  “This significant settlement sends a clear message: healthcare providers who engage in this kind of activity and put their own greed before the needs of their patients will be aggressively pursued by the FBI and our federal partners.”

Under the settlement agreement, Covidien will pay an additional $1,474,892 to California and $1,047,160 to Florida for claims settled by these state Medicaid programs.  The Medicaid program is a jointly funded federal and state program.  

The settlement resolves allegations contained in lawsuits filed by Erin Hayes and Richard Ponder (former sales managers for Covidien) and Shawnea Howerton (a former employee of one of Covidien’s customers), which are pending in federal court in San Francisco, California.  The lawsuits were filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the United States for false claims and to share in any recovery.  Mr. Hayes and Mr. Ponder will receive $3,146,030 as their share of the federal recovery.  

The settlement was the result of a coordinated effort by the Civil Division of the Department of Justice, the U.S. Attorney’s Office for the Northern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation, as well as the California Attorney General’s Office and the Florida Attorney General’s Office.  Covidien cooperated in the government’s investigation, including by sharing the results of its extensive internal investigation and by assisting in the development of a sophisticated damages model, and received credit for its cooperation.

The claims resolved by the settlement are allegations only, and there has been no determination of liability.  This case is being handled by Assistant United States Attorney Kimberly Friday and U.S. Department of Justice Trial Attorney Amy Kossak with assistance from Garland He, Jonathan Birch, and Tina Louie.
 

SAN FRANCISCO– A federal grand jury has indicted Haichao Huang, charging him with health care fraud and making false statements relating to health care matters, announced United States Attorney David L. Anderson, Office of Personnel Management Office of the Inspector General Deputy Assistant Inspector General for Investigations Thomas W. South, and U.S. Department of Labor Office of Inspector General Special Agent in Charge Abel Salinas.

According to the indictment, filed March 7, 2019, and unsealed today, from February 2013 through June 2018, Huang, 46, of San Francisco, was a health care provider who offered acupuncture, physical therapy, massage, and other services at his office in San Francisco.  The indictment alleges that Huang submitted claims for reimbursement to his patients’ health insurance plans, claiming that he provided reimbursable services and treatments when, in fact, he knew that the billings were false and not properly reimbursable.  The indictment gives three examples of the ways in which Huang allegedly submitted billings for reimbursement.  First, Huang submitted requests for reimbursement for acupuncture and other treatments when, in fact, the patient had received either much shorter periods of treatment or no treatment at all.  Second, after a patient reached the limit of acupuncture sessions allowed by the relevant insurance plan, Huang billed the plan for other types of treatments and services that were not provided in order to continue receiving improper reimbursements.  Third, Huang submitted claims for services rendered on days when the patient beneficiaries were not seen and received no services at all—including days when Huang was not in California.  

Huang is charged with six counts of health care fraud, in violation of 18 U.S.C. § 1347, and one count of false statement relating to health care matters, in violation of 18 U.S.C. § 1035(a)(2).  

An indictment merely alleges that crimes have been committed, and Huang, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 10 years in prison and $250,000 for each violation of 18 U.S.C. § 371.  The defendant faces five years in prison and a fine of $250,000 if convicted of the violation of 18 U.S.C. § 1035(a)(2).  The court may also order additional fines, restitution, and additional periods of supervised release at sentencing.  However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Huang made an initial appearance today before U.S. Magistrate Judge Joseph C. Spero.  Huang pleaded not guilty and was released on bond.  Judge Spero scheduled Huang’s next court appearance for March 12, 2019, for a further bond hearing.  Huang’s first appearance before a district court judge is scheduled for March 22, 2019, before the Hon. Susan Illston, U.S. District Judge.

Assistant U.S. Attorney Ross Weingarten is prosecuting the case with the assistance of Marina Ponomarchuk.  This prosecution is the result of investigations by the Office of Personnel Management Office of Inspector General and the Department of Labor Office of Inspector General, with assistance from the San Mateo County District Attorney’s Office. 
 

OAKLAND – Oscar Rene Noguera Baeza was sentenced today to 70 months in prison for distributing cocaine and being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge. 

Baeza, 31, of Concord, Calif., pleaded guilty to the charges on November 9, 2018.  According to his plea agreement, Baeza admitted that between June 2017 and February 2018, he distributed over a kilogram of cocaine in a series of transactions.  Baeza also admitted that he was paid a total of $36,960 for the cocaine he sold during these transactions.  Defendant also admitted that he possessed a Springfield XD40 semi-automatic .40 caliber pistol loaded with eight rounds ammunition, and an extended magazine that could hold at least sixteen rounds of ammunition.  

On August 3, 2018, Baeza was charged by information with one count of distribution of cocaine, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C), and one count of being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1).  Baeza pleaded guilty to both counts.

In addition to the prison term, Judge Tigar ordered Baeza to serve a 4-year term of supervised release that will begin at the conclusion of his prison term.    

Assistant U.S. Attorney Thomas Green is prosecuting the case with the assistance of Elyza Delgado.  The prosecution is the result of an investigation by the DEA and Concord Police Department.
 

SAN FRANCISCO – Oliver Barcenas was sentenced to 84 months in prison for being a felon in possession of a firearm and ammunition, announced United States Attorney David L. Anderson and Bureau of Alcohol, Tobacco, Firearms, and Explosives (“ATF”) Special Agent in Charge Rayfield Roundtree.  The sentence was handed down by the Honorable Vince Chhabria, United States District Judge.

Barcenas, 28, of Richmond, Calif., pleaded guilty to the charge on December 11, 2018.  According to the plea agreement, Barcenas admitted that on June 9, 2018, while on a crowded street in San Francisco, he possessed a loaded Glock 30, .45 caliber handgun, with an extended magazine. Barcenas admitted that he was approached by a San Francisco police officer, attempted to evade arrest, fled from the police, and while doing so, removed the firearm from his waistband.  Further, Barcenas admitted that on June 9, 2018, he was a convicted felon and was not eligible to possess a firearm.  According to court documents, San Francisco police officers arrested Barcenas hours after the Golden State Warriors’ 2018 victory in the NBA championship and during celebrations of the win.  During those celebrations in San Francisco, Barcenas ran on a crowded sidewalk while holding the firearm and threw the loaded gun into the crowded street.

On August 30, 2018, a federal grand jury indicted Barcenas, charging him with being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1).  Barcenas pleaded guilty to the charge.  

In addition to the prison term, Judge Chhabria ordered Barcenas to serve a three-year term of supervised release to begin at the conclusion of his prison term.  

Assistant United States Attorney Ross Weingarten is prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by the ATF and the San Francisco Police Department.    
 

SAN FRANCISCO – Stanley Charles was sentenced today to 33 months in prison and ordered to pay $657,888 in restitution for tax fraud, announced United States Attorney David L. Anderson and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter.  The sentence was handed down by the Honorable Maxine M. Chesney, U.S. District Judge.

Charles, age 33, of Cotati, Calif., pleaded guilty to the charges on July 18, 2018.  According to the plea agreement, Charles admitted that for tax years 2009 through 2015, he prepared and filed 428 false and fraudulent federal income tax returns requesting false deductions and credits on behalf of other taxpayers.  For example, Charles prepared and filed a fraudulent federal income tax return for a husband and wife without their knowledge or permission.  The tax return falsely reported that the couple had $8,000 in qualified higher education expenses.  Along with the false return, Charles filed a document directing the IRS to pay $5,447 of the refund to the couple, and the remaining $1,235 to his own bank account.   In addition, Charles admitted he prepared and filed with the IRS a false 2011 Amended U.S. Individual Income Tax Return regarding his own income.  Charles knew he was entitled to an American Opportunity Credit of no more than $2,500 and nevertheless falsely reported a credit of $9,873.    

On June 18, 2018, Charles was charged by information with one count of tax fraud, in violation of 26 U.S.C. § 7206(2), and one count of filing a false federal income tax return, in violation of 26 U.S.C. § 7206(1).  Charles pleaded guilty to both counts.

In addition to the prison term, Judge Chesney sentenced the defendant to one year of supervised release.  Judge Chesney also ordered the defendant to refrain from aiding or assisting in the preparation of federal income tax returns for anyone other than himself.   Judge Chesney ordered the defendant to begin serving his prison term on May 6, 2019.

Assistant U.S. Attorney Cynthia Stier is prosecuting the case with the assistance of Kathy Tat.  The prosecution is the result of an investigation by the IRS-CI.  
 

OAKLAND –James Robert Lewis was sentenced to 76 months in prison for being a felon in possession of a firearm and for violating the terms of his supervised release, announced United States Attorney David L. Anderson and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down today by the Honorable Phyllis J. Hamilton, Chief United States District Judge.

Lewis, 35, of Richmond, Calif., pleaded guilty to the felon-in-possession charge on December 14, 2018.  In pleading guilty, Lewis admitted that on August 26, 2018, he was a convicted felon and was not eligible to possess a firearm.  He fled from a Richmond police officer and discarded a loaded semiautomatic handgun into the bed of a pickup truck.  The firearm had an extended magazine, with a thirty-round capacity, and was loaded with 27 rounds of ammunition.  Lewis further acknowledged that on August 26, 2018, he was on supervised release pursuant to a conviction in 2013 for a separate firearms offense. 

On September 27, 2018, a federal grand jury indicted Lewis, charging him with being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1).  Lewis pleaded guilty to the charge and admitted that the crime was also a violation of the terms of his supervised release.  Chief Judge Hamilton ordered the defendant to serve a combined 76 months for both violations.

In addition to the prison term, Chief Judge Hamilton ordered Lewis to serve a three-year term of supervised release to begin at the conclusion of his prison term.  

Assistant United States Attorney Katherine Lloyd-Lovett is prosecuting the case with the assistance of Elyza Delgado.  The prosecution is the result of an investigation by the FBI and the Richmond Police Department.     
 

SAN JOSE – Ricardo Rios-Angulo, aka Ricardo Perez-Lopez, was sentenced today to 220 months in prison for his role in a conspiracy to distribute methamphetamine, announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Beth Labson Freeman, United States District Judge.

Rios-Angulo, 33, of Fresno, pleaded guilty to the charges on June 19, 2018.  At his change of plea hearing, Rios-Angulo admitted that on three occasions between May 2016 and April 2017, he conspired with others to sell over 21 pounds of methamphetamine to a confidential informant working for the DEA.  The purchased substances later were tested and contained approximately 8,842.3 grams of 100% pure “crystal meth” (d-methamphetamine hydrochloride).  During searches of Rios-Angulo’s two residences in Fresno, DEA agents found cocaine, heroin, and additional methamphetamine.  In total, Rios-Angulo possessed over 12,875 grams of 100% pure “crystal meth,” over 107 grams of cocaine, and over 1 gram of heroin.  Agents also found a Cobra .380 caliber handgun, a loaded Springfield Armory 1911 .38 caliber handgun, an AR-style assault rifle without a serial number with two high-capacity magazines, and various ammunition, including .380 caliber, .38 caliber, and .32 caliber bullets.  

On May 4, 2017, a federal grand jury returned an indictment charging Rios-Angulo with three counts of conspiracy to distribute methamphetamine, in violation of 21 U.S.C. §§ 846 and 841, and three counts of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841.  Rios-Angulo pleaded guilty to all six counts.  

In addition to the prison term, Judge Freeman sentenced the defendant to a five-year period of supervised release.  Rios-Angulo has been in custody since his arrest and will begin serving his sentence immediately.

Rios-Angulo’s co-defendant Sergio Antonio Padilla-Lopez also pleaded guilty today.  Judge Freeman scheduled Padilla-Lopez’s sentencing hearing for June 18, 2019.

Assistant U.S. Attorney Scott Simeon prosecuted the case with the assistance of Tong Zhang.  The prosecution is the result of an investigation by the DEA.
 

SAN FRANCISCO – Prithviraj R. Bhikha, a former employee of Cisco Systems, Inc. (Cisco), was charged in a criminal complaint with wire fraud, announced United States Attorney David L. Anderson and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The criminal complaint was unsealed today following Bhikha’s arrest on Friday, March 1, 2019, at the San Francisco International Airport.  

According to an affidavit filed by a special agent of the Federal Bureau of Investigation, Bhikha, 50, of San Francisco, was employed until mid-2017 by Cisco as a director in its global supply unit in San Jose, Calif.  That unit was in charge of working with suppliers and vendors to obtain parts for Cisco products.  In or about 2013, Bhikha is alleged to have begun advocating within Cisco for the approval of a new project, of which he would be in charge, the goal of which was for Cisco to retain third-party vendors to negotiate savings with manufacturers on small parts used in Cisco products.  The complaint affidavit alleges that Bhikha devised, participated in, and executed a scheme to defraud Cisco by establishing overseas business entities, then directing and approving Cisco contracts to these entities pursuant to the aforementioned project, and failing to disclose his ownership interest in the overseas entities.  The affidavit alleges that Cisco wired approximately $6.5 million to one of these entities and approximately $2.8 million to another.  The affidavit also alleges more than $8.5 million was wired from bank accounts associated with these two overseas entities to U.S. bank accounts either controlled jointly by Bhikha and his wife or by his wife alone.

The complaint affidavit also alleges that, when Cisco employees became suspicious regarding one of Bhikha’s overseas entities in 2016, Bhikha and another Cisco employee worked together to create documentation to send to Cisco employees regarding that company.  The other Cisco employee is also alleged to have asked a third party to pose as the CEO of the overseas entity in a meeting with Cisco employees in July 2016.  Bhikha is charged with one count of wire fraud, in violation of 18 U.S.C. § 1343.

Bhikha made his initial appearance this morning in federal court before U.S. Magistrate Judge Joseph C. Spero.  Magistrate Judge Spero released Bhikha on a $3,000,000 bond and scheduled his next court appearance for March 18, 2019, for preliminary hearing or arraignment.

A criminal complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted on the charge in the criminal complaint, the defendant would face a maximum sentence of 20 years’ imprisonment, and a fine of $250,000, plus restitution if appropriate.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Kyle Waldinger is prosecuting the case with the assistance of Rosario Calderon and Bridget Kilkenny.  The prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

OAKLAND – Kenneth Taylor pleaded guilty today to conspiracy to commit wire fraud and to filing a false federal income tax return, announced United States Attorney David L. Anderson, Principal Deputy Assistant Attorney General Ricard E. Zuckerman, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Kareem Carter.  The plea was accepted by the Honorable Jon S. Tigar, U.S. District Judge.

According to the plea agreement, between 2009 and 2012, Taylor, of Oakland, Calif., conspired with at least one of his codefendants, Sharon Ringgenberg, of Martinez, and Craig Scott, of Lafayette, to generate and transmit to banks fraudulent standby letters of credit and proof of funds statements.  The fraudulent financial instruments were issued by Success Bullion USA, LLC (SBUSA), an entity that was falsely advertised as the United States subsidiary of a large Hong Kong financial institution.  Among the reasons that the financial instruments were fraudulent is that they reported false client creditworthiness and they reported client balances that exceeded SBUSA’s assets.  

Taylor admitted that, at times when dealing with customers, he posed as a fictional Hong Kong-based attorney for SBUSA.  Taylor also admitted he assisted in the creation of SBUSA’s website and that another entity he controlled, Centerlink, LLC, transmitted the fraudulent instruments to banks in a format that rendered the instruments unenforceable.  Taylor received at least $550,000 from the scheme.  Taylor acknowledged the proceeds were sent to a bank account in Belize he controlled in the name of Centerlink, LLC.  

Furthermore, Taylor admitted he filed false 2009 and 2010 federal income tax returns that underreported his income in each year.  Taylor also acknowledged he did not file a tax return for tax years 2011 through 2015 despite receiving sufficient income in each year and knowing that he was required to file a return.  

On April 13, 2017, a federal grand jury indicted Taylor, Ringgenberg, and Scott.  Taylor was charged with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; two counts of wire fraud, in violation of 18 U.S.C. § 1343; and two counts of subscribing to false tax returns, in violation of 26 U.S.C. § 7206(1).  Today, Taylor pleaded guilty to the conspiracy count and to one count of making and subscribing a false tax return.  If Taylor complies with the plea agreement, the remaining counts pending against him will be dismissed at sentencing.

Judge Tigar scheduled Taylor’s sentencing for August 30, 2019.  The maximum statutory sentence for conspiring to commit wire fraud is 20 years in prison and a $250,000 fine.  The maximum statutory sentence for making and subscribing a false tax return is three years in prison and a $250,000 fine.  However, any sentence following conviction will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Ringgenberg and Scott have both pleaded guilty to their respective roles in the scheme; their sentencings have not yet been scheduled.  

Assistant United States Attorney Colin Sampson and Department of Justice Tax Division Trial Attorney Charles A. O’Reilly are prosecuting the case.  This case is the result of an investigation by the FBI and IRS-CI. 
 

OAKLAND – Dinesh Shankar was sentenced today to 33 months in prison and ordered to pay $2,618,000 in restitution as result of his mail fraud conviction for embezzling from an East Bay medical device company, announced United States Attorney David L. Anderson and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Yvonne Gonzalez Rogers, United States District Judge.

Shankar, 41, of San Jose, Calif., pleaded guilty to one count of mail fraud on November 1, 2018.  According to the plea agreement, from March 2013 until January 2018, Shankar was an employee of an Emeryville-based medical device company.  Beginning in July 2013 until December 2017, the defendant submitted false expense reports and false invoices to the company’s finance department, causing the company to pay more than half a million dollars in excess of the legitimate expenses and expenditures for services provided to the company.  In addition, Shankar admitted he created false invoices that appeared to be issued by six different entities.  The entities were actually fictitious business names for entities that Shankar controlled.  Shankar prepared the false invoices to make it appear the entities had provided testing and quality assurance services to his employer when, in fact, they had not provided the services.  Shankar admitted he caused a total loss to the company of about $2,576,384. 

A federal grand jury indicted Shankar on April 12, 2018, charging him with six counts of mail fraud, in violation of 18 U.S.C. § 1341.  Shankar pleaded guilty to one count and the remaining counts were dismissed.  

In addition to the prison sentence and restitution, Judge Gonzalez Rogers also sentenced the defendant to serve a three-year term of supervised release.  The defendant will begin serving the sentence on May 1, 2019.

Assistant U.S. Attorney Lloyd Farnham is prosecuting the case with the assistance of Bridget Kilkenny and Claudia Hyslop. The prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO - A federal grand jury in San Francisco indicted John Fry today for illegally disclosing information from Suspicious Activity Reports, misusing his computer, and illegally using a social security number, announced United States Attorney David L. Anderson and United States Department of the Treasury, Treasury Inspector General for Tax Administration (TIGTA), Special Agent in Charge Rod Ammari.

According to the indictment and a previously unsealed criminal complaint, Fry, 54, of San Francisco, unlawfully accessed and disclosed Suspicious Activity Reports (SARs) and SAR information pertaining to an individual taxpayer and a company owned by the taxpayer.  Fry was an Investigative Analyst for the IRS’s law enforcement arm, the Criminal Investigation Division, in San Francisco.  In this position, Fry had access to various law enforcement databases including the Financial Crimes Enforcement Network (FinCEN), Palantir, and the Integrated Data Retrieval System.  

The TIGTA investigation revealed that in May 2018, Fry logged on to FinCEN and Palantir from his work computer and conducted numerous searches related to the taxpayer who was a New York attorney.  Fry then disclosed the SAR information to an attorney based in Newport Beach, Calif.  On May 8, 2018, the attorney used a public Twitter account to circulate a dossier releasing confidential banking information related to the taxpayer and the taxpayer’s company.  The SAR information that was passed to the Los Angeles attorney was published in the Washington Post on May 8, 2018.  The Los Angeles attorney put Fry in contact with an investigative reporter in New York which led to confirmation of the confidential banking information and an interview, which was published in The New Yorker on May 16, 2018. 

The indictment charges Fry with violations of 31 U.S.C. § 5322(a), unauthorized disclosure of suspicious activity reports; 18 U.S.C. § 1030(a)(2), misuse of a computer; and 42 U.S.C. § 408(a)(8), illegal use of a social security number.  An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a maximum sentence of 5 years imprisonment, and a fine of $250,000, for each violation.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.   

Fry was previously arraigned on a criminal complaint and released on a $50,000 bond.  Fry’s next scheduled appearance is at 9:30 a.m. on March 13, 2019, for arraignment on the indictment before the Honorable Joseph Spero, U.S. Magistrate Judge.      
 

SAN JOSE – Tuan Ngoc Nguyen was sentenced today to 160 months in prison for his role in a conspiracy to distribute methamphetamine, announced United States Attorney David L. Anderson and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Beth Labson Freeman, United States District Judge.

Nguyen, 51, of San Jose, pleaded guilty to the charge on February 6, 2018.  At his change of plea hearing, Nguyen admitted that between February 10 and February 17 of 2017, he conspired with others to sell a pound of methamphetamine to a confidential informant working for the DEA.  The purchased substance was later tested and contained approximately 430.5 grams of 100% pure “crystal meth” (d-methamphetamine hydrochloride).  On October 19, 2017, a federal grand jury returned a second superseding indictment charging Nguyen with one count of conspiracy to distribute methamphetamine, in violation of 21 U.S.C. §§ 846 and 841, and one count of distribution of methamphetamine, in violation of 21 U.S.C. § 841.  Nguyen pleaded guilty to both counts.  

In addition to the prison term, Judge Freeman sentenced the defendant to a five-year period of supervised release.  Nguyen has been in custody since his arrest and will begin serving his sentence immediately.

Nguyen’s co-defendants Julio Camacho Pacheco and Quang Phuong Huynh pleaded guilty to their respective roles is the conspiracy on April 3, 2018, and September 4, 2018, respectively.  On July 17, 2018, Judge Freeman sentenced Pacheco to 140 months in prison, to be followed by 5 years of supervised release.  On December 11, 2018, Judge Freeman sentenced Huynh to 120 months in prison to be followed by 5 years of supervised release.

Assistant U.S. Attorney Marissa Harris prosecuted the case with the assistance of Tong Zhang.  The prosecution is the result of an investigation by the DEA.