Northern District of California

SAN FRANCISCO – Christopher Owens was sentenced to 41 months in prison for unlawfully prescribing oxycodone hydrochloride without a medical purpose, announced United States Attorney Alex G. Tse and U.S. Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down today by the Honorable William Alsup, U.S. District Judge.

Owens pleaded guilty on March 20, 2018.  According to his open plea application filed with the court, Owens, 50, of Indianapolis, Ind., was a medical doctor when he prescribed oxycodone hydrochloride, a Schedule II controlled substance, to an individual.  Owens acknowledged he prescribed the drugs without a legitimate medical need and outside of the course of medical practice.  On July 11, 2017, a federal grand jury indicted Owens charging him with distributing oxycodone without a medical need, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C).  .  Owens has since lost his license to practice medicine.

In sentencing Owens, Judge Alsup stated, “[Owens] was not running a pill mill, . . . but he was doing something just as bad . . ..  He used that prescription pad to feed a habit.”  

In addition to the prison term, Judge Alsup ordered Owens to serve three years of supervised release to begin after his prison term is completed and a $7,500 fine.  Judge Alsup ordered Owens to surrender and begin serving his sentence on December 3, 2018.  

Assistant U.S. Attorney Sheila A.G. Armbrust is prosecuting the case with the assistance of Linda Love.  The prosecution is the result of an investigation by the DEA with assistance from the University of California San Francisco Police Department. 
 

OAKLAND – Karl James Stehlin, aka Carl Davis, was sentenced to ten years in prison and ordered to pay $2,158,250.04 in restitution for leading a scheme to defraud multiple companies out of more than $9,500,000, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down yesterday by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge.

Stehlin, 63, of Seminole, Fla., pleaded guilty to the charges on January 25, 2018.  In pleading guilty, Stehlin admitted that along with co-defendant Gregory Scott Winters, aka Rob Sacci, 46, formerly of Ocala Fla., and others, he conspired to sell millions of dollars’ worth of fake invoices to a Walnut Creek company.   The Walnut Creek company provides services related to accounts receivable collateralized lending, also called “factoring.”  Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount.  The factor advances a percentage of the face amount of the invoices to the business and then collects the full amount from the customers of the business in due course.  Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business.  As part of the scheme, Stehlin and his co-conspirators created fake invoices and sold them to the Walnut Creek company.

To commit this fraud scheme, Stehlin and his co-conspirators created multiple shell entities.  For example, the co-conspirators created Nature’s Own Pharmacy, a company they claimed sold equine supplements.  They also created other shell companies the co-conspirators represented to be Nature’s Own Pharmacy’s customers.  In reality, Nature’s Own Pharmacy is a phony shell corporation that sold no goods.  Further, all of Nature’s Own Pharmacy’s purported customers were phony companies that purchased no goods and owed no legitimate debt.  Stehlin admitted that he and his co-conspirators then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the shell company’s fake customers, and then sold the phony invoices to victims.  

Stehlin admitted he perpetrated this scheme over a six-year period on multiple factoring companies throughout the United States.  Stehlin used false names, virtual office addresses, and other false information to execute the scheme.  

A federal grand jury indicted Stehlin on January 12, 2017, charging him and Winters with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349 and wire fraud, in violation of 18 U.S.C. § 1343.  Stehlin pleaded guilty to both counts.

During the proceedings at which Stehlin pleaded guilty and was sentenced, Judge Gonzalez Rogers made findings that the defendant organized the scheme and that he defrauded multiple factoring companies out of more than $9,500,000.  Further, Judge Gonzalez Rogers found that Stehlin and his co-conspirators duped their victims into believing they would collect the face value of the invoices from the purported customers when, in reality, the invoices sold by Stehlin to the factoring companies were worthless.  Stehlin admitted that the factoring companies involved in this case suffered losses in excess of $9,500,000.  Judge Gonzalez Rogers concluded the defendant’s conduct resulted in significant financial hardship to one or more of his victims, including one factoring company that had to close a branch and lay off employees, many of whom worked for that company for years.  

In addition to the prison term, Judge Gonzalez Rogers sentenced the defendant to a three-year period of supervised release.  The defendant has been in federal custody since his initial appearance and will begin serving his sentence immediately.  

Winters pleaded guilty to conspiracy and wire fraud charges on October 12, 2017.  On April 19, 2018, Judge Gonzalez Rogers sentenced Winters to two years in prison to be followed by three years of supervised release for his role in the scheme.  

Assistant U.S. Attorney William J. Gullotta is prosecuting the case with the assistance of Katie Turner and Michelle Alter Eck.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.
 

SAN FRANCISCO – Hermilo Virelas Maciel was sentenced to 96 months in prison for conspiracy and possessing with the intent to distribute methamphetamine announced United States Attorney Alex G. Tse, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Rayfield Roundtree, and United States Marshal Donald M. O’Keefe.  The sentence was handed down yesterday afternoon by the Honorable William H. Alsup, U.S. District Judge. 

Maciel, 64, of Santa Rosa, Calif., pleaded guilty to the charges on May 22, 2018.  Twenty three years earlier, on May 22, 1995, Maciel was arrested as he attempted to sell approximately 2.5 pounds of methamphetamine to a confidential informant.  

On June 15, 1995, a federal grand jury indicted Maciel, charging him with one count of conspiracy to possess with the intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 846, and one count of possession with the intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1).  The next day, June 16, 1995, Maciel was arraigned on the charges and then was released on an unsecured personal recognizance bond.  Weeks later, the defendant absconded from pre-trial supervision and on August 28, 1995, a bench warrant was issued for his arrest.  On March 28, 2018, Michigan State Police located the defendant in Michigan and arrested him on the then-almost 23-year outstanding bench warrant.  Upon his return in custody to San Francisco, Maciel pleaded guilty to the original charges in the indictment.    

Maciel has been in custody since his arrest in March of 2018; he will begin serving his sentence immediately. 

In addition to the prison term, Judge Alsup ordered Maciel to serve a three-year period of supervised release.  

Assistant U.S. Attorney Shailika Kotiya is prosecuting the case with the assistance of Rawaty Yim.  The prosecution is the result of an investigation by the Mendocino County-Wide Narcotics Task Force, the ATF, and the United States Marshals Service.   
 

OAKLAND – Four state-owned Chinese companies were arraigned on a Third Superseding Indictment charging each of the companies and two of their officers with conspiring to commit economic espionage and related crimes, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The companies were arraigned yesterday before U.S. Magistrate Judge Donna M. Ryu on charges that the defendants conspired and attempted to engage in economic espionage by seeking to acquire misappropriated trade secrets for the production technology for chloride-route titanium dioxide (TiO2) from E.I. du Pont de Nemours & Company (DuPont).

According to the indictment that was filed January 5, 2016, between 1998 and 2011, Pangang Group Company, Ltd. (also known as Panzhihua Iron and Steel (Group) Co., Ltd.) allegedly conspired with Chinese nationals Hou Shengdong and Dong Yingjie as well as three of the company’s subsidiaries and others to acquire stolen or misappropriated trade secrets.  The defendant subsidiaries companies are:

• Pangang Group Steel Vanadium & Titanium Company, Ltd.;
• Pangang Group Titanium Industry Company Ltd.; and
• Pangang Group International Economic & Trading Company.

The trade secrets relate to TiO2 technology from DuPont.  DuPont had developed the technology and controlled a significant amount of the world’s TiO2 sales.  The defendants are alleged to have obtained confidential trade secret information including photographs related to TiO2 plant technologies and facilities.  Further, the defendants are alleged to have paid an Oakland company at least $27,000,000 between 2006 and 2011 for assistance with TiO2 technology, including obtaining DuPont trade secrets.  The defendants also allegedly attempted, between 2008 and 2011, to commit economic espionage related to DuPont’s TiO2 processes.  

In sum, the indictment charges the four companies and two officers with one count of conspiracy to commit economic espionage, in violation of 18 U.S.C. § 1831(a)(5), and one count of attempted economic espionage, in violation of 18 U.S.C. §§ 1831(a)(1), (2), (3), and (4).  The indictment also seeks forfeiture of any property used in the offenses or derived from the commission of the offenses.  

The four companies appeared before Magistrate Judge Ryu through an attorney and pleaded not guilty to all charges.  

Initial appearances are scheduled for October 2, 2018, in Oakland, before the Honorable Jeffrey S. White, U.S. District Judge.  

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, each defendant company faces a maximum sentence five years of probation and a fine of $10,000,000 for each count of conviction.  Hou and Dong face 15 years of imprisonment, a $500,000 fine, and a maximum of 3 years of supervised release for each count in the indictment.  Restitution, if appropriate, may also 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.  

This case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s Office.  The prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

SAN FRANCISCO – Subhash Jay was sentenced today to 30 months in prison and ordered to pay restitution of $409,871 for operating an unlicensed money transmitting business and filing a false tax return announced United States Attorney Alex G. Tse, Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Tara Sullivan, Bureau of Industry and Security, Special Agent in Charge Joseph Whitehead, and Homeland Security Investigations Special Agent in Charge Ryan L. Spradlin.  The sentence was handed down by the Honorable Charles R. Breyer, Senior United States District Judge.

Jay, 59, of South San Francisco, pleaded guilty to the charges on March 23, 2018. According to the plea agreement, Jay admitted to operating a money transmitting business known as Force Services, Inc., without obtaining required state or federal licenses.  Jay admitted that, during 2010 through 2014, he caused two domestic bank accounts held in the name of Force Services to receive international wire transfers on behalf of a client with an aggregate value of at least $4,515,236.  Jay then forwarded most of those funds to the client, but retained $817,734 as a commission.  In addition, Jay willfully filed corporate tax returns for Force Services for the years 2010 through 2014, which failed to report the commissions as gross receipts, and also willfully filed individual income tax returns for the years 2010 through 2014, which failed to report the commissions as income.  

A federal grand jury indicted Jay on April 6, 2017, changing him with one count of operating an unlicensed money transmitting business in violation of 18 U.S.C. § 1960, ten counts of filing false tax returns in violation of 26 U.S.C. § 7206(1), one count of making false statements to a government agency in violation of 18 U.S.C. § 1001(a)(2), and one count of structuring financial transactions to evade reporting requirements in violation of 31 U.S.C. § 5324(a)(3).  Pursuant to his plea agreement, Jay pleaded guilty to one count of operating an unlicensed money transmitting business, and one count of filing false tax returns on March 23, 2018. The remaining counts were dismissed.  

In addition to the prison term and restitution, Judge Breyer also ordered Jay to serve a three-year period of supervised release.  Further, on July 11, 2018, Judge Breyer issue a forfeiture order in the amount of $4,515,236.  Judge Breyer ordered the defendant to begin serving the sentence on December 12, 2018. 

Assistant United States Attorney Michael G. Pitman is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation, Homeland Security Investigations and the Bureau of Industry and Security.
 

SAN JOSE – Grant Ridder pleaded guilty today to production, distribution, and possession of child pornography, announced United States Attorney Alex G. Tse and United States Secret Service Acting Special Agent in Charge John Roberts.  The guilty plea was accepted by the Honorable Lucy H. Koh, U.S. District Judge.  

According to his plea agreement, on July 27, 2013, Ridder, 27, of Mountain View, engaged in sexually explicit conduct with a minor and produced photographs and video of the sexual encounter.  In October 2013, he accessed the minor’s Facebook account without her permission and uploaded sexually explicit images of her to her Facebook page.  Ridder acknowledged that he uploaded the images with the intent to cause substantial emotional distress to the minor.  Ridder also possessed additional photographs of the minor engaged in sexually explicit conduct.  

Further, according to the plea agreement, on July 14, 2013, Ridder persuaded a second minor, aged between 12 and 15 years, to engage in sexually explicit conduct for the purpose of producing photographs which the minor sent to Ridder on his phone.  On July 26, 2013, Ridder coerced this minor to produce additional sexually explicit images of herself by threatening to post her prior sexually explicit photographs on a Russian website.  In January 2014, Ridder uploaded the sexually explicit photographs of the minor to a Russian-based website.  

Further according to the plea agreement, on December 7, 2013, Ridder coerced a third minor into producing sexually explicit images of herself by threatening to send her prior sexually explicit photographs to others.  In January 2014, Ridder uploaded the sexually explicit photographs of the minor to a Russian-based website.  

Lastly, according to the plea agreement, from approximately November 19, 2013, through June 18, 2014, Ridder used phone text messaging to entice a fourth minor to engage in sexual activity with him, knowing that she was a minor. 

A federal grand jury indicted Ridder on May 18, 2017, charging him with two 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); one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B); three counts of cyberstalking, in violation of 18 U.S.C. § 2261A; and one count of coercion and enticement of a minor, in violation of 18 U.S.C. § 2422(b).  Ridder pleaded guilty to one count of production, one count of distribution, and one count of possession of child pornography.  

Judge Koh scheduled a sentencing hearing for December 5, 2018, at 9:15 a.m., in San Jose.  The minimum statutory sentence for violating 18 U.S.C. § 2251(a) (production) is a 15-year prison term; the maximum statutory sentence is a 30-year prison term.  The minimum statutory sentence for a violation of 18 U.S.C. § 2252(a)(2) (distribution) is five years in prison and the maximum prison term is 20 years. The maximum statutory sentence for violating 18 U.S.C. § 2252(a)(4)(B) (possession) is 10 years in prison.  Additional fines, victim restitution, and a term of supervised release also may be imposed; 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 Maia Perez and Marissa Harris are prosecuting the case with the assistance of Nina Williams.  The prosecution is the result of an investigation by the United States Secret Service, the Contra Costa District Attorney’s Office, the Stockton Police Department, and the Martinez Police Department.

If members of the public have any information relevant to this investigation or 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.
 

SAN FRANCISCO – John Bryan Murphy was sentenced today to 51 months in prison, and ordered to pay $897,464.50 in restitution for wire fraud and money laundering, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.

Murphy, 44, of Hyannis, Massachusetts, pleaded guilty on April 27, 2018, to wire fraud and money laundering charges.  According to the plea agreement, Murphy admitted that between at least 2012 and continuing up until his arrest in 2017, he executed a scheme to defraud victims in order to obtain money and property from them by making false representations and promises.  Specifically, Murphy admitted he solicited investments from over a dozen victims on the false and fraudulent premise that he would professionally invest their money through an entity he controlled known as Capital Park, LLC.  Instead of investing their money, he used his victims’ money to support his lifestyle, to speculate on the stock market, and to partially repay other victims.  With respect to his partial payments to victims, he admitted that he made them to lull his victims into a false sense of security, to lead them to believe that the promises he made were true when in fact they were not, to postpone or prevent them from complaining to law enforcement, and to induce new victims to “invest” their money with him.  Murphy also admitted that he acted with the intent to defraud his victims during the entire scheme.  Finally, Murphy admitted that his scheme caused at least $890,000 in losses to his victims.

A federal grand jury indicted Murphy on November 30, 2017, charging him with ten counts of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of money laundering, in violation of 18 U.S.C. § 1957.  Murphy pleaded guilty to three counts of wire fraud and one count of money laundering.  The remaining counts were dismissed.  

“Today’s just and significant sentence is a reminder that fraud will not be tolerated and instead punished to the fullest extent of the law,” said US Attorney Tse.  “The defendant hid behind his lies and fraud to friends who trusted him with their hard earned investments.  Today’s sentence will hopefully bring some closure and relief to these victims of fraud.”

In addition to the prison term and restitution, Judge Breyer also ordered the defendant to serve a three-year period of supervised release to follow his prison term.  The defendant has remained in custody since his arrest and will begin serving his sentence immediately.

Assistant U.S. Attorney Robert David Rees is prosecuting the case with the assistance of Bridget Kilkenny.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.
 

SAN FRANCISCO – Richard Sollid was sentenced today to 48 months in prison for possessing with the intent to distribute heroin announced United States Attorney Alex G. Tse and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Charles R. Breyer, Senior U.S. District Judge.

Sollid, 56, of San Francisco, pleaded guilty to the charges on June 14, 2018.  According to his plea agreement, Sollid admitted that San Francisco Police Department officers arrested him on October 27, 2017. The arrest occurred in San Francisco’s Civic Center neighborhood. Sollid was found with approximately 95 grams of heroin and $7,840 in cash. Solid admitted he intended to distribute the drugs.

On April 19, 2018, a federal grand jury indicted Sollid, charging him with one count of possession with intent to distribute heroin, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(C).  Sollid pleaded guilty to the charged offense.

In addition to the prison term, Judge Breyer ordered Sollid to serve a three-year period of supervised release.  Sollid is currently in custody and will begin serving his sentence immediately.

Special Assistant U.S. Attorney Christopher Vieira is prosecuting the case with the assistance of Kimberly Richardson.  The prosecution is the result of collaboration between the DEA and the San Francisco Police Department.
 

SAN FRANCISCO – John D. Warbritton, III was sentenced today to 84 months in prison for transportation of child pornography, announced United States Attorney Alex G. Tse, U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin, Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen, and Internal Revenue Service-Criminal Investigation (IRS-CI) Acting Special Agent in Charge Tara Sullivan.  The sentence was handed down by the Honorable Charles R. Breyer, U.S. Senior District Judge.

Warbritton, 64, a former resident of Orinda, Calif., and an orthopedic surgeon, pleaded guilty to the charge on May 16, 2018.  According to his plea agreement, on March 27, 2016, Warbritton traveled from Bangkok, Thailand, to San Francisco International Airport (SFO) with electronic devices containing child pornography.  Specifically, Warbritton was traveling with a laptop and a cellular telephone, both of which contained images depicting children under the age of 12 engaged in sexually explicit conduct. The plea agreement describes some of the images that were on the devices, including depictions of grown men engaged in sexual acts with girls under the age of 12.  Warbritton stipulated that between 150 and 300 images of child pornography were on his electronic devices as he traveled to SFO.

A federal grand jury indicted Warbritton on October 13, 2016, charging him with one count of transportation  of child pornography and access with intent to view child pornography, in violation of 18 U.S.C. §§ 2252A(a) and (b).  Warbritton pleaded guilty to the charge.

In addition to the prison term, Judge Breyer also ordered Warbritton to serve a seven-year term of supervised release to begin after the prison term ends.  

Assistant U.S. Attorney Sheila Armbrust is prosecuting the case with the assistance of Ana Guerra.  The prosecution is the result of an investigation by HSI, DEA, and IRS-CI.  

If members of the public have any information relevant to this investigation or 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.  These tip lines 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.
 

SAN FRANCISCO – Bay Area executive and Croatian national Renato Libric, the former Chief Executive Officer of Bouxtie, Inc., pleaded guilty this afternoon to wire fraud charges related to a $1.5 million investment fraud scheme, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The plea was accepted by the Honorable Maxine M. Chesney, U.S. District Judge.

According to the plea agreement, Libric, 39, a resident of Redwood City, Calif., admitted that from August 2017 through February 2018, he devised and carried out a scheme to defraud potential investors in Bouxtie, Inc., a Delaware corporation based in the San Francisco Bay Area.  Libric admitted that an essential purpose of the scheme was to overstate the financial condition and prospects of Bouxtie, and to induce potential investors to believe Libric had authority to sell shares in Bouxtie to investors.  

Libric took multiple steps to convince members of a Las Vegas-based company to invest over a million dollars in Bouxtie.  As part of the scheme, Libric fraudulently suggested to representatives of the potential investors that a large publicly-traded corporation was interested in purchasing Bouxtie at a price of $150 million.  To bolster this claim, Libric fraudulently placed the signature of an executive with the alleged purchasing corporation on a forged Term Sheet that purported to indicate the large corporation was interested in the purchase of Bouxtie.  In addition, Libric caused the falsified Term Sheet and a falsified bank statement to be transmitted to potential investors.  The false bank statement suggested Bouxtie had a balance of over $2,000,000 in an account when, in fact, there was only $7,642.82 in the account.  Furthermore, Libric placed the signatures of members of Bouxtie’s Board of Directors on a document that purported to authorize Libric to enter into agreements pursuant to which the investors would lend $1.5 million to Bouxtie and that the loan eventually would be converted into shares of Bouxtie.  

As a result of his scheme, Libric convinced investors to transfer $1.5 million into accounts belonging to Bouxtie.  Further, after the $1.5 million was deposited, Libric withdrew more than $130,000 of the invested funds from an account and put the funds into his own checking account.  

On May 10, 2018, a federal grand jury indicted Libric, charging him with one count of wire fraud, in violation of 18 U.S.C. § 1343 and 2.  Today, Libric pleaded guilty to the charge and agreed to make restitution to the victims for their losses. 

Judge Chesney scheduled Libric’s sentencing for November 28, 2018.  The maximum statutory penalties for wire fraud are 20 years in prison, a $250,000 fine, and 3 years of supervised release. Additional fines, forfeitures, restitution, and special assessments also may 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.   

Assistant U.S. Attorney Matthew McCarthy is prosecuting the case with the assistance of Bridget Kilkenny.  The prosecution is the result of an investigation by the FBI.
 

OAKLAND – Quincy Krashna was sentenced today to 24 months in prison, and ordered to pay $450,000 in restitution to European concert promoters, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge.

Krashna, 50, of Albany, Calif., pleaded guilty on March 6, 2018.  According to the plea agreement, Krashna admitted that he misrepresented to concert promoters his connections to the Red Hot Chili Peppers.  The victims were interested in promoting Red Hot Chili Peppers concerts in Eastern Europe.  Krashna further admitted he told the concert promoters that he would hold in an escrow account a $450,000 down payment to secure the band’s services and that the money would be returned to the promoters if Krashna was unable to secure the band’s services.  Krashna admitted in the plea agreement that he created a fraudulent “Escrow Agreement” that had the appearance of being an escrow agreement used by Chase Bank, when in fact the alleged escrow account was a personal bank account that he controlled.  The concert promoters wired $450,000 into the fake escrow account after receiving Krashna’s assurances.

Krashna admitted in the plea agreement that he continued to inform the concert promoters that their money was in an escrow account controlled by Chase Bank, when in fact he had transferred the money out of his personal account into other accounts that he controlled.  Krashna admitted that he continued to misrepresent the whereabouts of the victims’ money until March 2012.

A federal grand jury indicted Krashna on January 12, 2017.  He was charged with seven counts of wire fraud, in violation of 18 U.S.C. § 1343.  Pursuant to the guilty plea, Krashna pleaded guilty to one count and the remaining counts were dismissed.  

In addition to the prison term and restitution, Judge White ordered the defendant to serve a three-year term of supervised release to follow his prison term.  The defendant will begin serving the sentence on November 6, 2018.   

Assistant U.S. Attorneys Tom Green and Michelle Kane are prosecuting the case with the assistance of Noble Hughes and Katie Turner.  The prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO –Robert Jacobsen was sentenced today to 78 months in prison for wire fraud and money laundering, announced United States Attorney Alex G. Tse, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, Special Inspector General for the Troubled Asset Relief Program Christy Goldsmith Romero, and Internal Revenue Service-Criminal Investigation (IRS-CI) Acting Special Agent in Charge Tara Sullivan.  The sentence was handed down by the Honorable Maxine M. Chesney, U.S. District Judge.  

Jacobsen, 70, of Kensington, Calif., pleaded guilty to the charges on July 19, 2017.  According to his plea agreement, Jacobsen admitted he created a scheme to sell homes to unsuspecting buyers who did not know the homes had unpaid mortgages attached to them.  As part of the scheme, Jacobsen created a company called “American Brokers’ Conduit Corporation.”  Jacobsen’s company was not related to an already-existing mortgage originator known as “American Brokers’ Conduit.”  The previously-existing company had originated mortgages in the Bay Area and elsewhere.  Jacobsen, through intermediaries, gained control of homes with mortgage liens that secured loans originated by the real “American Brokers’ Conduit.”  Then, Jacobsen used intermediaries to sue the phony “American Brokers’ Conduit Corporation” in court, claiming that the legitimate mortgage liens were invalid.  As he controlled both the plaintiff and the defendant in these lawsuits, Jacobsen then instructed the attorneys for both sides to enter into stipulated judgments, signed by the courts, resolving the lawsuits by purporting to declare the mortgage liens invalid.  In so doing, he omitted to tell the courts that neither he nor any other person involved in the lawsuits was a legitimate representative of either the real “American Brokers’ Conduit” or the then-current owners of the liens.  Jacobsen filed those agreements with the relevant county recorder’s offices, to give the appearance to anyone conducting a title search that the liens had been declared invalid by a court, and then sold the homes to unsuspecting buyers without paying off the original loans on the homes.  Jacobsen kept the vast majority of the proceeds of these sales to himself, laundering the money through multiple bank accounts in the United States and in Belize, and buying property and a yacht with the money.

Jacobsen successfully completed his scheme by selling two homes, one in Danville, Calif., for $540,000, and the other in San Francisco, for $1.2 million.  He also attempted the scheme on another home, in Monterey, Calif., which he attempted to sell for $3 million.  

A grand jury indicted Jacobsen on November 5, 2015, charging him with thirteen counts of wire fraud, in violation of 18 U.S.C. § 1343, and engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957.  Pursuant to the plea agreement, Jacobsen pleaded guilty to one count of wire fraud and one count of engaging in monetary transactions from specified unlawful activity.  If Jacobsen complies with the plea agreement, the remaining counts will be dismissed.  

In addition to the prison term, Judge Chesney sentenced Jacobsen to serve 3 years of supervised release.  As part of the plea agreement, Jacobsen also agreed to the forfeiture of the yacht that he purchased with fraud proceeds.  Judge Chesney scheduled a hearing on October 17, 2018, to determine the amount of restitution.  

Assistant U.S. Attorneys Benjamin Kingsley, Gregg Lowder, and Meredith Osborn are prosecuting the case with assistance from Bridget Kilkenny and Beth Margen.  The prosecution is the result of an investigation by the FBI, IRS-CI, and the Office of the Special Inspector General for the Troubled Asset Relief Program.
 

SAN FRANCISCO - A federal grand jury in San Francisco indicted Karen Posey with wire fraud, bank fraud, identity theft, and credit card fraud charges, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. 

According to the indictment, filed yesterday and unsealed earlier today, from July 2016 through December 2017, Posey, 57, of Martinez, worked as the business finance manager at a San Francisco architecture firm.  The firm specializes in designing schools and other public facilities for people with disabilities.  Posey is alleged to have stolen money from the firm in various ways, including by writing company checks and making them out to herself, and then depositing the money in her personal bank account.  She also used a corporate credit card to pay for personal expenses and used a corporate debit card to withdraw thousands of dollars in cash from the firm’s account.  In total, Posey is alleged to have stolen approximately $235,000 from the firm.  The indictment charges Posey with four counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count each of aggravated identity theft, in violation of 18 U.S.C. § 1028A; bank fraud, in violation of 18 U.S.C. § 1344(2); and fraudulent use of unauthorized access devices, in violation of 18 U.S.C. § 1029(a)(2).  

Posey was arrested today in Martinez and made her initial appearance in federal court before U.S. Magistrate Judge Jacqueline Corley this morning.  Posey was released on a $50,000 bond.  Posey’s next appearance is scheduled for September 4, 2018, before U.S. Magistrate Judge Elizabeth Laporte for identification of counsel and arraignment.  

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Posey faces the following maximum statutory penalties:  (1) wire fraud (each count): 20 years in prison, a $250,000 fine, plus restitution; (2) bank fraud: 30 years in prison, a $1,000,000 fine, plus restitution; (3) access device fraud: 10 years in prison, a $250,000 fine, plus restitution; and (4) aggravated identity theft: a two year mandatory term of imprisonment consecutive to the prison term for the underlying charge.  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 Ross Weingarten is prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by the FBI. 
 

OAKLAND – Archie Ned Williams was sentenced to 15 years in prison for his role in multiple armed robberies committed in San Francisco and Berkeley in 2016, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down today by the Honorable Yvonne Gonzalez Rogers, U.S. District Judge.

Williams, 46, of Oakland, pleaded guilty on May 16, 2018, to conspiracy to commit robbery affecting interstate commerce (“Hobbs Act robbery”), as well as two Hobbs Act robbery counts and one count of brandishing a firearm during a robbery.  According to the plea agreement, Williams admitted that on April 7, 2016, he and three other men agreed to commit two robberies on the same night.  To commit the first robbery, the four men travelled from Oakland to San Francisco looking for a place to rob, eventually deciding to rob a pizzeria.  Two members of the crew went into the pizzeria armed with pistols, while the other two remained in the getaway car acting as lookouts.  Once inside, one robber stopped an employee from leaving and forced him to wait inside against a wall during the robbery.  The other robber pointed his pistol at the cashier and stole cash from him.  The two robbers then left the restaurant and returned to the getaway vehicle, and all four men drove back to the East Bay.  Within an hour, the robbery crew robbed another restaurant, this time an Ethiopian restaurant in Berkeley.  Once again, two members of the crew entered the restaurant armed with pistols, while Williams and the fourth member waited in the getaway car.  The two robbers who entered the restaurant pointed their guns at two female victims standing by the cash register and demanded cash.  One robber then entered the kitchen area, engaged in a struggle with an employee, and fired a round from his pistol at the employee.  The employee was not struck by the bullet.  The two robbers then fled the restaurant with the stolen cash, returned to the getaway vehicle, and all four men drove off.  

A federal grand jury indicted Williams on February 9, 2017.  He was charged with conspiracy to commit Hobbs Act robbery and two Hobbs Act robberies, all in violation of 18 U.S.C. § 1951(a), and brandishing a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c).  He pleaded guilty to all counts.

Williams’s codefendants were arrested on April 21, 2016, while attempting to rob a bar in San Francisco, which they had previously robbed on two occasions.  All three men have pleaded guilty to their respective roles in the crimes.  Judge Gonzalez Rogers has sentenced three of the four defendants as follows: 
 

DEFENDANT

CONVICTIONS

SENTENCE

Shawan Spragans

• Conspiracy to commit Hobbs Act Robbery – 18 U.S.C. § 1951(a);
• Attempted Hobbs Act Robbery – 18 U.S.C. § 1951(a);
• Hobbs Act Robbery (three counts) – 18 U.S.C. § 1951(a);
• Discharging a firearm during and in relation to a crime of violence – 18 U.S.C. § 924(c); and
• Possession of a firearm by a felon – 18 U.S.C. § 922(g)(1)

23 years

Merl Simpson

• Conspiracy to commit Hobbs Act Robbery – 18 U.S.C. § 1951(a);
• Attempted Hobbs Act Robbery – 18 U.S.C. § 1951(a);
• Hobbs Act Robbery (three counts) – 18 U.S.C. § 1951(a);
• Discharging a firearm during and in relation to a crime of violence – 18 U.S.C. § 924(c); and
• Possession of a firearm by a felon – 18 U.S.C. § 922(g)(1)

20 years

Archie Williams

• Conspiracy to commit Hobbs Act Robbery – 18 U.S.C. § 1951(a);
• Hobbs Act Robbery (two counts) – 18 U.S.C. § 1951(a); and
• Brandishing a firearm during and in relation to a crime of violence – 18 U.S.C. § 924(c)

15 years

 

In addition to the prison term, Judge Gonzalez Rogers also sentenced the defendant to a 5-year period of supervised release, which will begin upon Williams’ release from prison.  The defendant has been in federal custody since May 2017, and he will begin serving his federal sentence at the conclusion of a previously-imposed unrelated state prison sentence.

Assistant U.S. Attorneys William Gullotta and Vanessa Baehr-Jones are prosecuting the case with the assistance of Michelle Alter, Noble Hughes, Katie Turner, and Vanessa Vargas.  The prosecution is the result of an investigation by the Federal Bureau of Investigation, Berkeley Police Department, San Francisco Police Department, and San Leandro Police Department.

SAN JOSE - A federal grand jury in San Jose indicted three doctors and three additional health care workers with conspiracy to pay and receive kickbacks for health care referrals and the receipt and payment of kickbacks for health care referrals, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  One defendant also was charged with obstruction of justice.

According to the indictment, filed August 16, 2018, and unsealed today, between April 2013 and May 2017, three doctors, Abdelsalam Mogasbe, 51, of San Jose, Jaime Cortes, 52, of Vacaville, and James Nickolopous, 70, of San Leandro, conspired to receive kickback payments, and did receive such payments, in exchange for referring Medicare patients to Medics Choice Home Health, Inc, a Milpitas home health care agency.  The indictment also alleges that three employees of Medics Choice, Felina Roque, 62, of Sunnyvale, Loreta Dario, 57, of Hayward, and Lorena Gerisomav, 40, of Vacaville, conspired with the doctors to pay, and actually did pay, kickbacks.

All six defendants were charged with one count of conspiracy to pay and receive remuneration for the referral of Medicare beneficiaries, in violation of 18 U.S.C. § 371.  Cortes Mogasbe, and Nickolopoulos were each charged with three counts of receipt of remuneration for referral of a Medicare patient, in violation of 42 U.S.C. § 1320a-7b(b)(1)(A).  Roque, the owner of Medics Choice, was charged with 16 counts of payment of remuneration for referral of a Medicare patient, in violation of 42 U.S.C. § 1320a-7b(b)(2)(A), and Dario and Gerisomav were each charged with three counts under the same statute. 

The indictment also alleges that Roque obstructed an investigation into Medics Choice that was being conducted by the FBI.  Specifically, the indictment alleges Roque threatened former employees of Medics Choice who were voluntarily interviewed by FBI agents. Roque was charged with one count of obstruction of justice, in violation of 18 U.S.C. § 1512(b)(3).  

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 5 years imprisonment and a fine of $250,000, plus restitution for each violation of 18 U.S.C. § 371; 5 years imprisonment and a fine of $25,000, plus restitution for each violation of 42 U.S.C. § 1320a-7b(b)(1)(A) and (2)(A); and 20 years imprisonment and a fine of $250,000, plus restitution for obstruction of justice, in violation of 18 U.S.C. § 1512(b)(3).  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 Patrick R. Delahunty is prosecuting the case with the assistance of Susan Kreider.  The prosecution is the result of an investigation by the FBI. 
 

SAN FRANCISCO – Desean Bailey was sentenced today to 57 months in prison for being a felon in possession of a firearm and ammunition, announced United States Attorney Alex G. Tse and Homeland Security Investigations Special Agent in Charge Ryan Spradlin. 

Bailey, 31, previously of Brisbane, Calif., pleaded guilty on June 13, 2018, to one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1).  According to his plea agreement, Bailey admitted to possessing a loaded Smith and Wesson, Model 39-2, .9mm firearm on the evening of November 6, 2017, when he was stopped by officers of the San Francisco Police Department (SFPD).  After being told by the officers that he was detained, Bailey fled on foot.  He then threw the handgun into the middle of the street where it was later recovered by SFPD.  In addition, Bailey admitted he possessed ammunition and that he was a convicted felon at the time he possessed the firearm.

On January 4, 2018, a federal grand jury indicted Bailey charging him with one count of violating 18 U.S.C. § 922(g)(1).  Pursuant to his plea agreement, Bailey pleaded guilty to the charge.  

The sentence was handed down by the Honorable Charles R. Breyer, Senior U.S. District Judge. Judge Breyer also sentenced the defendant to a three-year period of supervised release.  The defendant will begin serving the 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 an investigation by  Homeland Security Investigations with assistance from the Bureau of Alcohol, Tobacco, and Firearms.
 

SAN FRANCISCO – In the wake of the Mendocino Complex Fires, U.S. Attorney Alex Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett have stepped up efforts to remind the public to be aware of the potential for fraudulent activity in connection with the cleanup of the fires.  

Last year state and federal law enforcement led by the Federal Bureau of Investigation joined with other local authorities to form the North Bay Disaster Fraud Task Force to combat fraud arising from the North Bay wildfires.  The task force is a cooperative effort between local, state, and federal agencies to share and disseminate information and collaborate on investigations in an effort to streamline the process for preventing and addressing disaster-related fraud.  The task force has worked effectively to combat fraud and will continue to do so as wildfires continue to plague Northern California.

U.S. Attorney Tse stated: “In times of difficulty like the Mendocino Complex Fires, many people respond to their community with a spirit of generosity and a willingness to shoulder the difficulty together.  Others, however, take advantage of the vulnerability to unjustly enrich themselves.  I urge the public to report any suspected fraudulent activity in the aftermath of the recent wildfires to federal and local law enforcement, so that together we can pursue investigation and prosecution of fraud.”

“The FBI has seen criminals target every step of relief and recovery in the face of natural disasters,” said Special Agent in Charge John F. Bennett.  “The FBI is committed to protecting disaster victims from complex theft and fraud schemes.  We ask the public in Northern California to remain vigilant in this time of crisis and to report any suspicious activity to law enforcement immediately.”

Members of the public are reminded to apply a critical eye and do their due diligence before trusting anyone purporting to be working on behalf of disaster victims, and to be especially cautious of anyone who contacts you seeking personal identifying information or financial information.  Possible examples of disaster fraud activity may include fake charities claiming to provide relief for victims and individuals submitting false claims for disaster relief.  Members of the public who suspect fraud involving disaster relief efforts, or who believe that they have been the victim of fraud from a person or organization soliciting relief funds on behalf of disaster victims, should contact the National Center for Disaster Fraud at disaster@leo.gov or at 866-720-5721. The telephone line is staffed by a live operator 24 hours a day, 7 days a week. The public can also fax information to the Center at (225) 334-4707. The website for the National Center for Disaster Fraud is  www.justice.gov/diaster-fraud.  Suspected fraudulent activity also can be referred to local and federal law enforcement.
 

SAN FRANCISO – Laboratory testing services company Singulex, Inc. of Alameda, Calif., has agreed to resolve allegations that it violated the False Claims Act by billing federal health care programs for medically unnecessary testing, announced United States Attorney Alex G. Tse, Special Agent in Charge Steven J. Ryan of the Health and Human Services’ Office of Inspector General (HHS-OIG), Special Agent in Charge Chris D. Hendrickson of the Western Field Office, Defense Criminal Investigative Service (DCIS), and Special Agent in Charge John F. Bennett of the Federal Bureau of Investigation San Francisco Field Office.  Under the settlement, which stems from a whistleblower action filed under the federal False Claims Act, Singulex will pay $1.25 million.  

As alleged in the lawsuit, Singulex caused the submission of false claims to Medicare and TRICARE by pressuring health care providers to select certain diagnosis codes without regard to the patient’s medical condition, and/or added such codes to laboratory test orders without the health care provider’s knowledge or consent.  In addition, the lawsuit alleged that Singulex knowingly pressured health care providers to order laboratory tests without regard to medical necessity, made misrepresentations to health care providers to convince them to order additional laboratory tests, and/or added certain procedure codes to laboratory test requisition forms without health care provider’s knowledge or consent.  As a result, the United States alleges that Singulex billed federal health care programs, including Medicare and TRICARE, for medically unnecessary tests.  

“This settlement reflects the continuing commitment of the U.S. Attorney’s Office and our law enforcement partners to identify and prosecute improper Medicare and TRICARE billings by companies that are looking to increase their profits at the expense of taxpayers and without regard to proper patient care,” said U.S. Attorney Tse.

“Health care companies that use illegal shortcuts to boost profits undermine the financial integrity of federal health care programs,” said HHS-OIG Special Agent in Charge Steven J. Ryan.  “Our agency will continue to hold those who engage in such fraudulent schemes accountable.”

“Today's result resolves serious allegations of fraud against Singulex and is a victory for the U.S. taxpayer,” said Special Agent in Charge Hendrickson. “DCIS and its law enforcement partners will aggressively pursue those who attempt to defraud the U.S. military's health care program and other health care programs in order to ensure the health care system works for U.S. military personnel and their families.”

The lawsuit was filed by Vicki Swartzell and Jim Vandermeer under the qui tam provisions of the False Claims Act.  Under the act, private individuals can bring a lawsuit on behalf of the government for false claims.  The individual then shares in any recovery.  The act also permits the United States to intervene in and take over a whistleblower suit, as it has done here.  

Assistant U.S. Attorney Rebecca A. Falk is handling the matter on behalf of the U.S. Attorney’s Office for the Northern District of California, with the assistance of Garland He.  This matter was investigated by the U.S. Attorney’s Office of the Northern District of California, HHS-OIG, DCIS and the FBI.
 

SAN JOSE – A federal district court judge approved a settlement resolving alleged violations of the Clean Water Act and the Endangered Species Act in and around the Van Duzen River by Humboldt County landowner, Jack Noble.  The announcement was made by U.S. Attorney Alex G. Tse, Acting Assistant Attorney General for the U.S. Justice Department’s Environment and Natural Resource Division (ENRD) Jeffrey H. Wood, U.S. Environmental Protection Agency (EPA) Pacific Southwest Regional Administrator Michael Stoker, and Assistant Director for National Oceanic and Atmospheric Administration (NOAA) Fisheries West Coast Division Office of Law Enforcement Greg Busch.  

The settlement, approved by U.S. District Judge Saundra B. Armstrong on Monday, August 27, 2018, includes a consent decree pursuant to which Noble will remove concrete and other debris that he dumped into the Van Duzen River in an attempt to armor the river’s banks.  Noble also will create woody alcoves in the river for fish habitat and revegetate the banks to restore the river.  Under the decree, Noble also will pay a $10,000 civil penalty and is enjoined from additional work in the Van Duzen without first obtaining a clearance from relevant federal agencies.  

The Clean Water Act requires any person who plans to discharge fill in any portion of rivers (or other waters of the United States) to obtain a permit from the United States Army Corps of Engineers or authorized state. Further, the Endangered Species Act protects listed species and prohibits killing listed species, injuring them, or significantly modifying or degrading their habitat.  In this case, Noble placed fill and other pollutants in sections of the Van Duzen River, a designated Wild and Scenic River that serves as habitat to protected coho salmon, chinook salmon, and steelhead trout.  He did so without obtaining a permit and despite warnings from state and federal officials.  These activities altered the reach of the river, had an adverse impact on critical fish spawning areas, and otherwise crushed or stranded fish.  

“The federal law has been crafted to protect certain areas from unpermitted construction and dumping,” said U.S. Attorney Alex G. Tse.  “Today’s settlement would ensure that this critical habitat in Humboldt County will be restored to the condition it was before pollutants were introduced in and around the Van Duzen River.  We will continue to use the resources of this office to ensure that federal laws are enforced for the protection of our environment.”

“The Van Duzen River is not only a place for recreation, but also serves as an important water supply for the communities of Humboldt County, California,” said Acting Assistant Attorney General Jeffrey H. Wood for the Justice Department’s Environment and Natural Resource Division. “Today’s settlement shows that the Justice Department will continue to work closely with its partners at the federal, state and local level to ensure the longevity of our natural resources and make sure that companies, as well as individuals, comply with the Clean Water Act.”

“Today’s settlement will help restore one of California’s Wild and Scenic Rivers and enhance habitat for salmon,” said Regional Administrator Mike Stoker with the EPA’s Pacific Southwest Region. “EPA looks forward to continuing to work with our local, state and federal partners to monitor the restoration work’s success.”

“NOAA is committed to enforcing regulations for the conservation and recovery of threatened and endangered species,” said Greg Busch, Assistant Director for NOAA Fisheries Office of Law Enforcement, West Coast Division. “This case is an excellent example of how state and federal agencies work together to reduce the harmful effect of human activities on protected species and their habitats.” 

This litigation was handled jointly by Assistant U.S. Attorney Michael Pyle of the Northern District of California and Trial Attorneys John Thomas Do, Simi Bhat, and Andrea Gelatt of the Department of Justice Environment and Natural Resources Division.  The resolution of this case is the result of a joint effort by EPA, the U.S. Army Corps of Engineers, and NOAA who are often aided by their state counterparts as well as groups and individuals who report suspected violations.  This matter was brought to the attention of the federal agencies by the California Department of Fish and Wildlife and members of the public.  
 

SAN JOSE- Vilasini Ganesh was sentenced today to 63 months in prison for making false statements related to a health care benefits program, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge.  

Ganesh, 47, and her husband Gregory Belcher, 56, both of Saratoga, Calif., were convicted of the charges on December 15, 2017, after an eight-week trial.  The evidence at trial demonstrated Ganesh submitted a series of false medical claims related to the family medical practice she owned, Campbell Medical Group in Saratoga.  For example, Ganesh submitted claims for days when a patient had not been seen by the provider and claims for patients who had been seen by a physician provider who no longer was affiliated with her practice.  Additionally, Ganesh billed insurers with claims that certain patients were seen twelve to fifteen times in a single month.  

On July 13, 2017, a federal grand jury indicted Ganesh and Belcher, charging them with one count of conspiracy to commit health care fraud, in violation of 18 U.S.C. § 1349; one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h); multiple counts health care fraud, in violation of 18 U.S.C. § 1347 and 2; and making a false statement relating to health care matters, in violation of 18 U.S.C. § 1035. The jury convicted Belcher of one count of making a false statement related to health care matters and convicted Ganesh of five counts of health care fraud and five counts of making false statements.  The jury acquitted defendants of the remaining counts.  

During Ganesh’s sentencing hearing, Judge Koh stated that Ganesh obstructed justice by misrepresenting her understanding of the legal system, the amount of money she was paid by insurers, and whether she understood that it was improper to “upcharge” when submitting claims to insurers.  Judge Koh also found that Ganesh had abused a position of trust by submitting the false claims.  In addition to the prison term, Judge Koh sentenced Ganesh to a 3-year term of supervised release and ordered the defendant to pay restitution in the amount of $344,916.20.  Ganesh will begin serving the prison sentence on November 1, 2018.    

On April 4, 2018, Judge Koh sentenced Belcher to a year and a day in prison to be followed by three years of supervised release.

Assistant U.S. Attorneys Patrick Delahunty 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 Federal Bureau of Investigation.       
 

SAN FRANCISCO - A federal grand jury indicted four airline pilots for making false statements to the government in Federal Aviation Administration (FAA) forms, announced United States Attorney Alex G. Tse; U.S. Department of Veterans Affairs Office of Inspector General, Criminal Investigations Division, Special Agent in Charge James Wahleithner; and Department of Transportation Office of Inspector General Regional Special Agent in Charge Jeffrey Dubsick.  In each case, the pilots are accused of submitting forms to the FAA that deny the existence of medical conditions for which the pilots were receiving disability benefits from the U.S. Department of Veterans Affairs. 

The defendants, Gregory James Chrisman, 57, of Burlingame, Calif.; Nicholas King Beyer, 32, of Discovery Bay, Calif.; Adam Roger Asleson, 39, of Peachtree, Ga; and Walker Trent Grant, 36, of Fortuna, Calif., were charged in four separate indictments.  In each indictment, the defendant is charged with making at least one false statement in violation of 18 U.S.C. § 1001(a)(2), as follows:  
 

Defendant

Charges

Allegations

Adam Roger Asleson

Making a false statement, in violation of 18 U.S.C. § 1001(a)(2)

(1 count)

Allegedly stated on an FAA Form 8500-8:

 

    (i)   that he did not suffer from any mental disorders including depression or anxiety despite having represented to the VA that he suffered from major depressive disorder.

 

    (ii)   that he received medical disability benefits for knee strain and tinnitus despite having received service-related medical disability benefits from the VA for a major depressive disorder, and not for the conditions indicated on the Form 8500-8.

 

Walker Trent Grant

Making false statements, in violation of 18 U.S.C. § 1001(a)(2)

(2 counts)

Allegedly stated on an FAA Form 8500-8:

 

     (i)   that he did not suffer from and had never been diagnosed with “frequent or severe headaches” despite having represented to the VA that he suffered from tension headaches. 

   

     (ii)   that he did not receive medical disability benefits, despite having received service-related medical disability benefits from the VA, including benefits related to his tension headaches since 2011. 

 

Nicholas King Beyer

Making false statements, in violation of 18 U.S.C. § 1001(a)(2)

(2 counts)

 

18 U.S.C. § 1001(a)(1) – Falsify, Conceal, or Cover Up by Trick, Scheme, or Device a Material Fact

(2 counts)

 

 

Allegedly stated on an FAA Form 8500-8:

  

      (i)   that he did not have and had never had a mental disorder of any sort despite having represented to the VA that he had a major depressive disorder and having received medical disability benefits as a result of that condition. 

 

      (ii)  he was receiving VA medical disability benefits only because of a knee and back injuries (and not for a major depressive disorder).

Gregory James Chrisman

Making false statements,

in violation of 18 U.S.C. § 1001(a)(2)

(2 counts)

Allegedly stated on an FAA Form 8500-8:

 

       (i)     he did not have and had never had a mental disorder of any sort despite having represented to the VA that he had posttraumatic stress disorder and having received medical disability benefits as a result of that condition.

 

       (ii)   that he was not receiving and has never received medical disability benefits despite having received service-related medical disability benefits from the VA since 2011.

 

Each defendant was arraigned and released on a $10,000 bond, and each was required to surrender his passport.  Asleson will make his next appearance on October 3, 2018, before the Honorable Charles R. Breyer, U.S. District Judge.  Grant will make his next appearance on September 19, 2018, before the Honorable Edward Chen, U.S. District Judge.  Beyer will make his next appearance before Judge Breyer on October 3, 2018.  Chrisman will make his next appearance on September 25, 2018, before the Honorable Vince Chhabria, United States 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 5 years imprisonment and a fine of $250,000, plus restitution for each violation of 18 U.S.C. § 1001(a)(2) and each violation of 18 U.S.C. § 1001(a)(1).  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. Attorneys Sailaja M. Paidipaty and Nicholas J. Walsh are prosecuting the four cases with the assistance of Marina Ponomarchuk. The prosecutions are the result of an investigation by the Department of Transportation Office of Inspector General and the Department of Veterans Affairs, Office of Inspector General.

OAKLAND – William Michael Andrews was sentenced today to 12 months in prison, and ordered to pay $26,300 in restitution to the U.S. government after pleading guilty to theft of government property, announced United States Attorney Alex G. Tse and Department of Veterans Affairs (VA) Office of Inspector General Special Agent in Charge James Wahleithner. The sentence was handed down by the Honorable James Donato, U.S. District Judge.

Andrews, 50, of Windsor, Calif., pleaded guilty on April 25, 2018.  According to the plea agreement, from December 2015 until October 2016, Andrews used his position as a case-worker at an East Bay non-profit agency to acquire the personal information of homeless veterans.  He then used that information to steal grant money from the VA and use it pay his personal expenses.  Specifically, Andrews used the veterans’ personal information, including their social security numbers, to illegally direct VA grant money to his landlord to pay his own rent, rather than its intended purpose of paying for short-term rental apartments to help homeless veterans get off the streets.   In total, Andrews stole more than $26,000 in VA grant funds.  

A federal grand jury indicted Andrews on February 8, 2018.  He was charged with theft of government property, in violation of 18 U.S.C. § 641, and aggravated identity theft.  Pursuant to the guilty plea, Andrew pleaded guilty to the theft charge and the identity theft charge was dismissed.  

Judge Donato also sentenced the defendant to a three-year period of supervised release and ordered him to pay restitution to the U.S. government in the amount of $26,300.  The defendant will begin serving the sentence on November 16, 2018.

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 VA Office of Inspector General, Criminal Investigations Division.
 

SAN JOSE – Frank Miranda Carrillo pleaded guilty in federal court today to distributing crystal methamphetamine and illegally possessing unregistered firearms, announced U.S. Attorney Alex G. Tse and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.  The guilty plea was accepted by the Honorable Lucy H. Koh, U.S. District Judge.

According to his plea agreement, Carrillo, 30, of Salinas, Calif., admitted he was a methamphetamine dealer.  Carrillo admitted that, on March 27, 2018, he attempted to sell 443.2 grams of crystal methamphetamine to an undercover agent.  Carrillo also admitted that between June of 2017 and March of 2018, he sold approximately 598 grams of crystal methamphetamine in numerous transactions including the following four sales: (1) on July 12, 2017, he sold 15.4 grams of crystal methamphetamine; (2) on July 26, 2017, he sold 111.1 grams of crystal methamphetamine; (3) on September 6, 2017, he sold 0.6 grams of crystal methamphetamine; and (4) on October 4, 2017, he sold 27.7 grams of crystal methamphetamine.  

In addition to selling drugs, Carrillo admitted he possessed and sold numerous firearms– even though he was a previously-convicted felon and he had no license to deal in firearms.  In his plea agreement, Carrillo itemized more than three dozen items that he either sold or of which he was in possession between June 7, 2017, and March 27, 2018, the date of his arrest.  

On July 18, 2018, Carrillo was charged by information with one count each of distribution and possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A), and illegal possession of unregistered firearms, in violation of 26 U.S.C. § 5861(d).  Pursuant to today’s plea agreement, Carrillo pleaded guilty to both charges.  

Carrillo has been in custody since the date of his arrest.  Judge Koh scheduled his sentencing for December 5, 2018.  Carrillo faces a statutory maximum of life in prison and a fine of up to $10,000,000 for the drug distribution charge.  In addition, Carrillo faces a mandatory minimum statutory sentence of 10 years in prison for the drug distribution charge.  With respect to the gun possession charge, Carrillo faces a statutory maximum of 10 years in prison and a fine of $250,000.  The court also must impose a five-year term of supervised release to follow his prison term.  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. 

The Organized Crime Strike Force Section of the U.S. Attorney’s Office is prosecuting the case.  The prosecution is the result of an investigation conducted by the ATF and the Salinas Police Department.  
 

OAKLAND – Wesley Allen Krohn was sentenced to five years in prison for perpetrating a bank robbery spree, announced United States Attorney Alex G. Tse and Special Agent in Charge John Bennett of the Federal Bureau of Investigation (FBI)’s San Francisco Division and Special Agent in Charge Sean Ragan of the FBI’s Sacramento Division.  The Honorable Haywood S. Gilliam, Jr., United States District Judge, handed down the sentence on August 20, 2018.  

Krohn, 34, of San Jacinto, California, pleaded guilty to the robberies on April 23, 2018.  According to his plea agreement, Krohn admitted that between December 2015 and January of 2016, he went on a bank robbery spree across northern California.  In two of the robberies, Krohn used an object that appeared to be a black pistol.  During some of the robberies, Krohn entered the banks wearing a fake beard and a baseball hat in an attempt to disguise himself, approached the victim tellers, and presented a note that demanded money, indicating that he had a gun.  Krohn robbed, or attempted to rob, banks in Sonoma, Contra Costa, Sacramento, Solano, and San Joaquin counties:

• On December 3, 2015, Krohn robbed an Exchange Bank in Rohnert Park, California, of $9,000.  Krohn’s demand note said, essentially, “Put $10,000 in an envelope quickly and you won’t get hurt.”  When the victim teller pushed back from the counter after reading the note, Krohn noticed, and told the victim teller, “No quick movements.”
• On December 21, 2015, Krohn robbed a Tri Counties Bank in Brentwood, California, of $496.  Krohn used a folded-up check as a demand note, which said, “I HAVE A GUN.”  The blank check was filled out for $10,000.  Krohn said, “Give me all your money.”  Krohn kept his hand in his jacket pocket when he said, “Hurry up, I have a gun.”  
• On December 22, 2015, Krohn robbed a Wells Fargo Bank in Pleasant Hill, California, of $650.  Krohn pointed an object that appeared to be a black semi-automatic pistol at the victim teller and handed the teller a note that read, “No dye packs, $20,000.”
• On December 31, 2015, Krohn robbed a Bank of Rio Vista in Walnut Grove, California, of $1,439.  Krohn approached the victim teller, brandished an object that appeared to be a black semi-automatic pistol, and said, in a low voice, something to the effect of, “This is a stick-up.  Give me your [  ] money.”  Krohn raised his weapon, pointed it in the direction of the victim teller, and ordered her to open the bottom two drawers.
• On January 9, 2016, Krohn robbed a US Bank in Suisun City, California, of $884.  Krohn approached the victim teller, wearing a fake beard and a baseball cap, and presented a note that threatened he had a gun and demanded money.  Krohn also verbally demanded money and said he had a gun.  
• On January 19, 2016, Krohn attempted to rob a US Bank in Lodi, California.  He presented a note stating “I have a gun. Give me all the money.”  The teller pointed out that the bank had not yet opened and the cash drawers did not have money.  Krohn fled without any money from the bank.
• On January 19, 2016, Krohn robbed a Tri Counties Bank in Elk Grove, California, of $2,144. Krohn approached the victim teller with a note that said something to the effect of, “I have a gun on me, hurry up, and give me all the money. This is not a joke.”  While the teller was attempting to read the note, Krohn whispered to her, “Hurry up, I have a gun.”  

Krohn was later identified as the bank robbery suspect who appeared in FBI flyers.  He self-surrendered to federal authorities on December 8, 2017, following the grand jury’s return of an indictment.  On April 19, 2018,  Krohn was charged by Superseding Information with five counts of actual or attempted bank robbery, in violation of 18 U.S.C. § 2113(a), and two counts of armed bank robbery, in violation of 18 U.S.C. §§ 2113(a) and (d).  

In addition to the prison term, Judge Gilliam ordered Krohn to serve a three-year term of supervised release, and ordered him to pay full restitution to the victim banks.  The defendant has been in custody since his arrest and will begin serving his sentence immediately.

Assistant U.S. Attorney Christina McCall is prosecuting the case with the assistance of Vanessa Quant.  The prosecution is the result of an investigation by the FBI, the Rohnert Park Police Department, the Brentwood Police Department, the Pleasant Hill Police Department, the Sacramento County Sheriff’s Department, the Suisun City Police Department, the Elk Grove Police Department, the Lodi Police Department, and the Clearlake Police Department.   
 

SAN JOSE- A federal grand jury indicted twelve South Bay residents for a broad range of racketeering crimes including murder, arson, extortion by force, and drug trafficking, announced United States Attorney Alex G. Tse and Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  The Second Superseding Indictment handed down today amends the charges previously brought against the defendant in April of this year.  The defendant all are alleged to be MS-13 gang members and the new charges now specifically include allegations that certain defendants conspired to commit, attempted to commit, and ultimately succeeded in committing murder. 

“MS-13 has presented a violent threat in the Santa Cruz area for years,” said U.S. Attorney Tse.  “The gang targeted many, including other immigrants from El Salvador, and they instilled fear in everyone who experienced or witnessed their brutality.”

The indictment alleges the following defendants conspired to engage in racketeering activities:
 

Velarmino Escobar-Ayala (aka Meduza) 

Tomas Rivera (aka Profugo, aka Caballo)

Ismael Alvarenga-Rivera (aka Casper) 

Willfredo Ayala-Garcia (aka Chino) 

Jose David Abrego-Galdamez (aka Largo) 

Melvin Lopez (aka Sharky) 

Alexander Martinez-Flores (aka Pocar)

Gerber Morales (aka Choco, aka Chuki)

Emilio Escobar-Albarnga (aka Diablo)

Josue Alcedis Escobar-Cerritos (aka Penguino, aka Chui)

Erick Escalante-Torres (aka Deceptico, aka Problematico)

Jose Noe Ramirez-Avelar (aka Chepito, aka Sparky)
 

According to the indictment, the defendants all engaged in racketeering for the purpose of preserving the power, territory, reputation, and profits of the MS-13 gang.  The indictment describes how members of MS-13 met regularly to discuss issues such as disciplining members and planning crimes.  The indictment provides a list of dates on which the defendants allegedly met and conspired to commit a broad array of crimes, including murder, to further the purposes of the gang.  

According to the indictment, differing members of the enterprise met at times to discuss targeting rival gang members for murder and deciding which gang members had an interest in murdering the targets. For example, the indictment alleges Escobar-Ayala, Rivera, Lopez, Martinez-Flores, Escalante-Torres, and Ramirez-Avelar conspired to commit a murder, and that all these defendants, except Lopez, actually committed the murder.  Similarly, the indictment alleges Escalante-Torres attempted to commit the murder of a separate victim.  In addition, the indictment describes how some members met to create plans to commit murder while other members actually attempted or succeeded in committing murder, and how still others attempted to destroy proof of the gang’s crimes by burning evidence.   

The indictment also describes how certain defendants conspired to extort property from drug dealers in Santa Cruz by threatening violence against the dealers and other persons close to them.  According to the indictment, from February 2013 through at least February of 2017, Escobar-Ayala, Rivera, Alvarenga-Rivera, Ayala-Garcia, Abrego-Galdamez, Lopez, and Martinez-Flores engaged in the extortion and threatened force, violence, and fear to obtain money that was demanded.  

Also, the indictment alleges all the defendants were engaged in a conspiracy engage in drug trafficking.  According to the indictment, from April 2012 until the present, the defendants conspired to possess with intent to distribute 50 grams of more of a mixture of substance containing methamphetamine. 

According to additional court papers filed by the government, the current charges in this case stem from a multi-year investigation into the activities of a violent Santa Cruz street gang known as Santa Cruz Salvatrucha Locos 13 (SCSL13).  The government’s papers state that “SCSL13 is a subset of the larger Mara Salvatrucha 13 (MS-13) gang organization.”  According to the government, the defendants all are alleged to be either active members or recruits performing criminal tasks on behalf of SCSL13.   

In sum, the charges pending against each defendant are as follows:
 

Defendant

Age

Charges

Maximum Statutory Penalty

All Defendants

 

 

Racketeering Conspiracy

18 U.S.C. § 1962(d)

Life in prison

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Velarmino Escobar-Ayala (aka Meduza)

 

38

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Tomas Rivera (aka Profugo, aka Caballo)

 

25

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Ismael Alvarenga-Rivera (aka Casper)

 

39

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Willfredo Ayala-Garcia (aka Chino)

 

33

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Jose David Abrego-Galdamez (aka Largo)

 

38

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Melvin Lopez (aka Sharky)

 

26

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Alexander Martinez-Flores (aka Pocar)

 

29

Conspiracy to Commit Extortion by Force

18 U.S.C. § 1951(a)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Murder in Aid of Racketeering (18 U.S.C. § 1959(a)(1))

Death penalty eligible

Mandatory life in prison

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use/Possess/Brandish/Discharge of Firearm in Furtherance of Crime of Violence

18 U.S.C. § 924(c)(1)(A)

Life in prison

5 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use of Firearm in Furtherance of Crime of Violence Resulting in Death 18 U.S.C. § 924(j)(1)

Death penalty eligible

Life in prison

5 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Gerber Morales (aka Choco, aka Chuki)

 

30

Conspiracy to Possess With Intent to Distribute 50 Grams or More of Methamphetamine (21 U.S.C. §§ 846, 841(a)(1), (b)(1)(A)(viii)

Life in prison

(minimum 10 years)

Lifetime of supervised release

(minimum 5 years)

Fine of $10,000,000

Emilio Escobar-Albarnga (aka Diablo)

 

37

Conspiracy to Possess With Intent to Distribute 50 Grams or More of Methamphetamine (21 U.S.C. §§ 846, 841(a)(1), (b)(1)(A)(viii)

Life in prison

(minimum 10 years)

Lifetime of supervised release

(minimum 5 years)

Fine of $10,000,000

Josue Alcedis Escobar-Cerritos (aka Penguino, aka Chui)

 

30

Conspiracy to Possess With Intent to Distribute 50 Grams or More of Methamphetamine (21 U.S.C. §§ 846, 841(a)(1), (b)(1)(A)(viii)

Life in prison

(minimum 10 years)

Lifetime of supervised release

(minimum 5 years)

Fine of $10,000,000

Erick Escalante-Torres (aka Deceptico, aka Problematico)

 

23

Accessory After the Fact to Murder in Aid of Racketeering

18 U.S.C. § 3

 

(2 counts)

15 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use of Fire in Commission of Felony 18 U.S.C. § 844(h)

 

(2 counts)

10 years in prison

(mandatory and consecutive to any other term of imprisonment)

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Attempted Murder in Aid of Racketeering

18 U.S.C. §1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Assault with a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3)

20 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use/Possess/Brandish/Discharge of Firearm in Furtherance of Crime of Violence

18 U.S.C. § 924(c)(1)(A)

 

(2 counts)

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Murder in Aid of Racketeering (18 U.S.C. § 1959(a)(1))

Death penalty eligible

Mandatory life in prison

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use of Firearm in Furtherance of Crime of Violence Resulting in Death 18 U.S.C. § 924(j)(1)

Death penalty eligible

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Jose Noe Ramirez-Avelar (aka Chepito, aka Sparky)

28

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Murder in Aid of Racketeering (18 U.S.C. § 1959(a)(1))

Death penalty eligible

Mandatory life in prison

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use/Possess/Brandish/Discharge of Firearm in Furtherance of Crime of Violence

18 U.S.C. § 924(c)(1)(A)

 

Life in prison

3 years supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

Use of Firearm in Furtherance of Crime of Violence Resulting in Death 18 U.S.C. § 924(j)(1)

Death penalty eligible

5 years of supervised release

Fine of the greater of $250,000, twice the gain to the defendant, or twice the loss inflicted on another

 

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.  

In addition, 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. Attorneys Joseph Alioto and Jeffrey Backhus are prosecuting the case.  The prosecution is the result of an investigation by the HSI. 

SAN FRANCISCO – Krishna Viramontes was sentenced today to 204 months in prison for conspiring to produce and possessing child pornography, as well as extortion, announced United States Attorney Alex G. Tse and Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  The sentence was handed down by the Honorable Edward M. Chen, U.S. District Judge.

Viramontes, 37, of San Francisco, pleaded guilty to the charges on February 28, 2018.  In pleading guilty, Viramontes admitted that on June 24, 2016, July 25, 2016, and August 30, 2016, he used a minor to produce visual depictions of sexually explicit conduct.  He further admitted that between June 24, 2016, and September 29, 2016, he conspired with another person to produce sexually explicit depictions of a minor.  Viramontes further admitted that he possessed child pornography and transmitted threats in interstate commerce intended to extort another person. Specifically, Viramontes threatened to distribute sexually explicit videos of the minor in the hope that the threats would force the minor into a relationship with the defendant.  On July 26, 2016, officers from the San Francisco Police Department Internet Crimes Against Children (ICAC) Unit received a tip that an account holder at a file hosting service had uploaded digital video files of suspected child pornography to his account.  An investigation resulted in a search of Viramontes’ San Francisco residence and the discovery of numerous electronic devices containing images and videos of child pornography, including images and videos created by Viramontes of a minor.  

A federal grand jury indicted Viramontes on December 13, 2016, charging him with three counts of producing child pornography, in violation of 18 U.S.C. § 2251(a), one count of conspiring to produce child pornography, in violation of 18 U.S.C. §§ 2251(a) and (e), one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B), and one count of extortion through interstate communications, in violation of 18 U.S.C. § 875(d).  Viramontes pleaded guilty to all charges.  

In addition to the prison term, Judge Chen sentenced the defendant to a ten-year period of supervised release and ordered Viramontes to register with the state sex offender registration agency as required by state law.

Assistant United States Attorney Karen Kreuzkamp is prosecuting the case with the assistance of Tong Zhang, Lance Libatique, and Maria Sunga.  The prosecution is the result of an investigation by HSI and ICAC.
 

SAN FRANCISCO – San Francisco former certified public accountant Cary S. Collins was sentenced to 30 months in federal prison for wire fraud and money laundering, announced United States Attorney Alex G. Tse and Acting Special Agent in Charge Internal Revenue Service (IRS-CI) Tara Sullivan.  The sentence was handed down today by the Honorable Richard Seeborg, U.S. District Judge.

Collins, 56, pleaded guilty to the charges on January 31, 2018.  According to his plea agreement, Collins admitted that between February 2012 and April 2013, he devised and executed a plan to defraud a client of more than $1.3 million.  Collins described the victim as a “client and friend.”  Nevertheless, the defendant admitted he used his education and experience as a CPA, the position of trust he had developed as a financial advisor, and his personal relationship to convince the client to provide funds for the fraud.  To perpetrate the scheme, Collins promised the client that if funds were transferred directly into Collins’ company’s bank account, Collins would transfer the money to an account at a new investment firm in the client’s name.  On the basis of these representations, Collins convinced the victim to complete wire transfers to Collins’ company’s bank account.  The client made four wire transfers to Collins in the aggregate amount of $1,325,000 between February 21, 2012, and March 5, 2012.

Collins received the wire transfers but never deposited the funds with the new investment firm.  Instead, Collins spent the money on his own personal expenses, debts, and liabilities, including, among other things, payments for a vacation rental in Hawaii, payment of a contempt order against him, and payments to other entities such as Audi Financial Services, American Express, CitiCards, and Bi-Rite.

In April of 2012, the client inquired with Collins as to why the money had not been transferred to her new investment account.  Collins responded with numerous false excuses and fraudulent explanations over the course of the following year as to the whereabouts of the money and his purported intention to repay the funds.  The client ultimately was able to obtain the money back in July 2013, but only after obtaining a security interest on Collins’ home.  

On November 17, 2015, a federal grand jury indicted Collins, charging him with four counts of wire fraud, in violation of 18 U.S.C. § 1343; four counts of money laundering, in violation of 18 U.S.C. § 1957; and one count of aiding and assisting in preparing a false tax return, in violation of 26 U.S.C. § 7206(2).  Pursuant to his plea agreement, Collins pleaded guilty to one wire fraud count and one money laundering count.  The remaining wire fraud and money laundering charges were dismissed.  The aiding and assisting in preparing a false tax return count remains pending. 

In addition to the prison term, Judge Seeborg ordered that Collins be placed on a three-year term of supervised release following his release from prison and that he pay a criminal fine in the amount of $10,000.  Judge Seeborg ordered Collins to begin serving his sentence on January 2, 2019.  

Assistant U.S. Attorney Brian R. Faerstein prosecuted the case with the assistance of Rosario Calderon.  The prosecution is the result of an investigation by the IRS.
 

SAN FRANCISCO – Gerard Jones was sentenced today to 72 months in prison for distributing and possessing child pornography, announced United States Attorney Alex G. Tse and Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge.

Jones, 60, of San Francisco, pleaded guilty to the charges on April 2, 2018.  In pleading guilty, Jones admitted that on September 13, 2016, officers from the San Francisco Police Department Internet Crimes Against Children (ICAC) Unit received a tip that a social media account holder uploaded a video of suspected child pornography to a private on-line channel.  An investigation resulted in a search of Jones’s San Francisco residence and the discovery of numerous electronic devices containing tens of thousands of images and hundreds of videos of child pornography.  

A federal grand jury indicted Jones on February 7, 2017, charging him with one count each of distributing child pornography, in violation of 18 U.S.C. § 2252(a)(2), and possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).  Jones pleaded guilty to both charges.  

In addition to the prison term, Judge Chhabria sentenced the defendant to a five-year period of supervised release and ordered Jones to pay an assessment of $10,200.  Judge Chhabria also scheduled a hearing for October 4, 2018, to determine the amount of restitution to be paid to his victims.  The defendant was ordered to begin serving his sentence on November 30, 2018.   

Assistant United States Attorney Meredith Osborn is prosecuting the case with the assistance of Lance Libatique.  The prosecution is the result of an investigation by HIS with assistance from the ICAC.
 

SAN FRANCISCO – Gregory A. Vaughan pleaded guilty today in federal court to multiple counts of bank robbery, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The plea was accepted by the Honorable William H. Orrick, U.S. District Judge.

In pleading guilty Vaughan, 51, of Daly City, Calif., admitted he robbed five Bay Area banks between March 15, 2018, and April 6, 2018.  Specifically, Vaughan pleaded guilty to charges that he committed robberies of banks on the dates and at the places as follows: 

• $3,080 from Bank of America in San Jose, California, on March 15, 2018
• $3,400 from Wells Fargo Bank in San Mateo, California, on March 17, 2018
• $700 from California Bank & Trust in San Mateo, California, on March 23, 2018
• $2,232.60 from U.S. Bank in San Mateo, California, April 4, 2018
• $1,047 from U.S. Bank in Campbell, California, on April 6, 2018 

A federal grand jury indicted Vaughan on April 19, 2018, charging him with five counts of bank robbery, in violation of 18 U.S.C. § 2113(a).  Vaughan was arrested on April 7, 2018, and has been in custody since that date.        

Judge Orrick scheduled Vaughan’s sentencing hearing for December 6, 2018.  Vaughan faces a maximum statutory sentence of 20 years in prison for each count of bank robbery.  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 Jonathan Lee is prosecuting the case with the assistance of Kim Richardson and Alycee Lane.  The prosecution is the result of an investigation by the FBI and the police departments of San Mateo, San Jose, and Campbell.  
 

SAN JOSE - A federal grand jury in San Jose indicted Travis Cole Malone, Jr., on July 12, 2018, for conspiracy to commit computer fraud and abuse and for causing the transmission of code to damage protected computers, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. 

According to the indictment unsealed today, Malone, 20, of McAlester, Okla., is alleged to have coded and developed the “Medusa IRC Botnet DDoS” malicious software (“malware”).  When installed on a victim computer, the malware joined the victim computer to a “botnet” that could be used to conduct distributed denial of service (“DDoS”) attacks against websites.  Malone, using the moniker “stevenkings,” advertised the malware on various internet forums.  He then leased access to the botnet to co-conspirators for the purpose of executing DDoS attacks.  The indictment alleges that the malware was used in a January 2016 DDoS attack on the webservers for a San Francisco digital currency company.

Malone was arrested on August 7, 2018, and made his initial appearance in federal court in Muskogee, Oklahoma, yesterday.  Malone was released on bond and his next scheduled appearance is at 1:30 p.m. on September 12, 2018, for an initial appearance in the Northern District of California before U.S. Magistrate Judge Susan van Keulen.

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 ten years’ imprisonment, and a fine of $250,000, restitution, and forfeiture, for each violation of 18 U.S.C. § 1030.  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.

This case is being prosecuted by the Northern District of California’s Computer Hacking and Intellectual Property Section with the assistance of Elise Etter and Vanessa Quant.  The prosecution is the result of an investigation by the FBI in San Francisco and Muskogee. The FBI received assistance during the investigation from security researchers at Arbor Networks.
 

SAN FRANCISCO – Martin Marsich made an initial appearance today on a criminal complaint charging him with crimes related to the illegal intrusion of the computer network of a Bay Area video-game company, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. 

The allegations against Marsich, 25, whose last known residence was in Udine, Italy, and who possessed passports from both Serbia and Italy, are set out in an affidavit by an agent of the Federal Bureau of Investigation filed this morning in connection with the criminal complaint.  According to the affidavit, on March 25, 2018, a video-game company headquartered in the Bay Area discovered that an individual had illegally accessed its internal computer network and granted access to parts of the company’s systems.  The intruder, later identified as Marsich, gained access to 25,000 accounts that allow customers to purchase items for use in video games. 

In addition, Marsich allegedly used some of the information he obtained from the computer system to obtain in-game currency, used to buy and sell in-game items. The complaint further alleges Marsich sold access to the on-line game on black-market websites. After making the discovery of the intrusion, the company allegedly closed the stolen accounts and suffered a loss of approximately $324,000.  

The complaint charges Marsich with intentionally accessing a protected computer without authorization to obtain information for the purposes of commercial advantage and private financial gain, in violation of 18 U.S.C. § 1030(a)(2)(C) and (c)(1)(B)(i), and accessing a protected computer to defraud and obtain anything of value, in violation of 18 U.S.C. § 1030(a)(4).

Marsich was arrested at San Francisco International Airport last night and made his initial appearance in federal court in San Francisco today. Magistrate Judge Corley ordered Marsich released to a half-way house on the condition that he post the equivalent of $750,000 in cryptocurrency for bail.  Magistrate Judge Corley set Marsich’s next court appearance for August 13, 2018, to confirm the posting of the cryptocurrency and to set further dates in the case. 

A complaint 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 five years’ imprisonment, and a fine of $250,000, plus restitution if appropriate 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.  

Assistant U.S. Attorney Susan Knight is prosecuting the case with the assistance of Elise Etter.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.
 

SAN FRANCISCO – Nathan James Garcia, aka “Bones,” was sentenced to 84 months in prison today for robbing and conspiring to rob a bank in Salinas, Calif., announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Lucy H. Koh, United States District Judge.  

Garcia pleaded guilty to the charges on January 24, 2018.  According to the plea agreement, Garcia, 27, of Salinas, admitted that in May of 2012, he conspired with others to rob a bank in Salinas.  In the days leading up to the robbery, Garcia and his coconspirators prepared by casing the bank and rehearsing the robbery.  On May 19, 2012, the robbers entered the bank wearing masks and at least one of the co-conspirators carried and brandished a firearm.  Garcia admitted that he knew at least one of the robbers would be carrying the firearm to threaten, frighten, and intimidate the bank employees.  The robbers absconded with over $13,000.  

A federal grand jury indicted Garcia on May 11, 2017, and charged him with one count each of robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951(a); armed bank robbery, in violation of 18 U.S.C. §§ 2113(a) and (d), and 2; conspiracy to commit armed bank robbery, in violation of 18 U.S.C. §§ 2113(a) and (d), and 371; and robbery affecting interstate commerce, in violation of 18 U.S.C. §§ 1951(a) and (2).  Garcia pleaded guilty to armed bank robbery and conspiracy to commit robbery affecting interstate commerce, and the other two charges were dismissed.  

In addition to the prison term, Judge Koh ordered Garcia to pay restitution in the amount of $13,256 and to serve five years of supervised release to begin after his prison term.  Garcia has been in federal custody since his arrest in May of 2017 and will begin serving his sentence immediately.

The case is being prosecuted by Assistant U.S. Attorney Claudia A. Quiroz with the assistance of Jessica Meegan.  The prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO – Tony Pham pleaded guilty in federal court in San Francisco today to filing a false federal income tax return, announced United States Attorney Alex G. Tse and Acting Special Agent in Charge Internal Revenue Service (IRS-CI) Tara Sullivan.  The plea was accepted by the Honorable Edward M. Chen, U.S. District Judge.

In pleading guilty, Pham, 51, of San Francisco, admitted he operated High Quality Roofing, a contracting business that provided roofing services throughout the San Francisco Bay area.  Pham admitted he received gross receipts of $1,916,128 from High Quality Roofing during 2010 through 2013 that he did not report on his tax returns for those years.  Pham also admitted he did not tell his tax return preparer about this income so that the gross receipts would not be reported on his federal income tax returns filed with the IRS.  Pham signed his 2010 through 2013 income tax returns under penalty of perjury even though he knew they were false.  The total tax loss to the United States for tax years 2010 through 2013 was $369,532.  

Pham, was charged by information on June 26, 2018, with three counts of filing false federal income tax returns, in violation of 26 U.S.C. § 7206(1).  He pleaded guilty to one count.  The remaining two charges will be dismissed at the time of sentencing if Pham complies with the terms of the plea agreement. 

Pham is currently released on bond.  Judge Chen scheduled Pham’s sentencing hearing for November 14, 2018, at 2:30 p.m.  The maximum statutory penalty for a violation of filing a false federal income tax return in violation of 26 U.S.C. § 7206(1)  is three years imprisonment 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.  The prosecution is the result of an investigation by the IRS-CI.  
 

SAN FRANCISCO –Kevin Mitchell was sentenced to 46 months in prison for possessing a firearm and ammunition after being previously convicted of a felony, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down today by the Honorable Edward M. Chen, United States District Judge.

Mitchell pleaded guilty to the charge on May 16, 2018.  According to his plea agreement, Mitchell admitted that he was carrying a loaded firearm inside his vehicle in San Francisco on December 15, 2017.  At the time, he was a convicted felon and was not eligible to possess a firearm.  The firearm was a .45 caliber handgun with a large capacity magazine attached to it.  In additions, the magazine contained twenty-six rounds of ammunition.  On March 1, 2018, a federal grand jury indicted Mitchell charging him with one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1).  

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

Assistant United States Attorney Neal C. Hong is prosecuting the case with the assistance of Kimberly Richardson.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the San Francisco Police Department.     
 

SAN FRANCISCO – Douglas Peacock was sentenced today to 115 months in prison for traveling to a foreign country and engaging in illicit sexual conduct with a minor, announced United States Attorney Alex G. Tse and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Special Agent in Charge in Northern California and Northern Nevada Ryan L. Spradlin.  The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge.

“Today, the Court imposed a sentence commensurate with the egregiousness of the crime committed,” said U.S. Attorney Tse.  “This case demonstrates the borderless nature of crimes against children and this Office’s dedication to prosecute those crimes, protect the community, and bring justice to child victims and their families.”

“Homeland Security Investigations has one of the largest cadres of criminal investigators and allies globally that are highly trained and uniquely equipped to identify and arrest those who are involved in the exploitation of our most vulnerable citizens,” said Special Agent in Charge Spradlin. “Thanks to our work with our attaché in Jamaica, we were able to ensure this child molester was not only held accountable in a foreign country, but that he was prosecuted, will serve time, and be registered as sex offender here in the U.S. to help keep others safe from potential threat.”

Peacock, 44, of Foster City, pleaded guilty to the charge on April 25, 2018.  In pleading guilty, Peacock admitted that he traveled from the United States to Jamaica on June 20, 2017, and on the following day engaged in illicit sexual conduct with a minor.  Specifically, Peacock, while in the pool of a family-friendly resort in Jamaica, molested a six-year-old U.S. citizen.  A federal grand jury indicted Peacock on November 2, 2017, charging him with one count of engaging in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(c).  

In addition to the prison term, Judge Breyer also ordered Peacock to serve a 10-year period of supervised release, which will begin after his prison term is over, and to register as a sex offender.  

Peacock has been in federal custody since being returned to the United States on November 10, 2017, and will begin serving his sentence immediately.  

The case is being prosecuted by Assistant U.S. Attorney Shiao Lee with the assistance of Kimberly Richardson and Marina Ponomarchuk.  The case was investigated by HSI in San Francisco and Ohio with assistance from the HSI attaché in Kingston, Jamaica.
 

SAN FRANCISCO– Bitty Yu was sentenced to 24 months in prison for wire fraud, announced United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence was handed down today by the Honorable Richard Seeborg, United States District Judge.  

Yu, 69, of Pacifica, Calif., pleaded guilty to the wire fraud charge on March 20, 2018. According to her plea agreement, from about January 2013 through April 2017, Yu, along with others, engaged in a scheme to defraud an elderly married couple living in San Mateo of millions of dollars.  Specifically, in 2013, Yu convinced the couple that she and others were involved in a real estate project and that the couple’s funds would be used to purchase10 acres of land in London, England, for the project.  Yu and others claimed a deal was being brokered that would result in a $195 million return in commissions when the project was completed.  Yu acknowledged that she and others made false statements to the couple on various occasions, ultimately lulling the couple into wiring funds on multiple occasions.  

In total, the couple invested more than $4,000,000 in the bogus real estate project.  Yu received over $1,000,000 for her role in the scheme.  Yu admitted that she used the money she received from the couple for personal expenses including mortgage payments, personal credit account payments, automobile purchases, and federal and state income tax payments.  

Yu was charged by information on January 31, 2018, with a single count of wire fraud, in violation of 18 U.S.C. § 1343.  Pursuant to her plea agreement, she pleaded guilty to the charge.   

In addition to the prison term, Judge Seeborg also sentenced the defendant to a three-year period of supervised release and ordered her to pay $1,000,000 in restitution.  Yu will begin serving her sentence on October 9, 2018.

Assistant U.S. Attorney Chinhayi Cadet is prosecuting the case with the assistance of Bridget Kilkenny.  The prosecution is the result of an investigation by the FBI.
 

OAKLAND – Marcos Anthony Hatch was sentenced Friday, August 3, 2018, to 63 months in prison for dealing in firearms and prescription medications without a license and related charges, announced United States Attorney Alex G. Tse, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder, and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Jon S. Tigar after Hatch pleaded guilty to the charges.          

Hatch, 21, of Hayward, pleaded guilty on December 15, 2017.  According to his plea agreement, between January and May of 2017, he operated a social media account on which he posted photographs of prescription drugs, marijuana, and guns for sale.  Hatch admitted that he never obtained a license to sell firearms and never had any privileges to prescribe controlled substances.  Nevertheless, Hatch acknowledged that he engaged in the repetitive purchase and resale of firearms for profit.  Hatch further admitted he sold at least three guns to individuals he knew, or had reason to believe, could not lawfully possess firearms.  

On May 16, 2017, federal agents searched Hatch’s home and found $59,000 in cash, marijuana, a Glock 32 .357 caliber pistol with replacement barrel, four other firearms, and 40 pills of alprazolam (commonly known as Xanax).  In his plea, Hatch admitted he intended to distribute the alprazolam, that the Glock had been modified to function as a fully automatic machine gun.

On July 25, 2017, a federal grand jury returned a superseding indictment charging Hatch with one count each of conspiracy to deal in firearms without a license, in violation of 18 U.S.C. § 371; possession of an unregistered firearm, in violation of 26 U.S.C. § 5861(d); dealing firearms without a license, in violation of 18 U.S.C. § 922(a)(1)(A); possession with intent to distribute alprazolam, in violation of 21 U.S.C. §§ 841(a)(1) and (b)(1)(E)(2); and advertisement of a controlled substance on the internet, in violation of 21 U.S.C. § 843(c)(2)(A).  Hatch pleaded guilty to all the counts except the conspiracy and advertisement charges, which were dismissed.

In addition to the prison term, Judge Tigar sentenced the defendant to a three-year period of supervised release.   The defendant has been in custody since June 2018 and will begin serving the sentence immediately. 

The prosecution is the result of a joint investigation by the DEA Tactical Diversion Squad and the ATF.
 

SAN FRANCISCO - Sean Clark Cutting and Brian Scott Melland, respectively the former chief executive officer and former chief loan officer of Sonoma Valley Bank which failed on August 20, 2010, were sentenced today for their December, 2017 convictions for conspiracy, bank fraud, wire fraud, money laundering, falsifying bank records, lying to bank regulators and other crimes, announced Acting United States Attorney Alex G. Tse; Special Inspector General for the Troubled Asset Relief Program (SIGTARP) Christy Goldsmith Romero; Federal Housing Finance Agency (FHFA), Office of Inspector General Laura Wertheimer; and Federal Deposit Insurance Corporation (FDIC) Inspector General Jay N. Lerner.  Also sentenced today was co-defendant David John Lonich for his December 2017 convictions for conspiracy, bank fraud, wire fraud, attempted obstruction of justice, and other offenses.  Lonich was an attorney for Bijan Madjlessi, the Marin and Sonoma County real estate developer who, before his death on May 16, 2014, had been indicted on charges of bank fraud, wire fraud, attempted obstruction of justice, and other offenses.  The convictions and sentences followed an eight-week trial before the Honorable Susan Illston, U.S. District Judge that concluded in December 2017.

The court sentenced Cutting, 44, of Sonoma, Calif., to 100 months in prison; Melland, 45, of Santa Rosa, Calif., to 100 months in prison, and Lonich, 59, of Santa Rosa, Calif., to 80 months in prison.

“The defendants’ crimes directly caused the failure of a once-beloved community bank resulting in at least $47 million in losses and other staggering consequences,” said Acting U.S. Attorney Alex G. Tse.  “Senior bank executives and the corrupt attorneys who help them must always be held accountable for threatening the safety and soundness of federally insured banks, as today’s significant sentences reaffirm.”

“TARP is not a cookie jar, but that’s what Sonoma Valley Bank CEO Sean Cutting called it as he applied for $8 million in TARP dollars all while knowing he was committing a massive fraud that caused holes in the bank’s books,” said SIGTARP Special Inspector General Christy Romero.  “TARP was intended for healthy banks, not to fill holes in fraud-riddled bank books. Former bank CEO Cutting and chief loan officer Brian Melland will now spend years in prison after causing the bank to collapse under the weight of their fraud, leaving taxpayers who funded TARP at a loss of $8.6 million. I commend Acting U.S. Attorney Alex Tse, prosecutors Adam Reeves and Rob Rees, and our other law enforcement partners, for bringing accountability and justice.”

“Today’s sentencing holds senior bank executives and an attorney accountable for their years of deception to orchestrate multi-million-dollar fraud and for their abuse of positions of trust,” said FDIC Inspector General Lerner.  “We remain vigilant to investigate such fraud schemes that undermine the integrity of financial institutions, and we will continue to work with our law enforcement partners to bring to justice those who commit such offenses and breach their duties.”

The evidence at trial demonstrated that Cutting, Melland, and Lonich were involved in multiple schemes to defraud numerous financial institutions including Sonoma Valley Bank, its regulators at the FDIC, and what was then called the California Department of Financial Institutions (DFI).  The schemes to defraud involved years of excessive and illegal lending, often using “straw” or nominee borrowers, to Madjlessi for real estate projects in Santa Rosa and Petaluma, Calif.  

The defendants’ fraud and other crimes caused the failure of Sonoma Valley Bank.  Their crimes caused losses to taxpayers of over $47 million, as well as to the FDIC (approximately $39.18 million) and to the Troubled Asset Relief Program (TARP) (approximately $8.65 million) of the United States Treasury.  Other victims included the shareholders of Sonoma Valley Bank who suffered losses when the value of their securities collapsed.

In addition to the sentences listed above, Judge Illston ordered the forfeiture to the United States of Lonich’s interest in the Park Lane Villas East, an apartment complex located in Santa Rosa worth approximately $20.8 million.  Judge Illston found that the Park Lane Villas East complex constituted the proceeds of Lonich’s offenses.  Judge Illston also scheduled a hearing on September 18, 2018, to decide the amount of restitution the defendants owe. 

Much of the evidence at trial related to Madjlessi’s real estate projects at the Park Lane Villas in Santa Rosa and Petaluma Greenbriar Apartments in Petaluma.  According to the evidence admitted at trial, Sonoma Valley Bank, between 2004 and 2010, loaned Madjlessi and the persons and entities he controlled in excess of $35 million, approximately $24.7 million more than the legal lending limit set by the bank’s regulators.  To conceal this high concentration of lending, Cutting and Melland, the loan officer who worked most closely with Madjlessi, recommended multi-million dollar loans to nominee or “straw” borrowers, knowing that millions in proceeds from loans to other borrowers would go to Madjlessi and the companies he controlled.  At trial, the evidence proved that Cutting and Melland schemed to give Madjlessi and his companies in excess of $8.6 million in proceeds from loans nominally made in the name of other borrowers.

Melland also was convicted of receiving a bribe in the amount of approximately $50,000 from Madjlessi. In April 2008, Melland and Cutting recommended a set of loans for approximately $3.65 million to a nominee or “straw” borrower controlled by Madjlessi.  According to the trial evidence, Melland received the bribe the very next day.

Cutting and Melland were convicted of making false statements to Sonoma Valley Bank’s regulators, the FDIC and DFI, during joint examinations in May 2008, and again in December 2009, about the true nature and extent of the bank’s lending to Madjlessi and the persons and entities he controlled.

Judge Illston also sentenced Lonich, Madjlessi’s lawyer.  In early 2009, Lonich conspired with Cutting and Melland to mislead Sonoma Valley Bank into lending millions more to Madjlessi, again in the name of a nominee or “straw” borrower.  The conspiracy allowed Madjlessi to illegally buy-back for approximately $4 million an approximately $27 million debt he owed to IndyMac Bank.  At the time, IndyMac Bank had failed and been taken over by FDIC and FDIC rules specifically prohibited delinquent borrowers, like Madjlessi, from purchasing their own notes at auction.  Nonetheless, the defendants were all convicted of an elaborate bank and wire fraud scheme to obtain the defaulted note by misleading Sonoma Valley Bank, the FDIC, and eventually other financial institutions, about Madjlessi’s true role in the scheme.

In addition, in late 2009 and early 2010, Cutting helped Lonich gain control of additional units at the Park Lane Villas by issuing letters on Sonoma Valley Bank letterhead falsely stating that potential nominee buyers had sufficient funds at Sonoma Valley Bank for purchase.  The evidence at trial also demonstrated Lonich instructed one nominee to make false claims to federal agents and to a federal grand jury investigating the transactions.

In sum, the defendants were convicted of the following specific crimes:

DEFENDANT

CHARGES

Cutting, Melland, and Lonich

Conspiracy to Commit Bank Fraud, in violation of 18 U.S.C. § 371

Cutting, Melland, and Lonich

Bank Fraud, in violation of 18 U.S.C. § 1344

Cutting (six counts),      Melland (eight counts), and Lonich (five counts)

False Bank Entries and Reports, in violation of 18 U.S.C. § 1005

Cutting and Melland

Conspiracy to Make False Statements to the FDIC, in violation of 18 U.S.C. § 371

Cutting and Melland

Misapplication of Bank Funds, in violation of 18 U.S.C.  § 656

Cutting and Melland

False Statements to the FDIC, in violation of 18 U.S.C. § 1007

Melland

Receipt of Gifts for Procuring Loans, in violation of 18 U.S.C. § 215

Cutting, Melland, and Lonich

Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. § 1349

Cutting, Melland, and Lonich

Five counts of Wire Fraud, in violation of 18 U.S.C. § 1343

Cutting, Melland, and Lonich

Twelve counts of money laundering, in violation of 18 U.S.C. § 1957

Lonich

One count of attempted obstruction of justice, in violation of 18 U.S.C. § 1512(c)

Judge Illston ordered the defendants to surrender to begin serving their prison sentences by October 1, 2018. 

On May 6, 2014, approximately two months after he was indicted in this case, Madjlessi was found dead after the single-person car accident in a steep ravine in the Marin Highlands off Highway 1 in Marin County.

Assistant U.S. Attorneys Robert David Rees and Adam A. Reeves prosecuted the case with the assistance of Philip Villanueva, Maryam Beros, Patricia Mahoney, and Bridget Kilkenny.  The prosecution is the result of a multi-year investigation by the Special Inspector General for the Troubled Asset Relief Program, the Federal Housing Finance Agency Office of Inspector General, and the Federal Deposit Insurance Corporation Office of Inspector General, with the assistance of the Marin County Sheriff’s Office, the Sonoma County Sheriff’s Office, and the Santa Rosa Police Department.

 

SAN FRANCISCO – On July 26, 2018, a federal grand jury in San Francisco indicted former Bay Area resident Michael James Frew charging him with wire fraud, mail fraud, and money laundering announced Acting United States Attorney Alex G. Tse, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Acting Special Agent in Charge Internal Revenue Service (IRS-CI) Tara Sullivan.  The indictment was unsealed today following Frew’s arrest in Beatty, Nevada, on the charges.

According to the indictment, beginning no later than 2010, Frew, 70, formerly of Hillsborough, Calif., solicited investments from numerous individuals on the premise that their money would be invested into real estate in the United States and abroad.  After receiving misrepresentations in connection with Frew’s solicitations, several victim investors provided funds to Frew for the purpose of allowing him to invest funds on their behalf.  In fact, Frew used these “investments” primarily to support his personal lifestyle, to speculate on the stock market using an account in his name, and/or to repay other victims a portion of their investments.

The indictment alleges that Frew convinced his victims he would make investments into real estate in the United States and foreign countries in areas under recent distress from natural disasters.  The indictment describes how Frew allegedly persuaded one couple to transfer to him $380,000 in cash for the purpose of making investments in foreign real estate and a short term investment that would yield a 10% return.  Nevertheless, instead of investing the money as he promised, Frew used the money to make expenditures for personal expenses, to speculate on the stock market, and to repay other victim “investors.”  The indictment describes similar transactions between Frew and four other victims during the period 2010 through 2014.

In sum, the indictment charges Frew with two counts each of wire fraud, in violation of 18 U.S.C. § 1343; mail fraud, in violation of 18 U.S.C. § 1341; and money laundering, in violation of 18 U.S.C. § 1957.

After his arrest, Frew made his initial appearance in United States District Court in Las Vegas, Nevada, and was released on certain conditions, including that he give up his passport.  A local initial appearance in San Francisco is scheduled for August 21, 2018, before U.S. Magistrate Judge Jacqueline Scott Corley.

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’ imprisonment on each count of wire fraud and mail fraud, and 10 years’ imprisonment on each count of money laundering.  In addition, Frew faces fines of $250,000 on each count in the indictment and restitution for the losses he is alleged to have caused.  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 Robert David Rees is prosecuting the case with assistance from Bridget Kilkenny.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the IRS-CI. 
 

The Justice Department announced today that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in residential mortgage-backed securities (RMBS) containing loans originated by Wells Fargo.  

“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio. “It sends a strong message that the Department is committed to protecting the nation’s economy and financial markets against fraud.”  

“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” said Acting U.S. Attorney for the Northern District of California, Alex G. Tse. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Our office is steadfast in pursuing those who engage in wrongful conduct that hurts the public.” 

FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud. The United States alleged that, in 2005, Wells Fargo began an initiative to double its production of subprime and Alt-A loans. As part of that initative, Wells Fargo loosened its requirements for originating stated income loans – loans where a borrower simply states his or her income without providing any supporting income documentation.  

To evaluate the integrity of its increasing volume of stated income loans, Wells Fargo subjected a sample of these loans to “4506-T testing.” A 4506-T form is a government document signed by the borrower during the loan approval process that allows the lender to obtain the borrower’s tax transcripts from the Internal Revenue Service (IRS). 4506-T testing involves comparing the tax transcripts of the borrower with the income stated on the loan application. Wells Fargo implemented 4506-T testing on two of its programs. This testing revealed that more than 70% of the loans that Wells Fargo sampled had an “unacceptable” variance (greater than 20% discrepancy between the borrower’s stated income and the income information reflected in the borrower’s most recent tax returns filed with the IRS), and the average variance was approximately 65%. After receiving these results, Wells Fargo conducted further internal testing. This additional testing, performed by quality assurance analysts, was designed to determine if “plausible” explanations existed for the “unacceptable” variances over 20%. This additional step revealed that nearly half of the stated income loans that Wells Fargo tested had both an unacceptable variance and the absence of a plausible explanation for that variance.  

The results of Wells Fargo’s 4506-T testing were disclosed in internal monthly reports, which were widely distributed among Wells Fargo employees. One Wells Fargo employee in risk management observed that the “4506-T results are astounding” yet “instead of reacting in a way consistent with what is being reported WF [Wells Fargo] is expanding stated [income loan] programs in all business lines.” 

The United States alleged that, despite its knowledge that a substantial portion of its stated income loans contained misstated income, Wells Fargo failed to disclose this information, and instead reported to investors false debt-to-income ratios in connection with the loans it sold. Wells Fargo also allegedly heralded its fraud controls while failing to disclose the income discrepancies its controls had identified. The United States further alleged that Wells Fargo took steps to insulate itself from the risks of its stated income loans, by screening out many of these loans from its own loan portfolio held for investment and by limiting its liability to third parties for the accuracy of its stated income loans. Wells Fargo sold at least 73,539 stated income loans that were included in RMBS between 2005 to 2007, and nearly half of those loans have defaulted, resulting in billions of dollars in losses to investors.  

The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with investigative support from the Federal Housing Finance Agency, Office of Inspector General. 

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

SAN FRANCISCO-The Justice Department announced today that Wells Fargo Bank, N.A. and several of its affiliates (Wells Fargo) will pay a civil penalty of $2.09 billion under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) based on the bank’s alleged origination and sale of residential mortgage loans that it knew contained misstated income information and did not meet the quality that Wells Fargo represented. Investors, including federally insured financial institutions, suffered billions of dollars in losses from investing in residential mortgage-backed securities (RMBS) containing loans originated by Wells Fargo.         

“Abuses in the mortgage-backed securities industry led to a financial crisis that devastated millions of Americans,” said Acting U.S. Attorney for the Northern District of California, Alex G. Tse. “Today’s agreement holds Wells Fargo responsible for originating and selling tens of thousands of loans that were packaged into securities and subsequently defaulted. Our office is steadfast in pursuing those who engage in wrongful conduct that hurts the public.” 

“This settlement holds Wells Fargo accountable for actions that contributed to the financial crisis,” said Acting Associate Attorney General Jesse Panuccio. “It sends a strong message that the Department is committed to protecting the nation’s economy and financial markets against fraud.”  

FIRREA authorizes the federal government to seek civil penalties against financial institutions that violate various predicate criminal offenses, including wire and mail fraud. The United States alleged that, in 2005, Wells Fargo began an initiative to double its production of subprime and Alt-A loans. As part of that initative, Wells Fargo loosened its requirements for originating stated income loans – loans where a borrower simply states his or her income without providing any supporting income documentation.  

To evaluate the integrity of its increasing volume of stated income loans, Wells Fargo subjected a sample of these loans to “4506-T testing.” A 4506-T form is a government document signed by the borrower during the loan approval process that allows the lender to obtain the borrower’s tax transcripts from the Internal Revenue Service (IRS). 4506-T testing involves comparing the tax transcripts of the borrower with the income stated on the loan application. Wells Fargo implemented 4506-T testing on two of its programs. This testing revealed that more than 70% of the loans that Wells Fargo sampled had an “unacceptable” variance (greater than 20% discrepancy between the borrower’s stated income and the income information reflected in the borrower’s most recent tax returns filed with the IRS), and the average variance was approximately 65%. After receiving these results, Wells Fargo conducted further internal testing. This additional testing, performed by quality assurance analysts, was designed to determine if “plausible” explanations existed for the “unacceptable” variances over 20%. This additional step revealed that nearly half of the stated income loans that Wells Fargo tested had both an unacceptable variance and the absence of a plausible explanation for that variance.  

The results of Wells Fargo’s 4506-T testing were disclosed in internal monthly reports, which were widely distributed among Wells Fargo employees. One Wells Fargo employee in risk management observed that the “4506-T results are astounding” yet “instead of reacting in a way consistent with what is being reported WF [Wells Fargo] is expanding stated [income loan] programs in all business lines.” 

The United States alleged that, despite its knowledge that a substantial portion of its stated income loans contained misstated income, Wells Fargo failed to disclose this information, and instead reported to investors false debt-to-income ratios in connection with the loans it sold. Wells Fargo also allegedly heralded its fraud controls while failing to disclose the income discrepancies its controls had identified. The United States further alleged that Wells Fargo took steps to insulate itself from the risks of its stated income loans, by screening out many of these loans from its own loan portfolio held for investment and by limiting its liability to third parties for the accuracy of its stated income loans. Wells Fargo sold at least 73,539 stated income loans that were included in RMBS between 2005 to 2007, and nearly half of those loans have defaulted, resulting in billions of dollars in losses to investors.  

The settlement was the result of a coordinated effort between the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Northern District of California, with investigative support from the Federal Housing Finance Agency, Office of Inspector General.  Assistant U.S. Attorneys Douglas Chang and Kimberly Friday are handling the matter on behalf of the U.S. Attorney’s Office for the Northern District of California with the assistance of Tina Louie. The matter was handled in conjunction with Department of Justice Commercial Litigation Branch Trial Attorneys Derek Adams, Denise Barnes, and David Tyler.

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

SAN JOSE – John McEwan was sentenced yesterday to over five years in prison, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. 

McEwan pleaded guilty on March 20, 2018 to one count of wire fraud.  According to the plea agreement McEwan admitted to owning and operating a payroll processing company called Pinnacle Workforce Solutions (Pinnacle).  Pinnacle provided various payroll services to its customers, including distributing wages to employees, preparing employee paycheck withholdings, and paying income taxes.  In order to provide these services for its customers, Pinnacle withdrew funds from its customers’ bank accounts, and had access and authorization to initiate wire transfers from its customers’ bank accounts.  

In his plea agreement, McEwan further admitted that, in as early as 2009, Pinnacle was operating at a financial loss.  During this period of time, McEwan wired funds out of his clients’ bank accounts and used them in unauthorized ways.  Specifically, McEwan paid one client’s payroll with funds he took from another client.  Pinnacle’s customers assumed that McEwan was continuing to handle their payroll and withhold and pay taxes on their behalf.  Instead, through his guilty plea, McEwan admitted that this was not the case.  In total, McEwan took and misspent approximately $6,916,256/48 from his customers.  

McEwan, 69, of Seaside, California, waived indictment and was arraigned on an information on November 15, 2017.  He was charged with a single count of wire fraud for electronically transferring funds out of one of Pinnacle’s customer’s bank accounts without authorization.   

The sixty-three month sentence was handed down by The Honorable Beth L. Freeman, U.S. District Court Judge, following a guilty plea to one count of wire fraud in violation of Title 18, United States Code, Section 1343.  Judge Freeman also sentenced the defendant to a three-year period of supervised release. Judge Freeman scheduled a hearing for October 2, 2018 to determine the amount of restitution McEwan will be ordered to pay.  The defendant will begin serving the sentence on October 5, 2018.  

Jeff Schenk is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation by the FBI, the Monterey County District Attorney’s Office, and the Monterey County White Collar Crime Task Force. 
 

OAKLAND – David Lague, a physician’s assistant who formerly practiced in San Leandro, was convicted of thirty-nine counts of distributing oxycodone, oxymorphone, methadone, amphetamines, clonazepam, fentanyl, hydromorphone, morphine, hydrocodone, alprazolam, and carisoprodol outside the course of professional practice and without a legitimate medical purpose by a federal jury today, announced United States Attorney Alex Tse, Drug Enforcement Administration Special Agent in Charge Chris Nielson, and Health and Human Services, Office of Inspector General, Office of Investigations, Special Agent in Charge Steven J. Ryan, San Francisco Regional Office.

The jury found that Lague, 61, of San Mateo, had prescribed oxycodone pills on two occasions to a patient who had informed Lague that he intended to sell the pills to make a profit.  In addition, the jury concluded that Lague had prescribed potent and highly addictive controlled substances to four other patients in a manner that he knew was not medically legitimate.  The jury acquitted Lague of health care fraud charges in connection with his fentanyl prescriptions to one of the four patients.

Evidence at trial showed that Lague was the number one prescriber of opioids in the state of California in 2015 and 2016, according to Medicare’s records.  Lague prescribed over 1.6 million controlled substance pills, of which over 1.4 million were in the most dangerous and abused category (designated by the DEA as Schedule II), in 2016.  

Undercover videotapes showed Lague prescribing pills to an informant without asking any questions about the patient’s health or performing any physical examinations.  Further recordings showed that, on October 13, 2016, when the informant asked Lague to double his oxycodone prescription to allow him to sell the extra pills for $6,000, Lague proceeded to provide the prescription, along with suggestions on how to avoid detection by the pharmacy or insurance provider.  On December 12, 2016, Lague again doubled the informant’s prescriptions to allow the informant to sell the oxycodone pills.

In addition, evidence from medical records showed that Lague was prescribing controlled substances to other patients despite clear signs of addiction.  Studies compiled by the Centers for Disease Control and Prevention show that the combination of opioids and benzodiazepines (such as Xanax or Klonopin) quadruples the risk of overdose.  Medical records showed that Lague prescribed opioids and benzodiazepines to a patient who had twice tested positive for cocaine and whose father and former orthopedist had both warned Lague of red flags regarding the patient’s addiction.  Records further showed that Lague prescribed opioids and benzodiazepines to a patient who tested positive three times for cocaine and that Lague even wrote her an excuse note for her Narcotics Anonymous class before issuing her more prescriptions.  Medical records from a third patient showed that Lague prescribed a highly potent formulation of fentanyl that was intended for use only to treat cancer pain to a patient who did not have cancer and twice tested positive for heroin.  Records further showed that Lague had prescribed extraordinarily high amounts of oxycodone, as many as 90 oxycodone pills per day, to a fourth patient who had disclosed a prior oxycodone addiction and described consuming 25 pills at once on one occasion.  

The guilty verdict followed an eleven-day jury trial before the Honorable Haywood S. Gilliam, U.S. District Court Judge. 

Lague was indicted by a federal grand jury on December 5, 2017.  He was charged with thirty-six counts of distributing Schedule II controlled substances outside the usual course of professional practice without a legitimate medical purpose, three counts of distributing Schedule IV controlled substances outside the usual course of professional practice without a legitimate medical purpose, one count of conspiracy to commit health care fraud, and six counts of health care fraud. 

Following his conviction, Lague was remanded to the custody of the United States Marshals Service.  Defendant’s sentencing hearing is scheduled for October 22, 2018, before Judge Gilliam in Oakland.  The maximum statutory penalty for each count of distributing a controlled Schedule II substance outside the usual course of professional practice without a legitimate medical purpose in violation of 21 U.S.C. § 841(a)(1) is 20 years imprisonment and a fine of $1,000,000.  The maximum statutory penalty for each count of distributing a controlled Schedule IV substance outside the usual course of professional practice without a legitimate medical purpose in violation of 21 U.S.C. § 841(a)(1) is 5 years imprisonment and a fine of $250,000.  However, any sentence will 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. 

Rita Lin and Frank Riebli are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Ana Guerra, Diana Wong, and Linda Love.  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 –Amer Sinan Alhaggagi pleaded guilty today to attempting to provide material support to a designated foreign terrorist organization and identity theft charges, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The plea was accepted by the Honorable Charles R. Breyer.  In pleading guilty today, Alhaggagi admitted, without a written agreement, he was guilty of all the charges pending against him. 

During the hearing today, Alhaggagi, 23, of Oakland, Calif., admitted he knowingly attempted to provide services and personnel to the Islamic State of Iraq and Syria, or ISIS, in violation of 18 U.S.C. § 2339B.  Specifically, Alhaggagi admitted that in October and November of 2016, he created Twitter accounts and Facebook accounts along with the Gmail accounts that were necessary to authenticate them for individuals he believed were ISIS supporters.  ISIS was designated a foreign terrorist organization by the United States Secretary of State in 2014.  

In addition, Alhaggagi admitted that in the Fall of 2016 he communicated with two individuals who asked him to set up social media accounts.  Alhaggagi communicated with the individuals from his computer while he was in Oakland, Calif., and admitted opening several Twitter, Facebook, and Gmail accounts at their request.  Alhaggagi admitted knowing that both of the individuals were ISIS sympathizers and that by opening the social media accounts he was providing a service to ISIS.  According to government lawyers at the hearing, at least one of the individuals Alhaggagi opened accounts for was an actual member of ISIS.  

Additionally, Alhaggagi admitted that on November 29, 2016, the day of his arrest, he possessed a device used to make counterfeit credit cards and that between July and August 2016, he used a credit card with someone else’s name to buy more than $1,000 worth of clothes for himself online.

A federal grand jury indicted Alhaggagi on July 21, 2017, with one count of knowingly attempting to provide services and personnel to the Islamic State of Iraq and Syria, or ISIS, in violation of 18 U.S.C. § 2339B; one count of possessing an identity theft device, in violation of 18 U.S.C. § 1029(a)(4); one count of unauthorized identity theft, in violation of 18 U.S.C. § 1029(a)(2); and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  

Judge Breyer scheduled Alhaggagi’s sentencing hearing for November 20, 2018.  Alhaggagi faces the following maximum statutory penalties:
 

Charge

Maximum Prison Term

Maximum Term of Supervised Release (following release from prison)

Maximum Fine

Attempting to provide material support to a terrorist organization

20 Years

Life time of supervised release

$250,000

Possession of device-making equipment

15 years

3 years

$250,000

Using an unauthorized

access device

10 years

3 years

$250,000

Aggravated identity theft

2 years (consecutive to prison term

3 years

$250,000

 

In addition, the court may order that the defendant pay additional fines 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.

The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Special Prosecutions and National Security Unit of the United States Attorney’s Office for the Northern District of California, the United States Department of Justice National Security Division, the Berkeley Police Department, and members of the Joint Terrorism Task Force including, the Oakland Police Department.

 

SAN FRANCISCO – Stanley Charles pleaded guilty in federal court in San Francisco today to preparing and presenting a false and fraudulent federal income tax return and filing a false amended federal income tax return, announced Acting United States Attorney Alex G. Tse and Acting Special Agent in Charge Internal Revenue Service Tara Sullivan. The plea was accepted by the Honorable Maxine M. Chesney, U.S. District Judge.

In pleading guilty, Charles, 33, of Cotati, Calif., admitted to preparing and filing a fraudulent federal income tax return for two clients, a husband and wife, without their knowledge or permission.  This tax return falsely reported that the couple had $8,000 in higher qualified education expenses.  Along with the false return, Charles filed an IRS Form 8888 [Allocation of Refund] directing the IRS to split the tax refund by paying $5,447 to the couple and the remaining $1,235 to his own bank account.   Charles also admitted to preparing and filing with the IRS his own false 2011 Amended U.S. Individual Income Tax Return. His return falsely reported a $9,873 American Opportunity Credit although Charles knew the credit was no more than $2,500.  Charles also admitted that he prepared and filed an additional 428 false and fraudulent federal income tax returns for 2009 through 2015, which sought tax refunds generated by false deductions and/or credits.   

Charles was charged in an information filed on June 18, 2018, with one count of aiding and assisting in preparation and presentation of false tax returns, in violation of 26 U.S.C. § 7206(2), and one count of filing a false tax return, in violation of 26 U.S.C. § 7206(1).  Under today’s plea agreement, Charles pleaded guilty to both counts. 

Charles is currently released on a $100,000 bond. 

Judge Chesney scheduled Charles’s sentencing hearing for October 24, 2018, at 2:15 p.m.  The maximum statutory penalty for each count in the information is 3 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.  The prosecution is the result of an investigation by the Internal Revenue Service.  
 

SAN FRANCISCO – A federal jury convicted Marc Howard Berger today of three counts of aiding and abetting the filing of a false tax return announced Acting United States Attorney Alex G. Tse; Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division; Internal Revenue Service, Criminal Investigation (IRS-CI), Acting Special Agent in Charge Tara Sullivan; and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. 

The jury found that Berger willfully assisted in the preparation of three false Form 1040s for codefendant G. Steven Burrill for 2011, 2012, and 2013.  The guilty verdict followed a three-week jury trial before the Honorable Richard Seeborg, U.S. District Court Judge. 

“We commend today’s jury verdict,” said Acting United States Attorney Alex G. Tse.  “Tax preparers must know that they cannot willfully assist clients in defrauding the IRS and failing to pay their fair share.” 

Evidence at trial showed that Berger, 67, of Walnut Creek, Calif., was a Certified Public Accountant and partner with a regional tax preparation firm, Burr Pilger Mayer.  Berger’s client, Burrill, was the owner and CEO of Burrill & Company, Burrill Capital, and a number of related entities.  Through the entities, Burrill managed venture capital funds, including Burrill Life Sciences Capital Fund III, L.P. (the Fund), a $283 million investment fund focused on the life sciences industry.  Between December 2007 and September 2013, Burrill transferred more than $18 million from the Fund to his management companies in excess of the management fees that were due and allowable under the agreements that governed the Fund.  Berger intentionally prepared and filed false income tax returns for Burrill that failed to report more than $18 million in income, resulting in unpaid taxes of more than $4.7 million.  With Berger’s assistance, Burrill paid no individual income taxes for the years 2009 through 2013. 

Berger and Burrill were indicted by a federal grand jury on September 14, 2017.  Berger was charged with three counts of aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. § 7206(2). 

Berger is currently free on bond.  The maximum statutory penalty for each count in violation of 26 U.S.C. § 7206(2) is three years in prison and a fine of $100,000.  However, any sentence will 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. Berger’s sentencing hearing has not yet been scheduled.  

Burrill pleaded guilty on December 7, 2017, to one count of investment-adviser fraud, in violation of 15 U.S.C. §§ 80b-6 & 80b-17, 18 U.S.C. § 2, and 17 C.F.R. § 275.206(4)-8, and one count of tax evasion, in violation of 26 U.S.C. § 7201.  His sentencing is scheduled for September 25, 2018.  

Assistant U.S. Attorney Robert S. Leach and Trial Attorney Lori Hendrickson of the U.S. Department of Justice Tax Division are prosecuting the case with the assistance of Maryam Beros, Larry Garland, and Bridget Kilkenny.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation. 
 

SAN JOSE – Julio Camacho Pacheco was sentenced today to 140 months in prison for his role in a conspiracy to distribute methamphetamine, announced Acting United States Attorney Alex G. Tse and Drug Enforcement Administration Special Agent in Charge Chris Nielsen.  The sentence was handed down by the Honorable Beth Labson Freeman, United States District Judge.

Pacheco pleaded guilty to his role in the conspiracy on April 3, 2018.  According to his plea agreement, Pacheco admitted that between February 10 and February 17 of 2017, he conspired and collaborated with others to sell a pound of methamphetamine to a confidential informant working for the DEA.  Pacheco admitted he delivered approximately 430.5 grams of 100% pure “crystal meth” (d-methamphetamine hydrochloride) to the informant’s car at a Burger King restaurant in San Jose where he and his co-conspirators exchanged the drugs for $4,000.  Further, Pacheco acknowledged that after he was identified as the supplier for the transaction, he participated in another transaction on May 3, 2017, in which he sold a pound of methamphetamine to an undercover officer for $3,200.  On July 19, 2017, Pacheco was arrested after agreeing to sell another two kilograms of methamphetamine to the undercover officer.  At the time of his arrest, Pacheco was at the site arranged for the transaction and in possession of approximately 1,954 grams of crystal methamphetamine.  In all, Pacheco was responsible for the actual and attempted sale of over three kilograms of methamphetamine. 

On October 19, 2017, a federal grand jury returned a second superseding indictment charging Pacheco with one count of conspiracy to distribute methamphetamine, in violation of 21 U.S.C. §§ 846 and 841; two counts of distribution of methamphetamine, in violation of 21 U.S.C. § 841; and one count of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841.  Pursuant to his plea agreement, Pacheco pleaded guilty to all four counts. 

In addition to the prison term, Judge Freeman sentenced the defendant to a five-year period of supervised release and forfeiture of digital scales and U.S. currency recovered during a search of his home.  Pacheco has been in custody since his arrest and will begin serving his sentence immediately.

Assistant U.S. Attorney Marissa Harris prosecuted the case with the assistance of Susan Kreider.  The prosecution is the result of an investigation by the Drug Enforcement Administration.
 

SAN JOSE - A federal grand jury in San Jose indicted Xiaolang Zhang on Thursday, July 12, 2018, for theft of trade secrets, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigations, Special Agent in Charge John F. Bennett.  Zhang was arraigned before U.S. Magistrate Judge Virginia K. DeMarchi today on charges of theft of trade secrets, in violation of 18 U.S.C. § 1832.  Zang entered a plea of not guilty at the hearing.

According to the indictment, Zhang, 33, of San Jose, is alleged to have taken a confidential 25-page document containing detailed schematic drawings of a circuit board designed to be used in the critical infrastructure of a portion of an autonomous vehicle, knowing that the theft would injure the owner of the trade secrets, Apple, Inc.  

Court documents filed in the case allege that on April 30, 2018, Zhang told Apple personnel that he was resigning from his job so that he could return to China to be closer to his mother who was ill.  Apple immediately terminated Zhang’s access to its computer systems and Apple personnel began a forensic analysis of Zhang’s Apple-owned devices and network activity.  

According to an affidavit filed in the case, Apple subsequently learned that Zhang went to work for X-MOTORS – a company focused on electric automobiles and autonomous vehicle technology with its headquarters in China.  Apple security personnel confirmed that in the three days prior to April 30, 2018, Zhang’s network activity increased notably compared to the prior two years of his employment.  The majority of his activity consisted of downloading information from the project databases, and the downloaded information contained trade secret intellectual property. 

On July 7, 2018, FBI Agents learned that Zhang purchased a last-minute round-trip airline ticket with no co-travelers, departing San Jose, Calif., on July 7, 2018, traveling to Beijing, China with a final destination of Hangzhou, China aboard Hainan Airlines. Federal agents intercepted and arrested Zhang at the San Jose International Airport after he had passed through the security checkpoint of Terminal B. 

Zhang made his initial appearance in federal court in San Jose on July 9, 2018, before Magistrate Judge DeMarchi.  On July 10, 2018, Zhang was released, subject to GPS electronic monitoring, on a $300K bond.  Zhang’s next appearance is scheduled for August 27, 2018, at 1:30 p.m., before the Honorable 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 defendant faces a maximum sentence of 10 years in prison, and a fine of $250,000.  In addition, the court may order that Zhang serve a term of supervised release of up to 3 years following the prison term 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. Attorneys Amie Rooney and Matt Parrella are prosecuting the case with the assistance of Elise Etter.  The prosecution is the result of an investigation by the FBI. 
 

SAN FRANCISCO – A federal grand jury indicted Lawrence J. Gerrans, president and chief executive officer of San Rafael-based medical device company Sanovas, on three counts of wire fraud and money laundering, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The indictment describes a number of schemes allegedly employed by Gerrans to obtain money from Sanovas in order to pay cash for a home and a myriad of personal expenses.   

According to the indictment filed yesterday, between April of 2013 until at least May of 2015 Gerrans employed a number of fraudulent methods to syphon funds out of Sanovas.  In one part of the scheme, between April of 2013 and May of 2014, Gerrans allegedly withdrew a total of $500,000 from his personal Individual Retirement Account and then used the funds to pay for personal expenses including vacations, jewelry, and spa treatments.  Then, in March of 2015 after a newly constituted board of directors was convened at Sanovas, Gerrans claimed he used the IRA funds for Sanovas’s business and requested reimbursement for the liquidated IRA.  Gerrans argued to the new board of directors that he should be reimbursed for the funds as deferred compensation.  

The indictment describes another part of the scheme in which Gerrans allegedly orchestrated the payment of bogus consulting fees to a separate company that Gerrans owned.  The indictment alleges that, in addition to being president and CEO of Sanovas, Gerrans was the sole owner of Halo Management Group, LLC, a company with its principal place of business in the home in San Anselmo where Gerrans resided.  Gerrans allegedly caused invoices to be submitted by Halo to Sanovas even though Halo was not a legitimate independent consulting firm and provided no independent services to Sanovas.  Moreover, the indictment alleges Gerrans directed an employee to create after-the-fact accounting entries for consulting and professional services that Halo never actually provided to Sanovas. 

Another part of the scheme described in the indictment involves Gerrans’s purchase of a personal residence in San Anselmo, Calif., for $2,570,000.  According to the indictment, Gerrans created a shell company, Hartford Legend Capital Enterprises, with its principal place of business in Reno, Nevada.  The indictment alleges Gerrans used the company to receive money from Sanovas and Halo in order to facilitate the purchase of the San Anselmo home.  In addition, Gerrans orchestrated the payments to Hartford without the knowledge or approval of the Sanovas board of directors.  

In sum, the indictment charges Gerrans with three counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of money laundering, in violation of 18 U.S.C. § 1957.  Gerrans is scheduled to make his initial federal court appearance regarding the charges on July 29, 2018, before United States Magistrate Judge Sallie Kim.    

An indictment merely alleges that crimes have been committed, and Gerrans, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted of the wire fraud counts, Gerrans faces a maximum statutory sentence of 20 years in prison and a fine in the amount of the greater of $250,000 or twice the gain or loss resulting from the wire fraud scheme.  In addition, if convicted of money laundering, the defendant faces a maximum statutory sentence of 10 years in prison and a fine in the amount of the greater of $250,000 or twice the amount of the criminally derived property.  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.  

Assistant U.S. Attorney Robin Harris is prosecuting the case with assistance from Bridget Kilkenny.  This prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

SAN FRANCISCO – Six San Mateo residents were indicted on various charges involving methamphetamine trafficking announced Acting United States Attorney Alex G. Tse; Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder; and Drug Enforcement Administration (DEA) Special Agent in Charge Chris Nielsen.  The charges range from possession with intent to distribute methamphetamine to conspiracy to distribute methamphetamine and have resulted in arrests yesterday at numerous locations in San Mateo during coordinated law enforcement actions.

The six people arrested yesterday were charged in one of four indictments that were unsealed this morning.  In the first indictment, Ricardo Sanchez and Jesus Dario Gutierrez-Ramirez, both 28 years old, were charged along with other defendants in an alleged conspiracy to possess with intent to distribute methamphetamine.  According to the indictment, between August 1, 2017 and May 29, 2018, Ricardo Sanchez and Jesus Dario Gutierrez-Ramirez conspired with others to distribute  more than 500 grams of a mixture containing methamphetamine. 

The second indictment charges Emmanuel Gonzalez Sanchez, 24, and Luis Ramon Zamora Angulo, age 41, with a separate conspiracy to distribute methamphetamine.  In addition, the indictment charges Angulo with two substantive counts of possessing with intent to distribute and distributing methamphetamine.

The third and fourth indictments are single-count, single-defendant indictments.  One charges Alfredo Angel Enciso Maldonado, 37, with possession with intent to distribute methamphetamine on May 17, 2018; the other charges Edwin Alejandro Cervantes Sanchez with possession with intent to distribute methamphetamine on May 12, 2018.     

In sum, the defendants face the following charges and, if found guilty, the following minimum and maximum statutory sentences:

Defendant Name

Case Number

Charges

Minimum/ Maximum Statutory Penalties

Ricardo Sanchez

18-299 SI

Conspiracy to distribute and possess with intent to distribute 500 grams or more of a mixture and substance containing methamphetamine, in violation of 21 U.S.C. § 846, 841(a)(1) and (b)(1)(A)

Minimum 10 years and maximum lifetime in prison

Minimum 5 years and maximum lifetime of supervised release following prison term

Maximum $10 million fine

Jesus Dario Gutierrez-Ramirez

18-299 SI

Conspiracy to distribute and possess with intent to distribute 500 grams or more of a mixture and substance containing methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A)

Minimum 10 years and maximum lifetime in prison

Minimum 5 years and maximum lifetime of supervised release following prison term

Maximum $10 million fine

Emmanuel Gonzalez Sanchez

18-278 WHA

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

 

 

Maximum 20 years in prison

Minimum 3 years, maximum lifetime of supervised release following prison term

Maximum $1 million fine

 

Possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C)

Maximum 20 years in prison

Minimum 3 years, maximum lifetime of supervised release following prison term

Maximum $1 million fine

 

Possession with intent to distribute 50 grams or more of methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(B)

Minimum 5 years and maximum 40 years in prison

Minimum 4 years, maximum lifetime of supervised release following prison term

Maximum $5 million fine

Luis Ramon Zamora Angulo

18-278 WHA

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

Maximum 20 years in prison

Minimum 3 years, maximum lifetime of supervised release following prison term

Maximum $1 million fine

Alfredo Angel Enciso Maldonado

18-277 EMC

Possession with intent to distribute 50 grams or more of a mixture and substance containing methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(B)(viii)

Minimum 5 years, maximum 40 years in prison

Minimum 4 years, maximum lifetime of supervised release following prison term

Maximum $5 million fine

Edwin Alejandro Cervantes Sanchez

18-279 WHO

Possession with intent to distribute 50 grams or more of a mixture and substance containing methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(B)(viii)

Minimum 5 years, maximum 40 years in prison

Minimum 4 years, maximum lifetime of supervised release following prison term

Maximum $5 million fine

 

An indictment merely alleges that a crime has been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  In addition, 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. 

All six defendants, except Angulo, made their initial appearances this morning before U.S. Magistrate Judge Maria-Elena James.  Each, including Angulo, is scheduled to appear tomorrow for further proceedings to include identifying counsel for each defendant.  

Assistant United States Attorney Sheila Armbrust is prosecuting this case.  This case is the result of an investigation by the ATF, DEA, San Mateo Police Department, and San Mateo County Sherriff’s Department.  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.