Northern District of California

SAN FRANCISCO – Acting U.S. Attorney Alex G. Tse announced today that the Northern District of California collected $65,326,355.71 in criminal and civil actions in Fiscal Year 2017.  Of this amount, $59,083,869.47 was collected in criminal actions and $6,242,486.24 was collected in civil actions.  

Additionally, the Northern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $1,503,464,445.51 in cases pursued jointly with these offices.  Of this amount, $2,378,828.59 was collected in criminal actions and $1,501,085,616.92 was collected in civil actions.          

Overall, the Justice Department collected just over $15 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2017.  

“Year in and year out, the United States Attorney’s Office delivers results for the people of the United States in the form of millions of dollars in recoveries from criminal and civil defendants,” said Acting U.S. Attorney Alex Tse.  "This Office will continue the hard work of recouping victims’ losses from those who enrich themselves through crime and other violations of federal law.”

One example of the work being done in the Northern District of California involves criminal defendant Hien Minh Nguyen.  Evidence in the criminal case showed that Nguyen stole at least $1,449,365 from the San Jose Diocese between 2005 and 2011. On October 3, 2017, after Nguyen was convicted of bank fraud and tax evasion charges, the district court ordered the defendant to pay $1,449,365 in restitution to the Diocese of San Jose, and an additional $434,518 in restitution to the IRS. The Office of the United States Attorney for the Northern District of California recovered the entire $1,883,883 in restitution from Nguyen. 

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims.  The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss.  While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs. 

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

Additionally, the U.S. Attorney’s office in the Northern District of California, working with partner agencies and divisions, collected $9,206,346 in asset forfeiture actions in FY 2017.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
 

Update: On March 4, 2019, Senior U.S. District Court Judge Charles Roberts Breyer of the Northern District of California granted the Rule 29 motion and granted an acquittal. Mr. Bogucki was acquitted on all charges.

SAN FRANCISCO – Robert Bogucki, the former head of Barclays Capital Inc.’s (Barclays) New York foreign exchange trading operation was charged yesterday in an indictment for his alleged role in a scheme to defraud a client of Barclays through a method commonly referred to as “front-running.”  The charges relate to the manipulation of foreign exchange options in advance of an exceptionally large trade by the Palo Alto, California-based Hewlett-Packard Company (HP) in 2011.

Acting U.S. Attorney Alex G. Tse of the Northern District of California, Acting Assistant Attorney General John P. Cronan of the Justice Department’s Criminal Division, and Inspector General Jay N. Lerner of the Federal Deposit Insurance Corporation (FDIC) made the announcement.  

Bogucki, 45, of East Setauket, New York, was charged in an indictment filed in the Northern District of California on Jan. 16, with one count of conspiracy to commit wire fraud and six counts of wire fraud.  Bogucki will make his initial appearance on Wednesday, Jan. 17, at 2:00pm in Brooklyn, New York, before U.S. Magistrate Judge Cheryl L. Pollak of the Eastern District of New York.  

“The indictment filed in this case alleges Bogucki and others corruptly manipulated the foreign exchange market for the benefit of his bank and his own pocket,” said Acting U.S. Attorney Tse. “This Office will continue to investigate and prosecute those who attempt to enrich themselves by corrupting our markets.”

“Robert Bogucki and others allegedly not only betrayed his client’s confidences, but also risked undermining public trust in the foreign exchange options market,” said Acting Assistant Attorney General Cronan.  “The Criminal Division and our law enforcement partners remain committed to protecting American interests by investigating and prosecuting sophisticated schemes such as the one alleged in this indictment.” 

“The indictment returned today charges a fraudulent manipulation scheme where the defendant betrayed Barclays’ client by lying and misusing the client information, and then masked the activities,” said Inspector General Lerner.  “We are pleased to work with our law enforcement partners in investigating these matters and protecting the integrity of the banking system against such alleged abuses.”

According to the indictment, in September and October 2011, Bogucki misused information provided to him by HP, which had hired Barclays to execute a foreign exchange transaction related to the planned acquisition of a UK-based company.  Barclays was selected to execute the foreign exchange transaction – which required the sale of 6 billion British pounds worth of options – in September 2011.  The defendant and other Barclays employees assured HP and its employees that they understood the need to keep the planned transaction, which was exceptionally large, and therefore “market-moving,” confidential.  Instead, Bogucki and other Barclays employees allegedly used the confidential information they received to manipulate the price of “volatility,” a metric that affects the value of foreign exchange options.  During conversations with Bogucki, one Barclays trader stated that he and other traders would “bash the sh*t out of” and “spank the market” to depress the price of volatility.  Other Barclays traders also discussed “hammer[ing] the market lower” in order to decrease the value of the HP’s options.

The indictment alleges that, as part of the scheme, Bogucki made misrepresentations to HP and its employees about Barclays’ activities and the state of the options market that concealed the self-serving nature of Barclays’ actions.  Specifically, the indictment alleges that Bogucki directed options trading in a way that was designed to depress the price of volatility, to the benefit of Barclays and at HP’s expense.

The charges in the indictment are merely allegations, and the defendant is presumed innocent unless proven guilty beyond a reasonable doubt in a court of law.  This is the second indictment brought against the head of a foreign exchange desk of a global financial institution related to the Criminal Division’s ongoing investigation of fraud and manipulation in the foreign exchange markets.

Assistant U.S. Attorney Robert Leach, Assistant Chief Brian Young of the Criminal Division’s Fraud Section, and Department of Justice Trial Attorney Justin Weitz are prosecuting the case.  The investigation is being conducted by the FDIC’s Office of Inspector General.  
 

SAN FRANCISCO – Amir Bakhtiari, Arlette Casino, and Austin Caba were arrested today for their respective roles in an alleged conspiracy and fraud scheme, announced Acting United States Attorney Alex G. Tse; Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett; and Internal Revenue Service, Criminal Investigation (IRS-CI), Special Agent in Charge Michael T. Batdorf.  

According to the indictment, from at least 2010 to 2016, Bakhtiari, 50, a resident of Newport Beach, Calif. and formerly of Marin County, Calif., orchestrated an embezzlement scheme at Sonnen Motorcars (“Sonnen”).  Sonnen owned and operated three car dealerships in Marin County—Sonnen Volkswagen, Audi Marin, and Porsche Marin.  From 2009 to 2016, Bakhtiari managed the Volkswagen and Audi dealerships.  Bakhtiari allegedly used his role to initiate a scheme wherein Sonnen made payments on fraudulent invoices to fake advertising vendors who then forwarded the majority of the proceeds from Sonnen back to Bakhtiari.  The indictment alleges that Casino, 47, a resident of Santa Rosa, Calif., who served as controller of Sonnen from 2013 to 2016, and Caba, 38, a resident of Burlingame, Calif., who controlled one of the fake advertising vendors, conspired with Bakhtiari and participated in the scheme since at least 2013. 

According to the indictment unsealed today, Bakhtiari caused others to create shell entities with names suggesting that the shell companies were in the business of advertising.  The shell companies were controlled by friends or associates of Bakhtiari’s, including Caba.  These entities were Advision Advertisers, Elite Marketing and Advertising, Pacific Blue Advertising, and ARC Sierra Promotional & Incentive Co. (ARC Sierra).  The indictment alleges ARC Sierra was controlled by Caba.  Bakhtiari then allegedly created or caused the creation of fake invoices from each of the fake advertising vendors to Sonnen, purporting to bill Sonnen for advertising work.  Along with the controller, which from 2013 to 2016 was Casino, Bakhtiari approved the payments on these fake invoices from Sonnen’s bank accounts, in the form of checks written to the fake vendors.  In sum, the indictment alleges that from 2010 to 2016, Bakhtiari directed approximately $6.3 million in fraudulent transfers in this manner.   When the money reached the vendor bank accounts, the individuals who controlled these accounts wrote checks back to Bakhtiari for a majority of the funds.  In total, Bakhtiari received approximately $3.6 million via checks in this manner.   Caba also allegedly used funds embezzled from the ARC Sierra bank account to pay the balance on an American Express credit card account that he shared with Bakhtiari.  The indictment alleges Bakhtiari and Caba spent approximately $1.7 million on this American Express credit card account.  

According to the indictment, Bakhtiari and Casino also initiated other fraudulent payments to themselves, including bonuses that Bakhtiari falsely claimed were funded by the corporate offices of Volkswagen or Audi.  Bakhtiari and Casino approved the payment of these fraudulent bonuses, knowing they were not authorized by the majority owner of Sonnen Motorcars.  

Bakhtiari, Casino, and Caba were all charged 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.  Bakhtiari and Caba were also charged with conspiracy to engage in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1956(h), and engaging in monetary transactions in property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957.  

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 maximum penalty for each count of conspiracy to commit wire fraud and wire fraud is twenty years’ imprisonment and a $250,000 fine.  The maximum penalty for each count of conspiracy to engage in monetary transactions in property derived from specified unlawful activity and engaging in monetary transactions in property derived from specified unlawful activity is ten years’ imprisonment and a $250,000 fine.  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.

All three defendants were arrested today in California by the FBI – Bakhtiari was arrested in Newport Beach, Caba was arrested in Burlingame, and Casino was arrested in Santa Rosa.  

Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Bridget Kilkenny.  The prosecution is the result of an investigation by the FBI and the IRS-CI.  
 

OAKLAND - A federal grand jury indicted Adam Thatcher Lawrence today with importing wildlife contrary to law and mislabeling wildlife intended for importation, announced Acting United States Attorney Alex G. Tse and United States Fish and Wildlife Service Office of Law Enforcement Region 8 Assistant Special Agent in Charge Daniel Crum. 

According to the indictment, Lawrence, 38, of Willits, Calif., traveled to the Republic of South Africa in August 2011, where he hunted and killed a leopard.  Leopards are a protected species under both the Endangered Species Act, 16 U.S.C. § 1531 et seq., and the Convention on International Trade in Endangered Species of Wild Fauna and Flora, an international treaty to which the United States, South Africa, and Mozambique are signatories.

The indictment alleges Lawrence did not have the required permits to kill the leopard in South Africa, or to bring the leopard back into the United States.  Lawrence allegedly secretly transported the leopard’s skin and skull into the Republic of Mozambique in May 2012 and thereafter falsely claimed to the U.S. Fish and Wildlife Service that he had hunted and killed the leopard in Mozambique in 2012.  Lawrence then allegedly applied for permit paperwork from Mozambique, South Africa, and the United States in order to import the leopard skin and skull into the United States; each document falsely stated that the leopard was killed in Mozambique.  The indictment alleges that in April 2013, Lawrence imported the leopard parts into the United States based on his false statements.  In sum, Lawrence was charged with one count of importing wildlife contrary to law, in violation of 18 U.S.C. § 545 and 18 U.S.C. § 2(b), and one count of mislabeling wildlife intended for importation, in violation of 16 U.S.C. §§ 3372(d) and 18 U.S.C. § 2(b).  

Lawrence is scheduled to make his initial appearance in federal court in Oakland on January 18, 2018.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Lawrence faces a maximum sentence of twenty years’ imprisonment, and a fine of $250,000, plus restitution, for a violation of 18 U.S.C. § 545 and a maximum sentence of five years’ imprisonment, and a fine of $250,000, plus restitution, for a violation of 16 U.S.C. §§ 3372(d).  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 Katherine Lloyd-Lovett is prosecuting the case with the assistance of Vanessa Quant.  The prosecution is the result of a three-year investigation by the United States Fish and Wildlife Service Office of Law Enforcement.

SAN JOSE - Alfred Georgis was sentenced this morning to 37 months in prison for his role in a conspiracy to transport stolen goods in interstate commerce, announced Acting 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 Beth L. Freeman, United States District Judge, following a guilty plea in which Georgis admitted to conspiring in the transportation of high-end wines stolen from a number of businesses in the Bay Area, including, The French Laundry in Yountville, Calif., and Alexander’s Steakhouse in Cupertino, Calif., and which he sold to a buyer in North Carolina.  

According to his plea agreement, Georgis, 53, of Mountain View, conspired with Davis Kiryakoz, 44, of Modesto, and others, to steal approximately 29 bottles of high-end wines from Alexander’s Steakhouse in the early morning hours of November 8, 2014.  Georgis acknowledged the wines had a value of approximately $32,000.  Georgis admitted he and Kiryakoz made arrangements to sell the wines to a buyer in North Carolina and shipped approximately 17 bottles, worth about $25,000, of the wine to the buyer.   In addition, Georgis admitted conspiring with Kiryakoz to steal approximately 110 bottles of high-end wines, valued at the time at approximately $549,447, from The French Laundry in the early morning hours of December 26, 2014.  Georgis and Kiryakoz sold approximately 63 bottles of the stolen wines, valued at approximately $221,374, to the same buyer in North Carolina, and transported some of those wines on December 26, 2014, and December 29, 2014.  As part of his plea, Georgis also agreed that conduct relevant to his sentencing included the transportation of wines valued at $290,000 stolen shortly after midnight on March 27, 2013, from Fine Wines International in San Francisco and sold to a buyer in North Carolina.  

A federal grand jury charged Georgis and Kiryakoz with one count of conspiracy to transport stolen goods, in violation of 18 U.S.C. § 371, and two counts of transportation of stolen goods, in violation of 18 U.S.C. §§ 2314 and 2.  Both defendants pleaded guilty to the conspiracy charge and the remaining charges were dismissed.  On March 28, 2017, Judge Freeman sentenced Kiryakoz to 15 months in prison, three years of supervised release, and ordered that he pay $585,715 in restitution for his role in the scheme.  This morning, in addition to the prison term, Judge Freeman ordered that Georgis also pay $585,715 in restitution, jointly and severally with his co-defendant, and to serve three years of supervised release as part of his sentence.  

Assistant U.S. Attorney Cynthia Frey is prosecuting the case with the assistance of Elise Etter.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Napa County Sheriff's Office, with assistance from the Santa Clara County Sheriff's Office, Los Gatos Monte Sereno Police Department, San Francisco Police Department, Walnut Creek Police Department, and Carmel Police Department.  
 

SAN FRANCISCO- Defendants Leslie Yun, James Pau, Rinn Roeun, Kevin Siu, Michael Mei, Elaine Liang, Tina Liang, and Barry House were sentenced for crimes committed in connection with the same indictment that eventually led to the trial and conviction of Raymond “Shrimp Boy” Chow, announced Acting United States Attorney Alex G. Tse and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentences were handed down yesterday by the Honorable Charles R. Breyer, U.S. District Judge, after the defendants each pleaded guilty to their respective roles in a scheme that resulted in a 230-count Second Superseding indictment filed by a federal grand jury on January 29, 2015.    

The Second Superseding indictment charged Chow and 28 other individuals with crimes including money laundering, drug trafficking, trafficking in stolen liquor, firearms trafficking, and a host of other offenses.  In addition, seventeen of the defendants were charged with conspiring to use a San Francisco Chinatown-based organization, the Chee Kung Tong, or CKT, to conduct the affairs of an enterprise through a pattern of racketeering activity.  At yesterday’s sentencing, Judge Breyer announced his finding that the government demonstrated by clear and convincing evidence that a part of the membership of CKT had engaged in a criminal racketeering enterprise as alleged in the Second Superseding indictment.  In addition, Judge Breyer found that seven defendants—George Nieh, Leslie Yun, James Yat Wah Pau, Michael Mei, Elaine Liang, Tina Liang, and Kevin Siu—conspired with that enterprise.  

The Second Superseding indictment was amended and eventually led to the trial and January 8, 2016, conviction of Raymond Chow, 56, of San Francisco.  The jury found Chow guilty of every one of the 162 charges leveled against him.

Each defendant sentenced yesterday pleaded guilty prior to the Chow trial to crimes alleged in the Second Superseding indictment.  In most cases, the defendant pleaded guilty to fewer than all the charges pending against that defendant.  The offenses to which the defendants did not plead guilty remain pending.  As to all such charges, the Second Superseding indictment merely alleges that crimes have been committed, and all the defendants are presumed innocent until proven guilty beyond a reasonable doubt. 

Judge Breyer handed down these defendants’ sentences as set out below:

Defendant

Age/ Residence

Charged in the Second Superseding Indictment

Crimes to Which the Defendant Pleaded Guilty

Sentence Imposed/ Charges pending

Leslie Yun

51/Oakland

18 U.S.C. § 1962

conspiracy to engage in RICO (1 count)

18 U.S.C. § 1956(a)(3)(A) money laundering

(34 counts)

18 U.S.C. § 371

conspiracy to traffic contraband cigarettes

(3 counts)

21 U.S.C. § 846 Possession, manufacture and distribution of marijuana

(2 counts)

18 U.S.C. § 1956(a)(3)(A) 

(5 counts)

18 U.S.C. § 371

(3 counts)

21 U.S.C. § 846

(3 counts)

84 months in prison

18 U.S.C.

§ 1962

James Pau

58/Oakland

18 U.S.C. § 1962

conspiracy to engage in RICO

(1 count)

18 U.S.C. § 1956(a)(3)(A) money laundering

(18 counts)

18 U.S.C. § 371

conspiracy to traffic contraband cigarettes (2 counts)

21 U.S.C. § 846

Possession, manufacture and distribution of marijuana

(1 count)

18 U.S.C. § 371

(2 counts)

72 months in prison

All other charges remain pending

Rinn Roeun

34/San Francisco

18 U.S.C. § 922(a) weapons trafficking

(4 counts)

18 U.S.C. § 371

conspiracy to trafficking in weapons

(1 count)

18 U.S.C. § 1958

murder for hire

(1 count)

18 U.S.C. § 922(a)

(2 counts)

72 months in prison

All other charges remain pending

Barry House

48/Pittsburg CA

18 U.S.C. § 922(a) weapons trafficking

(2 counts)

18 U.S.C. § 371

conspiracy to trafficking in weapons

(1 count)

18 U.S.C. § 922(g)(1)

felon in possession

(2 counts)

18 U.S.C. § 922(g)(1)

(1 count)

48 months in prison

All other charges remain pending

Michael Mei

33/San Francisco

18 U.S.C. § 1962 conspiracy to engage in RICO

(1 count)

21 U.S.C. § 841(b)(1)(B) possession and manufacture of marijuana (2 counts)

21 U.S.C. § 841(b)(1)(B)

(2 counts)

60 months in prison

All other charges remain pending

Elaine Liang

55/San Francisco

18 U.S.C. § 1956(a)(1)(A) money laundering

(16 counts)

18 U.S.C. § 1962 conspiracy to engage in RICO

(1 count)

18 U.S.C. § 1956(a)(1)(A)

(1 count)

36 months in prison

All other charges remain pending

Tina Liang

43/San Francisco

18 U.S.C. § 1962 conspiracy to engage in RICO

(1 count)

18 U.S.C. § 371

conspiracy to transport stolen liquor

(1 count)

21 U.S.C. § 841(a)(1) possession and manufacture of marijuana

18 U.S.C. § 371

(1 count)

21 U.S.C. § 841(a)(1)

(1 count)

18 months in prison

18 U.S.C.   § 1962 (one count) remains pending

All other charges remain pending

Kevin Siu

34/Daly City

18 U.S.C. § 1962 conspiracy to engage in RICO

(1 count)

18 U.S.C. § 1956(a)(1)(A) money laundering

(24 counts)

18 U.S.C. § 1956(a)(1)(A)

(8 counts)

12 months and 1 day in prison

All other charges remain pending

In addition to the prison terms, Judge Breyer sentenced each defendant identified above, except for Micheal Mei, to three years of supervised release.  Mei was sentenced to four years supervised release.  The last remaining defendant to be sentenced is George Nieh; Judge Breyer scheduled Nieh’s sentencing hearing for July 11, 2018.  

Assistant U.S. Attorneys William Frentzen, Susan Badger, S. Waqar Hasib, Kimberly Hopkins, and David Countryman prosecuted the case with the assistance of Rosario Calderon, Kurk Kosek, Ana Guerra, Marina Ponomarchuk, Victoria Etterer, Lance Libatique, and Bridget Kilkenny.  The prosecution is the result of an investigation by Federal Bureau of Investigation; the U.S. Marshal Service, San Francisco Police Department Gang Task Force; Oakland Police Department; Internal Revenue Service, Criminal Investigation; Antioch Police Department; New York Police Department; Mercer County New Jersey Sheriff's Office; and the San Francisco and Alameda County Sheriff’s Departments.

SAN FRANCISCO – This morning, upon Brian Stretch’s resignation, Alex G. Tse became the Acting United States Attorney for the Northern District of California in accordance with the Vacancy Reform Act.  Mr. Tse formerly served as the First Assistant United States Attorney under Brian Stretch and the Chief of the Office’s Civil Division from 2012 – 2015.  Previously, Mr. Tse served as an Assistant United States Attorney in the Northern District of California from 1994 – 2006.  Between 2006 and 2012 Mr. Tse worked for the San Francisco City Attorney’s Office. 
 

SAN FRANCISCO – Peyton Erwin Eidson pleaded guilty in federal court in San Francisco today to aggravated identity theft and conspiracy to distribute marijuana, announced United States Attorney Brian J. Stretch, Special Agent in Charge Matthew Perlman of the U.S. State Department’s Diplomatic Security Service (DSS) San Francisco Field Office, and Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin.  The plea was accepted by the Honorable Susan Illston, U.S. District Judge.

In pleading guilty, Eidson, 73, of Aiken, S.C., admitted that he had conspired with others to import thousands of pounds of marijuana from Thailand into the United States in the mid-80s, and then to distribute that marijuana once it arrived.  Eidson further admitted that, after he and his co-conspirators were caught, he obtained a passport using another person’s identity and then fled the country.  Eidson was a fugitive for 32 years.  The State Department identified and located Eidson in 2011, and in 2017, he was returned to the United States to face the pending drug and passport fraud charges.

“Criminals who travel far and hide for a long time will not be shielded from prosecution,” said U.S. Attorney Stretch.  “We commend the steadfast work of our federal law enforcement partners whose hard work has brought this criminal to justice.”

“The successful return and prosecution of this longtime fugitive from halfway around the world are a clear demonstration of both the investigative diligence and global reach of the Diplomatic Security Service,” said DSS Special Agent in Charge Perlman.  DEA Special Agent in Charge Martin agreed:  “This case demonstrates that DEA remains willing and able to support the prosecution of those who violate our nation’s drug laws, even when they manage to evade capture for three decades.”

Eidson was indicted by a federal grand jury on January 14, 1985.  He was charged with conspiracy to import marijuana, in violation 21 U.S.C. § 963; conspiracy to distribute marijuana, in violation of 21 U.S.C. § 846; and two counts of distribution and possession of marijuana with intent to distribute it, in violation of 21 U.S.C. § 841.  Under today’s agreement, Eidson pleaded guilty to the conspiracy to distribute marijuana charge.  A federal grand jury also indicted Eidson on September 15, 2017, in a second case charging him with two counts of passport fraud, in violation of 18 U.S.C. § 1542; two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and one count of conspiracy to commit passport fraud, in violation of 18 U.S.C. § 371.  Under today’s plea agreement, Eidson pleaded guilty to one count of aggravated identity theft.

Eidson remains in custody pending sentencing.  Judge Illston scheduled his sentencing hearing for April 27, 2018.  The maximum statutory penalty for the drug charge is 15 years in prison, followed by 3 years of parole, and a $125,000 fine.  The penalty for the passport fraud case is two years in prison consecutive to any other sentence, a $250,000 fine, and one year of supervised release.  However, any sentence will be imposed by the court only after consideration of and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state, and local law enforcement agencies.
 

SAN FRANCISCO – Francisco Javier Marmolejo, aka “Blindy,” pleaded guilty today in federal court to robbing three San Francisco Bay Area banks announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The plea was accepted by the Honorable Lucy H. Koh, United States District Judge.  

According to today’s plea agreement, Marmolejo, 36, of Salinas admitted robbing Bay Area banks on three occasions between November of 2011 and January of 2012.  Marmolejo admitted that on November 9, 2011, together with others, he robbed a bank in Pacific Grove, Calif.  Marmolejo admitted that at least one of the robbers brandished a firearm and that he was the getaway driver while his fellow robbers went inside the bank to rob it. On that occasion, Marmolejo and his fellow robbers stole approximately $18,383.00 from the bank.  Further, on December 2, 2011, Marmolejo, together with others, robbed a bank in Seaside, Calif.  Marmolejo acknowledged that on that occasion, he brandished a firearm during the robbery.  Finally, on January 19, 2012, Marmolejo, together with others, robbed a bank in Salinas, Calif., during which one of the robbers brandished a gun.

In addition to the three robberies in which Marmolejo admitted he participated, he also admitted that in March of 2012, he possessed three semi-automatic handguns, bear repellant, three ballistic vests, three ski masks, and other items all of which were used and intended to be used during the commission of bank robberies and to avoid detection by law enforcement. 

On January 3, 2017, Marmolejo was charged by superseding information with one count of conspiracy to commit armed bank robbery, in violation of 18 U.S.C. § § 2113(a) and (d), and 371; one count of armed bank robbery, in violation of 18 U.S.C. § § 2113(a) and (2) and 2; and one count of use or possession of a firearm in furtherance of a crime of violence, in violation of 18 U.S.C. § § 924(c)(1)(A) and 2.  Pursuant to today’s plea agreement, Marmolejo pleaded guilty to all counts in the superseding information.  Marmolejo was originally indicted on some of these charges on November 8, 2016.  Marmolejo’s co-defendant Jorge Lopez, aka “Cowboy,” pleaded guilty to the same charges on December 18, 2017.  

The defendant is currently in custody pending sentencing.  Judge Koh scheduled Marmolejo’s sentencing hearing for May 9, 2018.  Co-defendant Lopez is scheduled to be sentenced on April 11, 2018.  The maximum statutory penalty for conspiracy to commit bank robbery is five years’ imprisonment and a fine of $250,000.  The maximum penalty for armed bank robbery is 25 years’ imprisonment and a fine of $250,000.  The maximum statutory penalty for using or possessing a firearm in furtherance of a crime of violence is seven years’ imprisonment and a fine of $250,000.   Further, additional terms of supervised release, penalties, and restitution may be ordered upon conviction.  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 case is being prosecuted by Assistant U.S. Attorney Claudia A. Quiroz with the assistance of paralegal Jessica Meegan and legal assistant Lance Libatique.  The prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO – Behnam Halali was sentenced to five years’ imprisonment, Ernesto Magat to four years’ imprisonment, and Karen Gagarin to three years’ imprisonment for their respective roles in a scheme to commit wire fraud and identity theft involving fraudulent life insurance policies, announced U.S. Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The defendants also were ordered to pay $2,837,791.93 in restitution to their former employer, American Income Life Insurance Company (AIL).  The sentences were handed down by the Honorable Susan Illston, United States District Judge in San Francisco, after the defendants were found guilty by a jury on March 13, 2017, following a four-week trial.   

According to the evidence produced at trial, Halali, 32, of San Jose; Magat, 35, of Hayward; and Gagarin, 32, of San Jose, were former agents of AIL.  While working at AIL, the defendants participated in a conspiracy involving the submission of hundreds of applications for life insurance policies on behalf of people at least some of whom did not know that a policy was applied for or issued in their name and/or did not want a life insurance policy. The defendants then shared the commissions and bonuses issued by AIL in connection with the fraudulent policies.  The defendants paid recruiters to find people willing to take medical exams in exchange for approximately $100, and then took the personal information associated with those people and submitted applications for life insurance in their names, in many cases without the individuals’ knowledge. The defendants and their co-conspirators also paid people to participate in a fictitious survey of a medical exam company, and took the personal information associated with those people and submitted applications for life insurance, in many cases without the individuals’ knowledge.  

The evidence also demonstrated that the defendants and their co-conspirators created phony driver’s licenses so that their co-conspirators could take medical exams purporting to be the applicants. The defendants opened hundreds of bank accounts to fund the premiums on the fraudulent policies, and typically paid one to four months of premiums before letting the policies lapse.  The defendants and their co-conspirators returned verification calls to AIL purporting to be the applicants on the fraudulent applications from telephones set up exclusively for the fraudulent scheme. All three defendants were charged with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349; wire fraud, in violation of 18 U.S.C. § 1343; and aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1). The jury found defendants guilty of all these counts. 

In addition to the prison terms and restitution, Judge Ilston also ordered each defendant to serve 140 hours community service and three years of supervised release.  Judge Illston ordered all three defendants to self-surrender on or before March 30, 2018, to begin serving their prison terms.

Assistant United States Attorneys Robert Leach and Matthew McCarthy are prosecuting the case with the assistance of Denise Oki and Bridget Kilkenny.  This prosecution is the result of an investigation by the FBI; the IRS, Criminal Investigation; and the Commissioner of the California Department of Insurance.
 

SAN FRANCISCO – Anthony Vega-Lobato appeared in court on Friday, December 22, on charges he produced, distributed, received, and possessed child pornography, announced United States Attorney Brian J. Stretch and Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. The appearance follows an indictment handed down by a federal grand jury yesterday.

According to the indictment, Vega-Lobato, 22, from Watsonville, has been involved in the production of child pornography since at least April 14, 2016.  The indictment alleges Vega-Lobato produced four video files containing visual depictions of three minors engaged in sexually explicit conduct.  The indictment also alleges that in April of 2017, Vega-Lobato distributed child pornography in interstate and foreign commerce.  Further, Vega-Lobato is charged with receiving child pornography at dates unknown until May 18, 2017, and with possessing child pornography until the same date.  

In sum, Vega-Lobato is charged in the indictment with four counts of production of child pornography, in violation of 18 U.S.C. § 2251(a); one count of distribution of child pornography, in violation of 18 U.S.C. § 2251(a)(2); one count of receipt of child pornography, in violation of 18 U.S.C. § 2252(a)(2); and one count of possession and access with intent to view child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).  

Vega-Lobato was arrested on Thursday, December 21, and made his initial appearance in federal court on Friday before the Honorable Joseph C. Spero, U.S. Magistrate Judge. He was remanded into the custody of the U.S. Marshal and remains in custody.  The defendant’s next scheduled appearance is at 9:30 a.m. on December 29, 2017, before the Honorable Elizabeth D. Laporte, U.S. Magistrate Judge, for arraignment and identification of counsel.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted of violating 18 U.S.C. § 2251, the defendant faces, per count, a mandatory minimum prison sentence of 15 years, a maximum sentence of 30 years, and a fine of $250,000 plus restitution, if appropriate.  If convicted of violating 18 U.S.C. § 2252(a)(2), the defendant faces, per count, a mandatory minimum prison sentence of 5 years, a maximum sentence of 20 years, and a fine of $250,000 plus restitution, if appropriate.  If convicted of violating 18 U.S.C. § 2252(a)(4), the defendant faces a maximum sentence of 20 years, a fine of $250,000, plus restitution, if appropriate.  Additional fines and a term of supervised release also may be imposed, 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 Scott Simeon is prosecuting the case with the assistance of Ryka Barghi.  The prosecution is the result of an ongoing investigation by the United States Department of Homeland Security.  

If members of the public have any information relevant to this investigation or to suspected child predators or suspicious activity, HSI encourages them to contact HSI through the toll-free Tip Line at 1-866-DHS-2-ICE or by completing its 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 – A complaint has been filed in federal court charging Ross Gordon Laverty with mailing an explosive device with the intent to injure or kill, announced United States Attorney Brian J. Stretch, U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez, Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder, and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett. 

According to the complaint unsealed this morning, Laverty, 56, of Oakland, mailed at least one explosive device.  The charge is based upon a bombing incident that occurred in October of this year.  

The complaint alleges that on October 11, 2017, a package containing an improvised explosive device was delivered to an address in East Palo Alto, Calif.  The addressee became suspicious of the package and initially decided not to open it.  Nevertheless, on October 19, the victim carried the package outside of his home and opened it in his back yard, causing it to detonate and injure the victim. 

The criminal complaint charges Laverty with one count of mailing an explosive devise with the intent to injure or kill, in violation of 18 U.S.C. § 1716(j)(2).  Laverty made his initial appearance and was arraigned on the charge this morning in San Francisco before U.S. Magistrate Judge Joseph C. Spero.  Magistrate Judge Spero scheduled a detention hearing for December 28, 2017.

A complaint merely alleges that a crime has been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted of the charge, Laverty faces a maximum sentence of 20 years’ imprisonment and a maximum fine of $250,000.   A term of supervised release and restitution may be ordered upon conviction.  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 U.S. Postal Inspection Service with assistance from the ATF and the FBI.
 

SAN JOSE - San Jose businesswoman Sridevi Aiyaswamy was sentenced to 13 months in prison today as a result of her involvement in executing an H-1B visa fraud scheme, announced U.S. Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin.  The sentence was handed down by the Honorable Lucy H. Koh, United States District Judge, after Aiyaswamy pleaded guilty to the crime on July 19, 2017. 

According to her plea agreement, Aiyaswamy, 50, of San Jose, pleaded guilty to three counts of visa fraud.  Aiyaswamy admitted that between April 2010 and June 2013 she made numerous false statements and submitted over 25 fraudulent documents to the United States Citizenship and Immigration Services (USCIS) to obtain H-1B non-immigrant classifications for skilled foreign workers.  Acting as a petitioner on behalf of foreign worker beneficiaries, Aiyaswamy falsely represented in I-129 petitions that the foreign worker beneficiaries would be working at an information technology and networking company in San Jose, Calif.  Aiayswamy further submitted counterfeit statements of work with forged signatures as back-up documentation to the I-129 petitions.  In fact, at the time she submitted these documents to USCIS, Aiyaswamy knew that the statements regarding offers of work from the South Bay company for these beneficiaries were false statements, and that the company had not made any offers of employment regarding these individuals.   

A federal grand jury indicted Aiyaswamy on December 3, 2015, charging her with 34 counts of visa fraud, in violation of 18 U.S.C. § 1546(a).  Pursuant to her plea agreement, Aiyaswamy pleaded guilty to three of the counts of visa fraud and the remaining counts were dismissed.  

In addition to the prison term, Judge Koh sentenced Aiyaswamy to a $10,000 fine and a three-year period of supervised release.  Judge Koh ordered the defendant to self-surrender by on February 14, 2018. 

Assistant U.S. Attorneys John Bostic and Jeff Nedrow are prosecuting the case with the aid of Mimi Lam, Laurie Worthen and Susan Kreider.  The prosecution is the result of an investigation led by HSI.  U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security at the California Service Center and the San Francisco Field Office also assisted with the investigation.  
 

SAN FRANCISCO – Peiwen Zhou, pleaded guilty in federal court in San Francisco today to illegally transporting hazardous materials and failing to properly declare imports of toxic substances, announced United States Attorney Brian J. Stretch, Environmental Protection Agency Special Agent in Charge Jay Green, and U.S. Department of Transportation Office of the Inspector General Regional Special Agent in Charge William Swallow.  The plea was accepted by the Honorable James Donato, U.S. District Judge.

In pleading guilty, Zhou, 55, of Palo Alto, admitted he did not adequately train employees at his company, AK Scientific, Inc., currently located in Union City, Calif., on the requirements of the Hazardous Materials Transportation Act, or HMTA.  Zhou further admitted that as a result of his failure, he caused AK Scientific employees to ship hazardous materials on a number of occasions without properly labeling, marking, and identifying the packages as containing such materials, in violation of the HMTA.  Zhou also admitted that he caused AK Scientific employees to fail to comply with the rules and regulations set forth in the Toxic Substances Control Act, or TSCA.  Specifically, Zhou admitted that he caused AK Scientific employees to not file TSCA import certifications on a number of occasions when the company imported chemical substances into the United States, including on one occasion when the chemical substance 1,2-dibromoethane was shipped to AK Scientific from China under a different name.  In sum, Zhou and AK Scientific each were charged by superseding information with one count of violating the HMTA, in violation of 49 U.S.C. § 5124, and one count of violating the TSCA, in violation of 18 U.S.C. § 2.

As part of today’s agreement, Zhou pleaded guilty to a felony violation of the HMTA and a misdemeanor violation of TSCA.  He also agreed to step down as CEO of AK Scientific and to play no role in the company’s shipping or regulatory functions.  The company, meanwhile, entered into a deferred prosecution agreement in which it agreed to pay a $100,000 fine and retain an independent monitor to oversee compliance.  Pursuant to the deferred prosecution agreement, the charges against the company will be dismissed if AK Scientific abides by the terms of the agreement for three years, including by maintaining compliance with safety and labelling requirements. 

“The rules and regulations the defendant violated are designed to keep the public safe from hazardous materials and toxic substances, and we are committed to prosecuting those who flaunt them,” said U.S. Attorney Stretch.

“Americans must be protected from those who skirt laws designed to protect workers and the public from mismanagement of toxic substances,” said EPA Administrator Scott Pruitt.  “The illegal importation and shipment of toxic substances in this case represents a clear threat to public safety and we will hold the responsible parties accountable under the law.”

"The plea agreement reached today demonstrates that ensuring the safety of the Nation's transportation systems remains a high priority for both the Office of Inspector General (OIG) and the Department of Transportation (DOT)," said William Swallow, DOT-OIG Regional Special Agent-in-Charge. "Working with our law enforcement and prosecutorial partners, we will continue our efforts to prevent and punish those who seek to compromise the integrity and safe transportation of hazardous materials."

Judge Donato scheduled Zhou’s sentencing hearing for April 18, 2018.   The maximum statutory penalty for Zhou for violating the HMTA is five years in prison and a fine of up to $250,000; the maximum statutory penalty for Zhou for violating TSCA is up to one year in prison and a fine of up to $50,000 for each day of violation.  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 prosecution is the result of an investigation by the U.S. Environmental Protection Agency’s Criminal Investigation Division, the U.S. Department of Transportation’s Office of Inspector General, and the U.S. Department of Homeland Security’s Homeland Security Investigations.
 

SAN FRANCISCO - Sean Clark Cutting and Brian Scott Melland, respectively the former Chief Executive Officer and former Chief Loan Officer of Sonoma Valley Bank, were convicted yesterday of conspiracy, bank fraud, wire fraud, money laundering, falsifying bank records, lying to bank regulators, and other crimes, announced United States Attorney Brian J. Stretch; Federal Deposit Insurance Corporation (FDIC) Inspector General Jay N. Lerner; Special Inspector General for the Troubled Asset Relief Program (TARP) Christy Goldsmith Romero; and Federal Housing Finance Agency (FHFA), Office of Inspector General Western Region, Special Agent in Charge Jay N. Johnson.  Co-defendant David John Lonich, an attorney for Marin and Sonoma County real estate developer Bijan Madjlessi (who had been indicted on these charges before his death on May 16, 2014) was also convicted of conspiracy, bank fraud, wire fraud, attempted obstruction of justice, and other offenses.  The verdicts followed an eight-week trial before the Honorable Susan Illston, U.S. District Judge.    

The evidence at trial demonstrated that Cutting, 48, of Sonoma, Calif.; Melland, 48, of Santa Rosa, Calif.; and Lonich, 63, of Santa Rosa, Calif.; were involved in multiple schemes to defraud Sonoma Valley Bank, which failed on August 20, 2010; its regulators at the FDIC; what was then called the California Department of Financial Institutions (“DFI”); and other financial institutions.  The schemes involved years of excessive and illegal lending to Madjlessi, often using “straw” or nominee borrowers, for real estate projects in Santa Rosa, Calif., and Petaluma, Calif.  As alleged in the indictments, the failure of Sonoma Valley Bank caused in excess of $20 million in losses to taxpayers, approximately $11.47 million to the FDIC, and $8.65 million to the TARP.

“Ultimately, this case was about senior bankers, and the persons with whom they conspired, putting their interests ahead of the federally-insured and federally-regulated bank they served,” United States Attorney Stretch stated.  “The defendants resorted to bank fraud, lies to bank regulators, and other crimes in a multi-year scheme to conceal millions of dollars in failed and failing loans.  By doing so, they put a respected community bank at ever greater risk of loss and jeopardy.  I am proud of the collaboration between the United States Attorney’s Office and our law enforcement partners whose perseverance and dedication over a multi-year investigation made this just outcome possible.”

“Today’s verdict sends a strong message that bank executives and attorneys who devise and orchestrate multi-million-dollar bank fraud schemes will be held accountable for their crimes,” said FDIC Inspector General Lerner.  “The FDIC Office of Inspector General is committed to working with U.S. Attorneys and its other law enforcement partners to deter such activity and help protect financial institutions against harm.”

“Today a federal jury brought justice to the top two officers of Sonoma Valley Bank for a massive fraud scheme designed to conceal bad loan after bad loan to a single customer, which ultimately cost the bank millions,” said Special Inspector General Romero.  “An aspect of the scheme started weeks after the bank received an $8.65 million bailout from TARP, all of which was lost.  An important source of lending to the Sonoma community was extinguished when this bank failed a little more than a year later.  I thank the U.S. Attorney’s Office for the Northern District of California for its excellent work and commitment to fighting TARP-related crime.”

“The evidence at trial showed that the defendants used their positions of power to take advantage of the banking system and ultimately the taxpayers,” said FHFA Special Agent in Charge Johnson.  “As the jury found in this case, their actions were unacceptable and will not be tolerated.  We are appreciative of our law enforcement partners on this case.  We will continue to work diligently to bring bad actors to justice.” 

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, between 2004 and 2010, Sonoma Valley Bank 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, Melland, the loan officer who worked most closely with Madjlessi, and Cutting recommended that the bank approve multi-million dollar loans to nominee or “straw” borrowers.  The evidence at trial established that Melland and Cutting knew that millions in proceeds from loans to these other borrowers would go to Madjlessi and the companies he controlled.  In sum, the evidence at trial 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 was also convicted of receiving a bribe from Madjlessi of approximately $50,000 in April 2008.  According to the trial evidence, one day after he received the bribe, Melland recommended a set of loans for approximately $3.65 million to a nominee or “straw” borrower controlled by Madjlessi.

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

Yet another scheme involved a conspiracy whereby Lonich, Madjlessi’s lawyer, 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, so Madjlessi could illegally buy back a debt he owed to IndyMac Bank.  IndyMac Bank had failed and been taken over by FDIC.  In early 2009, the defendants conspired to lend the money to Madjlessi’s nominee so that Madjlessi could buy the approximately $27 million debt back for only approximately $4 million.  FDIC rules specifically prohibited delinquent borrowers, like Madjlessi, from purchasing their own notes at auction.  Nonetheless, the defendants were 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 transactions. 

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.  The letters falsely stated that potential nominee buyers had sufficient funds at Sonoma Valley Bank to purchase the units.  The evidence at trial also demonstrated that Lonich attempted to obstruct justice by, among other things, instructing the nominee to make false statements to federal agents.

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

The defendants were convicted of the following specific crimes, which carry the maximum statutory penalties specified below:
 

DEFENDANT

CHARGES

Cutting, Melland, and Lonich (one count each)

Conspiracy to Commit Bank Fraud, in violation of 18 U.S.C. § 371, with up to 5 years of imprisonment, 3 years of supervised release, and a fine of $250,000.

Cutting, Melland, and Lonich (one count each)

Bank Fraud, in violation of 18 U.S.C. § 1344, with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

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

False Bank Entries and Reports, in violation of 18 U.S.C. § 1005, each with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Cutting and Melland (one count each)

Conspiracy to Make False Statements to the FDIC, in violation of 18 U.S.C. § 371, with up to 5 years of imprisonment, 3 years of supervised release, and a fine of $250,000.

Cutting and Melland (one count each)

Misapplication of Bank Funds, in violation of 18 U.S.C.  § 656, with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Cutting and Melland (one count each)

False Statements to the FDIC, in violation of 18 U.S.C. § 1007, with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Melland (one count)

Receipt of Gifts for Procuring Loans, in violation of 18 U.S.C. § 215, with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Cutting, Melland, and Lonich (one count each)

Conspiracy to Commit Wire Fraud, in violation of 18 U.S.C. § 1349, with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Cutting, Melland, and Lonich (five counts each)

Wire Fraud, in violation of 18 U.S.C. § 1343, each with up to 30 years of imprisonment, 5 years of supervised release, and a fine of $1,000,000.

Cutting, Melland, and Lonich (twelve counts each)

Money Laundering, in violation of 18 U.S.C. § 1957, each with up to 10 years of imprisonment, 3 years of supervised release, and a fine of $250,000.

Lonich (one count)

Attempted Obstruction of Justice, in violation of 18 U.S.C. § 1512(c), with up to 20 years of imprisonment, 3 years of supervised release, and a fine of $250,000.

In addition, the defendants face a $100 mandatory special assessment for each count of conviction against them as well as potential forfeiture and restitution.  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.  Judge Illston scheduled the defendants’ sentencing hearing for April 27, 2018.

Assistant U.S. Attorneys Robert David Rees and Adam A. Reeves are prosecuting the case with the assistance of Philip Villanueva, Maryam Beros, Patricia Mahoney, and Bridget Kilkenny.  The prosecution is the result of an 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 JOSE- Vilasini Ganesh and Gregory Belcher were convicted of providing false statements to health benefit programs by a federal jury yesterday, announced United States Attorney Brian Stretch and Special Agent in FBI Special Agent in Charge John F. Bennett.  The verdicts followed an eight-week jury trial before the Honorable Lucy H. Koh, U.S. District Court Judge.

The jury found Ganesh, 47, of Saratoga, guilty of five counts of health care fraud and five counts of making false statements relating to claims fraudulently submitted to health care benefit programs.  Belcher, 56, also of Saratoga, was found guilty of one count of making a false statement relating to a health care benefit program.  The defendants were acquitted of conspiracy and money laundering counts, and Belcher was also acquitted of four other health care fraud counts and one other count of making a false statement relating to a health care benefit program.  

Evidence at trial showed that Ganesh submitted false and fraudulent claims to several health care benefit programs for services that she knew were not properly payable, by including claims for days when the patient had not been seen by the provider, and claims that the patients had been seen by another physician provider who was no longer affiliated with her practice.  Evidence at trial further demonstrated that Belcher had on at least one occasion submitted a false claim in connection with a billing matter related to his physical therapy practice.  On July 13, 2017, a federal grand jury indicted the defendants, 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); and multiple counts health care fraud, in violation of 18 U.S.C. § 1347, and 2 and false statement relating to health care matters, in violation of 18 U.S.C. § 1035.   

The defendants are currently out of custody, on a $350,000 bond as to Ganesh and a $250,000 bond as to Belcher. 

Judge Koh scheduled the defendants’ sentencing hearing for April 4, 2018.  The maximum statutory penalty for each count in violation of 18 U.S.C. Section 1347 is 10 years imprisonment and a $250,000 fine plus restitution, if appropriate.  The maximum statutory penalty for each count in violation of 18 U.S.C. Section 1035 is five years imprisonment and a $250,000 fine plus restitution, if appropriate.  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. 

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 a two-year investigation by the Federal Bureau of Investigation.       
 

SAN FRANCISCO – Joel Zweig, an attorney who resides in New York, was sentenced to 56 months in prison for obstruction of justice and perjury, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and U.S. Postal Inspection Service Inspector in Charge Rafael Nuñez.  The sentence was handed down yesterday by the Honorable William H. Orrick, U.S. District Judge, following Zweig’s guilty plea to the charges on September 19, 2017.   

According to the plea agreement, Zweig, 54, admitted he manufactured evidence in an effort to establish damages in the lawsuit Pet Food Express, Limited v. Royal Canin USA, Inc., C09-1483 EMC.  The lawsuit was pending in the Northern District of California.  Zweig admitted he created a phony commercial lease, complete with fake signatures and a fake notarial stamp, as evidence that a business was being established in New York City.  In addition, Zweig acknowledged he directed an architect to visit a property in New York City so the architect could create drawings showing a store was being opened at the property.  Zweig admitted that at the time, he wrote to the architect it was unlikely that the store would be built.  Nevertheless, Zweig then failed to produce his communications with the architect in response to a grand jury subpoena and lied to a postal inspector by denying he knew the phony lease would be used to support a claim for damages in the California litigation.  

On May 17, 2016, a federal grand jury indicted Zweig, charging him with four counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of obstruction of justice, in violation of 18 U.S.C. § 1503; four counts of perjury, in violation of 18 U.S.C. § 1623(a); one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A; and one count of false statements to a government agency, in violation of 18 U.S.C. § 1001.   A trial on the charges commenced on September 11, 2017, however, on September 19, 2017, Zweig pleaded guilty to the obstruction of justice and perjury counts.  Pursuant to the plea agreement, the remaining counts were dismissed.

Assistant U.S. Attorneys Robin Harris and William Frentzen are prosecuting the case.  The prosecution is the result of an investigation by the FBI and the U.S. Postal Inspection Service.  
 

SAN FRANCISCO – Ryan Recaido Patacsil was sentenced to 9 years in prison for receipt of child pornography, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down yesterday by the Honorable Maxine M. Chesney, U.S. District Judge, following Patacsil’s guilty plea to the charge on August 2, 2017.

According to his guilty plea, Patacsil, 40, of Daly City, California, admitted to using peer-to-peer software to access and download child pornography, including images of minors younger than 12 years old and portrayals of sexual abuse or exploitation of an infant or toddler.  Patacsil acknowledged that he knowingly possessed numerous digital files that contained depictions of minors engaged in sexually explicit conduct on a variety of digital devices he kept in his home.  Patacsil also admitted that the software he used to access and download child pornography on the internet also allowed other people to download the pornography from his computer.  Patacsil acknowledged he possessed more than 600 images constituting child pornography.  

On April 11, 2017, a federal grand jury returned a superseding indictment charging Patacsil with one count each of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B), and receipt of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2)(B) and (b)(1).  Pursuant to his guilty plea, Patacsil pleaded guilty to the receipt charge, and the possession charge was dismissed.  

In addition to the prison term, Judge Chesney ordered Patacsil to serve a 7-year period of supervised release to follow his custodial sentence.  Patacsil has been in custody since his arrest in February 2017, and he will begin serving the sentence immediately. 

Assistant U.S. Attorney Andrew F. Dawson is prosecuting the case with the assistance of Wincy Wong and Marina Ponomarchuk.  The prosecution is the result of an investigation by the FBI. 
 

SAN JOSE –Ferdinand Pasion Arafiles, a/k/a Dennis Arafiles, pleaded guilty today to charges he defrauded a Bay Area manufacturer and seller of networking equipment and services, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The guilty plea was accepted by the Honorable Edward J. Davila, United States District Judge.  

Arafiles, 49, of Alameda County, was an employee of a Bay Area public school district.  According to his plea agreement, beginning in October of 2009 and continuing until February 2016, he devised a plan to take advantage of the relationship between the district and a leading networking equipment and services corporation (the “Corporation”). Specifically, Arafiles maintained access to the Corporation’s warranty contract and service program for the school district and used that access to order, receive, and then sell, replacement computer parts to which he was not entitled.

In the plea agreement, Arafiles acknowledged he created multiple email accounts, including variations on the name of the school district that employed him, and used those email accounts to create user accounts with the Corporation.  He then made service requests on the Corporation’s customer support website. Using those email accounts and fraudulent identities, Arafiles instructed the Corporation to send “replacement” parts to designated addresses, including Arafiles’s personal residence in Alameda County.  Arafiles understood that the Corporation required the return of failed or defective parts, so he returned bogus parts that contained forged or altered serial number labels.  Arafiles also posted for sale and sold on internet market places some of the parts he fraudulently obtained from the Corporation.    

A federal grand jury indicted Arafiles on June 23, 2016.  In sum, Arafiles was charged him with five counts each of wire fraud, in violation of 18 U.S.C. § 1343; interstate transportation of stolen property, in violation of 18 U.S.C. § 2314; and mail fraud, in violation of 18 U.S.C. § 1341.  Pursuant to today’s plea, Arafiles pleaded guilty to one count of wire fraud and the remaining charges will be dismissed at sentencing.

Arafiles faces a maximum statutory sentence of 20 years’ imprisonment and a fine of $250,000 plus restitution, if appropriate, for violating 18 U.S.C. § 1343.  Additional fines 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.

Arafiles currently is released on bond.  Judge Davila has scheduled his sentencing hearing for May 10, 2018, at 1:30 p.m.  An interim status date was also set for March 19, 2018, at 1:30 p.m. 

Assistant U.S. Attorney Timothy Lucey is prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation by the FBI.  
 

SAN FRANCISCO – A former Bay Area resident was arrested yesterday in Barnstable, Massachusetts on charges related to a long-running investment fraud scheme.  John Bryan Murphy was charged on November 30, 2017, by a federal grand jury in San Francisco with wire fraud and money laundering announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The indictment was unsealed late yesterday following Murphy’s arrest.

According to the indictment, between 2012 and 2017, Murphy, 44, who currently resides in Massachusetts, solicited investments from numerous individuals on the premise that their money would be professionally invested.  After receiving these solicitations, several victim investors provided funds to Murphy for the purpose of allowing him to invest those funds on their behalf.  In fact, Murphy primarily used these “investments” to support his personal lifestyle, to speculate on the stock market in an account in his name, and/or to repay other victims a portion of their investments.

The indictment alleges that Murphy made payments to various victims that were designed to lull them into a false sense of security, lead them to believe that the promises made to them would be fulfilled, postpone or prevent the victims’ complaints to law enforcement, conceal and prevent detection of the scheme and artifice, and induce victims to “invest” more money with Murphy.  The indictment alleges that Murphy obtained over $700,000 in fraudulently solicited funds from victims of the scheme.

The indictment charges Murphy 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.  

After his arrest, Murphy made his initial appearance in United States District Court in Boston, Massachusetts, and was detained pending further proceedings.  A detention hearing is scheduled for Friday, December 8, 2017, before Magistrate Judge Donald L. Cabell in Boston.  

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 wire fraud count and 10 years’ imprisonment on each money laundering count, 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 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 Robert Rees and Kyle Waldinger are prosecuting the case.  The prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

SAN FRANCISCO – Liang Chen, Donald Olgado, Wei-Yung Hsu, and Robert Ewald were charged for their respective roles in an alleged scheme to steal trade secrets from a Bay Area semiconductor chip equipment manufacturer, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The charges were issued in an indictment handed down on November 30, 2017, by a federal grand jury.  

According to the indictment, the defendants were employed at a Silicon Valley-based semiconductor manufacturer as follows: Chen, 52, of Saratoga, Calif., was a corporate vice president and general manager of the alternative energy products division; Olgado, 54, of Palo Alto, was a managing director of engineering within the product business group; Hsu, 57, of San Jose, was a vice president and general manager within the semiconductor LED division; and Ewald, 60, of Aptos, was a director of the energy and environmental systems within the alternative energy products division. The indictment alleges that in September of 2012, while the defendants were still employed by the semiconductor equipment manufacturer, they conspired to steal their employer’s trade secrets and use them in a competing company to be based in the United States and the People’s Republic of China.

According to the indictment, the technology at issue was developed by the semiconductor equipment manufacturer through years of research and testing, and through millions of dollars in investment. The technology related to the high-volume manufacturing of semiconductor wafers to be used in lighting and electronic devices, such as flat screen televisions and smart phones.  The indictment explains that the production of the wafers is highly sophisticated and must occur under “clean room” conditions by a fully automated process controlled by computers.  The defendants allegedly downloaded information relating to this technology from their employer’s confidential internal engineering database, including over 16,000 drawings; shared plans in multiple emails describing their plans to use the technology in a new startup company; and attempted to recruit investors in order to fund the new startup which would operate in the United States and China.  In sum, each defendant was charged with one count of conspiracy to commit theft of trade secrets, in violation of 18 U.S.C. § 1832(a)(5), and eleven counts of possessing stolen trade secrets, in violation of 18 U.S.C. § 1832(a)(3) & 2.  

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  The maximum sentence for a violation of 18 U.S.C. § 1832(a)(5) is 10 years’ imprisonment and a $250,000 fine.  The maximum sentence for a violation of 18 U.S.C. §§ 1832(a)(3) & 2 is 10 years’ imprisonment and a $250,000 fine.  

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.  

The defendants are scheduled to be arraigned on the indictment on December 15, 2017, before the Honorable Susan van Keulen, United States Magistrate Judge.  

Assistant United States Attorney Susan Knight is prosecuting this case with assistance from Elise Etter. The prosecution is the result of an investigation by the Federal Bureau of Investigation. 
 

SAN FRANCISCO – A federal grand jury indicted Jose Inez Garcia-Zarate today for being a felon in possession of a firearm and ammunition, and for being an illegally present alien in possession of a firearm and ammunition, announced United States Attorney General Jefferson B. Sessions; United States Attorney Brian J. Stretch from the Northern District of California; and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.

According to the indictment, on July 1, 2015, Garcia-Zarate, a citizen of Mexico who reportedly is 47 years old, possessed a semi-automatic pistol and multiple rounds of ammunition in violation of 18 U.S.C. § 922(g)(1) (felon in possession of a firearm) and 18 U.S.C. § 922(g)(5) (unlawfully present alien in possession of a firearm).

​An indictment merely alleges that a crime has been committed and Garcia-Zarate, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. Garcia-Zarate currently is in state custody on other charges.  If convicted of either violation of 18 U.S.C. § 922(g), Garcia-Zarate faces a maximum statutory penalty of 10 years in prison.  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 United States Attorneys Hallie Hoffman and Shiao Lee are prosecuting this case.  This case is the result of an investigation by the ATF.  

SAN FRANCISCO – A federal grand jury indicted Jose Inez Garcia-Zarate today for being a felon in possession of a firearm and ammunition, and for being an illegally present alien in possession of a firearm and ammunition, announced United States Attorney General Jefferson B. Sessions; United States Attorney Brian J. Stretch from the Northern District of California; and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.

According to the indictment, on July 1, 2015, Garcia-Zarate, a citizen of Mexico who reportedly is 47 years old, possessed a semi-automatic pistol and multiple rounds of ammunition in violation of 18 U.S.C. § 922(g)(1) (felon in possession of a firearm) and 18 U.S.C. § 922(g)(5) (unlawfully present alien in possession of a firearm).

An indictment merely alleges that a crime has been committed and Garcia-Zarate, like all defendants, is presumed innocent until proven guilty beyond a reasonable doubt. Garcia-Zarate currently is in state custody on other charges.  If convicted of either violation of 18 U.S.C. § 922(g), Garcia-Zarate faces a maximum statutory penalty of 10 years in prison.  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 United States Attorneys Hallie Hoffman and Shiao Lee are prosecuting this case.  This case is the result of an investigation by the ATF. 
 

SAN FRANCISCO – Donald MacCord, formerly a resident Washington State, and Shannon Doyle, a resident of Maryland, were arrested today for their role in an alleged conspiracy and fraud scheme, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Securities and Exchange Commission-Inspector General Carl W. Hoecker.  The United States Securities and Exchange Commission (“SEC”) filed a parallel civil action against MacCord and Doyle today in the Western District of Washington.

According to the indictment, from at least 2013 to 2017, MacCord and Doyle conspired in a scheme to defraud by making misrepresentations to raise money for Digi Outdoor Media, Inc. (“Digi”), and then by misappropriating that money from Digi through an entity called Signworks, LLC (“Signworks”).  They then both concealed their misstatements and misappropriation in various ways, and obstructed the investigation of the Securities and Exchange Commission in San Francisco into their conduct.

According to the indictment unsealed today, MacCord and Doyle, both 50, were the CEO and CFO of Digi, respectively.  Digi was, and is, in the business of obtaining leases for and installing digital advertising signs.  MacCord and Doyle raised money for Digi in various ways, including by soliciting investments.  They solicited investments both directly and through other entities and individuals, including an investment advisor firm registered with the SEC and the Financial Industry Regulatory Authority (“FINRA”).  According to the indictment, MacCord and Doyle made various misrepresentations, both to the investment advisor firm and investors, including misrepresentations regarding the number of leases into which Digi had entered or had negotiated with landlords and was prepared to enter, about the number of sites “committed” for sign installation, and that the funds would be used to pay for the construction, installation, and maintenance of signs.  

MacCord and Doyle then diverted Digi funds, including money raised from investors, to Signworks, concealing their diversion with fake invoices purporting to bill Digi for work done on non-existent sites.  From Signworks, MacCord and Doyle misappropriated the funds to their own personal use.  

As part of their conspiracy to defraud, MacCord and Doyle also lied in various other ways about the number of leases Digi had obtained.  Specifically, MacCord and Doyle caused Digi to file a Form S-1 registration statement with the SEC to sell Digi shares publicly.  The registration statement overstated the number of leases into which Digi had entered and the number of sign locations for which Digi had a right to install, and it failed to disclose MacCord’s and Doyle’s self-dealing with respect to Signworks.  According to the indictment, MacCord and Doyle also misrepresented to a joint venture partner and to a public accounting firm that was auditing Digi’s financial statements in connection with the S-1 the number of leases and lease sites into which Digi had entered.  

According to the indictment, MacCord and Doyle then concealed their conspiracy to defraud and obstructed the SEC’s investigation into it.  MacCord shared falsely executed leases with several parties—the investment advisor firm, the joint venture partner, and the accounting firm.  These leases contained the forged signatures of the purported counterparties, along with various other false statements.  The day after Digi received a subpoena from the SEC, MacCord deleted some of these leases from a Dropbox folder shared with the investment advisor firm, and then produced a set of executed leases to the SEC.  Both MacCord and Doyle then testified falsely, evasively, and non-responsively in proceedings of the SEC.

MacCord and Doyle were both charged with conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and obstruction of official proceedings, in violation of 18 U.S.C. § 1512(c)(2).  MacCord was also charged with false writings to a government agency, in violation of 18 U.S.C. § 1001(a)(3), and destruction, alteration, or falsification of records in violation of 18 U.S.C. § 1519. 

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 maximum penalty for each count of conspiracy to commit wire fraud, obstruction of official proceedings, and destruction, alteration, or falsification of records in federal investigations is twenty years’ imprisonment and a $250,000 fine.  The maximum penalty for each count of false writings to a government agency five years’ imprisonment and a $250,000 fine.  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.

MacCord surrendered to FBI custody today in Seattle, Washington, and Doyle surrendered to FBI custody today in Greenbelt, Maryland.  Both made appearances in court and were released.  Doyle is scheduled to appear on December 15, 2017, at 9:30 a.m., and MacCord on December 18, 2017, at 9:30 a.m., both in San Francisco, before U.S. Magistrate Judge Elizabeth D. Laporte, for arraignment.

Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Claudia Hyslop and Bridget Kilkenny.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the SEC-Office of the Inspector General. 
 

SAN JOSE – Sunitha Guntipally was sentenced today to 52 months in prison for her role in a conspiracy to commit several crimes including visa fraud, obstruction of justice, use of false documents, mail fraud, and witness tampering, announced United States Attorney Brian J. Stretch; U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin; and U.S. State Department, Diplomatic Security Service, San Francisco Field Office Special Agent in Charge Matthew Perlman.  The sentence was handed down by the Honorable Lucy H. Koh, U.S. District Judge, after Guntipally pleaded guilty to the conspiracy charge on May 3, 2017. 

A federal grand jury indicted Sunitha Guntipally, 44, of Fremont, and three co-defendants, Venkat Guntipally, 49, of Fremont; Pratap “Bob” Kondamoori, 56, of Incline Village, Nev.; and Sandhya Ramireddi, 58, of Pleasanton, in a 33-count indictment filed May 5, 2016.  The indictment contains charges in connection with the submission of fraudulent applications for H-1B specialty-occupation work visas.

In connection with her guilty plea, Sunitha Guntipally admitted that she and Venkat Guntipally were a husband and wife team who founded and owned DS Soft Tech and Equinett, two employment-staffing companies for technology firms. Sunitha Guntipally admitted that between approximately 2010 and 2014, she and her co-defendants submitted more than one hundred additional fraudulent petitions for foreign workers to be placed at other purported companies.  The end-client companies listed in the fraudulent H-1B applications either did not exist or never received the proposed H-1B workers.  None of them ever intended to receive those H-1B workers.  These applications were designed and intended to create a pool of H-1B beneficiaries who then could be placed at legitimate employment positions in the Northern District of California and elsewhere.  Through this scheme, Sunitha Guntipally, along with her co-conspirators, gained an unfair advantage over competing employment-staffing firms and, as a result, she and her husband, Venkat Guntipally, earned money from these downstream companies for themselves and their companies.  In addition, Sunitha Guntipally admitted that she obstructed justice, and directed her co-defendant to do the same, in an effort to mislead the agents, and conceal the conspiracy.

In sum, Sunitha Guntipally was charged with one count of conspiracy, in violation of 18 U.S.C. § 371; ten counts of substantive visa fraud, in violation of 18 U.S.C. § 1546(a); seven counts of using false statements, in violation of 18 U.S.C. § 1001(a)(3); four counts of mail fraud, in violation of 18 U.S.C. § 1341; and four counts of witness tampering, in violation of 18 U.S.C. § 1512(b)(3).  Pursuant to her guilty plea, Sunitha Guntipally pleaded guilty to the conspiracy charge and the remaining charges were dismissed.  

In sentencing Sunitha Guntipally, Judge Koh stated that the defendant’s crime does “damage to the rule of law.”  Judge Koh stated that the defendant’s conduct “undermines respect for our legal immigration system” and does “tremendous damage to our institutions and affects the rights of others to immigrate to the United States.”   

In addition to the prison term, Judge Koh ordered Sunitha Guntipally to serve three years of supervised release and to pay a $50,000 fine.  Each of Sunitha Guntipally’s co-defendants has already pleaded guilty to his respective roles in the scheme.  Judge Koh sentenced Ramireddi to 14 months’ imprisonment and Kondamoori to 20 months’ imprisonment for their respective roles earlier this year.  Venkat Guntipally, Sunitha Guntipally’s husband, is scheduled to be sentenced on March 21, 2018, at 9:15 a.m.  

Assistant U.S. Attorney Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation led by the U.S. Department of State Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF) overseen by the Department of Homeland Security’s Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
 

SAN FRANCISCO– Jeffrey Wertkin pleaded guilty today to two counts of obstruction of justice and one count of transportation of stolen property, announced United States Attorney Brian J. Stretch; Department of Justice Office of the Inspector General, Fraud Detection Office Special Agent in Charge Lewe Sessions; and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The guilty plea was accepted by the Honorable Maxine M. Chesney, U.S. District Judge, following the filing of the charges in a criminal information earlier this month.  

According to his plea agreement, Wertkin, 41, of Washington, D.C., worked for the Civil Fraud Section of the Department of Justice from October 24, 2010, until April 12, 2016.  During that time, he worked on qui tam actions pursuant to which the government investigated companies suspected of breaking the law.  By statute, qui tam complaints are filed under seal and therefore kept from public view until the court orders that the complaints may be made public.  In his plea agreement, Wertkin admitted that during the last month of his employment as a trial attorney with the Department of Justice, he began secretly reviewing and collecting sealed qui tam complaints that were not assigned to him.  Further, Wertkin has admitted that after he left the Department of Justice, he used the stolen information to improperly solicit clients that were the subject of the sealed complaints.  Wertkin acknowledged that in one instance, he was successful in using the information from a sealed complaint to convince the subject of a lawsuit to retain him as an attorney to represent it in the lawsuit.  Wertkin also acknowledged he lied to the Department of Justice in documents he completed during his exit process regarding whether he stole the complaints.

The plea agreement also describes two occasions in which Wertkin attempted to sell information to companies that were the subject of government investigations.  On November 30, 2016, Wertkin offered to sell a complaint to the corporation named in the lawsuit.  Then, between November 30, 2016, and January 31, 2017, Wertkin engaged in multiple conversations with a representative of the corporation to negotiate the sale of the sealed complaint for $310,000.   Similarly, on January 23, 2017, Wertkin contacted a second corporation and offered to mail to the representative a copy of the face sheet of the complaint.  Wertkin actually mailed a redacted copy of the face sheet and promised that, for a fee, he would provide the entire complaint.

Wertkin was arrested on January 31, 2017, after traveling from the Washington, D.C. Area to the San Francisco Bay Area with a copy of a sealed complaint.  On that day, Wertkin believed he was meeting at a Cupertino hotel with a representative from a company with whom he would exchange the complaint for a duffel bag filled with $310,000.  In truth, Wertkin was meeting with an undercover employee of the FBI.  

Further, Wertkin admitted that after his arrest, he took steps in an effort to obstruct the ongoing investigation.  Specifically, after being released from custody, Wertkin returned to his office, purportedly to retrieve his personal belongings, and removed and destroyed documents from his office that he knew could further incriminate him.  Wertkin acknowledged he took these and additional other steps in an effort to corruptly obstruct the ongoing investigation and proceedings against him.

In sum, on November 1, 2017, Wertkin was charged by information with two counts of obstruction of justice, in violation of 18 U.S.C. § 1505, and one count of interstate transportation of stolen goods, in violation of 18 U.S.C. § 2314.  Pursuant to the plea agreement, Wertkin pleaded guilty to all counts.  

Judge Chesney scheduled a hearing for sentencing Wertkin for March 14, 2018, at 2:15 p.m.  The maximum statutory sentence for each count of violating 18 U.S.C. § 1505 is five years in prison and a $250,000 fine.  The maximum statutory sentence for a violation of 18 U.S.C. § 2314 is 10 years in prison and a $250,000 fine.  Additional fines, victim restitution, and a term of supervised release also may be imposed.  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. Attorneys Robin L. Harris and William Frentzen are prosecuting the case.  The prosecution is the result of an investigation by the FBI and the Department of Justice Office of the Inspector General.  
 

Karim Baratov, aka Kay, aka Karim Taloverov, aka Karim Akehmet Tokbergenov, 22, a Canadian national and resident, pleaded guilty today, to charges returned by a grand jury in the Northern District of California in February 2017.  Baratov and three other defendants, including two officers of the Russian Federal Security Service (FSB), Russia’s domestic law enforcement and intelligence service, were charged with computer hacking and other criminal offenses in connection with a conspiracy to access Yahoo’s network and the contents of webmail accounts that began in January 2014.  Baratov’s co-defendants, all of whom remain at large in Russia, are Dmitry Aleksandrovich Dokuchaev, 33, a Russian national and resident; Igor Anatolyevich Sushchin, 43, a Russian national and resident; and Alexsey Alexseyevich Belan, aka Magg, 29, a Russian national and resident. 

The guilty plea was announced by Acting Assistant Attorney General Dana J. Boente of the National Security Division, U.S. Attorney Brian J. Stretch for the Northern District of California and Executive Assistant Director Paul Abbate of the FBI’s Criminal, Cyber, Response and Services Branch.

“Where a foreign law enforcement or intelligence agency recruits, tasks, or protects criminals targeting the United States and its companies or citizens, instead of taking steps to disrupt them and hold them accountable, the United States will leverage all of its available tools to expose that agency’s conduct and arrest those responsible,” said Acting Assistant Attorney General Boente. “Today’s plea exemplifies the Department’s commitment to pursuing, arresting and bringing to justice even those hackers who work for a foreign law enforcement or intelligence organization.  We wish to thank the Canadian authorities for their skillful assistance in the investigation and arrest of Baratov and to acknowledge the contributions of the other nations and law enforcement services that provided invaluable assistance.”

“The illegal hacking of private communications is a global problem that transcends political boundaries.  Cybercrime is not only a grave threat to personal privacy and security, but causes great financial harm to individuals who are hacked and costs the world economy hundreds of billions of dollars every year.  These threats are even more insidious when cyber criminals such as Baratov are employed by foreign government agencies acting outside the rule of law,” said U.S. Attorney Stretch.  “With the assistance of our law enforcement partners in Canada, we were able to track down and apprehend a prolific criminal hacker who had sold his services to Russian government agents.  This prosecution again illustrates that we will identify and pursue charges against hackers who compromise our country’s computer infrastructure.”

“This case is a prime example of the hybrid cyber threat we’re facing, in which nation states work with criminal hackers to carry out malicious activities,” said Executive Assistant Director Abbate. “Today’s guilty plea illustrates how the FBI continues to work relentlessly with our private sector, law enforcement and international partners to identify and hold accountable those who conduct cyber attacks against our nation, no matter who they’re working with or where they attempt to hide.”

Baratov’s role in the charged conspiracy was to hack webmail accounts of individuals of interest to the FSB and send those accounts’ passwords to Dokuchaev in exchange for money.  As alleged in the Indictment, Dokuchaev, Sushchin and Belan compromised Yahoo’s network and gained the ability to access Yahoo accounts.  When they desired access to individual webmail accounts at a number of other internet service providers, such as Google and Yandex (based in Russia), Dokuchaev tasked Baratov to compromise those accounts.  The Indictment is available here, and its allegations are summarized in greater detail in the press release that attended the unsealing of the Indictment on March 15.

As part of his plea agreement, Baratov not only admitted to agreeing and attempting to hack at least 80 webmail accounts on behalf of one of his FSB co-conspirators, but also to hacking more than 11,000 webmail accounts in total from in or around 2010 until his March 2017 arrest by Canadian authorities.  Baratov advertised his services through a network of primarily Russian-language hacker-for-hire web pages hosted on servers around the world.  He admitted that he generally spearphished his victims, sending them emails from accounts he established to appear to belong to the webmail provider at which the victim’s account was hosted (such as Google or Yandex).  Baratov’s spearphishing emails tricked victims into (i) visiting web pages he constructed to appear legitimate, as though they belonged to the victims’ webmail providers and (ii) entering their account credentials into those web pages.  Once Baratov collected the victims’ account credentials, he sent his customers screen shots of the victims’ account contents to prove that he had obtained access and, upon receipt of payment, provided his customers the victims’ log-in credentials.

Baratov pleaded guilty to Count One and Counts Forty through Forty-Seven of the Indictment.  Count One charged Baratov, Dokuchaev, Sushchin and Belan with conspiring to violate the Computer Fraud and Abuse Act by stealing information from protected computers in violation of 18 U.S.C. § 1030(a)(2) and causing damage to protected computers in violation of 18 U.S.C. § 1030(a)(5)(A).  Counts Forty through Forty-Seven charged Baratov and Dokuchaev with aggravated identity theft in violation of 18 U.S.C. § 1028A.  As part of the plea agreement, in addition to any prison sentence, Baratov agreed to pay restitution to his victims and to pay a fine up to $2,250,000 (at $250,000 per count) with any assets he has remaining after satisfying a restitution award.

Baratov waived extradition from Canada and is being detained in California without bail.

Baratov’s sentencing hearing is scheduled for Feb. 20, 2018, before the Honorable Vincent Chhabria, U.S. District Court Judge, in San Francisco.  The maximum statutory penalty for each count in violation of 18 U.S.C. §1030(b) is 10 years and a fine of $250,000, plus restitution, if appropriate.  The maximum statutory penalty for each count in violation of 18 U.S.C. §1028A is two years (mandatory consecutive) and a fine of $250,000, plus restitution, if appropriate.  However, any sentence, including restitution and fine, if any, 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 FBI, led by the San Francisco Field Office, conducted the investigation that resulted in the charges announced today. The case is being prosecuted by the U.S. Department of Justice National Security Division’s Counterintelligence and Export Control Section and the U.S. Attorney’s Office for the Northern District of California, with support of the Justice Department’s Office of International Affairs.

SAN FRANCISCO – Karim Baratov, a/k/a “Kay,” a/k/a/Karim Taloverov, a/k/a Karim Akehmet Tokbergenov, pleaded guilty today to charges returned by a grand jury in the Northern District of California in February 2017.  The guilty plea was announced by U.S. Attorney Brian J. Stretch; Acting Assistant Attorney General Dana J. Boente of the U.S. Justice Department’s National Security Division; Executive Assistant Director Paul Abbate of the Federal Bureau of Investigation’s Criminal, Cyber, Response and Services Branch; and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.

Baratov, 22, a Canadian national and resident, and three other defendants, including two officers of the Russian Federal Security Service (“FSB”), Russia’s domestic law enforcement and intelligence service, were charged with computer hacking and other criminal offenses in connection with a conspiracy to access Yahoo’s network and the contents of webmail accounts that began in January 2014.  Baratov’s co-defendants, all of whom remain at large in Russia, all are Russian nationals and residents: Dmitry Aleksandrovich Dokuchaev, 33; Igor Anatolyevich Sushchin, 43; and Alexsey Alexseyevich Belan, a/k/a “Magg,” 29.  

According to his plea agreement, Baratov’s role in the charged conspiracy was to hack webmail accounts of individuals of interest to the FSB and send those accounts’ passwords to Dokuchaev for money.  As alleged in the indictment, Dokuchaev, Sushchin, and Belan compromised Yahoo’s network and gained the ability to access Yahoo accounts.  When they desired access to individual webmail accounts at a number of other internet service providers, such as Google and Yandex (based in Russia), Dokuchaev tasked Baratov to compromise such accounts.  

“The illegal hacking of private communications is a global problem that transcends political boundaries.  Cybercrime is not only a grave threat to personal privacy and security, but causes great financial harm to individuals who are hacked and costs the world economy hundreds of billions of dollars every year.  These threats are even more insidious when cyber criminals such as Baratov are employed by foreign government agencies acting outside the rule of law,” said U.S. Attorney Stretch.  “With the assistance of our law enforcement partners in Canada, we were able to track down and apprehend a prolific criminal hacker who had sold his services to Russian government agents.  This prosecution again illustrates that we will identify and pursue charges against hackers who compromise our country’s computer infrastructure.”

“Where a foreign law enforcement or intelligence agency recruits, tasks, or protects criminals targeting the United States and its companies or citizens, instead of taking steps to disrupt them and hold them accountable, the United States will leverage all of its available tools to expose that agency’s conduct and arrest those responsible,” said Acting Assistant Attorney General Boente. “Today’s plea exemplifies the Department’s commitment to pursuing, arresting, and bringing to justice even those hackers who work for a foreign law enforcement or intelligence organization.  We wish to thank the Canadian authorities for their skillful assistance in the investigation and arrest of Baratov and to acknowledge the contributions of the other nations and law enforcement services that provided invaluable assistance.”

“This case is a prime example of the hybrid cyber threat we’re facing, in which nation states work with criminal hackers to carry out malicious activities,” said Executive Assistant Director Paul Abbate of the FBI’s Criminal, Cyber, Response and Services Branch. “Today’s guilty plea illustrates how the FBI continues to work relentlessly with our private sector, law enforcement, and international partners to identify and hold accountable those who conduct cyber attacks against our nation, no matter who they’re working with or where they attempt to hide.”

“Today's guilty plea is a testament to the FBI's tireless commitment to tracking down cyber-criminals who think they can anonymously attack our country's cyber infrastructure,” said FBI Special Agent In Charge Bennett. “The FBI is determined to find, unmask, and identify criminals who steal the information of our citizens.  With the help of our law enforcement partners around the world, we were able to expose this type of criminal behavior and bring them to justice.”

As part of his plea agreement, Baratov not only admitted to agreeing and attempting to hack at least 80 webmail accounts on behalf of one of his FSB co-conspirators, but also to hacking more than 11,000 webmail accounts in total from in or around 2010 until his March 2017 arrest by Canadian authorities.  Baratov advertised his services through a network of primarily Russian-language hacker-for-hire web pages hosted on servers around the world.  He admitted that he generally spearphished his victims, sending them emails from accounts he established to appear to belong to the webmail provider at which the victim’s account was hosted (such as Google or Yandex).  Baratov’s spearphishing emails tricked victims into (i) visiting web pages he constructed to appear legitimate, as though they belonged to the victims’ webmail providers, and (ii) entering their account credentials into those web pages.  Once Baratov collected the victims’ account credentials, he sent his customers screen shots of the victims’ account contents to prove that he had obtained access and, upon receipt of payment, provided his customers the victims’ log-in credentials.

Baratov pleaded guilty to Count One and Counts Forty through Forty-Seven of the Indictment.  Count One charged Baratov, Dokuchaev, Sushchin, and Belan with conspiring to violate the Computer Fraud and Abuse Act by stealing information from protected computers in violation of 18 U.S.C. § 1030(a)(2) and causing damage to protected computers in violation of 18 U.S.C. § 1030(a)(5)(A).  Counts Forty through Forty-Seven charged Baratov and Dokuchaev with aggravated identity theft in violation of 18 U.S.C. § 1028A.  As part of the plea agreement, in addition to any prison sentence, Baratov agreed to pay restitution to his victims, and to pay a fine up to $2,250,000 (at $250,000 per count) with any assets he has remaining after satisfying a restitution award.

Baratov waived extradition from Canada and is being detained in California without bail.

Baratov’s sentencing hearing is scheduled for February 20, 2018, at 3:00 p.m., before the Honorable Vincent Chhabria, U.S. District Court Judge, in San Francisco.  The maximum statutory penalty for each count in violation of 18 U.S.C. §1030(b) is 10 years and a fine of $250,000, plus restitution, if appropriate.  The maximum statutory penalty for each count in violation of 18 U.S.C. §1028A is two years (mandatory consecutive) and a fine of $250,000, plus restitution, if appropriate.  However, any sentence, including restitution and fine, if any, 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 FBI’s San Francisco Field Office led the investigation that resulted in the charges announced today. The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of California and the U.S. Department of Justice National Security Division’s Counterintelligence and Export Control Section with support of the Justice Department’s Office of International Affairs.
 

SAN FRANCISCO- A federal grand jury indicted eleven people including eight alleged associates of the Hells Angels Sonoma County chapter (HASC), one alleged associate of the Fresno Hells Angels chapter, and one alleged associate of the Salem/Boston Hells Angels chapter for their respective roles in a Racketeer Influenced and Corrupt Organizations (RICO) conspiracy and for committing numerous related crimes including murder, assault, maiming, and witness intimidation, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The eleventh defendant is an alleged HASC associate who was charged with witness intimidation.  The indictment, filed October 10, 2017, was unsealed today following the arrest of nine of the defendants.  

The indictment describes the Hells Angels as a transnational violent outlaw motorcycle gang and the HASC as a subset of the gang whose members primarily operate in Sonoma County, Calif.  According to the indictment, HASC works cooperatively with other Hells Angels chapters to engage in criminal activity including murder, narcotics distribution, assault, robbery, extortion, illegal firearms possession, and obstruction of justice.  

“This week we have taken a significant step toward bringing to justice an alleged conspiracy whose aim has been to commit violent crimes,” said U.S. Attorney Stretch. “The indictment unsealed this morning describes an array of serious offenses allegedly committed by the defendants including conspiracy to commit murder, assault, maiming, home invasion robbery, extortion, and witness intimidation.  This operation proves once again the value of pooling the resources of the federal government with those of our state and local law enforcement partners—it is only through this coordination that we are able to stamp out violence in our communities.  I commend and thank all of our law enforcement partners for their extraordinary work in bringing this phase of the operation to a successful conclusion.”

The indictment alleges that HASC members and associates commit acts of violence to maintain and enhance membership and discipline within the gang, including violence against rival gang members, those perceived to be rival gang members, rivals in general, those who disrespect or commit violence against HASC members or other Hells Angels, friends or family, as well as HASC members and associates who violate the gang’s rules.  In this case, the indictment alleges, Brian Wendt committed the murder of an unnamed victim on July 15, 2014, at the Fresno Hells Angels clubhouse.  According to the indictment, co-conspirator Jonathan Nelson directed the victim to meet with Wendt and co-conspirator Russell Ott accompanied the victim from the Northern District of California to the Fresno clubhouse where Wendt committed the murder.  

According to the indictment, some of the defendants were involved in the RICO conspiracy as early as July and August of 2007 when Raymond Foakes allegedly committed bank fraud and money laundering to obtain a residence in which to establish an indoor marijuana cultivation operation.  Additional crimes that are alleged to have been committed as part of the conspiracy include a home invasion robbery, extortion, assault, maiming, and the illegal possession of weapons and drugs.  

HASC members also are alleged to have obstructed justice by threatening, intimidating, and retaliating against witnesses whom they believed to be cooperating with law enforcement and by destroying evidence and providing false information to law enforcement.  In this case, Brian Allen Burke is accused of attempting to intimidate and threaten and corruptly persuade a victim by threatening to shoot the victim with a firearm.  Burke is alleged to have attempted to persuade the victim not to provide evidence in the adjudication of Foakes’ violation of the conditions of his supervised release in a federal case.  

The precise charges against each defendant, as well as their ages and places of residence where known, are set out in the chart below. 
 

Defendant

Age/Residence

Charges

Statute

JONATHAN JOSEPH NELSON a/k/a Jon Jon

41/Santa Rosa

RICO Conspiracy

18 U.S.C. § 1962(d)

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

Assault With a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3) 

Use/Possession of a Firearm During a Crime of Violence

18 U.S.C. § 924(c)(1)(A)

RAYMOND MICHAEL FOAKES

a/k/a Ray Ray

54/ Rohnert Park

RICO Conspiracy

18 U.S.C. § 1962(d)

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

Assault With a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3) 

Witness Intimidation

18 U.S.C. § 1512(b)

RUSSELL ALLEN LYLES, JR.

a/k/a J.R.

36/Windsor, CA

RICO Conspiracy

18 U.S.C. § 1962(d)

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

Assault With a Dangerous Weapon in aid of Racketeering

18 U.S.C. § 1959(a)(3) 

JEREMY DANIEL GREER

37/Santa Rosa

RICO Conspiracy

18 U.S.C. § 1962(d)

Hobbs Act Robbery

(3 counts)

18 U.S.C. § 1951(a)(1)

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

Assault With a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3) 

Use/Possession of a Firearm During a Crime of Violence

18 U.S.C. § 924(c)(1)(A)

BRIAN WAYNE WENDT

40/Tulare

RICO Conspiracy

18 U.S.C. § 1962(d)

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

RUSSELL TAYLOR OTT, a/k/a Rusty

64/Santa Rosa

RICO Conspiracy

18 U.S.C. § 1962(d)

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

CHRISTOPHER RANIERI

a/k/a Rain Man

49/Lynn, MA

RICO Conspiracy

18 U.S.C. § 1962(d)

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

DAMIEN DAVID CESENA

36/Santa Rosa

RICO Conspiracy

18 U.S.C. § 1962(d)

Hobbs Act Robbery

18 U.S.C. § 1951(a)(1)

BRIAN ALLEN BURKE

a/k/a Bucky

37/ Windsor, CA

Witness Intimidation

18 U.S.C. § 1512(b)

JASON RANDALL CLIFF

a/k/a Agro

50

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

Assault With a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3) 

DAVID SALVATORE DIAZ, III

45

RICO Conspiracy

18 U.S.C. § 1962(d)

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.  The maximum statutory penalties for the crimes of which the defendants have been accused are as follows:
 

Charge

Statute

Maximum Statutory Penalty

RICO Conspiracy

18 U.S.C. § 1962(d)

Life imprisonment, $250,000 fine, five years’ supervised release, $100 special assessment

Conspiracy to Commit Murder in Aid of Racketeering

18 U.S.C. § 1959(a)(5)

10 years’ imprisonment, $250,000 fine, three years’ supervised release, $100 special assessment

Maiming in Aid of Racketeering

18 U.S.C. § 1959(a)(2)

30 years’ imprisonment, $250,000 fine, five years’ supervised release, $100 special assessment

Assault With a Dangerous Weapon in Aid of Racketeering

18 U.S.C. § 1959(a)(3) 

20 years’ imprisonment, $250,000 fine, three years’ supervised release, $100 special assessment

Use/Possession of a Firearm During a Crime of Violence

18 U.S.C. § 924(c)(1)(A)

A consecutive sentence of not less than seven years and not more than life, $250,000 fine, five years’ supervised release, $100 special assessment

Witness Intimidation

18 U.S.C. § 1512(b)

20 years’ imprisonment, $250,000 fine, three years’ supervised release, $100 special assessment

Hobbs Act Robbery

(each count)

18 U.S.C. § 1951(a)(1)

20 years’ imprisonment, $250,000 fine, three years’ supervised release, $100 special assessment

Further, additional fines, forfeitures, and restitution may be ordered; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Several of the defendants were arrested in Santa Rosa on Saturday, November 18, 2017, as part of a criminal enforcement operation.  All the defendants except Lyles, Wendt, Foakes, and Ranieri appeared before the Honorable Maria Elena James, U.S. Magistrate Judge, on November 20, 2017.  The following appearances are scheduled for the defendants before the Honorable Sallie Kim, U.S. Magistrate Judge:  Russell Ott, November 21, 2017 at 9:30 a.m. for identification of counsel; Brian Burke, November 21, 2017 at 9:30 a.m. for bond hearing; Jason Cliff, November 21, 2017 for identification of counsel; Jonathan Nelson, November 21, 2017 at 9:30 a.m. for identification of counsel; Jeremy Greer, November 21, 2017 at 9:30 a.m. for identification of counsel; David Diaz, November 27, 2017 at 9:30 a.m. for detention hearing; Damien Cesena, November 29, 2017 at 9:30 a.m. for detention hearing. 

Assistant U.S. Attorneys Kevin Barry and Erin Cornell are prosecuting the case.  The prosecution is the result of an investigation by the FBI, the Santa Rosa Police Department, the Sonoma county Sheriff’s Department, and the California Highway Patrol.  
 

SAN FRANCISCO – A federal grand jury indicted Douglas Peacock for traveling to a foreign country and engaging in illicit sexual conduct with a minor, announced United States Attorney Brian J. Stretch and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  Peacock was detained in the Southern District of Florida this morning by the Honorable Barry L. Garber after being arrested on the charge in Miami on November 10, 2017.  

According to the indictment, Peacock, 43, of Foster City, traveled from the United States to Jamaica on or about June 19, 2017, and thereafter engaged in illicit sexual conduct with a minor who was, at the time, under 12 years of age.  Specifically, Peacock, while in the pool of a family-friendly resort in Jamaica, molested a six-year-old US citizen minor victim.  Peacock is charged with one count of engaging in illicit sexual conduct in foreign places, in violation of 18 U.S.C. § 2423(c).  

An indictment merely alleges that crimes have been committed, and all defendants, including Peacock, are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a maximum statutory sentence of 30 years.  He is being returned to San Francisco and will appear before the Honorable Charles R. Breyer at that time.

The case is being prosecuted by Assistant U.S. Attorney Shiao Lee.  The case was investigated by HSI.
 

SAN FRANCISCO – Jamillah Thompson was sentenced today to 12 months and one day in prison and ordered to pay $85,616 in restitution for conspiring to file false tax returns, announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The sentence was handed down by the Honorable Charles R. Breyer, U.S. District Judge, following Thompson’s plea of guilty to the charge.  

Thompson, 25, of Antioch, Calif., pleaded guilty on June 27, 2017, to conspiring to file false tax returns.  According to the plea agreement, Thompson admitted to entering into an agreement with others to use the personal identifying information of taxpayers, including their names and social security numbers, to prepare and file forty false federal income tax returns.  These false returns sought refunds of $223,359, of which the IRS paid $85,616 to Thompson’s bank account and pre-paid debit cards.  

A federal grand jury indicted Thompson on January 8, 2015, charging her with conspiring to file false tax returns, in violation of 18 U.S.C. § 286, and wire fraud, in violation of 18 U.S.C. § 1343.  Pursuant to the plea agreement, Thompson pleaded guilty to the conspiracy charge and the wire fraud charge was dismissed.

In addition to the prison term, Judge Breyer also sentenced the defendant to a three-year period of supervised release and ordered that during that period defendant may not possess personal identifying information of others or assist in the preparation of any federal income tax returns for anyone other than herself.  The defendant was previously placed in custody where she remains to serve her sentence.  

Assistant U.S. Attorney Cynthia Stier is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.  
 

SAN JOSE – Diep Vo, aka Nancy Vo, was sentenced to 54 months in prison today for conspiring to file false claims for tax refunds, submitting false claims for tax refunds, mail fraud, and aggravated identity theft, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.  The sentence was handed down by the Honorable Beth Labson Freeman, U.S. District Judge following a guilty plea in June of this year.

According to documents and information provided to the court, Vo, 71, of San Jose, conspired with codefendant Trong Nguyen, aka John Nguyen, to use the personal information of homeless and unemployed individuals in the San Jose area to file fraudulent claims for refunds with the Internal Revenue Service (IRS).  Vo went to homeless shelters and halfway houses and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years.  Vo convinced people to write down their names and social security numbers and to sign blank income tax returns.  Vo and Nguyen then falsified the signed returns by including bogus income and income tax withheld amounts.  Pursuant to this scheme, the defendants sought fraudulent refunds totaling approximately $3.4 million.  Vo and Nguyen directed the IRS to send the refund checks to private mailboxes they controlled.  

On May 18, 2017, a federal grand jury indicted Vo charging her with one count of conspiracy to file false claims, in violation of 18 U.S. C. § 286; three counts of aiding and abetting in filing false claims, in violation of 18 U.S.C. §§ 287 & 2; two counts of mail fraud, in violation of 18 U.S.C. § 1341; and two counts of aggravated identity theft, in violation of 18 U.C.S. §§ 1028A & 2.  Pursuant to her plea, Vo pleaded guilty to all counts.

In addition to the term of prison imposed, Judge Freeman ordered Vo to serve three years of supervised release and to pay $700,816 in restitution to the IRS.  Judge Freeman also ordered the defendant to self-surrender on January 4, 2018, to begin serving her sentence.  

Nguyen previously pleaded guilty to submitting and conspiring to submit false claims for refund and was sentenced in September to 25 months in prison.  

Assistant U.S. Attorney Amber Rosen and former Trial Attorney Gregory Bernstein of the Tax Division are prosecuting the case.  U.S. Attorney Stretch and Acting Deputy Assistant Attorney General Goldberg thanked the special agents of IRS Criminal Investigation who conducted the investigation. 
 

OAKLAND—Daniel Rush was sentenced yesterday afternoon to 37 months in prison for breaching his fiduciary duties to the United Food and Commercial Workers Union (UFCW) and participating in a money laundering scheme, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, following Rush’s guilty pleas on June 22, 2017.

Rush pleaded guilty to one count of receiving an illegal payment as a union employee, in violation of 29 U.S.C. § 186(b)(1); one count of honest services wire fraud, in violation of 18 U.S.C. §§ 1343, 1346; and one count of conspiracy to commit structuring and money laundering, in violation of 18 U.S.C. § 371.  

According to his plea agreement, between 2010 and 2015, Rush engaged in a series of schemes to enrich himself in violation of federal law and his fiduciary duties: 

• In 2010, he conspired with attorney Marc L. TerBeek and others to structure approximately $420,000 in illegal drug proceeds into the banking system.  Although the money was a loan from someone in the cannabis industry, Rush deliberately mischaracterized monthly interest payments as consulting fees.
• While serving as the Organizing Coordinator for the unofficial cannabis division at UFCW, Rush gave an employer a corrupted neutrality agreement in exchange for personal loan forgiveness.  He also accepted kickbacks from TerBeek in exchange for referring cannabis businesses he encountered in his union role to TerBeek’s law practice.  
• Rush abused his position as Executive Treasurer and Board Member at the Instituto de la Raza Laboral (Instituto) in similar fashion by demanding and accepting remuneration  from TerBeek in exchange for establishing TerBeek as an approved legal provider for workers’ compensation cases at the Insituto.  
• Finally, Rush engaged in corrupt conduct as a Commissioner on the Berkeley Medical Cannabis Commission when he attempted to extort a business that had applied for a dispensary permit.  Using TerBeek as an intermediary, Rush communicated that if the applicant did not offer him a salaried job, with benefits, he would take adverse action against its application. 

In sentencing Rush, Judge Gilliam commented that “the case reflects large-scale, long-lasting corruption on the defendant’s part.”

In addition to the prison term, the Court also sentenced the Rush to a three-year term of supervised release and ordered him to pay a fine of $7500.  Rush’s coconspirator, attorney Marc L. TerBeek pleaded guilty on February 16, 2017, to one count of making an illegal payment to a union employee, in violation of 29 U.S.C. § 186(a) and one count of willfully violating an anti-structuring regulation, in violation of 12 U.S.C. § 1956.  Judge Gilliam scheduled TerBeek’s sentencing hearing for November 27, 2017.

The prosecution is the result of an investigation by the FBI and the Internal Revenue Service-Criminal Investigation Division.
 

A California resident was sentenced to 54 months in prison today for conspiring to file false claims for tax refunds, submitting false claims for tax refunds, mail fraud, and aggravated identity theft, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian J. Stretch for the Northern District of California.

According to documents and information provided to the court, Diep Vo aka Nancy Vo, 71, conspired with codefendant Trong Nguyen aka John Nguyen, to use the IDs of homeless and unemployed individuals in the San Jose, California area to file fraudulent claims for refunds with the Internal Revenue Service (IRS).  Vo went to homeless shelters and halfway houses and falsely represented to individuals that she could get them money from a government program designed to assist people who had not worked in previous years.  Vo convinced people to write down their names and social security numbers and to sign blank income tax returns.  Vo and Nguyen then falsified the signed returns by including bogus income and income tax withheld amounts, and seeking fraudulent tax refunds totaling approximately $3.4 million.  Vo and Nguyen directed the refund checks to private mailboxes they controlled. 

In addition to the term of prison imposed, U.S. District Court Judge Beth Labson Freeman ordered Vo to serve three years of supervised release and to pay $700,816 in restitution to the IRS. Nguyen previously pleaded guilty to submitting and conspiring to submit false claims for refund and was sentenced in September to 25 months in prison.

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS Criminal Investigation, who conducted the investigation. Assistant U.S. Attorney Amber Rosen and former Trial Attorney Gregory Bernstein of the Tax Division prosecuted the case.

A former U.S. Secret Service Special Agent, who had been a member of the Baltimore Silk Road Task Force, was sentenced to prison today on charges of money laundering, announced Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, U.S. Attorney Brian J. Stretch of the Northern District of California, Chief Don Fort of the Internal Revenue Service Criminal Investigation (IRS-CI), and Special Agent in Charge John F. Bennett of the FBI’s San Francisco Division and Special Agent in Charge David Green of the Department of Homeland Security Office of Inspector General, Houston Field Office.

Shaun W. Bridges, 35, of Laurel, Maryland, was sentenced to 24 months in prison by U.S. District Judge Richard Seeborg in San Francisco following his earlier guilty plea to one count of money laundering.  Judge Seeborg ordered that the sentence be served consecutively to the 71-month sentence that Bridges is currently serving related to his 2015 conviction for a similar theft.  Bridges was also ordered to forfeit approximately 1,500 bitcoin and other fiat currency, which is currently valued at approximately $10.4 million.

Bridges had been a Special Agent with the U.S. Secret Service for approximately six years in the Baltimore Field Office.  Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road, a covert online marketplace for illicit goods, including drugs.  Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets of the Baltimore Task Force, including Ross Ulbricht, aka “Dread Pirate Roberts,” who ran the Silk Road from the Northern District of California. 

Prior to reporting to prison to begin serving his sentence for the 2015 conviction, Bridges was arrested and taken into custody on new charges related to another theft of approximately 1,600 bitcoin from a digital wallet belonging to the U.S. government.  According to admissions made in connection with his guilty plea, Bridges admitted to using a private key to access a digital wallet belonging to the U.S. government, and subsequently transferring the bitcoin to other digital wallets at other bitcoin exchanges to which only he had access.  As part of his plea, Bridges agreed to turn over the stolen bitcoin to U.S. agents.              

The case is being investigated by the FBI’s San Francisco Division, IRS-CI’s Washington, D.C. Field Office Cyber Crimes Unit and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The case is being prosecuted by Assistant U.S. Attorney William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.  Assistant U.S. Attorney David Countryman handled the asset forfeiture aspects of the case.    

SAN FRANCISCO – A former U.S. Secret Service Special Agent, who had been a member of the Baltimore Silk Road Task Force, was sentenced to prison today on charges of money laundering, announced U.S. Attorney Brian J. Stretch, Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Chief Don Fort of the Internal Revenue Service Criminal Investigation (IRS-CI), Special Agent in Charge John F. Bennett of the FBI’s San Francisco Division, and Special Agent in Charge of the Department of Homeland Security Office of the Inspector General Houston Field Office David Green.

Shaun W. Bridges, 35, of Laurel, Md., was sentenced to 24 months in prison by U.S. District Judge Richard Seeborg in San Francisco following his earlier guilty plea to one count of money laundering.  Judge Seeborg ordered that the sentence be served consecutively to a previous sentence that Bridges is currently serving.  Bridges was also ordered to forfeit approximately 1,500 bitcoin and other fiat currency which has a current value of approximately $10.4 million.   

Bridges had been a Special Agent with the U.S. Secret Service for approximately six years in the Baltimore Field Office.  Between 2012 and 2014, he was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road, a covert online marketplace for illicit goods, including drugs.  Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify and prosecute targets of the Baltimore Task Force, including Ross Ulbricht, aka “Dread Pirate Roberts,” who ran the Silk Road from the Northern District of California.  In 2015, Bridges was arrested and taken into custody on charges related to the theft of approximately 1,600 bitcoin from a digital wallet belonging to the U.S. government.  According to admissions made in connection with his guilty plea, Bridges admitted to using a private key to access a digital wallet belonging to the U.S. government, and subsequently transferring the bitcoin to other digital wallets at other bitcoin exchanges to which only he had access.  As part of his plea, Bridges agreed to turn over the stolen bitcoin to U.S. agents.                 
  
The case is being investigated by the FBI’s San Francisco Division, IRS-CI’s Washington, D.C. Field Office Cyber Crimes Unit, and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The case is being prosecuted by Assistant U.S. Attorney William Frentzen and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section.  Assistant U.S. Attorney David Countryman handled the asset forfeiture aspects of the case.    
 

SAN FRANCISCO – Chariot Transit, Inc. has entered a landmark settlement agreement with the United States Attorney’s Office to resolve allegations that the San Francisco-based company violated Title III of the Americans with Disabilities Act (ADA) by discriminating against customers with disabilities, announced United States Attorney Brian J. Stretch.  As part of the settlement, Chariot will pay a $50,000 civil penalty to the United States and take numerous steps to ensure that it provides equivalent service to individuals with disabilities.

Chariot, a private transportation company with its principal place of business in San Francisco, provides private commuter transportation services in the San Francisco Bay Area, New York City, and Austin, Texas. Customers may request rides through a smartphone application, and the Chariot commuter vehicle stops at pre-determined locations if customers have requested a vehicle to stop there.  An investigation by the United States determined that from July 2015 to November 2016, Chariot may have violated the ADA by leasing at least 161 new 14-passenger vehicles for use in its services in the San Francisco Bay Area and Austin, none of which were readily accessible to and usable by individuals with disabilities, including individuals who use wheelchairs. During this time, Chariot’s website and individual responses to customer inquiries indicated that Chariot only provided service to individuals who use wheelchairs if they could transfer to a seat and if there was space for their wheelchair that did not take the seat of another passenger; those who required an accessible vehicle would only be provided “accessible resources in the region.”  

“Passengers with disabilities are entitled to equal access to the innovative forms of transportation available in today’s market,” said United States Attorney Stretch. “With this agreement, Chariot has pledged its commitment to ensure individuals who use wheelchairs receive the same service as other passengers.”

Pursuant to the settlement, Chariot will pay a $50,000 civil penalty to the United States and will make the following changes:

• Operate sufficient readily accessible vehicles in each market to ensure individuals with disabilities receive equivalent service. 
• Not require passengers with disabilities, including individuals who use wheelchairs, to book a Chariot trip differently from any other passenger.  
• Ensure the Chariot smartphone application requests all relevant information from passengers such that a separate phone call or message with Chariot staff will not be required for passengers with disabilities. 
• Conduct ADA training for employees who interact with commuter customers, commuter vehicles, or the commuter customer-facing smartphone application (including product design employees, customer success managers and agents, Charioteers (drivers), captains, marketing employees, brand ambassadors, dispatchers, operations employees, and general managers).  The training will include instruction on the ADA requirements for private entities operating a transportation system and Chariot’s policies and practices regarding accommodation of individuals with disabilities.

Assistant U.S. Attorney Erica Blachman Hitchings is handling the matter on behalf of the U.S. Attorney’s Office for the Northern District of California.

OAKLAND – Marcus Jones was sentenced to ten years in prison and a $100,000 fine today after pleading guilty to being a felon in possession of a firearm, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence was handed down by the Honorable Jon S. Tigar, United States District Judge.

On August 11, 2017, Jones, 33, of Oakland, pleaded guilty without a written agreement to being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g).  As part of the guilty plea, Jones admitted to possessing a firearm and ammunition after sustaining a felony conviction.  During the sentencing hearing, Judge Tigar accepted the fact that Jones was arrested after he left Oakland International Airport and exited his vehicle near his residence.  The judge found that when Jones was arrested, he possessed in his waistband a black .40 caliber fully loaded semi-automatic Glock handgun with a 22 round extended magazine.  Jones also possessed a bulletproof vest, $19,478.00 in cash on his person, and an additional $14,980 in his luggage.  Judge Tigar also found that additional items retrieved from Jones’s residence belonged to him; the additional items include an AK-47 assault rifle, 1,268 grams of marijuana, $240,280.00 in cash, and evidence of credit card fraud including credit-card-making devices.  Judge Tigar concluded that all these items, including the Glock handgun found in defendant’s waistband during his arrest, were used to facilitate a drug trafficking operation.  During the sentencing hearing, Judge Tigar stated:

Defendant’s attempt this morning to explain his possession of a firearm and a bulletproof vest because people are constantly shooting at him were unpersuasive.  And the idea that he has no idea why it is that people in various locations in the United States are shooting at him is simply incredible.  It defies belief. . . . When I include the relevant conduct, the nature and severity of the offense is greater than any felon in possession case that I have seen.  . . . [The defendant] is a danger to the community.”

A federal grand jury indicted Jones on April 6, 2017, charging him with a single count of being a felon in possession of a firearm.  Pursuant to his plea, defendant pleaded guilty to the charge.  

In addition to the prison term and the $100,000 fine, Judge Tigar also sentenced Jones to a three-year period of supervised release, to commence after Jones completes his prison sentence.  Jones has been in custody since his arrest and will begin serving his sentence immediately.   

Assistant U.S. Attorney Bill Gullotta is prosecuting the case with assistance from Noble Hughes, Julissa Rey, and Katie Turner.  The prosecution is the result of an investigation by the San Leandro Police Department and the FBI. 
 

OAKLAND – Jeremy Luckett was sentenced today to 235 months in prison for his role in a conspiracy to distribute, and to possess with the intent to distribute, methamphetamine, announced United States Attorney Brian J. Stretch; Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf; and Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin.  The sentence was handed down by the Honorable Haywood S. Gilliam, Jr., U.S. District Judge, following a guilty plea in which Luckett admitted participating in an operation to smuggle methamphetamine, cocaine, and marijuana through the Oakland International Airport in violation of security requirements.

Luckett, 38, of Oakland, pleaded guilty on May 8, 2017, to one count of conspiring to distribute, and to possess with intent to distribute, fifty grams and more of actual methamphetamine, in violation of 21 U.S.C. §§ 846 and 841(b)(1)(A)(viii).  According to the plea agreement and the government’s sentencing memorandum, from at least January 2011, to April 28, 2014, Luckett was part of a conspiracy to smuggle narcotics through the Oakland airport by violating airport security measures to transport methamphetamine, cocaine, and marijuana to Hawaii.  In order to carry out his scheme, the defendant conspired with a Southwest Airlines employee to smuggle the narcotics into the Oakland Airport around the Transportation Security Administration checkpoint where the drugs were eventually provided to couriers who transported the narcotics on outbound commercial flights from Oakland to Hawaii.  Luckett recruited some of the couriers and typically paid them cash before and after their smuggling runs.  Luckett also purchased or directed a co-conspirator to purchase the plane tickets and hotel accommodations used to carry out the conspiracy.  The drug smuggling operation came to an end on April 28, 2014, when one of the couriers became intoxicated and was denied entry to her flight to Hawaii.  The courier was subsequently arrested and the narcotics provided to her for transport were seized.  The narcotics intended for distribution in Hawaii included packages that contained 1,741.7 grams of mixtures and substances containing 1,690.2 grams of actual (pure) methamphetamine as well as 998.6 grams of cocaine.

On August 11, 2016, Luckett was charged by a federal grand jury in a superseding indictment.  Luckett was charged with one count of conspiracy to enter an airport area in violation of security requirements and to defraud the United States, in violation of 18 U.S.C. § 371; 33 counts of entering an airport area in violation of security requirements, in violation of 49 U.S.C. §§ 46314(a) and 46314(b)(2); one count of conspiracy to distribute, and to possess with intent to distribute, methamphetamine and cocaine, in violation of 21 U.S.C. § 846; one count of distribution and possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1); one count of distribution and possession with intent to distribute cocaine, in violation of 21 U.S.C. § 841(a)(1); and one count of money laundering with intent to promote drug trafficking, in violation of 18 U.S.C. § 1956(a)(1)(A)(i).   Pursuant to his guilty plea, Luckett pleaded guilty to one count of conspiring to distribute and to possess with intent to distribute methamphetamine.  The remaining counts were dismissed.  

In addition to the prison term, Judge Gilliam also sentenced the defendant to a five-year period of supervised release.  The defendant, who is in custody, will begin serving the sentence immediately.

Luckett’s co-defendants, Damian Lewis, Christopher Cross, Anthony Turner, Ja’Del McField, Brianna Holloway, Laura Turner, and Katrice Day, pleaded guilty to their respective roles in the scheme.  Of these co-defendants, all except for Katrice Day await sentencing.  Judge Gilliam sentenced Katrice Day on July 31, 2017, to three years of probation.     

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

Anyone wishing to report suspected public corruption is encouraged to contact the FBI public corruption hotline at 415-553-7400 ext. 5 or at PublicCorruption.SF@fbi.gov.
 

SAN FRANCISCO – Scott Loren Steever was sentenced to 15 months in prison and ordered to pay $283,689.16 in restitution for his role in a conspiracy to commit wire fraud and to commit money laundering, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The sentence was handed down on October 25, 2017, by the Honorable Edward M. Chen, U.S. District Judge, following Steever’s plea of guilty to the charges.

According to the plea agreement, Steever, 60, of Rohnert Park, Calif., admitted that during the course of the offense, he was a licensed attorney and was working in a law firm with his co-defendant, Robert Anderson.  In 2009, the law firm became financially distressed and experienced persistent cash flow problems.  Between November 2009 and August 2012, Steever and his co-defendant took funds from a client’s trust account, used those funds to pay the firm’s expenses, including payment of Steever’s and his law partner’s draws, and later misrepresented that those funds were still held in a trust account for the client’s benefit, even though all of the funds had been spent.  As a result of the scheme, the client suffered a net loss of $210,189.16.  

A federal grand jury indicted Steever on December 18, 2014, charging him with one count of conspiracy to engage in wire 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); six counts of wire fraud, in violation of 18 U.S.C. §§ 1347 and 2; and one count of money laundering, in violation of 18 U.S.C. § § 1957 and 2.  On November 18, 2016, Steever pleaded guilty to the two conspiracy counts and the remaining charges were dismissed.    

In addition to the prison term, Judge Chen also sentenced the defendant to a 3-year period of supervised release.  Further, for losses caused by his offenses and other misuse of client funds entrusted to his former law firm, Steever agreed to pay, and Judge Chen ordered Steever to pay, restitution to the client in the amount of $210,189.16, and restitution to two other victims in the amounts of $45,000 and $28,500—for a total of $283,689.16 in restitution.  Steever will begin serving his prison term on January 8, 2018.

On March 9, 2016, Robert Anderson pleaded guilty to conspiracy to commit wire fraud and conspiracy to commit money laundering.  Judge Chen has scheduled Anderson’s sentencing for December 13, 2017.  

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

Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714, Phillip L.B. Halpern (619) 546-6964, Helen Hong (619) 546-6990, Billy Joe McLain (619) 546-6762

NEWS RELEASE SUMMARY – October 27, 2017

SAN DIEGO – Mexican businessman Jose Susumo Azano Matsura was sentenced in federal court today to three years in prison for making almost $600,000 in illegal political contributions to candidates Bonnie Dumanis and Bob Filner in the 2012 San Diego mayoral campaign in an effort to buy influence. U.S. District Judge Michael M. Anello also ordered Azano to pay a $560,955 fine.

In September 2016, after six weeks of trial and five days of deliberations, a federal jury in San Diego returned guilty verdicts against Azano, political consultant Ravneet Singh and Azano’s son, Edward Susumo Azano Hester. Each was convicted of felony counts associated with the illegal campaign contributions.

According to evidence presented at trial, Azano, Singh and others conspired to inject hundreds of thousands of dollars in cash and in-kind consulting services to the Dumanis and Filner campaigns, despite the fact that Azano’s foreign national status made such contributions illegal. To conceal his connection to these contributions, Azano arranged with his son Edward Hester and others to funnel this illegal foreign money through third person and corporate “straw donor” contributions.

“Today’s sentence serves as stark condemnation of Azano’s willful efforts to undermine the fundamental principles of American democracy,” said Executive U.S. Attorney Blair C. Perez. “The judge sent a message today: The integrity of our election system matters, and attempts to illegally manipulate it will be punished.”

FBI Special Agent in Charge Eric S. Birnbaum stated, “Jose Susumo Azano Matsura attempted to manipulate our electoral system and undercut our representative democracy. Our democracy is contingent upon a righteous electoral process and this case is evidence of the FBI’s steadfast commitment to upholding the strength and confidence in our system of government for the citizens of San Diego.”

“Motivated by greed and ego, Azano laundered nearly $600,000 in illegal foreign national campaign contributions into the 2012 election for San Diego’s mayor,” stated IRS Criminal Investigation’s Special Agent in Charge R. Damon Rowe. “Fair and legal elections are a fundamental institution of America. IRS Criminal Investigation is proud to assist our law enforcement partners in lifting the veil of secrecy and leveling the playing field for all candidates.”

Azano was convicted of all 36 campaign finance fraud-related counts he faced; he was also convicted in a subsequent trial of illegally possessing a semi-automatic 9 mm Sig Sauer handgun with a laser scope. Judge Anello ordered that Azano be immediately taken into custody.

According to the government’s sentencing memo, Azano was the unquestioned leader of the scheme who choreographed every move and used coercion to force business associates - who depended on him financially - to make campaign contributions to Azano’s favored candidates. Azano then reimbursed the straw donors, thus obscuring the nature and source of the political contributions

In return for his money, Azano sought to buy political influence and support for his vision: “Miami West” – a San Diego waterfront development project with a yacht marina, a branded five-star hotel and luxury bayside condominiums, a development project that promised Azano hundreds of millions in profit. Azano also demanded access, like the ability to summon influential political figures to his home on a moment’s notice or to obtain letters of reference to secure his son’s admission to the University of San Diego.

According to testimony at trial, Azano’s illegal money made the difference in electing Bob Filner as mayor. Within weeks after the election, with the mayor squarely in his pocket, Azano met in London with renowned, Middle East-based master developers to refine his plans for “Miami West.” A month after the election, Azano invited the developers to fly halfway around the globe to meet with him and Mayor Filner about the Miami West project, and just four days after Filner’s inauguration, that meeting occurred, catered by Nobu, at Azano’s Coronado Cays mansion.  

Filner resigned six months later amid allegations of sexual misconduct.

Also convicted in the same trial were political consultant Ravneet Singh, and Azano’s son, Edward Hester based on their conduct associated with the illegal campaign contributions. Singh was sentenced to 15 months in prison. Hester was sentenced to a 12-month term of probation. 

Assistant U.S. Attorneys Mark W. Pletcher, Phillip L.B. Halpern, Helen Hong and Billy Joe McLain of the U.S. Attorney’s Office for the Southern District of California prosecuted the case. 

DEFENDANT                                   Case Number: 14cr0388-MMA 

Jose Susumo Azano Matsura              Age: 52           Guadalajara, Mexico

SUMMARY OF CONVICTIONS

Count 1: Conspiracy to Commit Offenses Against the United States – Title 18, U.S.C., Sec. 371.

Maximum Penalties: Up to five years in prison and $250,000 fine

Count 3: Donation and Contribution by a Foreign National Aggregating $25,000 or more – Title 2, U.S.C., Secs. 437g (d) (1) (A) (i) and 441e (A) (1).

Maximum Penalties: Up to five years in prison and $250,000 fine

Count 4: Contribution in the Name of Another Aggregating $25,000 or more – Title 2, U.S.C., Secs. 437g(d) (1) (A) (i) and 441f.

Maximum Penalties: Up to five years in prison and $250,000 fine

Counts 5-37: Falsification of Records – Title 18, U.S.C., Sec. 1519.

Maximum Penalties: Up to 20 years in prison per count and $250,000 fine per count.

AGENCIES

Federal Bureau of Investigation

Internal Revenue Service, Criminal Investigation

San Diego Police Department

SAN FRANCISCO – Mariano Ramos-Lopez was sentenced today to 36 months in prison for possessing with the intent to distribute nearly a kilogram of heroin, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin.  The sentence was handed down by the Honorable William H. Orrick, U.S. District Judge.

According to his plea agreement, Ramos-Lopez, 37, of Porterville, Calif., admitted that in December of 2016, he offered to sell one kilogram of heroin to an individual and then traveled from Porterville to Foster City to make the sale.  Ramos-Lopez acknowledged he arrived at a hotel parking lot in Foster City in possession of 946.07 grams of heroin.  Ramos-Lopez was arrested after retrieving the drugs from a hidden compartment of his pickup truck.  

On January 31, 2017, a federal grand jury indicted Ramos-Lopez charging him with one count of possession intent to distribute heroin, in violation of 21 U.S.C. § 841(a)(1).  On July 10, 2017, Ramos-Lopez pleaded guilty to the charge.  

In addition to the prison term, Judge Orrick ordered Ramos-Lopez to serve a five-year period of supervised release.  Ramos-Lopez is in custody and will begin serving the sentence immediately.

Assistant U.S. Attorney Nikhil Bhagat is prosecuting the case with assistance from Ana Guerra.  The prosecution is the result of an investigation by the DEA, the San Mateo County Narcotics Task Force, and the Coast Guard Investigative Service.
 

SAN FRANCISCO – This Saturday, October 28, from 10 a.m. to 2 p.m. local time the federal Drug Enforcement Administration and its local law enforcement, community and tribal partners will give the public its 14th opportunity in seven years to prevent pill abuse and theft by ridding their homes of potentially dangerous expired, unused, and unwanted prescription drugs.

Individuals can take pills and other solid forms of medication to one of almost 5,000 collection sites manned by more than 4,000 partners nationwide. (DEA cannot accept liquids, needles or sharps.) They can find nearby collection sites at www.DEATakeBack.com or by calling 800-882-9539. The service is free and anonymous, no questions asked.

“The Department of Justice is committed to ensuring that unused and unwanted prescription drugs are disposed of properly,” said United States Attorney Brian J. Stretch.  “The DEA Takeback program is one proven way we can ensure that these potentially dangerous drugs no longer pose a threat to our community.”

“Disposing of leftover painkillers or other addictive medicines in the house is one of the best ways to prevent a member of your family from becoming a victim of the opioid epidemic,” said DEA Acting Administrator Robert W. Patterson. “More people start down the path of addiction through the misuse of opioid prescription drugs than any other substance. The abuse of these prescription drugs has fueled the nation’s opioid epidemic, which has led to the largest rate of overdose deaths this country has ever seen.”

“America is in the midst of a prescription drug crisis and the home medicine cabinet is a major source.  Let’s work together to help put an end to this epidemic by cleaning out that cabinet and disposing of unwanted medication at a take back location,” stated DEA Special Agent in Charge John J. Martin.”  

This initiative addresses a vital public safety and public health issue. Medicines that languish in home cabinets are highly susceptible to diversion, misuse, and abuse. Rates of prescription drug abuse in the U.S. are alarmingly high, as are the number of accidental poisonings and overdoses due to these drugs.  Studies show that a majority of abused prescription drugs are obtained from family and friends, including from the home medicine cabinet. DEA launched its prescription drug take back program when both the Environmental Protection Agency and the Food and Drug Administration advised the public that their usual methods for disposing of unused medicines—flushing them down the toilet or throwing them in the trash—posed potential safety and health hazards.

Last April the public turned in 450 tons (900,000 pounds) of prescription drugs at almost 5,500 sites operated by the DEA and more than 4,200 of its state and local law enforcement partners. Overall, in its 13 previous Take Back events, DEA and its partners have taken in over 8.1 million pounds—more than 4,050 tons—of pills. 
 

SAN JOSE – Jennifer Yang and her business partner Daniel Wu were charged with conspiracy to defraud the United States and a number of related crimes in connection with a scheme to fraudulently obtain immigration benefits through the government’s “EB-5” visa program, announced United States Attorney Brian J. Stretch; U.S. State Department, Diplomatic Security Service, San Francisco Field Office Special Agent in Charge Matthew Perlman; and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.  The superseding indictment alleges that Yang and Wu submitted to the government fraudulent documents that claimed applicants were creating new commercial enterprises when, in fact, the documents contained information about fake jobs and bogus investments.  

The charges are set out in a superseding indictment filed October 12, 2017.  As described in the superseding indictment, the EB-5 visa program is administered by the U.S. government through both the Department of State and the Department of Homeland Security.  The program enables foreigners and their immediate family members to obtain a path to Legal Permanent Residency (“LPR”) in the United States by investing in a commercial enterprise.  The investment must amount to $1,000,000—or $500,000 if made in certain geographical areas with low employment rates.  An applicant may be able to obtain full LPR status after two years, if the commercial enterprise complies with certain regulations, including the requirement to create 10 or more jobs.    

According to the superseding indictment, Yang, 50, of Palo Alto, is a licensed member of Bar of the District of Columbia.  She held herself out as a legal specialist for persons interested in applying for EB-5 visa benefits.  Since 2007 and until 2016, the defendants filed EB-5 visa petitions for at least seven foreign investors who supplied Yang and Wu, 54, of Las Vegas, with at least four-million dollars for the stated purpose of investment into a commercial enterprise.  Nevertheless, instead of making legitimate investments that created real jobs, the superseding indictment alleges the defendants created and submitted fraudulent records to deceive the government into issuing benefits on the basis of fake employees.  In at least some cases, the information about the bogus employees was created using the personal identifying information of third-parties, without the third-party individuals’ knowledge.  Further, the superseding indictment alleges the defendants created documents that misstated the true manner in which the investment monies were used, which in some cases was not for the new enterprises, but instead for the personal benefit of defendants. In this way, the superseding indictment alleges, defendants obtained benefits for clients based on jobs and businesses that did not, in fact, exist.  

Yang and Wu both are charged with one count of conspiracy to defraud the United States and to commit visa fraud, mail fraud, and aggravated identity theft, all in violation of 18 U.S.C. § 371; three counts of visa fraud, in violation of 18 U.S.C. § 1546(a); two counts of mail fraud, in violation of 18 U.S.C. § 1341; and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  In addition, Yang is charged with two counts of money laundering, in violation of 18 U.S.C. § 1957. 

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

DEFENDANT

STATUTE

CHARGE

MAXIMUM PENALTY

Yang and Wu

18 U.S.C. § 371

Conspiracy to Commit Visa Fraud, Mail Fraud, Aggravated Identity Theft, and to Defraud the United States

Maximum term of imprisonment: 5 years

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Restitution

Forfeiture

Yang and Wu

18 U.S.C. § 1546(a)

Visa Fraud

Maximum term of imprisonment: 10 years

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Restitution

Forfeiture

Yang and Wu

18 U.S.C. § 1341

Mail Fraud

Maximum term of imprisonment: 20 years

Maximum fine: $250,000 Maximum term of supervised release: 3 years

Restitution

Forfeiture

Yang and Wu

18 U.S.C. § 1028A

Aggravated Identity Theft

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

Maximum fine: $250,000

Maximum term of supervised release: 3 years

Yang

18 U.S.C. 1957

Money Laundering

Maximun prison sentence: 10 years

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

Maximum term of supervised release: 3 years

Restitution

Both defendants made an initial appearance today before the Honorable Nathanael Cousins, United States Magistrate Judge, and pleaded not guilty to the charges.  The defendants were released, each on a $500,000 bond.  A hearing for review of the bond conditions was scheduled for November 1, 2017, at 1:30 pm before the Honorable Howard R. Lloyd, U.S. Magistrate Judge.  In addition, a hearing before U.S. District Judge Lucy Koh is scheduled for December 20, 2017.  

Assistant United States Attorney Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation led by the U.S. Department of State Diplomatic Security Service’s representative to the Document and Benefit Fraud Task Force (DBFTF), overseen by the Department of Homeland Security’s Homeland Security Investigations. The DBFTF is a multi-agency task force that coordinates investigations into fraudulent immigration documents. U.S. Citizenship and Immigration Service’s Office of Fraud Detection and National Security also assisted with the investigation.
 

SAN FRANCISCO – A federal jury convicted Jorge Cornejo of making threats by phone and text message, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The guilty verdict was issued late yesterday following a week-long trial before the Honorable Charles R. Breyer, U.S. District Judge.

According to the evidence presented at trial, Cornejo, 41, formerly of New York, was confronted for various misrepresentations he made about his connection to San Francisco and New York night clubs.  After being confronted, Cornejo made a series of threats to individuals located in the Northern District of California. Cornejo communicated his threats from Las Vegas, Nevada.  Cornejo also used a cellular telephone to send a number of threatening text messages to nightclub owners in San Francisco and New York on May 10, 2017.  

A federal grand jury issued a superseding indictment on August 3, 2017, charging the defendant with two counts of making interstate threats to injure, in violation of 18 U.S.C. § 875(c).  Pursuant to yesterday’s verdict, Cornejo has been found guilty of both counts.  

Judge Breyer scheduled a hearing for sentencing for January 16, 2018.  The maximum statutory penalty for each count of violating 18 U.S.C. § 875 (c) is five years in prison and a fine of $250,000.  In addition, the court could impose a term of supervised release, however, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case was tried by Assistant United States Attorneys Meredith Osborn and Shailika Shah Kotiya, with assistance from Alycee Lane.  The prosecution is the result of an investigation by the FBI. 
 

SAN JOSE- A federal grand jury indicted five individuals for their respective roles in an alleged conspiracy to engage in a methamphetamine trafficking network, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and U.S. Drug Enforcement Administration (DEA) Special Agent in Charge John J. Martin.  A sixth defendant was named in the indictment and charged along with one of the conspirators with using a telephone to facilitate the sale of methamphetamine.  The indictment was unsealed today.

The indictment alleges that between March 2017 and September 2017, the conspiracy involved an agreement to distribute and to possess with intent to distribute methamphetamine.  In addition, some of the defendants were charged with related crimes, including possessing with intent to distribute methamphetamine, distributing methamphetamine, and use of a communication facility to commit a felony drug offense. The precise charges against each defendant, as well as their ages and places of residence, are set out in the chart below. 
 

Defendant

Age/

Residence

Charges

Statute

OSCAR GONZALEZ QUEVEDO, a/k/a “Oscar Quevedo Gonzalez,” a/k/a “El Oso,”

34/Mexicali, Mexico

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846

Distribution of 500 Grams or More of Methamphetamine (3 counts)

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

FRANCISCO PUGA CAMACHO, a/k/a “Francisco Puga Garcia,”

a/k/a/ “Frank Puga,”

48/Salinas, CA

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846

Possession With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(iii)

Distribution of 500 Grams or More of Methamphetamine (3 counts)

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

Use of Communication Facility (Telephone) to Commit Felony Drug Offense

21 U.S.C. § 843(b)

HORACIO QUINTANA

22/Salinas, CA

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846

Possession With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

Distribution of 500 Grams or More of Methamphetamine (2 counts)

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

JOEL QUINTANA MEDINA

25/Salinas, CA

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846

Distribution of 500 Grams or More of Methamphetamine (2 counts)

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

JESUS BERNAL NUNEZ, a/k/a “Animal,” a/k/a “Jesse James,”

33/Salinas, CA

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846

Distribution of 500 Grams or More of Methamphetamine

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

NESTOR TAVAREZ

50/Gonzalez, CA

Use of Communication Facility (Telephone) to Commit Felony Drug Offense

21 U.S.C. § 843(b)

The indictment was filed September 28, 2017, and describes four transactions in which two or more of the defendants are alleged to have possessed or distributed methamphetamine.  

Each of the following defendants was arrested and appeared in court on October 12, 2017:  Francisco Puga Camacho, Joel Quintana Medina, and Jesus Bernal Nunez Nestor Tavarez.   The coordinated arrests and searches took place in Salinas, Greenfield, Castroville, and Gonzalaz.  The defendants made their initial appearances before Magistrate Judge Nathanael M. Cousins on October 12, 2017.  Quevedo, pictured below, remains a fugitive.

The case has been assigned to the Honorable Lucy H. Koh, United States District Judge, for Northern District of California.

In addition to the indictment, two criminal complaints were filed as a result of this investigation, and two additional defendants were arrested.  

Alejandro Dominguez Hernandez was charged by complaint with distribution of a controlled substance in violation of 21 USC§ 841 (a)(1), (b)(1)(B).  According to the affidavit supporting the complaint, Hernandez distributed approximately one pound of methamphetamine to a confidential source on October 5, 2017, in Salinas, California.  

Ernesto Calderon Ramirez was charged by complaint with distribution of a controlled substance in violation of 21 USC§ 841 (a)(1), (b)(1)(B).  According to the affidavit supporting the complaint, Ramirez attempted to dispose of quantities of methamphetamine and cocaine when agents executed a search warrant at a residence in Greenfield, California.

Indictments and Complaints merely allege that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  The maximum statutory penalties for the crimes of which the defendants have been accused are as follows:
 

CHARGE

STATUTE

MAXIMUM PENALTY

(per count)

Conspiracy to Possess With Intent to Distribute 500 Grams or More of Methamphetamine

21 U.S.C. §§ 846, 841(a)(1) and (b)(1)(A)

Minimum 10 years imprisonment

Maximum lifetime imprisonment

Minimum 5 years supervised release following incarceration

Maximum lifetime supervised release

Maximum $10,000,000 fine

Possession With Intent to Distribute 500 Grams or More of A Mixture and Substance Containing Methamphetamine

21 U.S.C. §§ 841(a)(1) and (b)(1)(A)(viii)

Minimum 10 years imprisonment

Maximum lifetime imprisonment

Minimum 5 years supervised release following incarceration

Maximum lifetime supervised release

Maximum $10,000,000 fine

Distribution of 500 Grams or More of Methamphetamine

21 U.S.C.

§§ 841(a)(1) and (b)(1)(A)(viii)

Minimum 5 years imprisonment

Maximum 40 years

Minimum 4 years supervised release following incarceration

Maximum lifetime supervised release

Maximum $5,000,000 fine

Use of Communication Facility (Telephone) to Commit Felony Drug Offense

21 U.S.C. § 843(b)

Maximum 4 years imprisonment

Further, additional fines, forfeitures, and restitution may be ordered; however, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Assistant U.S. Attorney Jeffery Backhus is prosecuting the cases with assistance from Ryka Bargi.  The prosecution is the result of an investigation by the FBI with assistance from the DEA (including the DEA San Jose Task Force Group and the DEA San Francisco Field Division SRT), the U.S. Marshal Service, the California Department of Corrections, the Unified Narcotic Enforcement Team, the Peninsula Regional Violence and Narcotic Team, the Santa Cruz County Anti-Crime Team, and the California Highway Patrol. 

These cases are the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

SAN JOSE – Hung Ha was sentenced today to 36 months’ imprisonment for threatening IRS employees at the San Jose Taxpayer Assistance Center, announced United States Attorney Brian J. Stretch.  The sentence was handed down by the Honorable Lucy Koh, U.S. District Judge, following a jury trial resulting in Ha’s conviction of the crime.

Ha, 41, of San Jose, was indicted by a federal grand jury on April 22, 2015.  He was charged with threatening a federal official.  Ha was convicted on July 17, 2017, by a jury after a four day trial.  During the trial, evidence showed that Ha threatened to bomb the San Jose IRS Taxpayer Assistance Center.  Specifically, Ha demanded a tax refund he believed he was owed and said that if the IRS refused to give him the refund, he would bomb the office.  Ha was charged with two counts of threatening federal officials, in violation of 18 U.S.C. § 115(a)(1)(B).  The jury convicted Ha of one count.  

In addition to the prison term, Judge Koh sentenced the defendant to a three year period of supervised release.  The defendant is in custody and will begin serving the sentence immediately.

Assistant U.S. Attorney Scott Simeon and Special Assistant U.S. Attorney Christopher Vieira prosecuted the case with the assistance of Mimi Lam and Ryka Barghi.  The prosecution is the result of an investigation by the Treasury Inspector General for Tax Administration.
 

OAKLAND – Restaurant owner Akbar Dawood Arghandiwal pleaded guilty today in federal court to willful failure to account for and pay federal employment taxes announced United States Attorney Brian J. Stretch, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The plea was accepted by the Honorable Jeffery S. White, U.S. District Judge.  

In pleading guilty, Arghandiwal, 46, of Clayton, Calif., admitted that from 2008 through 2012, he owned restaurants in Clayton, Lafayette, and Danville.  Arghandiwal acknowledged that between January 2010 and December 2012, he knew he was required to withhold federal employment taxes from the wages of his employees, but instead paid those employees in cash and failed to pay employment taxes on those wages. He intentionally did not provide his accountant with complete and accurate information about the wages of his employees in order to conceal such wages and pay less in employment taxes.  In total, Arghandiwal failed to pay $90,648 in employment taxes to the Internal Revenue Service.  On September 13, 2017, Arghandiwal was charged by information with twelve counts of willful failure to account for and pay over employment taxes, in violation of 26 U.S.C. § 7202. Under the plea agreement, Arghandiwal pleaded guilty to a single count and the remaining counts will be dismissed.

Arghandiwal is currently free on bond.  Judge White has scheduled Arghandiwal’s sentencing for January 16, 2018.  The maximum statutory penalty for a violation of 26 U.S.C. § 7202 is five years in prison and a fine of $250,000.  Additional periods of supervised release, fines, and restitution 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 Jose A. Olivera is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation. 
 

OAKLAND –Shiv D. Kumar, the former president and sole shareholder of A-Paratransit Inc. (API), was sentenced today to 18 months in prison for filing false corporate tax returns with the Internal Revenue Service, announced U.S. Attorney Brian J. Stretch, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The sentence was handed down by the Honorable Judge Jon S. Tigar following the entry of a plea agreement in March 2017 in which Kumar admitted underreporting more than $4.6 million in gross receipts.

According to his plea agreement, Kumar, 60, of Dublin, Calif., was the sole shareholder and president of API, a company that provided transportation services to disabled individuals.  Kumar filed false corporate returns with the IRS for tax years 2009 and 2010, which underreported API’s gross receipts by $2,229,216 and $2,412,435, causing a tax loss to the United States of $1,584,055.  Kumar admitted that he deposited API’s receipts into three separate bank accounts and that to conceal API’s true gross receipts, he provided his accountant with bank records from only one of the bank accounts.  Kumar further acknowledged he provided his accountant with false books and records that omitted gross receipts diverted to undisclosed bank accounts.  Kumar used the unreported funds for personal expenditures, including purchasing property in the area of Vallejo, Calif.  

In addition to the prison term, Judge Tigar ordered Kumar to serve one year of supervised release and informed the parties that he will set a hearing in the future to determine the amount of restitution that Kumar should pay.     

Assistant U.S. Attorney José A. Olivera and Trial Attorney Rebecca J. Sable of the Tax Division are prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.
 

A Dublin, California man was sentenced to prison today in U.S. District Court in the Northern District of California for filing a false tax return, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and U.S. Attorney Brian Stretch for the Northern District of California.

Shiv D. Kumar, 60, was sentenced to serve 30 months in prison.  According to documents filed with the court, Kumar was the sole shareholder and president of A-Paratransit Inc. (API), a company that provided transportation services to disabled individuals.  Kumar filed false corporate returns with the Internal Revenue Service (IRS) for tax years 2009 and 2010, which underreported API’s gross receipts by $2,229,216 and $2,412,435, causing a tax loss of $1,584,055.  Kumar deposited API’s receipts into three separate bank accounts held at different banks.  To conceal API’s true income, Kumar provided his accountant with false books and records from which he had omitted gross receipts relating to two of API’s accounts.  Kumar used the unreported funds for personal expenditures, including purchasing property in the Vallejo, California area. 

In addition to the term of prison imposed, Kumar was also sentenced to serve one year of supervised release. Restitution will be decided at a later date. Kumar pleaded guilty in March to filing a false return.

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney José A. Olivera and Trial Attorney Rebecca J. Sable of the Tax Division, who prosecuted the case.

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