Northern District of California

OAKLAND – Kiana Scott Clark, 29, of Oakland, Calif., was sentenced today to 21 months in prison for conspiring to defraud the United States by obstructing, impeding, and interfering with the aviation security functions of the Transportation Security Administration (TSA) and for conspiring to distribute controlled substances, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation Special Agent in Charge John F. Bennett, and TSA Office of Inspection, Investigations Division Acting Special Agent in Charge Connie M. Youngers.  The sentence follows a plea agreement entered June 17, 2016.

According to the plea agreement, Clark admitted she abused her official, public, and sensitive position as a TSA Transportation Security Officer between 2013 and 2015 to enable drug smugglers, with whom she conspired, to circumvent the required TSA screening of carry-on baggage.  Clark acknowledged that on April 16, 2015, she was a TSA officer at the Oakland International Airport and had informed her co-conspirators of the security lane where she was positioned and the time when she was the TSA officer responsible for the x-ray screening of carry-on baggage at the TSA security checkpoint.  Instead of performing or requesting additional screening as her TSA duties required, Clark allowed her co-conspirator and the carry-on baggage to clear the TSA security checkpoint.  Clark’s co-conspirator entered the secure area of the airport and boarded a commercial aircraft.  Clark admitted that her conduct on April 16, 2015, facilitated the smuggling of approximately 10.9 kilograms of marijuana.  Clark further admitted that she had engaged in such corrupt and criminal conduct on multiple prior occasions and had conspired in such conduct between 2013 and 2015. 

“Congress created the TSA two months after the terrorist attacks on September 11, 2001, to ensure the security of aircraft and airports throughout the United States,” said U.S Attorney Stretch. “As federal employees charged and entrusted with carrying out this mission, TSA Transportation Security Officers take an oath to faithfully discharge their duties.  In this case, through her deception and dishonesty, Clark corruptly and repeatedly violated this oath.  Clark betrayed not only the public trust and the TSA, but also her fellow TSA officers who strive to perform their duties consistently, conscientiously, and faithfully to ensure aviation security. This office will vigorously prosecute people who violate the law and put the public at risk.”

Clark was indicted by a federal grand jury on December 15, 2015, and charged with two counts of conspiring to defraud the United States, in violation of 18 U.S.C. § 371, and two counts of conspiring to distribute a controlled substance, in violation of 21 U.S.C. §§ 846, 841.  Pursuant to her plea agreement, Clark pleaded guilty to one count of conspiring to defraud the United States and one count of conspiring to distribute a controlled substance.

The sentence was handed down by the Honorable Jon S. Tigar, U.S. District Judge.  In addition to the prison term, Judge Tigar also sentenced the defendant to a three-year period of supervised release.  The defendant will begin serving her sentence on April 7, 2017.

This case is being prosecuted by the Special Prosecutions and National Security Unit at the United States Attorney’s Office, and is the result of an investigation by the Federal Bureau of Investigation, Alameda County Sheriff’s Office, TSA Office of Inspection, Investigations Division, City of Tracy Police Department, and San Joaquin County District Attorney’s Office.

SAN JOSE – Yujen Chen and Maria Chen were sentenced yesterday to 75 months in prison and 64 months in prison, respectively, announced United States Attorney Brian J. Stretch, Internal Revenue Service Special Agent in Charge Michael T. Batdorf, FBI Special Agent in Charge John F. Bennett, and U.S. Customs and Border Protection Director of Field Operations Brian J. Humphrey.  The sentences follow the December 17, 2015, guilty pleas entered by the married couple in which they admitted committing aggravated identity theft and conspiring to commit wire fraud in connection with their ownership of the Sunnyvale auto dealership 888 Auto Corporation.

According to their guilty pleas, Yujen Chen, 61, and Maria Chen, 59, both of Cupertino, used their automotive business to fraudulently lease luxury vehicles, including vehicles from Porsche, Mercedes-Benz, Audi, BMW, and Toyota, and then to export those vehicles abroad. As part of the scheme, the Chens recruited friends and associates to serve as lessees on the vehicles and sometimes paid these people $500 to lease cars on the Chens’ behalf.  The Chens promised the lessees that they would assume the lease payments and that the lessees would not be financially responsible for the lease.  However, once the Chens convinced the person to sign the lease arrangement and the lessees turned the vehicles over to the Chens, the Chens typically made only initial payments to the automotive finance companies on behalf of the lessees.  Then, as a part of the scheme, the Chens would identify foreign purchasers for the leased vehicles.  The Chens admitted they falsified DMV paperwork reflecting a transfer of title from the financing company or lessor to an entity owned or controlled by the Chens.  The title transfer allowed the Chens to then forward the vehicle to a freight forwarder for the purpose of exporting the car to a foreign buyer.  As a part of the scheme, the Chens also provided or caused to be provided customs paperwork to a freight forwarder that included a fraudulently obtained, or “washed,” DMV title.  The Chens eventually caused the leased vehicles to be shipped abroad, then ceased making the financing payments on the leased vehicles, leaving the nominal lessees with a broken lease and no car. 

In the latter stages of the scheme, the Chens expanded the scope of their illegal conduct by using stolen identities.  Specifically, the Chens collected money and personal identifying information from individuals who had come into their business expressing interest in making a legitimate vehicle purchase.  Then, instead of providing dealers the money received from the persons for the vehicles, the Chens simply kept the purchase money provided by the victims for themselves.  Moreover, the Chens misappropriated the personal identifying information of these individuals in order to gain possession of cars using fraudulent leases or finance agreements. The vehicles were then exported using the same title washing, and exporting techniques.

The defendants were originally charged in a 24-count indictment filed November 20, 2013.  They each pleaded guilty to one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1343, and one count of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  As part of the plea agreement, the government agreed to dismiss the remaining open charges at the time of sentencing.

The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.  Judge Davila also imposed a term of three years supervised release on each defendant.  Judge Davila set a further restitution hearing in the case for March 2, 2017, at 1:30 p.m. for the purpose of considering an appropriate order of restitution for the individual and corporate victims in the case. The defendants currently are out of custody on bond. 

Assistant United States Attorneys Daniel Kaleba and Jeffrey Nedrow are prosecuting the case with the assistance of Susan Kreider and Laurie Worthen. The prosecution is the result of an investigation by the Internal Revenue Service, the Federal Bureau of Investigation, the United States Customs and Border Protection, the California Department of Motor Vehicles, and the California Highway Patrol.

Today, the Honorable Thelton E. Henderson imposed a sentence on Pacific Gas and Electric Company, following its six felony convictions last August.  As part of that sentence, Judge Henderson ordered PG&E to be supervised by a Compliance and Ethics Monitor.  The United States Attorney’s Office for the Northern District of California is in the process of reviewing candidates for this monitorship.  If you would like to be considered for the position of Monitor, please send a letter to:

Brian J. Stretch
United States Attorney
Northern District of California
450 Golden Gate Ave, 11th floor
San Francisco, CA 94102

If you have previously contacted this office regarding your interest to serve as a Monitor in this matter, you do not need to re-submit a letter. 

SAN FRANCISCO—  Pacific Gas and Electric Company (“PG&E”) was sentenced today to submit to an expansive program of probation after having been found guilty of multiple willful violations of the Natural Gas Pipeline Safety Act of 1968 (“PSA”) and obstructing an agency proceeding, announced U.S. Attorney Brian J. Stretch, San Mateo County District Attorney Stephen M. Wagstaffe, U.S. Department of Transportation Office of Inspector General Special Agent in Charge William Swallow, and FBI Special Agent in Charge John F. Bennett.  Among the provisions included in the program of probation issued by the Honorable Thelton E. Henderson, District Judge, are the obligation to submit to a corporate compliance and ethics monitorship, the obligation to complete 10,000 hours of community service, and the requirement to spend up to $3 million to inform the public in print advertisements and television commercials to notify the public of the utility’s criminal and neglectful behavior.

On August 9, 2016, after a 5 ½ week trial, a federal jury found PG&E guilty of multiple willful violations of the PSA and obstructing an agency proceeding.  The PSA-related charges stem from PG&E’s record keeping and pipeline “integrity management” practices and were uncovered in the course of the San Bruno investigation.  The obstruction charge was added after investigators discovered PG&E attempted to mislead the National Transportation Safety Board (NTSB) during its investigation.  The evidence at trial demonstrated that, between 2007 and 2010, PG&E willfully failed to address recordkeeping deficiencies concerning its larger natural gas pipelines knowing that its records were inaccurate or incomplete.  The evidence further demonstrated that PG&E willfully failed to identify threats to its larger natural gas pipelines and to take appropriate actions to investigate the seriousness of threats to pipelines when they were identified.  In addition, PG&E willfully failed to adequately prioritize as high risk and properly assess threatened pipelines after they were over pressurized, as the PSA and its regulations required.  These charges were filed in an indictment on April 1, 2014.  In finding PG&E guilty, the jury concluded the company knowingly and willfully violated the PSA and its regulations between 2007 and 2010.   The jury found PG&E guilty of six felony counts—five willful violations of the PSA and one count of corruptly obstructing the federal investigation into the 2010 fatal pipeline explosion in San Bruno, in violation of 18 U.S.C. § 1505.  The jury acquitted PG&E of an additional six alleged violations of the PSA.

The charge of obstructing an agency proceeding was included in a superseding indictment filed July 29, 2014.  The evidence at trial demonstrated that during the course of the NTSB’s investigation, PG&E provided a version of a policy outlining the way in which PG&E addressed manufacturing threats on its pipelines, and then sought to withdraw the document.  According to PG&E’s letter, the policy was produced in error and was an unapproved draft.  In finding PG&E guilty of obstructing an agency proceeding, the jury concluded PG&E intentionally and corruptly tried to influence, obstruct, or impede the NTSB investigation, in violation of 18 U.S.C. § 1505. 

“Today, the Pacific Gas and Electric Company was sentenced for its crimes after having been found guilty of violating federal regulations designed to keep our citizens safe and obstructing an agency proceeding,” said U.S. Attorney Stretch. “As a part of the sentence, the court has imposed upon PG&E a monitor to ensure the company’s future compliance with the rules and regulations the company has chosen in the past to flaunt.  As we know from the horrible explosion in San Bruno in 2010, the failure of PG&E to deliver gas safely can have devastating consequences that no amount of fines and no monetary penalties can ever remedy.  While the conviction and sentence in this case will not bring back those who were lost on September 9, 2010, or eliminate the suffering of their surviving family members, it does take necessary steps toward ensuring PG&E will never again engage in this type of criminal behavior that puts all of its customers at substantial risk.  I would like to acknowledge the many public servants—including the men and women of this office, the California Attorney General’s Office, the San Mateo County District Attorney’s Office, the San Bruno Police Department, the Federal Bureau of Investigation, and the U.S. Department of Transportation Office of Inspector General—whose hard work uncovered PG&E’s violations of the law and the company’s efforts to obstruct the investigation.  We are gratified that the verdicts and sentence memorialize PG&E’s criminal conduct.”

“Today’s sentencing of PG&E makes clear the solemn obligation that those entrusted with the public’s safety must make it their highest priority,” said William Swallow, regional Special Agent-in-Charge, USDOT OIG.  “The pipeline system is a critical part of our Nation’s infrastructure, and working with our Federal, state and local law enforcement and prosecutorial colleagues, we will continue to protect the safety and integrity of our transportation infrastructure from fraud, waste, abuse and violations of law.”

“The residents of San Mateo County are indebted to the public servants of the Office of the United States Attorney,” said District Attorney Wagstaffe. “We are very thankful for their hard work and perseverance without which we would not have seen such a successful conclusion to this case.” 

"The FBI San Francisco Division echoes the sentiments of our law enforcement and prosecutorial partners. PG&E demonstrated a lack of concern and irresponsibility to our community,” said FBI San Francisco Special Agent in Charge Jack Bennett. “We have a responsibility not only to uphold and enforce the laws of the United States but also to do everything within our power to protect our citizen’s and our community. This sentence is symbolic of the FBI’s commitment to serving justice and to show that no company is too large to be held accountable for criminal acts.”

In handing down the $3 million monetary penalty, Judge Henderson ordered PG&E to pay the maximum statutory penalty allowable for each count charged under the PSA and for obstruction of justice.  In addition to the monetary penalty, Judge Henderson ordered PG&E to the maximum term of five years’ probation.  While on probation, PG&E will submit to a corporate compliance and ethics monitorship, pay for advertising in national media outlets to publicize its criminal conduct, and engage in community service.

Judge Henderson ordered PG&E to develop within the first six months “an effective compliance and ethics program” as well as a schedule for implementation of the program.  Judge Henderson’s order directs PG&E to create a program that will prevent criminal conduct with respect to gas pipeline transmission safety.  In addition, during the five-year period, PG&E will be supervised by a Compliance and Ethics Monitor whose job it will be to approve the program, oversee PG&E’s compliance with the program, inspect PG&E’s records, and receive notifications from PG&E regarding any changes in the company’s financial status.

With respect to publicity, Judge Henderson ordered PG&E to spend $3 million to publicize “the nature of the offenses it committed, the convictions, the nature of the punishment imposed and the steps that will be taken to prevent the recurrence of similar offences.”  The $3 million expenditure will include two parts.  PG&E must purchase a full page advertisement in both the Wall Street Journal and the San Francisco Chronicle.  Also, PG&E was ordered to purchase television time to air commercials “to the greatest extent possible replicating the same channels and air times that PG&E used” in the time period around when the case was being tried. 

Judge Henderson also ordered PG&E to engage in 10,000 hours of community service that must be pre-approved by a federal probation officer.  Of the 10,000 hours, 2,000 must be completed by “high level” employees.  In addition, Judge Henderson stated his expectation that the planned community service would be approved only if is separate from, and in addition to, service that PG&E already had planned to do.  Judge Henderson also advised PG&E that he expected the community service would be completed, to the greatest extent possible, in San Bruno. 

Assistant United States Attorneys Hallie Hoffman, Jeff Schenk, and Hartley West prosecuted the case with the assistance of Denise Oki, Beth Margen, Maryam Beros, Alycee Lane, Bridget Kilkenny, and Maureen French.  The prosecution is the result of an investigation conducted by the U.S. Attorney’s Office for the Northern District of California, the California Attorney General’s Office, the San Mateo County District Attorney’s Office, the United States Department of Transportation Office of Inspector General, the FBI, the Pipeline and Hazardous Material Safety Administration, and the City of San Bruno Police Department. 

SAN FRANCISCO- A federal grand jury indicted Las Vegas resident Wen Bing Lei, aka Raymond Lei, aka Black Raymond, aka Skinny Raymond, for murder in aid of racketeering, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  According to the indictment filed today, the defendant was a member of the Chee Kung Tong (CKT), a predominantly Chinese-American association based in San Francisco’s Chinatown.  The indictment accuses Lei, 50, of aiding, abetting, and causing the death of Allen Leung, one of the association’s previous leaders. 

According to the indictment, the CKT is an organization formed in the late 1800s primarily for civic purposes.  The indictment alleges that while some of CKT’s members are involved strictly in legal functions and activities of the organization, other members were involved in illegal activities including narcotics distribution, assault, robbery, extortion, collection of unlawful debts, murder for hire, money laundering, trafficking in stolen goods, illegal firearms possession, and obstruction of justice.  The indictment further alleges that members protected and expanded the enterprise’s criminal operation by using violence, including murder, solicitation to commit murder, assaults, intimidation, and threats of violence directed against those who would act against CKT, its members, and its associates.  Allegedly, on February 27, 2006, Lei conspired with other members of CKT to aid, abet, and commit the murder of Allen Leung.  Among the purposes listed in the indictment for Lei’s involvement in the murder is to gain entrance to, and to maintain and increase his position in, the CKT.  Lei is charged with one count of murder in aid of racketeering, in violation of 18 U.S.C. § 1959(a)(1).

Lei currently is in the custody of the Bureau of Prisons on other charges and will be transported to the Northern District of California to make his initial appearance before U.S. Magistrate Judge Sallie Kim on January 31, 2017. 

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a mandatory minimum sentence of life in prison.  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 William Frentzen is prosecuting the case with the assistance of Bridget Kilkenny.  The prosecution is the result of an investigation by the FBI. 

SAN JOSE – Steve McVay pleaded guilty to concealing assets in a bankruptcy proceeding announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The plea was accepted yesterday by the Honorable Lucy H. Koh, United States District Judge.

According to the plea agreement, McVay, 68, whose last known address was in Morgan Hill, Calif., admitted he filed a voluntary petition for bankruptcy in the United States Bankruptcy Court for the Northern District of California, on February 9, 2010, through which he sought relief for approximately $1.5 million in debts.  McVay acknowledged that in connection with the petition, he signed documents under penalty of perjury that he knew contained false and fraudulent information.  Further, McVay acknowledged he signed the documents with the intent to hide assets from his creditors, the United States Trustee, the court, and other persons charged with control or custody of the bankruptcy estate.  Information about the false and fraudulent information in McVay’s bankruptcy filings is contained in the plea agreement.  For example, as part of the agreement McVay admitted that prior to filing for bankruptcy, he had opened a bank account in his wife’s name, without either her knowledge or consent, and that he had been using the account to receive and transmit monies under his exclusive control; McVay further admitted he failed to disclose the account in his bankruptcy filings.  Further, McVay admitted he knowingly concealed multiple additional bank accounts that he was required to disclose as part of his filings.

McVay was indicted on April 28, 2016, and charged with two counts of concealing assets in bankruptcy proceedings, in violation of 18 U.S.C. § 152(1), and one count of false testimony in bankruptcy proceedings, in violation of 18 U.S.C. § 152(2).  Pursuant to his plea agreement, McVay pleaded guilty to one count of concealing assets in bankruptcy proceedings.

McVay is scheduled to appear before Judge Koh for sentencing on May 17, 2017.  The maximum statutory penalty for a violation of 18 U.S.C. § 152(1) is five years in prison and $250,000 or twice the amount of gain or loss resulting from the scheme.  In addition, a term of supervised release and restitution 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. Timothy J. Lucey is prosecuting the case with the assistance of Laurie Worthen.  The prosecution is the result of an investigation by the FBI.

SAN FRANCISCO – Josiah Larkin was sentenced to 37 months in prison and was ordered to pay $184,798 in restitution for filing, and conspiring to file, false federal income tax returns announced United States Attorney Brian J. Stretch and Assistant Special Agent in Charge IRS Criminal Investigation, Tyrone W. Blanchette.  The sentence was handed down today by the Honorable Susan Illston, United States District Judge, after a six-day trial in September of 2016. 

Evidence at trial showed that Larkin, 40, of San Francisco, set up an unauthorized franchise, Colbert Ball Tax, on Third Street in the Bayview/Hunter’s Point neighborhood of San Francisco.  Larkin opened the tax shop on December 15, 2012, ten days before Christmas, and advertised “Get Up to $600- Even if Unemployed, On SSA or SSI.”  Larkin filed false tax returns reporting that taxpayers with $0 income had paid $4,000 in qualified education expenses to attend college.  This combination of $0 income and $4,000 in qualified education expenses resulted in a $1,000 tax refund based on the American Opportunity Tax Credit (“AOTC”).  Larkin took approximately half of the $1,000 tax refund and gave the remaining half to his clients.  On September 15, 2016, the jury convicted Larkin of one count of conspiring to file false tax returns, in violation of 18 U.S.C. § 286, and seven counts of filing false tax returns, in violation of 18 U.S.C. § 287.

“Today’s 37-month sentence should be a clear reminder that tax cheats who defraud the federal government wind up in jail,” said U.S. Attorney Stretch. 

“With his storefront and neon sign, Josiah Larkin appeared to operate a legitimate tax business,” said Assistant Special Agent in Charge Blanchette.  “In reality, he targeted vulnerable individuals with the promise of cash just days before Christmas.  He filed false federal refund claims and kept half.  IRS, Criminal Investigation will continue to aggressively pursue those who file false tax returns to claim refunds for which they are not entitled.”

In addition to the prison term and restitution, Judge Illston ordered the defendant to serve three years of supervised release.  The defendant will begin serving the sentence on April 28, 2017. 

Assistant U.S. Attorneys Cynthia Stier and Laurie Kloster Gray prosecuted the case.  The prosecution is the result of an investigation by the Internal Revenue Service. 

SAN FRANCISCO – Howard Webber, a former resident of Marin County, Calif., was convicted today by a federal jury for conspiring to use identities of others and file fraudulent income tax returns, announced U.S. Attorney Brian J. Stretch and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.  The verdict follows a two-week trial before the Honorable Richard Seeborg, U.S. District Judge.

According to the evidence presented at trial, from June 2010 through January 2012, Webber, 52, conspired with Clifford Bercovich, 69, of San Rafael, Calif., to obtain the names and social security numbers of fellow inmates while Webber was incarcerated at various prisons and jails, including San Quentin State Prison and Santa Clara County jail in California, and the Milwaukee Secure Detention Facility in Milwaukee, Wisconsin.

Webber convinced inmates to give their names and social security numbers by explaining that they could help inmates take advantage of government programs.  Webber recruited certain inmates to help solicit the identities of other inmates, and created a limited-liability company, Inmate Assets Recovery and Liquidation Services LLC, to make their scheme appear legitimate. Webber and Bercovich then used these identities to file false federal income tax returns with the Internal Revenue Service (IRS). The returns falsely represented that the inmates earned wages or other income and fraudulently claimed refunds.  Webber and Bercovich opened a post office box, which they listed as the taxpayer address on each false return and used it to receive the fraudulently obtained refund checks. In some cases, they also directed that the refunds be wired to bank accounts that they opened and controlled.  According to the evidence presented at trial, Webber and Bercovich filed more than 700 false returns and received over $600,000 in fraudulently obtained income tax refunds.

“Today’s guilty verdict brings a just end to Mr. Webber’s scheme to defraud the United States,” said U.S. Attorney Stretch.  “This office will continue to devote its resources to ensure that those who enrich themselves by using the identities of others and filing false tax returns are apprehended and prosecuted.”

“As the IRS filing season begins this week, today’s conviction sends a clear message to those contemplating stealing identities and using the information to obtain fraudulent refunds – plan on getting caught and facing significant jail time,” said Acting Deputy Assistant Attorney General Goldberg.

“We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law,” said Tyrone W. Blanchette, Internal Revenue Service, Criminal Investigation, Assistant Special Agent in Charge.  “However, no one is entitled to defraud the United States and the American Taxpayers.  Today’s guilty verdict should send a clear message that those involved in these types of schemes will be held accountable for their crimes.”

Webber is scheduled to be sentenced by Judge Seeborg on May 16, 2017.  Webber faces a statutory maximum sentence of 20 years in prison for mail fraud and conspiracy to commit mail and wire fraud.  Further, Webber faces a mandatory minimum of two years in prison for aggravated identity theft.  An additional period of supervised release, restitution, and monetary penalties 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.  Bercovich pleaded guilty in December 2016 to conspiracy, mail fraud and aggravated identity theft. He is scheduled to be sentenced by Judge Seeborg on April 11, 2017. 

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 William Frentzen and Trial Attorneys Gregory Bernstein and Arthur J. Ewenczyk of the Tax Division, who are prosecuting the case.

A Marin County, California man was convicted today by a federal jury in the Northern District of California of identity theft and conspiring to file fraudulent income tax returns, 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. 

“As the IRS filing season begins this week, today’s conviction sends a clear message to those contemplating stealing identities and using the information to obtain fraudulent refunds – plan on getting caught and facing significant jail time,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg.

“Today’s guilty verdict brings a just end to Mr. Webber’s scheme to defraud the United States,” said U.S. Attorney Stretch.  “This office will continue to devote its resources to ensure that those who enrich themselves by using the identities of others and filing false tax returns are apprehended and prosecuted.”

According to the evidence presented at the two week trial, from June 2010 through January 2012, Howard Webber, 52, conspired with Clifford Bercovich to obtain the names and social security numbers of fellow inmates while Webber was incarcerated at various prisons and jails, including San Quentin State Prison and Santa Clara County jail in California, and the Milwaukee Secure Detention Facility in Milwaukee, Wisconsin. 

Webber and Bercovich convinced inmates to give them their names and social security numbers by explaining that they could help the inmates take advantage of government stimulus programs or secret tax loopholes.  Webber and Bercovich recruited certain inmates to help them solicit the identities of other inmates, and created a limited-liability company, Inmate Assets Recovery and Liquidation Services LLC, to make their scheme appear legitimate. 

Webber and Bercovich then used these identities to file false federal income tax returns with the Internal Revenue Service (IRS). The returns falsely represented that the individuals earned wages or other income and fraudulently claimed refunds.  Webber and Bercovich opened a post office box, which they listed as the taxpayer address on each false return and used to receive the fraudulently obtained refund checks. In some cases, they also directed that the refunds be wired to bank accounts, which they opened and controlled.  According to the evidence presented at trial, Webber and Bercovich filed more than 700 false returns and received over $600,000 in fraudulently obtained income tax refunds.

“We want everyone who files a tax return to take advantage of the deductions and credits to which they are entitled by law,” said Assistant Special Agent in Charge Tyrone W. Blanchette of IRS Criminal Investigation (CI).  “However, no one is entitled to defraud the United States and the American taxpayers.  Today’s guilty verdict should send a clear message that those involved in these types of schemes will be held accountable for their crimes.”

Webber is scheduled to be sentenced on May 16 before U.S. District Court Judge Richard Seeborg.  Webber faces a statutory maximum sentence of 20 years in prison for conspiracy to commit mail and wire fraud and mail fraud and a mandatory minimum of two years in prison for aggravated identity theft, as well as a period of supervised release, restitution and monetary penalties.  Bercovich pleaded guilty in December 2016 to conspiracy, mail fraud and aggravated identity theft. He is scheduled to be sentenced on April 11.  

Acting Deputy Assistant Attorney General Goldberg and U.S. Attorney Stretch thanked special agents of IRS-CI, who conducted the investigation, and Assistant U.S. Attorney William Frentzen and Trial Attorneys Gregory Bernstein and Arthur J. Ewenczyk of the Tax Division, who are prosecuting the case. 

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

SAN FRANCISCO – Duane Charles Ackerman was sentenced today to fifteen years in prison for production and possession of child pornography, announced United States Attorney Brian J. Stretch and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.

Ackerman, 51, of San Francisco, pleaded guilty on September 27, 2016, to one count of production of pornography depicting minors in sexually explicit conduct, and one count of possessing child pornography.  According to his guilty plea, between June and August of 2015, Ackerman produced six video files of prepubescent girls who were each less than 12 years old.  The children were temporarily entrusted to his care at his home when he surreptitiously recorded their genitals using a hidden camera.  In addition, Ackerman admitted that in October of 2015, he possessed a computer hard drive that contained no fewer than 15,000 digital images and 800 video files depicting child pornography.  A federal grand jury issued a superseding indictment on February 25, 2016, charging Ackerman with six 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. § 2252(a)(2); and one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).  According to his plea agreement, Ackerman pleaded guilty to one count of production and one count of possessing child pornography.

The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge.  In addition to the prison term, Judge Chhabria also ordered Ackerman to serve a ten-year period of supervised release.  Additional proceedings have been scheduled to decide the issue of restitution. 

Assistant U.S. Attorneys Brian R. Faerstein and Laurie Kloster Gray prosecuted the case with the assistance of Patricia Mahoney.  The prosecution is the result of an investigation by HSI.

Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, via its toll-free 24-hour hotline, 1-800-843-5678.

OAKLAND, Calif. - A federal grand jury indicted Karl James Stehlin and Gregory Scott Winters charging them each with conspiracy to commit wire fraud and wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  According to the indictment unsealed last Friday, January 13, 2017, the defendants allegedly engaged in a scheme to defraud a victim in Walnut Creek, Calif., into paying in excess of $5,000,000 for fake invoices reflecting goods sold to non-existent customers, including several businesses purportedly in the equine industry. 

According to the indictment, Stehlin, 57, of Seminole, Fla., and Winters, 45, a resident of Ocala Fla., at the relevant time, were part of a conspiracy that sold millions of dollars’ worth of fake invoices to a Walnut Creek company that provides accounts receivable collateralized lending services, also called “factoring.”  Factoring is a financial transaction in which a business sells its accounts receivable (invoices) to a third party (the factor) at a discount.  The factor advances a percentage of the face amount of the invoice to the business and then collects the full amount from the customers of the business in due course.  Following collection from the customers, the factor deducts its commission and other fees and then pays the balance to the business. 

Stehlin, Winters, and their co-conspirators allegedly created multiple shell entities, including Nature’s Own Pharmacy, a company they claimed sold equine supplements, as well as many other shell companies that were represented to be Nature’s Own Pharmacy’s customers but in fact did no legitimate business with Nature’s Own Pharmacy.  According to the indictment, the defendants then created fake invoices that gave the appearance of the sale of goods from Nature’s Own Pharmacy to the fake customers of Nature’s Own Pharmacy.  The defendants then allegedly sold the invoices to the Walnut Creek factoring company.  The defendants allegedly used false names, virtual office addresses, and other false information to execute their scheme.  The fake customers of Nature’s Own Pharmacy supposedly received goods shipped from Nature’s Own Pharmacy to locations in various states around the country including Florida, California, Arizona, and Texas.  In reality, the indictment alleges, Nature’s Own Pharmacy sold neither goods nor services, and none of the purported customers bought any goods or services from Nature’s Own Pharmacy; the invoices sold were allegedly completely fake. 

Stehlin is in the custody of the Bureau of Prisons on other charges and will be transported to the Northern District of California to make his initial appearance in this case.  Winters is scheduled to make an initial appearance before U.S. Magistrate Judge Donna M. Ryu on February 2, 2017. 

An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendants face a maximum sentence of twenty (20) years in prison, a three-year term of supervised release, a fine of $250,000 or twice the gross gain or loss (whichever is greater), plus restitution, and a $100 special assessment for each count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorney William Gullotta is prosecuting the case with the assistance of Michelle Alter Eck and Trina Khadoo.  The prosecution is the result of an investigation by the FBI. 

OAKLAND, Calif. – Shawan I. Spragans and Merl J. Simpson each pleaded guilty in federal court in Oakland today to robbery affecting interstate commerce (Hobbs Act robbery), conspiracy to commit Hobbs Act robbery, attempted Hobbs Act robbery, discharging a firearm in furtherance of Hobbs Act robbery, and being a felon in possession of firearms, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.

In pleading guilty, Spragans, 41, of Oakland, and Simpson, 47, of Antioch, admitted to participating in a conspiracy to commit robberies in Northern District of California from around February 2016 until April 2016.  The pair specifically admitted to committing the armed robbery of a Walgreens pharmacy in Berkeley, Calif.; a bar-b-que restaurant on Shattuck Avenue in Berkeley, Calif.; an Ethiopia food restaurant on Telegraph Avenue in Berkeley, Calif.; and the attempted robbery of a bar on Dolores Street in San Francisco.  Spragans and Simpson also admitted that Spragans discharged a firearm during and in furtherance of the robbery of the Ethiopian restaurant.

Further, according to the plea agreements, Spragans, Simpson, and a co-conspirator agreed to rob all of these businesses at gunpoint.  On March 3, 3016, Spragans and a co-conspirator entered the Walgreens wearing masks, gloves, and dark-colored clothing, pointed a firearm at Walgreens employees and customers, and stole cash from the Walgreens.  Simpson drove the getaway vehicle.  On March 20, 2016, Spragans and a co-conspirator entered the bar-b-que restaurant wearing masks and dark clothing, and forced three employees at gunpoint to stand still while Spragans and his co-conspirator robbed the restaurant.  They fled the restaurant with the stolen cash, and Simpson drove them all away in the getaway vehicle.  On April 7, 2016, Spragans and a co-conspirator entered the Ethiopian food restaurant wearing masks and dark clothing.  They each pointed revolvers at two female employees and robbed them of the restaurant’s cash.  Spragans entered the kitchen and encountered another employee, who struggled with Spragans as the employee attempted to escape.  During that physical encounter, Spragans revolver was fired while pointed in the direction of the employee.  The bullet missed the employee.  Spragans and his co-conspirator then fled the restaurant with the stolen cash, and Simpson drove them all away in the getaway vehicle.  In addition, on April 21, 2016, Spragans and Simpson attempted to rob the bar on Dolores at gunpoint; however, they were encountered by police who were already in place conducting surveillance on the location.  The police apprehended and arrested Spragans and Simpson as they attempted to flee the area.  The police also arrested a co-conspirator who was waiting in the getaway car. 

Spragans and Simpson were arrested on April 21, 2016, by local law enforcement and initially remained in state custody.  Spragans and Simpson were indicted federally on June 30, 2016, and made their initial appearance in federal court on July 7, 2016.  They have since remained in federal custody.

Spragans’s and Simpson’s sentencing hearings are scheduled for April 5, 2017, before U.S. District Judge Yvonne Gonzalez Rogers.  The maximum statutory penalties are (1) life in prison for discharging a firearm in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A)(iii); (2) twenty years in prison for Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a); and (3) ten years in prison for being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1).  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorney Bill Gullotta is prosecuting the case with the assistance of Michelle Alter Eck and Trina Khadoo.  The prosecution is the result of an investigation by the FBI and the Berkeley Police Department. 

SAN JOSE – Jose Lemus was sentenced today to serve 54 months in prison for his role in an armed bank robbery, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett. The sentence, handed down today by the Honorable Lucy H. Koh, District Judge, follows a guilty plea in which Lemus admitted robbing the Castroville, Calif., branch of a federally-insured bank.

Lemus, 23, of Salinas, pleaded guilty on September 21, 2016, to one count of armed bank robbery and aiding and abetting.  According to the plea agreement, on August 22, 2011, Lemus entered the Castroville branch of the bank with another man who was carrying a loaded semi-automatic handgun.  Lemus and the other man both wore masks.   Lemus admitted that while the other man remained in the lobby and pointed the handgun at customers and employees, Lemus jumped over the partition door that separated the lobby area from the tellers.  Lemus went from teller station to teller station gathering money and placing it into a backpack.  Lemus acknowledged that he and the other robber absconded with approximately $44,000 of the bank’s money.

On August 18, 2016, Lemus was charged in a one-count information with armed bank robbery, aiding and abetting, in violation of 18 U.S.C. §§ 2213 (a), (d), and 2.  Pursuant to his plea agreement, Lemus pleaded guilty to the charge. 

In addition to the prison term, Judge Koh also ordered Lemus to pay $42, 930.01 in restitution and to serve five years of supervised release.  Lemus currently is in custody on state charges and will begin serving his sentence after the conclusion of his current state prison term. 

Assistant U.S. Attorneys Stephen Meyer, Jeffrey Backhus, and Claudia Quiroz are prosecuting the case with the assistance of Ryka Bargi, Jessica Meegan, and Nina Burney Williams.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Monterey County Sheriff’s Office.  The investigation was assisted by the Organized Crime Drug Enforcement Task Force, a focused multi-agency, multi-jurisdictional task force investigating and prosecuting the most significant drug trafficking and criminal organizations throughout the United States by leveraging the combined expertise of federal, state and local law enforcement agencies.

SAN FRANCISCO- Gary Kwong Yiu Chen, Anthony John Lai, and Xiu Ying Ling “Elaine” Liang pleaded guilty to money laundering charges; Tong Zao Zhang pleaded guilty to dealing in contraband cigarettes; and Bryan Tilton pleaded guilty to conspiracy to transport stolen goods in interstate commerce announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.   The five plea agreements, accepted Wednesday by the Honorable Charles R. Breyer, U.S. District Judge, resulted from charges leveled against the defendants in the same original indictment that eventually led to the trial and conviction of Raymond “Shrimp Boy” Chow.   

According to their plea agreements, Chen and Lai, both of San Francisco, admitted that from October through December of 2013, they facilitated eight separate financial transactions for the purpose of disguising the proceeds of illegal drug sales.  The defendants admitted they engaged in drug trafficking from which the profits were obtained and that the purpose of the financial transactions was to promote ongoing criminal activity.  The defendants also acknowledged that part of their objective was to transport profits from the East Coast to the West Coast and to conceal and disguise the funds from law enforcement.  Chen and Lai each acknowledged that the amount of money involved in the transactions was over $635,000.  They both pleaded guilty to two counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1)(A)(i).  Elaine Liang pleaded guilty, without a written agreement, to a single count of money laundering related to arranging the transactions that were carried out by Chen and Lai.  

In addition, Zhang, of Brooklyn, N.Y., pleaded guilty to dealing in contraband cigarettes.  According to his plea agreement, Zhang admitted that in July of 2013, he received more than 10,000 Marlboro cigarettes that he knew were contraband.  He transported the cigarettes, none of which bore evidence of the payment of applicable New York state taxes, and delivered them to another location for resale and distribution as contraband cigarettes.  Zhang acknowledged the amount of taxes avoided because of the transaction was approximately $292,500.  Zhang was charged in a Superseding Information filed January 3, 2017, with one count of dealing in contraband cigarettes, in violation of 18 U.S.C. § 2342(a) and 2344.  Pursuant to Wednesday’s plea agreement, he pleaded guilty to the charge.

Tilton, of San Francisco, admitted that between December of 2011 and March of 2013, he agreed with others including Chow and George Nieh, to purchase stolen Hennessy XO cognac alcohol.  On March 9, 2012, Tilton met in San Francisco with Nieh and others, including an undercover FBI agent, for the purpose of making arrangements for the purchase of purportedly stolen Hennessey XO. Tilton provided the undercover agent with a purple bag containing $30,000 in cash, tasted a sample of the liquor to confirm that it was not counterfeit, and arranged for the liquor to be unloaded from the undercover agent’s van.  Tilton admitted he later delivered an envelope containing $5,000 to Chow in exchange for Chow’s involvement in arranging the purchase of the purportedly stolen liquor.  Tilton pleaded guilty to one count of conspiracy, in violation of 18 U.S.C. § 371. 

Chen, Lai, Liang, Zhang, and Tilton all were named in an indictment filed April 3, 2014.  The indictment was amended several times and eventually led to the trial and January 8, 2016, conviction of Raymond Chow, 55, of San Francisco, for racketeering, murder, money laundering, and conspiracy.  Among the crimes with which Chow was charged and convicted were arranging the murder of Allen Leung and conspiring with others to murder Jim Tat Kong. The jury found Chow guilty of every one of the 162 charges leveled against him.

The maximum statutory sentence for money laundering is 20 years in prison and $250,000 or twice the value of the property laundered, whichever is greater.  The maximum statutory sentence for dealing in contraband cigarettes is five years in prison and a $250,000 fine.  The maximum statutory sentence for a violation of 18 U.S.C. § 371 is five years in prison and $250,000.  In each case, additional terms of supervised release, restitution, and forfeiture may apply.  However, any sentence 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.  Judge Breyer is scheduled to sentence the defendants on the following dates: Zhang—April 12, 2017; Chen, Lai, and Liang—May 10, 2017; Tilton—June 7, 2017. 

Assistant U.S. Attorneys William Frentzen, Susan Badger, S. Waqar Hasib, 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; New York Police Department; Mercer County New Jersey Sheriff's Office; and the San Francisco and Alameda County Sheriff’s Departments.

SAN JOSE – Bay Sleep Clinic, its related businesses— Qualium Corporation and Amerimed Corporation—and their owners and operators, Anooshiravan Mostowfipour and Tara Nader (collectively, the Defendants) have agreed to pay $2.6 million to settle allegations that they fraudulently billed the Medicare program, announced United States Attorney Brian J. Stretch and U.S. Department of Health and Human Services-Office of the Inspector General (HHS-OIG) Special Agent in Charge, Steven Ryan.  The settlement resolves allegations that the Defendants fraudulently charged the Medicare program for diagnostic sleep tests and medical devices in violation of Medicare payment rules.

The allegations against the Defendants were set out in an amended False Claims Act complaint filed by the United States on August 8, 2016.  According to the complaint, Saratoga, Calif., residents Mostowfipour, 58, and Nader, 58, own Amerimed Corporation (that was doing business as Amerimed Sleep Diagnostics and Amerimed CPAP Specialists) and Qualium Corporation, which operated twenty sleep clinics doing business as Bay Sleep Clinic.  The government alleged that as early as April 2002, Mostowfipour, Nader, and their businesses fraudulently billed Medicare for sleep tests performed by technicians lacking the licenses or certifications required by Medicare payment rules.  In addition, the Defendants billed Medicare for sleep tests that allegedly were conducted at unenrolled and unapproved locations.  Specifically, the government alleged that defendants regularly falsified documents to make it appear that a sleep test had been given at one of the defendants’ two locations which had been approved by Medicare, when, in fact, the test had been conducted at another, unapproved facility.  Additionally, the government alleged the Defendants fraudulently billed Medicare for medical devices in violation of Medicare rules and regulations that prohibit providers of diagnostic sleep tests from supplying medical devices and from sharing a sleep laboratory location with a durable medical equipment supplier. 

“Medicare patients expect to be treated by properly credentialed health care professionals in approved locations,” said U.S. Attorney Stretch.  “When companies treating Medicare beneficiaries violate the rules, they will be held accountable.”  

“Medicare beneficiaries need full confidence their medical professionals are properly licensed and services are provided in fully approved facilities,” said Special Agent in Charge Steven Ryan.  “Patients and taxpayers deserve no less.” 

The whistleblower action, captioned United States ex rel. Dresser v. Qualium Corp., et al., Civil Action No. 12-1745 (N.D. Cal.), was filed under the qui tam provisions of the False Claims Act.  The False Claims Act allows for private persons, such as Elma F. Dresser in this case, to file actions to provide the government information about wrongdoing and then obtain a portion of the government’s recovery.  Dresser will receive approximately $545,000.

As is permitted by the statute, the United States intervened in the action in May 2015 and filed its initial complaint in intervention in September 2015. 

As part of today’s agreement, the defendants have voluntarily terminated their two existing Medicare enrollments and agreed not to re-enroll as providers or suppliers in the Medicare program for a period of three years. 

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

Assistant U.S. Attorneys Erica Blachman Hitchings, Robin Wall, Kimberly Friday, and Tom Green handled the case with assistance from Jacqueline Hollar, Tina Louie, Bonny Wong, and Stefania Chin.  The investigation was conducted by the U.S. Attorney’s Office for the Northern District of California and HHS-OIG.

OAKLAND – Four members of the Nuestra Familia criminal organization – including the top gang leader – were sentenced to federal prison today for racketeering, murders, robberies, drug offenses, and related acts announced U.S. Attorney Brian J. Stretch, U.S. Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.

“Today, four additional members of the Nuestra Familia gang were sentenced for the heinous crimes they perpetrated upon our community, bringing to 12 the number of defendants sentenced as a result of this investigation,” said U.S. Attorney Brian J. Stretch.  “Today’s sentences have a special significance in light of the court’s findings that three of the defendants were among the highest ranked members of the organization internationally.  The sentences reflect the egregious conduct of the defendants who lured and intimidated younger members of the community into being the next generation of gang members ready to accept a life of crime, drugs, and violence.  It is with gratitude and appreciation that we congratulate the FBI, the Bureau of Prisons, and the scores of local law enforcement officials who have brought this 6-year investigation to a successful conclusion.”

“Criminal enterprises like the Nuestra Familia may spawn in prisons, but they often spread into our communities and onto our streets, bringing violence and mayhem with them,” said Assistant Attorney General Caldwell.  “We will continue to target these criminal organizations, dismantle their leadership, and return the violent offenders to prison.”

Nuestra Familia leader Andrew Cervantes, 60, aka “Mad Dog,” of Stockton, Calif., was sentenced to 36 years in prison.  Henry Cervantes, 52, aka “Happy,” of Lodi, Calif., was sentenced to 75 years in prison.  Alberto Larez, 48, aka “Bird,” of Salinas, Calif., was sentenced to life plus ten years in prison; Jaime Cervantes, 33, aka “Hennessy,” of San Mateo, Calif., was sentenced to 32 years in prison.

The four defendants were convicted of racketeering conspiracy and other offenses following a  three-month trial before U.S. District Judge Yvonne Gonzalez Rogers.

At today’s sentencing, Judge Gonzalez Rogers found that Andrew Cervantes was the top ranking leader, or so-called ‘overseer’, of the Nuestra Familia.  Andrew Cervantes led the criminal organization from a federal prison in Pennsylvania, using complex coded letters and telephone calls to communicate to his underlings.  He orchestrated and oversaw regiment commanders who generated money through drug sales and other crimes, like robbery.  The money was then sent up the chain to high ranking members in prison.  According to evidence introduced at trial, Andrew Cervantes used coded letters to order his fellow gang members to kill a fellow Nuestra Familia gang member for failing to uphold the rules of the organization.  A video tape was played at trial showing the man being stabbed 13 times in a cafeteria in a federal prison in Louisiana, shortly after the coded letters were written.

Henry Cervantes and Alberto Larez were Andrew Cervantes’ two highest ranking ‘street commanders’ in charge of the Nuestra Familia’s Bay Area “Street Regiment.”

In September, 2011, Henry Cervantes stabbed two people to death in an apartment in Oakland.  He then ordered two of his underlings to destroy the crime scene by pouring gasoline over the bodies and lighting them on fire.

Alberto Larez orchestrated the murder of a rival in San Jose.  According to the evidence at trial, Larez and two of his underlings traveled to San Jose, lured the rival to their location with phone calls, and then executed him with point-blank shots to the face and neck.

Jaime Cervantes was recruited by Larez to join the gang in 2010.  In the span of just over one year, Jaime Cervantes participated in three armed robberies on behalf of the gang, and stabbed a rival at the direction of his “carnal” Larez.

Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s.  Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.  The defendants were members or associates of the federal branch of the Nuestra Familia, which was controlled by two principal overseers incarcerated in the Federal Bureau of Prisons (BOP), including Andrew Cervantes.  Larez and Henry Cervantes were senior gang members who reported to Andrew Cervantes.  Larez recruited individuals, including Jaime Cervantes, to commit crimes on behalf of the gang and Henry Cervantes supervised the criminal activities of the gang in Oakland.  In 2010, Henry Cervantes and Larez were released from the BOP after serving sentences for racketeering conspiracy convictions in 2004 involving the distribution of controlled substances on behalf of the Nuestra Familia.

Evidence presented at trial established that from approximately fall 2010 through March 2013, under the supervision of Henry Cervantes and Larez, members and associates of Nuestra Familia engaged in the trafficking of methamphetamine, cocaine, and heroin and committed robberies to raise money for themselves and the gang.  At the direction of Andrew Cervantes, Larez instructed his subordinates to send proceeds from their criminal activities to the commissary accounts of gang leaders incarcerated in several BOP facilities, including the account of Andrew Cervantes.  Larez communicated with Andrew Cervantes primarily through prison phone calls and correspondence using coded language.

The evidence presented during the trial included proof of the defendants’ involvement in several gang-related murders and attacks including the following:

• In September 2011, Jaime Cervantes and another gang member burned the bodies of two murder victims in an apartment in Oakland based on orders from Henry Cervantes. 
• In January 2012, Jaime Cervantes and two other gang members committed a home invasion robbery of a drug dealer.  During the robbery, Jaime Cervantes beat one victim over the head with a baseball bat and another victim was shot. 
• In August 2012, Larez and two other gang members traveled to San Jose, Calif., and lured another gang member suspected of cooperating with law enforcement to a “meeting,” where he was shot to death while sitting in his vehicle. 
• In late 2012, while incarcerated at U.S. Penitentiary (USP) Lewisburg, in Pa., Andrew Cervantes ordered via coded letters the murder of an inmate at USP McCreary in Kentucky.  In March 2013, the inmate – whom Andrew Cervantes believed had violated gang rules – was assaulted and stabbed by two Nuestra Familia inmates in the prison dining facility and survived.  The Government introduced a video at trial of the stabbing.

Today’s sentencing marks the culmination of a six-year investigation and prosecution of Nuestra Familia, which resulted in the convictions of 12 members and associates of the gang.  Eight co-defendants previously pleaded guilty to racketeering conspiracy and other offenses and were sentenced to terms of imprisonment ranging from eight to 15 years. 

The case was investigated by the FBI and the U.S. Attorney’s Office of the Northern District of California, with assistance from the BOP.  Additional assistance was provided by the Santa Clara County District Attorney’s Office; the Oakland Police Department; the San Jose Police Department; the Red Bluff Police Department; the Livermore Police Department; the Alameda County Sheriff’s Office; the Campbell Police Department; the Tehama County District Attorney’s Office; and the Tehama County Sheriff’s Office.

Assistant U.S. Attorneys Joseph M. Alioto Jr. and William Frentzen, and trial Attorney Robert S. Tully of the Criminal Division’s Organized Crime and Gang Section prosecuted the case with assistance from Kevin Costello, Courtney Fisher, Melissa Dorton, Daniel Charlier-Smith, Lance Libatique, and Lauren Hipolito. 

Four members of the Nuestra Familia gang were sentenced to prison today—including a life sentence for one senior gang member—for participating in a variety of violent criminal acts, including racketeering conspiracy, murder, robbery and conspiracy to distribute controlled substances and other related offenses.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Brian J. Stretch of the Northern District of California and Special Agent in Charge John Bennett of the FBI’s San Francisco Division made the announcement.

“Criminal enterprises like the Nuestra Familia may spawn in prisons, but they often spread into our communities and onto our streets, bringing violence and mayhem with them,” said Assistant Attorney General Caldwell.  “We will continue to target these criminal organizations, dismantle their leadership, and return the violent offenders to prison.”

“Today, four additional members of the Nuestra Familia gang were sentenced for the heinous crimes they perpetrated upon our community, bringing to 12 the number of defendants sentenced as a result of this investigation,” said U.S. Attorney Stretch.  “Today’s sentences have a special significance in light of the court’s findings that three of the defendants were among the highest-ranked members of the organization internationally.  The sentences reflect the egregious conduct of the defendants who lured and intimidated younger members of the community into being the next generation of gang members ready to accept a life of crime, drugs and violence.  It is with gratitude and appreciation that we congratulate the FBI, the Bureau of Prisons and the scores of local law enforcement officials who have brought this six-year investigation to a successful conclusion.”

Alberto Larez, 48, aka Bird, of Salinas, California, was sentenced to life in prison plus 120 months in prison; Henry Cervantes, 52, aka Happy, of Lodi, California, was sentenced to 900 months in prison; Jaime Cervantes, 33, aka Hennessy, of San Mateo, California, was sentenced to 384 months in prison; and Andrew Cervantes, 60, aka Mad Dog, of Stockton, California, was sentenced to 432 months in prison.  The four defendants were previously convicted of racketeering conspiracy and other offenses following trial before U.S. District Judge Yvonne Gonzalez Rogers in the Northern District of California in Oakland, California. 

According to evidence presented at trial, Nuestra Familia is a prison gang that originally formed in the California state prison system in the 1960s.  Nuestra Familia leaders control and direct the gang’s criminal activities both inside and outside of the prison system.  The defendants were members or associates of the federal branch of the Nuestra Familia, which was controlled by two principal overseers incarcerated in the Federal Bureau of Prisons (BOP), including Andrew Cervantes, who is currently serving a 210-month sentence for a 1999 racketeering conviction.  Larez and Henry Cervantes were senior gang members who reported to Andrew Cervantes.  Larez recruited individuals, including Jaime Cervantes, to commit crimes on behalf of the gang and Henry Cervantes supervised the criminal activities of the gang in Oakland.  In 2010, Henry Cervantes and Larez were released from the BOP after serving sentences for racketeering conspiracy convictions in 2004 involving the distribution of controlled substances on behalf of the Nuestra Familia.

Evidence presented at trial established that from approximately fall 2010 through March 2013, under the supervision of Henry Cervantes and Larez, members and associates of Nuestra Familia engaged in the trafficking of methamphetamine, cocaine and heroin and committed robberies to raise money for themselves and the gang.  At the direction of Andrew Cervantes, Larez instructed his subordinates to send proceeds from their criminal activities to the commissary accounts of gang leaders incarcerated in several BOP facilities, including the account of Andrew Cervantes.  Larez communicated with Andrew Cervantes primarily through prison phone calls and correspondence using coded language.

During trial, evidence was presented of the defendants’ involvement in several gang-related murders and attacks.  In September 2011, Jaime Cervantes and another gang member burned the bodies of two murder victims in an apartment in Oakland based on orders from Henry Cervantes.  In January 2012, Jaime Cervantes and two other gang members committed a home invasion robbery of a drug dealer.  During the robbery, Jaime Cervantes beat one victim over the head with a baseball bat and another victim was shot.  In August 2012, Larez and two other gang members traveled to San Jose, California, and lured another gang member suspected of cooperating with law enforcement to a “meeting,” where he was shot to death while sitting in his vehicle.  In late 2012, while incarcerated at U.S. Penitentiary (USP) Lewisburg, in Pennsylvania, Andrew Cervantes ordered via coded letters the murder of an inmate at USP McCreary in Kentucky.  In March 2013, the inmate—whom Andrew Cervantes believed had violated gang rules—was assaulted and stabbed by two Nuestra Familia inmates in the prison dining facility and survived.

Today’s sentencing marks the culmination of a six-year investigation and prosecution of Nuestra Familia, which resulted in the convictions of 12 members and associates of the gang.  Eight co-defendants previously pleaded guilty to racketeering conspiracy and other offenses and were sentenced to terms of imprisonment ranging from eight to 15 years. 

The FBI Oakland Resident Agency investigated the case with the U.S. Attorney’s Office of the Northern District of California, with assistance from the BOP.  The Santa Clara County, California, District Attorney’s Office; Oakland Police Department; San Jose Police Department; Red Bluff, California, Police Department; Livermore, California, Police Department; Campbell, California, Police Department, Alameda County, California, Sheriff’s Office; Tehama County, California, District Attorney’s Office; and Tehama County Sheriff’s Office also assisted in the investigation.

Trial Attorney Robert S. Tully of the Criminal Division’s Organized Crime and Gang Section and Assistant U.S. Attorneys Joseph M. Alioto and William Frentzen of the Northern District of California prosecuted the case.

SAN JOSE - Davis Kiryakoz pleaded guilty to conspiracy to transport stolen goods announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.   The plea agreement, accepted today by the Honorable Beth Labson Freeman, U.S. District Judge, identifies the stolen goods as wines valued at over $870,000, more than $370,000 of which defendant arranged to have shipped in interstate commerce. 

According to the plea agreement, Kiryakoz, 44, of Modesto, admitted that between March of 2013 and January of 2015, he entered into an agreement with one or more co-conspirators to transport stolen goods in interstate commerce.  Specifically, Kiryakoz admitted he conspired to sell stolen high end wines.  Kiryakoz admitted that he knew the wines were stolen because he was involved in stealing them. 

As part of his plea agreement, Kiryakoz acknowledged he conspired to steal and transport wines from three locations.  The defendant conspired to steal approximately 110 bottles of high end wines from the French Laundry, a restaurant in Yountville, Calif.  The heist took place in the early morning hours the day after Christmas in 2014 and resulted in the theft of wines valued at the time at approximately $549.447.  Kiryakoz acknowledged that after stealing the wine, he and a co-conspirator arranged to ship the wine to a buyer in North Carolina from several cities in California, including Modesto, San Jose, and Los Gatos.  Kiryakoz admitted he and a co-conspirator actually shipped 63 bottles of the wine, valued at over $200,000, to the North Carolina buyer in exchange for several wire transfers.  Eventually, however, the buyer learned the wines had been stolen from the French Laundry and refused to make further payments for the stolen goods. 

Kiryakoz also admitted making arrangements to ship approximately 17 bottles of wine valued at approximately $25,550 stolen from Alexander’s Steakhouse in Cupertino, Calif.  Kiryakoz admitted he conspired to steal approximately 29 bottles of high end wines from the restaurant, with a total value of approximately $32,000.  The wines were stolen in the early morning hours of November 8, 2014. 

In addition, Kiryakoz admitting conspiring with others to arrange for the theft of wines from Fine Wines International in San Francisco.  According to the agreement, 142 bottles of wine valued at approximately $290,000 was stolen from the outlet shortly after midnight on March 27, 2013.  Kiryakoz admitted that the value of the wines he actually shipped from this lot was approximately $127,755. 

A federal grand jury indicted Kiryakoz on February 2, 2016, charging him with one count of conspiracy to transport stolen goods, in violation of 18 U.S.C. § 371, and additional offenses related to the transportation of stolen goods.  Pursuant to today’s plea agreement, Kiryakoz pleaded to the conspiracy charge. 

Kiryakoz currently is out of custody and is scheduled to be sentenced by Judge Freeman on March 28, 2017, at 8:30 a.m.

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. 

OAKLAND – S. Darin Kinion, Ph.D., was sentenced today to 18 months’ imprisonment for submitting false data and reports to defraud the United States in connection with a quantum computing research program announced United States Attorney Brian J. Stretch, U.S. Department of Energy Special Agent in Charge of the Office of the Inspector General Scott Berenberg, and Inspector General of the Intelligence Community I. Charles McCullough III.  The sentence follows a guilty plea entered June 14, 2016, in which Kinion acknowledged submitting false data and reports to the Intelligence Advanced Research Projects Activity (“IARPA”) of the Office of the Director of National Intelligence in a scheme to defraud the government out of money intended to fund research.

According to his plea agreement, Kinion, 44, of Lafayette, Calif., admitted that between 2008 and 2012, he received millions of dollars of funding from IARPA to design, build, and test experimental components in the field of quantum computing at the Lawrence Livermore National Laboratory (“LLNL”).  Nevertheless, rather than build and test the experimental components, Kinion presented to the government false and fraudulent data and information in a scheme to defraud IARPA into thinking he had performed the work.  In order to build and test the experimental components, Kinion would have had to set up and operate certain equipment.  Kinion requested funds from IARPA to purchase the equipment, claimed he had used the equipment successfully to build and test experimental components, and submitted reports and information in support of these claims.  Kinion, however, never setup nor operated the equipment.  Instead, he submitted false and fraudulent data and information to justify continued and further funds to support his purported research. 

Moreover, Kinion took deliberate additional steps to conceal and to prevent IARPA from discovering his fraudulent scheme.  For example, Kinion falsely claimed he mailed functioning components to IARPA’s validation team knowing that he had mailed “bogus” non-functioning components.  Kinion also altered and backdated Federal Express mailing labels and falsely claimed he mailed items on dates prior to the date he actually mailed them.  Further, when a scientist visited LLNL, Kinion conducted a 3-day “charade” experiment in an effort to establish that his testing was legitimate. 

On March 8, 2016, Kinion was charged by information with one count of mail fraud, in violation of 18 U.S.C. § 1341.  Pursuant to his plea agreement, Kinion pleaded guilty to the charge.

Today’s sentence was handed down by the Honorable Jeffrey S. White, U.S. District Judge.  In addition to the prison term, Judge White ordered the defendant to serve three years of supervised release and to pay $3,317,893 in restitution to the United States.  Kinion will begin serving the sentence on January 26, 2017.

This case is being prosecuted by the Special Prosecutions and National Security Unit at the United States Attorney’s Office and the result of an investigation by the Office of the Inspector General for the U.S. Department of Energy and the Inspector General of the Intelligence Community.

OAKLAND - A federal grand jury in Oakland indicted psychologist Kenneth Breslin on December 15, 2016, with possession of child pornography, announced United States Attorney Brian J. Stretch and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin. 

For many years, Breslin 68, of Lafayette, Calif., was the Director and Owner of “A Child’s Point of View,” an Orinda-based office that provided adolescent, adult, and family psychotherapy services.  Breslin is currently prohibited from practicing psychology pursuant to a Contra Costa Superior Court order issued on November 28, 2016.  Breslin was arrested at his residence on December 18, 2016, and made his initial appearance in federal court in San Francisco this morning.  According to the indictment, Breslin is alleged to have knowingly possessed, and accessed with intent to view, child pornography.  He was charged with one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B).

Breslin is currently being held in the custody of the United States Marshals Service.  His next scheduled appearance is at 9:30 a.m. on December 21, 2016, for a detention hearing before the Honorable Jacqueline Scott Corley, U.S. Magistrate Judge.      

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendant faces a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution.  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.

Investigators are asking anyone who has further information about the defendant or his activities that may be relevant to this case to call Homeland Security Investigations’ tip line at (866) 347-2423. 

Assistant U.S. Attorneys Christina McCall and Erin Cornell are prosecuting the case with the assistance of Vanessa Quant, Trina Khadoo, and Michelle Alter Eck.  The prosecution is the result of an investigation by HSI, the Silicon Valley Internet Crimes Against Children's Task Force, and the Contra Costa District Attorney’s Office.

SAN FRANCISCO – U.S. Attorney Brian J. Stretch announced today that the Northern District of California collected $46,085,348.08 in criminal and civil actions in Fiscal Year 2016.  Of this amount, $29,720,757.86 was collected in criminal actions and $16,364,590.22 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 $3,895,072,010.24 in cases pursued jointly with these offices.  Of this amount, $3,895,067,047.02 was collected in civil actions.         

Attorney General Loretta E. Lynch announced on December 14, 2016, that the Justice Department collected nearly $15.4 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2016.  The $15,380,130,434 in collections in FY 2016 represents more than five times the appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

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

“The recovery of tens of millions of dollars from criminal and civil defendants by this Office is a testament to the hard work of our Financial Litigation Unit,” said U.S. Attorney Brian J. Stretch.  "Our Office will continue to work relentlessly to recoup victims' losses and to disgorge profits from those who enrich themselves through crime and other violations of federal law.”

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.

SAN FRANCISCO – John E. Fox, the former owner of Premier Cru, a now-bankrupt wine shop based in Berkeley, has been sentence to 78 months in prison for wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence follows a guilty plea entered August 11, 2016, in which Fox admitted to using his wine shop to run a multi-million-dollar wine Ponzi scheme. 

Fox, 66, of Concord, Calif., co-founded Premier Cru in 1980, and eventually moved it to University Avenue in Berkeley.  In his plea agreement, Fox acknowledged that, beginning in the 1990s, he orchestrated a massive scheme to defraud customers of the business.

As part of his plea agreement, Fox admitted that, in many instances, he falsified purchase orders for wine he had never contracted to purchase, entered the phantom wine into Premier Cru’s inventory for sale, and then sold or caused Premier Cru’s salespeople to sell the phantom wine.  He also acknowledged that, between 2010 and 2015, he sold or attempted to sell approximately $20 million worth of phantom wine that he had never actually purchased prior to entering them onto Premier Cru’s inventory. 

In addition, in instances where Fox actually did contract with foreign suppliers on behalf of Premier Cru to purchase wine, he generally promised to pay the foreign suppliers within 30 days.  Fox admitted that he knew Premier Cru would not be able to make payment within 30 days, or in some cases, ever, because he embezzled money from Premier Cru’s business accounts and diverted money coming in from current customers to obtain wine for prior customers who had never received their wine.

According to the plea agreement, Fox embezzled funds from the Premier Cru accounts by both using Premier Cru’s business account to make payments for personal expenses and by making substantial cash transfers from the Premier Cru business accounts to personal accounts in his own name and in fake names.  Fox used the embezzled funds to pay for personal credit cards; memberships to private golf clubs; the purchase or lease of expensive cars including Corvettes, Ferraris, a Maserati, and various Mercedes-Benzes; and a variety of additional personal expenses, including more than $900,000 on women he met online.  

Premier Cru eventually filed for bankruptcy under Chapter 7 of the Bankruptcy Code.  At the time of Premier Cru’s bankruptcy, customers were owed approximately $45 million for wine that they had not received.  On June 28, 2016, Fox was charged with a single count of wire fraud in violation of 18 U.S.C. § 1343.  Pursuant to his plea agreement, he pleaded guilty to the charge.

The sentence was handed down by the Honorable James Donato, U.S. District Judge.  In sentencing Fox, Judge Donato referred to Fox’s conduct as, “a long running empire of deception.”  In addition to the prison term, Judge Donato ordered Fox to serve three years of supervised release.  He also found that restitution would be ordered, and scheduled a hearing on Wednesday, January 18, 2017, at 10:30 a.m., to determine a specific restitution amount.   Fox is in custody and will begin serving his sentence immediately. 

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 Federal Bureau of Investigation. 

SAN FRANCISCO – Dr. John Compagno pleaded guilty today to tax evasion announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.

According to the plea agreement, Compagno, 70, of Napa, Calif., is a medical physician specializing in Pathology.  Compagno is the owner and operator of three corporations located in Hercules, Calif., including John Compagno, M.D., Inc., West Coast Pathology Laboratory, Inc., and Histopathology Reference Laboratory, Inc.  In his plea agreement, Compagno admitted he submitted both corporate and individual tax returns that understated his liability to the IRS.

For the tax years 2005 through 2011, Compagno caused a corporate tax return preparer to overstate the amount of expenses on the corporate tax return by including non-deductible expenses.  Because the amounts of non-deductible expenses were overstated, the amount of income taxes due were understated.  Compagno approved and signed the corporate tax returns.  The amounts of non-deductible expenses included during each year are as follows:

 

Tax Year

Amount of

Non-Deductible

Expenses Included

 

 

Additional Tax Due

 

2005

$407,714

$138,623

2006

$722,644

$248,814

2007

$1,712,621

$601,235,

2008

$2,511,211

$737,848

2009

$2,640,726

$916,547

2010

$1,090,799

$646,063

2011

$1,593,365

$569,930

Total

$10,679,080

$3,859,060

 

In addition, Compagno omitted constructive dividends from his 2006 through 2011 individual income tax returns.  This resulted in additional tax due as follows:

 

Tax Year

Amount of

Constructive Dividends Omitted

 

 

Additional Tax Due

2006

$706,736

$118,812

2007

$1,657,324

$264,449

2008

$2,359,000

$307,732

2009

$2,411,547

$345,827

2010

$1,833,674

$287,558

2011

$1,536,810

$242,801

Total

$10,505,091

$1,567,179

 

In sum, Compagno acknowledged in his plea agreement he owes over $5.4 million in unpaid taxes.  Compagno was charged by Information filed November 16, 2016, with one count of tax evasion, in violation of 26 U.S.C. § 7201.  In today’s plea agreement, he pleaded guilty to knowingly and willfully filing with the IRS a false 2010 corporate tax return. 

Compagno is scheduled to be sentenced on March 28, 2017, at 2:00 p.m., before the Honorable William Alsup, U.S. District Judge.  The maximum sentence for tax evasion, in violation of 26 U.S.C. § 7201, is five years in prison and a fine of $250,000.  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 Thomas Moore is prosecuting the case.  The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.

SAN FRANCISCO – Sean Krishanmakoto Sharma, a graduate student in computer science, has been indicted for transmitting a program, information, code, or command causing damage to a protected computer announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The indictment, filed December 1, 2016, and unsealed December 9, 2016, accuses the graduate student of initiating a number of attacks on a local provider of online chat services.

According to the indictment, between November 6, 2014, and January 20, 2015, Sharma, 26, of La Canada, Calif., used a “distributed denial of service” (DDoS) tool to compromise the computers of a San Francisco-based company that provides online chat services to third party web sites.   The indictment charges Sharma with one count in violation of 18 U.S.C. §§ 1030(a)(5)(A) & (c)(4)(A)(i)(I).

Sharma was arrested December 9, 2016, in La Canada and made his initial appearance before the Honorable Alka Sagar, U.S. Magistrate Judge, Central District of California.  He was released on a $100,000 bond.  Sharma is next scheduled to appear on December 16, 2016, before the Honorable Jacqueline Scott Corley, U.S. Magistrate Judge, Northern District of California for arraignment.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Sharma faces a maximum sentence of ten years in prison, three years of supervised release, and/or a fine. 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 United States Attorney Cynthia Frey, a member of the U.S. Attorney’s Computer Hacking/Intellectual Property Unit.  The case is being investigated by the FBI. 

SAN JOSE – Eduardo Arriaga, AKA “Moreno,” was sentenced yesterday to 228 months (19 years) in prison for trafficking crystal methamphetamine and using a firearm during his narcotics trafficking operation, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was imposed by the Honorable Edward J. Davila, U.S. District Judge, after a federal jury convicted Arriaga in December 2015 of the methamphetamine distribution and firearms charges. 

Arriaga, 41, of San Jose, was the eighth defendant sentenced in a proactive operation by the FBI’s Santa Clara County Violent Gang Task Force targeting gang members selling methamphetamine in Santa Clara County.  According to the evidence presented at trial, Arriaga has been a Sureño gang member for over 20 years.  On April 29, 2012, Arriaga possessed a pound of crystal methamphetamine and sold a half-ounce of it to a confidential informant working for the FBI.  Arriaga, believing the confidential informant was a Sureño gang member from Southern California, conducted the drug deal out of his garage in San Jose while armed with a handgun.  Approximately two months later, in the same garage, the confidential informant witnessed Arriaga with approximately a half-pound of additional crystal methamphetamine and saw Arriaga sell a portion of the methamphetamine to another Sureño gang member.  During that drug deal, Arriaga had two different handguns in his garage. 

Arriaga was indicted on July 31, 2013, and charged with one count of distributing methamphetamine, in violation of 21 U.S.C. § 841, and one count of possessing firearms in furtherance of his drug trafficking activities, in violation of 18 U.S.C. § 924(c).  After a one-week trial, a jury convicted him of both counts.  In reaching its verdict, the jury found that Arriaga possessed 50 grams or more of crystal methamphetamine with the intent to distribute it. 

In addition to Arriaga’s prison term, Judge Davila imposed a five-year term of supervised release and a $200 special assessment.

Arriaga’s indictment was part of the FBI’s crackdown on Sureño gangs in Santa Clara County.  The FBI’s investigation into these gangs culminated in eight separate indictments alleging the distribution and conspiracy to distribute methamphetamine throughout Santa Clara County.  The defendants charged in the crackdown include the following: (1) the reputed “matriarch,” of 8th Street Gilroy (Maria Salinas); (2) the co-conspirator mother and daughter combination associated with the Sureño gang “Varrio Sur Town” (Laura Garcia and Vanessa Pulido), and (3) known members of the Sureño gangs “Colonias,” “Varrio Mexicanos Locos,” “Poco Way,” and “Varrio Paisanos Locos.”  The status of the matters against these additional defendants is as follows: 

Defendant

Charges

Docket Number

Sentence

LAURA GARCIA

a/k/a “Blinky”

 

Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine

 

CR 13-00508 LHK

9/24/14

65 months

 

VANESSA PULIDO

a/k/a “Bunny”

Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine

CR 13-00508 LHK

12/9/14

24 months home detention

RAFAEL MEDINA

a/k/a “Conejo”

Distribution and Conspiracy to Distribute Methamphetamine

CR 13-00507 LHK

10/22/14

75 months

RAUL VALLE MORFIN a/k/a “Green Eyes”

Distribution of Methamphetamine

CR 13-00509 DLJ

6/19/14

78 months

JESUS QUINONES

a/k/a “Canas”

Distribution of Methamphetamine

CR 13-00503 DLJ

10/9/14

60 months

JAIRO QUINTANA

a/k/a “Hido”

Distribution of Methamphetamine and Conspiracy to Distribute Methamphetamine

 

CR 13-00506 LHK

7/23/14

70 months

 

MARIA SALINAS

a/k/a “Grumpy”

Distribution of Methamphetamine

CR 13-00504 LHK

6/4/14

26 months

Assistant United States Attorneys Marissa Harris and Stephen Meyer prosecuted the case with the assistance of Nina Burney, and Ryka Barghi.   The case is the result of an investigation by the FBI.

SAN FRANCISCO – Patrick Harvey was sentenced today to 84 months in prison for receiving child pornography announced United States Attorney Brian J. Stretch and Federal Bureau of Investigations Special Agent in Charge John F. Bennett.

Harvey, 30, of Novato, Calif., pleaded guilty on September 14, 2016, to receipt of visual depictions of minors engaging in sexually explicit conduct.  In July 2014, Harvey used Facebook to contact a girl he eventually learned was fifteen years old at that time, and he persuaded her to create sexually explicit images of herself and send them to him.  Harvey saved the images on his cell phone.  Moreover, Harvey possessed more than 500 sexually explicit files of minors to include videos and images, some of which included depictions of pre-pubescent minors under the age of 12.  Harvey also sent images of child pornography to another individual via text message. 

A federal grand jury indicted Harvey on December 1, 2015, charging him with possession of child pornography, in violation of 18 U.S.C. § 2252; receipt of child pornography, in violation of 18 U.S.C. § 2251; and distribution of child pornography, in violation of 18 U.S.C. § 2252.  Harvey pleaded guilty to the receipt charge.

The sentence was handed down by the Honorable Maxine M. Chesney, U.S. District Judge.  In addition to the prison term, Harvey was ordered to serve a ten-year period of supervised release, including conditions prohibiting his use of computers and Internet, prohibiting him from frequenting locations where children may be present, and requiring him to submit to searches upon request of law enforcement, among other conditions.  Harvey will begin serving the sentence immediately.

Assistant U.S. Attorney Sarah Hawkins is prosecuting the case with the assistance of Maria Sunga.  The prosecution is the result of an investigation by the FBI.

SAN FRANCISCO – David Perez Hernandez was sentenced today to six years in prison for possessing with intent to distribute methamphetamine and using, carrying, or possessing a firearm during and in relation to a drug trafficking crime, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence follows a guilty plea entered September 15, 2016, in which Hernandez admitted he possessed with the intent to distribute the methamphetamine and used or carried a firearm during and in relation to the drug trafficking crime.

According to the plea agreement, Hernandez, 20, of San Francisco, admitted that on March 3, 2016, he possessed about 6.8 kilograms of a mixture and substance containing methamphetamine.  Further, Hernandez acknowledged he possessed a handgun in furtherance of the drug trafficking crime.  On July 5, 2016, a federal grand jury indicted Hernandez, charging him with one count of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(C), and one count of using, carrying, or possessing a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c). 

The sentence was handed down by the Honorable Richard Seeborg, U.S. District Judge.  In addition to the prison term, Judge Seeborg ordered Hernandez to serve a three-year period of supervised release.  The defendant has been in federal custody since his arrest in July and will begin serving his sentence immediately.

Assistant U.S. Attorney Helen Gilbert is prosecuting the case with the assistance of Marina Ponomarchuk and MK Swartsfager. This case is the product of an investigation by the FBI. 

OAKLAND – Michael Anthony Martin, 42, of Tracy, Calif., was sentenced today to 370 months in prison for his role in a conspiracy to commit robbery affecting interstate commerce and robbery affecting interstate commerce announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence follows Martin’s conviction of multiple counts of robbery on February 4, 2016, after a three-week jury trial before the Honorable Jeffrey S. White, U.S. District Judge.

Martin was one of five defendants indicted by a federal grand jury on April 10, 2014, in connection with robberies that targeted individuals selling high-end jewelry, such as diamonds and Rolex watches, on Craigslist.  Additional defendants were indicted in other related cases.  The evidence at trial demonstrated that between November 2012 and December 2013, the defendants were part of a crew that targeted victims nationwide whom they identified on Craigslist. The crew members contacted the targeted victims via e-mail or cellular telephone and negotiated to purportedly purchase the jewelry item.  The robbers frequently posed as music producers or pretended to be in the market for diamond engagement rings.  The crew members then induced the victims to travel to the Bay Area to sell the jewelry item by offering to pay for the victim’s airplane ticket or promising to reimburse the victim for travel.  Often a robbery crew member posed as an airport limousine driver and picked up the victim at the airport using a rental SUV.  The victim believed he or she was going to meet the buyer at a jewelry store or bank to complete the sale.  Instead, the driver took the victims to a different, predetermined location where two or more additional robbers, using guns and physical violence, robbed the victims of the jewelry items and other personal property. 

The evidence at trial showed the robbery crew is estimated to have been responsible for stealing more than $500,000 worth of jewelry from victims traveling from more than six states, including Arizona, California, Colorado, Oregon, Washington, and Wisconsin.  For his role in the robberies, Martin was charged with one count of conspiracy to commit robbery affecting interstate commerce, in violation of 18 U.S.C. § 1951, and four counts of substantive robbery, in violation of 18 U.S.C. § 1951(a) and 2.  Pursuant to the jury’s February 4, 2016, verdict, Martin was found guilty of all counts. 

In calculating Martin’s prison term, Judge White imposed a sentence based in part on the finding that the defendant committed perjury while testifying during his trial.  The perjury finding resulted in an obstruction enhancement and a higher sentence.  Further, in addition to the prison term, Judge White ordered Martin to serve a three-year period of supervised release and to pay restitution in the amount of $191,863.93.  

Martin is in federal custody and will begin serving his sentence immediately.

Other crew members that have been sentenced include the following:

NAME/

CASE NO.

AGE

NUMBER OF ROBBERIES/ ATTEMPTED ROBBERIES ADMITTED

SENTENCING DATE

SENTENCE

Rafael Lamont Davis/

CR 14-00093 JSW

19

1

October 14, 2014

41 months

Jaedon Eric Evans/

CR 14-00093 JSW

19

1

December 2, 2014

46 months

Keegan Leecodi Cotton/

CR 14-00093 JSW

20

5

June 2, 2015

70 months

Clarence Lee Andrews/

CR 14-00094 YGR

38

5

December 18, 2014

210 months

Assistant U.S. Attorneys Brigid S. Martin and Claudia A. Quiroz are prosecuting the case with the assistance of Melissa Dorton, Katie Turner, Patty Lau, Yvette Baird, Maria Sunga, and Maureen French.  The prosecution is the result of an investigation by the U.S. Attorney’s Office, the Federal Bureau of Investigation (San Francisco Division, assisted by Sacramento, St. Louis, San Antonio, and Mobile, Alabama Divisions), U.S. Bureau of Prisons, Fremont Police Department, California Department of Corrections, El Cerrito Police Department, Richmond Police Department, San Francisco Police Department, Alameda County Sheriff’s Office, Oakland Police Department, Berkeley Police Department, Danville Police Department, Concord Police Department, Livermore Police Department, Manteca Police Department, Tracy Police Department, Contra Costa Sheriff’s Office, Hayward Police Department, Burlingame Police Department, San Leandro Police Department, Berkeley, Missouri Police Department; Olivette, Missouri Police Department; and the Northern California Regional Intelligence Center.

SAN FRANCISCO – Marty Allen Rochester was sentenced today to 186 months in prison for producing child pornography announced United States Attorney Brian J. Stretch and U.S. Immigrations and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan L. Spradlin.

Rochester, 55, of Magnolia, Texas, pleaded guilty on July 19, 2016, to production of visual depictions of minors engaging in sexually explicit conduct.  In July 2014, Rochester used online chat services, including Skype, to contact a girl he eventually learned was nine years old at that time, and he persuaded her to create sexually explicit images of herself and send them to him.  Rochester saved the images on his computer and sent them to another person with whom he later conspired to produce more sexually explicit depictions of the minor victim.  Moreover, Rochester possessed more than 200 sexually explicit images of minors and more than 25 sexually explicit videos of minors, some of which included depictions of pre-pubescent minors under the age of 12. 

A federal grand jury indicted Rochester on January 28, 2016, charging him with distribution of child pornography, in violation of 18 U.S.C. § 2252; production of child pornography, in violation of 18 U.S.C. § 2251; and conspiracy to produce child pornography, in violation of 18 U.S.C. § 2251.  Rochester pleaded guilty to the production charge.

The sentence was handed down by the Honorable Vince Chhabria, U.S. District Judge.  In addition to the prison term, defendant was ordered to serve a ten-year period of supervised release, including conditions prohibiting his use of computers and Internet, prohibiting him from frequenting locations where children may be present, and requiring him to submit to searches upon request of law enforcement, among other conditions.  Rochester will begin serving the sentence immediately.

Assistant U.S. Attorney Andrew Dawson is prosecuting the case with the assistance of Marina Ponomarchuk.  The prosecution is the result of an investigation by HSI.

SAN JOSE – Jose Vazquez-Barron, AKA Chepa, was sentenced yesterday to 210 months (17.5 years) in prison for his role in a conspiracy to possess with intent to distribute methamphetamine, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.  The sentence follows a guilty plea entered August 15, 2016, in which Vasquez-Barron admitted he conspired to possess with the intent to distribute methamphetamine.

According to the plea agreement, Vasquez-Barron, 29, of San Jose, admitted that between February and October of 2015, he conspired with others to possess and distribute methamphetamine.  In his plea agreement, Vasquez-Barron described two transactions that occurred as part of the conspiracy.  First, on May 20, 2015, he sold 448 grams of actual methamphetamine to an undercover officer in exchange for $4,800.  Second, on September 1, 2015, Vasquez-Barron sold over 500 grams of methamphetamine to an undercover officer.  In addition to these transactions, Vasquez-Barron acknowledged he conspired with others to possess with the intent to distribute an additional 7 kilograms of methamphetamine; the distribution did not occur because the drugs were seized on October 4, 2015. 

Vasquez-Barron was indicted by a federal grand jury on October 8, 2015.  He was charged with one count of conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and 841(b)(1)(A)(viii), and two counts of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(viii).  Pursuant to his plea agreement, Vasquez-Barron pleaded guilty to one count of conspiracy, in violation of 21 U.S.C. §§ 846.   

The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge.  In addition to the prison term, Judge Davila sentenced Vasquez-Barron to a 5-year period of supervised release.  The defendant has been in federal custody since October 5, 2015, and will begin serving his sentence immediately.

Assistant U.S. Attorneys Bill Gullotta and Chinhayi Cadet are prosecuting the case with the assistance of Theresa Benitez and Lakisha Holliman. 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– Yan Feng was sentenced to 35 months of prison and three years of supervised release, announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and U.S. Department of State Diplomatic Security Service Special Agent in Charge David Zebley.  The sentence, handed down yesterday by the Honorable Maxine Chesney, United States District Judge, follows a guilty plea entered earlier this year. 

Feng, 42, of Daly City, was charged in an Information with a single count of what is commonly known as “offering violence to a foreign official,” in violation of 18 U.S.C. § 112(a).  Feng pleaded guilty to this felony charge on September 14, 2016.

According to the plea agreement and court records, Feng admitted that on New Year’s Day 2014, he started a fire at the Chinese Consulate located on Geary Boulevard in San Francisco, Calif.   Feng was arrested by FBI and DSS Special Agents within 48 hours of starting the fire, on January 3, 2014, and has remained in federal custody ever since.  

The prosecution is the result of an investigation by the FBI’s Joint Terrorism Task Force, the U.S. Department of State’s Diplomatic Security Service, and the San Francisco Police and Fire Departments. 

SAN JOSE -  A federal jury convicted Joseph Shayota and Adriana Shayota late yesterday of conspiracy to traffic in counterfeit goods and conspiracy to commit criminal copyright infringement and to introduce misbranded food into interstate commerce announced United States Attorney Brian J. Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Food and Drug Administration (FDA) Office of Criminal Investigations’ Los Angeles Field Office Special Agent in Charge Lisa L. Malinowski.  The guilty verdicts followed an eight-day jury trial before the Honorable Lucy H. Koh, U.S. District Court Judge, and brings to eight the number of people convicted as part of the conspiracy.

The evidence at trial demonstrated that Joseph Shayota, 64, and his wife, Adriana Shayota, 45, both of El Cajon, Calif., were leaders of a conspiracy concerning the illegal relabeling, repackaging, and eventual counterfeiting of the liquid dietary supplement 5-Hour ENERGY. The supplement is owned by Living Essentials, who manufactured all 5-Hour ENERGY at factories in Wabash, Indiana. Living Essentials registered and owns all 5-Hour ENERGY trademarks and related copyrights.  Among the important aspects of the trademarks and copyrights are various graphical elements of the product’s labeling and packaging; the 5-Hour ENERGY trademarks and copyrighted material are displayed on every bottle of 5-Hour ENERGY and display boxes. Living Essentials did not grant licenses to any individual or entity to manufacture 5-Hour ENERGY.  Joseph and Adriana Shayota (“the Shayotas”), through their company Tradeway International Inc., doing business as Baja Exporting, LLC, agreed with Living Essentials to distribute 5-Hour ENERGY in Mexico. According to the evidence at trial, rather than distributing authentic 5-Hour ENERGY with Spanish-language labeling in Mexico, the Shayotas, along with the other charged defendants, attempted to increase their profits by diverting, relabeling, repackaging, and eventually counterfeiting the product.  The jury convicted both defendants of all the charges presented against them at the trial.

“A jury has now determined that the defendants were involved in a conspiracy to substitute a well-known product with a dangerous counterfeit of their own,” said U.S. Attorney Stretch. “We are proud of the hard work of our law enforcement partners in the Food and Drug Administration and the Federal Bureau of Investigation who have worked so hard to uncover the evidence necessary to bring these criminals to justice.” 

“U.S. consumers rely on the FDA to ensure that their foods – and drinks – are safe and wholesome. When criminals introduce counterfeit foods into the U.S. marketplace, they not only cheat consumers, but place consumers’ health at risk,” said Lisa L. Malinowski, Special Agent in Charge, FDA Office of Criminal Investigations’ Los Angeles Field Office. “We will continue to pursue and bring to justice those who jeopardize the public’s health.”

Under its agreement with Baja Exporting, LLC, Living Essentials agreed to manufacture the liquid 5-Hour ENERGY product and provide Spanish-language labeling and display boxes to the exporter.  Under the agreement, the 5-Hour ENERGY product provided to Baja was to be distributed only in Mexico.  The agreement also specified that Living Essentials would provide to Baja a “complete product package” including Spanish-language labeling.  The evidence at trial demonstrated that the Shayotas and charged codefendants diverted the product in order to sell it in the United States at a higher price. After initial efforts to sell the product failed because of the Spanish-language labeling and display boxes, the Shayotas took additional steps to profit illegally from the 5-Hour ENERGY product. 

The Shayotas and other defendants next replaced the labeling and display boxes with counterfeit labels and boxes in English designed to imitate Living Essentials’ packaging in the United States. The defendants relabeled and repackaged over 350,000 bottles of 5-Hour ENERGY.  The defendants removed the legitimate lot numbers and expiration dates, replaced them with false labeling, and sold them in the United States at a price that was lower than what Living Essentials charged for authentic United States 5-Hour ENERGY. By December 2011, the Shayotas had sold off Baja’s remaining stock of the repackaged/relabeled 5-Hour ENERGY.

Further, the evidence at trial demonstrated that by early 2012, the Shayotas and other defendants began to substitute the entire 5-Hour ENERGY product with a counterfeit product. They manufactured the counterfeit 5-Hour ENERGY liquid at an unsanitary facility using untrained day workers, and mixed unregulated ingredients in plastic vats while attempting to mimic the real 5-Hour ENERGY products.  From approximately December 2011 through October 2012, the defendants ordered more than seven million counterfeit label sleeves and hundreds of thousands of counterfeit display boxes, and placed false lot and expiration codes on the bottles and boxes.  They often changed the lot and expiration codes on the counterfeit bottles and boxes to parallel the valid codes being used on the authentic product.

In addition, evidence at trial demonstrated that from May 2012 to October 2012, Midwest Wholesale Distributors, a company owned by defendant Walid Jamil, distributed more than four million bottles of counterfeit 5-Hour ENERGY into commercial channels throughout the United States. Midwest sold over 500,000 counterfeit 5-Hour ENERGY bottles to Baja Exporting and over 3,500,000 counterfeit 5-Hour ENERGY bottles to the Dan-Dee Company, which was owned by defendants Kevin Attiq and Fadi Attiq.

A Superseding Information was filed on June 29, 2016, charging the Shayota’s, Jamil, the Attiqs, and four others with conspiracy to traffic in counterfeit goods, in violation of 18 U.S.C. § 2320(a); and conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce, in violation of 18 U.S.C. § 371.

Joseph Shayota and Adriana Shayota are out of custody pending sentencing. Their sentencing hearing is scheduled for April 5, 2017, before Judge Koh in San Jose.  The maximum statutory penalty for conspiracy to traffic in counterfeit goods is ten years’ imprisonment, a fine of $2,000,000 and restitution.  The maximum statutory penalty for conspiracy to commit criminal copyright infringement and conspiracy to introduce misbranded food into interstate commerce is five years’ imprisonment, a $250,000 fine, and restitution.  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.

Six defendants, listed below, have pleaded guilty. 

Defendant

Guilty Plea

Sentencing Date

Kevin Attiq, 58, of El Cajon

Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

February 1, 2017

Raid Jamil, 47, of West Bloomfield, Michigan

Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

May 17, 2017

Walid Jamil, 66, of Troy, Michigan 

Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 23202(a), and Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

 

April 26, 2017

Mario Ramirez, 57, of San Diego, California

Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

February 8, 2017

Leslie Roman, 62, of Rancho Cucamonga, California

Conspiracy to Commit Criminal Copyright Infringement, and to Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

February 8, 2017

Justin Shayota, 33, of San Diego, California

Conspiracy to Traffic in Counterfeit Goods, in violation of 18 U.S.C. § 23202(a), and Conspiracy to  Introduce Misbranded Food into Interstate Commerce, in violation of 18 U.S.C. § 371

March 15, 2017

 

 

 

Defendant Juan Romero remains a fugitive.

Assistant U.S. Attorneys Matt Parrella and Susan Knight are prosecuting the case with the assistance of Lakisha Holliman, Nina Burney, and Elise Etter.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Food and Drug Administration’s Office of Criminal Investigations.

SAN JOSE – Jesus Armendariz was sentenced today to 15 years in prison based on his conviction on charges of racketeering conspiracy, distribution of crystal methamphetamine, and use of a firearm, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The sentence was imposed by the Honorable Edward J. Davila, U.S. District Judge, and represents the twelfth conviction resulting from a proactive operation by the FBI’s Santa Clara County Violent Gang Task Force targeting gang members committing violent crimes and selling methamphetamine in San Jose. 

The sentence follows a guilty plea entered July 28, 2016.  According to the plea agreement, Armendariz admitted being a Sureño gang member from at least January of 2009 to at least January of 2014.  Armendariz acknowledged performing the functions of a gang leader and liaison for the Mexican Mafia prison gang to Sureño gangs in San Jose, including the Sur Santos Pride (SSP) gang.  The SSP gang committed acts of violence, including murder, attempted murder, and robbery, for the benefit of the gang.  Like other Sureño gangs in San Jose, SSP pledged their loyalty to the Mexican Mafia prison gang and followed its directives. 

Armendariz admitted that he conspired with SSP members (as well as other Sureño gangs) to carry out the violent precepts of the Mexican Mafia through a pattern of criminal racketeering activity.  Armendariz acknowledged that part of his role was to fuel the Sureño gang members with guns and crystal methamphetamine provided by the Mexican Mafia.  The defendant also collected money from each Sureño gang in San Jose on behalf of the Mexican Mafia, sent that money on to the Mexican Mafia, and provided the Sureño gangs in San Jose with the directives of the Mexican Mafia relating to narcotics trafficking, gang operations, and other instructions to further the criminal goals of the Mexican Mafia prison gang.

Armendariz’s tattoo shop was raided by the FBI on January 30, 2014.  At that time, the FBI recovered over 700 grams (net/actual weight) of crystal methamphetamine, three handguns, and an AR-15 semi-automatic rifle.

Armendariz was among 27 Sureño gang members in San Jose indicted on March 18, 2014, with various charges, including Racketeer Influenced and Corrupt Organizations (RICO) Conspiracy, in violation of 18 U.S.C. § 1962(d); Violent Crime in Aid of Racketeering (VICAR) Murder Conspiracy, in violation of 18 U.S.C. § 1959(a)(5); VICAR Murder and Attempted Murder, in violation of 18 U.S.C. § 1959(a)(1) and (a)(5); distribution of crystal methamphetamine, in violation of 21 U.S.C. §§ 846 and 841; and using and possessing firearms, in violation of 18 U.S.C. §§ 922 and 924(c).  Pursuant to his plea agreement, Armendariz pleaded guilty to one count each of racketeering conspiracy; use of a firearm in relation to a crime of violence; and conspiracy to distribute and possess with intent to distribute 50 grams and more of methamphetamine.

In addition to the prison term, Judge Davila also ordered defendant to serve 5 years of supervised release and pay a $300 special assessment.  Defendant currently is in custody and will begin serving his sentence immediately.

The investigation leading to the indictment was part of the FBI’s crackdown on Sureño gangs in Santa Clara County.  Eleven of the other charged defendants already have been sentenced as reflected in the chart below.  Five other defendants are scheduled to be sentenced in the next two months.  Six defendants are pending trial set for May 2017, and a status conference is scheduled for December 15, 2016. 

Defendant

Charges

Sentence

JOSE DAVID SANCHEZ a/k/a “Joker”

Distribution of Methamphetamine

Sentenced on 10/21/14 to 77 months in prison

JUAN CHAVEZ

a/k/a “Dukester”

Distribution of Methamphetamine

Sentenced on 10/30/14 to 77 months in prison

ANDY LAMB LOPEZ a/k/a “Solo”

Felon in Possession of Firearm

Sentenced on 2/23/15 to 45 months in prison

MIGUEL MIRANDA

a/k/a “Payaso”

Distribution of Methamphetamine

Sentenced on 2/23/15 to 120 months in prison

MARIO GUERRERO

a/k/a “Lil Junior”

Distribution of Methamphetamine

Sentenced on 8/27/15 to 85 months in prison

FRANCISCO RAMIREZ a/k/a “Cisco”

Distribution of Methamphetamine

Sentenced on 11/2/15 to 46 months in prison

JORGE RODRIGUEZ a/k/a “Brownie”

RICO Conspiracy and VICAR Attempted Murder

Sentenced on 2/1/16 to 160 months in prison

RICARDO MONTOYA

a/k/a “Necio”

RICO Conspiracy and VICAR Attempted Murder

Sentenced on 5/16/16 to 108 months in prison

JOSE MORENO

a/k/a “Lil Chocolate”

RICO Conspiracy and Use of a Firearm

Sentenced on 8/4/16 to 160 months in prison

MARCOS LOMELI

a/k/a “Cookie”

RICO Conspiracy and Use of a Firearm

Sentenced on 9/26/16 to 127 months in prison

FERNANDO CRUZ

a/k/a “Nano”

RICO Conspiracy

Sentenced on 11/10/16 to 87 months in prison

FRANCISCO FONSECA

a/k/a “Griffo”

RICO Conspiracy, Distribution of Methamphetamine, Felon in Possession of a Firearm

Sentencing Scheduled for 12/12/16

DANIEL CORTEZ

a/k/a “Lil Temper”

RICO Conspiracy

Sentencing Scheduled for 12/18/16

FELIX HERNANDEZ CRISTOBAL a/k/a “Pato”

RICO Conspiracy

Sentencing Scheduled for 12/19/16

BENITO CANALES

a/k/a “Dopey”

RICO Conspiracy

Sentencing Scheduled for 12/20/16

DENNIS SANDOVAL

a/k/a “Criminal”

VICAR Attempted Murder

Sentencing Scheduled for 1/9/17

Assistant United States Attorneys Stephen Meyer, Cynthia Frey, and Amie Rooney are prosecuting the case.   The case is the result of an investigation by the FBI.
 

 

 

SAN FRANCISCO – Yolanda Brown, AKA Yo-Yo, pleaded guilty in federal court in San Francisco late yesterday to five robberies of Bay Area banks and credit unions, the unlawful possession of a firearm, and distribution of methamphetamine, announced United States Attorney Brian Stretch, Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett, and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.

In pleading guilty, Brown, 48, of San Francisco, admitted to robbing the following banks and credit unions:
 

Date

Bank / Credit Union

Location

January 11, 2016

Wells Fargo

2055 Chestnut Street, San Francisco, CA

January 13, 2016

Patelco Credit Union

1358 Fairmont Drive, San Leandro, CA

February 19, 2016

Patelco Credit Union

1358 Fairmont Drive, San Leandro, CA

June 9, 2016

Citibank

2400 19th Avenue, San Francisco, CA

June 16, 2016

Wells Fargo

3365 Deer Valley Road, Antioch, CA

 

In her plea agreement, Brown also admitted to being a convicted felon in possession of a firearm and to possessing with intent to distribute and distributing more than fifty grams of methamphetamine.

On October 20, 2016, a federal grand jury formally indicted Brown for the robberies and unlawful possession of a firearm.  The indictment charged her with five counts of bank or credit union robbery, in violation of 18 U.S.C. § 2113(a), and one count of being a felon in possession of a firearm, in violation of 18 U.S.C. § 922(g)(1).  Further, on September 15, 2015, Brown was indicted for distribution of methamphetamine, in violation of 21 U.S.C. § 841(a)(1).   Under the plea agreement, Brown pled guilty to all charges in both indictments.

Brown is currently in custody. Brown’s sentencing hearing is scheduled for February 27, 2017, at 2:30 PM before the Honorable Thelton E. Henderson, U.S. District Judge, in San Francisco.  The maximum statutory penalties for each count of bank robbery is 20 years’ imprisonment, a fine of $250,000, and applicable restitution.  The maximum statutory penalties for being a felon in possession of a firearm is 10 years’ imprisonment and a fine of $250,000.  The maximum statutory penalties for possession with intent to distribute and distribution of 50 grams or more of actual methamphetamine is life in prison, a minimum prison term of ten years, and a fine of $10,000,000.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Scott D. Joiner is prosecuting the case with the assistance of Lance Libatique, Christine Tian, and Linda Love.  The prosecution is the result of an investigation by the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the San Francisco Police Department, the San Leandro Police Department, and the Antioch Police Department.

 

SAN FRANCISCO – Rodney Vincent Ortiz and Vincent Rudy Ortiz (collectively, the defendants) pleaded guilty today in federal court today for their respective roles in the March 21, 2015, drug related shooting and murder on the Hoopa Valley Indian Reservation in Humboldt County, Calif., announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.  The guilty pleas were accepted by the Honorable Richard Seeborg, U.S. District Judge.

According to the plea agreement, the defendants committed the shooting and murder following a dispute over a drug transaction that took place a week earlier.  Vincent Ortiz, 27, of Willow Creek, Calif., admits he sold what was supposed to be a pound of marijuana to Victim 1, a resident and member of the reservation.  When Victim 1 complained that the amount of marijuana was less than a pound, Vincent eventually traveled with his father, Rodney Ortiz, 54, to Victim 1’s residence to resolve the dispute. Rodney Ortiz admits he brought a loaded firearm to the residence; Vincent Ortiz admits he knew Rodney Ortiz brought the loaded firearm and that it was foreseeable his father would use the weapon to shoot Victim 1.  When the defendants arrived at the residence, they encountered a group of people inside.  An argument ensued between Victim 1 and Rodney Ortiz, resulting in Rodney Ortiz shooting Victim 1 and Victim 2 in the head.  Rodney Ortiz then shot Victim 3 in the head and shoulder before fleeing the scene with his son, Vincent. Victim 1 died as a result of the shooting, but Victims 2 and 3 managed to survive.  In his plea agreement, Vincent Ortiz admits he aided and abetted Rodney Ortiz’s use, carrying, and discharging of the firearm in furtherance of and in relation to the drug conspiracy and the resulting murder of Victim 1.  Vincent Ortiz also acknowledges in his plea agreement that he reasonably could have foreseen the shootings of Victims 2 and 3.   

A federal grand jury indicted the defendants on December 17, 2015.  In the indictment, the defendants are charged with conspiracy to distribute and possess with intent to distribute marijuana, in violation of 21 U.S.C. § 846 and 841(a)(1) and (b)(1)(D), use of a firearm during and in relation to a drug trafficking crime, in violation of 18 U.S.C. § 924(c)(1)(A) and 2; and use of a firearm during a drug trafficking crime causing murder, in violation of 18 U.S.C. § 924(j) and 2, obstruction of justice, in violation of 18 U.S.C. § 1512(a)(1)(C) and (k), and use of a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c).  Pursuant to today’s plea agreement, the defendants both pleaded guilty to one count of use of a firearm during and in relation to a drug trafficking crime and one count of use of a firearm during a drug trafficking crime causing the murder of Victim 1.

The defendants are next scheduled to appear before Judge Seeborg on May 2, 2017, for a sentencing hearing.  The maximum statutory penalties for use of a firearm during and in relation to a drug trafficking crime are life imprisonment, and a mandatory minimum term of 10 years imprisonment, to be imposed consecutive to any other term of imprisonment.  The maximum statutory penalty for use of a firearm causing murder is life imprisonment.  Each crime carries a maximum term of 5 years supervised release and a $250,000 fine.  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 Kimberly Hopkins is prosecuting the case with the assistance of Lance Libatique and Jessica Meegan.  The prosecution is the result of an investigation by the Humboldt County Sherriff’s Office, Humboldt County District Attorney’s Office, Eureka Police Department, and the Federal Bureau of Investigation.

Defendant Allegedly Defrauded Hewlett-Packard Company in the Acquisition of Autonomy for $11 Billion

A federal grand jury indicted Sushovan Hussain, 52, a citizen and resident of the United Kingdom, with conspiracy to commit wire fraud and multiple counts of wire fraud.  According to the indictment filed last Nov. 10, Hussain allegedly engaged in a scheme to defraud purchasers and sellers of securities of Autonomy Corporation plc (Autonomy) and Hewlett-Packard Company about the true performance of Autonomy’s business, its financial condition and its prospects for growth. 

According to the indictment, Hussain, was the former Chief Financial Officer (CFO) of Autonomy, a company incorporated in the United Kingdom.  Autonomy maintained dual headquarters in San Francisco and Cambridge.  In 2010, about 68 percent of Autonomy’s reported revenues came from the United States and other countries in the Americas.

The case involves the acquisition by Palo Alto-based Hewlett-Packard Company and Hewlett-Packard Vision B.V., a wholly-owned subsidiary of HP (collectively HP), of Autonomy.  On Aug. 18, 2011, HP entered into an offer agreement with Autonomy and publicly announced its offer to acquire Autonomy for approximately $11 billion.  On Oct. 3, 2011, HP’s acquisition of Autonomy closed and HP acquired control of Autonomy.

According to the indictment, between 2009 and 2011, Hussain artificially inflated Autonomy’s revenues by backdating written agreements to record revenue in prior periods; recorded revenue on contracts that were subject to side letters or other contingencies that impacted revenue recognition; improperly recorded revenue for reciprocal or roundtrip transactions; and made false and misleading statements to Autonomy’s independent auditor about transactions allegedly supporting the recognition of revenue and other items in Autonomy’s financial statements.  In so doing, Hussain allegedly issued materially false and misleading quarterly and annual financial statements on behalf of Autonomy.  The indictment further alleges that defendant and others provided these financial statements to HP during the time that HP was considering whether to purchase Autonomy.

In addition, the indictment alleges that Hussain caused Autonomy to make materially false and misleading statements directly to HP regarding Autonomy’s financial condition, performance and business during the negotiations between HP and Autonomy leading up to the Aug. 18, 2011, acquisition announcement.  Allegedly, Hussain made false and misleading statements about the nature of Autonomy’s products, concealed Autonomy’s non-appliance hardware sales and made other false and misleading statements during HP’s “due diligence” of Autonomy.  In sum, the indictment charges Hussain with one count of conspiracy to commit wire fraud and 14 counts of wire fraud.    

No federal court appearance has yet been scheduled for the defendant. 

An indictment merely alleges that crimes have been committed and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a maximum sentence of 20 years in prison and a fine of $250,000, plus restitution, for each count of wire fraud and for the conspiracy count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence. 

Assistant U.S. Attorneys Robert S. Leach and Adam A. Reeves are prosecuting the case with the assistance of Phillip Villanueva and Bridget Kilkenny.  The prosecution is the result of a multi-year investigation involving the FBI and the U.S. Securities and Exchange Commission.   

SAN FRANCISCO - A federal grand jury indicted Sushovan Hussain with conspiracy to commit wire fraud and multiple counts of wire fraud.  According to the indictment filed last Thursday, November 10, 2016, Hussain allegedly engaged in a scheme to defraud purchasers and sellers of securities of Autonomy Corporation plc (“Autonomy”) and Hewlett-Packard Company about the true performance of Autonomy’s business, its financial condition, and its prospects for growth. 

According to the indictment, Hussain, 52, a citizen and resident of the United Kingdom, was the former Chief Financial Officer (CFO) of Autonomy, a company incorporated in the United Kingdom.  Autonomy maintained dual headquarters in San Francisco and Cambridge.  In 2010, about 68% of Autonomy’s reported revenues came from the United States and other countries in the Americas.

The case involves the acquisition by Palo Alto-based Hewlett-Packard Company and Hewlett-Packard Vision B.V., a wholly-owned subsidiary of HP (collectively HP), of Autonomy.  On August 18, 2011, HP entered into an Offer Agreement with Autonomy and publicly announced its offer to acquire Autonomy for approximately $11 billion.  On October 3, 2011, HP’s acquisition of Autonomy closed and HP acquired control of Autonomy.

According to the Indictment, between 2009 and 2011, Hussain artificially inflated Autonomy’s revenues by backdating written agreements to record revenue in prior periods; recorded revenue on contracts that were subject to side letters or other contingencies that impacted revenue recognition; improperly recorded revenue for reciprocal or roundtrip transactions; and made false and misleading statements to Autonomy’s independent auditor about transactions allegedly supporting the recognition of revenue and other items in Autonomy’s financial statements.  In so doing, Hussain allegedly issued materially false and misleading quarterly and annual financial statements on behalf of Autonomy.  The indictment further alleges that defendant and others provided these financial statements to HP during the time that HP was considering whether to purchase Autonomy.

In addition, the indictment alleges that Hussain caused Autonomy to make materially false and misleading statements directly to HP regarding Autonomy’s financial condition, performance, and business during the negotiations between HP and Autonomy leading up to the August 18, 2011, acquisition announcement.  Allegedly, Hussain made false and misleading statements about the nature of Autonomy’s products, concealed Autonomy’s non-appliance hardware sales, and made other false and misleading statements during HP’s “due diligence” of Autonomy.  In sum, the indictment charges Hussain with one count of conspiracy to commit wire fraud, in violation of 18 U.S.C. § 1349, and fourteen (14) counts of wire fraud, in violation of 18 U.S.C. § 1343.           

No federal court appearance has yet been scheduled for the defendant. 

An indictment merely alleges that crimes have been committed, and the defendant is presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, the defendant faces a maximum sentence of twenty (20) years in prison, and a fine of $250,000, plus restitution, for each count of wire fraud and for the conspiracy count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Assistant U.S. Attorneys Robert S. Leach and Adam A. Reeves are prosecuting the case with the assistance of Phillip Villanueva and Bridget Kilkenny.  The prosecution is the result of a multi-year investigation involving the FBI and the United States Securities and Exchange Commission.  

Oakland – A resident of Point Richmond, Calif. was sentenced late yesterday to serve 33 months in prison for tax evasion, announced U.S. Attorney Brian J. Stretch, Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and Special Agent in Charge of Internal Revenue Service-Criminal Investigation (IRS-CI) Michael T. Batdorf.

In June, Richard Thomas Grant, 63, was found guilty of three counts of tax evasion following a jury trial in Oakland, California. 

According to evidence presented at trial, in 2001, Grant stopped filing individual income tax returns and paying income taxes despite the fact that he received significant income as a partner with Grant Engineering & Manufacturing, an engineering company in Richmond.  In 2003, Grant stopped filing annual partnership returns for Grant Engineering, even though he continued to pay a CPA to prepare these returns.  That same year, Grant became a member of Freedom Law School, and paid thousands of dollars in yearly membership fees.  While the IRS attempted to collect unpaid taxes owed by Grant for 2001 and 2002, and attempted to examine Grant’s taxes for subsequent years, Grant, with the assistance of Freedom Law School, attempted to frustrate the IRS’s actions by, among other things, filing multiple law suits in various jurisdictions.  These lawsuits were unsuccessful. 

For the charged years 2005 through 2009, Grant’s partnership income was $509,339, $566,741, $486,062, $598,977, and $604,706, respectively.

In an effort to conceal his assets and income, in 2005, Grant significantly curbed the use of his checking accounts and began depositing his partnership distributions at a warehouse bank known as MyICIS in Berryville, Arkansas.  Warehouse banks can be used to conceal ownership of funds in part by commingling such funds with those of other individuals.  Between April 2005 and October 2006, Grant wrote hundreds of checks drawn on the MyICIS account and funded multiple prepaid debit cards.  Grant used the checks and debit cards to pay his mortgage and other personal expenses.

After the federal government shut down MyICIS, Grant used another bank to convert his partnership distributions to cashier’s checks and cash in order to avoid depositing the funds into a bank account and used the cashier’s checks to pay his mortgage and other high-dollar personal expenses.  He also used cash to purchase dozens of U.S. Postal money orders to pay other bills and expenses, including utilities, taxes, and expenses related to his classic aircraft.  

“Mr. Grant spent years trying to devise and implement ways to avoid paying his taxes,” said U.S. Attorney Stretch.  “In the end, his violations of the law equated to three years in jail and substantial monetary penalties.  Similar results await those who cheat on their taxes.”

“This was not a case about someone who simply fell behind in a good faith effort to keep up with their taxes, rather someone who earned millions of dollars and paid no taxes,” said Special Agent in Charge Michael T. Batdorf. “Mr. Grant moved his funds out of the traditional banking system which enabled him conceal ownership and hide his income.  Today’s sentencing sends a message that those who intentionally undermine our tax system will not go undetected and will be held accountable.”

In addition to the term of prison imposed, Grant was also ordered to serve three years of supervised release, as well as pay restitution to the IRS in the amount of $402,457.39, costs of prosecution of $4,400.90, and a fine of $7,500.  Grant was ordered to appear to begin serving his sentence on January 9, 2016,

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Stretch commended agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Colin Sampson, and Trial Attorney Matthew Kluge of the Tax Division, who prosecuted the case.

SAN JOSE— A federal jury convicted Sanjiv Kakkar of wire fraud and making misstatements to a bank announced U.S. Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.  The verdict, issued late yesterday, followed a twelve-day trial before the Honorable Edward J. Davila, U.S. District Judge.

The evidence presented at trial demonstrated that Kakkar, 55, of Saratoga, presented false information to a bank in connection with refinancing a hotel property he owned in Boulder Creek, Calif.  In November of 2008, Kakkar sought to secure a $6 million loan to refinance the Brookdale Inn and Spa.  In connection with the loan, he submitted to a bank falsified income information and tax returns that overstated his business income.  Further, in the months that followed, Kakkar did not comply with his continuing obligation under the terms of the loan to provide the bank with updated financial records and further tax documents.  In addition, the evidence at trial demonstrated that between January and June 2009, Kakkar fraudulently induced an escrow company to send hundreds of thousands of dollars to him in connection with construction costs.   About $1.5 million of the loan Kakkar secured with the bank was earmarked for construction on the property.  The bank retained an escrow company to disburse portions of the loan when reimbursement for construction costs was appropriate.  Kakker submitted false and fraudulent documents to induce the escrow company to wire six progress payments totaling $509,875.  

A grand jury issued a superseding indictment against Kakkar on June 2, 2016, charging him with one count of making misstatements to a bank, in violation of 18 U.S.C. § 1014, and six counts of wire fraud, in violation of 18 U.S.C. § 1343.  Kakkar was found guilty of all the charges presented in the superseding indictment.

Kakkar is scheduled to appear before Judge Davila on February 13, 2016, for sentencing.    The maximum statutory penalty for making misstatements to a bank is 30 years’ imprisonment, a $1 million fine, and five years of supervised release.  The maximum statutory penalty for each count of wire fraud is 20 years’ imprisonment, a $250,000 fine, and 5 years of supervised release.  However, any sentence would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorneys Amie Rooney and Maia Perez are prosecuting the case with assistance from Nina Burney and Elise Etter.  The case is the result of an investigation by the ATF.

SAN FRANCISCO – Defendant Jaime Balam (a/k/a “Tweety”) was sentenced today to 330 months’ imprisonment 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.  The sentence was handed down by the Honorable William H. Alsup, U.S. District Judge following a guilty plea entered August 16, 2016, in which Balam acknowledged committing numerous crimes including conspiracy to commit murder, racketeering, and illegal use and possession of firearms. 

Balam, 27, is a native and citizen of Mexico.  According to his guilty plea, since 2008, he was a member of La Mara Salvatrucha, or “MS-13,” a transnational criminal gang operating in various Central American countries and in numerous states across the United States. In his plea agreement, Balam acknowledged that as a member of MS-13, he conspired with other gang members to conduct of the affairs of MS-13 through a pattern of racketeering activity that included murder, attempted murder, and other acts of violence.  For example, Balam acknowledged that in order to maintain and increase his position as an MS-13 gang member, he would kill members of rival gangs and those believed to be members of rival gangs. 

Described in Balam’s plea agreement are the events of February 19, 2009.  On that day, Balam was riding in a stolen car with other gang members “hunting” for rival gang members in parts of San Francisco and Daly City.  When his coconspirators spotted a car parked near the Daly City BART station, Balam and another gang member exited the car, approached the suspected rival gang members from behind, and opened fire at the people seated inside the car.  The gun fire killed one person and gravely wounded two others.  Balam admitted he did not know the victims in the car; other court documents make clear that the victims were not gang members, but rather four friends on a regular Thursday evening outing for dinner and drinks.

Balam was indicted on August 21, 2012, and charged with racketeering conspiracy, in violation of 18 U.S.C. § 1962(d); conspiracy to commit murder in aid of racketeering activity, in violation of 18 U.S.C. § 1959(a)(5); conspiracy to commit assault with a dangerous weapon in aid of racketeering activity, in violation of 18 U.S.C. § 1959(a)(6); murder in aid of racketeering activity, in violation of 18 U.S.C. § 1959(a)(1); attempted murder in aid of racketeering activity, in violation of 18 U.S.C. § 1959(a)(5) (three counts); carrying and using a firearm during and in relation to a crime of violence, in violation of 18 U.S.C. § 924(c)(1)(A); causing death in the commission of a violation of 18 U.S.C. § 924(c), in violation of 18 U.S.C. § 924(j); and being an alien unlawfully in possession of a firearm or ammunition, in violation of 18 U.S.C. § 922(g)(5).  In February of 2015, Balam was extradited from Mexico and brought to the United States to face the charges in the indictment.  Pursuant to his plea agreement, Balam pleaded guilty to all but one of the murder in aid of racketeering charges. 

In addition to the prison term, Judge Alsup sentenced Balam to five years of supervised release and to pay $21,650 in restitution to the murder victim’s father. 

Assistant U.S. Attorney Andrew M. Scoble is prosecuting the case with the assistance of Lance Libatique and Kevin Costello.  The prosecution is the result of an investigation by Homeland Security Investigations, the San Francisco Police Department, and the Daly City Police Department.

SAN FRANCISCO – Shahram “Ron” Roohparvar was sentenced on November 2, 2016, to three months in custody followed by three months of home confinement for illegally trafficking elephant ivory announced United States Attorney Brian J. Stretch and Special Agent in Charge of the U.S. Fish and Wildlife Services (USFWS) Law Enforcement Jill Birchell.  The sentence was handed down by the Honorable Charles Breyer, United States Senior District Judge, following a guilty plea entered in July of this year.

According to his plea agreement, Roohparvar, 61, of Saratoga, admitted he falsified documents in order to illegally sell and ship protected elephant ivory to international purchasers.  In addition to the African elephant ivory, Roohpavar admitted that he illegally sold other wildlife protected by law to international purchasers.  This wildlife included leopard, helmeted hornbill, and red coral.  Roohparvar owned and operated a website through which he sold the protected wildlife.

The sale of elephant ivory has been largely banned and highly regulated since 1976.  Federal statutes and international agreements regulate the export of elephant ivory and make it a crime to, among other things, export such products without the proper permits and declarations. 

“Illegally wildlife trafficking presents a significant challenge for threatened and endangered wildlife like the African elephant, helmeted hornbill and coral,” said U.S. Attorney Stretch.  “This office will vigorously investigate and prosecute those people whose illegal activities threaten to drive these precious resources into extinction.”

"One of the highest priorities of the USFWS Office of Law Enforcement is to investigate individuals and companies that are involved in the unlawful commercial trafficking and smuggling of protected animals and plants here and around the world,” said Special Agent in Charge Jill Birchell.  “Many species are teetering on the brink of extinction due to poaching to supply the illegal wildlife trade, and elephants, in particular, have become increasingly susceptible to this unlawful exploitation.  This investigation demonstrates our commitment to bring to justice those who violate fish and wildlife laws for personal or commercial gain as well as those who drive the illegal trade nationally and internationally."

In addition to the prison term and home confinement, Judge Breyer sentenced Roohparvar to two years of supervised release, a fine of $20,000, restitution of $20,000 payable to the Lacey Act Reward Fund, and a special assessment of $100.  Roohparvar currently is free on bond; Judge Breyer ordered him to surrender on or before February 3, 2017, to begin serving his prison sentence.  

Assistant U.S. Attorney Laura Vartain Horn is prosecuting the case with the assistance of Ana Guerra and Theresa Benitez. The prosecution is the result of an investigation conducted by the USFWS Office of Law Enforcement.

SAN JOSE – Daniel Asa Hitesman was sentenced yesterday to 16 years in prison for attempted bank robbery, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation (FBI) Special Agent in Charge John F. Bennett.

On July 26, 2016, after a three-day trial before the Honorable Lucy H. Koh, U.S. District Judge, Hitesman was convicted by a jury of a single count of attempted bank robbery.  During the trial, evidence showed that on July 23, 2013, Hitesman left a halfway house in San Francisco and made his way to Cupertino where he went to the branch of a bank located on Stevens Creek Boulevard. Hitesman entered the bank carrying a large bag and wearing a hat and sunglasses to cover his face.  He stood in line and, when his turn came, approached the bank teller and said he had “a bag full of guns.”  Hitesman demanded money and told the teller that if he did not receive it he would “start shooting.”  The teller refused Hitesman’s demands and pressed the alarm.  Hitesman thereafter fled.

Although Hitesman concealed his face during the attempted robbery, the FBI obtained and distributed bank surveillance photos. Personnel from the halfway house at which Hitesman was staying recognized the defendant in the photos and contacted the FBI.  This identification and additional evidence linked Hitesman to the offense.

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

Assistant U.S. Attorneys Scott Simeon and Jeffrey Backhus are prosecuting the case with the assistance of Ryka Barghi, Lakisha Holliman, and Yolanda Singletary.  The prosecution is the result of an investigation by the FBI and the Santa Clara County Sheriff’s Office.

SAN FRANCISCO - A federal grand jury in San Francisco indicted former winemaker Jeffry Hill for mail fraud and wire fraud in connection with his operation of a Napa Valley- based wine company, announced United States Attorney Brian J. Stretch and Alcohol and Tobacco Tax and Trade Bureau (“TTB”) Assistant Administrator for Field Operations Tom Crone.  The indictment was unsealed this morning.

Hill, 38, formerly of Napa, Calif., now of Clovis, Calif., ran Hill Wine Company (“HWC”).  HWC was in the business of making and selling wine and wine inputs, such as pre-fermented grape juice, among other things.  HWC operated a winery and tasting room in Napa County, Calif., on the Silverado Trail, and used winemaking equipment at other facilities, owned by others, in Napa County and Sonoma County, Calif.  According to the indictment, Hill defrauded HWC’s customers by misrepresenting the geographic origin and grape varietal of the wine and wine products that he sold, thus causing customers to pay more than they would have otherwise, or to buy products that they would not have otherwise.

Federal regulations establish “American Viticultural Areas,” or AVAs, which are geographically delineated regions with particular wine growing characteristics.  The Napa Valley AVA is one such AVA in California.  Under federal regulations, wine can only be labeled as originating from a particular AVA if not less than 85% of the liquid volume of the wine is derived from grapes grown within the boundaries of the AVA.  Napa Valley wine is seen as premium wine and often sells at a higher price than wine from other parts of California, and grapes grown in the Napa Valley AVA are generally more expensive than those grown in other parts of California.  According to the indictment, Hill allegedly grew or purchased grapes, pre-fermented grape juice or wine grown outside of the Napa Valley then sold bulk grape juice, bulk wine, or bottled wine made from these non-Napa Valley grapes while representing these products to have been made from Napa Valley AVA grapes.  Similarly, Hill allegedly misrepresented as cabernet sauvignon wine that was made from other varietals of grapes.  According to the indictment, customers paid over $1,500,000 for fraudulently mislabeled wine, grape juice, or wine products.

Hill also allegedly took steps to conceal and hide his scheme to defraud.  Among the things Hill allegedly did to hide his conduct was alter or create false bills of lading and other records; maintain false records of inventory so as to misstate the geographic origin or varietal of grapes, wine, or grape juice in his company’s inventory; falsely state to his company’s employees that grapes grown outside of Napa Valley were grown in Napa Valley; move grapes or wine between his company’s three facilities to obscure the origin of the grapes; and instruct employees who picked grapes to mislabel the origin and varietal of grapes that they picked.  According to the indictment, Hill instructed grape growers outside of the Napa Valley AVA never to tell anyone that he, through his company, had bought grapes from them.  In all, Hill has been charged in the indictment with four counts of mail fraud, in violation of 18 U.S.C. § 1341; and four counts of wire fraud, in violation of 18 U.S.C. § 1343. 

Hill was arrested today in Clovis, Calif., and made his initial appearance in federal court in the Eastern District of California, in Fresno, Calif.  He was released on conditions.  His next appearance is scheduled to be at 9:30 a.m. on November 16, 2016, before the Honorable Laurel Beeler, United States Magistrate Judge, at 450 Golden Gate Avenue, San Francisco, Calif., for an initial appearance in the Northern District of California.

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 statutory penalty for a count of violating 18 U.S.C. § 1341 or 18 U.S.C. § 1343 is twenty years’ imprisonment and $250,000 or twice the amount gained or lost as a result of the scheme.  The court may also order that the defendant pay restitution, if appropriate.  However, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Benjamin Kingsley is prosecuting the case with the assistance of Denise Oki, Bridget Kilkenny, and Jessica Meegan.  The prosecution is the result of an investigation by the TTB and the Internal Revenue Service-Criminal Investigation.

OAKLAND – A federal jury convicted Hugh Robinson today, of conspiracy to commit theft of public money, theft of public money, and aggravated identity theft  announced United States Attorney Brian J. Stretch and Internal Revenue Service, Criminal Investigation, Special Agent in Charge Michael T. Batdorf.  The verdict follows a six-day trial before the Honorable Jeffrey S. White, United States District Judge. 

Evidence at trial showed that Robinson, 46, of Richmond, was involved with more than ten co-conspirators in a scheme to defraud the United States of public money.  From at least August 21, 2013, through April 27, 2015, Robinson and others who were based in such places as Northern California, Los Angles, and Texas, cashed stolen and fraudulently obtained U.S. Treasury checks.  The checks included stolen Social Security benefits checks and fraudulently obtained federal income tax refund checks.   As part of his scheme, Robinson and his co-conspirators acquired the personal identifying information (e.g., names, dates of birth, and social security numbers) of other people, including deceased people. Robinson then used the names, dates of birth, and social security numbers of these individuals to file false federal tax returns.  The tax returns reported false wages to the IRS and fraudulently requested tax refunds.  The evidence at trial also established that Robinson took steps to ensure he would receive the fraudulent refunds corresponding to the false returns he filed.  For example, on some occasions, Robinson directed the IRS to deposit the tax refunds into bank accounts he owned or that belonged to his co-conspirators.  On other occasions, Robinson directed the IRS to mail the tax refund checks to his address or to the address of a co-conspirator on the false tax returns.

Robinson also acquired stolen U.S. Treasury checks.  To cash these checks, Robinson paid to have numerous fake identification cards created that matched the names listed on the U.S. Treasury checks, but that displayed a photo of Robinson or one of his co-conspirators. Robinson and others used the fake identifications to cash the checks at Walmart stores—in some instances with the help of Walmart employees that Robinson paid to assist him.

On November 5, 2015, a federal grand jury issued a Second Superseding Indictment charging Robinson with conspiracy to commit theft of public money, in violation of 18 U.S.C. § 371; seven counts of theft of public money, in violation of 18 U.S.C. § 641; and seven counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  Today’s verdict establishes Robinson is guilty of all the counts with which he was charged in the indictment.

Hugh Robinson is scheduled to be sentenced on February 7, 2017, before Judge White.  The maximum sentence for a violation of 18 U.S.C. § 371 is 5 years in prison and a fine of $250,000.  The maximum penalty for each violation of 18 U.S.C § 641 is 10 years in prison and a fine of $250,000.  The mandatory minimum penalty for each count of identity fraud, in violation of 18 U.S.C § 1028A, is two years in prison, consecutive to the underlying felony and a fine of $250,000.  However, any sentence 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 Thomas Newman and Jose A. Olivera and Trial Attorney Gregory Bernstein of the Tax Division are prosecuting this case, with the assistance of Jonathan Deville. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.

SAN FRANCISCO – Samuel Campbell was sentenced to 70 months in prison for armed bank robbery, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.  The sentence, handed down last Friday, October 28, 2016, by the Honorable Susan Illston, U.S. District Judge, follows a guilty plea entered earlier this year.

Campbell, 26, formerly of Lake County, pleaded guilty on May 13, 2016, to a single count of armed bank robbery, in violation of 18 U.S.C. §§ 2113(a) and (d).  According to the plea agreement, Campbell admitted that on the morning of July 8, 2015, he drove to a bank branch in Clearlake, Calif., and robbed it.  During the robbery, he held what appeared to be a handgun while shouting commands to the bank employees.  He stole more than $3,000 in cash from the bank and $120 from a bank customer.

In addition to the prison term, Judge Illston also ordered Campbell to serve a 5-year term of supervised release and ordered him to pay restitution in the amount of $3,137.  Campbell currently is in custody and will begin serving his sentence immediately.

Special Assistant U.S. Attorney Philip Kopczynski is prosecuting the case with the assistance of MK Swartsfager.  The prosecution is the result of an investigation by the Federal Bureau of Investigation and the Clearlake Police Department.

OAKLAND –Jonathan Mota was sentenced today to life in prison plus 10 years for murder caused by a firearm; Hobbs Act robbery; and use and carry of a firearm during and in relation to that robbery, announced Acting U.S. Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.  The charges stemmed from the murder of Forrest Seagrave during the robbery of a convenience store in 2013.

On July 6, 2016, following a four-week jury trial before the Honorable Jon S. Tigar, U.S. District Judge, a federal jury convicted Mota, 34, of Lake County, Calif., of charges arising from the convenience store robbery.  Evidence at trial showed that on January 18, 2013, Mota, a convicted felon, parked a stolen vehicle in the vicinity of the Mount Konocti Gas & Mart in Kelseyville, Calif., to rob it.  Mota left a passenger in the vehicle and wore a hoodie, ski mask, baggy jeans, and gloves in an attempt to hide his identity.  Store clerk Forrest Seagrave was mopping up and preparing to end his shift when Mota arrived brandishing a silver handgun.  Seagrave did not know Mota was armed when Seagrave attempted to interrupt the robbery.  Mota shot Seagrave in the neck, causing Seagrave to bleed to death on the floor of the convenience store.  Video footage from the store cameras showed Mota stepping over Seagrave’s body to grab the money from the cash register. 

On June 27, 2013, a federal grand jury indicted Mota and charged him with Hobbs Act robbery, in violation of 18 U.S.C. § 1951(a); use and carry of a firearm during and in relation to the Hobbs Act robbery, in violation of Title 18 U.S.C. § 924(c); and use of the firearm resulting in murder, in violation of 18 U.S.C. § 924(j).  On July 6, 2016, the jury convicted Mota of all three counts in the indictment. 

Today’s sentence was handed down by Judge Tigar. 

Assistant United States Attorneys Damali Taylor and Sarah Hawkins prosecuted the case, with assistance from Kurt Kosek.  The prosecution is the result of an investigation led by the ATF and the Lake County Sheriff’s Office.

SAN JOSE – Christian Arballo was sentenced to 30 months’ imprisonment after pleading guilty to being a felon in possession of a firearm, announced United States Attorney Brian J. Stretch and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jill Snyder.  The sentence was handed down yesterday by the Honorable Beth Labson Freeman, United States District Judge, following a guilty plea entered on April 19, 2016. 

As part of his plea agreement, Arballo, 41, of Hollister, admitted that he had two previous criminal convictions, each of which prevented him from being entitled to legally possess firearms or ammunition.  Nevertheless, on August 10, 2015, Arballo possessed two assault rifles, including a commercial variant of the AK-47, as well as approximately 1,222 rounds of ammunition in four different calibers.

Arballo was indicted on August 20, 2015, and charged with one count of being a felon in possession of firearms and ammunition, in violation of 18 U.S.C. § 922(g)(1), and one count of being a person convicted of a misdemeanor domestic violence offense in possession of firearms and ammunition, in violation of 18 U.S.C. § 922(g)(9).  Pursuant to his plea agreement, he pleaded guilty to the first count and admitted the conduct in the second count, which was dismissed.  

In addition to the prison term, Judge Freeman sentenced Arballo to a three-year period of supervised release that will commence after he completes his prison sentence.  The defendant has been on pretrial release since August 19, 2015, and will begin serving his sentence on January 2, 2017.

Assistant U.S. Attorney Jonas Lerman is prosecuting the case with assistance from Elise Etter.  The prosecution is the result of an investigation by the ATF.

SAN FRANCISCO – United States Attorney Brian J. Stretch announced today that Assistant United States Attorney (AUSA) Michelle J. Kane will lead the efforts of the United States Attorney’s Office in connection with the Justice Department’s nationwide Election Day Program for the upcoming November 8, 2016, general elections.  AUSA Kane has been appointed to serve as the District Election Officer (DEO) for the Northern District of California, and in that capacity is responsible for overseeing the District’s handling of complaints of election fraud and voting rights abuses in consultation with Justice Department Headquarters in Washington.

The Department of Justice has an important role in deterring election fraud and discrimination at the polls, and combating these violations whenever and wherever they occur.  The Department’s long-standing Election Day Program furthers these goals, and also seeks to ensure public confidence in the integrity of the election process by providing local points of contact within the Department for the public to report possible election fraud and voting rights violations while the polls are open on election day.

Federal law protects against such crimes as intimidating or bribing voters, buying and selling votes, impersonating voters, altering vote tallies, stuffing ballot boxes, and marking ballots for voters against their wishes or without their input.  It also contains special protections for the rights of voters and provides that they can vote free from acts that intimidate or harass them.  For example, actions of persons designed to interrupt or intimidate voters at polling places by questioning or challenging them, or by photographing or videotaping them, under the pretext that these are actions to uncover illegal voting may violate federal voting rights law.  Further, federal law protects the right of voters to mark their own ballot or to be assisted by a person of their choice.

The franchise is the cornerstone of American democracy.  We all must ensure that those who are entitled to the franchise exercise it if they choose, and that those who seek to corrupt it are brought to justice.  In order to respond to complaints of election fraud or voting rights abuses on November 8, 2016, and to ensure that such complaints are directed to the appropriate authorities, United States Attorney Stretch stated that AUSA/DEO Kane will be on duty in this District while the polls are open.  She can be reached by the public at (510) 637-3680.

In addition, the FBI will have special agents available in each field office and resident agency throughout the country to receive allegations of election fraud and other election abuses on election day.  The local FBI field office can be reached by the public at (415) 553-7400.

Complaints about possible violations of the federal voting rights laws can be made directly to the Civil Rights Division’s Voting Section in Washington, DC by phone at 1-800-253-3931 or (202) 307-2767, by fax at (202) 307-3961, by email to voting.section@usdoj.gov or by complaint form at http://www.justice.gov/crt/complaint/votintake/index.php.

SAN JOSE – Baldemar Valencia Alcazar was sentenced yesterday to 12 years in prison for his role in a conspiracy to possess with intent to distribute, and to distribute, methamphetamine, announced United States Attorney Brian J. Stretch and Drug Enforcement Administration Special Agent in Charge John J. Martin.  The sentence follows a guilty plea entered July 6, 2016, in which Valencia admitted to conspiring to possess with the intent to distribute methamphetamine.

Valencia, 35, a citizen of Mexico who was living in Sunnyvale at the time of the offense, admitted he conspired with other individuals to distribute more than 7.4 kilograms of methamphetamine in the Northern District of California between June 30, 2015, and August 4, 2015.  In furtherance of the conspiracy, he distributed methamphetamine and possessed with the intent to distribute methamphetamine on numerous occasions during the course of his participation in the conspiracy.  Valencia was indicted by a federal grand jury on October 8, 2015.  He was charged with one count of conspiracy to possess with intent to distribute and to distribute methamphetamine, in violation of 21 U.S.C. §§ 846, 841(a)(1) and 841(b)(1)(A)(viii), and two counts of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A)(viii).  Valencia pleaded guilty to all three counts.  There was no plea agreement in this case. 

The sentence was handed down by the Honorable Edward J. Davila, U.S. District

Judge.  In addition to the prison term, Judge Davila sentenced Valencia to a 5-year period of supervised release.  The defendant has been in federal custody since December 3, 2015, and will begin serving his sentence immediately.

Assistant U.S. Attorneys Bill Gullotta and Chinhayi Cadet are prosecuting the case with the assistance of Theresa Benitez and Lakisha Holliman. 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.

A federal grand jury in Oakland, California, indicted Yevgeniy Aleksandrovich Nikulin 29, of Moscow, Russia, yesterday for obtaining information from computers, causing damage to computers, trafficking in access devices, aggravated identity theft and conspiracy, announced U.S. Attorney Brian J. Stretch for the Northern District of California and Special Agent in Charge John F. Bennett of the FBI.

The indictment, unsealed today, alleges that Nikulin, accessed computers belonging to LinkedIn, Dropbox and Formspring, each of which has its headquarters in the San Francisco Bay Area.  The indictment further alleges that the defendant accessed the computers without authorization and that he obtained information from the computers.  According to the indictment, the defendant also caused damage to computers belonging to a LinkedIn employee and to Formspring by transmitting a program, information, code, or command.  Nikulin also is alleged to have used the credentials of LinkedIn and Formspring employees in connection with the computer intrusions.  Further, Nikulin is alleged to have engaged in a conspiracy with unnamed co-conspirators to traffic stolen Formspring user credentials.  In all, Nikulin is charged with three counts of computer intrusion; two counts of intentional transmission of information, code, or command causing damage to a protected computer; two counts of aggravated identity theft; one count of trafficking in unauthorized access devices; and one count of conspiracy.

Nikulin was arrested on Oct. 5 by officials in the Czech Republic pursuant to an Interpol Red Notice based on a warrant issued in connection with a criminal complaint. He remains in custody in Prague, Czech Republic.

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

Assistant U.S. Attorney Michelle J. Kane, who is prosecuting the case, with the assistance of Melissa Dorton and Elise Etter.  The prosecution is the result of an investigation by the FBI with the assistance of authorities in the Czech Republic and the U.S. Department of Justice’s Criminal Division, Office of International Affairs.