Northern District of California

SAN JOSE – Two founders of the S3 Partners were sentenced to prison on Nov. 17, 2014, on investment fraud charges, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

The Honorable Ronald M. Whyte, United States District Court Judge, sentenced Melvin Russell “Rusty” Shields, 45, of Granite Falls, N.C. to 78 months in prison and Michael Sims, 60, of Gilroy, Calif. to 30 months in prison.

Following a seven week trial, on Dec. 23, 2013, the jury convicted Shields on 32 of the 39 counts in the superseding indictment, including finding him guilty of conspiracy to commit wire and bank fraud, 14 counts of wire fraud, 7 counts of bank fraud, 7 counts of making a false statement to a bank, and 3 counts of securities fraud. The jury acquitted Shields as to the remaining counts in the superseding indictment. The jury convicted Sims of 2 counts of wire fraud and acquitted him on the remaining counts in the superseding indictment. The third S3 Partner, Sam Stafford, 57, of Campbell, Calif., pleaded guilty on Oct. 17, 2013 to having conspired with Shields and Sims to commit wire, mail, and bank fraud.

Evidence at trial showed that from 2006 to 2009, Shields, Sims, and Stafford defrauded individual investors in the Northern District of California in connection with various real estate development projects. The three defendants conducted their business as “S3 Partners” out of a variety of locations including San Jose and Campbell; Hickory, N.C.; and Valrico, Fla.  Shields, Sims, and Stafford collectively obtained more than $21 million from individual investors and banks. Shields and Sims each diverted a portion of those funds for their personal use, their personal business ventures, and other unauthorized purposes. All the S3 Partners’ projects failed, resulting in a near total loss to many investors.

The jury verdicts and the evidence at trial regarding Shields specifically showed that he engaged in investment fraud targeting elderly investors, encouraging them to cash out their individual retirement accounts, educational savings, and home equity and to wire the proceeds to the S3 Partners for the purchase of shares in an S3 Partners-controlled company or to invest in other S3 projects. Shields then diverted investor funds for unauthorized purposes. The evidence further showed that Shields and Stafford fraudulently obtained millions of dollars from banks by submitting forged and fraudulent invoices and loan closing documents. Shields was responsible for over $7,225,000 in losses suffered by over two dozen individual investors as well as two banks.

In addition, the jury verdicts and the evidence specific to Sims showed that Sims defrauded two special education teachers out of over $411,000, including diverting and spending over $178,000 of what he knew to be their retirement savings. Sims encouraged the two teachers to cash out their individual retirement account (IRA) and wire the proceeds to him for the purchase of a share in an S3 Partners-controlled company which Sims said was a safe investment that would provide predictable returns. Sims instead spent those investors’ retirement funds for unauthorized purposes.

After the sentencing, Judge Whyte ordered Shields and Sims to self-surrender by Jan. 13, 2015. Shields, Sims, and Stafford have been out of custody on home electronic monitoring since their May 2012 arrest. Judge Whyte also ordered Shields to pay restitution in the amount of $7,225,904.73 and Sims to pay restitution in the amount of $411,460.92. Stafford’s sentencing is currently scheduled for Jan. 26, 2015.

Assistant U.S. Attorneys Joseph Fazioli and Timothy Lucey prosecuted the case with the assistance of Lakisha Holliman and Laurie Worthen. This prosecution is the result of an investigation by the FBI.

S3 superseding indictment

SAN FRANCISCO – Fortunato Rodelo-Lara and Jesus Wilfredo Almendares-Vasquez were convicted of two counts of engaging in a conspiracy to distribute cocaine and one count of distribution of cocaine by a federal jury on Nov. 18, 2014, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.

The jury found that from 2009 to 2012, the defendants worked with others to obtain cocaine from Southern California and distributing it in the Bay Area and in Seattle, Wash. Evidence at trial showed that Fortunato Rodelo-Lara, 45, of San Mateo, provided cash used to obtain cocaine on Jan. 22, 2010, and that the cocaine was then redistributed by members of the conspiracy. Rodelo-Lara also helped wrap and conceal kilograms of cocaine on other occasions as a part of the conspiracy. Evidence at trial also showed that Almendares-Vasquez, 39, of South San Francisco, distributed cocaine out of his auto detailing business in South San Francisco in 2010. The guilty verdict followed a two-week jury trial before the Honorable Edward M. Chen, United States District Court Judge.

This case is the product of an extensive investigation by the Organized Crime Drug Enforcement Task Force (OCDETF), 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.

Rodelo-Lara and Almendares-Vasquez were charged along with other co-defendants with various drug trafficking offenses. Seven other defendants have previously pleaded guilty to conspiracy to distribute cocaine, cocaine base i.e. “crack” cocaine, and methamphetamine, as well as other offenses in the case. The investigation by the Drug Enforcement Administration also resulted in cases filed in the Central District of California and the Western District of Washington.

Rodelo-Lara and Almendares-Vasquez were indicted by a federal grand jury on Jan. 17, 2012. They were charged with multiple violations of drug trafficking offenses, in violation of Title 21, United States Code, Sections 846 and 841(a)(1).

Upon conviction, Rodelo-Lara was remanded to the custody of the United States Marshal. Almendares-Vasquez is currently released on electronic monitoring with a bond amount of $200,000.

The defendants’ sentencing hearings are scheduled for Feb. 18, 2015, before Judge Chen in San Francisco. The maximum statutory penalty for each count is life imprisonment, lifetime supervised release following a term of imprisonment, and a fine of $10 million dollars. The defendants are each subject to a minimum of 5 years imprisonment and a minimum of 4 years of supervised release. Any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Rodelo-Lara and Almendares-Vasquez indictment

Rodelo-Lara and Almendares-Vasquez superseding indictment

SAN FRANCISCO – United States Attorney Melinda Haag announced today that the Northern District of California collected $327,128,651.76 in criminal and civil actions in the fiscal year ending Sept. 30, 2014 – the fifth highest amount of money collected by a U.S. Attorney’s Office in the country. Of this amount, $321,472,322.57 was collected in criminal actions and $5,656,329.19 was collected in civil actions.

Additionally, the Northern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $1,591,862,774.04 in cases pursued jointly with these offices. Of this amount, $3,717.65 was collected in criminal actions and $1,591,859,056.39 was collected in civil actions.

Attorney General Eric Holder announced today that the Justice Department collected $24.7 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions of the Justice Department combined in that same period.

“Every day, the Justice Department’s federal prosecutors and trial attorneys work hard to protect our citizens, to safeguard precious taxpayer resources, and to provide a valuable return on investment to the American people,” said Attorney General Holder. “Their diligent efforts are enabling us to achieve justice and recoup losses in virtually every sector of the U.S. economy. And it shows the fruits of the Justice Department’s tireless work in enforcing federal laws; in protecting the American people from violent crime, national security threats, discrimination, exploitation, and abuse; and in holding financial institutions accountable for their roles in causing the 2008 financial crisis.”

“Last year our office collected millions of dollars from financial institutions and others that had defrauded and committed crimes against the federal government as well as private individuals and institutions,” said United Sates Attorney Melinda Haag. “This office’s Financial Litigation Unit works relentlessly to ensure that those found accountable make their victims whole.”

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 JOSE – A federal grand jury returned a four count indictment charging a San Jose man with transmitting threats in the mail, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, U.S. Secret Service Acting Special Agent in Charge Russell Nelson, and U.S. Postal Inspection Service, Inspector in Charge Rafael E. Nunez.

Robert Gary Toltzis, 52, of San Jose, is named as the sole defendant in all four counts of the indictment, which was unsealed earlier today. According to the indictment, beginning as early as 2006 and continuing through at least Oct. 2013, Toltzis executed a scheme to make threats of death, bodily injury, injury to reputation, and other forms of harassment to individuals based on their real or perceived sexual orientation, national origin, and ethnic background using, among other ways, the services of anonymous remailers, his own e-mail address, his Dell printer, and the U.S. mail. The scheme was directed toward at least sixteen different victims.

The indictment alleges that on certain occasions, Toltzis assumed the identity of one victim in transmitting his threats and harassing e-mails and mailings to a new or different victim, by among other ways, listing a victim's name and return address on the envelope containing a threat mailed to another victim. Toltzis also sent copies of the written threats to the co-workers or relatives of his victims.

According to the indictment, on one occasion Toltzis mailed a letter containing a round of 9mm pistol ammunition, two Craigslist postings with graphic sexual images, and text that read as follows: The pics do say it all you are a disease spreading drug addict . . . the bullet says it all: I am going to kill you!!!

The indictment further alleges that on one occasion, Toltzis mailed a letter to a victim at his home claiming that the victim was a drug addict, bad husband, and a homosexual and urging the victim to kill himself.

The indictment further alleges that on one occasion, Toltzis mailed a letter to a victim at his place of employment, addressed to the victim’s boss. The one-page letter in the mailing included what appeared to be three color photographs superimposed on a Craigslist ad. The photographs included pictures of the victim. In one of the pictures, the word “HIV+” is superimposed on the victim’s forehead. The letter also included anti-homosexual slurs and multiple death threats.

The defendant made his initial appearance in federal court in San Francisco earlier today before Magistrate Judge Jacqueline Corley, who unsealed the indictment. He was remanded to the custody of the U.S. Marshal. The defendant’s next appearance for ID of counsel and further status is scheduled for Monday, Nov. 17, 2014, at 1:30 p.m., before the Honorable Paul S. Grewal, United States Magistrate Court Judge, in San Jose.

The maximum statutory penalty for each count of sending threats in the mail is five years imprisonment, a fine of $250,000, three years of supervised release, and restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Timothy J. Lucey is the Assistant United States Attorney who is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI with substantial assistance from the United States Secret Service and United States Postal Inspection Service.

Please note that an indictment contains only allegations. As with all defendants, Robert Gary Toltzis must be presumed innocent unless and until he is proven guilty.

(Toltzis indictment )

 

 

SAN FRANCISCO – Miguel Ortiz, Antonio Castillo, and Marvin Cortez were arraigned in federal court this morning after being arrested yesterday on charges that included racketeering conspiracy, firearms violations, and the commission of a July 19, 2014, gang-related murder in San Francisco, announced United States Attorney Melinda Haag, Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) San Francisco, and Police Chief Gregory P. Suhr of the San Francisco Police Department.

These charges were part of a superseding indictment returned by a federal grand jury on Nov. 6, 2014, which the court unsealed earlier today.

According to the superseding indictment, Ortiz, 27, of San Francisco, Castillo, 26, of San Bruno, and Cortez, 24, of San Francisco, conspired to conduct the affairs of the 19th Street Sureños street gang through a pattern of racketeering activity that included murder, drug trafficking, witness tampering and obstruction of justice. The 19th Street Sureños is a Hispanic street gang that claimed part of the Mission District of San Francisco as its territory. As a Sureño gang, the 19th Street Sureños warred against rival gangs, notably the various Norteño gangs in San Francisco.

In addition to conspiring to conduct the affairs of the 19th Street Sureños, all three defendants are also charged with conspiring to commit murder in aid of racketeering; conspiring to commit assault with a dangerous weapon in aid of racketeering; committing a gang-related murder on July 19, 2014; possessing, carrying, and using a firearm in furtherance of or during and in relation to a crime of violence; and using a firearm in furtherance of a crime of violence resulting in murder.

The superseding indictment also sets forth the various racketeering and firearms charges, originally returned by the grand jury on March 6, 2014, against fourteen other members of the 19th Street Sureños criminal enterprise.

The investigation of Ortiz, Castillo, and Cortez involved officers and agents from the San Francisco Police Department (SFPD) Homicide Detail, the SFPD Gang Task Force, and the Department of Homeland Security, Homeland Security Investigations.

Ortiz, Castillo and Cortez and made their initial appearances before the Honorable Jacqueline Scott Corley, United States Magistrate Court Judge, today. All three are currently in custody pending a detention hearing. They are scheduled to appear for an ID of Counsel hearing before the Honorable Jacqueline S. Corley, United States Magistrate Court Judge, on Nov. 20, 2014.

The maximum statutory penalty for each of the charged offenses is:

• racketeering conspiracy, in violation of Title 18, United States Code, Section 1962(d): life imprisonment, five years of supervised release, a fine of $250,000; and restitution, if appropriate;
• murder in aid of racketeering, in violation of Title 18, United States Code, Section 1959(a)(1): death or life imprisonment; a fine of $250,000; and restitution if appropriate;
• possessing, carrying and using a firearm in furtherance of, or during and in relation to, a crime of violence, in violation of Title 18, United States Code, Section 924(c)(1)(A): life imprisonment; five years of supervised release; a fine of $250,000;
• possessing, carrying and using a firearm in furtherance of, or during and in relation to, a crime of violence, resulting in murder, in violation of Title 18, United States Code, Section 924(j)(1): death or life imprisonment; a fine of $250,000; and restitution if appropriate;
• conspiracy to commit murder in aid of racketeering, in violation of Title 18, United States Code, Section 1959(a)(5): 10 years imprisonment; three years of supervised release; a fine of $250,000; and restitution if appropriate;
• conspiracy to commit assault with a deadly weapon in aid of racketeering, in violation of Title 18, United States Code, Section 1959(a)(6): 3 years imprisonment; one year of supervised release; a fine of $250,000; and restitution if appropriate;

However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Andrew M. Scoble, Kimberly Hopkins, and Laurie K. Gray are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Christine Tian and Ponly Tu. The prosecution is the result of an investigation by HSI and the SFPD.

Please note, an indictment contains only allegations and, as with all defendants, Miguel Ortiz, Antonio Castillo, and Marvin Cortez must be presumed innocent unless and until proven guilty.

(19th Sureños superseding indictment )

 

 

SAN JOSE – A federal grand jury in San Jose returned a twenty-nine count indictment charging a Los Altos investment manager with securities and mail fraud, relating to a multi-million dollar investment scheme, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, and Special Agent in Charge Kari Overson, Small Business Administration’s Office of Inspector General.

According to the indictment, which was unsealed yesterday, Mark Feathers is named as the sole defendant in all counts, including 17 counts of securities fraud and 12 counts of mail fraud between 2009 and 2012.

The indictment alleges that Feathers, 51, of Los Altos, Calif. was the founder, CEO, and a director of Small Business Capital Corporation (SBCC), a privately-held California corporation formed in 2004 with its principal place of business in Los Altos. SBCC was the sole manager of three investment funds that were marketed as investing in loans secured by first deeds of trust on commercial and income-producing residential real estate.

According to the indictment, Feathers, raised more than $50 million from over 250 investors through the offer and sale of securities in the form of membership interests in investment funds. The defendant and SBCC represented to prospective investors that the investment funds would pay “Member Returns” of at least 7.5% from profits generated by the investment funds' mortgage loan portfolios. However, by June 2012, as a result of his fraudulent scheme, Feathers had allegedly booked over $5 million in unsecured loans from the investments funds to his management company, paid returns to investors in excess of net profits of the investment funds, a “Ponzi” scheme in which the returns were partially funded with money from new investors, and in the process, diverted approximately $2 million to his own personal benefit.

According to the indictment, despite owing a fiduciary duty to the investment funds’ investors, the defendant failed to disclose significant conflicts of interest arising from causing the investment funds to transfer over $7 million to SBCC so it could pay its expenses, and recording a majority these transfers as assets of the investment funds. In addition, the defendant sent regular newsletters to investors reassuring them that the funds were making loans secured by first and second deeds of trust and that all loans were performing. However, as alleged in the indictment, the investment funds had unsecured loans to SBCC, these loans were not generating returns, and the investment funds themselves were not generating returns as represented in the Offering Documents or the subsequent account statements transmitted to investors.

The defendant made his initial appearance in federal court in San Jose yesterday before the Honorable Judge Paul S. Grewal, United States Magistrate Court Judge, who unsealed the indictment. The defendant was released on a $250,000 bond and subject to various terms and conditions. His next scheduled appearance is on Wednesday, Nov. 19, 2014, at 1:30 p.m., for status and further setting before Judge Grewal in San Jose.

The maximum statutory penalty for each count of securities fraud is thirty years imprisonment, a fine of $1,000,000 or twice the amount of gain or loss, whichever is greater, five years of supervised release, and restitution if appropriate. The maximum statutory penalty for each count of mail fraud is twenty years imprisonment, a fine of $250,000 or twice the amount of gain or loss, whichever is greater, and restitution if appropriate. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Timothy J. Lucey is the Assistant United States Attorney who is prosecuting the case with the assistance of Laurie Worthen. The prosecution is the result of an investigation by the FBI in coordination from the Small Business Administration’s Office of Inspector General and with substantial assistance from the Securities Exchange Commission’s Los Angeles Regional Office.

(Feathers indictment )

 

 

SAN FRANCISCO – Michael Ryan Trythall pleaded guilty to tax evasion today, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.

In pleading guilty, Trythall, 37, of Los Angeles, a professional audiologist, admitted to embezzling more than $750,000 between 2009 and 2012 from his employer at the time, a San Francisco audiology practice. During that period, Trythall performed bookkeeping services for his employer, and had access to the business’s financial records. He was authorized to print business checks for others to sign, but not to sign or issue checks on his own. Nevertheless, Trythall issued business checks payable to himself, forged the signature of an authorized signer onto the checks, and then deposited them into his personal bank accounts. Trythall also caused credit card payments made by clients to the business to be misdirected to an account he controlled. Trythall used the money he embezzled to pay for vacations and shopping at luxury retailers.

Trythall concealed his embezzlement by omitting payments to himself from the business’s books, making false entries into the business’s books, and failing to disclose his embezzlement, even when confronted by others. Trythall did not pay income taxes on any of the money he embezzled for calendar years 2009 through 2011, resulting in tax due and owing of over $230,000.

Trythall was charged by information on Sept. 25, 2014, with three counts of tax evasion, and pleaded guilty to one county. Trythall’s sentencing hearing is scheduled for March 11, 2015, at 2:30 p.m., before the Honorable Edward M. Chen, United States District Court Judge, in San Francisco. The maximum statutory penalty for each count of tax evasion, in violation of 26 U.S.C. § 7201, is five years in prison and a $250,000 fine.

Assistant U.S. Attorney Michael G. Pitman is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.

(Trythall information )

 

 

SAN JOSE – Kristin Nyunt pleaded guilty in federal court in San Jose today, to wiretapping charges, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

In pleading guilty, Nyunt admitted that from 2010 to 2012 she possessed spy software, including Mobistealth, StealthGenie, and mSpy, knowing that they were primarily useful for the purpose of the surreptitious interception of wire, oral, and electronic communications. She purchased and downloaded this software on-line, via the Internet, and eventually installed the software on cell phones and computers involved in communications that she intended to intercept.

This spyware had functions that allowed her to record phone calls, texts, voicemail, e-mail, appointments, digital address and contact information, photographs and videos, and oral conversations involving the phones and computers that she corrupted. The communications she intercepted included private e-mail communication and texts between individuals who were unaware that she was monitoring them. In one instance, she was paid money by the husband of a victim to spy on her and intercept her private communications using this software.

Nyunt further admitted that she repeatedly used a feature of the spyware that allowed her to activate the microphone of a cell phone, without the consent or knowledge of its user, for the purpose of eavesdropping on and recording oral conversations that were taking place in the vicinity of the phone, all without the consent or knowledge of the participants in those conversations. Among the communications she thus intercepted included sensitive law enforcement communication, which she accomplished by surreptitiously installing spyware on the cellular telephone of a police officer without his consent or knowledge.

Previously, on Sept. 29, 2014, the Department of Justice announced the indictment of Hammad Akbar, 31, of Lahore, Pakistan, the chief executive officer of InvoCode Pvt Ltd, the company that advertises and sells StealthGenie online. Akbar and his co-conspirators allegedly created the spyware, which could intercept communications to and from mobile phones, including Apple’s iPhone, Google’s Android, and Blackberry Limited’s Blackberry.

The investigation of Nyunt by the FBI was conducted jointly with investigators from the Monterey County District Attorney’s Office. As a result of this joint investigation, Nyunt pleaded guilty in state court earlier this year to burglary, forgery, identity theft, and unlawful computer access charges.

Nyunt, age 40, most recently of Monterey Calif., was charged by information on Oct. 17, 2014, with one count of interception of communications, in violation of 18 U.S.C. §§ 2511(1)(a) and 4(a), and one count of possession of interception devices, in violation of 18 U.S.C. § 2512(1)(b). Under the plea agreement, Nyunt pleaded guilty to both counts.

Nyunt’s sentencing hearing is scheduled for February 23, 2014, at 1:30 pm before the Honorable Edward J. Davila, United States District Court Judge, in San Jose. The maximum statutory penalty for each count of conviction is five years imprisonment and a fine of $250,000, plus 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.

Philip A. Guentert is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI jointly with investigators from the Monterey County District Attorney’s Office.

(Nyunt information October 17, 2014 )

 

 

SAN FRANCISCO – Robert Bradley Strahan, a/k/a Robin Bradley, a/k/a Kaola Bradley, pleaded guilty on Nov. 3 2014, to wire fraud, mail fraud, and tax evasion, announced United States Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.

In pleading guilty, Strahan admitted to embezzling more than $920,000 from a non-profit trade association in San Francisco where he worked as the chief financial officer. Strahan’s responsibilities included bookkeeping, payroll, and accounting. As the CFO, he had complete control over and access to the association’s books, records, and bank accounts. Without the knowledge or authorization of the non-profit trade association, Strahan wrote and cashed checks payable to himself and to “Cash” totaling over $550,000; he used the association’s credit cards to make unauthorized purchases totaling over $250,000; and he put an acquaintance on the payroll who received over $120,000 but did almost no work. To conceal the money that he embezzled, Strahan made false entries in the association’s accounting systems as well as emailing false financial statements to the board of directors that omitted the funds he was taking for his personal use. Finally, Strahan did not pay income taxes on any of the money he embezzled for calendar years 2009 through 2013, resulting in tax due and owing of over $175,000.

Strahan, 51, of San Francisco, was charged by superseding indictment on Aug. 7, 2014, with three counts of wire fraud, two counts of mail fraud, and two counts of tax evasion. Under the plea agreement, Strahan pleaded guilty to two counts of wire fraud, one count of mail fraud, and one count of tax evasion. Strahan was arrested on May 30, 2014, and has remained in custody since then.

Strahan’s sentencing hearing is scheduled for Feb. 9, 2015, before the Honorable Thelton E. Henderson, United States District Court Judge, in San Francisco.

The maximum statutory penalty for each count of wire fraud, in violation of 18 U.S.C § 1343, is 20 years imprisonment and a fine of $250,000. The maximum statutory penalty for each count of mail fraud, in violation of 18 U.S.C § 1341, is 20 years imprisonment and a fine of $250,000. The maximum penalty for tax evasion, in violation of Title 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 after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Hallie Hoffman is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Bridget Kilkenny. The prosecution is the result an investigation by the FBI and the IRS, Criminal Investigation.

(Strahan superseding indictment )

 

 

SAN FRANCISCO – Agilent Technologies, Inc. has agreed to pay the government $849,678 to resolve allegations that it submitted false claims to the United States in connection with the sale of electronic measurement instruments, United States Attorney Melinda Haag and Defense Criminal Investigative Service Special Agent in Charge Chris Hendrickson announced today.

In March 2013, Agilent made a voluntary disclosure to the Inspector General of the Department of Defense that certain sales of electronic measurement instruments and systems to the government were the result of improper coordination of pricing and bid strategy between Agilent and its distributors and resellers. During the government’s subsequent investigation, Agilent provided information and materials showing that it entered into agreements with its partners on whether to bid, and what prices to bid, often for the purpose of meeting the requirement under procurement rules that the government consider a minimum of three bids. The settlement agreement resolves the government’s investigation, in which Agilent fully cooperated.

“This settlement demonstrates our continuing commitment to ensure the integrity of the government procurement system. We commend Agilent for its prompt disclosure of improper price coordination, and subsequent cooperation in the government’s investigation.”

The settlement with Agilent was the result of a coordinated effort among the United States Attorney’s Office, Defense Criminal Investigative Service, Defense Contract Audit Agency, and the General Services Administration, Office of Inspector General.

Assistant U.S. Attorneys Steven J. Saltiel and Ann Marie Reding handled the matter on behalf of the U.S. Attorney’s Office.

 

 

OAKLAND – Jeffrey Deshon Applewhite, AKA Jeffrey Donald Mason, was sentenced today to 36 months in prison and ordered to pay $9,249 in restitution for assisting in the preparation of false federal income tax returns for clients in the San Francisco Bay Area, announced United States Attorney Melinda Haag, Acting Deputy Assistant Attorney General Larry J. Wszalek for the Justice Department's Tax Division, and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.

According to court documents, Applewhite owned and operated Applewhite and Co, CPA, along with Mason Financial Services, located in Inglewood, Calif. Applewhite also owned and operated his H&R Block franchise in Oakland, Calif. Although Applewhite mainly prepared tax returns from his Inglewood office, he came to the Oakland H&R Block location each year to meet with clients.

Following a five day trial, Applewhite was convicted on April 28, 2014, on 20 counts of aiding and assisting in the preparation and presentation of false and fraudulent tax returns. The returns reported false deductions and credits or false Schedule A expenses such as inflated charitable contributions.

On March 28, 2013, Applewhite, of Los Angeles was charged in a 34 count indictment with aiding and assisting in the preparation of false tax returns and identity fraud.

The sentence was handed down by the Honorable Jeffrey S. White, United States District Court Judge. Judge White also sentenced the defendant to a one-year period of supervised release. The defendant will begin serving his sentence on Jan. 12. 2015.

Assistant U.S. Attorney Cynthia Stier and Trial Attorney Sonia Owens of the Tax Division prosecuted the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.

(Applewhite indictment )

 

 

SAN FRANCISCO – Susan Xiao-Ping Su was sentenced on Friday to 198 months in prison, ordered to forfeit $5.6 million, and to pay $904,198.84 in restitution arising from a visa fraud scheme that she carried out in her role as the Founder, Chief Executive Officer, and President of Pleasanton-based Tri-Valley University, announced United States Attorney Melinda Haag and Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement’s (ICE), Homeland Security Investigations (HSI) San Francisco.

Su, 44, of Pleasanton, was convicted on March 23, 2014, after a 3-week trial of 31 counts of wire fraud, mail fraud, conspiracy to commit visa fraud, visa fraud, use of a false document, false statements to a government agency, alien harboring, unauthorized access to a government computer, and money laundering.

“Every year our country welcomes academically qualified students from all over the world to learn from our country’s best and brightest,” said U.S. Attorney Melinda Haag. “The defendant’s scheme took advantage of this highly valuable immigration process, reducing opportunities for legitimate, worthy student applicants. The conviction and sentence in this case demonstrate our resolve to work closely with HSI to ferret out and bring to justice those who choose to engage in immigration fraud.”

“This sentence should leave no doubt that there are serious consequences for those who exploit our legal immigration system for personal gain,” said Tatum King, acting special agent in charge for HSI San Francisco. “Student visas are intended to give people from around the world a chance to come to this country to enrich themselves with the vast learning opportunities available here, but in this case the defendant was interested in a different kind of enrichment, her own. Our message is simple – America’s legal immigration system is not for sale and HSI will move aggressively against those who compromise the integrity of that system and put our country’s security at risk simply to turn a profit.”

During the trial, evidence showed that Su engaged in a two-year scheme to defraud the Department of Homeland Security (DHS) by submitting fraudulent documents in support of Tri-Valley University’s petition for approval to admit foreign students and, after having obtained such approval, fraudulently issued visa-related documents to student aliens in exchange for “tuition and fees.” In her petition for approval, Su made material false representations to DHS regarding Tri-Valley University’s admission requirements, graduation requirements, administrators, instructors, class transferability, and intent to comply with federal regulations.

Three purported Tri-Valley University professors testified that they never authorized Su to use their credentials in connection with the university. Multiple Tri-Valley University employees testified that the university had no requirements for admission or graduation, and that Su routinely instructed her staff to fabricate fraudulent transcripts, and other university documents.

In carrying out the scheme, Su made additional false representations to DHS through Tri-Valley University’s use of the Student and Exchange Visitor Information System (SEVIS), which the United States government uses, in part, to monitor the “F-1” student visa program. Through her false representations, Su was able to unlawfully obtain and issue F-1 visa-related documents without regard to the students’ academic qualifications or intent to pursue a course of study required to maintain a lawful immigration status. Su admitted and maintained student aliens in exchange for tuition and other payments. In furtherance of the F-1 visa scheme, Su was also convicted of harboring two Tri-Valley University student-employees to assist her in making the false representations to SEVIS. One of the harbored student employees testified that Su also requested him to paint her house and to move furniture.

Su made over $5.6 million through her operation of Tri-Valley University and engaged in seven money laundering transactions using proceeds to purchase commercial real estate, a Mercedes Benz car, and multiple residences, including a mansion on the Ruby Hill Golf Club in Pleasanton, each in her name.

The investigation began in May 2010 following a tip to HSI pertaining to irregularities at Tri-Valley University.

The sentence was handed down by the Honorable Jon S. Tigar, United States District Court Judge, following a jury trial on counts of 18 U.S.C. § 1343 (wire fraud); 18 U.S.C. § 1341 (mail fraud); 18 U.S.C. § 1546(a) (visa fraud); 18 U.S.C. § 1001(a)(3) (use of a false document); 8 U.S.C. § 1324 (alien harboring); 18 U.S.C. § 1030 (unauthorized access of government computer); and 18 U.S.C. § 1957(a) (money laundering).

Judge Tigar also sentenced the defendant to three-years of supervised release. Su has already begun serving her sentence after being remanded into custody after trial.

Wade Rhyne and Hartley West are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Noble Hughes, Janice Pagsanjan, and Rosario Calderon. The prosecution is the result of an investigation by DHS, Homeland Security Investigations and by the multiagency Document and Benefit Fraud Task Force, which is overseen by HSI.

(Su indictment )

(Su superseding indictment )

 

 

San Francisco – Ebony Standifer, was charged with conspiracy to file false claims, wire fraud, and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.

According to the indictment, between May 2010 and February 2012, Standifer and others conspired to defraud the IRS by obtaining false and fraudulent refunds. As part of the scheme, Standifer procured the names and Social Security numbers of others and used that information to file false federal income tax returns. The returns falsely claimed that the people listed on the returns earned wages in amounts specified on fictitious Forms W-2 that were filed with the tax returns. The fraudulent refunds were transmitted into bank accounts or onto debit cards. In some instances, Standifer agreed to pay co-conspirators who supplied the identities used in the scheme.

Standifer, of Pittsburg, was arrested this morning and made her initial appearance before the Honorable Elizabeth D. Laporte, United States Magistrate Court Judge. Standifer is scheduled to appear before the Honorable Charles R. Breyer, United States District Court Judge, on Nov. 5, 2014.

The maximum statutory penalty for conspiracy to file false claim, in violation of 18 U.S.C. § 286, is ten years in prison and a fine of $250,000. The maximum penalty for wire fraud, in violation of Title 18, U.S.C § 1343, is 20 years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C. § 1028A, is a mandatory consecutive sentence of two years in prison, and a fine of $250,000 plus restitution. 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 US Attorney Thomas Newman is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.

Please note that an indictment contains only allegations. As with all defendants, Ebony Standifer must be presumed innocent unless and until she is proven guilty.

(Standifer indictment )

 

 

SAN FRANCISCO – Craig S. On was charged in an Information filed today with one count of Conspiracy to Make a Materially False and Misleading Statement to an Accountant, announced U.S. Attorney Melinda Haag; Federal Deposit Insurance Corporation, Office of the Inspector General, Special Agent in Charge Wade Walters; Special Inspector General for the Troubled Asset Relief Program Christy Romero; Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Office of the Inspector General, Special Agent in Charge Scott Redington; and FBI Special Agent in Charge David J. Johnson.

On, 62, of Berkeley, Calif., is the former Chief Financial Officer (CFO) of United Commercial Bank (UCB). UCB was a commercial bank headquartered in San Francisco, Calif., with branch offices throughout the United States as well as in China and Taiwan. Until 2009, its holding company, UCBH Holdings, Inc., was publicly traded on NASDAQ.

On Nov. 6, 2009, UCB was taken over by the Federal Deposit Insurance Corporation (FDIC). According to the Information, the Troubled Asset Relief Program (TARP) provided approximately $297 million in federal funds to UCB on Nov. 14, 2008, during the 2008 financial crisis.

According to the Information, On, beginning in 2009, together with others, allegedly engaged in a conspiracy to deceive UCB’s auditors by manipulating the bank’s books and records in a manner that misrepresented and concealed the bank’s true financial condition and performance and caused the bank to issue materially false and misleading financial statements in violation of 18 U.S.C. § 371.

The maximum statutory penalty for a conviction for conspiracy in violation of 18 U.S.C. § 371 is five years in prison and a fine of $250,000, plus restitution. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Adam A. Reeves and Robert David Rees are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Denise Oki, Phillip Villanueva and Bridget Kilkenny. The prosecution is the result of an investigation by the FDIC Office of Inspector General, the Special Inspector General of the Troubled Asset Relief Program, the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau Office of Inspector General and the Federal Bureau of Investigation.

Please note, an information contains only allegations against an individual and, as with all defendants, Craig S. On must be presumed innocent unless and until proven guilty.

(On information )

 

 

SAN FRANCISCO – Dignity Health has agreed to pay the United States $37 million to settle allegations that 13 of its hospitals in California, Nevada, and Arizona knowingly submitted false claims to Medicare and TRICARE by admitting patients who could have been treated on a less costly, outpatient basis, announced today United States Attorney Melinda Haag, Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division, and U.S. Department of Health & Human Services, Office of Inspector General Special Agent in Charge Ivan Negroni. Dignity, formerly known as Catholic Healthcare West, is based in San Francisco and is one of the five largest hospital systems in the nation with 39 hospitals in three states.

“This settlement demonstrates this office’s commitment to protecting our federal health care programs,” said U.S. Attorney Melinda Haag for the Northern District of California. “We will continue to aggressively and appropriately pursue False Claims Act allegations of wrongdoing in the health care industry.”

“Charging the government for higher cost inpatient services that patients do not need wastes the country’s vital health care dollars,” said Acting Assistant Attorney General Joyce R. Branda for the Justice Department’s Civil Division. “This department will continue its work to stop abuses of the nation’s health care resources and to ensure patients receive the most appropriate care.”

The settlement resolves allegations that 13 Dignity Health hospitals knowingly overcharged Medicare and TRICARE, part of the military health care program, for inpatient services for patients who should have been treated on a less costly, outpatient basis. Because hospitals generally receive significantly higher payments from federal health care programs for inpatient admissions as opposed to outpatient treatment, the admission of numerous patients who do not need inpatient care, as alleged here, can result in substantial financial harm to federal health care programs.

The United States alleged that from 2006 through 2010, 13 Dignity hospitals billed Medicare and TRICARE for inpatient care for certain patients who underwent elective cardiovascular procedures (e.g., stents, pacemakers) in scheduled surgeries when the claims should have been billed as outpatient surgeries. In addition, the government alleged that from 2000 through 2008, four of the hospitals billed Medicare for beneficiaries undergoing elective kyphoplasty procedures, which are minimally-invasive and performed to treat certain spinal compression fractures that should have been billed as less costly outpatient procedures. Lastly, the government alleged that from 2006 through 2010, 13 hospitals admitted patients for certain common medical diagnoses where admission as an inpatient was medically unnecessary and appropriate care could have been provided in a less costly outpatient or observation setting.

As part of today’s agreement, Dignity entered into a corporate integrity agreement with the U.S. Department of Health and Human Services – Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years. Under the agreement, Dignity is required to retain independent review organizations to review the accuracy of the company’s claims for services furnished to federal health care program beneficiaries.

“Hospitals that attempt to boost profits by admitting patients for expensive and unnecessary inpatient hospital stays will be held accountable,” said Special Agent in Charge Ivan Negroni of HHS-OIG’s San Francisco Office. “Both patients and taxpayers deserve to have medical decisions made solely on what is best for the patient based on medical necessity.”

This settlement resolves a lawsuit filed in the U.S. District Court for the Northern District of California by Kathleen Hawkins, a former employee of Dignity, under the qui tam or whistleblower provisions of the False Claims Act, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. Hawkins will receive approximately $6.25 million.

This settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $23 billion through False Claims Act cases, with more than $14.8 billion of that amount recovered in cases involving fraud against federal health care programs.

Ila C. Deiss and Erica Blachman Hitchings are the Assistant U.S. Attorneys who handled the case and were assisted by Jonathan Birch, Michael Zehr, and Jessica Meegan. Senior Trial Attorney Counsel Marie Bonkowski of the U.S. Department of Justice's Civil Division also handled the matter, with assistance from Anthony Gould. The settlement is the result of an investigation by the U.S. Attorney's Office for the Northern District of California, the Department of Justice's Civil Division, and the U.S. Department of Health and Human Services Office of Inspector General. The U.S. Attorney's Office for the Western District of New York provided assistance on the matter.

The case is captioned United States ex rel. Hawkins v. Catholic Healthcare West, et al., CV C 09-5604 JCS. The claims resolved by this settlement are allegations only and there has been no determination of liability.

(Dignity Health settlement agreement )

 

 

SAN JOSE – Maxito Pean was indicted by a federal grand jury today for stealing money through an email takeover scam and laundering those funds by “layering” them through multiple accounts, announced United States Attorney Melinda Haag, Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon, and Santa Clara County Regional Enforcement Allied Computer Team Task Force (REACT) Project Director Michael Sterner.

Pean, 51, of Port-au-Prince, Haiti, was charged with conspiracy to commit wire fraud and four substantive counts of wire fraud. He was also charged with conspiracy to commit money laundering, four substantive counts of laundering funds to conceal their source, and six counts of engaging in financial transactions using criminal proceeds.

According to the indictment, Pean received funds as a result of an email takeover scam, in which a victim was sent a “phishing” email to capture his username and account password. The phishing email was designed to trick the victim into clicking on a link that delivered him to a fraudulent website created to look like its legitimate counterpart. When the victim logged into the fraudulent website, his username and password for that account were captured, allowing an imposter to access the victim’s account, review its contents, and send and receive e-mails posing as the victim.

The indictment further alleges the fraud began when an imposter, who had gained access to the email account of a victim living in Saratoga, Calif., posed as the victim to send an email directing a representative at Deutsche Bank in San Francisco to transfer funds from the victim’s account. Believing the instructions had come from her client, the representative wired $233,200 from the victim’s account to an account held in the name of “Southeastern Capital Group Inc.” in Lauderhill, Fla. That account was opened only a month before the transfer, by a homeless man in Florida whom the indictment alleges was acting as a “money mule” in return for a small cash payment. From there, the funds went to another account, opened by a different “money mule,” held in the name of “Meade Financial Services.” Only after passing through those two accounts did the funds make their way to the defendant.

The maximum penalty for conspiracy to commit wire fraud and wire fraud, in violation of 18 U.S.C. §§ 1349 and 1343, respectively, is 30 years in prison and a $1,000,000 fine, or twice the gross gain or gross loss from the transaction, whichever is higher. The maximum penalty for conspiracy to commit money laundering and money laundering, in violation of 18 U.S.C. §§ 1956(h) and 1956(a)(1)(B)(i), is 20 years in prison and a $500,000 fine, or twice the value of the property involved in the transaction, whichever is higher. The maximum penalty for engaging in monetary transactions using property derived from specified unlawful activity, in violation of 18 U.S.C. § 1957, is ten years in prison and a $250,000 fine, or twice the value of the property involved, whichever is higher.

The prosecution is the result of an investigation initiated by the REACT in San Jose. REACT partnered with IRS Criminal Investigation – Oakland Field Office to expand the scope of the investigation. U.S. Immigration and Customs Enforcement, Homeland Security Investigations – West Palm Beach, and IRS Criminal Investigation – Jacksonville, Fla., also provided valuable support. Assistant United States Attorney David R. Callaway is prosecuting the case with the assistance of Elise Etter.

Please note that an indictment contains only allegations. As with all defendants, Maxito Pean must be presumed innocent unless and until he is proven guilty.

(Pean indictment )

 

 

OAKLAND – Stephen B. Lopez was sentenced today to 24 months in prison, and ordered to pay $1.3 million in restitution for his guilty plea to two counts of wire fraud, announced U.S. Attorney Melinda Haag, Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon and FBI Special Agent in Charge David J. Johnson.

Lopez, 58, of Lafayette, Calif., was indicted by a federal grand jury on March 21, 2013. He was charged with three counts of mail fraud, seven counts of wire fraud, and two counts of money laundering. On April 10, 2014, a superseding indictment was returned charging Lopez with obstruction of justice and witness tampering. On Aug. 12, 2014, Lopez pleaded guilty to two counts of wire fraud, in violation of 18 U.S.C. § 1343.

According to the plea agreement, Lopez, who held a law degree from Stanford University, was the founder of Lighthorse Ventures, LLC (LHV), a private equity investment company located in Lafayette and Walnut Creek, Calif. In March of 2008, Lopez needed money to pay off a civil settlement agreement owed by him personally. In order to raise this money, Lopez told victims that LHV needed money to pay off a loan; he intentionally failed to tell the victims that the money LHV received would be used to pay off his own personal debt. Victims wrote checks to LHV, which Lopez deposited into LHV’s bank account. Thereafter, Lopez wrote a $600,000 check from LHV’s bank account to pay off his personal debt.

The sentence was handed down by the Honorable Jeffrey White, United States District Court Judge. Judge White also sentenced the defendant to a three-year period of supervised release and ordered Lopez to pay $1.3 million in restitution to the victims.

Maureen Bessette is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan. The prosecution is the result of an investigation by the IRS - Criminal Investigation and the FBI.

(Lopez superseding indictment )

 

 

SAN FRANCISCO – Sandra Lynn Vitorelo, AKA Sandra Mathewson, was sentenced yesterday to two years in prison and ordered to pay $91,442 in restitution for failure to report misappropriated funds on tax return, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Acting Special Agent in Charge Thomas McMahon.

According to court documents, Vitorelo had her own tax return preparation and accounting business called M-V Services. In 2000, Vitorelo became the bookkeeper for her cousin. Vitorelo managed her cousin’s assets including stocks, currency, and real property. In 2006, the daughter of Vitorelo’s cousin opened a clothing store in Novato, Calif. Vitorelo subsequently began managing the finances for that store.

Vitorelo made unauthorized transfers from the bank accounts of her cousin and cousin’s daughter to her own Bank of America accounts. Vitorelo admitted to misappropriating at least $248,583 which she kept for her own use.

Vitorelo admitted that the money she misappropriated from her victims was converted to her own personal use. Vitorelo further admitted that she underreported her income on her federal income tax returns beginning in 2006 and continuing through 2009 as a result of her intentional failure to report these funds as income.

Vitorelo pleaded guilty in open court yesterday.

On Oct. 3, 2013, Vitorelo, 59, of American Canyon, was indicted on four counts of filing false tax returns. The sentence was handed down by the Honorable Thelton E. Henderson, United States District Court Judge, following a guilty plea on one count in violation of 26 U.S.C. § 7206(1). Judge Henderson also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving her sentence on April 27, 2015.

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

(Vitorelo indictment )

 

 

SAN JOSE – Briana Irene Roy was sentenced today to nine months in prison, and ordered to pay $197,240.95 in restitution for wire fraud stemming from an employee embezzlement scheme, announced United States Attorney Melinda Haag and U.S. Secret Service Special Agent in Charge Cristina Beloud.

Roy pleaded guilty on May 29, 2014, to one count of wire fraud. According to the plea agreement, Roy admitted that between March 2010 and February 2013, while she had been employed in the marketing division of a local engineering company based in San Jose, Calif., she devised and implemented a scheme whereby she used a company credit card issued in the name of one of the company’s executives on approximately 80 separate occasions to make charges to her personal PayPal account for her personal benefit. Roy further admitted that she attempted to conceal these activities by generating fake invoices and receipts for products and services in the name of another San Jose business. Through this fraudulent scheme, Roy admitted that she stole or attempted to steal funds to which she was not entitled in the amount of $247,387.45.

Roy, 38, of Hollister, Calif., had previously waived Indictment and was charged by a felony Information on Dec. 13, 2013. She was charged with one count of wire fraud in violation of Title 18 United States Code § 1343. Roy pleaded guilty to the single count and agreed to pay restitution for the full amount of the loss. Roy is currently released on bond. Bail was set previously at $50,000.

The sentence was handed down by the Honorable D. Lowell Jensen, Senior United States District Court Judge. Judge Jensen also sentenced the defendant to a three-year period of supervised release. The defendant will begin serving the sentence on or before Feb. 25, 2015.

Amie Rooney is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Tracey Andersen. The prosecution is the result of an investigation by the U.S. Secret Service.

(Roy information )

 

 

SAN FRANCISCO – A federal grand jury in San Francisco has indicted 10 defendants for their alleged role in a far-reaching prostitution racketeering enterprise that recruited Asian women to work as prostitutes in approximately 40 brothels located throughout the Bay Area, announced United States Attorney Melinda Haag, Tatum King, Acting Special Agent in Charge for U.S. Immigration and Customs Enforcement (ICE), Homeland Security Investigations (HSI) San Francisco, and Police Chief Susan Manheimer of the San Mateo Police Department.

The defendants – Allen Fong, Ya Huai Hung, Leow Wan Ru Veron, Robert Chun, Jie Mu, Laurence Shu Kwan Lee, Kevin Hartig, Waylon Fong, Angelina Chuong, and Chonthicha Jaemratanasophin – are charged with Conspiring to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity; Use of Facility in Interstate and Foreign Commerce to Promote Prostitution; Laundering of Monetary Instruments; Importation of Aliens for an Immoral Purpose; and Transportation in Interstate and Foreign Commerce for Prostitution.

According to the indictment, all 10 defendants are charged with Conspiracy to Conduct a Racketeering Enterprise for operating 40 brothels in the greater San Francisco Bay Area from at least August 2002 through July 2014. Members and associates of the Enterprise solicited, enticed, and persuaded adult females, primarily from Asian countries, to work for the Enterprise as prostitutes in the Northern District of California. The Enterprise rented the apartments used as brothels through nominee lessees for limited periods of time, and then opened other brothels, often with overlapping rental periods. The Enterprise used social networking websites such as MyRedbook.com, Craigslist.org, and Backpage.com to post advertisements for prostitution services, which included contact information and photographs of nude and partially nude women assuming provocative and suggestive poses. The Enterprise’s telephone operators answered the calls for telephone numbers posted on the website advertisements for prostitution services, coordinated the meeting place between the prostitutes and their customers (“Johns”), and directed the “Johns” to a particular brothel. The prostitutes kept approximately two-thirds of their earnings from the “Johns” and paid one-third to the Enterprise, primarily through Allen Fong, the alleged ringleader of the Enterprise.

The Enterprise allegedly operated brothels in the cities of Pinole, San Mateo, Redwood City, Sunnyvale, Belmont, Fremont, Cupertino, Santa Clara, Foster City, San Bruno, Colma, and South San Francisco.

The indictment further alleges that, from at least March 4, 2004, through Oct. 3, 2013, members of the Enterprise sent numerous outgoing international wire transfers to Asian countries such as Singapore, Thailand, China, Hong Kong, Taiwan, Vietnam, and the Philippines, including to known Enterprise members and prostitutes. Enterprise members sent at least twenty-three international wire transfers, totaling $179,218.00, to Leow Wan Ru Veron, the Enterprise’s recruiter of prostitutes in Singapore. Chonthicha Jaemratanasophin, an Enterprise prostitute, funded twenty international wire transfers, totaling $109,300.00, to Singapore and Thailand.

As set forth in the indictment, Allen Fong, 58, of San Mateo, is charged in all thirty-two counts of the Indictment with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution and substantive counts of Use of Facility in Interstate Commerce to Promote Prostitution, Conspiracy to Launder Money and substantive counts of Money Laundering, and Conspiracy to Transport for Prostitution and Importation of Alien for Immoral Purpose;

• Ya Huai Hung, 53, a citizen of Taiwan, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution, Conspiracy to Launder Money and substantive counts of Money Laundering, and Conspiracy to Transport for Prostitution and Importation of Alien for Immoral Purpose;
• Leow Wan Ru Veron, 53, a citizen of Singapore, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution, Conspiracy to Launder Money and substantive counts of Money Laundering, and Conspiracy to Transport for Prostitution and Importation of Alien for Immoral Purpose;
• Robert Chun, 54, of San Francisco, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution, and Conspiracy to Launder Money;
• Jie Mu, 43, of San Francisco, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution, Conspiracy to Launder Money, and Conspiracy to Transport for Prostitution and Importation of Alien for Immoral Purpose;
• Laurence Shu Kwan Lee, 36, of San Francisco is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity and Conspiracy to Use Facility in Interstate and Foreign Commerce to Promote Prostitution;
• Kevin Hartig, 58, of Daly City, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity and Conspiracy to Launder Money;
• Waylen Fong, 70, formerly of San Mateo, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity and Conspiracy to Launder Money;
• Angelina Chuong, 39, of San Francisco, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity and Conspiracy to Launder Money; and
• Chonthicha Jaemratanasophin, 48, a citizen of Thailand, is charged with Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity and Conspiracy to Launder Money.

Allen Fong, Robert Chun, Jie Mu, Laurence Shu Kwan Lee, Kevin Hartig, Angelina Chuong, and Chonthicha Jaemratanasophin were arrested today and made their initial appearances in federal magistrate court in San Francisco. Chonthicha Jaemratanasophin was detained. The other defendants were released on bonds ranging from $100,000 to $500,000.

Allen Fong’s next scheduled appearance is at 2:30 p.m. on Dec. 16, 2014, before the Honorable Richard Seeborg, United States District Court Judge. The other defendants are scheduled to appear for continued proceedings in Magistrate Court at 9:30 a.m. on Oct. 29, 2014.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, the defendants face a maximum sentence of twenty years’ imprisonment for Conspiracies to Conduct a Racketeering Enterprise and Money Laundering; ten years’ imprisonment for Conspiracy to Import Alien for Immoral Purpose and Transportation in Interstate and Foreign Commerce for Prostitution; and five years’ imprisonment for Conspiracy to Use a Facility in Interstate and Foreign Commerce to Promote Prostitution. The fines range from $250,000 to $500,000, or twice the gross profits or value of the funds, whichever is greater. 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.

Deborah R. Douglas is the Assistant United States Attorney who is prosecuting the case with the assistance of Assistant United States Attorney David Countryman, Christine Tian, and Daniel Charlier-Smith. The prosecution is the result of a joint investigation by ICE HSI, and the San Mateo Police Department.

(Fong indictment )

 

 

SAN FRANCISCO – Three members of La Mara Salvatrucha – also known as the “MS-13” gang – were sentenced to 27 years in prison for the June 21, 2010, murder of Alexander Temaj-Castanon and to racketeering conspiracy charges today, announced United States Attorney Melinda Haag and Tatum King, Acting Special agent in Charge for U.S. Immigration and Custom Enforcement’s (ICE), Homeland Security Investigations (HSI), San Francisco.

According to court documents, Davie Jimmy Mejia-Sensente, a/k/a “Crazy” or “Loco,” 31, Carlos Mejia- Quintanilla, a/k/a “Sleepy” or “Dormido,” 25, and Luis Amilar-Zanas, a/k/a “Trucha,” 35, were all members of MS-13. MS-13 is a transnational street gang with local chapters, or “cliques,” throughout the world, including El Salvador, Honduras, Mexico, and the United States. MS-13 members engage in crimes such as murder, narcotics trafficking, and obstruction of justice.

One of principal rules of MS-13 is that its members must seek out and kill rival gang members. In the San Francisco Bay Area, MS-13’s principal rival has been and remains the Norteños, gang members who have roots in Northern California and who claim allegiance to the Nuestra Familia prison gang.

According to court documents, Mejia-Sensente, Mejia-Quintanilla, and Amilar-Zanas were all MS-13 members since at least 2002, originally joining the gang in their native El Salvador. During the late evening of June 20, 2010, the three were together on a Muni 14 Mission bus heading from San Francisco to Daly City. Alexander Temaj-Castanon got on the bus and sat near Mejia-Sensente, Mejia-Quintanilla, and Amilar-Zanas, and the three thought that Temaj-Castanon looked like a Norteño gang member. As a result, they decided to kill him.

Amilar-Zanas left a backpack containing a loaded gun for Mejia-Sensente and Mejia-Quintanilla to use, and then exited the bus. When the bus stopped on Mission Street in Daly City, Mejia-Sensente and Mejia-Quintanilla exited along with the victim. Mejia-Sensente was carrying the backpack with the gun, and after waiting until no one else was around, Mejia-Quintanilla took the gun from the backpack and shot Temaj-Castanon at least once, knocking Temaj-Castanon to the street. Mejia-Sensente then took the gun from Mejia-Quintanilla and shot Temaj-Castanon again. Temaj-Castanon died from his gunshot wounds. He was not affiliated with any gang.

All three of the defendants pleaded guilty to conspiring to conduct the affairs of MS-13 through a pattern of racketeering, which included murder, in violation of 18 U.S.C. § 1962(d), as well as to using a firearm during and in relation to the racketeering conspiracy, causing the murder of Alexander Temaj-Castanon, in violation of 18 U.S.C. §§ 924(j) and 2. The defendants were each sentenced to a term of 27 years’ imprisonment. There is no parole for federal sentences.

“The brutal and senseless murder of Alexander Temaj-Castanon is an outrage that demonstrates the danger gangs pose to our communities,” said U.S. Attorney Melinda Haag. “I commend the outstanding work of our federal and local law enforcement partners who collaborated with the U.S. Attorney’s Office to bring these violent criminals to justice. We hope Alexander Temaj-Castanon’s family and loved ones are brought some measure of closure by the sentences handed down today.”

“We’re gratified by today’s sentences because they represent another important stride in our ongoing effort to combat gang-related crime in the Bay Area,” said Tatum King, Acting Special Agent in Charge for ICE, HSI San Francisco. “Working with the Daly City Police Department and the U.S. Attorney’s Office, we’ve successfully brought to justice three dangerous gang members who ruthlessly murdered a member of our community. Rest assured, we will continue to work with our local, state, and federal law enforcement partners to pursue transnational criminal organizations like MS-13, who show no regard for the law or human life.”

In addition to the gang-related charges, Mejia-Sensente also pleaded guilty to being an illegal alien in possession of ammunition, in violation of 18 U.S.C. § 922(g)(5), while Amilar-Zanas also pled guilty to illegally re-entering the United States after having previously been deported, in violation of 8 U.S.C. § 1326(a) and (b)(2).

The sentences were imposed by the Honorable Charles R. Breyer, United States District Court Judge, in San Francisco.

Andrew M. Scoble and Matthew L. McCarthy are the Assistant United States Attorneys who are prosecuting this case, with the assistance of Erica Doerr, Ponly Tu, Ana Guerra, Marina Ponomarchuk, and Daniel Charlier-Smith. This prosecution is the result of an investigation by the Daly City Police Department, working with Homeland Security Investigations.

 

 

SAN FRANCISCO – Efrain Arturo Jovel pleaded guilty today to filing two false tax returns and failing to report his financial interest in foreign bank accounts, U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez, announced.

According to the plea agreement, Jovel owned and operated a tax return preparation business for over 30 years, first out of his home, then out of offices on Guerneville Road, both in Santa Rosa, Calif. On average, Jovel prepared approximately 1,800 tax returns per year. Jovel admitted that for the tax years 2009 and 2010, he filed personal U.S. Individual Income tax returns that were false in that he did not disclose his foreign bank accounts in Guatemala and El Salvador. In addition, Jovel did not disclose interest income of $35,104 earned in 2009 and 2010 on the funds held in these foreign bank accounts. Jovel additionally admitted that he willfully underreported gross receipts from his tax preparation service of $244,120 and $307,846, respectively. This resulted in a tax loss of $175,023.

Jovel, 64, of Santa Rosa, was charged on September 9, 2014, with one count of willfully violating foreign bank account reporting requirements and two counts of subscribing to false tax returns. He pleaded guilty to all counts.

Jovel’s sentencing hearing is scheduled for January 20, 2014 before the Honorable Richard Seeborg, U.S. District Court Judge, in San Francisco. The maximum penalty for filing a false tax return, in violation of Title 26 U.S.C. § 7206(1), is three years in prison and a fine of $250,000. The maximum penalty for willfully violating foreign bank account reporting requirements, in violation of Title 31 U.S.C. §§ 5314 and 5322(a), is five years in prison and a fine of $250,000.

Assistant U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the IRS Criminal Investigation.

 

 

SAN FRANCISCO – Kamran Azizi and Hedyeh Shoar were charged with conspiracy to defraud the United States, announced U.S. Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

According to the Indictment, during 2005 through 2008, Azizi was responsible for collecting donations at several MTO centers in the Northern District of California. MTO, a Sufi Islamic organization, has members who often make donations to the organization by way of cash or checks. During 2005 through 2008, Shoar was employed by MTO as an accountant. The Indictment alleges that Azizi kept a portion of members’ donations to MTO for his own benefit with the knowledge and assistance of Shoar.

Azizi and Shoar, married at the time, filed joint federal income tax returns for the tax years 2005 and 2006. Azizi filed individual federal income tax returns for the tax years 2007 and 2008. These tax returns omitted the MTO donations Azizi kept for his own benefit during these years, even though these donations were Azizi’s primary source of income. The Indictment also alleges that defendants deceived their tax return preparer by failing to provide that person with complete information regarding Azizi’s income.

Azizi was also charged with 2 counts of filing false federal income tax returns for the 2007 and 2008 filings.

Azizi was arraigned before the Honorable Elizabeth D. Laporte, United States Magistrate Judge, on Oct. 20, 2014. Azizi made his initial appearance before the Honorable Kandis Westmore, United States Magistrate Judge, on Oct. 16, 2014, at which time the Indictment was unsealed. Shoar remains a fugitive.

The maximum statutory penalty for each count of Conspiracy, in violation of 18 U.S.C. § 371, is five years in prison and a $250,000 fine. The maximum statutory penalty for each count of Filing a False Tax Return, in violation of 26 U.S.C. § 7206(1), is three years in prison and a $250,000 fine.

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

Please note, an indictment contains only allegations and, as with all defendants, Azizi and Shoar must be presumed innocent unless and until proven guilty.

(Azizi unsealed indictment )

 

 

SAN JOSE – Kristin Nyunt was charged by information today with two counts of illegal wiretapping and the possession of illegal interception devices, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

According to the information, from 2010 to 2012, Nyunt, 40, most recently of Monterey Calif., is alleged to have intercepted communications, including sensitive law enforcement communications, by means that included “spy software” that the defendant secretly installed on the mobile phone of a police officer. The information also alleges that during the same period she illegally possessed interception devices, namely spy software including Mobistealth, StealthGenie, and mSpy, knowing that the design of those products renders them primarily useful for the purpose of the surreptitious interception of wire, oral, and electronic communications.

Previously, on Sept. 29, 2014, the Department of Justice announced the indictment of Hammad Akbar, 31, of Lahore, Pakistan, the chief executive officer of InvoCode Pvt Ltd, the company that advertises and sells StealthGenie online. Akbar and his co-conspirators allegedly created the spyware, which could intercept communications to and from mobile phones, including Apple’s iPhone, Google’s Android, and Blackberry Limited’s Blackberry.

Nyunt’s initial appearance is scheduled for October 23, 2014, at 1:30 p.m. before the Honorable Howard R. Lloyd, Magistrate Court Judge, in San Jose.

An information 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 five years and a fine of $250,000 for each violation of Title 18, United States Code, Sections 2511(1)(a) (Interception of Communications) and 2512(1)(b) (Possession of Interception Device Transported in Interstate Commerce). 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.

Philip A. Guentert is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the FBI and the Monterey County District Attorney’s Office.

(Nyunt information )

 

 

SAN JOSE – Bernard Ogie Oretekor, a/k/a “Emmanuel Libs,” and Chantale Petit-Frere were indicted by a federal grand jury yesterday for stealing money from multiple victims through an email takeover scam and “Nigerian Fraud” scheme, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

Oretekor, 43, of Ellenwood, Ga., and Petit-Frere, 47, of Brooklyn, N.Y., were charged with conspiracy to commit wire fraud and six substantive counts of wire fraud. Oretekor was also charged with seven counts of money laundering. According to the indictment, the defendants received funds as a result of an email takeover scam, in which the victims were sent so-called “phishing” emails to capture their usernames and account passwords. The phishing emails were designed to trick victims into clicking on a link that delivered them to a fraudulent website created to look like its legitimate counterpart. When a victim logged into the fraudulent website, her username and password for that account were captured, allowing an imposter to access the victim’s account, review its contents, and send and receive e-mails posing as the victim.

According to the indictment, the fraud began when an imposter, who had gained access to the victim’s email accounts through a phishing email, sent an email from the victim’s Yahoo or Google email account, posing as the victim and directing his or her bookkeeper, financial advisor, or bank officer to transfer funds from the victim’s account. The imposter also set up filters in the victim’s account so that any emails from those persons would go directly to the victim’s “trash” folder. The filters ensured that the victim would not likely see any emails pertaining to the fraudulent transactions. The indictment details how the email takeovers resulted in unauthorized wire transfers of over $500,000 from four victims, and an additional $330,000 in attempted transfers that were identified as fraudulent in time to be reversed.

The indictment further alleges that the defendants used a “Nigerian Scam” scheme against a father and son from New Mexico, stealing over $200,000 from them. The “Nigerian Scam” refers generally to a fraud in which the perpetrator, often posing as a current or former high-ranking official from a foreign government, convinces a victim that he will receive a substantial sum of money in return for paying certain “taxes” or “fees” needed to release that money. In this case, according to the indictment, the defendants represented that they were diplomats attached to the South African embassy and that there was a “consignment box” containing $19M that was “tied up in Customs” but that would be released, and the proceeds split, if the victims paid the necessary “fees” and “taxes.

The indictment further alleges that after the victims in New Mexico ran out of money, the defendants converted them into unwitting “money mules” – a term that refers to persons who receive fraudulent funds into their bank account and distribute them as directed by the fraudsters. The indictment also describes how the defendants were eventually introduced to an undercover officer, who posed as the “cousin” of the New Mexico victims and, through this ruse, as able to deal with the defendants directly.

The defendants were arrested on Oct. 7, 2014, pursuant to arrest warrants issued by the Honorable Paul S. Grewal, United States Magistrate Judge. Oretekor was arrested in Ellenwood, Ga., and Petit-Frere in Brooklyn, N.Y. Both remain in custody.

The maximum penalty for conspiracy to commit wire fraud and wire fraud, in violation of 18 U.S.C. §§ 1349 and 1343, respectively, is 30 years in prison and a $1,000,000 fine. The maximum penalty for money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), is 20 years in prison and a $500,000 fine.

The prosecution is the result of an investigation initiated by the Regional Enforcement Allied Computer Team (REACT) Task Force in San Jose. REACT partnered with IRS Criminal Investigation – Oakland Field Office to expand the scope of the investigation. The United States Secret Service – Atlanta Field Office, as well as U.S. ICE HSI – New York (Brooklyn), also provided valuable support. Assistant United States Attorney David R. Callaway is prosecuting the case with the assistance of Elise Etter.

Please note that an indictment contains only allegations. As with all defendants, Bernard Ogie Oretekor and Chantale Petit-Frere must be presumed innocent unless and until proven guilty.

(Oretekor indictment )

 

 

SAN FRANCISCO – Jasmine M. Mitchell was sentenced today to 27 months in prison for credit card fraud and identity theft, announced United States Attorney Melinda Haag and United States Secret Service Special Agent in Charge Andrew C. Adelmann.

Mitchell pleaded guilty on Aug. 13, 2014, to one count of access device (credit card) fraud and one count of aggravated identity theft. According to the plea agreement, Mitchell admitted to using counterfeit credit cards in the name of another individual to obtain cash advances at the Graton Resort and Casino on Feb. 23, 2014. When Mitchell was arrested by Sonoma County Sheriff’s Deputies that day, she was found with numerous other counterfeit credit cards in the names of other individuals.

Mitchell, 34, who has lived throughout the Bay Area, was indicted by a federal grand jury on May 1, 2014. She was charged with fraudulent use of unauthorized access devices, in violation of 18 U.S.C. § 1029(a)(2), and aggravated identity theft, in violation of 18 U.S.C. § 1028A(a)(1).

The sentence was handed down by the Honorable Edward M. Chen, United States District Court Judge, following a guilty plea on one count of access device fraud in violation of 18 U.S.C. § 1029(a)(2), and one count of aggravated identity theft in violation of 18 U.S.C. § 1028A(a)(1). Judge Chen also sentenced the defendant to a three-year period of supervised release. Mitchell was also ordered to pay restitution to Citibank and CIBC. The defendant has been in federal custody since May 2014, when she was arrested by Sonoma County Sheriff’s Detectives outside of a hotel in Tiburon, Calif.

Kyle F. Waldinger is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim. The prosecution is the result of an investigation by the U.S. Secret Service and the Sonoma County Sheriff’s Office.

(Mitchell indictment )

 

 

OAKLAND – Noah Blue was sentenced on October 10, 2014, to 78 months in prison for a summer bank robbery spree in Oakland, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

In pleading guilty, Blue admitted to committing the following bank robberies:

Date

Bank

Location

Amount Stolen

7/26/2013

Bank of the West

2023 Mountain Boulevard, Oakland

$1,805

8/1/2013

Bank of the West

2023 Mountain Boulevard, Oakland

$684

8/26/2013

Bank of the West

2023 Mountain Boulevard, Oakland

$1,849

9/4/2013

Chase Bank

3310 International Boulevard, Oakland

$1,732

During the commission of the robberies, Blue entered the banks hooded with his face masked and wearing gloves. Blue passed the victim tellers notes announcing that he was robbing the bank and demanded they give him money. In his Aug. 26, 2013 robbery of the Bank of the West, Blue, armed with an 18-inch baton, jumped the teller counter and confronted the victim tellers face to face. Blue raised the baton at one victim teller and threated to beat her if she did not give him money.

Blue, 22, of Oakland, was arrested on Sept. 4, 2013. He was charged by federal criminal complaint on Oct. 17, 2013, and a grand jury returned an indictment on Oct. 24, 2013, charging him with one count of armed bank robbery, in violation of 18 U.S.C. § 2113(a) and (d), and three counts of unarmed bank robbery, in violation of 18 U.S.C. § 2113(a). Blue pleaded guilty on July 18, 2014, without an agreement with the government, admitting all four of the charged bank robberies. Blue was remanded into custody after he pleaded guilty to the charged offenses.

The sentence was handed down by the Honorable Jon S. Tigar, United States District Court Judge. Judge Tigar sentenced Blue to 78 months in prison to be followed by a 5-year period of supervised release. Blue was also ordered to pay full restitution to Bank of the West. The money stolen from the Chase Bank was seized at the time of Blue’s arrest.

Brian C. Lewis is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan. The prosecution is the result of an investigation by the Oakland Police Department and the FBI.

(Blue complaint )

(Blue indictment )

 

 

OAKLAND – Frank Anthony Morton, was convicted of two federal drug trafficking offenses, conspiracy to distribute and possess with intent to distribute cocaine, and possession with intent to distribute and distribution of cocaine, by a federal jury on Oct. 10, 2014, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.

The jury found that Morton, 26, of Pittsburg, worked with his uncle, Miguel Nunez, to deliver a kilogram of cocaine on Aug. 28, 2013 in Oakland, Calif. Nunez, 46, of San Leandro previously pleaded guilty to the cocaine trafficking offenses and is awaiting sentencing. The guilty verdict against Morton followed a four-day jury trial before the Honorable Phyllis J. Hamilton, United States District Court Judge. Following the jury’s guilty verdict, Morton was remanded to the custody of the United States Marshals.

Evidence at trial showed that Morton and Nunez arrived to a Walmart shopping center parking lot, located at 8400 Edgewater Drive in Oakland, at approximately 1:00 p.m. Recorded telephone calls introduced at trial showed that Nunez had previously arranged to meet a cocaine buyer at this location and agreed to sell a kilogram of cocaine in exchange for $18,000. Agents testified that Nunez and Morton arrived in a large white box truck and were observed exiting the truck and entering a nearby video game store. Inside, Morton and Nunez were captured on security cameras as they stood at the storefront windows overlooking the parking lot. The government’s drug trafficking expert testified that their behavior was consistent with counter-surveillance techniques. The video game store security camera also captured Nunez handing Morton a white paper bag, later determined to contain the kilogram brick of cocaine. Morton and Nunez exited the video game store and were again captured on exterior security cameras as they walked towards the cocaine buyer’s vehicle. Morton entered the buyer’s car and placed the kilogram of cocaine on the floorboard while his uncle went into a nearby juice store. DEA agents arrested Nunez and Morton immediately after the cocaine delivery.

Later the same afternoon, Nunez was due in federal court on a separate drug trafficking case. In April of 2013, Nunez was arrested in possession of approximately five kilograms of cocaine. Nunez was subsequently indicted and released on bond while his case was pending. Later, DEA received a tip that Nunez was continuing to distribute cocaine while on pre-trial release. DEA agents resumed their investigation into Nunez, which lead to the arrests of Nunez and Morton in August of 2013.

Morton’s sentencing hearing is scheduled for Jan. 28, 2014 before Judge Hamilton in Oakland. Nunez’s sentencing hearing is scheduled for Nov. 5, 2014. The maximum statutory penalty for each count of the convicted offenses, in violation of 21 U.S.C. §§ 841(a)(1),(b)(1)(C) and 860 is a twenty year term of imprisonment and a fine of $1,000,000. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Aaron Wegner and Katie Burroughs Medearis are the Assistant U.S. Attorneys prosecuting the case, with the assistance of Ana Guerra and Vanessa Vargas. The prosecution is the result of an investigation by DEA.

(Morton second superseding indictment )

 

 

OAKLAND – Kyle Edward Moore was sentenced, today to 37 months in prison, and was ordered to pay $520,904 in restitution for carrying out two conspiracies to commit financial aid fraud and wire fraud, announced United States Attorney Melinda Haag and FBI Special Agent in Charge David J. Johnson.

Moore pleaded guilty on Feb. 14, 2014, to two counts of conspiracy to commit financial aid fraud and one count of wire fraud. According to the plea agreement, Moore conspired to obtain federal student aid funds offered under the Title IV Federal Student Assistance Program. Moore and his co-defendants obtained the aid by preparing and transmitting fraudulent Free Applications for Federal Student Aid (FAFSAs) to the U.S. Department of Education.

In carrying out the fraud scheme, Moore and his co-defendants recruited third-parties to serve as “straw students” and then assisted the straw students in preparing, signing, and transmitting fraudulent FAFSAs. Moore knew that many of the straw students were not eligible to obtain Title IV funds because, among other things, the straw students had not obtained high school diplomas or a recognized equivalent and had no intention of attending school or using the funds for educational purposes. After receiving the student loan funds, Moore and his co-defendants shared the fraudulently obtained funds among themselves and sometimes with the straw students.

Moore admitted to intending to steal $771,268 and to successfully stealing $520,904.

Moore, 29, of Hayward, and three co-defendants were indicted by a federal grand jury on Aug. 15, 2013. They were charged with conspiracy to commit financial aid fraud, in violation of 18 U.S.C. § 371, and with multiple counts of wire fraud, in violation of 18 U.S.C. § 1343.

The sentence was handed down by the Honorable John S. Tigar, United States District Court Judge, in Oakland, following a guilty plea on two counts in violation of 18 U.S.C. § 371, and on one count of 18 U.S.C. § 1343. Judge Tigar also sentenced the defendant to a three-year period of supervised release and to forfeit $520,904 in the form of a money judgment. The defendant will begin serving the sentence on Jan. 12, 2015.

Wade M. Rhyne is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Janice Pagsanjan and Patty Lau. The prosecution is the result of an investigation by the U.S. Department of Education, OIG; the FBI; and the U.S. Department of Housing and Urban Development, OIG.

(Moore indictment )

 

 

OAKLAND – Thomas Yu pleaded guilty in federal court in San Francisco to charges of conspiracy to commit false bank entries, reports, and transactions related to his preparation of false and misleading reports, announced U.S. Attorney Melinda Haag; Federal Deposit Insurance Corporation, Office of the Inspector General, Special Agent in Charge Wade Walters; Office of the Special Inspector General for the Troubled Asset Relief Program, Special Agent in Charge Scott O'Briant; Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Office of the Inspector General, Special Agent in Charge Scott Redington; and FBI Special Agent in Charge David J. Johnson.

Yu, 51, of San Ramon, Calif., is a former Senior Vice President of United Commercial Bank (UCB). UCB was a commercial bank headquartered in San Francisco, Calif., with branch offices throughout the United States as well as in China and Taiwan. Until 2009, its holding company, UCBH Holdings, Inc., was publicly traded on NASDAQ.

On Nov. 6, 2009, UCB was taken over by the Federal Deposit Insurance Corporation (FDIC). According to the March 11, 2014 Superseding Indictment, FDIC estimates that there will be approximately $1.1 billion in losses as a result of the bank’s failure. In addition, the Troubled Asset Relief Program (TARP) provided approximately $297 million in federal funds to UCB on Nov. 14, 2008, during the 2008 financial crisis. None of the TARP funds have been repaid.

According to the Plea Agreement, Yu prepared false and misleading quarterly loan loss allowance reports in which the bank calculated the loss reserves it was required to recognize as part of its quarterly financial reporting in the third and fourth quarters of 2008. By failing to properly downgrade poor performing loans, Yu admitted that he helped the bank avoid required loan loss reserves that enabled the bank to artificially inflate its reported earnings to the public. The conviction followed a change of plea hearing today before the Honorable Jeffrey S. White, United States District Court Judge.

Yu is currently released on a $500,000 appearance bond secured by real property. Yu’s sentencing hearing before Judge White has not been scheduled. The maximum statutory penalty for a conviction for conspiracy in violation of 18 U.S.C. § 371 is five years in prison and a fine of $250,000, plus restitution. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Adam A. Reeves and Robert David Rees are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Denise Oki, Phillip Villanueva and Bridget Kilkenny. The prosecution is the result of an investigation by the FDIC, Office of the Inspector General; the Special Inspector General of the Troubled Asset Relief Program; the Board of Governors of the Federal Reserve System and the Consumer Financial Protection Bureau, Office of the Inspector General; and the Federal Bureau of Investigation.

 

 

SAN FRANCISCO – Jonathan Edward Mills, the former Chief Executive Officer of a San Francisco-based technology company, pleaded guilty in federal court in San Francisco today to two counts of wire fraud, United States Attorney Melinda Haag announced.

Mills founded Motionloft, Inc., in 2010, and he served as its CEO until he was fired in December 2013. In pleading guilty, Mills admitted that he falsely told victims that Motionloft was soon to be acquired by a well-known multinational company based in Silicon Valley. Mills told his victims that in exchange for providing him money to be invested in Motionloft, these investors would earn an ownership stake in Motionloft and massive profits upon completion of the imminent acquisition. In furtherance of his scheme, Mills claimed that the acquiring company had agreed to pay hundreds of millions of dollars to acquire Motionloft. When the purported acquisition failed to materialize, Mills told his victims a series of false excuses, including blaming lawyers, blaming the government shutdown, and blaming financial institutions. In pleading guilty, however, Mills admitted that not only was there no such acquisition planned, but Mills spent substantial amounts of his victims’ money on his own personal expenses such as vacations and other entertainment. In all, Mills admitted that he caused his victims to lose approximately $765,000.

Mills, 30, of San Francisco, was arrested on February 19, 2014, after a Criminal Complaint was filed against him. He was indicted by a federal Grand Jury on March 13, 2014. In that Indictment, he was charged with two counts of wire fraud, in violation of Title 18, United States Code, Section 1343, and four counts of money laundering, in violation of Title 18, United States Code, Section 1957. Pursuant to the Plea Agreement, Mills pleaded guilty to both counts of wire fraud.

Mills’ sentencing hearing is scheduled for February 3, 2015, before The Honorable Richard Seeborg, U.S. District Court Judge, in San Francisco. The maximum statutory penalty for each count of wire fraud, in violation of Title 18, United States Code, Section 1343, is 20 years in prison, a fine of $250,000, plus restitution. Any sentence, however, 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.

Doug Sprague is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rawaty Yim and Muffy Mallory. The prosecution is the result of a two-month investigation by the Federal Bureau of Investigation.

(Mills indictment )

 

 

OAKLAND – Starkisha Benson pleaded guilty on October 3, 2014, to conspiring to file false claims and aggravated identity theft, United States Attorney Melinda Haag and IRS-CI Internal Revenue Service – Criminal Investigation Division Special Agent in Charge José M. Martinez, announced.

According to her plea agreement, Benson filed false tax returns from her residence and from various locations along with her co-conspirators and without the permission of the person listed on the tax return. Benson admitted to creating fake W-2 forms that were used to inflate income and corresponding credits in order to receive fraudulent income tax refunds. Benson also admitted to stealing another person’s identity and using that information to file a false 2009 and 2010 tax returns. Benson further admitted to misusing the identity of that same person’s minor child. Benson acknowledged embezzling these tax refunds from the Internal Revenue Service and keeping the money for her own use on debit cards that she possessed.

Benson, 35, of Antioch, was charged with Khyber Law and Jessika Green in a twenty-four count superseding indictment on Dec. 17, 2013. The defendants were charged with wire fraud, conspiracy to file false claims, filing false claims, effecting fraudulent transactions with an access device, theft of public money, and aggravated identity theft. Law and Green each pleaded guilty to conspiracy to file false claims.

Law, 26, and Green, 33, of Antioch, are scheduled to be sentenced before the Honorable Jon S. Tigar, United States District Court Judge, on Dec. 5, 2014, in Oakland.

Benson is scheduled to be sentenced on Jan. 9, 2015. Based on her plea of guilty, Benson faces a mandatory minimum 2-year sentence related to the aggravated identity theft conviction.

The maximum statutory penalty for each count of conspiracy to file false claim, in violation of 18 U.S.C. § 286, is ten years in prison and a fine of $250,000. The maximum penalty for aggravated identity theft, in violation of Title 18, U.S.C. § 1028A, is a mandatory consecutive sentence of two years in prison, and a fine of $250,000 plus restitution. 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 Newman is prosecuting the case. The prosecution is the result of an investigation by the Berkeley Police Department and the IRS, Criminal Investigation Division.

(Benson indictment )

 

 

OAKLAND – Anthony Keslinke was charge today by superseding indictment in a scheme involving short sale mortgage fraud, announced U.S. Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

According to the superseding indictment, Keslinke used straw buyers to purchase real estate throughout Northern California. Keslinke identified properties, including his own properties, that were potential candidates for a “short sale.” A “short sale” is a sale of real estate in which the sale proceeds are less than the balance owed on the mortgage loan pertaining to the property and often occurs when a borrower cannot pay the mortgage loan. In furtherance of the scheme, Keslinke allegedly submitted offers to the financial institutions on behalf of straw buyers. In order to induce a bank to accept a short sale offer, Keslinke would draft fraudulent financial hardship letters and submit them on behalf of the seller of a property. In addition, Keslinke often altered engineering and pest reports associated with the properties in order to give the appearance to the financial institutions that the properties were worth significantly less than true fair market value. Additionally, according to the superseding indictment, Keslinke often altered bank account documents to create the appearance that the straw buyers had sufficient funds to purchase the properties in cash. Once a financial institution accepted a particular property for a short sale, Keslinke used his own funds to purchase the property in the name of the straw buyer. After a short sale was completed on a particular property, Keslinke maintained control of the property and often sold the property for a significant financial gain. Keslinke is charged in the superseding indictment with using this mortgage fraud scheme to orchestrate the short sale of properties in Danville, California; Walnut Creek, California; and Kings Beach, California.

The indictment also alleges that between August of 2013 and February of 2014, Keslinke met with an undercover agent purporting to be a drug dealer on multiple occasions. On five separate occasions, Keslinke accepted a total of $550,000 from the undercover agent. In an attempt to conceal the true source of the funds, Keslinke repeatedly deposited the money received from the undercover agent into business bank accounts under Keslinke's control. Keslinke then attempted to launder the money by wiring it from his business bank accounts to an account controlled by the undercover agent. During the investigation, Keslinke routinely kept 8-10% of the money provided to him from the undercover agent as a fee for his services.

Upon a conviction on any of the bank fraud or wire fraud charges, alleged in counts one through six, Keslinke shall forfeit any property, real or personal, which constitutes or is derived from proceeds traceable to the offense.

Upon a conviction of any of the money laundering charges, alleged in counts seven through twelve, Keslinke shall forfeit $320,000 cash seized from Keslinke’s residence, approximately $1.4 million from bank accounts, 500 American Silver Eagle coin, and a Tiffany diamond solitaire ring, all of which allegedly constitutes or is derived from the proceeds traceable to the offenses.

The maximum statutory penalty for each count of Conspiracy to Commit Bank Fraud and Bank Fraud, in violation of 18 U.S.C. § 1349 and 18 U.S.C. §§ 1344, is 30 years in prison and a $1,000,000 fine. The maximum statutory penalty for each count of Wire Fraud, in violation of 18 U.S.C. §§ 1343, is 20 years in prison and a $250,000 fine. The maximum statutory penalty for each count of Conspiracy to Commit Money Laundering and Money Laundering, in violation of 18 U.S.C. § 1956(h) and 18 U.S.C. § 1956(a)(3)(B), is 20 years in prison and a $250,000 fine.

Assistant U.S. Attorney Aaron Wegner is prosecuting the case with the assistance of Vanessa Vargas. The prosecution is the result of an investigation by the Drug Enforcement Administration and Internal Revenue Service. The Contra Costa Sheriff’s Office and Livermore Police Department have also provided assistance during the investigation. The investigation was conducted and funded by the Organized Crime Drug Enforcement Task Force, a multi-agency task force that coordinates long-term narcotics trafficking investigations.

Please note, an indictment contains only allegations. Therefore, as with all defendants, Anthony Keslinke must be presumed innocent unless and until proven guilty.

(Keslinke superseding indictment )

 

 

SAN FRANCISCO – Francisco R. Legaspi was sentenced today to 21 months for aiding and assisting in the preparation and presentation of false tax returns and for failing to appear for his sentencing on the tax charges originally scheduled to take place on Jan. 28, 1993, U.S. Attorney Melinda Haag and IRS-CI Special Agent in Charge José M. Martinez, announced.

According to the plea agreement, Legaspi was indicted on August 19, 1992, on three counts of aiding and assisting in the preparation and presentation of false tax returns. He was released from custody with the condition that he appear in court for all hearings. He pleaded guilty on November 5, 1992, to one count of preparing a false tax return. Legaspi’s attorney told him that his sentencing was set for January 28, 1993. On January 27, 1993, IRS employees went to Legaspi’s business to collect unpaid withholding payroll taxes. During the visit an IRS employee and Legaspi discussed the fact that he was scheduled to appear in court the next day for his criminal case. The next day, January 28, 1993, Legapsi intentionally did not appear for sentencing and fled to Mexico and later to Canada to avoid prison time for his tax crime.

Legaspi, 61, formerly of Daly City, was located in Canada in 2012, after the State Department Bureau of Diplomatic Security researched social media websites and found Legaspi’s Facebook page. The Royal Canadian Mounted Police used the information to apprehend Legaspi. Thereafter, he was extradited from Canada to the United States with the assistance of the U.S. Justice Department’s Office of International Affairs and the United States Marshals Service. Legaspi made his initial appearance in federal court in San Francisco On July 1, 2014.

The sentence was handed down by the Honorable William H. Orrick, United States District Court Judge, in San Francisco. Judge Orrick also sentenced Legaspi to a 1-year period of supervised release.

Assistant U.S. Attorney Thomas Moore is prosecuting the case with the assistance of Paralegal Specialist Edward Solis. The prosecution is the result of an investigation by the IRS, Criminal Investigation with assistance from the State Department Bureau of Diplomatic Security, the Royal Canadian Mounted Police, the United States Marshals Service, and United States Department of Justice, Office of International Affairs.

 

 

SAN FRANCISCO – Victor Flores, Benjamin Campos-Gonzalez, and Armando Acosta were convicted of racketeering conspiracy by a federal jury yesterday, announced United States Attorney Melinda Haag, Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Acting Special Agent in Charge Tatum King, and FBI Special Agent in Charge David J. Johnson.

In addition, the jury also convicted Flores of three counts of racketeering murder and four counts of racketeering attempted murder for his involvement in a Dec. 22, 2010, shooting in South San Francisco, Calif., as well as the attempted murder of three federal agents whom he shot and seriously wounded when the agents sought to arrest him on May 3, 2012. Acosta was also convicted of being an accessory-after-the-fact to murder, as well as various obstruction offenses. A fourth defendant, Mario Bergren, was acquitted of the charges against him.

The guilty verdict followed a three-month jury trial before the Honorable Susan Illston, United States District Court Judge, in San Francisco. The jury found that Flores, 23, of Petaluma, Campos-Gonzalez, 24, of San Mateo, and Acosta, 29, of South San Francisco, conspired to conduct the affairs of a racketeering enterprise, the 500 Block/C Street Gang. The 500 Block/C Street Gang was a Norteño gang based in South San Francisco that engaged in drug dealing, robbery, obstruction of justice, and crimes of violence, including one of the most violent single crimes in South San Francisco history.

According to the evidence presented at trial, during the evening of Dec. 22, 2010, Flores, along with fellow 500 Block/C Street gang member Joseph Ortiz shot at seven victims, whom they perceived to be rival gang members as the victims walked down Eighth Lane in South San Francisco. Gonzalo Avalos, Omar Cortez, and Hector Flores were killed while three of the others were wounded. Acosta was also convicted of being an accessory-after-the-fact to racketeering murder for his role in helping to cover up the murders.

In addition, when members of the Los Angeles Special Response Team of Homeland Security Investigations went to execute an arrest warrant for Flores on May 3, 2012, in Petaluma, Calif., Flores opened fired on the federal agents with an AK-47-style assault weapon. He fired twenty rounds of large-caliber ammunition at the agents, emptying two full magazines of ammunition, before he eventually surrendered to law enforcement. The jury convicted Flores for the attempted murder of the three federal agents whom he wounded.

“These convictions are the result of the tireless effort of law enforcement agents from multiple agencies working together to keep the community safe. For the victims and their families, there is nothing we can do to erase their pain and sorrow. We hope, however, that these convictions demonstrate that justice has been served and that the victims and their families can now begin to heal,” U.S. Attorney Haag said. “The facts of this case highlight the extraordinary bravery with which the men and women of law enforcement perform their duties.”

“These verdicts represent another important victory in the ongoing effort to rid our communities of violent street gangs along with the scourge of fear and crime they foster,” said Tatum King, acting special agent in charge for HSI San Francisco. “As we said when these defendants were arrested, ‘justice is patient and justice is resolute.’ Yesterday, it was rewarded. In that vein, HSI will continue to work closely with the South San Francisco and Daly City police departments and other local and federal law enforcement agencies to infiltrate and dismantle these dangerous criminal enterprises and hold their members accountable for their actions.”

“The conviction of Victor Flores for his attempted murder of three Department of Homeland Security agents represents a significant victory for the rule of law and for the agents and officers who put their lives on the line every day to enforce those laws,” said David J. Johnson, FBI Special Agent in Charge of the San Francisco Field Office. “The FBI is proud of its role in this highly successful case and will continue to work tirelessly with our law enforcement partners to bring to justice anyone who attempts to harm law enforcement agents or officers engaged in the pursuit of justice.”

"South San Francisco is a safe place to live and work and yesterday's conviction sends a strong message to those who continue to promote the gang lifestyle, that we are not going to tolerate to be shaken by senseless and blatant acts of gang violence," South San Francisco Police Chief Jeff Azzopardi said. "We will continue our partnership with the Daly City Police Department, Homeland Security Investigations(HSI), the FBI, and the United States Attorney's Office to keep South San Francisco as one of the safest places in the Bay Area."

Flores, Campos-Gonzalez, and Acosta are currently being held in custody and are scheduled to be sentenced on Jan. 16, 2015, before Judge Illston. Flores faces a maximum penalty of six life terms plus 103 years’ imprisonment, and a mandatory minimum sentence of three life terms plus 35 years’ imprisonment. Campos-Gonzalez faces up to twenty years’ imprisonment for his conviction for racketeering conspiracy, while Acosta faces up to sixty years’ imprisonment for his conviction for racketeering conspiracy, being an accessory-after-the-fact to murder, and obstruction of justice. However, any sentence will be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The jury’s verdict concludes an investigation initiated by the South San Francisco Police Department, the Daly City Police Department, HSI, and by the FBI. In all, more than 19 defendants were charged, with more than 15 defendants pleading guilty, including Joseph Ortiz, who is presently serving a sentence of five life terms plus sixty years’ imprisonment for his involvement in the Dec. 22, 2010, shooting.

Acadia L. Senese, Stephen Meyer, and Benjamin Tolkoff are the Assistant United States Attorneys who prosecuted this case, with the assistance of Kevin Costello and Daniel Charlier-Smith.

(Ortiz et al superseding indictment )

 

 

SAN FRANCISCO – Miguel Macias aka “Flaco” pleaded guilty today and Alejandro Miranda pleaded guilty on Sept. 24, 2014, to distribution and possession with the intent to distribute methamphetamine and conspiracy to launder money, announced United States Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

According to the plea agreements, Miranda admitted to selling four ounces of methamphetamine to an undercover officer (UC). On Feb. 26, 2013, Miranda met with the UC in a parking lot in San Rafael. He gave the UC the drugs and the UC gave him the money. On Dec. 6, 2013, Macias sold methamphetamine to someone in the parking lot of the Home Depot store in San Rafael for which he received $5,000 for the drugs. On Sept. 21, 2013, Miranda helped Macias wire transfer money to Mexico. Miranda contacted the wire remitters by telephone to arrange the wire transfers. Macias then sent the wires under different sender names and different recipient names. This method was used to conceal the nature, source, and ownership of the funds. According to court documents the drug trafficking took place through Azteca Market in San Rafael.

Macias, 24, of Daly City, and Miranda, 28, of San Pablo, were both charged with distribution and possession with the intent to distribute methamphetamine and conspiracy to launder money. They each pleaded guilty to both counts.

Miranda and Macias are scheduled to be sentenced on Dec. 17, 2014, at 10:00 a.m., before the Honorable Charles R. Breyer, United States District Court Judge, in San Francisco.

The maximum statutory penalties for distribution and possession with the intent to distribute methamphetamine, in violation of 21 U.S.C. § 841, is life in prison, with a minimum term of 10 years, a $10,000,000 fine, and denial of federal benefits for five years. The maximum statutory penalties for conspiracy to launder money, in violation of U.S.C. § 1956(h), (b)(1)(A), is 20 years in prison and a fine of $500,00 or twice the value of the property involved in the transaction. 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.

The prosecution is the result of an investigation by the Marin County Major Crimes Task Force, the DEA and the IRS, Criminal Investigation.

(Macias indictment )

(Macias superseding information )

(Miranda indictment )

(Miranda superseding information )

 

 

SAN FRANCISCO – Matthew David Graves pleaded guilty on Sept. 26, 2014, to manufacturing and possession of marijuana with intent to distribute, conspiracy to do so, and money laundering, announced United States Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

In open court, Graves admitted that between Nov. 6, 2008 and Nov. 8, 2012, he knowingly and intentionally conspired to manufacture and possess with the intent to distribute 100 or more marijuana plants and that he possessed more than 100 marijuana plants with intent to distribute on multiple occasions during that period. Graves also pleaded guilty to multiple counts of money laundering and admitted that he made multiple cash deposits into the bank account of his business, Matt Graves Construction, and that those deposits involved the proceeds from the manufacturing and possession of marijuana.

On Sept. 19, 2013, Graves, 56, of Laytonville, Calif., was charged by a Superseding Indictment with conspiracy to possess with the intent to distribute marijuana, three counts of manufacturing and possession with intent to distribute marijuana, four counts of money laundering, and one count of being a felon in possession of a firearm. Graves pleaded guilty to all counts in the superseding indictment with the exception of being a felon in possession of a firearm.

Graves also consented to the forfeiture of his interest in four pieces of real property in Leggett, Calif. and a 2008 Toyota Tundra. This property was used to commit or facilitate the crimes to which Graves pleaded guilty.

The maximum statutory penalties for conspiracy to manufacture and possess with intent to distribute 100 or more marijuana plants, in violation of 21 U.S.C. § 846, and manufacture and possession with intent to distribute 100 or more marijuana plants, in violation of U.S.C. §§ 841(a)(1) and 841(b)(1)(B)(vii), is 40 years in prison with a mandatory minimum of five years imprisonment, a $5,000,000 fine and a lifetime supervised release with a four year minimum term of supervised release. The maximum statutory penalty for money laundering, in violation of 18 U.S.C. § 1956(a)(1)(B)(i), is 20 years in prison, and a $500,000 fine or twice the value of the property involved in the transaction. 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.

Graves sentencing is scheduled for Dec. 17, 2014, before the Honorable Charles R. Breyer, United States District Court Judge, in San Francisco.

Assistant United States Attorney Kevin Barry is prosecuting the case. The prosecution is the result of an investigation by the Mendocino County Sheriff's Office, the Drug Enforcement Administration, and the Internal Revenue Service, Criminal Investigation.

(Graves superseding indictment )

 

 

SAN FRANCISCO – A federal grand jury in San Francisco indicted Jeffrey Neely, a former high-ranking official with the U.S. General Services Administration (GSA), today on charges that he submitted fraudulent reimbursement claims and made false statements, announced United States Attorney Melinda Haag and GSA Office of Inspector General, Special Agent in Charge David House.

According to the indictment, Neely, 59, of Gardnerville, Nev., is alleged to have fraudulently sought reimbursement for personal travel and expenses – incurred in Las Vegas, Nev.; Long Beach, Calif.; Guam; and Saipan – by submitting false and fraudulent claims to the United States. The indictment further alleges that, when GSA employees questioned him about these expenses, Neely falsely represented that the costs were incurred for official government business. At the time of this conduct, Neely was the Regional Commissioner and Acting Regional Administrator for GSA’s Public Buildings Service, Pacific Rim Region, which encompasses California, Arizona, Nevada, Hawaii, and outlying territories.

Neely came under scrutiny as the top official overseeing an annual GSA conference in 2010. Allegations of waste, fraud, and abuse relating to this conference triggered a congressional inquiry and an investigation by GSA’s Office of Inspector General regarding conference spending as well as Neely’s own travel and expenditures.

The indictment includes three false claims counts, under 18 U.S.C. § 287, and two counts of making false statements and using false documents, under 18 U.S.C. § 1001. Neely is scheduled to make his initial appearance in federal court in San Francisco on October 20, 2014, before the Honorable Elizabeth D. Laporte, United States Magistrate Court Judge.

If convicted, the defendants face a maximum sentence of five years imprisonment, and a fine of $250,000 for each violation. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Hartley M. K. West is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Rosario Calderon. The prosecution is the result of an investigation by the GSA’s OIG.

(Neely indictment )

 

 

SAN JOSE – Brenda Jo Kibbee, was sentenced yesterday to nine months’ imprisonment for intentionally failing to pay Federal excise tax on wine, and ordered to pay $877,126.94 in restitution to the Alcohol and Tobacco Tax and Trade Bureau (TTB), announced United States Attorney Melinda Haag, TTB Assistant Administrator for Field Operations Tom Crone, and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

On Dec. 17, 2013, Kibbee pleaded guilty to one count of failing to pay an excise tax on wine. According to the plea agreement, Kibbee owned and operated Monterey Wine Services, a bonded wine cellar located in Monterey County, Calif. For each of the reporting periods from Aug. 1, 2008, through at least May 31, 2009, Monterey Wine Services had taxable removals of wine from its bonded wine cellar, which resulted in a wine excise tax due and owing to TTB. Kibbee failed to pay the excise tax due for each of these periods. In the wine warehousing industry, bonded wine cellars pay wine excise tax on the removal of wine, but then typically pass this cost on to their winery customers. Even though Kibbee did not pay the excise tax due to TTB, she invoiced her customers and received payments from them for the excise taxes. Kibbee agreed that the tax loss resulting from her misconduct was at least $877,126.94.

TTB Assistant Administrator for Field Operations Tom Crone said, “Tax evasion is not a victimless crime. Law abiding businesses rely on us to ensure a level playing field. We take that responsibility seriously.”

Kibbee, 41 of Salinas, Calif., was indicted on Sept. 26, 2012, on 11 counts of failing to pay an excise tax on wine. She pleaded guilty to one count.

The sentence was handed down by the Honorable D. Lowell Jensen, United States District Court Judge, in San Jose. Judge Jensen also sentenced Kibbee to a three-year term of supervised release. Kibbee was ordered to surrender on December 16, 2014.

Matthew J. Kluge, Trial Attorney with the United States Department of Justice, and Thomas Moore, Assistant United States Attorney for the Northern District of California, are prosecuting the case. The prosecution is the result of an investigation by the TTB, and the IRS, Criminal Investigation.

(Kibbee indictment )

 

 

SAN JOSE – Liping Liu was sentenced today to 30 months imprisonment, a $25,000 fine, and ordered to pay $744,248 in restitution for tax evasion, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez announced.

According to the plea agreement, Liu was the receptionist and office manager for her spouse’s pediatric dental and orthodontic practice. Liu created a tax evasion scheme in which she skimmed money from various sources, including rental properties and her spouse’s dental and orthodontic practice. Liu admitted that she knew her actions were against the law and she was evading the assessment and payment of federal taxes throughout the course of her scheme.

Liu evaded taxes by funneling money from her husband’s practice into various bank accounts to prevent those funds from appearing in the business bank accounts. The only funds deposited into the business bank accounts were insurance payments, aside from thirteen personal checks in 2006 and one personal check in 2009. Liu admitted that she deposited the insurance proceeds exclusively into the business accounts because she knew the insurance company reported these payments to the IRS. Liu further admitted that she offered a 10% discount to dental clients if they paid in cash or by check, as long as they left the payee section on the check blank. Liu also modified checks, in the memo and payee fields to disguise the source of the payment. This enabled her to deposit the checks into the non-business accounts and evade taxes.

In addition, according to her plea agreement, from 2006 through 2010, Liu was a 50% partner in a limited liability corporation, HSL, which was created to hold rental property. Liu diverted rental checks paid to HSL to non-business bank accounts for the purpose of evading taxes on the HSL entity. She also changed the payee information on numerous rental checks.

From 2006 through 2010, Liu omitted $2,147,741.04 in gross receipts. This resulted in additional tax due and owing of $744,248.

Liu also admitted to providing incomplete and false information to the family bookkeeper, and engaging in a series of structured cash transactions from September 2008 to September 2009, which allowed her to continue to hide taxes from the IRS.

Liu, 56, of Saratoga was charged on March 19, 2014, with one count of tax evasion. She pleaded guilty to the charge on March 24, 2014.

The sentence was handed down by the Honorable Ronald M. Whyte, United States District Court Judge, in San Jose. Judge Whyte also sentenced Liu to a three-year term of supervised release. The defendant was ordered to surrender on December 1, 2014.

Assistant United States Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service, Criminal Investigation.

(Liu indictment )

 

 

WASHINGTON—The Justice Department announced Monday that Attorney General Eric Holder has recorded a video message as part of the Cartoon Network’s “I Speak Up” campaign to combat bullying. The project urges young people to speak up in order to help bring bullying situations to an end.

The goal of the campaign is to collect one million user-generated videos that unite the voices of kids, parents, educators, celebrities and government officials all saying “I Speak Up.” Attorney General Holder joined other notable voices such as Education Secretary Arne Duncan, as well as actors and professional athletes, in recording a message for the campaign.

In his video, the Attorney General delivers the following message: “The violence of bullying has a devastating effect on young people. Help me defend childhood by speaking up for those who – too often – cannot speak for themselves. I’m Attorney General Eric Holder, and I am joining Cartoon Network to challenge one million people to speak up against bullying. Please go to StopBullyingSpeakUp.com to learn more.”

The full video of the Attorney General’s message is available at https://www.youtube.com/watch?v=NMH5Abirdaw.

 

 

SAN FRANCISCO – ZAO Hewlett-Packard A.O. (HP Russia), an international subsidiary of the California technology company Hewlett-Packard Company (HP Co.), pleaded guilty today to felony violations of the Foreign Corrupt Practices Act (FCPA) and was then sentenced for its role in bribing Russian government officials to secure a large technology contract with the Office of the Prosecutor General of the Russian Federation.

U.S. Attorney Melinda Haag of the Northern District of California, Principal Assistant Attorney General Marshall L. Miller of the Justice Department’s Criminal Division, Acting Assistant Director in Charge Timothy A. Gallagher of the FBI’s Washington Field Office and Chief Richard Weber of the Internal Revenue Service – Criminal Investigation (IRS-CI) made the announcement.

HP Russia pleaded guilty this morning before U.S. District Judge D. Lowell Jensen of the Northern District of California to conspiracy and substantive violations of the anti-bribery and accounting provisions of the FCPA. According to the plea agreement, HP Russia executives created a multimillion dollar secret slush fund, at least part of which was used to bribe Russian government officials who awarded the company a contract valued at more than €35 million.

At the conclusion of the plea proceeding, the court sentenced HP Russia to pay a $58,772,250 fine.

“Today’s conviction and sentence of HP Russia demonstrates that the United States Attorney’s Office is dedicated to aggressively prosecuting all forms of corporate fraud that touch our district, wherever they may occur,” said U.S. Attorney Haag. “HP’s cooperation during the investigation is what we expect of major corporate leaders facing the challenges of doing business around the world.”

“In a brazen violation of the FCPA, Hewlett Packard’s Russia subsidiary used millions of dollars in bribes from a secret slush fund to secure a lucrative government contract,” said Principal Deputy Assistant Attorney General Miller. “Even more troubling was that the government contract up for sale was with Russia’s top prosecutor’s office. Tech companies, like all companies, must compete on a level playing field, not resort to secret books and sham transactions to hide millions of dollars in bribes. The Criminal Division has been at the forefront of this fight because when corruption takes hold overseas, American companies and the rule of law are harmed. Today’s conviction and sentencing are important steps in our ongoing efforts to hold accountable those who corrupt the international marketplace.”

“For more than a decade HP Russia business executives participated in an elaborate scheme that involved paying bribes to government officials in exchange for large contracts,” said Assistant Director in Charge McCabe. “There is no place for bribery in any business model or corporate culture. Along with the Department of Justice, the IRS and international law enforcement partners, the FBI is committed to investigating corrupt backroom deals that threaten our global commerce.”

“HP Russia thought that they could play by a different set of rules than the. rest of the international business community,” said Chief Richard Weber, IRS Criminal Investigation. “Unfortunately, they are not alone. For other companies out there conducting business in this way, let the message be very clear—we will relentlessly follow the money trail. IRS-CI is a trusted leader in the pursuit of corporations and executives who circumvent the law. CI is committed to maintaining fair competition, free of corrupt. practices, through a potent synthesis of global teamwork and our dynamic financial investigative talents.”

According to the statement of facts filed with the plea agreement, HP Russia created excess profit margins to finance the slush fund through an elaborate buy-back deal scheme. HP subsidiaries first sold the computer hardware and other technology products called for under the contract to a Russian channel partner, then bought the same products back from an intermediary at a nearly €8 million mark-up and an additional €4.2 million in purported services, then sold the same products to the Office of the Prosecutor General of the Russian Federation at the increased price. The payments to the intermediary were then largely transferred through multiple layers of shell companies, some of which were directly associated with government officials. Proceeds from the slush fund were spent on travel services, luxury automobiles, expensive jewelry, clothing, furniture and various other items.

To keep track of and conceal these corrupt payments, the conspirators inside HP Russia kept two sets of books: secret spreadsheets that detailed the categories of bribe recipients, and sanitized versions that hid the bribes from others outside of HP Russia. They also entered into off-the-books side agreements to further mask the bribes. As one example, an HP Russia executive executed a letter agreement to pay €2.8 million in purported “commission” fees to a U.K.-registered shell company, which was linked to a director of the Russian government agency responsible for managing the Office of the Prosecutor General of the Russian Federation project. HP Russia never disclosed the existence of the agreement to internal or external auditors or management outside of HP Russia.

On April 9, 2014, the government also announced criminal resolutions with HP subsidiaries in Poland and Mexico which violated the FCPA in connection with contracts with Poland’s national police agency and Mexico’s state-owned petroleum company, respectively. Pursuant to a deferred prosecution agreement, the department filed a criminal information charging Hewlett-Packard Polska, Sp. Z o.o. with violating the accounting provisions of the FCPA. Hewlett-Packard Mexico, S. de R.L. de C.V. entered into a non-prosecution agreement with the government pursuant to which it has agreed to forfeit proceeds and has admitted and accepted responsibility for its misconduct. In total, the three HP entities will pay $76,760,224 in criminal penalties and forfeiture.

In a related FCPA matter, the U.S. Securities and Exchange Commission (SEC) filed a proposed final judgment in April 2014 to which HP Co. consented. Under the terms of the proposed final judgment, HP Co. has paid $31,472,250 in disgorgement, prejudgment interest and civil penalties, bringing the total amount of U.S. criminal and regulatory penalties against HP Co. and its subsidiaries to more than $108 million.

Court filings acknowledge HP Co.’s extensive cooperation with the department, including conducting a robust internal investigation, voluntarily making U.S. and foreign employees available for interviews, and collecting, analyzing, and organizing voluminous evidence for the department. Court filings also acknowledge the extensive anti-corruption remedial efforts undertaken by HP Co., including taking appropriate disciplinary action against culpable employees, and enhancing HP Co.’s internal accounting, reporting, and compliance functions.

The case is being prosecuted by Assistant U.S. Attorney Adam A. Reeves of the Northern District of California, Trial Attorneys Ryan Rohlfsen and Jason Linder of the Criminal Division’s Fraud Section with the assistance of Phillip Villanueva, Maryam Beros and Bridget Kilkenny of the Northern District of California. The Criminal Division’s Office of International Affairs also provided significant assistance in this matter. The case is being investigated by the FBI’s Washington Field Office with assistance from the FBI’s New York Field Office and FBI Legal Attache offices in Mexico City, Moscow, Berlin and Warsaw, and the IRS-CI’s Oakland Field Office.

The Justice Department expresses its deep appreciation for the significant assistance provided by the SEC’s Division of Enforcement, the Polish Anti-Corruption Bureau (CBA), the Polish Appellate Prosecutor’s Office, the Public Prosecutor’s Office in Dresden, Germany, and our law enforcement partners in Mexico, the United Kingdom, Lithuania, Latvia, Italy, Spain and Hungary.

Additional information about the Justice Department’s FCPA enforcement efforts can be found at www.justice.gov/criminal/fraud/fcpa.

(HP Russia plea agreement )

(HP Russia information )

(HP Poland information )

(HP Poland DPA )

(HP Mexico NPA )

 

 

OAKLAND – Sherry L Hender was sentenced to 29 months and ordered to pay restitution of $51,629 for theft of government property and aggravated identity theft, announced United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation, Special Agent in Charge José M. Martinez.

Hender pleaded guilty on June 3, 2014. According to the plea and court documents, beginning in August 2011, Hender assisted in preparing hundreds of false income tax returns, claiming fraudulent tax credits and fraudulent tax refunds. In order to conduct her tax scheme, Hender created an identification information form, “ID-DOC”, which was used to prepare the fraudulent income tax returns. This form contained questions about personal identification, including name, date of birth, Social Security number, income, number of dependents, expenses, and occupation.

In January 2012, Hender opened a business bank account which was used to receive tax refunds. Between Jan. 18, 2012 and Feb. 21, 2012, Hender used the information obtained on the ID-DOC to prepare and submit fraudulent income tax returns, directing the IRS to send the refunds to her bank account. On Feb. 7, 2012, and Feb. 24, 2012, Hender told IRS Special Agents that she knew the tax refund money was obtained fraudulently and agreed to return it to the IRS. However, she did not return the money to the IRS. Rather, she withdrew the funds and spent it on personal items and illegal drugs. Hender obtained $51,629 in fraudulent refunds.

Hender, 50, of Pleasant Hill, was charged on May 21, 2013, with thirteen counts of theft of government property and one count of aggravated identity theft. She pleaded guilty to one count of theft of government property and to the aggravated identity theft count.

The sentence was handed down by the Honorable Jeffrey S. White, United States District Court Judge in Oakland. Judge White also sentenced Hender to a three-year term of supervised release, and ordered her to pay $200.00 in special assessment. The defendant was ordered to surrender on Oct. 21, 2014.

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.

(Hender indictment )

 

 

OAKLAND – On Sept. 4, 2014, a federal grand jury indicted Doctor Michael Roger Chiarottino, with fourteen counts of distributing Schedule II controlled substances, and one count of distributing a Schedule III controlled substance outside the usual course of professional practice and without a legitimate medical purpose, announced United States Attorney Melinda Haag and Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick.

The Indictment against Chiarottino was unsealed at his initial appearance this morning in United States District Court in Oakland.

According to the indictment, Chiarottino, 66, of Corte Madera, is alleged to have improperly prescribed controlled substances including oxycodone, hydrocodone, oxymorphone, hydromorphone, and methadone.

Chiarottino was arrested on Sept. 8, 2014, made his initial appearance in federal court today, and was released on $75,000 bail. Chiarottino's next scheduled appearance is at on Sept. 15, 2014, at 9:30 a.m. for a bail review hearing before the Honorable Donna M. Ryu, United States Magistrate Judge.

The maximum statutory penalty for each count of distributing a Schedule II controlled substance, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(C), is 20 years imprisonment, a fine of $1,000,000, a lifetime of supervised release, a mandatory minimum three years of supervised release, and a $100 special assessment. The maximum statutory penalty for the count of distributing a Schedule III controlled substance, in violation of 21 U.S.C. §§ 841(a)(1), (b)(1)(E)(i), (iii), is 10 years imprisonment, a fine of $500,000, a lifetime of supervised release, a mandatory minimum two years of supervised release, and a $100 special assessment. 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.

Garth Hire is the Assistant U.S. Attorney who is prosecuting the case with the assistance of Melissa Dorton. The prosecution is the result of an investigation by the Drug Enforcement Administration, Livermore Police Department, Pleasanton Police Department, Marin County Narcotics Task Force, and the Medical Board of California. 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.

Please note, an indictment contains only allegations and, as with all defendants, Michael Roger Chiarottino must be presumed innocent unless and until proven guilty.

(Chiarottino indictment )

 

 

WASHINGTON - Earlier today, Associate Attorney General Tony West, Assistant Attorney General Stuart Delery for the Civil Division and members of the Department’s Elder Justice Initiative met with stakeholders in the field of elder abuse and financial exploitation to launch the Elder Justice website in an effort to further prevent and combat elder abuse and financial exploitation.

Associate Attorney General West and Assistant Attorney General Delery delivered remarks at the outreach event to federal, state and local law enforcement, as well as to other partners who combat elder abuse. The remarks focused on the significant contributions that the Elder Justice website can make to the field and on the Department’s commitment to protecting seniors from abuse and exploitation. The Elder Justice website will serve as a resource for elder abuse prosecutors, researchers and practitioners, and most importantly, for victims of elder abuse and their families. This website will also serve as a forum for law enforcement and elder justice policy communities to share information and enhance public awareness on the subject matter.

“The launch of the Elder Justice website today marks another milestone in reaching our shared goal of keeping older Americans safe from abuse and neglect,” said Associate Attorney General West. “The more we embrace our elders with respect and care, the stronger our society will be. This tool helps move us closer to that goal.”

Protecting older Americans is one of the Department's top priorities, as evidence shows that nearly one in 10 people over the age of 60 suffer abuse and neglect. Elder abuse includes physical, sexual and emotional abuse, neglect and financial exploitation. Elder abuse depletes the resources of individuals, families, businesses and public programs, including Medicare and Medicaid, by billions of dollars each year, which in turn places enormous burdens on our health care, financial and judicial systems.

Older Americans are also targeted by consumer scams, health care fraud and financial exploitation, and protecting this group from financial exploitation is also a priority of the department. It is estimated that older adults in the United States lose more than $2.9 billion annually from financial exploitation. Financial loss may result in loss of independence, decreased health and psychological distress, all of which culminate in a diminished quality of life for older adults. Over the years, the department has successfully prosecuted a number of criminals who targeted the elderly through reverse mortgage fraud scams and lottery scams. Healthcare fraud prevention and consumer protection efforts are examples of ways the department protects older Americans from financial exploitation.

“The website provides resources and a means for improved communication among prosecutors, supports victims and families, and establishes a mechanism for collaboration for researchers and practitioners,” said Assistant Attorney General Delery. “While there are many other victim support websites available, we believed that the department could add significant value in this domain by consolidating information nationwide and making it more user-friendly. The Civil Division will continue to strengthen its efforts to protect the elderly.”

Partners in attendance included the Federal Trade Commission; the American Bar Association; the U.S. Department of Health and Human Services-Office of the Inspector General; the National Association for Medicaid Fraud Control Units; the Office of the U.S. Attorney General for the District of Columbia; the Consumer Financial Protection Bureau; and the Social Security Administration.

 

 

WASHINGTON – Calling prescription drug addiction an “urgent and growing threat” to our nation’s public health, Attorney General Eric Holder on Monday announced a new Drug Enforcement Agency (DEA) regulation that would allow pharmacies, hospitals, clinics, and other authorized collectors to serve as authorized drop-off sites for unused prescription drugs. Under the new policy, long-term care facilities will also be able to collect controlled substances turned in by residents of those facilities, and prescription drug users everywhere will have permission to directly mail in their unused medications to authorized collectors.

Attorney General Holder said the new changes will help save lives and protect American families from the increased dangers of prescriptions drug misuse. In 2011 alone, more than half of the 41,300 unintentional drug overdose deaths in the United States involved prescription drugs, and hazardous opioid pain relievers led to about 17,000 of those deaths. Young people are especially susceptible to these dangers. The Attorney General noted that nearly four in 10 teens who have misused or abused a prescription drug have obtained it from their parents’ medicine cabinet.

“These shocking statistics illustrate that prescription drug addiction and abuse represent nothing less than a public health crisis,” the Attorney General said in a video message posted on the Justice Department’s website. “Every day, this crisis touches – and devastates – the lives of Americans from every state, in every region, and from every background and walk of life.”

The new policy announced Monday builds on existing take-back programs launched by the DEA. A recent take-back event coordinated by the DEA last April resulted in the safe return of 390 tons of prescription drugs at nearly 6,100 sites. Over the last four years alone, the DEA and other partnering organizations have taken in over 4.1 million pounds—or more than 2,100 tons—of prescription pills. The DEA’s next take-back event will be on Sept. 27, 2014.

In the video message, the Attorney General described the new policy as evidence of the department’s commitment to ending the national epidemic of prescription drug abuse that has already taken too many lives and hurt too many American families.

The complete text of the Attorney General’s video message is below:

“Prescription drug misuse and abuse is an urgent—and growing—threat to our nation and its citizens. According to a 2013 survey, roughly 6.5 million people ages 12 and older are current nonmedical users of prescription drugs. As recently as 2011, more than half of the 41,300 unintentional drug overdose deaths in the United States involved prescription drugs—and opioid pain relievers were involved in nearly 17,000 of those deaths. Nearly 110 Americans died every day that year from drug overdoses.

“And as we’ve learned from scientific studies, treatment providers, victims, and investigations, prescription drug abuse can easily lead to the abuse of heroin—an addiction that has become increasingly lethal. In fact, in the decade from 2002 to 2011, the annual number of drug poisoning deaths involving heroin doubled, making prescription opioids and heroin some of the most lethal substances in common use.

“These shocking statistics illustrate that prescription drug addiction and abuse represent nothing less than a public health crisis. And every day, this crisis touches – and devastates – the lives of Americans from every state, in every region, and from every background and walk of life.

“The Department of Justice has taken aggressive steps to fight back—by targeting the illegal supply chain; by disrupting so-called “pill mills”; and by expanding public health, education, and law enforcement efforts. But we also recognize that much of this work must start at home. Nearly four in 10 teens who have misused or abused a prescription drug have obtained it from their parents’ medicine cabinet.

“That’s why, today, I am announcing that we are expanding drug take-back efforts – by introducing new ways for people to safely dispose of old or unused prescription drugs. Through new DEA regulations, patients will be allowed to more easily join the fight against prescription drug abuse by dropping off their leftover medications at pharmacies, hospitals, clinics, and other “authorized collectors.” Beyond authorizing new drop-off sites, the new DEA rule will allow long-term care facilities to assist in the disposal of prescription controlled substances belonging to current or former residents. And most importantly, patients or their family members can mail their prescription controlled substances to an authorized collector using pre-paid mail-back packages that can be obtained right from their pharmacy, or from other locations like libraries and community centers.

“Drug take-back programs on a more limited scale have already proven effective. At a drug take-back event last April, Americans around the country turned in 390 tons of prescription drugs at nearly 6,100 sites coordinated by the DEA—and more than 4,400 state and local law enforcement partners. Over the last four years alone, the DEA and its allies have taken in over 4.1 million pounds—that's more than 2,100 tons—of prescription pills. Once collected, these medications are then responsibly destroyed to ensure that they don’t damage our environment by ending up in landfills or in the water supply. With these new regulations, and with continued take-back events—like the one scheduled in the coming weeks for September 27th—we hope to increase those numbers, and prevent more potentially harmful medications from being misused or abused by young people and others.

“As a lifelong member of America’s law enforcement community—as a former judge and U.S. Attorney—I have seen the devastating consequences of prescription drug abuse firsthand. And as Attorney General—and as a parent—I am committed to ending the national epidemic that has already stolen too many lives and torn apart too many families. I thank you for your help and your partnership in ensuring that we can continue to save lives and protect the futures of our young people.”

For more information, please visit the DEA’s website at www.DEA.gov. The full video of the Attorney General’s message is available at http://www.justice.gov/agwa.php.

 

 

SAN JOSE – Aris Aristidis Vavasis pleaded guilty in federal court yesterday to Felony Distribution of Unapproved New Drugs and Felony Distribution of Misbranded Drugs, announced United States Attorney Melinda Haag, Drug Enforcement Administration Special Agent in Charge Jay Fitzpatrick, and U.S. Food and Drug Administration Office of Criminal Investigations Acting Director Philip J. Walsky, and Department of Justice Office of the Inspector General Special Agent in Charge Ronald G. Gardella, New York Field Office.

In pleading guilty, Vavasis admitted to being the owner of the internet supplement company Nutrition Dome, Inc., located at 4518 11th Avenue, 2nd level, Brooklyn, New York, 11219, and to using that company to knowingly distribute two purported dietary supplements, “Methastadrol,” and “Lipodrene,” both of which contained misbranded drugs, in interstate commerce, including to the Northern District of California. Methastadrol contained the Schedule III anabolic steroid Methasterone (also known by the chemical name 17a-methyldrostanolone) as an active ingredient.

Lipodrene contained the active ingredient ephedrine. On February 11, 2004, the FDA published in the Federal Register a final rule that established a regulation declaring dietary supplements containing ephedrine alkaloids adulterated under the Federal Food, Drug, and Cosmetic Act because they present an unreasonable risk of illness or injury under the conditions of use recommended or suggested in labeling, or if no conditions of use are suggested or recommended in labeling, under ordinary conditions of use (69 FR 6787). The final rule became effective on April 12, 2004.

Vavasis admitted that during the time he was operating Nutrition Dome, Inc., he was employed as a Deputy United States Marshal in the Eastern District of New York. In addition to his home computer system, Vavasis utilized the computer system of the United States Marshals Service in the Eastern District of New York, without authorization, to operate Nutrition Dome, Inc. business, including but not limited to communicating with purchasers, fulfilling orders, and otherwise administering the business of Nutrition Dome, Inc. Vavasis retired from the United States Marshals Service after the execution of a federal search warrant at the location of Nutrition Dome in July, 2012.

“The distribution of anabolic steroids and misbranded drugs through internet supplement companies constitutes a serious danger to the health and safety of consumers,” said United States Attorney Melinda Haag. “The fact that this defendant abused his position as a Deputy United States Marshal and utilized the computer system of the United States Marshals Service in the Eastern District of New York to commit these crimes is especially disturbing.”

“Distribution of anabolic steroids and misbranded drugs is a danger to the community. DEA will continue to collaborate with our law enforcement partners to pursue those who violate public trust and put their health and safety at risk,” stated Drug Enforcement Administration, San Francisco Field Office Special Agent in Charge Jay Fitzpatrick.

“Dietary supplements and drugs each have very specific FDA requirements that manufacturers must meet in order to protect the public’s health,” said Philip J. Walsky, acting director, FDA’s Office of Criminal Investigation. “Our agents will continue to pursue and bring to justice those who would put consumers’ health at risk through false representations about the status and safety of the products they sell.”

New York Field Office Special Agent-in-Charge Ronald G. Gardella of the Department of Justice Office of the Inspector General thanked the Drug Enforcement Administration and Food and Drug Administration Office of Criminal Investigation agents who collaborated in the investigation, stating that “the public has every right to expect the highest integrity from those entrusted with authority and we are determined to hold accountable anyone who betrays that trust.”

Vavasis, 51, of Brooklyn, New York, was charged with the introduction and delivery for introduction of an unapproved new drug into interstate commerce, in violation of 21 U.S.C. § 331(d), and the introduction and delivery for introduction of a misbranded drug, in violation of 21 U.S.C. § 331(a). Under the plea agreement, Vavasis pleaded guilty to all counts.

Vavasis was released on a recognizance bond, and his sentencing hearing is scheduled for Dec. 22, 2014, before the Honorable Lucy H. Koh, United States District Court Judge, in San Jose. The maximum statutory penalty for each count in violation of 21 U.S.C. § 331(d) & 331(a) is 3 years custody, 3 years supervised release, and a fine of $10,000.00 plus restitution if appropriate. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Matt Parrella and Jeff Nedrow are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Elise Etter. The prosecution is the result of an investigation by the DEA, the FDA Office of Criminal Investigation, and the Department of Justice Office of the Inspector General.

(Vavasis superseding information )

 

 

SAN FRANCISCO – Martin Christopher Edwards was ordered to serve a 33 month prison sentence yesterday, and ordered to pay $894,222 in restitution to the WineTasting Network for his involvement in an embezzlement and tax evasion scheme, announced U.S. Attorney Melinda Haag, FBI Special Agent in Charge David J. Johnson, and IRS Special Agent in Charge Jose M. Martinez.

Edwards, 49, pleaded guilty on April 16, 2014, to a two-count information that charged him with mail fraud, in violation of Title 18, United States Code, Section 1341, and tax evasion, in violation of Title 26, United States Code, Section 7201.

According to the plea agreement, Edwards was the Vice President and General Manager of the WineTasting Network, when he created Dufrane Compliance Trust, a fictitious entity that purported to provide compliance services to wineries and wine retailers. Edwards directed the WineTasting Network to make payments to the Dufrane Compliance Trust totaling approximately $894,000. Edwards falsely represented to WineTasting Network employees that these payments were for tax compliance services rendered by Dufrane Compliance Trust, when, in fact, no such services were rendered. Edwards deposited those funds into an account that he controlled and then used the money for his own personal expenses, including the purchase of a BMW, vacations, meals, and a cruise. In addition, during tax years 2010, 2011, and 2012, Edwards did not declare any of the monies he diverted to the account he controlled on his federal income tax returns. The plea agreement also included an enhancement for obstruction of justice for Edwards’s flight to Mexico to avoid prosecution for these crimes.

The sentence was handed down by the Honorable William Alsup, United States District Judge in San Francisco. Judge Alsup also sentenced Edwards to a three-year term of supervised release. The defendant has been in custody since Jan. 20, 2014.

Kim A. Berger and Arvon Perteet are the Assistant U.S. Attorneys who are prosecuting the case with the assistance of Rawaty Yim and Bridget Kilkenney. This prosecution is the result of an investigation by the FBI, and the Internal Revenue Service, Criminal Investigation Division.

(Edwards information )

(Edwards indictment )

 

 

SAN FRANCISCO – The United States filed a civil False Claims Act complaint on Friday against the owners, operators, and manager of two nursing homes in Watsonville, Calif., United States Attorney Melinda Haag announced.

Defendants CF Watsonville East, LLC, and CF Watsonville West, LLC, are for-profit entities that own and operate the nursing homes named in the complaint. Defendant ARBA Group owns CF Watsonville East and West, and exercised close oversight and control over the finances and operations of the nursing homes, and defendant Country Villa Health Service Corporation, dba Country Villa Health Services, was also responsible for the management of the nursing homes under consulting agreements with the owners.

The United States alleges that Defendants submitted false claims for materially substandard or worthless services provided to Medicare and Medicaid beneficiaries residing in the two nursing homes, Country Villa Watsonville East Nursing Center (renamed Watsonville Nursing Center in April 2014), and Country Villa Watsonville West Nursing and Rehabilitation Center (renamed Watsonville Post-Acute Center in April 2014). Specifically, the complaint alleges that between 2007 and 2012, defendants persistently and severely overmedicated elderly and vulnerable residents of the nursing homes.

The False Claims Act, 31 U.S.C. §§ 3729-3733, provides for treble damages and civil penalties against those who submit false claims to federal programs such as Medicare and Medicaid.

Gioconda Molinari is the Assistant U.S. Attorney who is litigating the case with the assistance of Lucille Yee and Tina Louie. The lawsuit is the result of an investigation by the U.S. Attorney’s Office and the U.S. Department of Health and Human Services, Office of the Inspector General.

If you know someone who is the victim of elder abuse, neglect, or exploitation in a nursing home, you can report it to the California Long-term-Care Ombudsman, 1-800-231-4024, http://www.aging.ca.gov/Programs/LTCOP/, your local California Department of Public Health, Licensing and Certification Division, District office, http://www.cdph.ca.gov/HealthInfo/Pages/NursingHomePatient.aspx, your local adult protective services office, and/or the police.

(Country Villa complaint )

 

 

OAKLAND – Jonathan Davis was sentenced today to 30 months in prison and ordered to pay restitution of $178,426 for his involvement in a tax fraud scheme, United States Attorney Melinda Haag and Internal Revenue Service, Criminal Investigation Special Agent in Charge José M. Martinez announced.

Davis, 33, of Oakland, pleaded guilty to one count of wire fraud on April 18, 2014. According to the plea agreement, Davis devised a scheme to obtain money by preparing and filing false federal income tax returns in the names of other people. In order to carry out this scheme, Davis had friends obtain names, birthdates, and social security numbers of people who did not authorize the use of that information on the filed tax returns. Davis opened bank accounts in the names of these victims and linked those accounts to debit cards for the purpose of receiving the fraudulent tax refunds. Davis directed the banks to mail the debit cards to himself or his friends and paid his friends up to $200 for addresses that he could use for bank accounts, debit cards, and tax returns. During 2011 and 2012, Davis caused 111 materially false federal income tax returns to be electronically filed. On those 111 returns, Davis falsely claimed refunds of $484,546, and successfully obtained $178,426 from the IRS.

Davis was indicted on August 22, 2013. He was charged with 11 counts of wire fraud and 11 counts of aggravated identity theft.

The sentence was handed down by the Honorable Jon S. Tigar, United States District Court Judge, following a guilty plea on one count in violation of 18 U.S.C. Section 1343. Judge Tigar also sentenced the defendant to a five-year period of supervised release. The defendant was ordered to surrender on Nov. 3, 2014.

Assistant United States Attorney Thomas Moore is prosecuting the case. The prosecution is the result of an investigation by the IRS, Criminal Investigation.

(Davis indictment )