Northern District of California

SAN FRANCISCO – HSQ Technology, A Corporation, a Hayward-based subsidiary of RailWorks Corporation, has agreed to pay $250,000 in penalties to resolve allegations that it knowingly violated the False Claims Act by submitting false claims for payment for network communications equipment it provided for the Santa Clara Valley Transportation Authority’s (VTA) Silicon Valley Berryessa Extension Project (Project) for the Bay Area Rapid Transit rail system, announced United States Attorney Ismail J. Ramsey and U.S. Department of Transportation Office of the Inspector General (DOT OIG) Western Region Special Agent in Charge Cory LeGars. The Project was partially funded by a federal grant provided by the Federal Transit Administration, an operating administration of the U.S. Department of Transportation.

As part of the settlement, HSQ acknowledged and accepted responsibility for the following facts:

• In August 2012, HSQ entered into a subcontract to deliver a communications system for the Project. In carrying out its work on the Project, HSQ purchased and installed network communications equipment.

• The subcontract required HSQ to procure network communications equipment from authorized distributors except when specifically approved by VTA to do otherwise. Yet, HSQ purchased some of the network communications equipment through internet sites from unauthorized distributors and without approval by VTA to do so.

• Between July 2015 and August 2016, HSQ submitted eight claims for payment for purchases of network communications equipment for which HSQ lacked documentation confirming that the equipment came from an authorized distributor.

• Each of these claims for payment sought the payment of money funded in part by a DOT grant.

“Contractors or subcontractors that receive federal funds must be truthful about the goods they are supplying and whether they meet contract requirements,” said U.S. Attorney Ramsey. “This Office will continue using the False Claims Act to address fraudulent conduct by government contractors, subcontractors, and suppliers.”

“Government contractors are expected to adhere to the contractual obligations to which they agreed and for which they have been paid,” said Special Agent-in-Charge LeGars. “The settlement announced today demonstrates our commitment to working with our prosecutorial colleagues to protect the integrity of Federal-aid programs.”

Assistant U.S. Attorney Emmet P. Ong handled this matter for the government, with assistance from Jacqueline Hollar and Garland He. The investigation and settlement resulted from a coordinated effort by the U.S. Attorney’s Office for the Northern District of California and DOT OIG.

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

The investigation and resolution of this matter illustrate the government’s emphasis on combating fraud in federal grants. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement, can be reported to DOT OIG at https://www.oig.dot.gov/report-fraud-hotline.

SAN FRANCISCO – On May 8, 2024, the government of Honduras extradited convicted felon Victor Viera-Chirinos to the United States. The extradition marks the fourth in the case against 14 defendants alleged to have been trafficking large quantities of heroin, methamphetamine, cocaine base, and cocaine in San Francisco. Information about the three defendants previously extradited can be found here.

“Victor Viera-Chirinos thought he could evade consequences for his criminal conduct by fleeing to Honduras prior to his sentencing,” said U.S. Attorney Ismail Ramsey. “Let this case be instructive to people considering whether to distribute drugs in the Tenderloin District; the reach of the government is long and we are determined to assign the resources necessary to eradicate drug dealing from our neighborhoods and punish those who are found guilty of violating the drug trafficking laws.”

“Victor Viera-Chirinos thought he could run from justice, but he could not hide from it,” said DEA Special Agent in Charge Brian M. Clark. “As our sustained enforcement efforts in San Francisco continue, the economics of drug dealing no longer make sense for those peddling poison in the Tenderloin. This extradition makes it clear that we will use every tool at our disposal to hold you accountable because no one is beyond the grasp of the DEA and our law enforcement partners.”

Viera-Chirinos, 42, was originally charged by criminal complaint on July 29, 2019, with charges that he participated in a conspiracy to distribute drugs in the Tenderloin. A federal grand jury indicted Viera-Chirinos on August 8, 2019, alleging he was one of 14 defendants trafficking large quantities of heroin, methamphetamine, cocaine base, and cocaine. The charging documents describe how Viera-Chirinos was involved with the organization. For example, the complaint alleges Viera-Chirinos collected “rent” for street-level dealers who paid the organization for housing while participating in the organization’s drug trafficking activities. Similarly, the charging documents describe how the defendant played a role in ensuring street-level dealers were supplied with drugs for trafficking activities.

On January 27, 2021, Viera-Chirinos pleaded guilty to conspiring to distribute and possess with the intent to distribute heroin, methamphetamine, cocaine base, and cocaine, in violation of 21 U.S.C. §§ 846, 841(a)(1), (b)(1)(B). In his plea agreement, Viera-Chirinos described his role in the drug trafficking organization; specifically, Viera-Chirinos admitted that no later than June 2018 he entered into an agreement with other individuals to distribute and possess with intent to distribute heroin, methamphetamine, cocaine base, and cocaine to street-level dealers, who ultimately sold drugs in the streets of San Francisco, including in the city’s Tenderloin District. Viera-Chirinos also admitted that he made at least one delivery of drugs to a co-conspirator and described how he facilitated the sale of additional drugs to other members of the conspiracy. Viera-Chirinos further acknowledged in his plea agreement that the total weight of drugs attributable to him was an amount over 1775 kilograms of converted drug weight.

The district court scheduled Viera-Chirinos’s sentencing hearing for June 2, 2021. In filings related to the defendant’s sentencing, the government described Viera-Chirinos as an experienced trafficker who, through his own admission, had been selling drugs in San Francisco’s Tenderloin District for years. The filing described how Viera-Chirinos’s conduct in the case demonstrated his “savviness as a trafficker.” Approximately one week prior to his sentencing, the defendant absconded from pretrial release and fled to Honduras.

Viera-Chirinos arrived back in the Northern District of California on May 8, 2024, to face sentencing for the charge set out in the August 2019 indictment. He is scheduled to appear before U.S. Magistrate Judge Sallie Kim on May 15, 2024, for further proceedings, including identification of counsel. A date for his sentencing has not yet been scheduled.

The Justice Department’s Office of International Affairs worked with Honduran authorities to secure the arrest and extradition of Viera-Chirinos.

This prosecution is part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

SAN FRANCISCO – Gregory Finkelson, a San Francisco resident, has pleaded guilty to one count of theft of government property in connection with his fraudulent receipt of hundreds of thousands of dollars in low-income housing benefits, announced United States Attorney Ismail J. Ramsey; Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp; U.S. Department of Housing and Urban Development (HUD) Office of the Inspector General (OIG) Special Agent in Charge Mark Kaminsky; and IRS Criminal Investigation (CI) Special Agent in Charge Michael Mosley of the Oakland Field Office. Finkelson’s guilty plea was accepted by the Hon. James Donato, United States District Judge, on May 6, 2024.

The Section 8 Certificate Program is a rent subsidy program funded by HUD and administered jointly in San Francisco by HUD and the San Francisco Housing Authority (SFHA). The program is intended to help low- and moderate-income families afford housing, and it has income limits and other eligibility requirements that applicants must meet to qualify for assistance.

In his plea agreement, Finkelson, 64, admitted that, between approximately August 2006 and February 2020, he wrongfully claimed $341,455 in Section 8 Program subsidies by lying about his income and his ownership of (i) a San Francisco residence he purchased in 2005 that is now valued at approximately $2.4 million; and (ii) a business he ran out of his residence. He then used the funds he fraudulently obtained to benefit himself, including by funding his business, paying his credit card bills, and making payments on a timeshare in Hawaii.

“This defendant fraudulently obtained housing benefits designated for some of the neediest individuals in our society and used them to enrich himself,” said United States Attorney Ismail J. Ramsey. “I am proud of the work this Office does to prosecute those who defraud the government, particularly where, as here, it is low-income families who suffer the most as a result of the defendant’s selfish conduct.”

“Finkelson stole money that was intended to provide safe housing for low-income families and used it for his own self-enrichment,” said HUD OIG Special Agent in Charge Mark Kaminsky. “HUD OIG will continue to work with its law enforcement partners to diligently pursue and hold accountable bad actors who willfully misuse federal assets.”

“Today’s plea makes clear that greed does not pay. For years, Finkelson took advantage of Section 8 housing assistance funds by using nominee ownership to conceal his ill-gotten gains while simply lining his own pockets,” said CI Acting Special Agent in Charge Michael Mosley. “Our agents are experts at following the money and building cases that help bring financial criminals to justice.”

Finkelson admitted that, as part of his scheme, he used the name of a Russian national living in Russia to purchase his San Francisco home, claiming, wrongfully, that she was his landlord and that he made rent payments to her. Finkelson also admitted he opened several bank accounts, including in the Russian national’s name, and that he used these bank accounts to conceal his use of the ill-gotten Section 8 Program subsidies.

Finally, pursuant to his plea agreement, Finkelson agreed to pay at least $341,455 in restitution, which represents the total amount he admitted he stole from the government.

Finkelson was indicted by a federal grand jury on July 25, 2023. He pleaded guilty this week to one count of theft of government property, in violation of 18 U.S.C. §§ 641 & 2, for which he faces a statutory maximum prison term of 10 years. In addition, as part of any sentence, the court may order the defendant to pay a fine of up to $250,000 and to serve a term of supervised release of up to three years. 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.

Judge Donato has scheduled Finkelson’s sentencing hearing for September 9, 2024.

Assistant United States Attorneys Christiaan Highsmith and Kevin Yeh are prosecuting the case with the assistance of Claudia Hyslop and Laurence Macaraeg. The prosecution is the result of a joint investigation by the FBI, HUD OIG, and CI, with assistance from SFHA.

OAKLAND – Salman Salman pleaded guilty today to one count of tax evasion in violation of 26 U.S.C. § 7201. The plea was accepted by the Honorable Haywood S. Gilliam, Jr., United States District Judge. The announcement was made by United States Attorney for the Northern District of California Ismail J. Ramsey and IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office.

Salman, 47, of Rodeo, Calif., was charged with a scheme to evade taxes by filing false Form 1040 joint income tax returns for himself and his wife for tax years 2016 through 2019. Specifically, Salman admitted to falsely underreporting income he and his wife enjoyed from three businesses he owned and operated during the course of the scheme, The Plug Tattoo & Piercing, Inc., S&S Real Estate Investment Group, and Synergy Investment Group Ohio Inc.

In the plea agreement, Salman admitted that he both understated income from his companies and that he claimed false and overstated expenses as part of his scheme to further reduce his tax obligations. In total, Salman admitted that he failed to disclose over $3.4 million in income he received from his companies for tax years 2016 through 2019.

On December 11, 2023, Salman was charged by information with four counts of tax evasion, in violation of 26 U.S.C. § 7201. Pursuant to the plea agreement, Salman admitted the conduct alleged as support for all four counts in the information, but pleaded guilty to Count Four, which charges him with tax evasion for tax year 2019.

Judge Gilliam scheduled Salman’s sentencing hearing for September 18, 2024. For the tax evasion charge, Salman faces a maximum prison term of five years, a maximum fine of $250,000, and restitution of at least $438,247 to the IRS. As part of any sentence, the court may also order Salman to serve a period of supervised release and to pay additional assessments, however, the court will impose a sentence only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case is being prosecuted by Assistant U.S. Attorney Thomas Green, with the assistance of Kay Konopaske and Christine Tian of the U.S. Attorney’s Office. The prosecution is the result of an investigation by the Internal Revenue Service-Criminal Investigation.

OAKLAND – Javier Antonio Ramirez was sentenced to serve 20 years in prison for coercing and enticing teenaged girls to produce child pornography and receiving child pornography this week, announced U.S. Attorney Ismail J. Ramsey and Homeland Security Investigations (“HSI”) San Francisco Special Agent in Charge Tatum King. The sentence was handed down by the Hon. Jon S. Tigar, United States District Judge.

Ramirez, 29, of Concord, was charged by indictment on March 2, 2023, with one count of coercion and enticement of a minor, in violation of 18 U.S.C. § 2422(b), and one count of receipt of child pornography, in violation of 18 U.S.C. §§ 2252(a)(2) and (b). Ramirez pleaded guilty to both counts on November 13, 2023.

“Javier Ramirez’s conduct is every parent’s nightmare,” said U.S. Attorney Ismail J. Ramsey. “That Ramirez introduced minors to fentanyl, a lethal drug, to assist in coercing and exploiting them and then watched those minors overdose repeatedly, only makes matters worse. Let this sentence serve as a reminder that this Office will take all steps available to hold accountable those who prey on and exploit our youth.”

“The sentencing of Ramirez to 20 years in prison for coercing and enticing minors to produce child sexual abuse material while admittedly poisoning them with the dangerous narcotics is a stern reminder of the imperative to safeguard our children,” said Special Agent in Charge Tatum King. “This verdict underscores HSI’s unwavering commitment to protect the innocent and hold perpetrators of such despicable crimes fully accountable under the law.”

According to the plea agreement, Ramirez admitted that between June 2021 through February 2023, Ramirez used social media to identify minor girls to persuade them to engage in sexual intercourse and sexually explicit conduct with Ramirez, which, on occasion, Ramirez would film or photograph. Ramirez admitted that the first step of the pattern of coercion began with Ramirez supplying narcotics to girls, who were all under the age of 18 years old. Ramirez provided narcotics, including cocaine and fentanyl, to these victims at discounted prices or even for free in exchange for sexual acts.

According to court filings, Ramirez was the one who introduced many of the victims to fentanyl for the first time, when the victims were only 16 or 17 years old. Over time, Ramirez watched each identified victim overdose multiple times and yet continued to supply more fentanyl to the victims, all while sexually exploiting them. In January 2023, one of the minor victims suffered a non-fatal fentanyl overdose while at a high school in Contra Costa County, from fentanyl Ramirez took her to procure in San Francisco the night before.

Ramirez also pleaded guilty to receipt of child pornography. According to the plea agreement, Ramirez admitted having almost 100 videos and images of child pornography, including of prepubescent minors and toddlers.

Judge Tigar sentenced Ramirez to 240 months of imprisonment for the coercion and enticement count, to be served concurrently with 216 months of imprisonment for the receipt of child pornography count. In addition to the prison term, Judge Tigar also ordered Ramirez to serve 15 years of supervised release which will begin after the term of imprisonment. Ramirez was immediately remanded into custody.

Assistant U.S. Attorney Kelly Volkar of the Oakland Branch of the United States Attorney’s Office is prosecuting the case, with the assistance of Mark DiCenzo. The prosecution is the result of an investigation by Homeland Security Investigations, the Contra Costa Internet Crimes Against Children Task Force, the Lafayette Police Department, and the Contra Costa Sherriff’s Office.

Online child sexual exploitation and abuse is a threat to all children and teens who use the internet. Prevention and reporting resources for children and caregivers are now available online at www.dhs.gov/know2protect and includes HSI’s signature iGuardian training program.

One Pill Can Kill: Beware of pills bought on the street: One Pill Can Kill. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs, but can be obtained at a lower cost. However, very small variations in the amount or quality of fentanyl create huge effects on the potency of the counterfeit pills and can easily cause death. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are usually shaped and colored to resemble pills that are sold legitimately at pharmacies. For example, counterfeit pills known as M30s mimic Oxycodone, but when sold on the street they routinely contain fentanyl. These tablets are round and often light blue in color, though they may be made in many colors, and have “M” and “30” imprinted on opposite sides of the pill.

SAN FRANCISCO – A federal grand jury has charged Daniel Schatt, Joseph Podulka, and James Alexander with wire fraud conspiracy and related crimes in connection with their respective roles in an alleged scheme to defraud customers and investors in Cred, LLC (Cred) allegedly causing losses of customer cryptocurrency assets with a market value that may have exceeded $780 million. Cred, a San Francisco-based financial services firm that specialized in making investments in cryptocurrencies, filed for Chapter 11 bankruptcy on November 7, 2020. The charges against the defendants are set out in two separate indictments handed down by the grand jury earlier this week.

“The Northern District of California is home to many of the nation’s most innovative businesses,” said U.S. Attorney Ismail Ramsey. “Maintaining a market for continued prosperity requires rooting out those who use fraud as a substitute for success. This prosecution demonstrates our determination to keep our markets free of fraudsters and safe for investors.”

“The allegations against the defendants associated with Cred, LLC highlight a predatory, deceptive scheme defrauding potential victims of hundreds of millions of dollars of cryptocurrency at market value,” said IRS Criminal Investigation Acting Special Agent in Charge Mark Mosley. “The indictments levied demonstrate the investigative capabilities of IRS Criminal Investigation and our commitment to pursuing justice against financial criminals.”

The announcement was made by United States Attorney Ismail Ramsey, Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp, and IRS Criminal Investigation Acting Special Agent in Charge Michael Mosley of the Oakland Field Office.

The first indictment (Schatt Indictment) charges Schatt, 53, of San Mateo, and Podulka, 51, of Palo Alto, with conspiracy, thirteen counts of wire fraud and money laundering. The second indictment (Alexander Indictment) recites many of the same allegations and charges Alexander, 54, of Sherman Oaks, with conspiracy, four counts of wire fraud and money laundering.

According to the indictments, Schatt was Cred’s co-owner and Chief Executive Officer, Podulka was Cred’s Chief Financial Officer, and Alexander was Cred’s Chief Capitol Officer. Cred was founded in 2018 by Schatt and another individual and provided financial services to holders of cryptocurrency and other assets. By late 2018, Cred’s business included two principal businesses: (1) offering loans in U.S. dollars to customers using customers’ cryptocurrency as collateral and (2) accepting deposits of cryptocurrency in exchange for a promise for a yield (interest payments) for that cryptocurrency.

The indictments allege that no later than March of 2020, the defendants began making false and fraudulent statements to customers and investors about Cred’s lending and investing practices. For example, the defendants represented to Cred’s customers and investors that Cred engaged only in “collateralized or guaranteed lending,” that Cred’s cryptocurrency investments were “hedged,” and that Cred maintained an “all weather approach” to investment to protect against volatility. Cred’s marketing materials asserted that the company was a “licensed lender with comprehensive insurance.” Further, after the “flash crash” in March of 2020, during which many cryptocurrencies were significantly devalued, defendants allegedly continued to represent to Cred’s customers and investors that Cred remained solvent and that the company maintained comprehensive insurance that assured Cred’s customers would be made whole. The indictments allege all these assurances and statements were false.

The indictments describe how the defendants lured customers to make investments by promising to return a significant yield on cryptocurrency investments—the defendants did not disclose, however, that virtually all the assets to pay the yield were generated by a single company whose business was to make unsecured micro-loans to Chinese gamers. Contrary to the defendants’ assurances, Cred engaged in lending that was neither collateralized nor guaranteed. Moreover, Cred’s hedging strategy did not protect the company’s investments against volatility. Indeed, shortly after the flash crash in March of 2020, Cred had lost its hedging partner, had learned that a significant creditor to whom Cred had loaned $40 million would be unable fulfill its promise to repay the loan, was being threatened with a lawsuit, and was effectively insolvent. The indictments describe the striking contrast between the reality of Cred’s financial situation by the end of March 2020 and the statements the defendants made to customers and investors at that time. On the one hand, on March 16, 2020, Cred’s General Counsel informed the defendants that “Cred may not be financially solvent and that defendants “must be careful at all times to be accurate in its statements to its creditors and to all stakeholders.” Nevertheless, rather than disclose to Cred’s customers and investors the reality of Cred’s finances, defendants allegedly attempted to keep the business afloat by bringing in new customer funds and by discouraging existing customers from seeking and obtaining redemptions from their investments. According to the indictment, at the time Cred collapsed and filed for bankruptcy, its customers suffered losses of cryptocurrency assets with a market value of $150 million at the time of the bankruptcy, and a “maximum market value of over $783 million since the date of the bankruptcy.”

The indictments describe how the defendants assured numerous victims to make or renew financial commitments to Cred even after the company’s effective insolvency.

With respect to Schatt and Podulka, the Schatt Indictment lists 13 transactions that occurred between April 14, 2020, and October 15, 2020, as the defendants continued to make repeated false and fraudulent assurances that Cred’s financial situation was sound. The indictment further describes how Schatt and Podulka failed to inform customers about significant losses sustained by the company until October of 2020, when a cryptocurrency exchange, then a customer of Cred, contacted Cred to inquire about its finances. During the two-hour call, the cryptocurrency exchange learned for the first time that Cred had no hedges, that its asset to liabilities ratio was off by tens of millions of dollars, and that Cred discovered it had lost over $8 million in February 2020 after Alexander was scammed by a fake customer earlier that year. According to the Schatt Indictment, Cred filed bankruptcy on November 7, 2020, and in a bankruptcy-related filing, Schatt misleadingly claimed that Cred’s financial difficulties were “primarily due to James Alexander’s “malfeasance,” including his appropriation of approximately 255 bitcoin on June 24, 2020,” and his alleged failure to do proper due diligence with respect to the February 2020 scam.

With respect to Alexander, the Alexander Indictment alleges that between May 15, 2020, and June 24, 2020, Alexander reassured a victim that the flash crash was “a good thing” for Cred and failed to disclose to another customer that Cred was having a solvency crisis. In addition, the Alexander Indictment lists two transactions in which victims transferred funds to Cred after receiving reassurances from Alexander that Cred’s financial situation was sound. The Alexander Indictment further describes how on or about June 24, 2020, the day Schatt fired him from his position in Cred, Alexander instructed a Cred employee to transfer approximately 225 bitcoin from a Cred account to one controlled by Alexander. The indictment alleges that in the months following his ouster, Alexander appropriated the bitcoin to his own use, including converting some of it to U.S. dollars, depositing the assets in his private bank account, and making personal expenditures.

In sum, the defendants are charged with the following crimes:

Defendant

Violation

Maximum Sentence (per count), if Convicted

All Defendants (1 count, each)

18 U.S.C. § 1349

Conspiracy to Commit Wire Fraud

20 years’ imprisonment

$250,000 fine

3 years’ supervised release

SCHATT (13 counts)

PODULKA (13 counts)

ALEXANDER (4 counts)

18 U.S.C. § 1343

Wire Fraud

20 years’ imprisonment

$250,000 fine

3 years’ supervised release

SCHATT (1 count)

PODULKA (1 count)

ALEXANDER (8 counts)

18 U.S.C. § 1957

Engaging in Transactions in Property Derived from Specified Unlawful Activity (Money Laundering)

10 years’ imprisonment

$250,000 fine 

3 years’ supervised release

SCHATT (1 count)

PODULKA (1 count)

18 U.S.C. § 1956(a)(1)(A) Engaging in a Financial Transaction to Promote Unlawful Activity

20 years’ imprisonment

$500,000 fine

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. In addition, any sentence following conviction would be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Schatt and Podulka made their initial federal court appearance on May 2, 2024. They have been ordered to return to court on May 8, 2024, for further proceedings including the entry of a plea. Alexander’s initial federal court appearance has not yet been scheduled.

Assistant United States Attorneys Barbara J. Valliere and Adam A. Reeves are prosecuting these cases with the assistance of Beth Margen and Kathy Tat. These prosecutions are the result of an investigation by the FBI and the IRS Criminal Investigation.

A Russian national pleaded guilty today to conspiracy to commit money laundering related to his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.

According to court documents, Alexander Vinnik, 44, was one of the operators of BTC-e, which was one of the world’s largest virtual currency exchanges. From its inception in or around 2011 until it was shut down by law enforcement in or around July 2017 contemporaneous with Vinnik’s arrest, BTC-e processed over $9 billion-worth of transactions and served over one million users worldwide, including numerous customers in the United States.

“Today’s result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime,” said Deputy Attorney General Lisa Monaco. “This guilty plea reflects the Department’s ongoing commitment to use all tools to fight money laundering, police crypto markets, and recover restitution for victims.”

BTC-e was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities. BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware attacks, identity theft schemes, corrupt public officials, and narcotics distribution rings. Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for a loss amount of at least $121 million.

Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), as federal law requires. BTC-e had no anti-money laundering (AML) and/or “know-your-customer” (KYC) processes and policies in place, as federal law also requires. BTC-e collected virtually no customer data at all, which made the exchange attractive to those who desired to conceal criminal proceeds from law enforcement.

BTC-e relied on shell companies and affiliate entities that were similarly unregistered with FinCEN and lacked basic anti-money laundering and KYC policies to electronically transfer fiat currency in and out of BTC-e. Vinnik set up numerous such shell companies and financial accounts across the globe to allow BTC-e to conduct its business. 

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

In 2017, FinCEN announced that it assessed an approximately $110 million civil money penalty against BTC-e for willfully violating U.S. AML laws, and a $12 million civil penalty against Vinnik for his role in the violations.

The FBI; IRS Criminal Investigation’s Cyber Crime Unit and Oakland Field Office; U.S. Secret Service Criminal Investigative Division; and Homeland Security Investigations (HSI) are investigating the case. The lengthy investigation was supported by numerous former prosecutors and investigators from multiple agencies.

Trial Attorney C. Alden Pelker of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Claudia Quiroz and Katie Lloyd-Lovett for the Northern District of California are prosecuting the case. Pelker and Quiroz are members of the Department’s National Cryptocurrency Enforcement Team (NCET).

The Justice Department’s Office of International Affairs provided valuable assistance in securing the extradition of Vinnik. The Justice Department thanks the Government of Greece for its cooperation in securing Vinnik’s transfer to the United States.

SAN FRANCISCO – A Russian national pleaded guilty today to conspiracy to commit money laundering related to his role in operating the cryptocurrency exchange BTC-e from 2011 to 2017.

According to court documents, Alexander Vinnik, 44, was one of the operators of BTC-e, which was one of the world’s largest virtual currency exchanges. From its inception in or around 2011 until it was shut down by law enforcement in or around July 2017 contemporaneous with Vinnik’s arrest, BTC-e processed over $9 billion-worth of transactions and served over one million users worldwide, including numerous customers in the United States and the Northern District of California.

“Today’s result shows how the Justice Department, working with international partners, reaches across the globe to combat cryptocrime,” said Deputy Attorney General Lisa Monaco. “This guilty plea reflects the Department’s ongoing commitment to use all tools to fight money laundering, police crypto markets, and recover restitution for victims.”

BTC-e was one of the primary ways by which cyber criminals around the world transferred, laundered, and stored the criminal proceeds of their illegal activities. BTC-e received criminal proceeds of numerous computer intrusions and hacking incidents, ransomware attacks, identity theft schemes, corrupt public officials, and narcotics distribution rings. Vinnik operated BTC-e with the intent to promote these unlawful activities and was responsible for a loss amount of at least $121 million.

Despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), as federal law requires. BTC-e had no anti-money laundering (AML) and/or “know-your-customer” (KYC) processes and policies in place, as federal law also requires. BTC-e collected virtually no customer data at all, which made the exchange attractive to those who desired to conceal criminal proceeds from law enforcement.

BTC-e relied on shell companies and affiliate entities that were similarly unregistered with FinCEN and lacked basic AML and KYC policies to electronically transfer fiat currency in and out of BTC-e. Vinnik set up numerous such shell companies and financial accounts across the globe to allow BTC-e to conduct its business.

Vinnik faces a maximum penalty of 20 years in prison. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

In 2017, FinCEN announced that it assessed an approximately $110 million civil money penalty against BTC-e for willfully violating U.S. AML laws, and a $12 million civil penalty against Vinnik for his role in the violations.

U.S. Attorney Ismail J. Ramsey; Principal Deputy Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division; Assistant Director Michael D. Nordwall of the FBI’s Criminal Investigative Division; Chief Guy Ficco of IRS Criminal Investigation (IRS-CI); Special Agent in Charge William Mancino of the U.S. Secret Service (USSS) Criminal Investigative Division; and Special Agent in Charge Tatum King of Homeland Security Investigations (HSI) San Francisco made the announcement.

The FBI; IRS-CI Cyber Crime Unit and Oakland Field Office; USSS Criminal Investigative Division; and HSI are investigating the case. The lengthy investigation was supported by numerous former prosecutors and investigators from multiple agencies, including IRS-CI Special Agent James Hade (1980-2019) and former IRS-CI Special Agent Tigran Gambaryan.

Assistant U.S. Attorneys Claudia Quiroz and Katie Lloyd-Lovett for the Northern District of California and Trial Attorney C. Alden Pelker of the Justice Department’s Computer Crime and Intellectual Property Section are prosecuting the case. Pelker and Quiroz are members of the Justice Department’s National Cryptocurrency Enforcement Team (NCET).

The Justice Department’s Office of International Affairs provided valuable assistance in securing the extradition of Vinnik. The Justice Department thanks the Greek government for its cooperation in securing Vinnik’s transfer to the United States.

SAN JOSE – A federal grand jury has handed down an indictment charging 11 South Bay residents with taking part in a racketeering conspiracy to promote the aims of the Salinas Acosta Plaza Norteños (SAP Norteños) street gang. The indictment, filed April 18, 2024, and unsealed earlier today, describes a halting list of crimes including eight murders during the last five years, multiple additional shootings, drug and gun distribution, and other related crimes allegedly perpetrated by the defendants on behalf of the street gang. The announcement was made at a press conference held at the Salinas Police Department this afternoon.

“The allegations in the indictment, if proven, describe a group that has a wanton disregard for life and an extreme penchant for violence,” said U.S. Attorney Ismail Ramsey. “The dozens of crimes outlined in the complaint describe a vicious gang that, for example, uses beatings as a hazing for membership and death as a penalty for trying to leave the group. I want to thank Homeland Security Investigations and the Salinas Police Department, including Acting Chief John Murray, for their excellent work. We will continue to round up and prosecute all such offenders to the fullest extent of the law.”

"The charges against the eleven South Bay residents signify a concerted effort to dismantle criminal enterprises and hold individuals accountable for their alleged involvement in egregious organized crime,” said San Francisco Special Agent in Charge Tatum King. “Thank you to the men and women of HSI, Salinas Police Department, the U.S. Attorney’s Office, Northern District of California, and partner law enforcement agencies for making today’s court authorized actions safe for all involved. We appreciate their selfless work in protecting those who may not have a voice. In recognition of Police Week, I also acknowledge law enforcement personnel who have given the ultimate sacrifice in service to our Nation.”

The 12-page indictment charges all 11 defendants under a single count of racketeering conspiracy. According to the indictment, the SAP Norteños are a street gang that originated in a Salinas apartment complex by the same name. The group is now recognized as a clique within the larger collection of Norteño criminal street gangs.

The 11 defendants are as follows: Gil Vasquez, aka “Rhino;” 35, Rigoberto Ramirez Jr., aka “Scooby,” 36; Sergio Hernandez Jr., aka “Mono,” 35; Juan Alvarez, aka “Yogi,” 38; Bertin Medrano, aka “Dre,” 30; Jose Mexicano, aka “Armani,” 25, Salvador Mexicano, aka “Jumpshot,” 20; Raul Coronel Suarez, aka “Ray,” 20; Gustavo Garcia, aka “Tatis,” 25; Lorenzo Garcia Jr., aka “Chito,” 30; and Jose Saldana aka “Chepe,” 19.

As described by the indictment, members of the street gang “meet and work together” to carry out crimes for the benefit of the street gang, its members, the larger Norteño organization, and the Nuestra Familia prison gang. Crimes are perpetrated by gang members to protect and uphold its power, territory, and profits and gang members are expected to engage in shootings, robberies, drug sales, and other criminal conduct to gain entry into, and improve a member’s status in, the gang. In addition, once in the gang, attempting to leave is not permitted; the punishment for attempting to leave is death.

Indictment lists more than three dozen criminal acts that the defendants are alleged to have committed. The list of crimes includes eight murders, one that occurred in July 2014, and another seven that occurred between December 2019 and December 2023. The murder victims include people who defendants perceived were associate with rival gangs, transient men, and men perceived to have dropped out of the SAP Norteños. In addition to the murder allegations, additional crimes described in the indictment that allegedly were committed by the defendants include robberies of individuals at gunpoint; the firebombing of a Salinas apartment; the distribution of drugs including fentanyl, methamphetamine, cocaine, and marijuana; firearms trafficking, and numerous shootings.

In sum, each defendant is charged with one count of racketeering conspiracy, in violation of 18 U.S.C. § 1962(d). The maximum statutory penalty for a racketeering conspiracy violation is 20 years in prison, and $250,000 fine. In addition, the indictment alleges that special sentencing factors apply to four defendants as follows:

(a)    Gustavo Garcia and Lorenzo Garcia for their respective roles in the July 19, 2014, murder of a person identified in the indictment as “Victim 1;” and

(b)    Raul Coronel Suarez and Jose Saldana for their respective roles in the December 2, 2023, murder of a person identified as “Victim 2.”

The maximum statutory penalty applying to these violations is life in prison. In addition, as part of any sentence, the court may order additional fines; restitution, if appropriate; and an additional term of supervised release to begin after any prison. Nevertheless, 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.

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

All the defendants except Lorenzo Garcia and Salvador Mexicano were arrested this morning in coordinated law enforcement operations. Lorenzo Garcia and Salvador Mexicano already were in custody.

This case is being prosecuted by Assistant United States Attorneys Leif Dautch, Amani Floyd, and George Hageman. The prosecution is the result of an investigation by Homeland Security Investigations and the Salinas Police Department, with assistance from the Monterey County District Attorney’s Office.

acosta_plaza_indictment.pdf

SAN FRANCISCO – Miguel Ramos was sentenced today to five years in prison for crimes including possession with intent to distribute fentanyl, methamphetamine, cocaine base, cocaine, and heroin, announced United States Attorney Ismail J. Ramsey and Drug Enforcement Administration (DEA), San Francisco Field Division, Special Agent in Charge Brian M. Clark. The sentence was handed down by the Hon. Richard Seeborg, Chief United States District Judge.

Ramos, 25, a citizen of Honduras, pleaded guilty in January 2024 to one count of possession with intent to distribute 400 grams or more of fentanyl in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(A)(vi), and four counts of possession with intent to distribute methamphetamine, cocaine base, cocaine, and heroin, all in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C).

According to court filings, Ramos was arrested in October 2022 in possession of approximately 3,530 grams (around 7.7 pounds) of fentanyl in various colors located in several different baggies. He also possessed approximately 54 grams of methamphetamine, 18 grams of cocaine base, 12 grams of cocaine salt, 26 grams of heroin, a large amount of cash, and a digital scale at the time of his arrest. All weights are gross weights.

“Fentanyl is wreaking havoc in our communities, particularly in the Tenderloin,” said United States Attorney Ismail J. Ramsey. “Miguel Ramos cavalierly possessed more than seven pounds of this highly lethal substance for sale. This Office will ensure that dealers like Mr. Ramos face Justice and long prison sentences.”

“Fentanyl is the deadliest drug threat our communities have ever faced. The staggering amount of this poison seized from Ramos equates to several thousand potential deadly doses,” said DEA Special Agent in Charge Brian M. Clark. “DEA will continue to respond to this unprecedented threat in San Francisco with unprecedented action. Our sustained efforts in the Tenderloin will continue as we work tirelessly to save lives.”

In addition to sentencing Ramos to prison, Judge Seeborg ordered the defendant to serve three years of supervised release to begin after his prison term is completed. Ramos was indicted by a federal grand jury on December 13, 2022, and was immediately remanded into custody following his sentencing today.

Assistant U.S. Attorney George Hageman is prosecuting the case with the assistance of Helen Yee. The prosecution is the result of a months-long investigation by the DEA and the San Francisco Police Department.

One Pill Can Kill: Beware of pills bought on the street. Fentanyl, a Schedule II controlled substance, is a highly potent opiate that can be diluted with cutting agents to create counterfeit pills that purport to mimic the effects of Oxycodone, Percocet, and other drugs, but can be obtained at a lower cost. However, very small variations in the amount or quality of fentanyl create huge effects on the potency of the counterfeit pills and can easily cause death. Fentanyl has now become the leading cause of drug overdose deaths in the United States. Counterfeit, fentanyl-laced pills are usually shaped and colored to resemble pills that are sold legitimately at pharmacies.

SAN JOSE - Shane Brightpath Mike pleaded guilty in federal court today to failing to pay over employment taxes withheld from the wages of his company’s employees, announced United States Attorney Ismail J. Ramsey, Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division, and IRS Criminal Investigation Acting Special Agent in Charge Michael Mosley of the Oakland Field Office.

Mike, 52, of Whittier, California, was indicted by a federal Grand Jury on June 27, 2019. He was charged with five counts of Failure to Pay Over Employment Tax in violation of 26 U.S.C. § 7202, and two counts of Making and Subscribing a False Return in violation of 26 U.S.C. § 7206(1). Today, Mike pleaded guilty to one count of Failure to Pay Over Employment Tax.

In pleading guilty, Mike admitted that he owned and was the President and Chief Operating Officer of Excel Behavioral Services, Inc. (Excel), a business located in Campbell, California, that provided home care to persons with disabilities. Mike was responsible for withholding Social Security, Medicare and income taxes from his employees’ wages and paying those funds to the IRS.

According to the plea agreement, from the fourth quarter of 2014 through the third quarter of 2015, Mike did not pay any of the withheld taxes to the IRS. For the third quarter of 2014, Mike only he paid part of the funds withheld. For these five quarters, Mike did not pay to the IRS more than $1 million in taxes. During that same time, Mike used Excel’s funds to pay his personal expenses.

Mike also admitted to filing false personal income tax returns for tax years 2014 and 2015. On those returns, Mike falsely claimed credit for federal tax withholdings from wages he received from Excel, knowing that such in fact had not been paid over to the IRS. In total, Mike caused a tax loss to the IRS of $1,177,947.

Mike is currently released on bond. His sentencing hearing is scheduled for September 24, 2024, at 9:00 a.m. before The Honorable Beth Labson Freeman, United States District Court Judge, in San Jose. The maximum statutory penalty is 5 years in prison, a fine of $250,000, and restitution of at least $1,177,947. However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Sarah E. Griswold and Assistant Chief Matthew J. Kluge of the Justice Department’s Tax Division are prosecuting the case with the assistance of Lynette Dixon. The prosecution is the result of an investigation by IRS Criminal Investigation.

OAKLAND – A federal grand jury has handed down a superseding indictment alleging Jakari Jenkins, Demarco Barnett, Garland Rabon, and Keanna Smith-Stewart conspired with each other, and other members of an Oakland-based street gang, to rob several San Francisco Bay Area businesses, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation (“FBI”) Special Agent in Charge Robert K Tripp. The superseding indictment, filed April 18, 2024, was unsealed last Friday at an initial appearance by defendant Rabon before U.S. Magistrate Judge Kandis A. Westmore. The final defendant to appear in court, Ms. Smith-Stewart, made her initial appearance before Magistrate Judge Westmore earlier today.

The superseding indictment alleges that by March of 2022, the four defendants were all members of, or had association with, an Oakland-based street gang called the Ghost Town gang. The indictment describes a series of armed robberies and burglaries that were committed by groups of co-conspirators.

The first robbery described in the superseding indictment involved Barnett and Jenkins, who along with other members of the gang carried out the armed robbery of a coin and stamp store located on the 10th floor of a building in the South of Market neighborhood of San Francisco. As part of the plan, members of the conspiracy allegedly rented a car to be used as a getaway car. In addition, members of the conspiracy stole a license plate to be used on the getaway car and met additional members of the conspiracy at the Oakland residence of another gang member. On March 18, 2022, the day of the robbery, Barnett, Jenkins, and at least two additional unnamed co-conspirators entered the store, brandished firearms, and demanded money from the business and the two individuals who happened to be present at the time— the owner and his son. The robbers struck the head and zip-tied the hands of the owner’s son, and absconded with cash, jewelry, and coins having an aggregate value of more than $300,000.

The second armed robbery described in the superseding indictment occurred approximately eight months later. As a prelude to the second robbery, members of the conspiracy pretended to be customers of a jewelry store in San Pablo. The pretend customers left jewelry with the operators of the store. According to the indictment, Jenkins, Barnett, and Rabon arrived at the jewelry store on November 12, 2022, with at least four other co-conspirators and robbed the store of jewelry, including the jewelry that members of the gang previously had left with the store. The robbers arrived in two getaway cars—both Dodge Chargers bearing stolen license plates. Five co-conspirators, at least three of whom were brandishing firearms, entered the store while two of the co-conspirators waited outside in the getaway cars. The co-conspirators stole bags of jewelry valued at approximately $300,000 to $500,000. The indictment describes how all four defendants in the superseding indictment later wore the stolen jewelry, shared the stolen jewelry with other members of Ghost Town gang members, or otherwise made use of the stolen jewelry for their personal purposes.

The superseding indictment also describes the November 24, 2022, burglary of an Audi dealership in Oakland. Specifically, the indictment describes how days before the robbery, Smith-Stewart allegedly purchased a black Audi S5 from the dealership using a fake driver’s license and another person’s social security number. After providing a down payment of approximately $9,500 toward the purchase of the car, Jenkins, Barnett, and another unindicted co-conspirator burglarized the dealership and stole the safe containing the down payment that Smith-Stewart previously had submitted.

Finally, the superseding indictment describes the Christmas Eve, 2022, armed robbery of a marijuana business in Oakland and one of its employees. The superseding indictment describes how the worker was leaving the business when Jenkins, Barnett, Rabon, and Smith-Stewart, along with at least four other co-conspirators, arrived at the marijuana business in two getaway cars. The robbers brandished weapons, directed the worker back into the building, and demanded “budded weed” and “money.” One of the robbers struck the worker in the head with a firearm. The robbers searched through the worker’s pockets and stole his bank debit card. The robbers absconded with the victim’s debit card and a bag of marijuana plant trimmings. The superseding indictment describes how on December 26, 2022, Smith-Stewart allegedly used the victim’s debit card at Westfield Mall in San Francisco to purchase more than $1,000 worth of items at Bloomingdale’s and Nordstrom.

In sum, the defendants are charged with the following crimes:

Defendant

Charge

Maximum Statutory Sentence, If Convicted

ALL DEFENDANTS

(one count each)

18 U.S.C. § 1951(a)
Conspiracy to Engage in Robbery Affecting Interstate Commerce

(Hobbs Act Robbery)

- Imprisonment: 20 years

- Fine: $250,000

- Supervised Release: 3 years

- Special Assessment: $100 per count

- Forfeiture

- Restitution

JAKARI JENKINS

(three counts)

DEMARCO BARNETT

(three counts)

GARLAND RABON

(two counts)

KEANNA SMITH-STEWART

(one count)

18 U.S.C. § 1951

Robbery and Aiding and Abetting Robbery Affecting Interstate Commerce

- Imprisonment: 20 years

- Fine: $250,000

- Supervised Release: 3 years

- Special Assessment: $100 per count

- Forfeiture

- Restitution

KEANNA SMITH-STEWART

(one count)

18 U.S.C. §§ 1029(a) and 2

Counterfeit Access Device Fraud

-Imprisonment: 10 years

- Fine: $250,000

- Supervised Release: 3 years

- Special Assessment: $100

- Forfeiture

- Restitution

KEANNA SMITH-STEWART

(one count)

18 U.S.C. § 1029(a)(5)

Access Device Fraud

Imprisonment: 15 years

- Fine: $250,000

- Supervised Release: 3 years

- Special Assessment: $100

- Forfeiture

- Restitution

In addition, as part of any sentence, the court may order additional fines; restitution, if appropriate; and an additional term of supervised release to begin after any prison. Nevertheless, 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.

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

Defendants Jenkins and Barnett are in custody and are scheduled to make the next appearance before the Honorable U.S. District Judge Araceli Martinez-Olguin on July 15, 2024, in Oakland. Defendants Rabon and Smith-Stewart are in custody and scheduled to appear before Chief Magistrate Judge Ryu on May 1, 2024.

This case is being prosecuted by Assistant U.S. Attorneys Lauren Harding and Jonathan Lee, with the assistance of Yenni Weinberg and Erick Machado. The prosecution is the result of an investigation by the FBI, with assistance from the police departments of Oakland, San Francisco, and San Pablo.

SAN FRANCISCO –Allen Gessen was sentenced to 120 months in prison for arranging to pay an undercover FBI agent for the murder of the mother of his young children, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp. The sentence was handed down by the Hon. Jacqueline Scott Corley, U.S. District Judge.

Gessen was convicted of the crime by a jury after a one-week trial before Judge Corley. The evidence at trial established that Gessen, 49, of Massachusetts, was an attorney licensed in New York when he was introduced to an undercover FBI agent by a target of a separate FBI investigation into violations of international money laundering. In the summer of 2022, Gessen met with the undercover FBI agent on two occasions, first in Boca Raton, Florida, and then again in New York City, New York. During the meetings, Gessen volunteered details of a years-long dispute with his former partner which had resulted in contentious child custody proceedings. At these meetings and through a series of encrypted electronic messages, Gessen initiated plans to commit two different crimes utilizing the undercover FBI agent’s connections. The evidence at trial established that over the course of the investigation, Gessen’s objectives quickly transformed from bribing an immigration official to deport his former partner to hiring someone to murder her. Gessen resolved to murder his former partner because it was a “cheaper way to get rid of her” and was a more permanent solution.

The trial evidence established that Gessen wired a total of $23,000 to an FBI undercover bank account in San Francisco to carry out the murder. Around the same time, Gessen also sent to the undercover FBI agent a written agreement containing a promise to pay for phony “consulting services” as a method to disguise the true nature of the funds. Gessen also provided to the undercover FBI agent a target package containing details about his former partner’s whereabouts, schedule, and lifestyle habits.

A federal grand jury indicted Gessen on July 26, 2022, charging him with one count of murder for hire, in violation of 18 U.S.C. § 1958. The jury convicted Gessen of the charge.

In addition to the prison term, Judge Corley also ordered Gessen to serve three years of supervised release to begin after his prison term.

The case is being prosecuted by the Corporate and Securities Fraud Section of the U.S. Attorney’s Office. The case is a result of an investigation by the FBI.

OAKLAND – Domenick Nardone appeared in federal court in Oakland this week to face conspiracy, wire fraud, money laundering, and related charges for his alleged role in a kickback scheme that defrauded Williams Sonoma, Inc. (WSI) of millions of dollars, announced United States Attorney Ismail J. Ramsey and IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office.

According to a superseding indictment returned by a federal grand jury on March 12, 2024, Nardone, 66, of Port St. Lucie, Florida, conspired with others to pay millions of dollars in kickbacks to Eric Marsiglia, a former WSI executive and co-defendant in the case, to ensure Marsiglia would direct additional business to two New Jersey companies controlled in part by Nardone as Chief Financial Officer and minority owner. Nardone was arrested in Florida on March 29, 2024, and made an appearance in federal court there shortly thereafter. He was released on a $250,000 bond.

“Williams Sonoma is a Bay Area institution, and the defendants charged in this case are accused of taking advantage of their positions to defraud that venerable company out of millions of dollars over several years,” said United States Attorney Ismail J. Ramsey. “As National Crime Victims’ Rights Week comes to an end, I am proud to say this Office is committed to vindicating the rights of all victims, including companies like Williams Sonoma that call our district home.”

“Greed can easily overtake one’s ability to be content. Mr. Nardone abused his position as the Chief Financial Officer and conspired with others to secure favorable contracts only to end up in court,” said IRS Criminal Investigation Acting Special Agent in Charge Michael Mosley. “IRS Criminal Investigation will continue to unravel the truth and bring these selfish acts to light. We value our partnership with the U.S. Attorney’s Office Northern District of California as we press forward with charging those who entangled themselves in this multimillion-dollar kickback scheme.”

WSI is a home-goods retailer that operates brands Williams Sonoma, Pottery Barn, West Elm, and others. As alleged in the superseding indictment, Marsiglia was WSI’s Vice President of Engineering, Projects, Planning, Facilities, and Real Estate, and, as such, was responsible for identifying commercial real estate opportunities for the company. In his position, Marsiglia allegedly solicited and received millions of dollars from the two New Jersey companies—one a forklift company, the other a warehouse racking and logistics company—in part owned and controlled by Nardone and Michael Podhurst, a Vice President at the two companies who was also charged for his role in the offense and pleaded guilty in June 2023. In exchange, Marsiglia allegedly directed contracts for WSI’s business to those companies. The superseding indictment alleges that, from 2018 to 2020, WSI awarded companies connected to Nardone and/or Podhurst more than $48 million in contracts for work done at warehouses around the country, and that Marsiglia, Nardone, and Podhurst arranged for more than $12 million in kickbacks to be paid to Marsiglia’s shell company, REM Group LLC, which Marsiglia allegedly set up for the sole purpose of receiving and hiding kickback payments.

The superseding indictment also alleges that Marsiglia engaged in a second scheme to defraud WSI. In his role at WSI, Marsiglia was responsible for negotiating real estate contracts on behalf of WSI that required third parties to pay millions of dollars in brokerage fee rebates to WSI. According to the superseding indictment, rather than ensure that WSI received the brokerage fee rebates, Marsiglia conspired with others to have the rebates paid to his shell company, REM Group LLC. The superseding indictment charges Marsiglia and others with diverting and misappropriating approximately $5.9 million in broker commission rebates owed to WSI.

In total, the superseding indictment alleges that, from 2018–2022, Marsiglia fraudulently received nearly $20 million through his shell company, REM Group LLC, all of which was in the form of stolen broker rebate payments or kickbacks received for awarding business to entities connected to Nardone and/or Podhurst.

Marsiglia, 49, of Olive Branch, Mississippi, first appeared on the superseding indictment in federal court in San Francisco on April 23, 2024, although he had previously appeared in federal court in both Mississippi and San Francisco on an indictment issued in April 2023. Both Marsiglia and Nardone are next scheduled to appear in federal court in San Francisco on June 11, 2024, before the Honorable Richard Seeborg, Chief United States District Judge. The defendants have each pleaded not guilty to the charges against them.

An indictment merely alleges that crimes have been committed, and each defendant is presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Nardone and Marsiglia each face a maximum sentence of 20 years in prison, and a fine of $250,000, plus restitution, if appropriate, for each violation of 18 U.S.C. §§ 1343, 1346, and 1349, as well as a maximum sentence of 20 years in prison, and a fine of $500,000, plus restitution, if appropriate, for each violation of 18 U.S.C. § 1956(h). The court also may order an additional term of supervised release to begin after any prison term as part of the sentence for either or both defendants. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Christiaan Highsmith is prosecuting the case with the assistance of Aarian Beiti. The prosecution is the result of an investigation by CI.

An indictment was unsealed today charging two Chinese nationals, Han Li, also known as Anson Li, 44, and Lin Chen, 64, with crimes related to a conspiracy to illegally export U.S. technology, including a machine manufactured by a California-based company that is used to process silicon wafer microchips, to prohibited end users in China, in violation of the International Emergency Economic Powers Act (IEEPA) and Export Administration Regulations (EAR). Chen was arrested in Chicago yesterday.

“As alleged, the defendants sought to evade export controls to obtain U.S. semiconductor manufacturing technology for a prohibited Chinese company,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department is committed to enforcing export controls and holding accountable those who seek to illicitly procure U.S.-developed technologies that put our national security at risk.”

“The export restrictions at issue in this case were put in place to prevent the illicit procurement of commodities and technologies for unauthorized military end use in the People’s Republic of China,” said U.S. Attorney Ismail Ramsey for the Northern District of California. “This office will continue to vigorously enforce the nation’s export laws, including those pertaining to advanced technologies, to protect our national security.”

“This indictment puts an end to Ms. Chen’s alleged involvement in a scheme to illegally export U.S. technology to China,” said Executive Assistant Director Larissa L. Knapp of the FBI’s National Security Branch. “The U.S. does not tolerate illegally exporting our advanced technology, and any attempt to circumvent U.S. laws and regulations will have consequences. The FBI and its partners will continue to seek justice in this matter.”

Federal regulations restrict the export of certain items to companies, research institutions, and other entities identified on the Department of Commerce’s Entity List. In August 2014, the Commerce Department added Changdu GaStone Technology Company (CGTC), a company based in China, to the Entity List. 

As alleged in the indictment, between at least May 2015 and August 2018, Li and Chen conspired to evade the export restrictions imposed by the Department of Commerce on CGTC through the use of intermediaries to conceal CGTC’s involvement with the transactions. Specifically, the defendants sought to illegally obtain a DTX-150 Automatic Diamond Scriber Breaker machine from Dynatex International, a Santa Rosa, California, company. The machine is used to cut thin semiconductors used in electronics, also known as silicon wafers, and under Department of Commerce regulations, requires a license and authorization to export to CGTC. The defendants sought to acquire the machine for CGTC through an intermediary company called Jiangsu Hantang International (JHI), a proxy they fraudulently represented as the purchaser and end user. To avoid detection, Li and Chen instructed Dynatex International to ensure that the export information associated with the sale did not list CGTC as the ultimate consignee of the shipment. 

Li is believed to be in the People’s Republic of China. 

Li and Chen each are charged with the following offenses, and if convicted, face maximum penalties as indicated: Conspiracy to violate IEEPA, up to 20 years in prison and a $1 million fine; false electronic export information activities, up to five years in prison and a $250,000 fine; smuggling, up to 10 years in prison and a $250,000 fine; and IEEPA violations, up to 20 years in prison and a $1 million fine. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI, Homeland Security Investigations, and Department of Commerce’s Bureau of Industry and Security are investigating the case.

The U.S. Attorney’s Office for the Northern District of California and National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

SAN FRANCISCO – An indictment was unsealed charging Chinese nationals, Han Li, 44, also known as “Anson” Li, and Lin Chen, 64, with crimes related to a conspiracy to illegally export U.S technology to prohibited end users in China, in violation of the International Emergency Economic Powers Act (“IEEPA”) and Export Administration Regulations (“EAR”). The technology at issue includes a machine manufactured by a California-based company that is used to process silicon wafer microchips. Chen was arrested in Chicago yesterday.

“The export restrictions at issue in this case were put in place to prevent the illicit procurement of commodities and technologies for unauthorized military end use in the People’s Republic of China,” said the U.S. Attorney for the Northern District of California Ismail Ramsey. “This office will continue to vigorously enforce the nation’s export laws, including those pertaining to advanced technologies, to protect our national security.”

“As alleged, the defendants sought to evade export controls to obtain U.S. semiconductor manufacturing technology for a prohibited Chinese company,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The Justice Department is committed to enforcing export controls and holding accountable those who seek to illicitly procure U.S.-developed technologies that puts our national security at risk.”

“Stopping the illegal export of U.S. technology to China is one of the FBI’s highest priorities. We will aggressively pursue anyone who violates export control laws designed to protect our national and economic security. I am proud of the tenacious work that resulted in today’s announcement,” said FBI Special Agent in Charge Robert Tripp. “U.S. business leaders should be encouraged to establish a relationship with their local FBI field office to help protect against the pervasive threat of criminals looking to steal American technology.”

“This arrest highlights the importance of interagency collaboration in preventing illegal exports that could compromise sensitive technologies and our national security as well as undermine our American economy. Thank you to our partners at U.S. Customs and Border Protection, the Dept. of Commerce’ Bureau of Industry and Security, the FBI, the U.S. Attorney’s Office, Northern District of California, and the Dept. of Justice National Security Division.” said HSI San Francisco Special Agent in Charge Tatum King.

“Stopping the flow of U.S. semiconductor technology that supports the PRC’s military modernization efforts is a top priority for the Office of Export Enforcement,” said Brent Burmester, Special Agent in Charge of the U.S. Department of Commerce, Bureau of Industry and Security, Office of Export Enforcement, San Jose Field Office. “BIS will continue to prioritize investigations involving exports of advanced technologies to prohibited parties to protect U.S. national security.”

Federal regulations restrict the export of certain items to companies, research institutions, and other entities identified on the Department of Commerce’s Entity List. In August 2014, the Department of Commerce added Changdu GaStone Technology Company (“CGTC”), a company based in China, to the Entity List, making the company ineligible to receive exports of certain U.S. technologies and services.

As alleged in the indictment, between at least May 2015 and August 2018, Li and Chen conspired to evade the export restrictions imposed by the Department of Commerce on CGTC by using intermediary companies. Specifically, the defendants sought to illegally obtain for CGTC a DTX-150 Automatic Diamond Scriber Breaker machine from Dynatex International, a Santa Rosa, California company. The machine is used to cut thin semiconductors used in electronics, also known as silicon wafers, and under Department of Commerce regulations, requires a license and authorization to export to CGTC. The defendants sought to obtain the machine through an intermediary company called Jiangsu Hantang International (JHI), which they fraudulently represented as the purchaser and end user. ), a proxy they fraudulently represented as the purchaser and end user. To avoid detection, Li and Chen instructed Dynatex International to ensure that the export information associated with the sale did not list CGTC as the ultimate consignee of the shipment.

Li is believed to be in the People’s Republic of China.

In sum, Li and Chen each are charged as follows:

Count

Violation

Description and Maximum

Sentence, if Convicted

1

18 U.S.C. § 1705 and 15 C.F.R. § 764.2(d)

Conspiracy to Violate IEEPA;

20 years prison, $1,000,000 fine

2

13 U.S.C. § 305 and 18 U.S.C. § 2

False Electronic Export Information Activities;

5 years prison, $250,000 fine

3

18 U.S.C. §§ 554 and 2 

Smuggling;

10 years prison, $250,000 fine

4

18 U.S.C. § 1705 and 15 C.F.R. § 764.2(d)

IEEPA Violations;

20 years prison, $1,000,000 fine

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. Any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

The case is being prosecuted by the Special Prosecutions Unit of the United States Attorney’s Office for the Northern District of California and the Department of Justice National Security Division’s Counterintelligence and Export Control Section. The prosecution is the result of a joint investigation by the Federal Bureau of Investigation, Homeland Security Investigations, and Department of Commerce’s Bureau of Industry and Security.

SAN FRANCISCO – Lamar Nolan Ryan has been sentenced to 105 months in prison following his conviction at trial for illegally possessing a loaded firearm, announced United States Attorney Ismail J. Ramsey; Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp; and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jennifer Cicolani. The sentence was handed down by the Hon. William H. Orrick, Senior United States District Judge.

Ryan, 42, of San Francisco, was convicted at a bench trial in December 2023 on one count of being a felon in possession of a firearm and ammunition, in violation of 18 U.S.C. § 922(g)(1). A federal grand jury had indicted him on that offense in August 2023.

The evidence presented at trial showed that, on July 1, 2023, Ryan possessed a loaded, semi-automatic Glock handgun with an obliterated serial number that he had concealed in a holster underneath his clothes. Law enforcement officers detained Ryan in South San Francisco after receiving a report that he had taken a woman there and was attempting to coerce her to perform commercial sex work.

According to the government’s sentencing memorandum, the defendant met the woman at a San Francisco motel, where he paid her $500 for sex. After having sex with the woman, however, the defendant took the money back and tried to convince the woman to perform commercial sex acts under his management, in exchange for a 30 percent cut of her profits. The woman reluctantly agreed to go with the defendant, and he brought her to South San Francisco, where the defendant rented a motel room and showed the woman a handgun, telling her she would be “protected” while working for him. Not long thereafter, South San Francisco police officers found the defendant and the woman—whose family had tracked her location using her cellphone—in a car parked outside a laundromat.

In addition to sentencing Ryan to prison, Judge Orrick ordered the defendant to serve three years of supervised release to begin after his prison term is completed.

Assistant U.S. Attorneys Jared Buszin and Alexandra Shepard are prosecuting the case with assistance from Maribel Gallegos. The prosecution is the result of an investigation by the FBI and ATF.

SAN FRANCISCO – Manish Lachwani, a tech entrepreneur who founded a Silicon Valley-based software-as-a-service (SaaS) company that he duped potential investors into supporting, was sentenced today to 18 months in prison, following his conviction on wire and securities fraud charges, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp. The sentence was handed down by the Hon. Charles R. Breyer, Senior United States District Judge.

Lachwani, 47, of Los Altos, California, pleaded guilty on April 23, 2023, to two counts of wire fraud, in violation of 18 U.S.C. § 1343, and one count of securities fraud, in violation of 15 U.S.C. §§ 78j(b) and 78ff and 17 C.F.R. § 240.10b-5. He had been charged in a superseding indictment in August 2022 with wire fraud, securities fraud, and money laundering.

According to his plea agreement, Lachwani founded HeadSpin, Inc. in 2015 and served as its Chief Executive Officer until May 2020. Among other things, HeadSpin provided clients with software tools and access to remote devices to test mobile applications. Between April 2017 and April 2020, HeadSpin raised more than $100 million from investors. But Lachwani admitted that, to obtain that financing, he provided potential investors with information about the company’s business, customers, revenue, and finances that he knew was inaccurate.

For example, Lachwani admitted he sent potential investors financial information that he knew overstated HeadSpin’s revenue and annual recurring revenue (ARR), which is a measure of a company’s subscription revenue rate at a particular point in time, annualized to show revenue the company would expect to make, at that rate, over the course of a full year. Specifically, he admitted he knew the revenue and ARR figures he provided to investors were overstated because they included amounts from potential customers that had not agreed to pay subscription fees to HeadSpin, amounts that were more than real customers had agreed to pay, and amounts from customers that had stopped using and paying for HeadSpin’s services.

Lachwani also admitted that he knowingly sent HeadSpin’s accountant false information about customer contracts that was incorporated into HeadSpin’s financial statements, as well as invoices that he knew had been altered to show amounts that had not actually been invoiced to clients.

“This defendant admitted he lied about his company’s revenue and customers to attract funding from investors, including many in Silicon Valley,” said United States Attorney Ismail J. Ramsey. “Today’s sentencing should send a message to other entrepreneurs who may be tempted to cross the line into fraud and to ‘fake it until they make it.’ This Office is committed to protecting investors—including those whose capital powers the engines of innovation in Silicon Valley—from start-ups that misrepresent their finances and try to cut corners.”

“This case sends a clear message to start-up founders that inflating company revenue and lying to investors is not only unethical but illegal,” said FBI Special Agent in Charge Robert K. Tripp. “The FBI and our partners will continue to pursue those who attempt to defraud and disrupt the fair capital market system.”

In addition to sentencing Lachwani to prison, Judge Breyer ordered the defendant to serve three years of supervised release to begin after his prison term is completed. Judge Breyer also ordered Lachwani to pay a $1 million fine and scheduled a hearing for July 31, 2024, to address the issue of restitution.

The case is being prosecuted by the Corporate and Securities Fraud Section of the United States Attorney’s Office. Assistant U.S. Attorneys Lloyd Farnham and Noah Stern are prosecuting the case with assistance from Aarian Beiti. The prosecution is the result of an investigation by the FBI. The U.S. Attorney’s Office and the FBI thank the San Francisco Regional Office of the Securities and Exchange Commission (SEC). An SEC civil enforcement action is currently pending against Lachwani in the Northern District of California.

SAN FRANCISCO – Jose Navarro Mendoza has been sentenced to 120 months in prison following his conviction for possession of child pornography, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp. The sentence was imposed on April 12, 2024, by the Hon. Charles R. Breyer, Senior United States District Judge.

Navarro Mendoza, 45, a resident of Vallejo, California, pleaded guilty in May 2023 to one count of possession of child pornography, in violation of 18 U.S.C. § 2252(a)(4)(B) and (b)(2). He was originally indicted by a federal grand jury in August 2022.

According to the government’s sentencing memorandum, the defendant possessed more than 1,500 images and videos of child pornography on his electronic devices, including nearly 100 files depicting sexual abuse of infants and toddlers. Additional evidence found on the defendant’s electronic devices suggested he used social media and/or messaging apps to participate in chat groups where users posted and exchanged child pornography, the government said in its sentencing submission.

The government further argued in its sentencing papers that the defendant groomed and sexually abused several members of his extended family when they were 6 to 11 years old. These victims included two minors who told investigators that the defendant had rubbed their bodies, including their genitalia.

In addition to sentencing Navarro Mendoza to prison, Judge Breyer ordered the defendant to serve five years of supervised release to begin after his prison term is completed.

Assistant United States Attorney Jared Buszin is prosecuting the case with the assistance of Christine Tian. The prosecution is the result of an investigation by the FBI.

SAN FRANCISCO - Six San Francisco residents have been sentenced to prison for terms ranging from 11 to 32 years for their participation in the criminal activities of the 19th Street/16th Street Sureños enterprise and their respective roles in seven cold-case murders that took place between 2006 and 2013, announced United States Attorney Ismail J. Ramsey and Homeland Security Investigations (HSI) Special Agent in Charge Tatum King. The sentences were handed down by the Honorable Richard Seeborg, Chief United States District Judge.

Eddy Urbina, AKA “Rhino,” 35, Weston Venegas, AKA “Cartoon,” 34, Orlando Hernandez, AKA “Chisto,” 41, and Juan Carlos Gallardo, AKA “Huero,” 35, all of San Francisco, were sentenced yesterday, following sentencings for Jonathan Aguilar, AKA “Trompo,” 37, and Mario Reyes, AKA “Shy Boy,” 44, on April 2, 2024, and March 5, 2024, respectively. Each defendant pleaded guilty in October 2023 to offenses related to the 19th Street/16th Street Sureños enterprise and the seven cold-case murders. The sentences imposed were as follows:

Defendant

Date Convicted

Date Sentenced

Sentence Imposed

Eddy Urbina

October 16, 2023

April 8, 2024

32 years

Jonathan Aguilar

October 16, 2023

April 2, 2024

30 years

Orlando Hernandez

October 16, 2023

April 8, 2024

25 years (13 years consecutive to prior 12 year sentence)

Weston Venegas

October 16, 2023

April 8, 2024

25 years (13 years consecutive to prior 12 year sentence)

Juan Carlos Gallardo

October 10, 2023

April 8, 2024

22 years

Mario Reyes

October 16, 2023

March 5, 2024

11 years

In his plea agreement, Urbina admitted to committing a shooting September 4, 2008, in which he and others killed two victims and attempted to kill a third in retaliation for the murder of a fellow Sureño earlier that day. Urbina also admitted that in 2015, he had attempted to reveal the identity of government witnesses to an incarcerated Sureño by sending a letter in coded language and that, as a member of the enterprise, he had sold narcotics in gang territory and participated in robberies.

Aguilar admitted, in his plea agreement, to committing a shooting on March 14, 2006, in San Francisco, in which he and others in the enterprise killed two victims and attempted to kill two others. He also admitted to committing another shooting in September 2007 and to selling narcotics on behalf of the enterprise.

In 2015, Hernandez and Venegas were each previously convicted of participating in a racketeering conspiracy and sentenced to twelve years in prison in United States v. Alvarez et al., case number 14-CR-00120 EMC. In their respective plea agreements in this case, Hernandez and Venegas each admitted to taking part in the March 30, 2013, murder of a victim in San Francisco’s Mission District, planned as a retaliation for the murder of another Sureño two years earlier. According to court filings, the victim was not a rival, but an innocent civilian mistaken for a rival. The thirteen-year prison sentences for both men imposed by Judge Seeborg yesterday will run consecutively to their earlier sentences, resulting in an aggregate twenty-five-year sentence for each man.

In his plea agreement, Gallardo admitted to shooting and killing a victim on February 28, 2009, while at a house party in Richmond, California; the victim was a 16-year-old boy. Gallardo also admitted to participating in robberies with others in the enterprise.

Finally, Reyes admitted in his plea agreement that he, too, was involved in the hunt for victims on March 30, 2013. He pleaded guilty to participating in various racketeering conspiracies and not in the murder itself. Reyes also admitted to selling narcotics in gang territory.

“This Sureño criminal enterprise has terrorized San Francisco’s Mission District for decades through shootings, robberies, and drug dealing,” said U.S. Attorney Ramsey. “The sentences in this case make clear that we will pursue the perpetrators of gang violence and seek justice no matter when that violence occurred. We are pleased to bring closure to the families of these victims and to hold these defendants accountable for the tremendous harm they caused.”

“This sentencing reflects efforts by law enforcement to pursue justice in a long running case that terrorized victims in the Mission District and beyond. We hope this sentence provides some solace and closure to victim families who have suffered for a significant period of time,” said Special Agent in Charge King.

In addition to the custodial sentences, Judge Seeborg also ordered all six defendants to spend five years on supervised release, beginning after their respective prison terms are completed.

Assistant U.S. Attorneys Andrew Scoble and Richard Ewenstein are prosecuting the case with the assistance of Supervisory Legal Administrative Specialist Madeline Wachs and Paralegal Specialist Sara Slattery. The prosecution is the result of a multi-year investigation by HSI, with assistance from the San Francisco Police Department’s Community Violence Reduction Team and Homicide Detail.

OAKLAND – Three individuals were charged with the use of unauthorized access devices were filed this week, announced United States Attorney Ismail J. Ramsey and United States Secret Service (“USSS”) – San Francisco Field Office, Special Agent in Charge Shawn Bradstreet.

The three defendants—Petrica Mosneagu, 44; Ionut Sopirla, 38; and Virgil Tudorascu, 42, all of Romania—were charged with stealing Electronic Benefit Transfer (“EBT”) account information and making fraudulent cash withdrawals at ATMs using that stolen EBT information in violation of 18 U.S.C. § 1029(a)(2). The defendants were arrested in a multi-district, USSS-led operation, which resulted in several arrests this week, including in the Southern District of California.

According to the public criminal complaints, law enforcement agencies have been investigating EBT theft across California for the past fourteen months. The complaints allege that the California Department of Social Services has identified that approximately $22.8 million has been stolen from victim EBT card beneficiaries from January to March 2024 in California, including in the Northern District of California. Most of these stolen funds have been obtained by unauthorized ATM withdrawals. Furthermore, the complaints allege that victims of the scheme are largely low-income families who depend on EBT benefits to buy food and other household necessities.

The complaints allege that the defendants fraudulently withdrew cash with “cloned” cards, which are debit cards, gift cards, or other devices with magnetic strips that have been encoded with information from legitimate EBT cards. The account holders’ account information was primarily “skimmed” at ATMs or point-of-sale terminals. Skimming devices recorded victim account holder account information on the magnetic strips and log their PINs through keypad overlays. Once skimmed, the victim account holders’ account information was then loaded onto blank or repurposed debit cards, which the defendants then used to withdraw cash or make purchases.

If convicted, each defendant face a maximum statutory sentence of ten years in prison on each charge. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Defendants Mosneagu and Sopirla made their initial appearances Tuesday morning in Oakland and will appear for their detention hearings on April 10, 2024, before the Honorable Kandis A. Westmore. Defendant Tudorascu made his initial appearance Thursday morning and will also appear for his detention hearing on April 10, 2024.

Criminal complaints only allege that crimes have been committed, and each defendant must be presumed innocent until proven guilty beyond a reasonable doubt.

Assistant U.S. Attorney Alexis James and Special Assistant U.S. Attorney Zachary Glimcher are prosecuting these cases, with the help of Katie Turner and Kay Konopaske. These prosecutions are the result of an investigation by the USSS, California Department of Social Services, U.S. Department of Agriculture – Office of Inspector General, Homeland Security Investigations (HSI), San Francisco Human Services Agency – Special Investigations Unit, Pleasant Hill PD, Richmond PD, Oakland PD, Berkeley PD, Alameda County Sheriff’s Office, Romanian National Police, and U.S. Secret Service Bucharest.

OAKLAND – A federal grand jury has charged two defendants with various crimes, including one defendant with extortion and assaulting a federal officer with a deadly weapon, announced United States Attorney Ismail J. Ramsey; Drug Enforcement Administration (DEA), San Francisco Field Division, Special Agent in Charge Brian M. Clark; Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp; IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office; and San Francisco Division Postal Inspector in Charge Rafael Nuñez.

The superseding indictment—which was returned by a federal grand jury on March 26, 2024, but unsealed today—charges Joel Dowen, 44, of Concord, California, with one count each of mailing threatening communications with intent to extort, in violation of 18 U.S.C. § 876(b), and assaulting a federal officer with a deadly weapon, in violation of 18 U.S.C. § 111(b). The indictment also charges Micah-Luc Almeida, 45, of San Francisco, California, with one count of possession with intent to distribute 3,4-Methylenedioxyamphetamine, commonly known as MDA, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). And it charges Dowen and Almeida together with one count of conspiracy to manufacture, distribute, or possess with intent to distribute MDA, in violation of 21 U.S.C. §§ 846, 841(a)(1), and (b)(1)(C). Dowen had originally been indicted on one count of mailing threatening communications with intent to extort, in violation of 18 U.S.C. § 876(b), on January 9, 2024.

“We will protect our federal law enforcement partners when someone harms or threatens them merely for doing their jobs,” said United States Attorney Ismail J. Ramsey. “The defendants here are charged with serious crimes, and I am proud of the work being done by this Office to bring them to justice and safeguard everyone in the Northern District of California, including those sworn to protect us all.”

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Dowen faces a maximum statutory sentence of 20 years in prison on each of the three charges against him. Almeida faces the same statutory maximum sentence of 20 years in prison on each of the two charges on which he has been indicted. 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.

Dowen’s next court appearance is scheduled for May 3, 2024, before the Honorable Jon S. Tigar, United States District Judge for the Northern District of California. Dowen has been in federal custody since his arrest on January 17, 2024, and has been ordered detained pending trial. Almeida’s initial court appearance is scheduled for April 4, 2024, before the Honorable Kandis A. Westmore, United States Magistrate Judge for the Northern District of California.

This prosecution is part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

Assistant United States Attorney Dan Karmel is prosecuting these cases with the assistance of Sara Slattery and Andy Ding. These prosecutions are the result of an investigation by the DEA, FBI, CI, and United States Postal Inspection Service, with assistance from the Bureau of Alcohol, Tobacco, Firearms, and Explosives; San Francisco Homeland Security Investigations; and United States Customs and Border Protection.

SAN FRANCISCO – Two defendants in separate cases have been sentenced to multi-year prison terms for selling or intending to sell drugs in the Bay Area, including in the Tenderloin district of San Francisco, announced United States Attorney Ismail J. Ramsey.

Marcos Carcamo, 25, a Honduran national who was living in Oakland, was sentenced to 48 months in prison following his conviction in December 2023 on charges of possession with intent to distribute fentanyl and cocaine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). Carcamo’s sentence was imposed by the Hon. Jacqueline Scott Corley, United States District Judge.

Raul Alexander Guisa-Ortega, 25, also a Honduran national who was living in Oakland, was sentenced to 36 months in prison following his conviction in December 2023 on a charge of possession with intent to distribute methamphetamine, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). Guisa-Ortega’s sentence was imposed by the Hon. Susan Illston, Senior United States District Judge.

At sentencing, Carcamo admitted he possessed approximately 1.77 kilograms—that is, almost four pounds—of fentanyl, along with a lesser quantity of cocaine, all of which he intended to sell, when he was arrested in San Francisco on August 9, 2023. According to the government’s sentencing memorandum, Carcamo admitted he mixed fentanyl with cutting agents at his residence in Oakland and that he traveled from Oakland to San Francisco four or five times per week to sell drugs. In a search of Carcamo’s residence, which he shared with his brother, officers seized, among other things, additional suspected drugs, including methamphetamine and heroin; a firearm and ammunition; a pill press and materials for mixing drugs; and almost $59,000 in cash.

According to the government’s sentencing memorandum, Guisa-Ortega—who has three prior convictions, including one federal conviction, for selling drugs in the Tenderloin—sold drugs including fentanyl and methamphetamine to an undercover officer three times in August 2023. When officers arrested Guisa-Ortega on August 31, 2023, he admitted that he sold fentanyl, which he said he knew was often deadly. Officers found more drugs hidden in Guisa-Ortega’s car and in his house, both of which they searched following his arrest.

In addition to sentencing Carcamo and Guisa-Ortega to prison, Judges Corley and Illston ordered both defendants to serve three years of supervised release to begin after their prison terms are completed. Carcamo was indicted by a federal grand jury on October 25, 2023, and has been in federal custody since October 6, 2023. Guisa-Ortega was indicted by a federal grand jury on September 26, 2023, and was remanded into custody following his sentencing last week.

Assistant United States Attorney Kevin Yeh is prosecuting these cases with the assistance of Laurie Worthen and Jessie Chelsea. These prosecutions are the result of investigations by the San Francisco Police Department, with assistance from the Drug Enforcement Administration, Federal Bureau of Investigation, and California Highway Patrol.
 

SAN FRANCISCO –Fares Abdo Al Eyani was sentenced to twelve months and a day in prison for conspiring to export defense articles and attempting to export defense articles.  The sentence was handed down by the Hon. Charles R. Breyer, Senior United States District Judge.

“Enforcing the nation’s export laws is an important objective for my Office,” said United States Attorney Ismail Ramsey, “because controlling our ports prevents the proliferation of weapons, protects our national security, furthers our foreign policy, and maintains our business competitiveness.”  

“The illicit export of weapons overseas will not be tolerated by the FBI, and anyone attempting to do so will be held accountable,” said Executive Assistant Director Larissa L. Knapp of the FBI’s National Security Branch. “Our office, along with our federal law enforcement partners, are committed to protecting our U.S. technology and citizens from anyone who tries to evade our laws and threaten our national security.”

“The sentencing of El Anayi for attempting to illegally export firearms and night vision rifle scopes to The Sultanate of Oman underscores the serious ramifications for international arms trafficking. Such actions not only pose significant risks to national security but also contribute to destabilizing regions and potentially fueling conflicts. It's crucial for law enforcement agencies to remain vigilant and prosecute individuals involved in such activities to prevent the illicit proliferation of weapons and technology. This case highlights the importance of international cooperation in combating arms trafficking and enforcing export control regulations. Justice has been served with the hard work and dedication of HSI, and partner organizations FBI, CBP Office of Field Operations San Francisco, and the U.S. Attorney’s Office San Francisco, and the Department of Justice National Security Division,” said San Francisco Homeland Security Investigations Special Agent in Charge Tatum King.

“Export controls exist to protect the security of the United States and its people,” said FBI Special Agent in Charge Robert Tripp of the San Francisco Division. “Fares Abdo Al Eyani tried to move deadly weapons of war into a foreign country, and his actions had the potential to undermine U.S. foreign policy in a dangerously reckless manner. The FBI and our partners are committed to aggressive investigations that will keep U.S. citizens and interests safe both here and abroad.”

According to court documents, Al Eyani, 41, of Oakland, acquired no less than four firearms, with magazines and ammunition, and at least 44 rifle scopes, monoculars, and goggles with night vision capabilities in 2019.  In November 2019, Al Eyani attempted to send the firearms to the Sultanate of Oman in shipping containers departing from the Port of Oakland.  He concealed the firearms by disassembling them, wrapping them in aluminum foil, and then secreting them within automobiles inside the shipping container.  Then, in December 2019, Al Eyani attempted to export the 44 rifle scopes, monoculars, and goggles to the Sultanate of Oman in two shipping containers departing from the Port of Oakland.  Law enforcement searched the containers and seized the firearms, the magazines, and the ammunition, as well as the 44 rifle scopes, monoculars, and goggles with night vision capabilities.  These actions thwarted Al Eyani’s unlawful scheme.

The commercial export of arms, ammunitions, implements of war and defense articles and services from the United States is governed by the Arms Export Control Act (“AECA”), 22 U.S.C. § 2778, and its attendant regulations, the International Trafficking in Arms Regulations (“ITAR”), 22 C.F.R. §§ 120-130.  The AECA authorizes the President, among other things, to control the export of “defense articles” deemed critical to the national security and foreign policy interests of the United States.  The AECA also authorizes the President to designate goods as “defense articles,” require licenses for the export of such articles, and promulgate regulations for the export of such articles.  By executive order, the President has delegated this authority to the United States Department of State, Bureau of Political-Military Affairs, Directorate of Defense Trade Controls (“DDTC”).  Accordingly, the DDTC has promulgated regulations under the AECA, known as the ITAR.  The ITAR defines a “defense article” as any item on the United States Munitions List (“USML”).  Persons desiring to export items on the USML from the United States to a place overseas must first register with the DDTC and obtain individual export licenses prior to any shipment abroad.  

Court documents establish that the four firearms, the magazines, and the ammunition, as well as at least seven of the night-vision rifle scopes, were defense articles prohibited from export without a license by the AECA and the ITAR.  Al Eyani did not have a license to export the defense articles.

In addition to the prison term, Judge Breyer ordered Al Eyani to serve three years of supervised release to begin after his prison term is completed.

In a separate sentencing, Al Eyani’s wife, Saba Mohsen Dhaifallah, 42 and also a resident of Oakland, was sentenced to three years of probation for making false statements to Federal Bureau of Investigation special agents during the investigation of this matter, in violation of 18 U.S.C. § 1001.  Her sentence was also imposed by Judge Breyer.

The National Security and Cybercrime Section of the United States Attorney’s Office for the Northern District of California is prosecuting the case in consultation with the Counterintelligence and Export Control Section of the National Security Division of the Department of Justice.  The prosecution is the result of an investigation by the Federal Bureau of Investigation, Homeland Security Investigations, and United States Customs and Border Protection.
 

Fares Abdo Al Eyani, 41, of Oakland, California, was sentenced to 12 months and a day in prison, followed by three years of supervised release, for conspiring to export defense articles and attempting to export defense articles.

“Mr. Al Eyani admitted to conspiring to smuggle restricted arms, ammunition, and other defense material to a foreign country and has now been held to account,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “The unlawful trafficking of U.S. weapons overseas represents a threat to public safety and national security and will be met with the full force of the Justice Department.”

“Enforcing the nation’s export laws is an important objective for my office,” said U.S Attorney Ismail J. Ramsey for the Northern District of California, “Because controlling our ports prevents the proliferation of weapons, protects our national security, furthers our foreign policy, and maintains our business competitiveness.”

“The illicit export of weapons overseas will not be tolerated by the FBI and anyone attempting to do so will be held accountable,” said Executive Assistant Director Larissa L. Knapp of the FBI’s National Security Branch. “Our office, along with our federal law enforcement partners, are committed to protecting our U.S. technology and citizens from anyone who tries to evade our laws and threaten our national security.”

“The sentencing of El Anayi for attempting to illegally export firearms and night vision rifle scopes to The Sultanate of Oman underscores the serious ramifications for international arms trafficking,” said Special Agent in Charge Tatum King of Homeland Security Investigations (HSI) San Francisco. “Such actions not only pose significant risks to national security but also contribute to destabilizing regions and potentially fueling conflicts. It's crucial for law enforcement agencies to remain vigilant and prosecute individuals involved in such activities to prevent the illicit proliferation of weapons and technology. This case highlights the importance of international cooperation in combating arms trafficking and enforcing export control regulations. Justice has been served with the hard work and dedication of HSI, and partner organizations FBI, U.S. Customs and Border Protection (CBP) Office of Field Operations San Francisco, the U.S. Attorney’s Office for the Northern District of California and the Justice Department’s National Security Division.”

According to court documents, Al Eyani acquired no less than four firearms with magazines and ammunition, and at least 44 rifle scopes, monoculars, and goggles with night vision capabilities in 2019. In November 2019, Al Eyani attempted to send the firearms to the Sultanate of Oman in shipping containers departing from the Port of Oakland. He concealed the firearms by disassembling them, wrapping them in aluminum foil, and then secreting them within automobiles inside the shipping container. Then, in December 2019, Al Eyani attempted to export the 44 rifle scopes, monoculars, and goggles to the Sultanate of Oman in two shipping containers departing from the Port of Oakland. Law enforcement searched the containers and seized the firearms, magazines, and ammunition, as well as the 44 rifle scopes, monoculars, and goggles with night vision capabilities, thereby thwarting Al Eyani’s unlawful scheme.

The commercial export of arms, ammunitions, implements of war and defense articles and services from the United States is governed by the Arms Export Control Act (AECA) and its attendant regulations, the International Trafficking in Arms Regulations (ITAR). The AECA authorizes the President, among other things, to control the export of “defense articles” deemed critical to the national security and foreign policy interests of the United States. The AECA also authorizes the President to designate goods as “defense articles,” require licenses for the export of such articles, and promulgate regulations for the export of such articles. By executive order, the President has delegated this authority to the U.S. Department of State, Bureau of Political-Military Affairs, Directorate of Defense Trade Controls (DDTC). Accordingly, the DDTC has promulgated regulations under the AECA, known as the ITAR. The ITAR defines a “defense article” as any item on the United States Munitions List (USML). Persons desiring to export items on the USML from the United States to a place overseas must first register with the DDTC and obtain individual export licenses prior to any shipment abroad. 

Court documents establish that the items Al Eyani attempted to export — four firearms, magazines, ammunition, and night-vision rifle scopes — were defense articles prohibited from export without a license by the AECA and the ITAR. Al Eyani did not have a license to export the defense articles.

In a separate sentencing, Al Eyani’s wife, Saba Mohsen Dhaifallah, 42, also of Oakland, was sentenced to three years of probation for making false statements to FBI special agents during the investigation of this matter.

The FBI, HSI, and CBP investigated the case.

The U.S. Attorney’s Office for the Northern District of California’s National Security and Cybercrime Section is prosecuting the case in consultation with the National Security Division’s Counterintelligence and Export Control Section.

A California man pleaded guilty yesterday to a scheme to defraud the Department of Defense’s (DoD) Defense Logistics Agency (DLA) by selling over $3.5 million worth of fan assemblies to the DLA that were either counterfeit or misrepresented to be new.

“The defendant sold counterfeit and deficient fan assemblies for use in military systems to increase his profit,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Criminals who cheat the U.S. military by selling deficient or counterfeit goods put our national security at risk. This case demonstrates the Justice Department’s commitment to protecting the military supply chain and Americans’ security.”

“Through his company, Kim delivered counterfeit products to our armed services and tried to pass off non-conforming products with fake invoices,” said U.S. Attorney Ismail Ramsey for the Northern District of California. “Swindling our military is a sure way to find oneself in jail. This office is always on the lookout for fraudsters and will prosecute anyone caught cheating our military by providing products that endanger our service people or compromise our readiness.”

According to court documents, Steve H.S. Kim, 63, of Alameda County, controlled Company A, which sold fan assemblies to the DLA that were either counterfeit or were used or surplus fan assemblies that he claimed were new. To trick the DLA into accepting the fan assemblies, Kim created counterfeit labels — some of which used Company B’s registered trademarks — that he attached to the fan assemblies he sold to the DLA. When the DLA questioned Kim about the origin of the fan assemblies, Kim concealed his scheme by giving the DLA fake tracing documents that he created and often signed using a false identity. Some of these counterfeit fans were installed or intended to be installed with electrical components on a nuclear submarine, a laser system on an aircraft, and a surface-to-air missile system.

“The Defense Criminal Investigative Service (DCIS), the law enforcement arm of the DoD Office of Inspector General, is fully committed to protecting the integrity of the DoD supply chain,” said Special Agent in Charge Bryan D. Denny of the DCIS Western Field Office. “Supplying counterfeit products to the DoD endangers the mission and betrays the public’s trust. This investigation demonstrates DCIS’ ongoing commitment to working with its law enforcement partners to hold individuals who defraud the DoD accountable.”

“The Naval Criminal Investigative Service (NCIS) and our law enforcement partners work diligently to thwart attempts to infiltrate the DoD supply chain with potentially damaging counterfeit product,” said Special Agent in Charge Greg Gross of the NCIS Economic Crimes Field Office. “This case highlights the efforts of the investigative team to expeditiously shut down such a scheme and prevent possible grievous harm to our ability to conduct effective combat operations.”

“This case reflects Homeland Security Investigation’s (HSI) core mission set of investigating national security threats as well as protecting global trade and government supply chains,” said Special Agent in Charge Tatum King of HSI San Francisco. “In this case, the serious risks posed to mission readiness were especially alarming. HSI appreciates the joint efforts of NCIS, DCIS, and the Army Criminal Investigation Division (Army CID), together with the Justice Department, in bringing the violator to justice.”

“The result of this joint investigation underscores the importance of our federal law enforcement partnerships and shows that by working together we can identify, prosecute, and dismantle businesses that supply the U.S. military with fraudulent parts and services,” said Special Agent in Charge Keith K. Kelly of the Army CID Fraud Field Office. “Our Army communities and the public can rest assured that we are committed to pursuing anyone that would defraud the U.S. government for their own personal gain and put combat readiness at risk.”

Kim pleaded guilty to one count of wire fraud and one count of trafficking in counterfeit goods. He is scheduled to be sentenced on July 17 and faces a maximum penalty of 20 years in prison on the wire fraud count and 10 years in prison on the trafficking in counterfeit goods count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

DCIS, NCIS, HSI, and Army CID are investigating the case.

Assistant Chief Kyle C. Hankey and Trial Attorneys Louis Manzo and David D. Hamstra of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Katherine Lloyd-Lovett for the Northern District of California are prosecuting the case. Assistant Deputy Chief Adrienne Rose and Senior Counsels Jason Gull and Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section provided substantial assistance with the investigation. 

OAKLAND — Steve H.S. Kim pleaded guilty today to a scheme to defraud the Department of Defense’s (DoD) Defense Logistics Agency (DLA) by selling over $3.5 million worth of fan assemblies to the DLA that were either counterfeit or misrepresented to be new.  The plea was accepted by the Hon. Haywood S. Gilliam, Jr., United States District Judge.

“Through his company, Kim delivered counterfeit products to our armed services and tried to pass off non-conforming products with fake invoices,” said U.S. Attorney Ismail Ramsey for the Northern District of California.  “Swindling our military is a sure way to find oneself in jail. This office is always on the lookout for fraudsters and will prosecute anyone caught cheating our military by providing products that endanger our service people or compromise our readiness.”

“The defendant sold counterfeit and deficient fan assemblies for use in military systems to increase his profit,” said Principal Deputy Assistant Attorney General Nicole M. Argentieri, head of the Justice Department’s Criminal Division. “Criminals who cheat the U.S. military by selling deficient or counterfeit goods put our national security at risk. This case demonstrates the Justice Department’s commitment to protecting the military supply chain and Americans’ security.”

According to court documents, Kim, 63, of Alameda County, and Company A sold counterfeit fan assemblies to the DLA, including used and surplus fan assemblies that he claimed were new. To trick the DLA into accepting the fan assemblies, Kim created counterfeit labels – some of which used Company B’s registered trademarks – that he attached to the fan assemblies he sold to the DLA. When the DLA questioned Kim about the origin of the fan assemblies he sold to the DLA, Kim concealed his scheme by giving the DLA fake tracing documents that he created and often signed using a false identity. Some of these counterfeit fans were installed or intended to be installed with electrical components of a nuclear submarine, a laser system on an aircraft, and a surface-to-air missile system.

“The Defense Criminal Investigative Service, the law enforcement arm of the DoD Office of Inspector General, is fully committed to protecting the integrity of the DoD supply chain,” said Special Agent in Charge Bryan D. Denny of the Defense Criminal Investigative Service (DCIS) Western Field Office. “Supplying counterfeit products to the DoD endangers the mission and betrays the public’s trust. This investigation demonstrates DCIS’ ongoing commitment to working with its law enforcement partners to hold individuals who defraud the DoD accountable.”

“NCIS and our law enforcement partners work diligently to thwart attempts to infiltrate the DoD supply chain with potentially damaging counterfeit product,” said Special Agent in Charge Greg Gross of the Naval Criminal Investigative Service (NCIS) Economic Crimes Field Office. “This case highlights the efforts of the investigative team to expeditiously shut down such a scheme and prevent possible grievous harm to our ability to conduct effective combat operations.”

“This case reflects HSI’s core mission set of investigating national security threats as well as protecting global trade and government supply chains,” said Special Agent in Charge Tatum King of Homeland Security Investigations (HSI). “In this case, the serious risks posed to mission readiness were especially alarming. HSI appreciates the joint efforts of NCIS, DCIS, and Army CID, together with the Justice Department, in bringing the violator to justice.”

“The result of this joint investigation underscores the importance of our federal law enforcement partnerships and shows that by working together we can identify, prosecute, and dismantle businesses that supply the U.S. military with fraudulent parts and services,” said Special Agent in Charge Keith K. Kelly of the Department of the Army Criminal Investigation Division’s (Army CID) Fraud Field Office. “Our army communities and the public can rest assured that we are committed to pursuing anyone that would defraud the U.S. government for their own personal gain and put combat readiness at risk.”

Kim pleaded guilty to one count of wire fraud and one count of trafficking in counterfeit goods. Judge Gilliam scheduled a hearing for Kim’s sentencing for July 17. Kim and faces a maximum penalty of 20 years in prison on the wire fraud count and 10 years in prison on the trafficking in counterfeit goods count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

DCIS, NCIS, HSI, and Army CID are investigating the case.

Assistant U.S. Attorney Katherine Lloyd-Lovett for the Northern District of California, Criminal Division Fraud Section Assistant Chief Kyle C. Hankey, and Trial Attorneys Louis Manzo and David D. Hamstra of the Criminal Division’s Fraud Section are prosecuting the case. Assistant Chief Adrienne Rose and Senior Counsels Jason Gull and Matthew A. Lamberti of the Criminal Division’s Computer Crime and Intellectual Property Section provided substantial assistance with the investigation.
 

A former correctional officer at the Federal Correctional Institution Dublin (FCI Dublin), where he supervised prisoners, was sentenced to 72 months in prison for sexually abusing five inmates at FCI Dublin. This is the seventh correctional officer to be sentenced in connection with the wide-ranging investigation into sexual abuse of the inmates in the prison.

Nakie Nunley, 48, of Fairfield, California, pleaded guilty on Sep. 5, 2023 to four counts of sexual abuse of a ward, five counts of abusive sexual contact, and one count of making false statements in connection with the investigation into abuse allegations at FCI Dublin. In addition to admitting he was guilty of crimes related to his sexual acts and sexual contacts with five separate women, Nunley also describes in his plea agreement how he engaged in sexual acts with two other inmates and how he lied to Justice Department Office of Inspector General (DOJ-OIG) agents who were investigating allegations regarding his conduct. 

“Nakie Nunley egregiously exploited his authority by sexually abusing multiple incarcerated women and then retaliating against those who blew the whistle,” said Deputy Attorney General Lisa Monaco. “As today’s sentence shows, the Justice Department will hold accountable officials who abuse their authority to harm those they are sworn to protect — and will not tolerate retaliation against victims.”

“Rooting out injustice in prisons is difficult work,” said U.S. Attorney Ismail Ramsey for the Northern District of California. “But we will not shy away from the task. I want to thank the DOJ-OIG and the FBI for their continued partnership in prosecuting this case. With their help, we will ensure that prison personnel who violate the rights of inmates are held accountable.”

“Today’s sentencing holds Nunley accountable for his heinous abuse of his authority by sexually assaulting multiple inmates under his custody and care, and retaliating against his victims by threatening to take away their UNICOR jobs and transfer them to another facility,” said Inspector General Michael E. Horowitz. of DOJ-OIG “The DOJ-OIG will continue to aggressively investigate sexual abuse at FCI Dublin and across the Federal Bureau of Prisons.”

"The defendant sexually assaulted multiple female inmates, disregarding their dignity and violating his responsibilities as a corrections officer,” said Assistant Director Michael D. Nordwall of the FBI’s Criminal Investigative Division. “Today’s sentencing demonstrates the FBI’s dedication to investigating civil rights violations and holding accountable any corrections officers who abuse their authority."

At the time that Nunley abused his victims, he was assigned to supervise prisoners who worked for UNICOR, a trade name for the federal prison industries. All of Nunley’s victims worked at the UNICOR call center at the time he abused them. 

According to his plea agreement, Nunley admitted that, between March 2020 and November 2021, he engaged in sexual acts with two prisoners, including having oral and vaginal sex with one victim and digitally penetrating another victim on multiple occasions. He also admitted that he was guilty of crimes related to his illegal sexual contacts with three other prisoners. 

In addition to his conduct with the five victims that resulted in criminal charges, Nunley admitted he sexually abused two additional prisoners and engaged in inappropriate conduct with multiple other prisoners who worked at UNICOR. With respect to one victim, Nunley admitted he digitally penetrated her vagina and caused her to touch his penis under his pants, resulting in him ejaculating in her hand. Further, Nunley admitted he caused another victim to perform oral sex on him. Moreover, Nunley wrote sexual notes to one of his victims and made sexual comments to multiple additional victims. 

Nunley’s plea agreement also describes how he retaliated against prisoners who complained about his conduct. For example, the plea agreement describes how one of his victims approached Nunley about his conduct towards another victim. In response, Nunley threatened her by telling her she could get transferred to another facility and that she could lose her job. Similarly, Nunley admitted that he told another victim that if she wanted to keep her job at UNICOR, she needed to pull down her underwear and bend over. When she complied, Nunley slapped her buttocks several times.

In addition to admitting he engaged in illegal and improper conduct towards prisoners, Nunley also admitted in his plea agreement that he lied to federal investigators about sexually abusing his victims and about sending one of his victims sexually explicit notes.

DOJ-OIG and the FBI investigated the case.

Assistant U.S. Attorneys Molly K. Priedeman and Andrew Paulson for the Northern District of California are prosecuting the case with the assistance of Legal Assistant Kay Konopaske.

OAKLAND – Nakie Nunley, a former correctional officer at FCI Dublin where he supervised prisoners, has been ordered to serve 72 months on prison for sexually abusing five inmates at the Federal Correctional Institute Dublin (FCI Dublin).  This is the seventh correctional officer to be sentenced in connection with the wide-ranging investigation into sexual abuse of the inmates in the prison.  The sentence was handed down by the Hon. Yvonne Gonzalez Rogers, United States District Judge.

Nunley, 48, of Fairfield, Calif., pleaded guilty to the charges on September 5, 2023.  Specifically, Nunley pleaded guilty to four counts of sexual abuse of a ward, five counts of abusive sexual contact, and one count of making false statements in connection with the investigation into abuse allegations at FCI Dublin.  In addition to admitting he was guilty of crimes related to his sexual acts and sexual contacts with five separate women, Nunley also describes in his plea agreement how he engaged in sexual acts with two other inmates and how he lied to federal investigators who were investigating allegations regarding his conduct.  

“Nakie Nunley egregiously exploited his authority by sexually abusing multiple incarcerated women and then retaliating against those who blew the whistle,” said Deputy Attorney General Lisa Monaco. “As today’s sentence shows, the Justice Department will hold accountable officials who abuse their authority to harm those they are sworn to protect — and will not tolerate retaliation against victims.”

“Rooting out injustice in prisons is difficult work,” said U.S. Attorney Ismail Ramsey, “but we will not shy away from the task.  I want to thank the Department of Justice Office of the Inspector General and the FBI for their continued partnership in prosecuting this case. With their help, we will ensure that prison personnel who violate the rights of inmates are held accountable.”  

“Today’s sentencing holds Nunley accountable for his heinous abuse of his authority by sexually assaulting multiple inmates under his custody and care, and retaliating against his victims by threatening to take away their UNICOR jobs and transfer them to another facility.  The Department of Justice Office of the Inspector General will continue to aggressively investigate sexual abuse at FCI Dublin and across the Federal Bureau of Prisons,” said Department of Justice Inspector General Michael E. Horowitz.

“This sentence is the result of the tireless efforts by the FBI and our partners to bring to justice Dublin FCI corrections officers and personnel who abused their positions to commit deplorable crimes,” said FBI Special Agent in Charge Robert Tripp. “We continue to work with our partners to protect the safety and civil rights of all individuals and hold public servants accountable when they violate the law and betray public trust.”

At the time that Nunley abused his victims, he was assigned to supervise prisoners who worked for UNICOR, a trade name for the federal prison industries.  All of Nunley’s victims worked at the UNICOR call center at the time he abused them.  

According to his plea agreement, Nunley admitted that between March 2020 and November 2021, he engaged in sexual acts with two prisoners, including having oral and vaginal sex with one victim and digitally penetrating another victim on multiple occasions.  He also admitted that he was guilty of crimes related to his illegal sexual contacts with three other prisoners.  

Further, in addition to his conduct with the five victims that resulted in criminal charges, Nunley admitted he sexually abused two additional prisoners and engaged in inappropriate conduct with multiple other prisoners who worked at UNICOR.  With respect to one victim, Nunley admitted he digitally penetrated her vagina and caused her to touch his penis under his pants, resulting in him ejaculating in her hand.  Further, Nunley admitted he caused another victim to perform oral sex on him.  Moreover, Nunley wrote sexual notes to one of his victims and made sexual comments to multiple additional victims.  

Nunley’s plea agreement also describes how he retaliated against prisoners who complained about his conduct.  For example, the plea agreement describes how one of his victims approached Nunley about his conduct towards another victim.  In response, Nunley threatened her by telling her she could get transferred to another facility and that she could lose her job.  Similarly, Nunley admitted that he told another victim that if she wanted to keep her job at UNICOR, she needed to pull down her underwear and bend over.  When she complied, Nunley slapped her buttocks several times.

In addition to admitting he engaged in illegal and improper conduct towards prisoners, Nunley also admitted in his plea agreement that he lied to federal investigators about sexually abusing his victims and about sending one of his victims sexually explicit notes.

In sum, Nunley was charged by information with four counts of sexual abuse of a ward, in violation of 18 U.S.C. § 2243(b); five counts of abusive sexual contact, in violation of 18 U.S.C. § 2244(a)(4); and one count of making false statements to a government agency, in violation of 18 U.S.C. § 1001(a)(2).  He pleaded guilty to all counts.
            
Assistant U.S. Attorneys Molly K. Priedeman and Andrew Paulson are prosecuting the case with the assistance of Kay Konopaske.  The prosecution is the result of an investigation by the Department of Justice Office of the Inspector General and the FBI. 
 

OAKLAND – David Allen Carrier was sentenced to eleven months in prison for making voicemail threats to Speaker Emerita Nancy Pelosi and United States Secretary of Homeland Security Alejandro Mayorkas, announced United States Attorney Ismail J. Ramsey, Federal Bureau of Investigation (“FBI”) Special Agent in Charge Robert K Tripp, and United States Secret Service (“USSS”) Special Agent in Charge Shawn M. Bradstreet.  The sentence was handed down by the Hon. William Alsup, Senior United States District Judge.
 
Carrier, 44, of Concord, pleaded guilty to two counts of making threats against a federal official, in violation of 18 U.S.C. § 115(a)(1)(B), on Dec. 19, 2023.  A grand jury indicted him on Sept. 12, 2023, charging him with the crimes.
 
Court documents describe how on Thursday, Jan. 21, 2021, Carrier left a message on the office voicemail of Congresswoman Nancy Pelosi, who was at the time the Speaker of the United States House of Representatives.  On the message, Carrier threatened to assault the Congresswoman.  In pleading guilty to the charge, Carrier acknowledged that he acted with the intent to interfere with her performance as she was engaged with her official duties as a Member of Congress.  Seventeen months later, on June 30, 2022, Carrier called the United States Department of Homeland Security hotline and left a voicemail message threatening to assault United States Secretary of Homeland Security Alejandro Mayorkas.  Carrier made his threat to assault Secretary Mayorkas with the intent to interfere with the Secretary while the Secretary was engaged in the performance of his official duties as the Secretary of the Department of Homeland Security.  

“Participating in the public political conversation is an important right for all citizens,” said U.S. Attorney Ismail J. Ramsey, “Nevertheless, threatening our public servants is not protected by the First Amendment and corrodes our ability to engage in peaceful and important public discourse.  This Office will not tolerate behavior that crosses the line to criminal threats.”  

"Violent threats targeting elected officials also threaten our democratic system," said FBI Special Agent in Charge Robert Tripp. "Today's sentence demonstrates that anyone who sends politically motivated threats of violence to government officials will be investigated by the FBI and held accountable."

“We take threats against a U.S. Secret Service protectee very seriously,” said Shawn M. Bradstreet, Special Agent in Charge of the U.S. Secret Service’s San Francisco Field Office. “This is a great example of the coordination and partnership between the U.S. Secret Service, the FBI and the U.S. Attorney’s Office for the Northern District of California to investigate and prosecute threats against our nation’s leaders.”

In addition to the prison term, Judge Alsup ordered Carrier to serve three years of supervised release to begin after his prison term is completed. Judge Alsup also ordered Carrier to stay away and have no contact, direct or indirect, with both Speaker Emerita Pelosi and Secretary Mayorkas, as well as to attend mental health and substance abuse treatment, among other conditions, while on supervised release.
 
The National Security and Cybercrime Section prosecuted the case. The prosecution is the result of an investigation by the FBI and the USSS.
 

TYLER, Texas – A San Francisco, California man has pleaded guilty to federal violations in the Eastern District of Texas, announced U.S. Attorney Damien M. Diggs.

John Khuu, 28, pleaded guilty to conspiracy to commit money laundering, conspiracy to operate an unlicensed money transmitting business, and importation of MDMA before U.S. Magistrate Judge John D. Love on March 26, 2024.

According to information presented in court, Khuu conspired with others to launder the proceeds of his drug trafficking organization through cryptocurrency.  Khuu imported and distributed counterfeit pharmaceutical pills and other controlled substances on dark web markets (DWMs) and elsewhere to customers across the United States.  Customers paid for their purchases by transferring cryptocurrency, usually Bitcoin (BTC), from their DWM customer accounts to one of Khuu’s vendor accounts.  Khuu and his co-conspirators traded the BTC for U.S. currency and laundered and transmitted the proceeds through hundreds of transactions and dozens of financial accounts.

Khuu was indicted on May 18, 2022, in the Eastern District of Texas and charged with conspiracy to commit money laundering.  On August 17, 2022, Khuu was indicted in the Northern District of California and charged with unlawful importation of a Schedule I controlled substance.  On August 19, 2022, agents arrested Khuu pursuant to both warrants at a residence in Garden Grove, CA.

Khuu faces up to 20 years in federal prison at sentencing.  The maximum statutory sentence prescribed by Congress is provided here for information purposes, as the sentencing will be determined by the court based on the advisory sentencing guidelines and other statutory factors.  A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.

The cases were investigated by the U.S. Secret Service, U.S. Postal Inspection Service, and Homeland Security Investigations, San Francisco, and were prosecuted by Assistant U.S. Attorneys D. Ryan Locker and Nathaniel C. Kummerfeld for the Eastern District of Texas, and Assistant U.S. Attorney Charles Bisesto for the Northern District of California.

###

SAN FRANCISCO – A federal grand jury indicted Rajesh Kumar Kapoor, charging him with sexual abuse of another passenger during an international flight, announced U.S. Attorney Ismail Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp.  Kapoor was arrested this morning, appeared before U.S. Magistrate Judge Laurel Beeler for his initial court appearance, and was released pending trial. 

The indictment filed March 13, 2024, and unsealed earlier today, alleges that on January 16, 2024, Kapoor, 56, of Sacramento, Calif., was aboard a flight from the Republic of Korea to San Francisco when he engaged in abusive sexual contact with another passenger.  Specifically, the indictment alleges Kapoor touched the victim’s breasts and inner thigh without the passenger’s permission.  

Kapoor is charged with one count of abusive sexual contact, in violation of 18 U.S.C. § 2244(b) and 49 U.S.C. § 46506(1).  Kapoor’s next court appearance is scheduled for May 9, 2024, before Senior United States District Judge Edward M. Chen, for a status conference.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.  If convicted, Kapoor faces a statutory maximum of two years’ imprisonment and a $250,000 fine.  In addition, as part of any sentence a court may order an additional period 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, as applicable, and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

Special Assistant United States Attorney Matthew Chou is prosecuting this case with the assistance of Tina Rosenbaum and Marina Ponomarchuk.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.
 

OAKLAND – Rashad Shambray-Jones was sentenced today to 40 months in prison for illegally possessing a firearm and 19 rounds of ammunition, announced United States Attorney Ismail J. Ramsey and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jennifer Cicolani.  The sentence was handed down by the Hon. Haywood S. Gilliam, Jr., United States District Judge.
 
Shambray-Jones, 30, of San Ramon, pleaded guilty to one count of Felon in Possession of a Firearm and Ammunition, in violation of 18 U.S.C. § 922(g)(1), on October 6, 2021.  He was charged by Information on September 15, 2021.
 
As court documents state, Shambray-Jones crashed a vehicle into a fence on federal property on January 31, 2021, and, when police responded to the scene to render assistance, they observed a firearm and nineteen rounds of ammunition on the front floorboard of the driver’s side of the vehicle.  Shambray-Jones was arrested for unlawfully possessing the firearm and ammunition, due to his prohibited status as a convicted felon.  

After pleading guilty to the charged offense, Shambray-Jones was referred to the Northern District of California’s Conviction Alternatives Program (“CAP”), a court-administered program entails intensive supervision of participants prior to sentencing.  The program offers the potential of a reduced or non-custodial sentence for participants who successfully complete it.  Court documents show that, while participating in CAP, Shambray-Jones was captured on surveillance video firing approximately seven rounds from a firearm in a shooting incident that occurred on May 5, 2023, in the Bayview District of San Francisco.  Shambray-Jones was arrested by San Francisco Police Department officers in connection with the May 5 incident after he went to San Francisco General Hospital on September 1, 2023, seeking treatment for a gunshot wound soon after another shooting incident in the same area where the shooting incident occurred on May 5, 2023.

“Alternative justice programs are an important part of our criminal justice system,” said U.S. Attorney Ismail J. Ramsey.  “They often help defendants overcome serious root, personal problems, such as addiction, that motivate their criminal conduct.  But, when defendants masquerade through these programs while in fact continuing to terrorize our streets with gun violence, we will ask for sentences that appropriately address their deception and violent conduct.  Let today’s sentence serve as a warning: the resulting prison time will be serious.”    

“Being in possession of a firearm while being a prohibited person is a crime,” said ATF Special Agent in Charge Jennifer Cicolani.  “The defendant in this case was afforded an opportunity to choose a different course of behavior and made the decision not to. The defendant endangered the safety of the public by conducting violent behavior. This violent conduct will not be tolerated and those who chose to put the public in danger will be prosecuted.”
  
In addition to the prison term, Judge Gilliam ordered Shambray-Jones to serve three years of supervised release once his prison term is completed.
 
Assistant U.S. Attorney Jared Buszin prosecuted the case, with the assistance of Paralegal Specialist Helen Yee. The prosecution is the result of an investigation by ATF.
 

SAN JOSE – Carlos Manuel Ruiz-Montanez was sentenced yesterday to 38 months in prison for crimes related to illegal firearms sales, including the sale of machineguns, announced United States Attorney Ismail J. Ramsey and Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) Special Agent in Charge Jennifer Cicolani. The sentence was handed down by the Hon. Edward J. Davila, United States District Judge.

Ruiz-Montanez, 22, of Watsonville, pleaded guilty to one count of Illegal Possession and Transfer of Machineguns, in violation of 18 U.S.C. § 922(o), and one count of Dealing in Firearms Without a License, in violation of 18 U.S.C. § 922(a)(1)(A), on October 2, 2023. He was charged by Information on August 26, 2022.

According to court documents, from February 11, 2020, to September 13, 2021, Ruiz-Montanez sold and helped facilitate the sale of eight firearms, including a short-barrel shotgun, two machineguns, a firearm with an obliterated serial number, and an assault rifle (AR) style pistol.  The AR-style pistol was a “ghost gun,” meaning it was privately made and did not bear a serial number. 

In addition to the prison term, Judge Davila ordered Ruiz-Montanez to serve three years of supervised release to begin after his prison term is completed.

Assistant U.S. Attorney Neal C. Hong prosecuted the case. The prosecution is the result of an investigation by ATF, the Salinas Police Department, the California Department of Corrections and Rehabilitation (CDCR) Special Service Unit, and the California Highway Patrol.
 

OAKLAND – Felipe de Jesus Ornelas Mora, the owner of Rincon Musical, a money transmitting business in Oakland, was sentenced today to 18 months in federal prison following his conviction for conspiracy to commit money laundering, announced First Assistant United States Attorney Patrick D. Robbins; IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office; and Drug Enforcement Administration (DEA), San Francisco Field Division, Special Agent in Charge Brian M. Clark. The sentence was handed down by the Hon. Jeffrey S. White, Senior United States District Judge.

Ornelas Mora, 51, of Oakland, pleaded guilty to one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h), in October 2023. He had originally been charged with that offense in August 2022.

According to his plea agreement, Ornelas Mora owned and operated Rincon Musical. From no later than September 2020 through August 2022, Ornelas Mora and his employees knowingly laundered drug proceeds by accepting large amounts of cash from drug dealers and wiring it to Mexico, disguising it to look like routine remittances. The defendant and his employees used legitimate customers’ names and IDs to circumvent the compliance controls of Rincon’s parent wire service, Money Services Business-1 (MSB-1). The defendant oversaw the structuring of large amounts of cash into multiple wire transfers of less than $3,000, which is the threshold above which federal law imposes mandatory customer reporting requirements. Employees of Rincon then disguised the wire payments as routine remittances by sending them using the names and IDs of legitimate customers to avoid arousing the suspicion of MSB-1 and the U.S. authorities. Ornelas Mora and his employees engaged in these practices after completing extensive anti-money laundering training, which is required annually for money services businesses employees.

“This defendant knowingly aided Bay Area drug dealers by disguising drug money as remittances and laundering it through his business through wire payments to Mexico,” said First Assistant U.S. Attorney Patrick D. Robbins. “By disrupting the flow of drug money, this Office demonstrates its commitment to a sweeping approach to combatting the drug trade in the Northern District of California. Today’s sentence should send a signal to other money services businesses who launder drug proceeds and abuse the financial system: we will find you and we will prosecute you.”

“Facilitating the profitability of drug trafficking by laundering illegal drug proceeds perpetuates the deadly drug epidemic in our communities, and we will not stand for it,” said CI Acting Special Agent in Charge Michael Mosley. “Taking money launderers off the street and leading criminal investigations that land them in prison is what CI special agents do. CI special agents are experts at uncovering money trails and dedicated to the safety of our communities.”

“Money and greed are the foundation of the cartel business model and Ornelas Mora provided a lifeline by laundering drug proceeds,” said DEA Special Agent in Charge Brian M. Clark. “This sentence underscores our commitment to aggressively pursue every level of the drug supply chain to include those facilitators who enable transnational criminal networks.”

In its sentencing papers, the government described how the investigation leading to Ornelas Mora’s conviction began with wire receipts found on the cell phones of drug dealers who had been arrested. Wire receipts found on the phone of one drug dealer (Drug Trafficker-1) showed that, between August 2020 and December 2020, Drug Trafficker-1 had wired more than $109,000 to Mexico and Honduras from Rincon. Federal agents determined from the receipts that Drug Trafficker-1 had used Rincon to send more than 60 wire payments to Mexico between August 2020 and December 2020. The receipts showed that Rincon employees had made Drug Trafficker-1’s wire payments look legitimate by using the names of unrelated customers and listing those customers as the senders of the wires.

As the investigation continued, federal agents used two confidential witnesses—CW-1 and CW-2—to conduct multiple undercover wire transactions at Rincon. CW-1 and CW-2 told Rincon cashiers that they did not want their names and IDs used to send large amounts of cash from Rincon to recipients in Mexico. Two Rincon cashiers structured the cash brought in by CW-1 and CW-2 into multiple wire transfers that fell below $3,000 to avoid federal reporting requirements. The cashiers then processed the wire payments using legitimate customers’ names and IDs, without authorization from those customers, to feign compliance with MSB-1’s ID requirements. During an undercover operation on June 16, 2022, for example, CW-2 wired more than $12,000 to five recipients in Mexico. With Ornelas Mora present at the adjacent teller window when CW-2 requested the wires, a Rincon cashier sent each of the wire payments in amounts less than $3,000. Later that evening, the Rincon cashier texted CW-2 receipts that reflected the names of other individuals as the senders of the wires.

In his plea agreement, Ornelas Mora admitted he knew that large amounts of cash he and his employees received from certain individuals and sent to Mexico and Honduras using the names and IDs of unrelated customers were drug proceeds. He also admitted that he knew the structuring of cash payments in excess of $3,000 into multiple wires falling below that threshold was prohibited by federal law. And he admitted he knew that he and his employees acted with intent to avoid mandatory customer information and customer information reporting requirements by structuring wire payments to fall below the $3,000 threshold.

In addition to sentencing Ornelas Mora to prison, Judge White ordered the defendant to serve three years of supervised release to begin after his prison term is completed.

This prosecution is part of an Organized Crime Drug Enforcement Task Force (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

Assistant United States Attorney Daniel Pastor is prosecuting the case with assistance from Amanda Martinez and Andy Ding. The prosecution is the result of an investigation by CI and DEA, with assistance from the Oakland Police Department.
 

SAN JOSE – Harry Corl, III was sentenced today to 30 months in prison and ordered to pay $253,625.50 in restitution to over 30 victim employees and shareholders, announced United States Attorney Ismail J. Ramsey and Klaus Placke, Regional Director of the U.S. Department of Labor’s Employee Benefits Security Administration, San Francisco Regional Office.

Corl, now of Pittsburg, California, was indicted on several wire fraud and money laundering counts by a federal grand jury on November 29, 2018.  On September 25, 2023, he pleaded guilty to conspiracy to commit wire fraud in violation of 18 U.S.C. § 1349.

According to court filings, from 2008 to 2014, Corl and his estranged wife and co-defendant were executive officers for Nu-Metal Finishing, Inc. They also served as trustees of the company’s Employee Stock Ownership Plan and Trust, or ESOP, which provided retirement benefits and savings to the company’s employees by purchasing and investing company stock for their collective benefit.  As trustees, the Corls had a fiduciary duty to competently manage the ESOP’s cash, stock, and assets and act in the best interests of the employee-shareholders.  They failed to do so.

As set forth in the government’s sentencing memorandum, from 2011 to 2014, Corl used Nu-Metal’s corporate accounts to pay for numerous personal expenses wholly unrelated to the business of a metal finishing company.  For example, Corl used corporate funds to purchase extravagant jewelry from Tiffany & Co. and made lease payments on a Ferrari 599 GTB coupe, listing Nu-Metal Finishing as a lessee.  Corl also used corporate funds to lease a Bentley and to purchase outright a Mercedes S63 sedan.  The Corls flaunted their luxury car collection on social media.

Furthermore, in May 2014, the Corls arranged a fraudulent sale of Nu-Metal.  In all formal written agreements and conversations with all parties involved, the Corls represented themselves as the sole owners of the company, falsely stating that the ESOP had been terminated and was no longer a concern.  In reality, the ESOP and another shareholder owned well over 50% of the company’s outstanding stock and were owed their corresponding portion of the proceeds from the company’s sale.  However, Corl immediately transferred nearly the entire sale proceeds to his personal accounts and moved to Texas.  To date, the employees who participated in the ESOP, all laid off after the sale of the company, have not received any portion of the sale proceeds owed to them.  As indicated in the filed victim impact statements, these victims lost expected retirement income, and some have suffered serious financial distress a result.

The sentence was handed down by the Honorable Edward J. Davila, U.S. District Judge, who also sentenced Corl to pay $253,625.50 in restitution, serve a three-year period of supervised release, and pay a $100 special assessment fee.  The defendant will begin serving his sentence on June 13, 2024.

Marissa Harris is the Assistant U.S. Attorney prosecuting the case with the assistance of Sahib Kaur.  The prosecution is the result of a four-year investigation by the U.S. Department of Labor, Employee Benefits Security Administration.
 

SAN FRANCISCO – Today, United States Attorney Ismail Ramsey publicly announced the release of new policies underlying the Northern District of California (NDCA) Whistleblower Pilot Program.  The recently-announced NDCA Whistleblower Pilot Program (attached and published here) is designed to proactively uncover criminal conduct in the District.

U.S. Deputy Attorney General Lisa Monaco announced the pilot program on March 7, 2024, as part of her keynote address to the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco, California. During the keynote address, Deputy A.G. Monaco observed that the program complements the Department of Justice’s Voluntary Self Disclosure (VSD) programs—programs that encourage companies to take responsibility for misconduct within their organizations. The Whistleblower Pilot Program is, “in essence, [a] voluntary self-disclosure program[ ] for individuals.” Like the VSD program, the new Whistleblower Pilot Program rewards self-disclosure, in part by “offering non-prosecution agreements to certain categories of at-fault individuals who self-disclose wrongdoing . . . .”

United States Attorney Ramsey said:

“Our District’s new Whistleblower Program creates a strong incentive for wrongdoers to come forward, report crimes, and cooperate with us in several critical areas – fraud, public corruption, and theft of trade secrets.  In exchange for the self-disclosure of unknown federal crimes and for ongoing cooperation against other individuals, qualifying whistleblowers can receive a promise from this Office not to prosecute them.

Our message to companies and individuals alike is straightforward:  If you know a crime has been committed, you have a limited window to come forward and receive leniency.  If you choose not to come forward, someone else will, and then you will face prosecution and punishment.  To get on the right side of the law and take advantage of this program, email us using the instructions on our website.”

The Whistleblower Pilot Program encourages early and voluntary self-disclosure of criminal conduct by individual participants in certain non-violent offenses.  In exchange for self-disclosure and cooperation against others involved in the criminal conduct, the Office of the United States Attorney in the NDCA will enter into a non-prosecution agreement where certain specified conditions are met, including, importantly, the condition that the Government was not previously aware of the criminal conduct that is the subject of the disclosure.  By providing clarity on the requirements and the benefits of such self-disclosure, the published policies incentivize individuals and their counsel to provide actionable and timely information.  That will, in turn, help bring more misconduct to light and better protect the communities within the District.

As with all internal policies of the U.S. Attorney’s Office, this program provides guidance to prosecutors.  Nothing in these policies creates any substantive or procedural rights, privileges, or benefits enforceable in any administrative, civil, or criminal matter by prospective or actual witnesses or parties.  It remains at all times in the sole discretion of the U.S. Attorney’s Office to determine whether an individual has satisfied each of the conditions necessary for the Office to enter into a non-prosecution agreement in exchange for the individual’s cooperation, and, where the Office has determined that any of those conditions are not met, it remains at all times in the sole discretion of the Office to determine whether to extend a non-prosecution agreement in exchange for the individual’s cooperation.
 

SAN FRANCISCO - A federal grand jury in San Francisco indicted Vikram Srinivasan, charging him with wire fraud and aggravated identity theft in connection with an alleged fraudulent real estate investment scheme, announced United States Attorney Ismail J. Ramsey and FBI Special Agent in Charge Robert Tripp.

The indictment was filed February 29, 2024, and unsealed earlier today.  According to the indictment, Srinivasan, 31, of Fremont, operated, controlled, and at least partially owned Paragon Holdings, LLC, a San Francisco Bay Area-based company that he used to facilitate the fraud.  Specifically, the indictment describes how in August of 2019, a victim (identified in the indictment only as “R.K.”) provided money to an individual for the purchase of real estate in San Francisco and, after fearing the invested money had been fraudulently obtained, eventually met with Srinivasan.  Srinivasan represented to the victim that he (Srinivasan) could salvage the prior real estate deal.  According to the indictment, rather than salvage the deal, Srinivasan made things worse.  For example, Srinivasan claimed he could retrieve the victim’s money; however, rather than retrieve the money, Srinivasan allegedly transferred at least some of it to an account in his own name and used the transferred money for his own purposes.  Further, the indictment describes how Srinivasan represented that the victim’s money was held by certain escrow companies, when, in fact, it was not.  Srinivasan allegedly provided false and fraudulent documentation in support of these representations.

In addition, Srinivasan allegedly solicited additional funds from the victim, promising to use the money for the purchase of additional real estate in Pleasant Hill.  Srinivasan represented that he would use Paragon to facilitate the transaction.  The indictment alleges the victim provided Srinivasan approximately $125,000 based on this and related misrepresentations.  For example, the indictment alleges Srinivasan again allegedly provided fraudulent documentation that suggested there was a sale of the property from a seller through a real estate agent to Srinivasan, as Paragon.  This sale of the property did not occur.  Rather than use the money for the real estate transaction, Srinivasan transferred some of it to an account in his own name and used it for his own purposes.  The indictment also alleges that Srinivasan unlawfully used means of identification of at least two other victims during and in relation to his fraud (identified in the indictment only as “B.R.” and “A.S.”).

In sum, the indictment charges Srinivasan with one count of wire fraud, in violation of 18 U.S.C. § 1343, and two counts of aggravated identity theft, in violation of 18 U.S.C. § 1028A.  If convicted of wire fraud, Srinivasan faces a maximum sentence of 20 years in prison, and a fine of $250,000 (or twice the value of the gain or loss from the scheme), plus restitution, if appropriate.  In addition, if Srinivasan is convicted of aggravated identity theft, each count carries a mandatory two years in prison which would be consecutive to any prison term imposed for the wire fraud count.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Srinivasan made his initial appearance this morning before Chief Magistrate Judge Donna M. Ryu.  His next scheduled appearance is scheduled for March 20, 2024, before Magistrate Judge Ryu for further proceeding including a further bail review.

Assistant U.S. Attorney Robert David Rees is prosecuting the case with the assistance of Katie Turner and Kay Konopaske.  The prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO - Harlan Kelly Jr. was sentenced today to four years in prison and ordered to pay a $10,000 fine after being tried and convicted of participating in a long-running honest services fraud bribery conspiracy and a separate bank fraud scheme and conspiracy, announced First Assistant United States Attorney Patrick D. Robbins, FBI Special Agent in Charge Robert K Tripp, and IRS Criminal Investigation (CI) Acting Special Agent in Charge Michael Mosley of the Oakland Field Office.  The sentence was handed down by the Hon. Richard Seeborg, Chief U.S. District Judge, following a 12-day jury trial.

“By abusing his position and violating his duty of trust, Harlan Kelly betrayed the people of the City of San Francisco in service to his personal greed,” said First Assistant U.S. Attorney Robbins. “Today’s four-year prison sentence sends a clear message that public officials who violate their oath of office and betray their duty as public stewards will be held accountable.”

“The citizens of San Francisco deserve honesty and integrity from their public officials,” said FBI Special Agent in Charge Robert Tripp. “Kelly, however, put his own personal gain above the people he served, for which he will now spend years in prison. The FBI and our partners will continue to root out and hold accountable government officials who violate the public's trust.”

“Harlan Kelly’s long-running bribery and bank fraud schemes were rooted in greed and are blatant abuses of power,” said CI Acting Special Agent in Charge Michael Mosley. “Today’s sentencing serves notice to those afflicted with such greed and disregard for public trust: you are not above the law and CI special agents along with their federal law enforcement partners work daily to protect and maintain public trust while developing cases that hold criminals responsible.”

Kelly, 61, of San Francisco, was convicted of the crimes on July 14, 2023.  The evidence at trial showed that during the relevant time, Kelly was the general manager of the San Francisco Public Utilities Commission (SFPUC) and one of the highest-ranking appointed officials in San Francisco City government.  The evidence demonstrated that for over six years, while Kelly was leading the SFPUC, he received a stream of bribes from a contractor seeking to be awarded millions of dollars in SFPUC contracts.  The jury concluded Kelly accepted the bribes which included payments for a lavish vacation to Hong Kong and China, construction work on this house, and other benefits.  Further, the evidence demonstrated that in return for bribes, Kelly used his official position to provide aid to a contractor by providing the contractor with internal, confidential PUC documents related to the contract being sought.

In addition, Kelly was convicted of participating in a separate bank fraud conspiracy.  The jury concluded that both Kelly and his co-conspirator Victor Makras, 65, of San Francisco, took steps to defraud Quicken Loans as part of a $1.3 million mortgage loan application. Both Kelly and Makras were convicted of bank fraud and false statements for their respective roles in the scheme.

On May 31, 2022, a federal grand jury handed down a superseding indictment charging Kelly with conspiracy to commit honest services fraud, in violation of 18 U.S.C. § 1349, honest services fraud, in violation of 18 U.S.C. § 1343 and §1346, conspiracy to commit bank fraud, in violation of 18 U.S.C. § 1349, bank fraud, in violation of 18 U.S.C. § 1344, conspiracy to make false statements to a bank, in violation of 18 U.S.C. § 371, and making false statements to a bank, in violation of 18 U.S.C. § 1014. Kelly was convicted of one count of conspiracy to commit honest services wire fraud, one count of honest services wire fraud, and all four counts related to the bank fraud scheme. The jury found Kelly was not guilty of two honest services wire fraud counts.

In addition to the prison term and the fine, Judge Seeborg also ordered Kelly to serve a three-year period of supervised release to begin after his prison term. Judge Seeborg ordered Kelly to begin serving his sentence on June 19, 2024.

Assistant U.S. Attorneys David Ward and Kristina Green are prosecuting the case with the assistance of Tina Rosenbaum.

The prosecution is the result of an investigation by the Federal Bureau of Investigation and the CI. Kelly’s sentencing is the latest in the U.S. Attorney’s six-year investigation into public corruption in San Francisco.  To date, more than a dozen individuals and two corporations have pleaded guilty or admitted their involvement in the sprawling corruption schemes.
 

SAN FRANCISCO – Robert Alvin Justus, Jr. was sentenced today to life in prison for his role in the May 29, 2020, drive-by shooting at the Ronald V. Dellums Federal Building and U.S. Courthouse in Oakland, Calif., that resulted in the murder of Protective Services Officer (“PSO”) Dave Patrick Underwood and the attempted murder of a second PSO.  The sentence was handed down by the Hon. Yvonne Gonzalez Rogers, United States District Judge, after Justus was convicted by a jury of aiding and abetting the murder and attempted murder following a two-week trial.  In 2022, Justus’s co-defendant Steven Carrillo, was sentenced to serve 41 years in prison followed by a lifetime of supervised release for his role in the crimes.

“With this sentence, the Justice Department has ensured that both of the defendants responsible for brutally murdering a law enforcement officer and seriously wounding another are held accountable for their heinous crimes,” said Attorney General Merrick B. Garland. “Law enforcement officers serve their communities at great risk to themselves, and anyone who targets these brave men and women will be met with the full force of the Justice Department.”

“The defendant and Mr. Carrillo tried to destabilize our government by attacking the courts, killing one protective services officer and wounding another as they guarded the federal courthouse,” said U.S. Attorney Ismail Ramsey for the Northern District of California.  “The loss of Mr. Underwood to his family, friends, and the community is incalculable, and the wounding of the second officer has permanently altered his life and that of his family.  Today's sentence punishes this heinous conduct and signals any like-minded individuals who would attack those guarding our courts and other public institutions that we will find and prosecute them to the fullest extent of the law.”

"Justus and Carrillo ambushed two federal protective service officers in fulfillment of a conspiracy fueled by extremist beliefs. Now they will both spend the rest of their lives in prison,” said FBI Special Agent in Charge Robert K. Tripp. “The senseless murder of Officer Underwood and the serious injury done to Officer Mifkovic cannot be undone, but these two subjects have been held accountable. We will continue to stand with our partners to investigate politically motivated acts of violence and keep the American people safe.”

“ATF is pleased to hear today’s sentence,” said Special Agent in Charge Jennifer Cicolani, San Francisco Field Division, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). Every day members of law enforcement put their lives on the line in the pursuit of ensuring the safety and wellbeing of the public. This was a senseless crime that resulted in the tragic loss of Protective Services Officer Underwood. While, this verdict does not bring him back, we hope that his family and our community as a whole can find comfort in knowing that this violent offender will  spend the rest of his life in jail.”

The evidence at trial established that Justus, 34, of Millbrae, was the driver of the vehicle from which Steven Carrillo, 35, of Santa Cruz fired the gunshots that killed Officer Underwood and wounded the second officer.  On May 29, 2020, at approximately 9:27 p.m., Justus parked a white Ford Econoline van directly across the street from the federal courthouse building in Oakland on Jefferson Street.  The van was on the southeast corner in the spot closest to the intersection with an unobstructed view of the guard post where Officer Underwood and his partner that evening stood guard to protect the building and its occupants.  At approximately 9:44 p.m., the exterior lights of the van turned on and Justus drove the van north on Jefferson Street toward the guard post.  The passenger-side sliding door opened, and Carrillo fired numerous rounds from an AR-style rifle toward the guard post, killing Officer Underwood and seriously injuring his partner.  The image below showing the shooting in progress as Justus drove the white van across the intersection is from a courthouse security camera and was in evidence at trial.

From a courthouse security camera, the image shows the shooting in progress as Justus drove the white van across the intersection.

The trial ending in Justus’s conviction contained ominous evidence of the leadup to participation in the drive-by shooting.  For example, Justus and Carrillo shared an allegiance to a  anti-government movement called Boogaloo.  In February of 2020, Justus commented on Facebook that he had a “bloodlust for police,” and in April 2020, he corresponded with an armed anti-government militia group he was interested in joining.  On May 27, 2020, Justus posted an image depicting a police officer being shot in the head with a caption reading “Speak to cops in a language they understand.”  In addition, on the day before the shooting, Carrillo posted a video of a mob attacking police cruisers and commented, “[T]his needs to be nationwide.  It’s a great opportunity to target the specialty soup bois”—a Boogaloo slang term for federal agents.  Justus responded to Carrillo’s post that same day, writing “Let’s boogie.”

The trial evidence demonstrated that on the day of the shooting Carrillo and Justus planned to capitalize on protests being planned in Oakland in response to the death of George Floyd. They hoped their attack would spark further anti-government violence. Carrillo and Justus met in a parking lot in San Leandro before the two circled the downtown area in Oakland several times.  In the hour leading up to the shooting, Justus exited the van twice to scout the area on foot and locate targets.  Investigators from the FBI, OPD and other agencies located security video footage from numerous locations throughout Oakland showing Justus’s movements on both occasions when he left the white van but returned before the shooting.  After the shooting, Justus drove Carrillo back to Millbrae and the two separated.

The incident set off an eight-day manhunt.  During this time, Justus destroyed digital and physical evidence connecting him to the shooting, continued to post anti-law enforcement content on Facebook, and corresponded with Carrillo about meeting in the future.  Eventually, Carrillo was captured at his residence in Ben Lomond, Calif., -- but not before Carrillo killed a Santa Cruz Sheriff’s Deputy and injured another.  Several days later, Justus became aware that he was under investigation and travelled to the Federal Building in San Francisco where he met with the FBI and admitted to his involvement in the shooting.

The jury convicted Justus of Aiding and Abetting the Murder of a Federal Employee and Aiding and Abetting the Attempted Murder of a Federal Employee, both in violation of 18 U.S.C. §§ 1114(3), 1111, 2.  Pursuant to today’s sentence, Justus will serve the rest of his life in prison pursuant to the aiding and abetting murder charge and a twenty-year concurrent sentence pursuant to the aiding and abetting attempted murder charge.

On February 11, 2022, Carrillo pleaded guilty to two federal charges related to the May 29, 2020, shooting—use of a firearm in furtherance of a crime of violence resulting in death, in violation of 18 U.S.C. §§ 924(j)(1) and 2, and attempted murder of a person assisting an officer of the United States Government, in violation of 18 U.S.C. §§ 1114(3), 1111.  On June 3, 2022, Judge Gonzalez Rogers sentenced Carrillo to serve 41 years in prison followed by a lifetime of supervised release for his role in the crimes.  Carrillo also received a life sentence in Santa Cruz County Superior Court in connection with his murder of the Santa Cruz Sheriff’s Deputy.

The FBI, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the FPS, and the U.S. Marshal Service investigated the case, with assistance from the Oakland Police Department and the Santa Cruz County Sheriff’s Office.

Assistant United States Attorneys Jonathan U. Lee and John C. Bostic are prosecuting the case with the assistance of Trial Attorney Jessica Fender of the National Security Division’s Counterterrorism Section, Yenni Weinberg, and Lynette Dixon.
 

Robert Alvin Justus Jr., 34, of Millbrae, California, was sentenced on Friday to life in prison for his role in the May 29, 2020, drive-by shooting at the Ronald V. Dellums Federal Building and U.S. Courthouse in Oakland, California, that resulted in the murder of Protective Services Officer (PSO) Dave Patrick Underwood and the attempted murder of a second PSO. In 2022, Justus’s co-defendant, Steven Carrillo, was sentenced to 41 years in prison followed by a lifetime of supervised release for his role in the crimes.

“With this sentence, the Justice Department has ensured that both of the defendants responsible for brutally murdering a law enforcement officer and seriously wounding another are held accountable for their heinous crimes,” said Attorney General Merrick B. Garland. “Law enforcement officers serve their communities at great risk to themselves, and anyone who targets these brave men and women will be met with the full force of the Justice Department.”

According to court documents, Justus was convicted by a jury of aiding and abetting the murder and attempted murder following a two-week trial. The evidence established that Justus was the driver of the vehicle from which Steven Carrillo, 35, of Santa Cruz, fired the gunshots that killed Officer Underwood and wounded the second officer.

On May 29, 2020, at approximately 9:27 p.m., Justus parked a white Ford Econoline van directly across the street from the federal courthouse building in Oakland on Jefferson Street. The van was on the southeast corner in the spot closest to the intersection with an unobstructed view of the guard post where Officer Underwood and his partner that evening stood guard to protect the building and its occupants. At approximately 9:44 p.m., the exterior lights of the van turned on and Justus drove the van north on Jefferson Street toward the guard post. The passenger-side sliding door opened, and Carrillo fired numerous rounds from an AR-style rifle toward the guard post, killing Officer Underwood and seriously injuring his partner. The image below shows the shooting in progress as Justus drove the white van across the intersection is from a courthouse security camera and was in evidence at trial.

From a courthouse security camera, the image shows the shooting in progress as Justus drove the white van across the intersection.

The trial ending in Justus’s conviction contained ominous evidence of the leadup to participation in the drive-by shooting. For example, Justus and Carrillo shared an allegiance to an anti-government movement called Boogaloo. In February 2020, Justus commented on Facebook that he had a “bloodlust for police,” and in April 2020, he corresponded with an armed anti-government militia group he was interested in joining. On May 27, 2020, Justus posted an image depicting a police officer being shot in the head with a caption reading “Speak to cops in a language they understand.” In addition, on the day before the shooting, Carrillo posted a video of a mob attacking police cruisers and commented, “[T]his needs to be nationwide. It’s a great opportunity to target the specialty soup bois” – a Boogaloo slang term for federal agents. Justus responded to Carrillo’s post that same day, writing “Let’s boogie.” 

The trial evidence demonstrated that, on the day of the shooting, Carrillo and Justus planned to capitalize on protests being planned in Oakland in response to the death of George Floyd. They hoped their attack would spark further anti-government violence. Carrillo and Justus met in a parking lot in San Leandro before the two circled the downtown area in Oakland several times. In the hour leading up to the shooting, Justus exited the van twice to scout the area on foot and locate targets. Investigators from the FBI, Oakland Police Department and other agencies located security video footage from numerous locations throughout Oakland showing Justus’s movements on both occasions when he left the white van but returned before the shooting. After the shooting, Justus drove Carrillo back to Millbrae and the two separated.

The incident set off an eight-day manhunt. During this time, Justus destroyed digital and physical evidence connecting him to the shooting, continued to post anti-law enforcement content on Facebook and corresponded with Carrillo about meeting in the future. Eventually, Carrillo was captured at his residence in Ben Lomond, California, but not before Carrillo killed a Santa Cruz Sheriff’s Deputy and injured another. Several days later, Justus became aware that he was under investigation and travelled to the Federal Building in San Francisco where he met with the FBI and admitted to his involvement in the shooting.

On Feb. 11, 2022, Carrillo pleaded guilty to two federal charges related to the May 29, 2020, shooting – use of a firearm in furtherance of a crime of violence resulting in death and attempted murder of a person assisting an officer of the U.S. government. On June 3, 2022, Judge Gonzalez Rogers sentenced Carrillo to serve 41 years in prison followed by a lifetime of supervised release for his role in the crimes. Carrillo also received a life sentence in Santa Cruz County Superior Court in connection with his murder of the Santa Cruz Sheriff’s Deputy.

The FBI, Bureau of Alcohol, Tobacco, Firearms and Explosives, Federal Protective Service, and U.S. Marshals Service investigated the case, with assistance from the Oakland Police Department and the Santa Cruz County Sheriff’s Office.

Assistant U.S. Attorneys Jonathan U. Lee and John C. Bostic for the Northern District of California prosecuted the case, with assistance from Trial Attorney Jessica Fender of the National Security Division’s Counterterrorism Section.

OAKLAND – Parto Karimi, a former Bay Area doctor, has been sentenced to one year and one day in federal prison for distributing powerful opioids outside the scope of medical practice, announced United States Attorney Ismail J. Ramsey and Drug Enforcement Administration (DEA), San Francisco Field Division, Special Agent in Charge Brian M. Clark. The sentence was handed down on March 15, 2024, by the Hon. Jon S. Tigar, United States District Judge.

Karimi, 59, of Alamo, California, pleaded guilty in July 2023 to one count of distributing hydrocodone, a Schedule II controlled substance, outside the scope of professional practice, in violation of 21 U.S.C. § 841(a)(1) and (b)(1)(C). According to the government’s sentencing memorandum, Karimi practiced medicine from an accessory dwelling unit on the grounds of her suburban home from roughly 2011 to 2022. Her practice operated under the name “Mindful Medicine.” Karimi was a licensed practitioner of internal medicine who had previously worked as an emergency room doctor at an East Bay hospital and was authorized to prescribe controlled substances as part of her medical practice.

According to the government’s sentencing memorandum, the DEA began investigating Karimi after receiving concerning information from the family of one of Karimi’s former patients, who had passed away. The investigation included multiple visits by undercover agents to Karimi’s medical practice. During one, on October 1, 2021, an undercover agent asked Karimi for 10mg Norco tablets based on a claim of leg pain resulting from work as a restaurant server. Karimi admitted in her plea agreement that she wrote the undercover agent a prescription for 60 high-dose Norco pills without conducting a physical examination, without asking follow-up questions about the undercover’s reported pain, without obtaining medical records, and without exploring alternative treatment options or trying a lower dose. Karimi admitted that, in doing so, she knew she was acting in an unauthorized manner by prescribing a controlled substance outside the usual course of medical practice. She also admitted she knew the drug she prescribed was a powerful opioid that can be highly addictive and is liable to abuse by patients.

The government argued in its papers that Karimi wrote medical prescriptions for opioids like Norco in exchange for street drugs including cocaine and methamphetamine, as well as cash payments.

In addition to sentencing Karimi to prison, Judge Tigar ordered the defendant to serve three years of supervised release to begin after her prison term is completed. Judge Tigar also ordered the defendant to forfeit her California medical license and to pay a $4,000 fine.

Assistant United States Attorney Daniel Pastor is prosecuting the case with assistance from Laurie Worthen. The prosecution is the result of an investigation by DEA, with assistance from the United States Department of Health and Human Services – Office of Inspector General and the California Department of Justice Division of Medical Fraud and Elder Abuse.
 

SAN JOSE – A federal jury has convicted Brian Broderick of threatening two FBI agents following a one week-trial before the Hon. Edward J. Davila, United States District Judge, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation (FBI) Special Agent in Charge Robert K. Tripp. The jury convicted the defendant on one count of transmitting a communication containing a threat to injure, in violation of 18 U.S.C. § 875(c), rendering its verdict on March 8, 2024.

The evidence at trial showed that Broderick, 32, formerly of Santa Cruz, California, contacted the FBI a number of times in 2021 and 2022 to report several matters, including allegations concerning his former employer. On May 10, 2022, an FBI special agent sent Broderick an email to follow up on his reports. Beginning on that date, and lasting through June 1, 2022, Broderick sent a series of escalating and derogatory emails to multiple FBI agents, including the special agent who had responded to Broderick’s previous reports. On June 1, 2022, Broderick sent an email telling two FBI agents he was “literally hunting” the “idiot traitor” FBI agent who had initially reached out to him. Broderick went on to warn the FBI: “You act on this in . . . 24 hours, or I go beyond taking your livelihood.” On the same day, the defendant posted on his YouTube channel a video he filmed of himself surveilling a local FBI office.

Judge Davila scheduled a sentencing hearing for June 24, 2024. Broderick faces a maximum sentence of five years in prison. However, his sentence will be imposed only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorneys Kenneth Chambers and Thomas Colthurst are prosecuting the case with the assistance of Laurie Worthen, Elise Etter, Kay Konopaske, and Kathleen Turner. This prosecution is the result of an investigation by the FBI.
 

SAN FRANCISCO – Jairo Tomas Santos was sentenced to 36 months in prison and ordered to pay $1,191,638.64 in restitution for bank fraud in connection with a scheme to embezzle funds from his former employer, a San Francisco-based law firm, announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp.  The sentence was handed down by the Hon. William H. Alsup, United States District Judge.

Santos, 42, formerly of San Mateo, California, pleaded guilty to the charge on November 20, 2023.  According to his plea agreement, Santos admitted he embezzled more than $1.1 million from a San Francisco-based law firm where he had been employed as the office manager.  According to his plea agreement, Santos began his embezzlement scheme no later than March 2016 and continued it through February 2023.  As part of the scheme, Santos obtained checks from the victim law firm, filled out the payee line of those checks, addressing them to “Jairo Santos,” and signed each check with the signature of the law firm’s senior partner even though Santos was not authorized to do so.  Santos then deposited these checks into his personal checking accounts at Wells Fargo Bank. Santos admitted he deposited approximately 806 fraudulent and unauthorized checks from the victim law firm made payable to Santos into his personal checking accounts.  The total value of these unauthorized deposits was approximately $1,191,683.  Santos deposited these checks from the victim law firm knowing that the payments were not authorized by the firm or its senior partner.

A federal grand jury indicted Santos on July 25, 2023, charging him with three counts of bank fraud, in violation of 18 U.S.C. § 1344. Santos pleaded guilty to one count. As part of his sentencing, Judge Alsup dismissed the remaining counts.

In imposing the sentence, Judge Alsup remarked that this is “an egregious case” with “hundreds and hundreds of checks written and stolen” by the defendant.  Judge Alsup emphasized that Santos “took advantage” of the victim law firm and that Santos’s conduct was “unforgivable.”  In addition to the prison term and restitution, Judge Alsup also sentenced the defendant to a five-year period of supervised release to begin after the defendant is released from prison.  Judge Alsup ordered the defendant to begin serving his prison term on April 23, 2024.

Assistant U.S. Attorney Christiaan Highsmith is prosecuting the case with the assistance of Aarian Beiti.  The prosecution is the result of an investigation by the FBI.
 

A Daly City, California, resident and former rideshare driver was arrested today for an Oct. 26, 2023, assault on a rider because he perceived the rider to be Jewish or Israeli.

“The defendant, a rideshare driver, is charged with assaulting a rider because he thought the rider was Jewish or Israeli,” said Attorney General Merrick B. Garland. “No one in this country should live in fear because of how they worship or where they come from. The Justice Department will aggressively prosecute those who perpetrate hate-fueled violence motivated by antisemitism or by bias of any kind.”

“No one should ever fear being attacked because of their nationality or religion,” said FBI Director Christopher Wray. “In this case, a rideshare driver assaulted the victim because he perceived them as Jewish or Israeli. The FBI is firmly committed to investigating such bias-motivated acts of violence and holding the perpetrators accountable to keep Americans safe.”

“When taking public transportation – whether a taxi, bus, or rideshare – customers should be able to ride without being profiled, or worse yet attacked, because of their nationality or religion by drivers,” said U.S. Attorney Ismail J. Ramsey for the Northern District of California. “We will prosecute any ride-share driver who assaults a passenger in such hate-fueled violence.”

According to the indictment unsealed this morning, on Oct. 26, 2023, Csaba John Csukás, 39, struck the victim in the face while at San Francisco International Airport (SFO) because the defendant perceived the victim to be Jewish or Israeli. The indictment alleges Csukás worked as a driver for an app-based rideshare company and was hired to drive the victim from SFO to the victim’s home. The indictment further alleges that when Csukás approached the victim at a predetermined pickup location, Csukás asked the victim if the victim was Jewish or Israeli, stated that he would not transport a Jewish or Israeli person, and attacked the victim by striking the victim in the face with his fist.

Csukás made his initial appearance today and is charged with committing a federal hate crime which prohibits, among other things, causing bodily injury because of the actual or perceived religion or national origin of a person in circumstances affecting interstate commerce.

Csukás faces a maximum penalty of 10 years in prison and a fine of $250,000 for the hate crime charge. If convicted, a federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division and Special Agent in Charge Robert K. Tripp of the FBI San Francisco Field Office joined the announcement.

The FBI San Francisco Field Office investigated the case.

The U.S. Attorney’s Office for the Northern District of California’s Special Prosecutions Section is prosecuting the case.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

SAN FRANCISCO—A Daly City, California, resident and former rideshare driver was arrested on March 13, 2024, for an Oct. 26, 2023, assault on a rider because he perceived the rider to be Jewish or Israeli.

“The defendant, a rideshare driver, is charged with assaulting a rider because he thought the rider was Jewish or Israeli,” said Attorney General Merrick B. Garland. “No one in this country should live in fear because of how they worship or where they come from. The Justice Department will aggressively prosecute those who perpetrate hate-fueled violence motivated by antisemitism or by bias of any kind.”

“When taking public transportation – whether a taxi, bus, or rideshare – customers should be able to ride without being profiled, or worse yet attacked, because of their nationality or religion by drivers,” said U.S. Attorney Ismail J. Ramsey for the Northern District of California. “We will prosecute any ride-share driver who assaults a passenger in such hate-fueled violence.”

“This unprovoked attack was senseless and brutal,” said Robert Tripp, SAC of the San Francisco FBI Field Office. “Hate crime is among the FBI’s highest priorities and we will work to bring justice for victims of bias-motivated crime.”

According to the indictment unsealed this morning, on Oct. 26, 2023, Csaba John Csukás, 39, struck the victim in the face while at San Francisco International Airport (SFO) because the defendant perceived the victim to be Jewish or Israeli. The indictment alleges Csukás worked as a driver for an app-based rideshare company and was hired to drive the victim from SFO to the victim’s home. The indictment further alleges that when Csukás approached the victim at a predetermined pickup location, Csukás asked the victim the if the victim was Jewish or Israeli, stated that he would not transport a Jewish or Israeli person, and attacked the victim by striking the victim in the face with his fist.

Csukás made his initial appearance today and is charged with committing a federal hate crime which prohibits, among other things, causing bodily injury because of the actual or perceived religion or national origin of a person in circumstances affecting interstate commerce.

Csukás faces a maximum penalty of 10 years in prison and a fine of $250,000 for the hate crime charge. If convicted, a federal district court judge will determine any sentence after consulting the U.S. Sentencing Guidelines and other statutory factors. 

Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division, U.S. Attorney Ismail J. Ramsey for the Northern District of California and Special Agent in Charge Robert K. Tripp of the FBI San Francisco Field Office made the announcement.

The FBI San Francisco Field Office investigated the case.

The U.S. Attorney’s Office for the Northern District of California’s Special Prosecutions Section is prosecuting the case. 
 

​​​​​​​View the indictment here.

Watch U.S. Attorney Ramsey's video statement here.

A federal grand jury indicted Linwei Ding, aka Leon Ding, charging him with four counts of theft of trade secrets in connection with an alleged plan to steal from Google LLC (Google) proprietary information related to artificial intelligence (AI) technology. The announcement was made by Attorney General Merrick B. Garland this afternoon while participating in a “Fireside Chat” at the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco.

According to the indictment, returned on March 5 and unsealed earlier today, Ding, 38, a national of the People’s Republic of China and resident of Newark, California, transferred sensitive Google trade secrets and other confidential information from Google’s network to his personal account while secretly affiliating himself with PRC-based companies in the AI industry. Ding was arrested earlier this morning in Newark.

“The Justice Department will not tolerate the theft of artificial intelligence and other advanced technologies that could put our national security at risk,” said Attorney General Garland. “In this case, we allege the defendant stole artificial intelligence-related trade secrets from Google while secretly working for two companies based in China. We will fiercely protect sensitive technologies developed in America from falling into the hands of those who should not have them.”  

“While we work to responsibly harness the benefits of AI, the Justice Department is on high alert to its risks, including global threats to our national security,” said Deputy Attorney General Lisa Monaco. “As alleged in today’s charges, the defendant stole from Google over 500 confidential files containing AI trade secrets, while covertly working for China-based companies seeking an edge in the AI technology race. The Justice Department will relentlessly pursue and hold accountable those who would siphon disruptive technologies – especially AI – for unlawful export.”

“Today’s charges are the latest illustration of the lengths affiliates of companies based in the People’s Republic of China are willing to go to steal American innovation,” said FBI Director Christopher Wray. “The theft of innovative technology and trade secrets from American companies can cost jobs and have devastating economic and national security consequences. The FBI will continue its efforts to vigorously pursue those responsible for stealing U.S. companies’ intellectual property and most closely guarded secrets.”  

“Mr. Ding allegedly schemed to siphon off cutting-edge AI technology from Google while secretly trying to go into business with Chinese competitors,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Through the Disruptive Technology Strike Force, we will work relentlessly to find and hold accountable those who would steal advanced American technology and jeopardize our national security and economic prosperity.”

“While Linwei Ding was employed as a software engineer at Google, he was secretly working to enrich himself and two companies based in the People’s Republic of China,” said U.S. Attorney Ismail Ramsey. “By stealing Google’s trade secrets about its artificial intelligence supercomputing systems, Ding gave himself and the companies that he affiliated with in the PRC an unfair competitive advantage.  This office is committed to protecting the innovation of our Silicon Valley companies. To that end, we will aggressively investigate and prosecute the theft of sensitive trade secrets by insiders like Ding, including criminal efforts to jump start illegitimate competition.”

“In the one year since its inception, the Disruptive Technology Strike Force has been relentless in protecting advanced U.S. technologies, like artificial intelligence, from malign actors,” said Assistant Secretary Matthew S. Axelrod of the Commerce Department’s Office for Export Enforcement. “Let today’s announcement serve as further warning – those who would steal sensitive U.S. technology risk finding themselves on the wrong end of a criminal indictment.”

According to court documents, the technology Ding allegedly stole involves the building blocks of Google’s advanced supercomputing data centers, which are designed to support machine learning workloads used to train and host large AI models. According to the indictment, large AI models are AI applications capable of understanding nuanced language and generating intelligent responses to prompts, tasks, or queries. The indictment describes how Google developed both proprietary hardware and software to facilitate the machine learning process powered by its supercomputing data centers. With respect to hardware, Google uses advanced computer chips with the extraordinary processing power required to facilitate machine learning and run AI applications. With respect to software, Google deploys several layers of software, referred to in the indictment as the “software platform,” to orchestrate machine learning workloads efficiently. For example, one component of the software platform is the Cluster Management System (CMS), which functions as the “brain” of Google’s supercomputing data centers. The CMS organizes, prioritizes, and assigns tasks to the hardware infrastructure, allowing the advanced chips to function efficiently when executing machine learning workloads or hosting AI applications.

According to the indictment, Google hired Ding as a software engineer in 2019. Ding’s responsibilities included developing the software deployed in Google’s supercomputing data centers. In connection with his employment, Ding was granted access to Goggle’s confidential information related to the hardware infrastructure, the software platform, and the AI models and applications they supported. The indictment alleges that on May 21, 2022, Ding began secretly uploading trade secrets that were stored in Google’s network by copying the information into a personal Google Cloud account. According to the indictment, Ding continued periodic uploads until May 2, 2023, by which time Ding allegedly uploaded more than 500 unique files containing confidential information.

In addition, the indictment alleges that Ding secretly affiliated himself with two PRC-based technology companies. According to the indictment, on or about June 13, 2022, Ding received several emails from the CEO of an early-stage technology company based in the PRC indicating Ding had been offered the position of Chief Technology Officer for the company. Ding allegedly traveled to the PRC on Oct. 29, 2022, and remained there until March 25, 2023, during which time he participated in investor meetings to raise capital for the new company. The indictment alleges potential investors were told Ding was the new company’s Chief Technology Officer and that Ding owned 20% of the company’s stock.

According to the indictment, unbeknownst to Google, by no later than May 30, 2023, Ding had founded his own technology company in the AI and machine learning industry and was acting as the company’s CEO. Ding’s company touted the development of a software platform designed to accelerate machine learning workloads, including training large AI models. As alleged in the indictment, Ding applied to a PRC-based startup incubation program and traveled to Beijing, to present his company at an investor conference on Nov. 24, 2023. As set forth in the indictment, a document related to Ding’s startup company stated, “we have experience with Google's ten-thousand-card computational power platform; we just need to replicate and upgrade it - and then further develop a computational power platform suited to China's national conditions.” 

The indictment alleges Ding’s conduct violated his employment agreement as well as a separate code of conduct that Ding signed when he became a Google employee. Further, the indictment describes measures that Ding allegedly took to conceal his theft of the trade secrets. For example, he allegedly copied data from Google source files into the Apple Notes application on his Google-issued MacBook laptop. By then converting the Apple Notes into PDF files and uploading them from the Google network into as separate account, Ding allegedly evaded detection by Google’s data loss prevention systems. Likewise, the indictment describes how in December 2023 Ding allegedly permitted another Google employee to use his Google-issued access badge to scan into the entrance of a Google building – making it appear he was working from his U.S. Google office when, in fact, he was in the PRC.

Ding is charged with four counts of theft of trade secrets. If convicted, Ding faces a maximum penalty of 10 years in prison and up to a $250,000 fine for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and Commerce Department are investigating the case.

The U.S. Attorney’s Office for the Northern District of California and Justice Department National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

Today’s action was coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation-states.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

SAN FRANCISCO – A federal grand jury indicted Linwei Ding, aka Leon Ding, charging him with four counts of theft of trade secrets in connection with an alleged plan to steal from Google LLC (Google) proprietary information related to artificial intelligence (AI) technology. The announcement was made by Attorney General Merrick B. Garland this afternoon while participating in a “Fireside Chat” at the American Bar Association’s 39th National Institute on White Collar Crime in San Francisco. U.S. Attorney Ismail Ramsey posted a statement about the case here: https://youtu.be/l64VlrA-GUA.

According to the indictment, returned on March 5 and unsealed earlier today, Ding, 38, a national of the People’s Republic of China and resident of Newark, California, stole sensitive Google trade secrets and other confidential information from Google’s network to his personal account while secretly affiliating himself with PRC-based companies in the AI industry. Ding was arrested earlier this morning in Newark.

“The Justice Department will not tolerate the theft of artificial intelligence and other advanced technologies that could put our national security at risk,” said Attorney General Garland. “In this case, we allege the defendant stole artificial intelligence-related trade secrets from Google while secretly working for two companies based in China. We will fiercely protect sensitive technologies developed in America from falling into the hands of those who should not have them.”

“While we work to responsibly harness the benefits of AI, the Justice Department is on high alert to its risks, including global threats to our national security,” said Deputy Attorney General Lisa Monaco. “As alleged in today’s charges, the defendant stole from Google over 500 confidential files containing AI trade secrets, while covertly working for China-based companies seeking an edge in the AI technology race. The Justice Department will relentlessly pursue and hold accountable those who would siphon disruptive technologies – especially AI – for unlawful export.”

“While Linwei Ding was employed as a software engineer at Google, he was secretly working to enrich himself and two companies based in the People’s Republic of China,” said U.S. Attorney Ismail Ramsey. “By stealing Google’s trade secrets about its artificial intelligence supercomputing systems, Ding gave himself and the companies that he affiliated with in the PRC an unfair competitive advantage. This office is committed to protecting the innovation of our Silicon Valley companies. To that end, we will aggressively investigate and prosecute the theft of sensitive trade secrets by insiders like Ding, particularly when the theft endeavors to jump start illegitimate competition.”

“Today’s charges are the latest illustration of the lengths affiliates of companies based in the People’s Republic of China are willing to go to steal American innovation,” said FBI Director Christopher Wray. “The theft of innovative technology and trade secrets from American companies can cost jobs and have devastating economic and national security consequences. The FBI will continue its efforts to vigorously pursue those responsible for stealing U.S. companies’ intellectual property and most closely guarded secrets.”

“The FBI’s area of responsibility is home to internationally renowned innovation and cutting-edge technology. Unfortunately, this makes many businesses a target for criminals looking to steal crucial proprietary information, " said FBI Special Agent in Charge Robert Tripp. "This case exemplifies our commitment to protecting U.S. technologies and our ability to accelerate priority investigations when we have a pre-established relationship with private sector companies.”

“Mr. Ding allegedly schemed to siphon off cutting-edge AI technology from Google while secretly trying to go into business with Chinese competitors,” said Assistant Attorney General Matthew G. Olsen of the Justice Department’s National Security Division. “Through the Disruptive Technology Strike Force, we will work relentlessly to find and hold accountable those who would steal advanced American technology and jeopardize our national security and economic prosperity.”

“In the one year since its inception, the Disruptive Technology Strike Force has been relentless in protecting advanced U.S. technologies, like artificial intelligence, from malign actors,” said Assistant Secretary Matthew S. Axelrod of the Commerce Department’s Office for Export Enforcement. “Let today’s announcement serve as further warning – those who would steal sensitive U.S. technology risk finding themselves on the wrong end of a criminal indictment.”

According to court documents, the technology Ding allegedly stole involves the building blocks of Google’s advanced supercomputing data centers, which are designed to support machine learning workloads used to train and host large AI models. According to the indictment, large AI models are AI applications capable of understanding nuanced language and generating intelligent responses to prompts, tasks, or queries. The indictment describes how Google developed both proprietary hardware and software to facilitate the machine learning process powered by its supercomputing data centers. With respect to hardware, Google uses advanced computer chips with the extraordinary processing power required to facilitate machine learning and run AI applications. With respect to software, Google deploys several layers of software, referred to in the indictment as the “software platform,” to orchestrate machine learning workloads efficiently. For example, one component of the software platform is the Cluster Management System (CMS), which functions as the “brain” of Google’s supercomputing data centers. The CMS organizes, prioritizes, and assigns tasks to the hardware infrastructure, allowing the advanced chips to function efficiently when executing machine learning workloads or hosting AI applications.

According to the indictment, Google hired Ding as a software engineer in 2019. Ding’s responsibilities included developing the software deployed in Google’s supercomputing data centers. In connection with his employment, Ding was granted access to Google’s confidential information related to the hardware infrastructure, the software platform, and the AI models and applications they supported. The indictment alleges that on May 21, 2022, Ding began secretly uploading trade secrets that were stored in Google’s network by copying the information into a personal Google Cloud account. According to the indictment, Ding continued periodic uploads until May 2, 2023, by which time Ding allegedly uploaded more than 500 unique files containing confidential information.

In addition, the indictment alleges that Ding secretly affiliated himself with two PRC-based technology companies. According to the indictment, on or about June 13, 2022, Ding received several emails from the CEO of an early-stage technology company based in the PRC indicating Ding had been offered the position of Chief Technology Officer for the company. Ding allegedly traveled to the PRC on Oct. 29, 2022, and remained there until March 25, 2023, during which time he participated in investor meetings to raise capital for the new company. The indictment alleges potential investors were told Ding was the new company’s Chief Technology Officer and that Ding owned 20% of the company’s stock.

According to the indictment, unbeknownst to Google, by no later than May 30, 2023, Ding had founded his own technology company in the AI and machine learning industry and was acting as the company’s CEO. Ding’s company touted the development of a software platform designed to accelerate machine learning workloads, including training large AI models. As alleged in the indictment, Ding applied to a PRC-based startup incubation program and traveled to Beijing, to present his company at an investor conference on Nov. 24, 2023. As set forth in the indictment, a document related to Ding’s startup company stated, “we have experience with Google's ten-thousand-card computational power platform; we just need to replicate and upgrade it - and then further develop a computational power platform suited to China's national conditions.”

The indictment alleges Ding’s conduct violated his employment agreement as well as a separate code of conduct that Ding signed when he became a Google employee. Further, the indictment describes measures that Ding allegedly took to conceal his theft of the trade secrets. For example, he allegedly copied data from Google source files into the Apple Notes application on his Google-issued MacBook laptop. By then converting the Apple Notes into PDF files and uploading them from the Google network into as separate account, Ding allegedly evaded detection by Google’s data loss prevention systems. Likewise, the indictment describes how in December 2023 Ding allegedly permitted another Google employee to use his Google-issued access badge to scan into the entrance of a Google building – making it appear he was working from his U.S. Google office when, in fact, he was in the PRC.

Ding is charged with four counts of theft of trade secrets. If convicted, Ding faces a maximum penalty of 10 years in prison and up to a $250,000 fine for each count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and Commerce Department are investigating the case.

The U.S. Attorney’s Office for the Northern District of California and Justice Department National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

Today’s action was coordinated through the Justice and Commerce Departments’ Disruptive Technology Strike Force. The Disruptive Technology Strike Force is an interagency law enforcement strike force co-led by the Departments of Justice and Commerce designed to target illicit actors, protect supply chains, and prevent critical technology from being acquired by authoritarian regimes and hostile nation-states.

An indictment is merely an allegation. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

ding_indictment_filed.pdf

SAN FRANCISCO – Joon Woo Kim pleaded guilty in federal court to charges related to his role in two related multi-million-dollar fraud schemes—the first, a scheme to mislead investors to contribute to a fund he formed in San Francisco, and the second, a scheme to obtain a multi-million dollar business loans and line of credit by lying to a bank—announced United States Attorney Ismail J. Ramsey and Federal Bureau of Investigation Special Agent in Charge Robert K. Tripp.

In his plea agreement, Kim, 57, of Montebello, Calif., admitted that he engaged in the first fraud scheme from June 2015 through at least March 19, 2022. Kim created an investment fund called the M5 Doctors Fund and induced investors to contribute to the fund by making false statements and omissions about the kinds of investments Kim would make while managing the fund’s assets. For example, Kim admitted that he advertised that he would invest assets of the M5 Doctors Fund in securities of Tesla, Inc. and electric vehicle companies. Nevertheless, rather than invest the funds as he promised, Kim admitted that he transferred nearly all M5 Doctors Fund assets, including funds from the liquidation of investments and the return on those investments, to CKR Enterprise, Inc., a wholesale food distribution company owned by, among others, Kim and his wife and operated by Kim and his wife.

Kim further admitted in his plea agreement that he acted with the intent to deceive and cheat investors and that in furtherance of the scheme he caused the creation of the M5 Doctors Fund and a separate management entity called M5 Management and he induced investors to invest in the M5 Doctors Fund and maintain their investment funds in the M5 Doctors Fund based on false statements and omissions regarding the kinds of investments he would make.

Kim admitted that without telling his investors he transferred nearly all M5 Doctors Fund assets to his business, CKR, and thereby defrauded investors out of $4,690,000. Further, Kim misled investors into believing that the M5 Doctors fund was solvent and engaged in investment activities. For example, Kim sent investors misleading quarterly reports suggesting that their money was invested in securities such as Tesla when in fact Kim had transferred nearly all investor money to CKR.

Kim further admitted that he engaged in a second fraud scheme in which he defrauded Hanmi Bank by applying for two loans for CKR, a $1,300,000 line of credit and a $3,200,000 business loan, that contained materially false and fraudulent representations and promises. As a result of these fraudulent representations and promises, Kim obtained the proceeds of these loans.

A federal grand jury charged Kim on June 27, 2023, with eight counts of wire fraud, in violation of 18 U.S.C. § 1343; two counts of bank fraud, in violation of 18 U.S.C. § 1344; and one count of making a false statement to a bank, in violation of 18 U.S.C. § 1014. Under the plea agreement, Kim pleaded guilty to one count of wire fraud and one count of making a false statement to a bank. If Kim complies with his plea agreement, the remaining counts will be dismissed at sentencing.

Kim was arrested on July 17, 2023, and subsequently released on a bond. His sentencing hearing is scheduled for June 24, 2024. The maximum statutory penalty for each of the wire fraud charges is 20 years in prison, and a fine of $250,000, plus restitution, if appropriate. The maximum statutory penalty for each of the bank fraud and making a false statement to a bank is 30 years in prison, and a fine of $1,000,000, plus restitution, if appropriate. The court also may order an additional term of supervised release to begin after a prison term as part of any sentence. However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

Assistant U.S. Attorney Christiaan Highsmith is prosecuting the case with the assistance of Aarian Beti. The prosecution is the result of an investigation by the FBI.

SAN JOSE – Paul Garcia was sentenced today to 235 months’ imprisonment after pleading guilty to methamphetamine trafficking, announced United States Attorney Ismail J. Ramsey and Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) Special Agent in Charge Jennifer L. Cicolani. The sentence was handed down by the Hon. Edward J. Davila, United States District Judge.

Garcia, 34, formerly of Santa Cruz County, was arrested in July 2019 after Santa Cruz County Sheriff’s Deputies seized a stash of drugs in a Santa Cruz motel room Garcia was using. The stash included more than two pounds of heroin, 440 grams of methamphetamine, cocaine, fentanyl, and pills. Deputies also found a loaded, semi-automatic pistol in the motel room. Garcia was indicted by a federal grand jury on February 6, 2020, on one count of possession with intent to distribute 50 grams or more of a mixture or substance containing methamphetamine, in violation of 21 U.S.C. §§ 841(a)(1) and 841(b)(1)(A).

In February 2020, Garcia made his initial appearance in federal court and was released on a $100,000 bond. Garcia eventually violated the terms of his release, his bail was revoked, and Garcia was ordered to report to the Santa Rita Jail facility in June 2020. Garcia failed to report as ordered, and became a fugitive. Garcia’s bond was subsequently forfeited, and the Court entered forfeiture judgments against his sureties.

Garcia remained a fugitive until he was arrested on April 18, 2021. At that time, Sunnyvale police officers approached Garcia in the parking lot of a motel, and Garcia fled through the motel with officers in pursuit. During the chase, Garcia retrieved a pistol from his waistband and fired two shots at the officers before being taken into custody.

On December 18, 2023, Garcia pleaded guilty to the federal charge against him. In the plea agreement, Garcia admitted, among other things, that he possessed the methamphetamine, cocaine, and heroin found in his Santa Cruz motel room in July 2019, with the intent to distribute them, and also that he possessed the semi-automatic pistol found in the motel room in connection with his drug dealing. Garcia also admitted he failed to report to the Santa Rita Jail facility as ordered, and that he willfully remained a fugitive until he was arrested in Sunnyvale.

“Disrupting drug trafficking in Santa Cruz County is a priority for our office,” said United States Attorney Ismail J. Ramsey. “Anyone who traffics drugs in Santa Cruz County, or anywhere else in the Northern District, particularly while armed, should know that federal criminal convictions come with serious prison time.”

“Removing violent offenders from our communities is a priority for ATF,” said ATF Special Agent in Charge Jennifer Cicolani. “Anyone who participates in trafficking will be held accountable. Throughout this case, ATF has worked side by side with our prosecutorial partners to fulfill one of our core duties to the public. That duty being to ensure the safety of our communities. Today’s sentencing ensured that our commitment to the public is being upheld.”

Judge Davila ordered that Garcia’s federal prison term be served concurrently with a 29-year prison term Garcia is currently serving. In addition to the prison term, Judge Davila also ordered Garcia to serve a five-year term of supervised release upon his release from prison.

Assistant United States Attorneys Michael G. Pitman and Daniel N. Kassabian are prosecuting the case, with the assistance of Sahib Kaur. The prosecution is the result of an investigation by ATF and the Santa Cruz County Sheriff’s Office.