Southern District of California

For Further Information, Contact:
Assistant U.S. Attorneys Daniel C. Silva (619) 546-9713 and Mark W. Pletcher (619) 546-9714

SAN DIEGO – Liang Zhou pleaded guilty in federal court today to operating an unlicensed money transmitting business. His guilty plea is the third in this ongoing investigation targeting operators of unlawful underground financial institutions that transfer money between the United States and China, thereby circumventing domestic and foreign laws regarding monetary transfers and reporting, including United States anti-money laundering scrutiny and Chinese capital flight controls.

As part of his agreement to plead guilty, Zhou agreed to forfeit $446,330 to the United States as property involved in the operation of his unlicensed money transmitting business.

As admitted in the plea agreement entered today before U.S. Magistrate Judge Karen S. Crawford, Zhou sold hard currency in U.S. dollars that he collected from various, and occasionally unknown, third parties. His customers were typically individuals with bank accounts in China who could not readily access cash in the United States due to capital controls that cap the amount of Chinese yuan that an individual can convert to foreign currency. Often these customers needed the money to gamble at the casinos in Las Vegas. Upon receiving U.S. dollars, the customers would transfer from a Chinese bank account an equivalent value in yuan, over their mobile phones in the United States, to a separate bank account in China designated by Zhou.

"Individuals and organizations operating outside the conventional financial system represent a clear and present danger to the international banking system and the ability of law enforcement to detect and confront the criminal activity," said U.S. Attorney Robert S. Brewer. He commended prosecutors Daniel Silva and Mark Pletcher, as well as federal agents from Homeland Security Investigations, IRS Criminal Investigation Las Vegas Financial Crimes Task Force and the Drug Enforcement Administration for their excellent work on this case.

Sentencing is scheduled for January 8, 2021 before U.S. District Court Judge Dana Sabraw.

DEFENDANTS Case Numbers 20-CR-3084

Liang Zhou          Las Vegas, NV Age: 37

SUMMARY OF CHARGES*

Operation of Unlicensed Money Transmitting Business – Title 18, U.S.C., Section 1960

Maximum penalty: Five years in prison, forfeiture, and $250,000 fine

AGENCIES

Homeland Security Investigations

IRS Criminal Investigation Las Vegas Financial Crimes Task Force

Drug Enforcement Administration

*The charges and allegations contained in an indictment or information are merely accusations, and the defendants are considered innocent unless and until proven guilty.

For Further Information, Contact:
Assistant U.S. Attorney Daniel C. Silva (619) 546-9713 and DOJ Trial Attorney Kevin Lowell

SAN DIEGO – A La Jolla-based CEO pleaded guilty today to multiple felonies relating to the operation of his financial firm, Surf Financial Group, LLC, including conspiring to defraud shareholders of publicly traded companies, transmitting millions of dollars through an unlicensed money transmitting business, and falsifying multiple years of federal tax returns.

David John Nava, 62, pleaded guilty to one count of conspiracy to commit securities fraud, one count of operating an unlicensed money transmitting business (an "MTB"), and one count of tax fraud before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California. Nava further agreed to forfeit more than $3.1 million for his crimes.

According to the plea agreement filed today, Nava managed Surf Financial Group, LLC despite federal securities regulators permanently banning and censuring him in 1994 from participating in the industry. Despite the ban, Nava admitted that he and other co-conspirators, including a licensed attorney, converted the debt of various publicly traded companies under materially false and fraudulent pretenses into unrestricted stock and then sold the stock for profit. Nava further admitted that he and his co-conspirators carried out their fraudulent scheme by entering into agreements where Nava sold shares of various entities’ stock on public exchanges after fraudulently claiming an exemption from the U.S. Securities and Exchange Commission’s ("SEC") registration requirements for selling securities in the public marketplace.

To conceal his involvement in the securities fraud scheme, Nava admitted using various nominees to ensure that, as Nava described it, he was a "ghost" in the transactions. Brokerage firms relied on the purported truth and accuracy of the attorney opinion letters in evaluating whether to clear the sale of shares of the restricted stocks on public markets. After the stocks were cleared for sale as a result of the false attorney opinion letters, Nava and his co-conspirators sold millions of shares of these stocks to the investing public.

"The defendant flagrantly engaged in an egregious fraud scheme on multiple levels—with securities for publicly traded companies; through the operation of an underground and unlicensed money transmitting business; and by misrepresenting his income for these schemes to the IRS," said U.S. Attorney Robert S. Brewer, Jr. "Law enforcement will vigorously pursue both the individuals and entities who commit fraud and operate outside the conventional financial system to carry out that fraud." U.S. Attorney Brewer commended Homeland Security Investigations, IRS Criminal Investigation, the Financial Investigations and Border Crimes Task Force, and the Department of Justice Criminal Division’s Fraud Section for their work on this case.

Nava further admitted that, from approximately 2017 to 2018, he operated an unlicensed MTB as a means to transmit financial proceeds from foreign locations, including Hong Kong and the Bahamas, as a way to disguise the source, origin, and control of the proceeds. As stated in his plea agreement, in 2017 Nava entered into a business partnership with at least one person who resided in Mexico and delivered dairy products for a living. To conceal Nava’s control over the MTB, Nava directed the Mexican resident to open a bank account at a financial institution in San Diego, and to transmit millions of dollars in funds as directed by Nava. Nava failed to register his MTB with the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, as required under federal law.

"This investigation is an excellent example of the work Homeland Security Investigations (HSI) continues to do in its fight against transnational criminal enterprises that seek to exploit the global financial system," said Cardell T. Morant, Special Agent in Charge of HSI in San Diego. "No matter how creative or sophisticated the scheme; HSI and our partners at IRS-CI will continue to work tirelessly to stamp out fraud and the illicit movement of money, even in these trying times."

"Twenty years after David John Nava was censured and permanently barred from the securities industry, he orchestrated a multimillion-dollar scheme and fabricated documents to circumvent SEC requirements in order to sell fraudulent securities and victimize innocent shareholders," said IRS Criminal Investigation Special Agent in Charge Ryan L. Korner. "Nava failed to report nearly $2.8 million in gross receipts from his scheme, thereby stealing over $609,000 in tax revenue from the United States. Today’s guilty plea evidences the hard work of our Special Agents and IRS Criminal Investigation’s commitment to working with our law enforcement partners to bring to justice fraudsters who repeatedly corrupt our securities exchanges and banking systems, while victimizing innocent Americans to feed their greed."

This case was investigated by Homeland Security Investigations, IRS Criminal Investigation, the Financial Investigations and Border Crimes Task Force, and the Department of Justice Criminal Division’s Fraud Section. Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel Silva of the U.S. Attorney’s Office for the Southern District of California are prosecuting the case.

Sentencing is scheduled to occur on January 8, 2021 before U.S. District Court Judge Dana Sabraw.

DEFENDANTS Case Number: 20-cr-03085-DMS

David John Nava               La Jolla, CA Age: 62

SUMMARY OF CHARGES*

Conspiracy to Commit Securities Fraud – Title 18, U.S.C., Section 371

Maximum penalty: Five years in prison, restitution, and $250,000 fine

Operation of Unlicensed Money Transmitting Business – Title 18, U.S.C., Section 1960

Maximum penalty: Five years in prison, forfeiture, and $250,000 fine

Tax Fraud – Title 26 U.S.C. Section 7206(1)

Maximum Penalty: Three years in prison, and $100,000 fine

AGENCIES

Homeland Security Investigations

IRS Criminal Investigation – Financial Investigations and Border Crimes Task Force

*The charges and allegations contained in an indictment or information are merely accusations, and the defendants are considered innocent unless and until proven guilty.

A California-based man pleaded guilty today to conspiring with others to defraud shareholders of publicly traded companies, transmitting millions of dollars through the operation of an unlicensed money-services business in California, and falsifying multiple years of federal tax returns.   

Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Robert S. Brewer for the Southern District of California, Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office and Special Agent in Charge Cardell Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) made the announcement.

David Nava, 62, of La Jolla, California, pleaded guilty to one count of conspiracy to commit securities fraud, one count of operating an unlicensed money transmitting business  (MTB), and one count of tax fraud before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California.  Sentencing is set for Jan. 8, 2021.

According to the plea agreement filed in court, Nava was at all relevant times the CEO of the Surf Financial Group LLC (Surf Financial), a financial-services firm based in La Jolla, California.  In 1994, federal securities regulators permanently banned and censured Nava from participating in the securities industry.  Despite the two-decades’ old ban, Nava admitted in the plea agreement that he and other co-conspirators, including a licensed attorney, converted the debt of various publicly traded companies under materially false and fraudulent pretenses into unrestricted stock and then sold the stock for profit.  Nava further admitted that he and his co-conspirators carried out their fraudulent scheme by entering into agreements in which Nava sold shares of various entities’ stock in public-market exchanges, only after fraudulently claiming an exemption from the U.S. Securities and Exchange Commission’s (SEC) registration requirements for selling securities in the public marketplace.

In the plea agreement, Nava admitted that he directed at least one attorney, as well other co-conspirators, to prepare fraudulent attorney opinion letters that were used to remove restrictions on various publicly traded companies’ stocks so that they could be freely traded on the open market.  These fraudulent attorney opinion letters permitted Nava and his co-conspirators to sell their shares of stock at times of their choosing and unlawfully to circumvent the SEC’s regulations governing the offer and sale of securities.    

To conceal his involvement in the scheme, Nava admitted he used various nominees to ensure that, as Nava described it, he was a “ghost” in the transactions.  Brokerage firms relied on the purported truth and accuracy of the attorney opinion letters in evaluating whether to clear the sale of shares of the restricted stocks on public markets.  After the stocks were cleared for sale as a result of the false attorney opinion letters, Nava and his co-conspirators sold millions of shares of these stocks to the investing public.  Nava further admitted that, after selling these shares and securities, he transferred the proceeds derived from the securities-fraud scheme into bank accounts under his direct control.

Nava also admitted that, from approximately 2017 to 2018, he owned and operated an unlicensed MTB as a means to transmit financial proceeds from foreign locations, including Hong Kong and the Bahamas, all of which disguised the source, origin and control of such financial proceeds.  As Nava further admitted, in 2017, Nava entered into a business partnership with at least one co-conspirator who resided in Mexico and delivered dairy products for a living.  To conceal Nava’s control over the MTB, Nava directed the Mexican resident to fraudulently open a deposit account in his name at a financial institution in San Diego, and to transmit funds as a nominee and as directed by Nava.  According to the plea agreement, Nava’s unlicensed MTB transacted millions of dollars in international wire transfers with entities purportedly involved in investment-banking services and which sold futures and securities.  Nava failed to register his MTB with the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, as required under federal law. 

As stated in the plea agreement, Nava also falsified his tax returns for years 2014, 2015 and 2016.  He admitted that he falsely and fraudulently underreported Surf Financial’s profits, and he did so for the purpose of underreporting Nava’s true income and tax liability.

This case was investigated by IRS- CI and HSI.  Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel Silva of the U.S. Attorney’s Office for the Southern District of California are prosecuting the case.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

Assistant U. S. Attorney Cindy Cipriani (619) 546-9608    

NEWS RELEASE SUMMARY – October 6, 2020

SAN DIEGO – U.S. Attorney Robert Brewer today announced $1,549,980 in Department of Justice grants to assist victims in the Southern District of California. The grants, awarded by the Department’s Office of Justice Programs, are part of almost $1.8 billion distributed to state victim assistance and compensation programs to fund thousands of local victim assistance programs across the country and to provide millions in compensation to victims of crime.

The Office for Victims of Crime, a component of the Department’s Office of Justice Programs, flagship formula grant program is supported by the Crime Victims Fund (the Fund), which was established under The Victims of Crime Act. The Fund supports a broad array of programs and services that focus on helping victims in the immediate aftermath of crime and continuing to support them as they rebuild their lives. In FY 2019 alone, VOCA grants served over seven million victims and paid more than $399 million in compensation claims.

“Advocates, service providers, and law enforcement agencies from around the country stand ready to help crime victims exercise their legal rights and reclaim their lives,” said Attorney General William P. Barr. “These new funding resources continue this administration’s unprecedented commitment to providing the support necessary for victims of crimes to be able to heal and recover.”

The awards made to organizations in the Southern District of California and around the country will support local direct victim service programs, including children’s advocacy centers, domestic violence shelters, rape crisis centers, human trafficking and elder abuse programs, civil legal services, crime victims’ rights enforcement, as well as victim assistance positions in prosecutors’ offices and law enforcement departments.

“Helping crime victims achieve justice and obtain support is our top concern, and these grants are an important part of that equation,” said U.S. Attorney Robert Brewer. “This money has the potential to change many lives for the better.”

In the Southern District of California, which includes San Diego and Imperial counties, grants were awarded to Rady Children’s Hospital San Diego, $1,250,000; and to Nile Sisters Development Initiative, which serves refugee and immigrant communities, $299,980.

State victim compensation programs will receive over $133 million to supplement the state funds that offset victims’ financial burdens resulting from crime. This compensation is often extremely vital to victims who face enormous financial setbacks from medical fees, lost income, dependent care, funeral expenses and other costs.

“The services made available by this funding represent a lifeline for tens of thousands of survivors each month, many of whom otherwise would have no place to turn in a moment of profound crisis,” said Katharine T. Sullivan, Principal Deputy Assistant Attorney General of the Office of Justice Programs. “These awards will help service providers, as well as law enforcement agencies and prosecutors’ offices respond to the many emotional and material challenges that crime victims in our country face every day.”

The Fund is financed by fines and penalties paid by convicted federal offenders and does not include tax dollars. More information about OJP and its components can be found at www.ojp.gov.

 

Special Assistant U.S. Attorney Lisa J. Sanniti (619) 546-8811

NEWS RELEASE SUMMARY – October 6, 2020

SAN DIEGO – Antonia Barber, the former operations manager for Carlsbad-based contractors’ insurance company Target Financial and Insurance Services, was sentenced in federal court yesterday to 21 months in prison for stealing $726,060.75 from the company.

Sentencing documents reflect that Barber held a sensitive position at Target Financial, where she was permitted to approve reimbursement requests from employees, issue reimbursement checks, pay vendors, and report to the owner as to the financial condition of the company. In 2008, Barber began writing hundreds of checks to a family member for bogus “Records Management” services that were never provided.  Barber’s conduct escalated to writing herself checks for nonexistent “expense reimbursement,” totaling over $600,000.

Barber went so far as to report to the owner that the company was struggling financially, causing the owner to infuse money into the company to keep people employed and the business afloat.  Barber’s scheme went on for seven years until the owner caught on to her theft, and reported it to law enforcement.

“This defendant abused her position of trust to steal hundreds of thousands of dollars,” said U.S. Attorney Robert Brewer. “This sentence is a reminder that there will be a price to pay for employees who use company coffers as a personal bank account.” Brewer praised prosecutor Lisa Sanniti and agents from the U.S. Secret Service for their hard work in this case.

DEFENDANT                                                      Case No. 18-CR-4028-W                                                  

ANTONIA BARBER                                                Age 52            San Diego, CA

     aka “Antonia M. Barber”

     aka “Antonia Marie Barber”

     aka “Antonia Marie Martinez”

SUMMARY OF CHARGES

Wire Fraud – Title 18, U.S.C., Section 1343

Maximum penalty:  Twenty years in custody and a $250,000 fine

AGENCY

United States Secret Service

Assistant U. S. Attorney KimThoa Hoang (619) 546-9397

NEWS RELEASE SUMMARY – October 2, 2020

SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice has awarded more than $5.8 million in grants to Native American tribes based in San Diego County to provide resources to crime victims, particularly victims of domestic violence and sexual assault.

Recipients include the Intertribal Court of Southern California, $1,428,927; the Pauma Band of Mission Indians, $900,000; San Pasqual Band of Mission Indians $900,000; Southern Indian Health Council, $614,433; and La Jolla Band of Luiseno Indians, $836,856 and $417,000. Additionally, this office previously announced that Valley Center-based Strong Hearted Native Women’s Coalition received a DOJ grant for $353,615 and the Pauma Band received $363,223.

“Violence against women has increased during the pandemic, making these funds more important than ever,” said U.S. Attorney Robert Brewer. “This is one way for the Department of Justice to make sure that Indian women are protected and their attackers brought to justice.  The grants announced today will also significantly expand the Intertribal Court’s capacity to provide victim services to all tribal members.”

The Tribal Governments Program, Purpose Area 5 of the 2019 Coordinated Tribal Assistance Solicitation, was created in Title IX of the Violence Against Women Act of 2005 and amended by 34 U.S.C. 10452. The Tribal Governments Program is designed to fulfill the following goals of Title IX: (1) decreasing the incidence of violent crime against Indian women; (2) strengthening the capacity of Indian tribes to exercise their sovereign authority to respond to violent crimes committed against Indian women; and (3) ensuring that perpetrators of violent crimes committed against Indian women are held accountable for their criminal behavior.

The Pauma Band of Mission Indians is a federally recognized Tribe located in in San Diego County, California. With this funding, the Pauma Sexual Assault Response Team will: (1) increase tribal capacity to respond to domestic violence, dating violence, sexual assault, sex trafficking, and stalking crimes; (2) strengthen the tribal justice interventions, including tribal law enforcement and prosecution; (3) enhance services to victims; (4) work in cooperation with the community to develop education and prevention strategies; (5) provide legal assistance to victims in legal matters arising as a consequence of abuse or violence; (6) provide services to address the needs of youth who are victims of domestic violence, dating violence, sexual assault, sex trafficking, or stalking and the needs of youth and children exposed to domestic violence, dating violence, sexual assault, or stalking; and (7) develop and promote legislation and policies. The Pauma Band of Mission Indians has partnered with Strong Hearted Native Women’s Coalition to plan and implement this project.

The San Pasqual Band of Mission Indians is a federally recognized tribe located in San Diego County, California. With this funding, the San Pasqual Native Women’s Resource Center (NWRC) and the San Pasqual Public Safety Department will: (1) increase and improve tribal law enforcement response and follow-up to victims of domestic violence, dating violence, sexual assault, sex trafficking, and stalking by hiring a dedicated officer; (2) expand the capacity of the Native Women’s Resource Center to provide timely intervention and supportive services; and (3) provide community education and outreach regarding prevention and intervention resources for domestic violence and other crimes of violence against Indian women. The San Pasqual Band of Mission Indians has partnered with a community advisory committee and the Strong Hearted Native Women’s Coalition to plan and implement this project.

Southern Indian Health Council, Inc. (SIHC) is a tribal non-profit located in San Diego County, California. SIHC is a duly authorized designee of the Barona Band of Mission Indians, the Campo Band of Mission Indians, the Ewiiaapaayp Band of Kumeyaay Indians, the Jamul Indian Village of California, the La Posta Band of Diegueno Mission Indians, the Manzanita Band of the Kumeyaay Nation, and the Viejas Band of Capitan Grande Band of Mission Indians of the Viejas Reservation, all federally recognized tribes. The tribes individually have (1) authorized SIHC to submit an application on behalf of the tribe; and (2) stated its support for the project and its commitment to participate in the project upon receiving this funding. In general, SIHC provides medical, dental, and mental health care at four clinic locations in rural southeast San Diego County. SIHC has partnered with Strong Hearted Native Women’s Coalition to plan and implement this project. With this funding, SIHC will: (1) provide transitional housing assistance for victims of domestic violence, sexual assault, dating violence, stalking, or sex trafficking; (2) provide supervised visitation and safe visitation exchange; (3) increase tribal capacity to respond to domestic violence, dating violence, sexual assault, stalking, and sex trafficking, by providing training to tribal staff and partners; (4) provide civil legal assistance to victims with legal issues arising out of the violence they experienced; and (5) provide services to youth that are victims or exposed to domestic violence, sexual assault, or stalking.

The La Jolla Band of Luiseno Indians is a federally recognized tribe located in San Diego County, California. The La Jolla Band of Luiseno Indians’ Avellaka Program works to address violence against Indian women by providing 24/7 crisis intervention services, court advocacy and accompaniment, transitional housing assistance, and community awareness and education. With this funding, the Avellaka Program will: (1) increase and enhance tribal capacity to respond to domestic violence, dating violence, sexual assault, sex trafficking, and stalking crimes against Indian women; (2) work in cooperation with the community to develop education and prevention strategies; and (3) provide transitional housing for victims. The Avellaka Program has partnered with the La Jolla Native Women’s Advisory Committee to plan and implement this project.

Further, the Tribal Victim Services grant award will enable La Jolla to (1) hire a 1.0 FTE Advocate for Youth; 2) retain the services of a consultant to help develop a strategic plan and conduct evaluation activities for the project; 3) retain the services of a videographer to help youth document digital stories and create PSAs targeting youth victims of crime; and 4) support the development of a Native Children's Advocacy Committee.

Under its award, Intertribal Court of Southern California (ICSC), located in Valley Center, will expand victim services for member tribes of their consortium. ICSC will hire four victim services program staff (Family Services Manager, Youth Services Advocate, Adult Services Manager, and an Administrative Assistant) to expand services to child, adolescent, and adult victims of crime; renovate a portion of the ICSC building to serve as a private waiting area for victims awaiting court proceedings; purchase a mobile office to house the four victim services staff; and contract with American Indian Development Associates LLC to conduct a needs assessment, create a Victim Services Program strategic plan, and assist with a two-year formative program performance plan in Year 1 and 2.

For information of the Valley Center-based Strong Hearted Native Women’s Coalition grant please see https://www.justice.gov/usao-sdca/pr/department-justice-awards-1-million-grants-san-diego-county-organizations. For information on the first Pauma grant, please see https://www.justice.gov/usao-sdca/pr/us-doj-office-violence-against-women-awards-363223-pauma-band-mission-indians-support.

Assistant U.S. Attorneys Jill Streja and Seth Askins (619)546-8401

NEWS RELEASE SUMMARY – October 5, 2020

SAN DIEGO – Julio Cesar Murillo-Arce was sentenced in federal court today to 83 months in prison for his role as the captain of a panga boat that suffered engine trouble and capsized in February 2020, resulting in the deaths of two of the six smuggled aliens on board. Murillo-Arce pleaded guilty to four counts of alien smuggling in June 2020.   

As reflected in court records, during the late hours of February 2 and early morning hours of February, Murillo-Arce piloted a panga boat with six illegal aliens aboard from Ensenada, Mexico, to United States territorial waters.  At approximately 1:30 a.m., as the boat was approximately 150 yards offshore and beyond the breakers near Imperial Beach, it began experiencing severe engine trouble and eventually became inoperable in the rough seas.

Law enforcement personnel with the Joint Harbor Operations Center were able to observe the boat, and Border Patrol agents responded to the shore. Fearing capture, Murillo-Arce told the other individuals aboard not to identify him as the pilot of the boat and then dove into the water, abandoning them at their time of greatest need. Thereafter, a large wave capsized the boat, throwing all six smuggled aliens into the rough seas.  Four eventually were able to make it to shore, but two – Ramon Ponce-Rodriguez and Modesto Rodriguez-Ballesteros – were unable to swim and drowned.   

When this incident occurred, Murillo-Arce previously had been convicted of a maritime alien smuggling offense in 2019 in the Central District of California and was on supervised release.

U.S. District Court Judge Marilyn L. Huff sentenced Murillo-Arce to 78 months in federal prison for his criminal conduct in this case.  When handing down the sentence, Judge Huff observed that this was a “tragic, tragic, tragic circumstance” and “one of the most egregious that the court has seen in many years of experience.”  She noted that Murillo-Arce was not deterred by his prior conviction and stated, “These deaths should not have happened.”  Judge Huff also imposed a 10-month sentence for Murillo-Arce’s violation of the terms of his supervised release and ran five months consecutive, for a total sentence of 83 months. 

“This is yet another tragedy that never should have happened,” said U.S. Attorney Robert Brewer. “This defendant and others like him care only about their bank accounts and their own safety. Because of his callous disregard for the passengers he attempted to smuggle, two lives were lost.” U.S. Attorney Brewer commended Assistant U.S. Attorneys Jill Streja and Seth Askins, as well as the U.S. Border Patrol and the Joint Harbor Operations Command for their work on this case.

“As made evident by these events, organizations that use the Pacific Ocean to smuggle people have little regard for human life,” stated U.S. Border Patrol, San Diego Sector’s Acting Chief Patrol Agent Patricia McGurk-Daniel. “Border Patrol agents work relentlessly to pursue these smugglers and prevent these tragedies from occurring. The San Diego Sector is grateful for the U.S. Attorney’s Office’s tireless efforts in bringing them to justice.”

DEFENDANT                                               Criminal Case No. 3:20-CR-761-H

Julio Cesar Murillo-Arce                                Age: 42                       Residence: Mexico

SUMMARY OF CHARGES

8 U.S.C. § 1324(a)(1)(A)(i) and (B)(iv) – Attempted Bringing in Illegal Aliens Resulting in Death (2 counts)

Maximum Penalties:  Death or Imprisonment for any term of years or for Life; $250,000 fine.

8 U.S.C. § 1324(a)(2)(B)(ii) – Attempting Bringing in Illegal Aliens for Financial Gain (2 counts)

Maximum Penalties: Mandatory Minimum three years; Maximum ten years; $250,000 fine

INVESTIGATING AGENCIES

United States Border Patrol

Joint Harbor Operations Command

Assistant U. S. Attorney Paul Starita (619) 546-7701

NEWS RELEASE SUMMARY – September --, 2020

San Diego – San Diego-based Phamatech, Inc. and its CEO and founder, Tuan Pham, have agreed to pay $3,043,484 to resolve allegations that they violated the False Claims Act by submitting false claims to Medicare for laboratory drug-testing services. Phamatech is a medical technology company that manufactures diagnostic devices and provides laboratory testing including for drugs and alcohol.

The United States alleged that Phamatech improperly paid a medical clinic to induce it to refer orders for laboratory drug-testing to Phamatech and consequently received government reimbursement for those tests in violation of the federal Anti-Kickback Statute and the False Claims Act. Specifically, the United States alleged that Phamatech paid kickbacks to Imperial Valley Wellness (“IVW”), a medical practice group, to induce IVW to order laboratory testing for its patients enrolled in Medicare. For about two years, Phamatech allegedly paid IVW a per-specimen fee in exchange for IVW’s referral of urine samples from Medicare beneficiaries.  The government further alleged that many of the samples that IVW referred to Phamatech for testing under this arrangement were not medically necessary and therefore not lawfully eligible for Medicare reimbursement.  

“We are committed to protecting the integrity of the Medicare program and ensuring accountability under the False Claims Act. This settlement meets these goals,” said U.S. Attorney Robert Brewer. Brewer praised Assistant U.S. Attorney Paul Starita and federal agents from FBI and Health and Human Services, Office of Inspector General, for their excellent work on this case.

“Paying to secure business increases costs—ultimately, leaving taxpayers to pick up the bill,” said Timothy B. DeFrancesca, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “With our law enforcement partners, we will continue pursuing potential threats to our health programs.”

“The FBI is committed to rooting out fraud within the healthcare industry and works with the U.S. Attorney’s Office and law enforcement partners to find a just result in each case,” said FBI SAC Suzanne Turner. “We urge anyone with information about suspected healthcare fraud to contact their local FBI Field Office.”

The False Claims Act allegations being resolved were originally brought in a lawsuit filed by a former employee of Phamatech, John Polanco, under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens with knowledge of fraud against the government to bring suit on behalf of the government and to share in any recovery. Mr. Polanco will receive $517,392 from the settlement proceeds.

The investigation was conducted by the U.S. Attorney’s Office for the Southern District of California, the Department of Health and Human Services Office of Inspector General, and the Federal Bureau of Investigation. This case is captioned United States, et al., ex rel. John Polanco v. Phamatech, Inc. and Tuan Pham, 16CV1835-L-NLS, and the matter was handled by Assistant U.S. Attorney Paul Starita of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office. The claims resolved by the settlement are allegations only, and there has been no determination of liability.

DEFENDANTS                                                                   

Phamatech, Inc.                                                                      San Diego, CA

Tuan Pham                                                                              San Diego, CA

AGENCIES

Federal Bureau of Investigation

Health and Human Services, Office of Inspector General

Assistant U. S. Attorney Valerie Chu (619) 546-6750

NEWS RELEASE SUMMARY – September 30, 2020

SAN DIEGO – Federal officials today announced a historic nationwide enforcement action involving 345 charged defendants across 51 federal districts, including more than 100 doctors, nurses and other licensed medical professionals located in San Diego and across the country.

These defendants have been charged with submitting more than $6 billion in false and fraudulent claims to federal health care programs and private insurers, including more than $4.5 billion connected to telemedicine, more than $845 million connected to substance abuse treatment facilities, or “sober homes,” and more than $806 million connected to other health care fraud and illegal opioid distribution schemes across the country.

In San Diego, the U.S. Attorney’s Office announced charges against defendants in several unrelated cases who collectively attempted to defraud Medicare of nearly $1 billion and Tricare of over $70 million. In addition, some defendants were charged with distributing fentanyl causing deaths in San Diego County.

“These frauds represent a staggering amount of theft to federal health programs, and ultimately the victims are every patient,” said U.S. Attorney Robert Brewer. “We will continue to investigate and prosecute these selfish criminals whose deplorable schemes drive healthcare costs sky high for everyone.” Brewer praised the federal agents and prosecutors who endeavor to expose these fraudsters and protect patients. Prosecutors who worked on these cases include Blanca Quintero, Valerie H. Chu, Mark Pletcher, Kevin Larsen, Josh Green, Drew Galvin, Paul Starita, Dylan Aste and Larry Casper.

“These cases demonstrate our commitment to pursuing medical providers, suppliers and others who insist on placing profits before patients,” said Timothy B. DeFrancesca, Special Agent in Charge, Office of the Inspector General for the U.S. Department of Health and Human Services. “We will continue to root out fraud, waste, and abuse in federal healthcare programs and hold accountable people who brazenly steal from the vital programs.”

“The FBI, together with our federal, state, and local partners, remains steadfast in our commitment to uncover and investigate health care fraud, no matter what form it takes,” said Suzanne Turner, Special Agent in Charge of the FBI's San Diego Field Office.  “Our agents will continue this important work to ensure public and private health care dollars are used as intended, to promote the health and safety of all Americans and safeguard continued access to critical health care services.”

U.S. Attorney Brewer announced the following charges in San Diego as part of the national takedown:

• United States v. Burruss, et. al.  On September 29, 2020, Charles A. Burruss and Ardalaan “Armani” Adams were charged with conspiracy to commit wire fraud for participating in a massive scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment.  According to the charging documents, the defendants created a network of over 30 DME companies in the names of straw and nominee owners, to increase their profits and avoid scrutiny and audits from Medicare that could occur if the same companies submitted hundreds or thousands of bills for similar DME products in a short period of time.  The United States alleges that the Medicare beneficiaries were often harassed by telemarketers through multiple phone calls per day, to accept back, knee, wrist, and other braces covered by Medicare.  Because they were paid by the brace, the telemarketers used fast-talking, high-pressure tactics to “upsell” patients (although the patients actually paid nothing for the braces, not even the required co-pays) to consent to receiving multiple products, up to a goal of what was called the “iron man kit” – back brace, neck brace, shoulder brace, two knee braces, two ankle braces, and two wrist braces.  Marketing companies purchased those patient names, then paid telemedicine doctors to sign prescriptions and issue cut-and-paste justifications for patients they hadn’t examined and had rarely spoken with.  The DME companies owned or managed by Burruss and Adams paid for the referral of these Medicare patients, generally between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute.  All told, Burruss and Adams, through their more than 30 different DME companies, submitted bills topping $871 million, and received a whopping $424,648,137 in payment for supplying the mostly-unneeded braces.  While Medicare was the primary target of the fraud, bills were submitted to Tricare, Civilian Health and Medical Program of the Department of Veterans Affairs (“CHAMPVA”), and Medi-Cal as well. DME companies associated with Burruss and Adams submitted claims for over 181,218 Medicare beneficiaries nationwide, including 11,312 elderly or disabled residents of California.  The defendants have also been charged in the District of New Jersey and the Middle District of Florida for related conduct. 
   
• United States v. Bell, et al.  On September 18, 2020, father-and-son duo Anthony Duane Bell Sr. and Anthony Duane Bell Jr. were indicted for conspiracy to commit wire fraud for participating in a huge scheme to pay kickbacks for referrals of Medicare patients, then bill Medicare for Durable Medical Equipment (“DME”) sent to those patients, who had not been examined by a physician, and who generally did not need, and many times did not want, the equipment.   Through their companies, Universal Medical Solutions, the Bells paid between $250 and $380 for each referral of brace for a Medicare patient, in violation of the Anti-Kickback Statute, in order to submit thousands of dollars in bills for the DME to Medicare, in violation of the health care fraud statutes, according to the indictment. Through just their single company, the Bells submitted over $49 million in bills to Medicare in less than two years. They also perpetuated their business model to increase their own profits by providing funds and the necessary contacts and introductions to set up other DME companies, and encouraging those DME companies to pay unlawful kickbacks by purchasing completed doctors’ orders – all so that they could obtain a “revenue share” (that is, a portion of the payments that those other DME companies received from Medicare).  As a further deceptive aspect of their scheme, the defendants lied to Medicare about the ownership and control over their company, and Bell Jr. told multiple lies to the FBI when interviewed about the company in April 2019. 
•  
• United States v. Collins, et. al.  On June 9, 2020, Jimmy Collins, Ashley Collins, Kyle Adams, Daniel Castro, and Jeremy Syto were indicted for health care fraud and paying and receiving kickbacks for Tricare referrals for their efforts to supply expensive compound medications to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Jimmy and Ashley Collins, a husband-and-wife team, allegedly created a multi-level-marketing network, paying marketing representatives to recruit Tricare beneficiaries at military bases such as Twenty-nine Palms and Miramar by paying them hundreds of dollars to sign up to receive the worthless compound creams. If those service members recruited additional Tricare beneficiaries, they received a portion of the TRICARE reimbursement that resulted. Doctors in Tennessee, who had never examined nor spoken with their purported patients, issued hundreds of prescriptions for these pharmaceuticals to the San Diego soldiers and sailors. The average price of these compounded drugs was $14,510.33 apiece. The conspiring pharmacies submitted over $65 million in bills to Tricare for these drugs, which most beneficiaries did not need and which many simply threw into the trash.  With their ill-gotten gains, Jimmy and Ashley Collins purchased an $8 million yacht and farm equipment, which has been forfeited.  Former U.S. Marines Adams and Castro, and U.S. Navy service member Syto, have pleaded guilty, admitting their participation in the Tricare fraud and kickback scheme. Each admitted to having received over $100,000 in kickbacks for receiving the worthless creams and for recruiting other service members into the scheme.
   
• United States v. Green, et. al.  On June 29, 2020, Melinda Green and Ron Green were indicted for health care fraud and paying kickbacks for Tricare referrals for their efforts to supply expensive compound creams to beneficiaries covered by Tricare, the health care benefit program for military service members and their dependents. Though neither defendant is a pharmacist, they concocted compounds with the highest-priced ingredients in order to maximize the reimbursement from Tricare, then pushed their marketing representatives to pay doctors and clinics to prescribe these compounds that were supposedly customized for a patient’s individual needs.  Through their companies, NHS Pharma and NHS Pharma Sales, they submitted over $4.5 million in bills to Tricare for these compounds, which beneficiaries did not need.  The defendants are next due in court on January 8, 2021 at 11:00am.
   

The following cases were included in today’s takedown figures, but have been previously announced by this office:

• United States v. Matthews. On August 24, 2020, Donald Joseph Matthews, the former Vice President of Market Development for local genetics company Proove Biosciences, Inc., pleaded guilty to participating in a conspiracy to pay kickbacks to doctors for referring Medicare patients to Proove for genetic tests.  To paper-over the illegal kickback scheme, the payments were disguised as compensation to doctors for participating in a clinical research study, although no study existed and doctors were told to fabricate the number of “hours” they worked on the study, when in reality they were being paid for each patient referred to Proove.  Proove submitted more than $45 million in claims to Medicare for tests procured by the unlawful kickbacks and received approximately $21 million in unlawful payments.
   
  https://www.justice.gov/usao-sdca/pr/vp-genetics-company-pleads-guilty-paying-physicians-sham-clinical-research-fees-part-21
   
• In re Progenity.  On July 21, 2020, the United States reached a settlement with San Diego-based research laboratory Progenity, Inc., in which the company agreed to pay $49 million to resolve claims that it had defrauded Tricare, Medicare, and state health care benefit programs by knowingly using the incorrect code to bill for genetic testing that would otherwise not have been covered by those programs. 
   
  https://www.justice.gov/usao-sdca/pr/san-diego-laboratory-admits-fraudulent-tricare-billing-agrees-pay-49-million
   
• Dr. Prakash Bhatia.  On April 30, 2020, local psychiatrist Dr. Prakash Bhatia agreed to pay $145,000 to resolve allegations that he overprescribed opioids, including fentanyl, hydromorphone, morphine, methadone, oxycodone, and oxymorphone, in violation of the civil provisions of the Controlled Substance Act.  The United States’ allegations included that Dr. Bhatia inappropriately prescribed opioids along with benzodiazepines and/or muscle relaxants to the same patients, combinations known to increase the risk of abuse, addiction, and overdose.           

https://www.justice.gov/usao-sdca/pr/san-diego-psychiatrist-pays-145000-resolve-opioid-overprescribing-investigation

In addition, in light of the ongoing opioid epidemic and an alarming increase in fentanyl overdose deaths within the Southern District, the U.S. Attorney’s Office continues to aggressively prosecute those responsible for illegally distributing fentanyl and other opioids that cause death irrespective of the defendant’s place in the chain of distribution of such deadly drugs. 

• United States v. Garcia.  On May 20, 2020, Lorenzo Anthony Garcia was indicted for distributing fentanyl that resulted in the death of a 15-year old high school junior who was a member of his school varsity football team. https://www.justice.gov/usao-sdca/pr/law-enforcement-issues-public-safety-warning-about-extreme-danger-fentanyl
   
• United States v. Davis.  On August 18, 2020, Perry Edward Davis was indicted for distributing fentanyl and cocaine resulting the death of a 25-year old victim. The charges followed after three people overdosed and collapsed within minutes of each other outside of a local cocktail bar.  Two females were revived by paramedics but the male victim did not survive.
   

Today’s enforcement actions were led and coordinated by the Criminal Division, Fraud Section’s Health Care Fraud Unit, in conjunction with its Health Care Fraud and Appalachian Regional Prescription Opioid (ARPO) Strike Force program, and its core partners, the U.S. Attorneys’ Offices, HHS-OIG, FBI, and DEA, as part of the department’s ongoing efforts to combat the devastating effects of health care fraud and the opioid epidemic.  The cases announced today are being prosecuted by Health Care Fraud and ARPO Strike Force teams from the Criminal Division’s Fraud Section, along with 43 U.S. Attorneys’ Offices nationwide, and agents from HHS-OIG, FBI, DEA, and other various federal and state law enforcement agencies.

Some of the cases listed above are part of the joint FBI and HHS Operation Rubber Stamp and the 2020 Telemedicine takedown, which was coordinated by The National Rapid Response Strikeforce of the Health Care Fraud Unit of the Criminal Division Fraud Section. The Telemedicine takedown involves charges and guilty pleas in connection with widespread telemedicine schemes involving over $4 billion in false billing. The focus on telemedicine fraud builds on the 2019 telemedicine and durable medical equipment takedown ("Operation Brace Yourself"), which resulted in an estimated cost avoidance of over $1.5 billion in the amount paid by Medicare for orthotic braces in the seventeen months since the takedown, preserving the Medicare trust fund for legitimate medical care. In addition, CMS/CPI separately announced today that it took the largest number of adverse administrative actions resulting from a single administrative health care fraud investigative initiative in history in revoking the Medicare billing privileges of 256 additional medical professionals for their involvement in telemedicine schemes. 

For further information about the national takedown, see https://www.justice.gov/opa/pr/national-health-care-fraud-and-opioid-takedown-results-charges-against-345-defendants.

DEFENDANTS                                            Case Number 202980-WQH

Charles A. Burruss, 51, San Diego, CA

Ardalaan “Armani” Adams, 33, San Diego, CA                   

SUMMARY OF CHARGES

Conspiracy to Commit Wire Fraud – Title 18, U.S.C., 1349

Maximum penalty: Twenty years in prison and $500,000 fine, or twice the pecuniary gain / loss

AGENCIES

Federal Bureau of Investigation

US. Department of Health and Human Services, Office of Inspector General

DEFENDANTS                                            Case Number 202887-WQH

Anthony Duane Bell Sr., 52, El Cajon, CA

Anthony Duane Bell Jr., 30, Los Angeles, CA

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371

Maximum penalty: Five years in prison and $500,000 fine

Health Care Fraud – Title 18, U.S.C., 1347

Maximum penalty: Ten years in prison and $500,000 fine, or twice the pecuniary gain / loss

Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)

Maximum penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss

False statement to Government – Title 18, U.S.C., 1001

Maximum Penalty: Five years in prison and $250,000 fine

AGENCIES

Federal Bureau of Investigation

US. Department of Health and Human Services, Office of Inspector General

DEFENDANTS                                            Case Number 18CR432-JLS

Jimmy Collins, 56, Tennessee

Ashley Collins, 34, Tennessee

Kyle Adams, 33, Texas

Daniel Casto, 32, Illinois

Jeremy Syto, 27, California

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud – Title 18, U.S.C., 1349

Maximum penalty: Ten years in prison and $500,000 fine

Conspiracy to Pay and Receive Illegal Remunerations – Title 18, U.S.C., 371

Maximum penalty: Five years in prison and $500,000 fine

Receive Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(1)

Maximum penalty: Four years in prison and $500,000 fine

Pay Illegal Remunerations – Title 42, U.S.C., 1320a-7b(b)(2)

Maximum penalty: Four years in prison and $500,000 fine

AGENCIES

Defense Criminal Investigative Service

Federal Bureau of Investigation

DEFENDANTS                                            Case Number 18CR432-JLS

Melinda Green, 59, Escondido, CA and Windermere, FL

Ronald Green, 66, Escondido, CA and Windermere, FL

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud and Pay Kickbacks – Title 18, U.S.C., 371

Maximum penalty: Five years in prison and $500,000 fine

Unlawful Remuneration – Title 42, U.S.C., 1320d-7b(b)

Maximum Penalty: Four years in prison and $500,000 fine, or twice the pecuniary gain / loss

AGENCY

Defense Criminal Investigative Service

DEFENDANT                                               Case Number 20CR1222-GPC

Lorenzo Anthony Garcia, 21, Brawley, CA

SUMMARY OF CHARGES

Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury  – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)

Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison

AGENCY

Drug Enforcement Administration

DEFENDANT                                               Case Number 20CR2500-LAB

Perry Edward Davis, 44, San Diego, CA

SUMMARY OF CHARGES

Manufacture, distribute, or possess with intent to manufacture, distribute, or dispense a controlled substance resulting in death or serious bodily injury  – Title 21, U.S.C., Section 841(a)(1), (b)(1)(C)

Maximum Penalty: Mandatory minimum 20 years in prison, Maximum life in prison

AGENCIES

Drug Enforcement Administration

El Cajon Police Department

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

 

RESUMEN DEL COMUNICADO DE PRENSA –24 de septiembre de 2020

SAN DIEGO – Melissa Álvarez Torres y José Luis Olmos Hernández, una pareja de Chula Vista que operaba lo que ellos afirmaban era una compañía privada que vendía seguros de salud, hicieron su primera comparecencia en el tribunal federal el día de hoy para responder a cargos de que se asociaron delictivamente para estafar a cientos de mujeres embarazadas y de ocasionarle aproximadamente 1.6 millones de dólares en pérdidas a Medi-Cal, un programa federal de servicios de salud.

Según una demanda penal que se reveló esta tarde, del 2016 hasta la fecha presente, Álvarez y Olmos se asociaron delictivamente para defraudar al Programa de Acceso a Medical ("MCAP," por sus siglas en inglés), que es un programa de servicios de salud que administra el Departamento de Servicios para el Cuidado de la Salud de California (DHCS, por sus siglas en inglés) que opera con fondos del gobierno estatal y el gobierno federal. MCAP es un programa diseñado para ayudar a familias trabajadoras de

medianos ingresos del estado de California que no cuentan con un seguro de salud adecuado que cubra los servicios de maternidad y el cuidado post-natal a un bajo costo basado en sus ingresos.

La demanda alega que Álvarez y Olmos promovían el "seguro" privado a mujeres embarazadas de nacionalidad mexicana que tuviesen una visa de trabajo o de turista. A través de publicidad en Facebook, donde se anunciaban bajo el nombre de Seguros Americanos Embarazo ("American Pregnancy Insurance"), Álvarez y Olmos engañosamente aducían que el "seguro" que ellos ofrecían permitiría que estas mujeres embarazadas dieran a luz legalmente en los Estados Unidos, sin arriesgar sus visas por utilizar los servicios gubernamentales. Le cobraron a cada una de las mujeres embarazadas miles de dólares por el supuesto "seguro".

Sin embargo, Álvarez y Olmos en realidad no tenían un seguro privado que pudiesen vender. En lugar de eso, ellos usaron la información personal que identificaba a estas mujeres para registrarlas para recibir las prestaciones que ofrece MCAP. Como se acusa en la demanda, Álvarez y Olmos presentaron cientos de solicitudes fraudulentas y documentación fiscal y de empleo fraudulenta para apoyar dichas solicitudes ante MCAP, simulando que las mujeres calificaban para recibir dichas prestaciones cuando en realidad no calificaban – y no habían dado su consentimiento para que se les inscribiera en dicho programa. Como resultado, se acusa a Álvarez y Olmos de haberles costado a los contribuyentes americanos millones de dólares en costos de servicios de salud, además de los cientos de miles de dólares en honorarios que recibieron de las mujeres a las que estafaron.

Álvarez y Olmos fueron arrestados el miércoles en la mañana como resultado de una investigación que involucró a múltiples dependencias, que inició el Departamento de Servicios para el Cuidado de la Salud de California, y que se llevó a cabo en cooperación con otras dependencias, incluyendo la Administración del Seguro Social, la Oficina de la Fiscalía Federal del Distrito Sur de California, y el Buró Federal de Investigaciones (FBI), para la aplicación de las leyes que gobiernan a Viajeros y la Residencia.

"No vamos a tolerar a estafadores que tratan de lucrar y aprovecharse de programas importantes de salud pública y de mujeres embarazadas", declaró el Fiscal Federal Brewer. "Seguiremos protegiendo al contribuyente americano y garantizaremos la integridad de los programas cuyo propósito es ayudar a los menesterosos e investigaremos y procesaremos penalmente a quienes tratan de aprovecharse de ellos".

"Agradecemos el apoyo crucial que las dependencias aliadas brindaron en esta investigación para arrestar a personas que tratan de aprovecharse de algunos de los miembros más vulnerables de nuestra sociedad, así como la asistencia que brindaron para proteger la integridad del programa Medi-Cal", señaló el Director de DHCS, Will Lightbourne.

"Agentes del FBI trabajan de manera diligente todos los días sin falta para descubrir actividades de fraude en contra del gobierno", declaró la Agente Especial a Cargo Suzanne Turner. "En este caso, los investigadores descubrieron una pérdida que se aduce es de 1.6 millones de dólares que sufrió el Programa Medi-Cal de California, así como dinero que se obtuvo de manera fraudulenta de cientos de mujeres embarazadas que creyeron que estaban comprando un seguro legítimo con cobertura para los servicios de salud que necesitaban. La viabilidad de los programas de servicios de salud gubernamentales depende de que estos programas se utilicen con honradez y para las personas necesitadas. Por ello, el FBI se mantiene firme en la realización del importante trabajo de descubrir el fraude en los servicios de salud, trabajando en alianza con el Departamento de Servicios para el Cuidado de la Salud de California y otras dependencias a cargo de la ejecución de la ley".

Si usted cree que ha sido víctima de Álvarez y Olmos, o si ha comprado un seguro de salud de Seguros Americanos Embarazo, por favor comuníquese con el Departamento de Servicios para el Cuidado de la

Salud de California, marcando el número 1-800-822-6222.

ACUSADOS Caso Núm. 20-mj-4076

MELISSA ÁLVAREZ TORRES Edad 33 Chula Vista, CA

alias "Melissa Torres"

alias "Melissa A. Torres"

JOSÉ LUIS OLMOS HERNÁNDEZ Edad 36 Chula Vista, CA

alias "José Luis Hernández"

alias "José L. Hernández"

alias "José Carlos"

alias "Carlos García"

RESUMEN DE LOS CARGOS

Asociación Delictuosa para Cometer Fraude a los Servicios de Salud y Fraude Mediante el Uso de Telecomunicaciones – Título 18, U.S.C., Sección 1349

Pena Máxima: 20 años de encarcelamiento y una multa de $250,000 dólares, o dos veces la ganancia monetaria o dos veces la pérdida monetaria, lo que resulte ser mayor. El resarcimiento es obligatorio.

DEPENDENCIAS

Departamento de Servicios para el Cuidado de la Salud del Estado de California

Buró Federal de Investigaciones

*Los cargos y alegatos que contiene una acusación formal o demanda penal son únicamente acusaciones, y a los acusados se les considera inocentes a menos que y hasta que se pruebe su culpabilidad.

 

NEWS RELEASE SUMMARY – September 24, 2020

SAN DIEGO – Melissa Alvarez Torres and Jose Luis Olmos Hernandez, a Chula Vista couple who operated what they claimed to be a private insurance sales company, made their initial appearances today in federal court on charges that they conspired to defraud hundreds of pregnant women and caused an estimated $1.6 million in losses to Medi-Cal, a government health care program.

According to a complaint unsealed this afternoon, from 2016 through the present Alvarez and Olmos conspired to defraud the Medi-Cal Access Program ("MCAP"), a health care program administered by the California Department of Health Care Services and funded by state and federal government funds. MCAP is a program designed to assist working, middle-income California families without adequate health insurance by covering maternity services and post-natal care for a low cost based on their income.

It is alleged in the complaint that Alvarez and Olmos marketed private "insurance" to pregnant Mexican nationals holding work or tourist visas. Through Facebook advertising under the name Seguros Americanos Embarazo ("American Pregnancy Insurance"), Alvarez and Olmos falsely claimed that their "insurance" product would permit these pregnant women to give birth legally in the United States, without jeopardizing their visas by using government services. They charged the pregnant women thousands of dollars apiece for the purported "insurance."

In reality, however, Alvarez and Olmos did not have private insurance to sell. Instead, they used the women’s personal identifying information to sign them up for MCAP benefits. As charged in the complaint, Alvarez and Olmos submitted hundreds of false applications and fraudulent supporting tax and employment documents to MCAP, pretending that the women were eligible for benefits when in fact they did not qualify—and did not consent to be signed up for the program. As a result, it is alleged that Alvarez and Olmos cost American taxpayers millions of dollars in health care costs on top of the hundreds of thousands in fees they collected from the women they defrauded.

Alvarez and Olmos were arrested on Wednesday morning as a result of a multiagency investigation initiated by the California Department of Health Care Services, pursuant to the Travel and Residency Enforcement Co-Op with the Social Security Administration and the United States Attorney’s Office for the Southern District of California, along with the Federal Bureau of Investigation.

"We will not tolerate criminals who try to profit and take advantage of important public health programs and vulnerable pregnant women," said U.S. Attorney Brewer. "We will continue to protect the American taxpayer and ensure the integrity of programs intended to help the needy by investigating and prosecuting those who would try to exploit them."

"We appreciate the crucial support our partners provided in this investigation to apprehend people preying on some of society’s most vulnerable members, and their assistance in protecting the integrity of the Medi-Cal program," said DHCS Director Will Lightbourne.

"Each and every day, FBI agents are working diligently to uncover fraud against the government," said FBI Special Agent in Charge Suzanne Turner. "In this case, investigators uncovered an alleged $1.6 million dollar loss from the California Medi-Cal Program as well as fraudulently obtained money from hundreds of pregnant women who thought they were purchasing legitimate insurance coverage for their health care needs. The viability of government healthcare programs depends on honest use of the programs for those in need. Therefore, the FBI remains steadfast in the important work of uncovering healthcare fraud in partnership with California’s Department of Health Care Services and other law enforcement agencies."

If you think you are a victim of Alvarez and Olmos, or purchased health insurance through Seguros Americanos Embarazo, please contact the California Department of Health Care Services at 1-800-822-6222.

DEFENDANTS Case No. 20-mj-4076

MELISSA ALVAREZ TORRES Age 33 Chula Vista, CA

aka "Melissa Torres"

aka "Melissa A. Torres"

JOSE LUIS OLMOS HERNANDEZ Age 36 Chula Vista, CA

aka "Jose Luis Hernandez"

aka "Jose L. Hernandez"

aka "Jose Carlos"

aka "Carlos Garcia"

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud and Wire Fraud – Title 18, U.S.C., Section 1349

Maximum penalty: 20 years in custody and a $250,000 fine, or twice the pecuniary gain or twice the pecuniary loss, whichever is greater. Restitution is mandatory.

AGENCIES

State of California’s Department of Health Care Services

Federal Bureau of Investigation

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Assistant U. S. Attorneys Andrew J. Galvin (619) 546-9721 and Aaron P. Arnzen (619) 546-8384    

NEWS RELEASE SUMMARY – September 21, 2020

SAN DIEGO – An indictment unsealed today charges four individuals, including a securities attorney, with securities fraud for running an illegal pump-and-dump scheme surrounding two publicly-traded stocks.  The investigation that led to these charges involved a co-conspirator-turned-confidential-informant who was cooperating with the FBI.   

According to court documents, Ongkaruck Sripetch (a resident of Gig Harbor, Washington, who used the aliases “King Richards” and “Shelby Saint-Claire”), Canadian resident Michael Wexler, Canadian resident and securities attorney Ashmit Patel, and Grand Cayman resident Andrew McAlpine were members of a stock fraud ring who worked together to artificially inflate the prices of penny stocks, then quickly unload their own shares before the prices collapsed. The defendants did not know that, while the scheme was underway, one of their partners had begun cooperating with the Government’s investigation and was collecting evidence against his co-conspirators. 

Defendant McAlpine was arrested Friday when he entered the United States from Grand Cayman, and defendant Sripetch was also arrested Friday, in Gig Harbor, Washington. The United States is seeking the arrest of defendants Patel and Wexler. 

As alleged in the indictment, a pump-and-dump scheme takes place when subjects acquire publicly-traded stock at low prices, issue misleading news releases or promotional materials to artificially increase the price of the stock, sell the stock to unsuspecting investors, and split the proceeds. The stock fraud ring charged here carried out pump-and-dump schemes on the stock of two companies: Ottawa, Canada-based VMS Rehab Systems, which claimed to sell “quality of life orthopedic seat cushions for the home healthcare sector,” and Argus Worldwide, a company headquartered in Cheyenne, Wyoming, which purportedly focused on “digital/internet products and services, smart consumer electronic products and health industries.” 

“These defendants sought to boost the stock price of two companies, and then leave innocent investors with investments that they knew would almost immediately lose most or all of their value,” said U.S. Attorney Robert Brewer.  “We will continue to investigate and prosecute this type of stock fraud.”  Brewer praised prosecutors Andrew Galvin and Aaron Arnzen, as well as the Federal Bureau of Investigation and the Securities and Exchange Commission for their investigation in this case.

“The FBI's complex financial crimes investigators diligently work securities fraud cases like this pump-and-dump scheme in order to maintain the integrity of our financial markets,” said Suzanne Turner, Special Agent in Charge of the FBI's San Diego Division.  “Today, Grand Cayman resident Andrew McAlpine and co-conspirator Ongkaruck Sripetch were arrested by FBI Agents and will face the charges for this alleged conspiracy.  The FBI will continue to seek justice for those who are victmized by unscrupulous actors that manipulate our financial markets no matter where they reside.”

The indictment also alleges that, as part of the scheme, the conspirators traded the stock of VMS Rehab and Argus Worldwide between themselves. They made these trades to create the appearance that investors were genuinely interested in and actively trading the stocks. Sadly for victim investors, it was a façade – this manipulative trading was just part of defendants’ effort to entice investors to purchase VMS Rehab and Argus Worldwide stock at artificially high prices. 

DEFENDANTS                                            Case Number 20cr0160-H                                       

Ongkaruck Sripetch                                        Age: 45                                   Gig Harbor, WA

aka King Richards

aka Shelby Saint-Claire

Michael Wexler                                              Age: 74                                   Ottawa, Ontario, Canada

Ashmit Patel                                                   Age: 36                                   Oakville, Ontario, Canada

Andrew McAlpine                                          Age: 47                                   Grand Cayman, Cayman Islands

SUMMARY OF CHARGES

Conspiracy to Commit Securities Fraud – Title 18, U.S.C., Section 371

Securities Fraud – Title 15, U.S.C., Sections 78j(b), 78ff, and Title 17, C.F.R., Section 240.10b-5

Manipulative Securities Trading – Title 15, U.S.C., Sections 78i(a)(1), 78ff.

Maximum penalty: Twenty years in prison and $5 million fine

AGENCIES

Federal Bureau of Investigation

Securities and Exchange Commission

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

Assistant U. S. Attorney Cindy Cipriani (619) 546-9608

NEWS RELEASE SUMMARY – September 21, 2020

SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice has awarded more than $1 million in grants to organizations based in San Diego County that provide resources to victims of domestic violence and sexual assault.

San Diego-based Alliance for Hope International, led by former San Diego City Attorney Casey Gwinn, received $675,000; Valley Center-based Strong Hearted Native Women’s Coalition received $353,615.

 “These are significant grants that will help these organizations provide important services to our community,” said U.S. Attorney Robert Brewer. “This funding supports our goal to put an end to violence against women. These strong partnerships with community organizations put us closer to that goal and bring us together for an important cause.”

The Office on Violence Against Women (OVW) Training and Technical Assistance (TA) Initiative provides OVW grantees such as Alliance for Hope International with the expertise and support they need to develop and implement successful state, local, tribal, and campus projects; increase victim safety; and bolster offender accountability. Through cooperative agreements, OVW supports educational initiatives, conferences, peer-to-peer consultations, and targeted assistance, allowing current and potential grantees to learn from experts and one another about how to overcome obstacles and incorporate promising practices in their efforts to address violence against women. In addition, OVW is focused on building the capacity of the criminal and civil justice systems and victim services organizations to respond effectively to domestic violence, dating violence, sexual assault, and stalking and to foster partnerships between organizations that have not traditionally worked together to address violence against women.

With this FY 2020 TA award, Alliance for HOPE International will continue to implement the Identifying, Investigating, and Prosecuting Strangulation Project. During the course of the project period, Alliance will continue to implement the Training Institute on Strangulation Prevention, maintain the project website with new and revised tools and resources for multidisciplinary professions, conduct stand-alone webinars, and provide on-going technical assistance on addressing strangulation in domestic violence and sexual assault cases.

The Tribal Domestic Violence and Sexual Assault Coalitions Program (Tribal Coalitions Program) supports the development and operation of nonprofit, nongovernmental tribal domestic violence and sexual assault coalitions. The Violence Against Women Reauthorization Act of 2013 changed the program from a discretionary program to a mixed formula and discretionary program, with each recognized coalition receiving an equal amount of available funds and organizations that propose to incorporate and operate new tribal coalitions eligible to apply for discretionary funding. This program is funded through statutory set-asides from the STOP Violence Against Women Formula Program (34 U.S.C. § 10446(b)(4)) and the Improving Criminal Justice Responses to Sexual Assault, Domestic Violence, Dating Violence, and Stalking Grant Program (34 U.S.C. § 10461(f)). The Tribal Coalitions Program also includes a statutory set-aside from the Sexual Assault Services Program (SASP), specifically for tribal sexual assault coalitions (34 U.S.C. § 12511(d)(3)(A)).

The Strong Hearted Native Women's Coalition (SHNWC) serves tribal reservations and communities located in the Counties of San Diego, Santa Barbara, San Bernardino, and Riverside in California. Additionally, SHNWC also works with many of the non-native service providers within San Diego and Riverside Counties, including four shelter programs and three rape crisis centers, as well as with San Bernardino-Riverside Indian Health under the Kiicha, Safe Home project. With this award, SHNWC will provide technical assistance, training, and services to the community service area to enhance access to and awareness of services for victims of domestic violence, sexual assault, dating violence, stalking, and sex trafficking.

Assistant U. S. Attorney Katherine McGrath (619) 546-9054   

NEWS RELEASE SUMMARY – September 21, 2020

SAN DIEGO – Joseph Price was sentenced in federal court today for sex trafficking a minor in San Diego in July and August 2019, in violation of 18 U.S.C. § 1591. Price was sentenced to fifteen years in custody by U.S. District Judge Larry Alan Burns.

In his plea agreement, Price admitted that on approximately 11 occasions, he caused a 15-year old girl to engage in commercial sex acts in San Diego. On at least one occasion, he admitted that he hit the minor in order to make her complete the sex acts. As part of his plea, Price further admitted to meeting two additional minor females in Texas over “Instagram” and then encouraging them to engage in commercial sex acts. One of these girls also engaged in commercial sex acts in Texas and sent the money she made to Price. Both were being encouraged by Price to leave their family and friends in Texas and travel to San Diego to continue working for Price when law enforcement intervened.

“Sex trafficking of teenagers targets some of the most vulnerable individuals in our community, and leaves in its wake trauma that can affect victims for the rest of their lives,” said U.S. Attorney Robert S. Brewer, Jr. “The U.S. Attorney’s Office is deeply committed to ensuring that justice is done for the victims of these horrible crimes.” Brewer praised prosecutor Katherine McGrath and the San Diego Human Trafficking Task Force for working hard to protect children.

This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section.  Formed in 2019 by U.S. Attorney Brewer, the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.

DEFENDANT                                               Case Number 19-CR-3649-LAB                                        

Joseph Price                                                    Age: 24                       San Diego

SUMMARY OF CHARGES

18 U.S.C. § 1591, Sex Trafficking of a Minor

Maximum penalty: Mandatory minimum of 10 years and a maximum of life in prison; a maximum fine of $250,000, at least five years of supervised release and up to life.

AGENCY

San Diego Human Trafficking Task Force

 

Assistant U. S. Attorney Mark W. Pletcher (619) 546-9714

NEWS RELEASE SUMMARY – September 18, 2020

SAN DIEGO – Two doctors, Susan Vergot and Carl Lindblad, were sentenced in federal court today for participating in a health care fraud scheme that bilked TRICARE – the health care program that covers United States service members – out of tens of millions of dollars by prescribing thousands of exorbitantly expensive compounded drugs to patients they never saw or examined.

Dr. Vergot and Dr. Lindblad were sentenced to 24 and 28 months in custody, respectively, by U.S. District Judge Janis L. Sammartino. The custodial portion of each defendant’s sentence will be split between prison and home confinement. Each was also sentenced to pay a $15,000 fine.

"This conspiracy inflicted nearly $65 million in actual losses to TRICARE, the health care benefits program relied upon by millions of our military members and their families," said U.S. Attorney Robert Brewer. "It is hard to imagine a more outrageous example of selfish doctors stealing from the U.S. health care system believing they were exempt from providing necessary care."

"Today’s sentencings demonstrate our resolve to hold those accountable who seek to enrich themselves at the expense of taxpayers," said Michael Mentavlos, Special Agent in Charge of the Defense Criminal Investigative Service, Southwest Field Office. "TRICARE is a critical DoD program providing care for our service members, retirees, and their families. Together with our partners, we will continue to use all means available to root out fraud in this invaluable program."

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

According to the sentencing memorandum, as part of this conspiracy a team of individuals worked to recruit and pay Marines, primarily from the San Diego area, and their dependents – all TRICARE beneficiaries – to obtain compounded medications that would be paid for by TRICARE. This information was sent to Choice MD, the Tennessee medical clinic that employed Dr. Vergot and Dr. Lindblad. Dr. Vergot and Dr. Lindblad then wrote prescriptions for the TRICARE beneficiaries, despite never examining the patients. Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to particular pharmacies controlled by co-conspirators, most often a small pharmacy, The Medicine Shoppe in Bountiful, Utah, which filled the prescriptions and mailed the drugs to the patients in California.

Between November 2014 and June 2015, Drs. Vergot and Lindblad authorized 6,694 prescriptions, for which their co-conspirators billed TRICARE a staggering $89,725,000. Of this amount, over $65 million was for prescriptions written for straw TRICARE beneficiaries in the Southern District of California.

Defendants Vergot and Lindblad are the second and third defendants sentenced in this matter. CFK, Inc., the corporate owner of The Medicine Shoppe, was sentenced previously. A nurse practitioner, Candace Craven, previously pleaded guilty, as have the patient recruiters, including Joshua Morgan, Kyle Adams, Daniel Castro, Jeremy Syto, and Bradely White. All await sentencing. Jimmy and Ashley Collins, the owners of Choice MD, were charged by Superseding Indictment in June 2020. Their case remains pending. .

DEFENDANTS Case Numbers: 18-CR-1850-JLS, 18-CR-1855-JLS

Carl Lindblad Age: 77 Chattanooga, TN

Susan Vergot Age: 65 Chattanooga, TN

SUMMARY OF CHARGES

Conspiracy to Commit Health Care Fraud – Title 18, U.S.C § 1349

Maximum penalty: Ten years in prison and $250,000 fine or double loss amount, whichever is greater

AGENCY

Defense Criminal Investigative Service

Naval Criminal Investigative Service

IRS Criminal Investigation Division, Gulfport, MS

Federal Bureau of Investigation - Jackson, MS Field Office

Assistant U. S. Attorneys Nicholas Pilchak (619) 546-9709 or Andrew Haden (619) 546-6961

NEWS RELEASE SUMMARY – September 15, 2020

SAN DIEGO – Former San Diego County Sheriff’s Captain Marco Garmo pleaded guilty in federal court today to illegally trafficking in firearms from his office in the Rancho San Diego Station and committing other corrupt acts spanning close to a quarter of his 27 years in the department.

As part of his plea, Garmo also admitted that he tipped off a marijuana dispensary that was about to be searched by Sheriff’s officials – part-owned by his cousin – and pressured another illegal dispensary to hire his friend and co-defendant Waiel Anton as a “consultant,” along with another individual who had agreed to pay Garmo a kickback.

In the plea agreement, Garmo admitted that he engaged in the business of dealing in firearms for profit without a license, which he knew was against the law.  He acknowledged acquiring 144 firearms in less than six years, and selling or transferring 98 of them.  His unlawful business provided Garmo several forms of compensation.  In some transactions, he received a financial profit. In others, Garmo engaged in firearm sales to build good will for future favors related to his anticipated campaign for Sheriff of San Diego County.  The charges against Garmo include a series of “straw purchases” in which Garmo falsely told dealers that he was acquiring handguns for himself, when in truth he was sourcing them for associates who could not buy them directly under California law.

Garmo admitted in his plea agreement that as a law enforcement officer, he occupied a position of public trust that he abused to commit these offenses.  Specifically, California law provided Garmo with a series of special firearms privileges—like the ability to purchase an unlimited number of handguns per month, and the right to purchase newer-model “off-roster” handguns not approved for initial sale to civilians—and Garmo abused these privileges to conduct his unlicensed firearms dealing. 

Garmo also abused his position of trust as the chief law enforcement officer in charge of the Rancho San Diego Station to tip off his cousin—a partner in an illegal marijuana dispensary known as “Campo Greens”—by providing information he had received about an impending search of the cousin’s dispensary. 

Garmo admitted lying to federal agents when asked about the tip-off during an interview, saying he would never put his fellow deputies “in harm’s way” by notifying the targets of a search warrant. In the plea, Garmo specifically acknowledged that he provided this information in order to help his cousin and Campo Greens evade law enforcement officers and avoid the seizure of the dispensary’s inventory and cash proceeds.  Indeed, as alleged in the indictment, Campo Greens staff heeded Garmo’s secret warning by emptying the store of its valuable products and cash proceeds in advance of the impending search.

According to the indictment, Garmo continued his efforts to unlawfully assist his cousin weeks later, by seeking help from a San Diego County employee when Campo Greens was served with a nuisance abatement letter by County Code Enforcement that would force the illegal dispensary to cease operations.  Having received a copy of the letter from his cousin, Garmo texted the County employee to ask “can we push it back?”  The County employee answered, “Yes you can.” 

As part of today’s guilty plea, Garmo admitted that he also sought to profit from a second unlicensed marijuana dispensary, when the County condemned the property housing the dispensary.  In the summer of 2018, Garmo recommended that the dispensary’s landlord hire co-defendant Waiel Anton and another individual—then working for the County—as “consultants” to help get the condemned property reopened.  According to Garmo’s plea agreement, Anton would pretend to rent the landlord’s property.  In exchange for recommending the County employee as a “consultant,” the employee agreed to pay 10 percent of their fee to Garmo as a kickback.  Garmo admitted that, when the proposal fell through and the landlord declined to hire Anton and the County employee, Garmo retaliated by telling the employee to have the County “piss on” the landlord.

According to the indictment, Garmo was a Sheriff’s deputy for the San Diego County Sheriff’s Department for almost 27 years until September 20, 2019.  In his plea, Garmo admitted that he was engaged in the unlawful acquisition, transfer, and sale of firearms during his entire tenure as the Captain of the Rancho San Diego Station.

In fact, one of Garmo’s firearms transactions involved a brazen sale inside the Captain’s Office of the Rancho San Diego Station on October 28, 2016. Garmo admitted that on that date, he and co-defendant Giovanni Tilotta (a licensed San Diego gun dealer) sold a Glock handgun, an AR-15 style rifle, and a Smith & Wesson handgun to a local defense attorney inside Garmo’s office. Per the plea agreement, Garmo coordinated backdated paperwork to avoid the 10-day waiting period required by California law for handgun purchases, and Garmo supplied the attorney with San Diego Sheriff’s Department-issued ammunition.  Garmo expressly admitted that this sale violated California law, which requires firearms sales to be conducted at the dealer’s premises, a gun show or special event, or at the buyer or seller’s home. 

“This case involved stunning and sustained violations of the public trust by a high-ranking law enforcement officer who bent his public position to his private gain,” said Attorney for the United States Linda Frakes. “This office will not hesitate to hold accountable anyone who thinks that their badge or office is a license to break the law. All of the honorable men and women serving their communities in law enforcement deserve no less.” 

Part of Garmo’s unlicensed firearms dealing operation involved directing his immediate subordinate, co-defendant Fred Magana, in completing a straw purchase of two firearms for co-defendant Leo Hamel, when Magana was serving as a Lieutenant under Garmo’s command. Magana entered a guilty plea on November 22, 2019 to aiding and abetting Garmo’s firearms trafficking by participating in that transaction.  For his part, local jeweler and businessman Leo Hamel pleaded guilty the same day to aiding and abetting Garmo’s unlicensed firearms dealing.  In his plea agreement, Hamel admitted working with Tilotta to create falsified records to make firearms straw purchases appear legitimate.  Hamel also acknowledged that Garmo benefited from his arrangement with Hamel by securing Hamel’s future support for Garmo’s anticipated campaign for Sheriff of San Diego County. 

According to the indictment, Waiel Anton aided and abetted Garmo’s unlicensed firearms dealing by helping Garmo’s firearms buyers apply for permits to carry a concealed weapon (“CCW”) as part of Anton’s “consulting” business.  Anton’s “consulting” arrangement secured early CCW appointments for his clients to avoid a months-long backlog at the licensing desk—a benefit that Anton provided by leveraging his relationship with a member of the licensing staff to whom he had made an unlawful cash payment.  In his plea today, Garmo admitted Anton’s role, and acknowledged that Anton would pay Garmo a kickback of $100 per CCW applicant that Garmo referred to Anton. Garmo expressly admitted receiving such a kickback in early February 2019 in exchange for referring an undercover ATF agent to Anton for his “consulting” services, and then lying to federal agents asking about money Garmo had received from Anton.  

Anton is also charged with obstruction of justice for repeatedly urging one of his “consulting” clients—in reality, an undercover agent—to lie to federal investigators following the search of Anton’s residence in February.  Per the indictment, Anton exhorted the undercover agent not to tell investigators about the $1,000 in cash Anton had charged the undercover agent to fast-track his CCW appointment, and to claim instead that Anton was helping him with his application because they were friends. 

Garmo is set to be sentenced by U.S. District Judge Gonzalo P. Curiel on December 9, 2020 at 8:30 a.m.  The next hearing in the ongoing case against Anton and Tilotta is set for October 8, 2020.

Garmo agreed to forfeit 58 firearms and 5,385 rounds of ammunition as part of his plea agreement.  In total, approximately 291 firearms and 131,458 rounds of ammunition have been forfeited as part of this investigation. 

Frakes praised the lead prosecutors on the case, Assistant U.S. Attorneys Nicholas Pilchak and Andrew Haden, as well as the dedicated investigators from the ATF and FBI.  Frakes added that the U.S. Attorney’s Office wishes to extend its sincerest gratitude to the San Diego County Sheriff’s Department for initiating this investigation, and for their assistance and support throughout its course.

“ATF’s committed to investigating and preventing firearms trafficking, and ensuring federal firearms laws are followed so criminals do not acquire guns,” said ATF Los Angeles Field Division Special Agent in Charge Monique Villegas. “ATF will hold those who sell guns illegally accountable.  ATF strives to keep our communities safe from gun-related crime.” 

“Rather than fulfill his sworn duty to uphold the law, former San Diego Sheriff's Department Captain Marco Garmo used his position to benefit himself and those he sold weapons to in his unlawful firearms business,” said FBI Special Agent in Charge Suzanne Turner. “Garmo wore the badge, but ultimately, he failed his department and the public’s trust. Today’s plea demonstrates that no one is above the law – not even a high-ranking law enforcement official. At a time when many in the public are questioning their confidence in law enforcement, the FBI remains committed to vigorously pursuing corrupt and unlawful actions by those who wear the badge. Public confidence in law enforcement and upholding the integrity of dedicated law enforcement officers who honorably serve each and every day is a priority for the FBI.”

U.S. v. Garmo, et. al, 19-CR-4768-GPC

Defendants

Morad Marco Garmo, 52 years old

Leo Joseph Hamel, 62 years old

Giovanni Vincenzo Tilotta, 38 years old

Fred Magana, 42 years old

Waiel Yousif Anton, 35 years old

Summary of Charges

Title 18, U.S.C., Sec. 922(a)(1)(A) – Engaging in the Business of Dealing in Firearms Without a License

Maximum Penalty: Five years in prison

Investigating Agencies

Bureau of Alcohol Tobacco Firearms & Explosives (ATF)

Federal Bureau of Investigation (FBI)

*The charges and allegations contained in an indictment are merely accusations.  The defendants are considered innocent unless and until proven guilty.

Assistant U. S. Attorneys Emily W. Allen (619) 546-9738, Oleksandra Johnson (619) 546-9769, and Randy Grossman (619) 546-6761

NEWS RELEASE SUMMARY – September 14, 2020

SAN DIEGO – Mendel Goldstein, the owner of a videography business based in Brooklyn, New York, pleaded guilty in federal court today to tax evasion charges relating to a long-running conspiracy with his brother, Rabbi Yisroel Goldstein.

Until around 2018, Yisroel Goldstein was the director and head rabbi at Chabad of Poway, a tax-exempt organization that the brothers used to divert Mendel Goldstein’s income and conceal more than $700,000 in earnings from the IRS.  They hid the money by depositing it into Chabad accounts, then secretly funneling it back to Mendel Goldstein by writing checks to fictitious names like “Mr. Green,” “Mr. Gold,” or “Mr. Fish.”

According to his plea agreement, beginning in 2012, Mendel Goldstein agreed with his brother Yisroel Goldstein that Mendel Goldstein could deposit his freelance videography income directly into bank accounts owned by Chabad of Poway. This allowed Mendel Goldstein to avoid reporting his entire income to the IRS.  In return, the brothers agreed that Yisroel Goldstein would keep 10 percent of Mendel Goldstein’s income as his fee—amounting to about $70,000.  Mendel Goldstein saved approximately $155,881 in taxes he should have paid to the IRS.

As Mendel Goldstein admitted today, the conspiracy operated for several years until December 2018. At that time, Yisroel Goldstein discovered that he was under investigation for tax evasion and other crimes.  He warned Mendel Goldstein about the investigation and encouraged him to conceal his tax evasion by filing delinquent tax returns.

In July 2020, Yisroel Goldstein, along with five other associates, pleaded guilty to fraud charges, admitting that he participated in a complex, years-long, multi-million dollar tax-evasion scheme and other financial deceptions involving theft of public money. Among the schemes he admitted as part of his guilty plea, Yisroel Goldstein outlined the tax avoidance conspiracy he operated with Mendel Goldstein.  Yisroel Goldstein has agreed to cooperate with the ongoing investigation.  He is scheduled to be sentenced by U.S. District Judge Cynthia Bashant on April 26, 2021.

“People who cheat on their taxes are cheating all honest taxpayers,” said U.S. Attorney Robert Brewer. “We will not tolerate the exploitation of non-profit and religious organizations to line the perpetrators’ pockets at society’s expense.”

“The law clearly states that income is subject to tax and must be reported, from whatever source derived, including compensation for services,” said Ryan L. Korner, Special Agent in Charge of IRS Criminal Investigation. “Mr. Mendel Goldstein admitted that he broke the law by hiding over $700,000 in income and willfully evading his taxes for over six years. His tax crime is made even more egregious because he exploited the tax-exempt status of Chabad of Poway to cheat the United States. Today’s guilty plea demonstrates that the IRS will diligently continue our important enforcement efforts despite the ongoing challenges posed by Covid-19. We will work alongside our law enforcement partners in a collective effort to enforce the law and ensure the public trust.”

“This investigation uncovered a conspiracy of crimes involving fraud, deception and evasion that used the cloak of a tax-exempt religious organization, the Chabad of Poway, for personal financial benefit,” said Suzanne Turner, Special Agent in Charge of FBI's San Diego Field Office.  “The FBI takes seriously the harm that financial crimes have on our country. We are all expected to follow the rule of law, and the FBI is charged with enforcing these laws.   Today, Mendel Goldstein has been reminded of this important lesson, as he acknowledged with his guilty plea.”

Judge Bashant presided over today’s arraignment and guilty plea. Mendel Goldstein is next scheduled to appear at a sentencing hearing on December 14, 2020 at 9 a.m.

NEW DEFENDANT AND SUMMARY OF NEW CHARGES

Mendel Goldstein, Case Number 20CR2772-BAS            Age: 63           Brooklyn, NY

Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371

Maximum Penalty: Five years in prison

PREVIOUSLY CHARGED DEFENDANTS AND SUMMARY OF CHARGES                   

Yisroel Goldstein, Case Number 20CR1916-BAS             Age: 58           Poway

Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371

Maximum Penalty: Five years in prison

Alexander Avergoon, Case Number 19CR2955-BAS       Age: 44           San Diego                  

Wire Fraud, in violation of Title 18, USC 1343

Maximum Penalty: Twenty years in prison

Aggravated Identity Theft, in violation of Title 18, USC 1028A

Maximum Penalty: Two years minimum consecutive term in prison

Money Laundering, in violation of Title 18, USC 1956(a)(1)(B)(i)

Maximum Penalty: Twenty years in prison

Bruce Baker, Case Number 20CR1912-BAS                     Age: 74           La Jolla

Conspiracy to Defraud the United States and file false tax returns, in violation of Title 18, USC 371

Maximum Penalty: Five years in prison

Bijan Moossazadeh, Case Number 20CR1893-BAS         Age: 63           San Diego

Filing a False Tax Return, in violation of Title 26, USC 7206(1)

Maximum Penalty: Three years in prison

Yousef Shemirani, Case Number 20CR1895-BAS            Age: 74           Poway

Filing a False Tax Return, in violation of Title 26, USC 7206(1)

Maximum Penalty: Three years in prison

Boris Shkoller, Case Number 20CR1913-BAS                  Age: 83           Del Mar

Filing a False Tax Return, in violation of Title 26, USC 7206(1)

Maximum Penalty: Three years in prison

INVESTIGATING AGENCIES

Federal Bureau of Investigation, Internal Revenue Service

Assistant U. S. Attorney Kim Thoa Hoang (619) 546-9397

NEWS RELEASE SUMMARY – September 11, 2020

SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice Office of Violence Against Women has awarded $363,223 to the Pauma Band of Mission Indians to support the tribe’s criminal justice response to domestic violence.

“This grant will enable the Pauma Band’s criminal justice system to ensure both victim safety and offender accountability,” said U.S. Attorney Robert Brewer. “All parties must receive the full measure of rights guaranteed by the criminal justice system when violence occurs, and importantly the tribes can provide this in a culturally competent way.”The Office of Violence Against Women currently administers 19 grant programs authorized by the Violence Against Women Act (VAWA) of 1994 and subsequent legislation. These grant programs are designed to develop the nation’s capacity to reduce domestic violence, dating violence, sexual assault, and stalking by strengthening services to victims and holding offenders accountable.

The Violence Against Women Reauthorization Act of 2013 (VAWA 2013) included a provision recognizing the authority of participating tribes to exercise “special domestic violence criminal jurisdiction” (SDVCJ) over certain defendants, regardless of their Indian or non-Indian status, who commit crimes of domestic violence or dating violence or violate certain protection orders in Indian country. The Act also specified the rights that a participating tribe must provide to defendants in SDVCJ cases. The Grants to Tribal Governments to Exercise Special Domestic Violence Criminal Jurisdiction (Tribal Jurisdiction) Program is designed to assist Indian tribes in exercising SDVCJ.

Through this grant program, Indian tribes receive support to exercise SDVCJ and technical assistance for planning and implementing changes in their criminal justice systems necessary to exercise the jurisdiction. The program encourages collaborations among tribal leadership, tribal courts, tribal prosecutors, tribal attorneys, tribal defenders, law enforcement, probation, service providers, and other partners to incorporate systemic change that ensures victim safety and offender accountability.

The Pauma Band of Mission Indians is a federally recognized Tribal Government. The Pauma-Yuima reservation is located in Pauma Valley in northeastern San Diego County, California. The tribe, and its internal and external partners, are committed to developing, implementing, and exercising SDVCJ. Through this project, the Pauma Tribe will dedicate a Domestic Violence Court Program Manager to lead the effort with the partnership of the Pauma Tribal Council, Tribal Administration, Tribal Attorney, the Pauma Police Department, the Domestic Violence Program, and the Sexual Assault Response Team.

Through the Pauma Domestic Violence Court Project the partners will engage in activities focused on: strengthening the tribal criminal justice system in order to implement and exercise SDVCJ; providing indigent criminal defendants, in SDVCJ proceedings, with effective assistance of licensed defense counsel; ensuring jurors are summoned, selected, and instructed appropriately; and affording victims of domestic violence, dating violence, and violations of protection orders crime victim rights. Specific activities include, but are not limited to: completing the required planning period to engage all required and key partners in a planning process and MOU development; participating in the Inter-Tribal Technical Assistance Working Group (ITWG) on SDVCJ; participating in on-site and other training and technical assistance opportunities; and submitting the SDVCJ supporting certifications for OVW review and approval.

 

COPS Office Public Affairs  (202) 514-9079  or cops.office.public.affairs@usdoj.gov

NEWS RELEASE SUMMARY – September 10, 2020

SAN DIEGO – U.S. Attorney Robert Brewer of the Southern District of California announced today that the La Mesa-Spring Valley School District received $415,000 from the Department of Justice’s Office of Community Oriented Policing Services (COPS Office) School Violence Prevention Program (SVPP).

Nationally, the COPS Office SVPP awarded nearly $50 million in school safety funding. SVPP provides up to 75 percent funding for school safety measures in and around primary and secondary schools and school grounds.

“These grants will help the La Mesa-Spring Valley School District and many others across the country keep our children out of harm’s way,” said U.S. Attorney Robert Brewer. “There is nothing more important than safeguarding our children and schools.”

“With the new school year underway, the safety of our nation’s students remains paramount,” said COPS Office Director Phil Keith.  “Although this school year may look different at the start, now is the ideal time to make preparations to enhance school safety for when all of our children are back in the classroom.”   

The Students, Teachers, and Officers Preventing School Violence Act of 2018 (STOP School Violence Act of 2018) gave the COPS Office authority to provide awards directly to states, units of local government, Indian tribes, and public agencies (such as school districts and law enforcement agencies) to improve security at schools and on school grounds in the jurisdiction of the grantee through evidence-based school safety programs.  The [x number] award[s] announced today can be used for coordination with law enforcement; training for local law enforcement officers to prevent student violence; metal detectors, locks, lighting, and other deterrent measures; technology for expedited notification of local law enforcement during an emergency; and other measures that provide a significant improvement in security.  The full list of SVPP awards can be found here: https://cops.usdoj.gov/pdf/2020AwardDocs/svpp/Award_List.pdf.

In addition to the school safety grants announced today, the COPS Office School Safety Working Group, which is composed of representatives from eight national law enforcement organizations, has identified 10 essential actions that can be taken by schools, school districts, and law enforcement agencies to help prevent critical incidents involving the loss of life or injuries in our nation's schools and to respond rapidly and effectively when incidents do occur. The Ten Essential Actions to Improve School Safety are applicable to school shootings as well as to other areas of school safety, including natural disasters and traumatic events such as student suicide. Adopting policies and practices based on the recommendations in this publication can help make school communities safer and save lives.

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The COPS Office is the federal component of the Department of Justice responsible for advancing community policing nationwide.  Since 1994, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 134,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

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COPS Office Public Affairs (202) 514-9079; cops.office.public.affairs@usdoj.gov

NEWS RELEASE SUMMARY – September 9, 2020

SAN DIEGO – The Department of Justice’s Office of Community Oriented Policing Services (COPS Office) today announced nearly $8 million in funding to advance the practice of community policing in law enforcement, including $40,000 to the La Mesa Police Department.

Community Policing Development (CPD) program funds are used to develop the capacity of law enforcement to implement community policing by providing guidance on promising practices through the development and testing of innovative strategies; building knowledge about effective practices and outcomes; and supporting new, creative approaches to preventing crime and promoting safe communities. The COPS Office also announced a new $8.5 million award under the Preparing for Active Shooter Situations (PASS) program to the Advanced Law Enforcement Rapid Response Training (ALERRT) Center at Texas State University to provide multi-disciplinary, scenario-based active shooter training to first responders.

“One of the top priorities of the Department of Justice is to keep communities safe from violent crime,” said COPS Office Director Phil Keith.  “The two grant programs announced today will promote promising best practices to advance community policing, which is a proven public safety approach, and provide much-needed training against active shooters, which remain a constant threat to the citizens of this great country.”

“This funding will provide crucial training for the La Mesa Police Department and many other law enforcement agencies across the country,” said U.S. Attorney Robert Brewer. “It is our top priority to keep our communities safe.”

Highlights of today’s 24 CPD awards include $500,000 to the International Association of Chiefs of Police to document and advance victim support services; $1.3 million to the University of Tennessee to establish a rural law enforcement training center; and $500,000 to Movement Forward, which is a national law enforcement and faith-based partnership program.  Additionally, $1.3 million is being awarded in partnership with the U.S. Department of Transportation’s National Highway Traffic Safety Administration to expand training opportunities for officers and create updated resource guides for law enforcement on safe and effective vehicular pursuits.  The full list of awards is available on the COPS Office website at: https://cops.usdoj.gov/pdf/2020AwardDocs/cpd/Award_List.pdf

Since 2017, COPS Office funding through the PASS program has provided active shooter training for approximately 53,000 first responders across the nation.  The additional $8.5 million announced today will fund training for roughly 20,000 additional first responders.  Additional information about the PASS program can be found here: https://cops.usdoj.gov/pdf/2020AwardDocs/pass/Award_List.pdf. The COPS Office is the federal component of the Department of Justice responsible for advancing community policing nationwide.  Since 1994, the COPS Office has invested more than $14 billion to advance community policing, including grants awarded to more than 13,000 state, local and tribal law enforcement agencies to fund the hiring and redeployment of more than 134,000 officers and provide a variety of knowledge resource products including publications, training and technical assistance.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

 

 

 

NEWS RELEASE SUMMARY – September 3, 2020

SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice (DOJ) Bureau of Justice Assistance has awarded $265,930 to local non-profit organizations to lead programs that will break the cycle of crime and keep youth and reentering adults from being involved in gangs and crime, enabling them to reach their full potential.  This is the first in a series of awards under DOJ’s Project Safe Neighborhoods (PSN) for the Southern District of California (SDCA). The awardees in this grant cycle are the Boys and Girls Club of Oceanside, El Centro Police Athletic League, the Kroc Institute for Peace and Justice, Reality Changers, STAR Police Athletic League, and Youth Empowerment. The grant funding will help these non-profits deter crime, provide support and expand mentoring programs within our community.

Project Safe Neighborhoods (PSN) is designed to create and foster safer neighborhoods through a sustained reduction in violent crime, including, but not limited to, addressing criminal gangs and the felonious possession and use of firearms. The program’s effectiveness depends upon the ongoing coordination, cooperation, and partnerships of local, state, tribal, and federal law enforcement agencies – and the communities they serve – engaged in a unified approach led by the U.S. Attorney in all 94 districts.

“Reducing violent crime requires a collaborative, multi-layered strategy that includes prevention as well as enforcement,” said U.S. Attorney Robert Brewer.  “Many are recruited into gang life at a young age because they lack role models and mentors.  These awardees are effectively reaching at risk youth and reentering adults by building trusting relationships and showing the path toward a fulfilling life that does not involve gangs and criminal behavior. The end result? Brighter futures and safer neighborhoods.”

The nonprofit recipients will help deter gang involvement, prevent criminal activity and provide resources to local communities.  The Kroc Institute of Peace and Justice award will conduct research into PSN program outcomes, helping to ensure an evidence-based, data-driven approach to local prevention efforts. The Children’s Initiative, which works to ensure that San Diego’s low-income and under-served children and families reach their full potential, is serving as the fiscal agent to all awardees in this grant cycle and all forthcoming grant cycles.

• The Boy and Girls Club of Oceanside (BCGO) works to inspire, develop and enrich young people aged 5-18 so they can reach their full potential as confident, responsible, caring members of society. The PSN grant will assist the Oceanside Youth Partnership (OYP), a collaborative program of BCGO and the Oceanside Police Department. OYP is a character building and mentoring program designed to deter gang involvement and prevent and reduce juvenile arrests. “We are so grateful to receive a PSN grant. These funds will allow us to continue to work collaboratively with the Oceanside Police Department to deliver the Oceanside Youth Partnership program.  Together, we will be able to reach out to more at-risk youth and work to keep them on the right path and out of the juvenile justice system,” said Jodi Diamond, BCGO Chief Executive Officer.
   
• Reality Changers is a non-profit that provides youth from disadvantaged backgrounds with academic support, financial assistance and leadership training. Reality Changers will use the award to enhance its 8th grade College Town Program, which prepares low-income, struggling 8th -11th graders to be college-ready by 12th grade. Through workshops, tutoring, social and emotional development programs, Reality Changers helps to keep youth on a positive path, away from gangs and violent crime.
   
• The STAR Police Athletic League (STAR/PAL) is a non-profit that aims to empower underserved youth and build a safer community by engaging with law enforcement and collaborative partners. PSN funding will assist with STAR Pal leadership development, mentoring, crime prevention education, life skills and positive sports team activities.
• Youth Empowerment (YE) is a non-profit that provides services for justice involved youth and adults living in the communities of City Heights and Southeast San Diego. YE focuses on mentoring youth and adults from the reentry population to aide them in successfully transitioning back into their communities and not recidivate. PSN funding will further support their efforts and provide more services to the community they serve. “Youth Empowerment helps support and transform communities and builds public safety through community mentoring, systems engagement, and advocacy,” said President/CEO Arthur Soriano. “All our staff have experience in the justice system and this experience is going to have an impact in the communities we serve. Investing in grassroots efforts encourages and promotes civic engagement and restoration with solution based approaches."
   
• El Centro Police Athletic League (PAL) is a non-profit that provides youth aged 5 – 17 with recreational and educational programs as alternatives to criminal delinquency, drugs and gangs. The award will help build closer relationships between youth and law enforcement, reduce juvenile crimes and decrease the lure of gangs and drug use through soccer, boxing, martial arts, golf, mentoring program, youth leadership program, after school tutoring, and summer camp.

In addition to the considerable financial support announced today, the U.S. Attorney’s Office for the SDCA will continue to build relationship with community partners and use all resources available to help deter crime and make our communities safer for everyone.

The SDCA’s PSN grants were competitively awarded based on the recommendations of U.S. Attorney Brewer’s PSN Executive Committee, which includes former Police Chiefs David Bejarano and Shelley Zimmerman and retired Assistant U.S. Attorney (AUSA) Paul Cook.  The grants announced today are part of Project Safe Neighborhoods, a program that brings together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer. The U.S. Department of Justice reinvigorated PSN in 2017, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

U.S. Attorney Robert S. Brewer Jr. (619) 557-5690

NEWS RELEASE SUMMARY – September 4, 2020

SAN DIEGO – The U.S. Department of Justice has received multiple reports that individuals claiming to represent the DOJ are calling members of the public as part of an imposter scam. The department strongly encourages the public to remain vigilant and not to provide personal information during these calls, which appear to target the elderly.

Reports to the National Elder Fraud Hotline indicate these scammers falsely represent themselves as Department of Justice investigators or employees and attempt to obtain personal information from the call recipient, or they leave a voicemail with a return phone number. The return phone number directs users to a recorded menu that matches the recorded menu for the department’s main phone number. Eventually, the user reaches an “operator” who steers the user to someone claiming to be an investigator. That “investigator” then attempts to gain the user’s personal information.

“We don’t want anyone – particularly our seniors – to be fooled by scammers posing as employees of the Department of Justice,” said U.S. Attorney Robert Brewer. “Please protect yourself! Do not be fooled by scammers, and don’t give out your personal information to a random caller claiming to be a DOJ employee.”

“Phone scams are an ugly and pervasive act of victimization. The scams being reported to our National Elder Fraud Hotline are especially heinous because they show the perpetrators are preying upon one of the most vulnerable segments of our society – the elderly,” said Director Jessica Hart of the Office of Justice Programs’ Office for Victims of Crime (OVC). “As if this were not despicable enough, the scammers do so posing as employees of the Justice Department, usurping public trust in the agency that serves as a bastion of fairness and lawfulness while these scams exploit the elderly for financial gain. The first step to identifying these criminals is to have their crimes reported.”

Those who receive these calls are encouraged not to provide personal information and to report these scams to the FTC via their website or by calling 877–FTC–HELP (877-382-4357). Fraud can also be reported to the FBI for law enforcement action at https://www.justice.gov/criminal-fraud/report-fraud.

The National Elder Fraud Hotline is a resource created by OVC for people to report fraud against anyone age 60 or older. Reporting certain financial losses due to fraud as soon as possible, and within the first 2–3 days, can increase the likelihood of recovering losses. The hotline is open seven days a week. For more information about the hotline, please visit https://stopelderfraud.ovc.ojp.gov/

 

 

NEWS RELEASE SUMMARY – September 1, 2020

SAN DIEGO – Nikole L. Edwards – the founder of Social Savvy Marketing – pleaded guilty today to making false statements to the Small Business Administration.  In court, Edwards admitted to submitting fake tax records and payroll information in order to secure a loan under the Paycheck Protection Program (“PPP”).

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act authorized the Small Business Administration to guarantee hundreds of billions of dollars in forgivable loans to small businesses to pay employees through the PPP.  In order to obtain a PPP loan, a qualifying business has to provide its average monthly payroll expenses and number of employees, along with supporting documentation. These figures are used to calculate the amount of money the small business is eligible to receive under the PPP. A business’s PPP loan application is received and processed, in the first instance, by a participating financial institution, then transmitted to the Small Business Administration to assess the applicant’s eligibility.

In April and May 2020, Edwards applied for tens of thousands of dollars of PPP loans with three financial institutions.  In her applications, Edwards falsely claimed that Social Savvy Marketing employed two individuals who earned annual salaries of $75,000 and $50,000.  In reality, Social Savvy Marketing did not have any employees.  Edwards also provided false addresses and Social Security numbers for her purported employees.  To further support her false claims, Edwards submitted fake W-2s.

After a representative from one financial institution told Edwards that Social Savvy Marketing could not receive a PPP loan, Edwards lied and said: “This is a lifeline for my employees and my business and we won’t survive without it.”  Despite not having any employees, Edwards ultimately succeeded in obtaining a $19,583 PPP loan.  As part of her plea agreement, Edwards is required to repay the entire $19,583 loan.

“The PPP is designed to help struggling businesses meet legitimate payroll obligations, not to enrich sole proprietors engaging in outright fraud,” said U.S. Attorney Robert Brewer.  “We are working diligently with our law enforcement partners to investigate and prosecute those who abuse this critical lifeline for the nation’s businesses, workers and economy.” 

"The Paycheck Protection Program was designed to provide dire relief to business owners and employees suffering during the pandemic,” said Suzanne Turner, Special Agent in Charge of the FBI San Diego Field Office. “The FBI will not tolerate anyone who steals government funds intended to assist Americans who are struggling financially and is committed to tackling COVID-related fraud head on with our law enforcement partners.”

Edwards is scheduled to appear for sentencing before U.S. District Judge Gonzalo Curiel at November 18, 2020 at 8:30 a.m. 

The CARES Act is a federal law enacted on March 29, 2020, designed to provide emergency financial assistance to the millions of Americans who are suffering the economic effects caused by the COVID-19 pandemic.  One source of relief provided by the CARES Act was the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses, through the PPP.  In April 2020, Congress authorized over $300 billion in additional PPP funding.

The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of one percent.  PPP loan proceeds must be used by businesses on payroll costs, interest on mortgages, rent, and utilities.  The PPP allows the interest and principal to be entirely forgiven if the business spends the loan proceeds on these expense items within a designated period of time after receiving the proceeds and uses a certain amount of the PPP loan proceeds on payroll expenses. 

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form.

DEFENDANT:                                                         Case Number 20-CR-2637-GPC

Nikole L. Edwards                 Age:    40                                San Diego, California

SUMMARY OF CHARGES

False Statements to the Small Business Administration – Title 15, U.S.C., Section 645

Maximum penalty: 2 years’ imprisonment and $5,000 fine

AGENCY

Federal Bureau of Investigation

Small Business Administration, Office of Inspector General

NEWS RELEASE SUMMARY – September 1, 2020

SAN DIEGO – Oscar Luna-Aquino was sentenced in federal court yesterday to 100 months in prison for importing methamphetamine into the United States.  A jury found Luna-Aquino guilty after a two-day trial in February 2020. 

At trial, the Government’s evidence established that Luna-Aquino drove a car into the United States at the San Ysidro, California, Port of Entry on October 16, 2019.  An inspection of the vehicle revealed 95 pounds of 99% pure methamphetamine concealed under the windshield and in the front fenders, rear quarter panels, and spare tire.  The wholesale value of the methamphetamine was at least $80,000.  The Government also presented evidence from Luna-Aquino’s cell phone showing that he not only knew of the drugs in his car on October 16, but also that he had successfully smuggled narcotics into the United States on three prior occasions

When handing down the sentence, U.S. District Court Judge Larry A. Burns emphasized the large amount of methamphetamine, the prior smuggling incidents, and the danger of methamphetamine and the personal destruction the drug causes.

“The extremely potent meth smuggled from Mexico contributes to more deaths in San Diego County than opioids.  And many deaths result from poly-drug use, most of which involve meth as a significant aggravating factor,” said U.S. Attorney Robert Brewer. “The sentence set forth today recognizes the severe harm meth inflicts on our community.” U.S. Attorney Brewer commended Assistant U.S. Attorneys Eric Olah and Seth Askins, as well as Homeland Security Investigations and Customs & Border Protection for their work on this case.

DEFENDANT                                               Criminal Case No. 3:20-CR-439-LAB

Oscar Luna-Aquino                                        Age: 34                                   Residence: Mexico

SUMMARY OF CHARGE

21 U.S.C. §§ 952/960

Maximum Penalties:  life imprisonment; $10,000,000 fine.

INVESTIGATING AGENCIES

Homeland Security Investigations

Customs and Border Protection

NEWS RELEASE SUMMARY – August 31, 2020

SAN DIEGO – U.S. Attorney Robert Brewer announced today that the U.S. Department of Justice Office on Violence Against Women (OVW) has awarded $800,000 in grant funding to the Center for Community Solutions (CCS), which has three San Diego locations (in Mission Bay, Escondido and El Cajon) that provide legal services to survivors of sexual assault, stalking, domestic violence and dating violence.  

“Addressing the many needs of women who are threatened by or subjected to violence is a top priority for the Department of Justice,” said U.S. Attorney Robert Brewer.   “This award will help to ensure that all victims are able to access the assistance and support they need to seek the recourse and protection afforded by our legal system.”

The Legal Assistance for Victims Grant (LAV) Program, which is authorized by 34 U.S.C. § 20121, is designed to increase the availability of civil and criminal legal assistance programs for adult and youth victims of domestic violence, dating violence, sexual assault, and stalking who are seeking relief in legal matters relating to or arising out of that abuse or violence, at minimum or no cost to the victims. Eligible applicants are private nonprofit entities, Indian tribal governments and tribal organizations, territorial organizations, and publicly funded organizations not acting in a governmental capacity, such as law schools.

The $800,000 award to CCS will fund provision of comprehensive bilingual legal services to survivors of sexual assault, stalking, domestic violence, and dating violence. Funding from this award will enable the collaborative to support additional attorneys, provide legal assistance in nine areas of law, and serve additional clients. Founded in 1969, CCS served more than 17,000 adults and children last year to heal and prevent relationship and sexual violence. CCS operates the only rape crisis center in the city of San Diego along with a countywide 24-hour bilingual crisis helpline. The nonprofit agency also provides emergency domestic violence shelters, hospital and court accompaniment, as well as legal and counseling services for those affected by domestic violence, sexual assault and stalking. Individuals in need of help can reach CCS through its 24-hour, confidential hotline: 1-888-385-4657.  In addition to providing services, CCS collaborates with community partners to offer prevention programs that promote healthy relationships and peaceful communities. 

OVW currently administers 19 grant programs authorized by the Violence Against Women Act (VAWA) of 1994 and subsequent legislation. These grant programs are designed to develop the nation’s capacity to reduce domestic violence, dating violence, sexual assault, and stalking by strengthening services to victims and holding offenders accountable.

 

RELEASE SUMMARY – August 28, 2020

SAN DIEGO - Christopher Duane Wade was sentenced in federal court today to more than 11 years in federal prison for distribution of child pornography. Wade first came to the attention of law enforcement in April of 2019, when he communicated with an undercover agent from Homeland Security Investigations (HSI), posing as a 13-year-old girl on an encrypted chat application. After more than a week of sexually explicit chats with the apparent 13-year-old girl, Wade arranged a meeting. When Wade showed up for the meeting, he was met by HSI special agents. Agents seized Wade’s cellular phone and found it contained child pornography, including depictions of the abuse of very young children. Wade’s cell phone also contained chat discussions between Wade and other individuals, where Wade sent others files of child pornography.

In the sentencing proceedings, the Government argued that Wade, who pled guilty to child pornography charges, engaged in egregious conduct that distinguished him from other child pornography offenders. The prosecutor pointed to conversations located on Wade’s cell phone that encouraged others to sexually abuse minors to whom they had access, and to document such abuse for purposes of distributing it to others. Wade had also engaged in sexually explicit chats with two other undercover agents posing as minors prior to his arrest.

Following his release from federal prison, the Court imposed a 10-year term of supervised release, during which time Wade will be required to comply with special conditions, including conditions prohibiting him from having contact with minors.

“One of our most important roles as prosecutors is to protect our nation’s vulnerable children,” said U.S. Attorney Robert Brewer.  “In addition to personally engaging in despicable conduct, this defendant worked to recruit others to follow in his footsteps. The sentence set forth today makes our community safer and recognizes the severe harm child pornography inflicts on its victims.” U.S. Attorney Brewer commended Assistant U.S. Attorney Janet Cabral and the agents at Homeland Security Investigations for their work on this case.

This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section of the U.S. Attorney’s Office.  Formed in 2019, by U.S. Attorney Robert Brewer, the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Childhood, Project Safe Neighborhoods, and Human Trafficking.

DEFENDANT                                               Criminal Case No. 19cr2285-DMS

Christopher Duane Wade                     Age: 41                     San Diego, CA

SUMMARY OF CHARGE

Title 18, United States Code, Section 2252(a)(2), Distribution of Images of Minors Engaged in Sexually Explicit Conduct

Maximum penalties: 5-20 years in prison

INVESTIGATING AGENCIES

Homeland Security Investigations

Assistant U. S. Attorney Charlotte E. Kaiser (619) 546-7282 

NEWS RELEASE SUMMARY – August 25, 2020

SAN DIEGO – Two brothers from Chihuahua, Mexico, pleaded guilty in federal court today, admitting that they smuggled three sisters across the U.S.-Mexico border in an ill-fated trek across treacherous terrain that resulted in the tragic deaths of the young women. One of the victims was the mother of a young child.

Cecilio and Ricardo Rios-Quinones pleaded guilty to Transportation of Aliens Resulting in Death, Bringing in Aliens for Financial Gain and Conspiracy. The brothers are scheduled to be sentenced on November 13, 2020 at 9 a.m. before U.S. District Judge Cathy Ann Bencivengo. The defendants also agreed to provide restitution to the sisters’ families.

As part of their plea agreements, the defendants admitted that they conspired with others to serve as foot guides in order to smuggle individuals illegally into the United States, and that they were ill-prepared when they guided the three sisters - Juana Santos Arce, Margarita Santos Arce and Paula Santos Arce of Oaxaca, Mexico - through a remote, mountainous region during a snow storm. The youngest sister was the mother of a young child.

According to the plea agreements, the defendants guided the three sisters - ages 35, 32 and 29 respectively - across the border from Mexico through the boundary fence in a remote area within the Southern District of California. They encountered cold, windy and rainy weather. It then began to snow. They lacked proper clothing, shoes, shelter, and other food and equipment to remain or hike in this cold, remote, mountainous environment.

According to the plea agreements, agents from the Border Patrol, Search, Trauma and Rescue (BORSTAR) unit initiated a rescue operation due to a distress call in the Boulevard Border Patrol Station’s area of operation on February 10, 2020, at approximately 1:50 p.m. The call concerned five undocumented aliens who were lost and experiencing hypothermia. BORSTAR agents initially encountered the two defendants in the snow in an area approximately 20.5 miles east of the Tecate, California port of entry and approximately 12 miles north of the border. The defendants pointed agents to the direction of the three sisters.  Agents subsequently found the three sisters lying on the ground near a large boulder on a ridge.

Two of the women were already dead; one was responsive but suffering severely from hypothermia. She later died despite gallant efforts of members of BORSTAR, Border Patrol Agents from the Campo/Boulevard area and ASTREA, the aviation unit from the San Diego Sheriff’s Department, who placed their own lives at risk while trying to keep the distressed woman alive as temperatures dropped and winds accelerated. Autopsies confirmed the three sisters died due to environmental hypothermia.

“These three young women lost their lives in horrible circumstances, despite the heroic efforts of many who tried to save them,” said U.S. Attorney Robert Brewer. “This is a tragedy that never should have happened. Unfortunately, migrant deaths are not uncommon because selfish smugglers don’t hesitate to place vulnerable victims in grave danger to make money. We will deliver justice to these callous smugglers who value their pay day over human lives.” Brewer commended the hard work of prosecutor Charlotte Kaiser and federal agents from Homeland Security Investigations to achieve justice in this case, and the heroism of many Border Patrol agents and Sheriff’s deputies in this heartbreaking case.

“Human smugglers are driven by greed, prey on the desperate, and demonstrate a blatant disregard for human life, as demonstrated by this senseless tragedy,” said Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant. “HSI and our partners remain committed to pursuing and convicting the criminal networks that exploit migrants for profit and undermine our nation’s immigration laws.”

“Justice has been served with these guilty pleas. Unfortunately, the families of those lost in this tragedy will never be whole. These young woman suffered and died at the hands of smugglers who never saw them as people, but only as commodities that could be exploited,” said San Diego Sector Chief Patrol Agent Aaron Heitke. “Border Patrol agents frequently risk their own lives to save others. The actions exhibited in this event represent the highest values of the Border Patrol.”

DEFENDANT                                               Case Number 20cr0868-CAB                                        

Cecilio Rios-Quinones                                   Age: 37                        Chihuahua, Mexico

Ricardo Rios-Quinones                                   Age: 22                       Chihuahua, Mexico

SUMMARY OF CHARGES

Transportation of Aliens Resulting in Death – Title 8, U.S.C., Section 1324(a)(1)(A)(i) and (B)(iv)

Maximum penalty: Life in prison or death and $250,000 fine

Bringing in Aliens for Financial Gain – Title 8, U.S.C., Section 1324(a)(2)(B)(ii)

Maximum penalty: Three years mandatory minimum in prison, 10 years maximum, and $250,000 fine

Conspiracy – Title 18, U.S.C., Section 371

Maximum Penalty: Five years in prison and $250,000 fine

AGENCIES

Homeland Security Investigations

U.S. Border Patrol, Intelligence Unit

 

Assistant U.S. Attorneys Emily W. Allen (619) 546-9738; W. Mark Conover (619) 546-6763; and Phillip L.B. Halpern (619) 546-6964

NEWS RELEASE SUMMARY – August 24, 2020

SAN DIEGO – Because of her quick admission of guilt and her substantial assistance in the corruption case against her husband, Margaret E. Hunter was sentenced in federal court today to eight months of punitive home detention to be served as part of three years of probation.

The sentencing of Hunter, wife of former Congressman Duncan D. Hunter, concludes the long-running scandal in which the couple used almost $250,000 in campaign funds as their personal bank account and spent lavishly for items as inconsequential as fast food, movie tickets and sneakers; as trivial as video games, Lego sets and Playdoh; as mundane as groceries, dog food, and utilities; and as self-indulgent as luxury hotels, overseas vacations, and plane tickets for themselves, their family members, and their pet rabbits, Eggburt and Cadbury.

U.S. District Judge Thomas Whelan noted Margaret Hunter’s “remarkable cooperation” in handing down the unusual sentence. For the home detention portion of the sentence, he restricted all movement outside the home except for employment, education, religious services, mental health and substance abuse counseling, and court proceedings. He banned her from seeking employment with fiduciary responsibility.

“Margaret Hunter promptly accepted responsibility for her role in this campaign finance fraud,” said Assistant U.S. Attorney David Leshner, chief of the Criminal Division at the U.S. Attorney’s Office. “Her sentence reflects her lesser culpability relative to her husband, the important part she played in securing her husband’s guilty plea, and her role in reinforcing the bedrock principle underlying our democracy that the politicians who write our laws do not stand above them.” Leshner praised prosecutors Phil Halpern, Emily Allen and Mark Conover as well as the Federal Bureau of Investigation for their tireless pursuit of justice in this case.

“Public corruption is a mission priority for the FBI,” said Omer Meisel, Acting Special Agent in Charge of the FBI San Diego Field Office. “We are dedicated to focusing our efforts, resources and expertise to these complex and sensitive investigations because public officials who use their position for private gain undermine the integrity of government and erode the public’s trust in the very framework of our democracy. Today's sentencing marks the end of a four-year FBI investigation which resulted in felony convictions of former Congressman Duncan Hunter and his wife, Margaret Hunter, for lying and stealing from Hunters’ constituents and undermining the public's trust.”

In recommending punitive home detention, federal prosecutors contrasted Margaret Hunter’s case with that of her husband – who received an 11-month custodial sentence. They noted that rather than admit guilt and resign his seat in April 2016 when his conduct was originally questioned, Duncan Hunter initially sought to deny the misconduct, and then to blame his wife for his own misdeeds. After the latter tactic garnered almost universal condemnation, Duncan Hunter then began his relentless and unceasing attacks on the justice system in general, and the Department of Justice and the FBI in particular.

By contrast, government prosecutors noted that Margaret Hunter admitted her guilt early, quickly entered a guilty plea, and cooperated with the United States in its investigation into her husband’s criminal conduct.  According to the government’s sentencing memo, in doing so, she “did much to establish that the rule of law triumphed over dangerous tropes that the Department of Justice was falsely targeting political figures.” 

The sentencing recommendation also accounted for the fact that Margaret Hunter’s substantial cooperation came at a great cost to herself and her family. The prosecution observed that her decision to cooperate against her husband (the father of her three children) was a wrenching and difficult one, which effectively pitted herself against the rest of the extended Hunter family. The personal cost of this decision resulted in severe psychological and emotional consequences, including a fractured marriage, intense public scrutiny, and the arduous of task of rebuilding her life as a single mother in a hostile family environment.

Finally, the United States remarked in its sentencing memo that the individual most responsible for the instant offense was undeniably Duncan Hunter. Although Margaret Hunter admitted that she played an active and very substantial role in the theft of campaign funds, she did so only with the concurrence, encouragement, and support of the then-Congressman.  Apart from Duncan Hunter’s own theft of campaign funds, it remains uncontested that—time and time again, over many years—he placed his wife in a position to steal campaign funds with full knowledge that she would use those funds to support a lifestyle that their family otherwise could not afford. As early as December 2009, he directed his campaign treasurer to get his wife a campaign credit card, even though at the time she had absolutely no official role with the campaign. And, after receiving multiple warnings from multiple sources that his wife was stealing campaign funds, Hunter allowed her illegal conduct to escalate.

DEFENDANT                                               Case Number 18cr3677-W                          

Margaret E. Hunter                                         Age: 45                       La Mesa, CA

SUMMARY OF CHARGE

Conspiracy to Steal Campaign Funds – Title 18, U.S.C., Sec. 371

Maximum Penalty: Five years in prison and $250,000 fine

AGENCY

Federal Bureau of Investigation

Assistant U. S. Attorney Michelle L. Wasserman (619) 546-8431

NEWS RELEASE SUMMARY – August 24, 2020

SAN DIEGO – Herbert Gutierrez, former warehouse manager at the U.S. Navy Military Sealift Command Warehouse in San Diego and 20-year veteran of the U.S. Navy, was sentenced in federal court today to 24 months in custody for stealing more than $2.5 million worth of goods from the Navy warehouse where he worked.  Gutierrez was also ordered to forfeit $57,656.69 and pay $2,536,293.63 in restitution to the United States Navy.

Sentencing documents reflect that Gutierrez began stealing from the warehouse for his own personal gain a few months after he started working there. For approximately nine months, between July 2018 and April 2019, Gutierrez advertised items from the warehouse for sale online, including through such websites as eBay, and then allowed private individuals into the MSC warehouse yard during work hours and after hours to take the government property, load it onto trucks, and haul it away. 

In February 2019, Gutierrez permitted a utility truck and a tractor-trailer to enter the MSC warehouse after hours and drive away with more than $1 million in stolen copper nickel tubing. 

That same month, Gutierrez sold numerous Caterpillar parts from the warehouse to a company he found online.  Once again, Gutierrez allowed a private freight company to enter the MSC warehouse yard and load the items, which filled four pallets.  He created fraudulent government paperwork to conceal his criminal activity.  

In April 2019, Gutierrez again allowed two individuals to enter the MSC warehouse in broad daylight, and he loaded up their vehicle with stolen government property, accepting thousands of dollars in cash in exchange.  The two men were – unbeknownst to Gutierrez – undercover agents.  At the time, Gutierrez told the undercover agents that “I’m looking at volume. I’m not looking at making a million-dollar profit, I’m looking at volume. I’m trying to keep this stuff going, that’s how I get paid.” 

Gutierrez was paid for the stolen goods in cash and via PayPal. Gutierrez admitted in his plea agreement that the total aggregate value of the items that he stole from the United States and resold for personal profit was $2,536,293.63. 

“This defendant was running a massive and brazen scheme that fleeced the Navy of millions of dollars,” said U.S. Attorney Robert Brewer. “This conduct was outrageous and illegal, and he is now appropriately going to prison for it. The excellent work of prosecutor Michelle Wasserman and NCIS agents brought justice for the Navy and taxpayers.”

“NCIS exposed Mr. Guiterrez's scheme to steal and sell government property,” said NCIS Southwest Field Office Special Agent in Charge Garrett Waugh. “This result highlights how critically important it is for our military personnel and family members to remain vigilant and always report suspected fraud. It also represents an outstanding effort by Special Agents assigned to the NCIS Southwest Field Office to bring a criminal to justice for threatening Navy readiness and wasting taxpayer money.”

DEFENDANT                                               Case Number 19CR4552-W                       

Herbert Gutierrez                                            Age: 54                                   San Diego, CA

SUMMARY OF CHARGES

Theft of Government Property – Title 18, U.S.C., Section 641

Maximum penalty: Ten years in prison and $250,000 fine

AGENCY

Naval Criminal Investigative Service

 

 

 

Assistant U. S. Attorney Mario J. Peia (619) 546-9706

NEWS RELEASE SUMMARY – August 17, 2020

SAN DIEGO – A man who allegedly threatened to “kill all the gays and children” at the San Diego Pride parade was sentenced to 70 months in prison today after pleading guilty to one count of bank robbery and two counts of armed bank robbery.

According to a federal complaint, Andre Lafayette Holmes robbed US Bank on Campo Road in Spring Valley on November 4, 2016; Mission Federal Credit Union in San Diego on June 14, 2018, and California Bank and Trust on Fifth Avenue, also in San Diego, on June 28, 2019. In the first crime he claimed to have a gun; in the second and third robberies he pointed a pistol at tellers, the complaint said.

FBI agents identified Holmes as the armed bank robber in three unsolved cases following threats he made to the San Diego Pride Parade organizers on July 10, 2019. In the first of two late-morning phone calls to pride organizers’ main line, a caller stated: “I think I’m going to have to kill all the gays and the children.” He then repeated, “I’m going to have to kill the f------ and children.” The employee asked, “Sir, what’s your name?” The caller replied: “I don’t like them” and “I hate the f------.” He then hung up. About four minutes later, he called back. “F--- Donald Trump. I hate Hillary. I hate f---. I’m going to shoot up the Pride event.” The male caller repeated the same statement approximately four times.

On July 11, San Diego Police Department investigators identified the phone number as belonging to Holmes. They determined that Holmes drives a 2009 Toyota minivan registered in his name. They located Holmes near Miramar College and conducted a traffic stop. He was in possession of the phone from which the threats were made, the complaint said.

During subsequent searches of Holmes residence and vehicle, investigators discovered evidence of the armed bank robberies, including a gray semi-automatic pistol, a rubber “old man” style mask, a large bag of cash and clothing believed worn by the bank robber, among other things. They also found a Big Gulp 7-Eleven mug consistent with the one used during two of the robberies.

In the first robbery, the complaint alleges that Holmes used a demand note which said: “We have guns! I will personally shoot anyone you alert! Don’t make me jump over the counter and kill innocent people. Big bills only and I’ll calmly leave. Money now!!!!” On the back of the note, it said: “I’m sorry, good man on hard times. Sincerely, Bank Robber.”

In the second robbery at Mission Federal Credit Union, Holmes pulled a semi-automatic pistol from his pocket and pointed it at a teller and demanded money, the complaint said. He then proceeded to demand money from a second teller.

In the third robbery, Holmes again had a light-colored semiautomatic pistol and verbally demanded money.

Holmes is presently charged in the San Diego County Superior Court for the threats made to the San Diego Pride Parade.

“This dangerous defendant was apprehended because of excellent investigation by the FBI and terrific work by prosecutor Mario Peia,” said U.S. Attorney Robert Brewer. “Mr. Holmes terrorized bank employees and put their lives at risk, and for that he goes where he deserves to go-   prison.”

“The FBI is committed to investigating, prosecuting, and incarcerating dangerous violent criminals who threaten the safety and security of our community,” said Omer Meisel, Acting Special Agent in Charge of FBI's San Diego Field Office.  “Mr. Jones is a dangerous criminal who utilized a firearm in the commission of his crimes and today a violent criminal was brought to justice.” 

This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section.  Formed in 2019, by U.S. Attorney Robert S. Brewer Jr., the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.

DEFENDANT                                               Case Number 19cr3018-LAB                                             

Andre Lafayette Holmes                                 Age: 31                                   San Diego, California

SUMMARY OF CHARGES

Bank Robbery – Title 18, U.S.C., Section 2113(a)

Maximum penalty: Twenty years

Armed Bank Robbery – Title 18, U.S.C., Section 2113(a) & (d)

Maximum penalty: Twenty five years

Brandishing a Firearm in Commission of Crime of Violence – Title 18, U.S.C., Section 924(c)

Maximum penalty: Life in prison; Consecutive mandatory minimum: Seven years

AGENCY

Federal Bureau of Investigation

San Diego Police Department

RELEASE SUMMARY – August 17, 2020

SAN DIEGO – Luigi Cristinel Popescu of Cernatesti, Romania, was extradited to the United States over the weekend and made his first appearance in federal court today to face charges that he is the leader of an international alien smuggling network responsible for smuggling thousands of Romanians into the United States.

Popescu was arrested in Bucharest, Romania by Romanian law enforcement officials on August 14, 2020 at the request of the United States and was extradited to the United States on Saturday.  At today’s hearing, Popescu was arraigned on a Superseding Indictment and ordered detained as a flight risk, by Magistrate Judge Jill Burkhardt.  Popescu’s next court appearance is scheduled for September 23, 2020, before U.S. District Court Judge Cynthia Bashant for motion hearing and trial setting.

Popescu was indicted by a federal grand jury in late 2019. He is charged in a Superseding Indictment with one count of Conspiracy to Bring-in Illegal Aliens for Financial Gain, five counts of Bringing in Aliens for Financial Gain and Aiding and Abetting.

According to the Superseding Indictment, Popescu was the leader of an international alien smuggling organization for almost seven years and has been responsible for smuggling Romanian Nationals into the United States at both its northern and southern borders. Homeland Security agents learned from interviews with Romanian Nationals smuggled by Popescu, both those arrested and those who turned themselves into U.S. Border Patrol, that he facilitated the smuggling of aliens from Romania to the U.S. through Europe, Central America, Mexico and Canada, generally charging $10,000 to $25,000 for individuals and families. 

The investigation revealed that Popescu worked with numerous co-conspirators in Romania, Spain, Guatemala and Mexico to facilitate the smuggling arrangements of thousands of Romanians.  According to the investigation, Popescu utilized WhatsApp and FaceTime to remain in contact with aliens being smuggled, providing instructions and contacts along the way, including the name and number for smugglers in route to the United States.  These co-conspirators would arrange for passage in route to the U.S. border.  Popescu would send a picture of the Romanian aliens to co-conspirators and instructed the aliens that smugglers on their route would be waiting for them and would have their picture. Popescu used an ever-changing cadre of associates, guides, stash house operators and drivers to facilitate the organization’s criminal activities.  In the final stage of crossing illegal aliens coming through Mexico into the United States, the Popescu network made use of various stash houses near the San Ysidro and Calexico, Ports of Entry.

“Putting your faith, hope and future in the hands of smugglers is extremely dangerous,” said U.S. Attorney Robert Brewer. “My office will aggressively prosecute transnational criminal organizations that smuggle others into the United States for financial gain.” Brewer praised Homeland Security Investigations, the U.S. Border Patrol and prosecutor Timothy D. Coughlin for their excellent work on the case.

“Transnational criminal organizations engaged in human smuggling endanger the security of the United States,” said Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant. “Through close collaboration with our partners from U.S. Customs and Border Protection, the U.S. Attorney’s Office, and the government of Romania, this arrest signifies another victory in our fight to disrupt and dismantle organizations facilitating illegal entry into this country.”

“As a global organization, HSI collaborates with our foreign partners to identify, locate and investigate individuals who seek to exploit U.S. laws,” said HSI Regional Attaché Katie Bay, “We will continue to work to ensure that they face justice both at home and abroad.”

“On behalf of the U.S. Border Patrol, I want to express our appreciation for the countless hours expended by the men and women of law enforcement who were involved in bringing Popescu to justice”, San Diego Sector Border Patrol Chief Patrol Agent Aaron Heitke. “His case is the latest and one of many that has helped us to dismantle and degrade Transnational Criminal Organizations around the world.”

This case is the result of ongoing efforts by Homeland Security Investigations and the United States Border Patrol to target active Transnational Criminal Organizations, such as the Popescu network involved in alien smuggling along the U.S./Mexican border in the Southern District of California.

Homeland Security Investigations (HSI) Special Agent in Charge Cardell T. Morant stated, “Transnational criminal organizations engaged in human smuggling endanger the security of the United States. Through close collaboration with our partners from U.S. Customs and Border Protection, the U.S. Attorney’s Office, and the government of Romania, this arrest signifies another victory in our fight to disrupt and dismantle organizations facilitating illegal entry into this country.”

HSI Calexico Special Agents worked closely with Attaché offices in Mexico, Guatemala, Spain, Austria, and with foreign law enforcement agencies in a concerted effort to disrupt and dismantle the Popescu alien smuggling organization. The U.S. Department of State’s Diplomatic Security Service (DSS) provided substantial assistance during the investigation.

The Justice Department’s Office of International Affairs handled the extradition.

DEFENDANT                                               Case Number 18cr5174-BAS                      

Luigi Cristinel Popescu                                  Age: 52                       Cernatesti, Romania

SUMMARY OF CHARGES

Count 1 – Conspiracy: to Bring-in Illegal Aliens for Financial Gain – Title 8, U.S.C., Section 1324(a) (1)

(A) (i), (a) (1) (A) (v) (I) and (a) (1) (B) (i).

Maximum penalty: Ten years’ imprisonment and $250,000 fine

Counts 2-6 - Bringing in Aliens for Financial Gain: - Title 8, U.S.C., Section 1324(a)(2)(B)(ii) and Title 18, U.S.C., Section 2 - Aiding and Abetting.

Maximum penalty: Each count carries a mandatory minimum term of imprisonment of three (3) years and a maximum of ten (10) years for the first or second violation.  Any additional violations carry a mandatory minimum term of imprisonment of five (5) years and a maximum of fifteen (15) years.

AGENCY

Homeland Security Investigations

United States Border Patrol, Calexico, California Intelligence Unit

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

 

NEWS RELEASE SUMMARY – August 5, 2020

SAN DIEGO – Federal District Court Judge Gonzalo P. Curiel today sentenced defendant Michael Steen to 148 months in prison for supplying the fentanyl that led to a 33-year-old Ramona woman’s fatal overdose on July 9, 2018. 

On March 4, 2020, Steen pleaded guilty to Conspiracy to Distribute Fentanyl, and admitted he sold more than 500 grams of what he knew to be fentanyl in 2018.

“The current fentanyl threat requires an “all in” response by law enforcement. My office is collaborating with partners at every level to seize fentanyl at the border, build cases against cartels and street distributors, and pursue death charges against dealers of this deadly poison,” said U.S. Attorney Robert Brewer. “If you are selling fentanyl, beware: as today’s sentence reflects, you will be held fully accountable for the death and destruction you selfishly cause.”

“One of the DEA’s goals is to put people responsible for drug deaths in federal prison,” said DEA Special Agent in Charge John W. Callery.  “Today’s sentence of Michael Steen to over 12 years in federal prison is testament to the hard work DEA and our outstanding law enforcement partners put into this investigation to ensure our goal was accomplished.  We will continue to aggressively pursue those who deal drugs and cause death in our community.”

“The Sheriff's Department will continue to conduct thorough and collaborative fentanyl death investigations, ensuring traffickers and dealers are held accountable for a crime that costs lives and negatively impacts the community as a whole,” said Sheriff’s Narcotic and Gang Division Captain Dan Brislin.

The United States Attorney’s Office is working closely with the San Diego County District Attorney’s Office, the San Diego County Sheriff’s Office, the Drug Enforcement Administration and our other federal, state and local law enforcement partners to investigate and prosecute cases targeting those who supply drugs in fatal overdose cases.

U.S. Attorney Brewer praised prosecutor David Finn as well as the San Diego County Sheriff’s Department and DEA agents for their hard work on the case.

For those who suffer from addiction, please know there is help. Call the Crisis line at 888-724-7240; it’s always open.

DEFENDANTS                                            Case Number 19-CR-0869-GPC                                         

Michael Steen                                                    Age: 27

SUMMARY OF CHARGES

Conspiracy to Distribute Fentanyl – Title 21, U.S.C., Section 841(a)(1) Maximum penalty: Mandatory minimum 10 years in prison up to life

AGENCY

San Diego Sheriff’s Office

U.S. Drug Enforcement Administration, Narcotics Task Force

NEWS RELEASE SUMMARY – August 4, 2020

SAN DIEGO – Donald Joseph Matthews, the former Vice President of Market Development for Proove Biosciences. Inc., pleaded guilty in federal court today to conspiring to pay physicians kickbacks to order genetic tests for Medicare beneficiaries in violation of the Anti-Kickback Statute.

According to Matthews’ plea agreement, Proove paid doctors at least $3.5 million to induce them to order Proove’s DNA tests—which the company claimed could determine a patient’s risk of abusing certain prescription narcotics.  Proove billed approximately $45 million to the Medicare program for the tests, in violation of Medicare’s prohibition against kickbacks, and Proove received approximately $21 million in unlawful payments. Proove concealed the true nature of the kickbacks by falsely characterizing the payments as compensation for participating in a clinical research program sponsored by Proove.  In furtherance of the scheme, Proove placed its own employees in doctors’ offices.  The Proove employees collected a cheek swab and completed most of the paperwork associated with the “clinical research” program. Without the financial compensation, Matthews admitted that most doctors were not interested in ordering Proove’s tests for their patients.

The compensation Proove paid to doctors was directly tied to the volume of tests that a doctor ordered and whether a doctor continued to order more tests from Proove over time.  When doctors were not paid, they threatened to “pull the plug” and stop ordering Proove’s genetic tests.  When the doctors complained about delayed payments, a Proove executive demanded that the doctors increase their testing volume. 

“Kickbacks corrupt the medical judgment of physicians, generate unnecessary tests and treatments, increase health care costs, and create unfair competition,” said U.S. Attorney Robert Brewer. “Our office will aggressively move to terminate these illegal schemes and prosecute those who engage in them.”  Brewer commended the excellent work of Assistant U.S. Attorneys Joseph S. Green and Andrew J. Galvin, who investigated this important case.

“Our nation’s healthcare system cannot tolerate kickbacks to physicians while criminals line their pockets with taxpayer-funded healthcare dollars, particularly in light of our nation’s current struggles with the COVID-19 pandemic,” said Acting Special Agent in Charge Omer Meisel, San Diego Division of the Federal Bureau of Investigation.  “The FBI will pursue those criminals who corrupt the health care system rather than support legitimate, necessary testing and treatment for patients.”

“When health care executives offer kickbacks to physicians to boost profits, they compromise medical decision making and undermine public trust in our nation’s health care system,” said Timothy B. DeFrancesca, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services. “This investigation illustrates our ongoing efforts to investigate such kickback schemes and to protect patients who rely on federal health care programs.”

Matthews pleaded guilty today before U.S. Magistrate Judge Karen S. Crawford.  His sentencing is scheduled for October 26, 2020 at 9:00 a.m. before U.S. District Judge William Q. Hayes.

Vigilance in ensuring that fraud and kickbacks do not usurp the legitimate practice of medicine  is more important than ever. If you are aware of any fraud or kickbacks, including COVID-19 fraud, please call the FBI hotline at 1-800-CALL-FBI.

DEFENDANTS                                            Case Number 20CR1933-WQH                             

Donald Joseph Matthew                                             Age: 50                                   Naples, FL

SUMMARY OF CHARGES

Conspiracy to Pay Kickbacks in Connection with a Federal Healthcare Program – Title 18, U.S.C., Section 371, Title 42, United States Code, Sections 1320a-7b(b)(1)(B) and (b)(2)(B).

Maximum penalty: 5 years’ imprisonment and $250,000 fine

AGENCY

Federal Bureau of Investigation

Office of Inspector General, Department of Health and Human Services

NEWS RELEASE SUMMARY – August 4, 2020

SAN DIEGO – Today, Attorney General William P. Barr and Advisor to the President Ivanka Trump announced that the Office for Victims of Crime (OVC), a component of the Department of Justice’s Office of Justice Programs (OJP), has awarded $35,104,338 in grant funding to provide safe, stable housing and appropriate services to victims of human trafficking.  U.S. Attorney Robert Brewer revealed that San Diego’s North County Lifeline, Inc. was selected as one of 73 grant awardees in 34 states. The organization will receive $500,000 in grant funds to provide six to 24 months of transitional or short-term housing assistance for trafficking victims, including rental, utilities or related expenses, such as security deposits and relocation costs.  The grants will also provide funding for support needed to help victims locate permanent housing, secure employment, as well as occupational training and counseling.  This is the largest federal investment of its kind.

“Eradicating the horrific crime of human trafficking and helping its victims are top priorities for the Department of Justice,” said U.S. Attorney Robert Brewer.   “We are working relentlessly to bring human traffickers to justice and to deliver critical aid to trafficking survivors, who often have nowhere to go once they are freed from trafficking. We cannot allow the trauma of trafficking to give way to new dangers caused by homelessness, which often leads to re-victimization by predators. These funds will provide San Diego victims the shelter and support they need to turn the corner and begin a new life.”

North County Lifeline, Inc., a 24 hour on-call victim services organization, works in collaboration with San Diego Human Trafficking Task Force to ensure that every victim of human trafficking is provided with individualized resources and services. Lifeline’s transitional housing program utilizes a Housing First model, which ensures that factors that often preclude trafficking victims from qualifying for long-term housing programs (substance use/abuse, untreated mental health issues, prior criminal record) are not an issue. According to the DOJ award, this type of unrestricted housing for trafficking victims, in addition to being in short supply in San Diego, is considered most conducive to providing trafficking victims with the safety and stability they need to shift out of a crisis mindset and begin working toward self-sufficiency. Lifeline plans to serve approximately 75 trafficking victims over the project period. In addition to housing, clients may elect to participate in supportive services including, but not limited to, ongoing case management, medical and dental care, (limited) legal assistance, literacy/GED/education assistance, LGBTQ services, substance abuse treatment, trauma counseling, life skills training, and employment and financial coaching.

The grant funds announced today will support multiple forms of short-term housing assistance, including helping survivors make rent payments, cover utility bills or security deposits, or pay moving expenses. The grants are the first-ever federal program dedicated exclusively to providing housing for survivors of human trafficking. It represents part of approximately 100 million dollars in total grants that the Department of Justice anticipates awarding this year to combat human trafficking.

“In addition to the considerable financial support announced today, the Department of Justice and this office will continue to use the full force of our law enforcement resources to investigate, prosecute, and punish the people behind the cruel crime of human trafficking,” Brewer added.

Assistant U.S. Attorney Matthew J. Sutton (619) 546-8941

NEWS RELEASE SUMMARY - July 31, 2020

SAN DIEGO – The alleged leader of a prolific maritime alien smuggling ring, Guillermo Barba, was arraigned on an indictment charging him with alien smuggling offenses yesterday in federal court before U.S. Magistrate Judge Andrew G. Schopler.

Barba is scheduled for a detention hearing before U.S. Magistrate Judge William V. Gallo on August 4, 2020 at 2:00 p.m.

According to the indictment and other publicly available court documents, Barba was a leader of an alien smuggling organization based out of Baja California, Mexico and San Diego, California, which used panga boats, pleasure crafts, and multiple load vehicles to facilitate its sophisticated maritime smuggling operation. This organization is believed to responsible for at least 25 alien smuggling events dating back to November 2017.

This case is the result of ongoing efforts by Homeland Security Investigations - Marine Task Force (MTF) to dismantle active transnational criminal organizations involved in alien smuggling along the U.S.-Mexico border in the Southern District of California. During the last year, MTF and its interagency partners have apprehended approximately 300 illegal aliens off the coast of San Diego. The MTF was also aided in this investigation by the HSI Tijuana Attaché Office

“In addition to undermining this nation’s border security, smuggling on the ocean is extremely dangerous for the individuals being smuggled,” said U.S. Attorney Robert Brewer. “Barba’s arrest and the dismantling of this alien smuggling group is the product of outstanding federal and international law enforcement cooperation that resulted in this successful arrest.”

“Maritime smuggling puts lives at risk and is extremely dangerous. Smugglers often use unsafe boats to enter the U.S. illegally,” said San Diego Sector Border Patrol Chief Patrol Agent Aaron Heitke. “A unified effort has brought this alleged criminal enterprise to an end and it is only through continued cooperation that other transnational criminal organizations can be effectively targeted and dismantled.”

“Homeland Security Investigations (HSI) remains steadfast in our commitment to vigorously pursuing members of transnational criminal networks that exploit and endanger the people they smuggle into our country,” said Cardell T. Morant, Special Agent in Charge of HSI San Diego. “We will continue to work collaboratively with our domestic and international partners to identify, investigate, and prosecute the leaders of these dangerous smuggling networks.”

The United States is represented in court by Assistant U.S. Attorney Matthew J. Sutton.

The public is reminded that an indictment is not evidence of guilt. The defendant is presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

DEFENDANT                                   Criminal Case No: 19-cr-4531-JLS

Name

Age

Hometown

Guillermo Barba

29

San Diego, CA

SUMMARY OF CHARGES

Conspiracy to Bring in Illegal Aliens for Financial Gain

Conspiracy to Transport Illegal Aliens for Financial Gain

Maximum Penalties: A term of custody including a mandatory minimum of three years in custody and up to 10 years in custody

AGENCIES

Homeland Security Investigations - Marine Task Force

United States Border Patrol, Imperial Beach Station

United States Border Patrol, San Clemente Station

Customs and Border Protection, Office of Air and Marine

Customs and Border Protection, Office of Field Operations

U.S. Coast Guard

U.S. Coast Guard Investigative Service

San Diego Harbor Police

Homeland Security Investigations – Tijuana

San Diego ReCoM - Regional Coordinating Mechanism.

(ReCoM is comprised of the U.S. Coast Guard, CBP’s Office of Air and Marine, Office of Field Operations, U.S. Border Patrol, Immigration and Customs Enforcement Homeland Security Investigations and state and local law enforcement partners operating in the Southern California. The ReCoM utilizes the fusion of intelligence, planning and operations to target the threat of transnational crime along the coastal border)

Assistant U. S. Attorney Michael A. Deshong (619) 546-9290

NEWS RELEASE SUMMARY – July 27, 2020

SAN DIEGO – Barbara Ross was sentenced in federal court today to 18 months in prison for assaulting a Customs and Border Protection Officer at the San Ysidro Port of Entry on August 2, 2019.

Ross, 39, was convicted by a federal jury following a two-day trial in January. According to evidence presented at trial, Ross attempted to enter the United States through a vehicle lane with her husband and two minor children in her car. When Customs and Border Protection Officer Robert Barragan attempted to ask Ross standard questions regarding her international travel, Ross became aggressive and threatening.

Ross screamed profanities at Officer Barragan and refused to answer questions. Officer Barragan referred her to a secondary inspection lot where other officers could speak with Ross without causing delays in the vehicle lane. As Ross’s husband drove their car to the secondary inspection lot, Ross continued to scream profanities. Upon arriving in the lot, Ross jumped out of the car and when Customs and Border Protection Officer Moises Perez contacted her, Ross repeatedly slapped at Officer Perez with enough force that she broke the skin on his hand and drew blood.  

At sentencing today, the Court heard about Ross’s history of aggressive behavior towards law enforcement going back to 2003. The Court also heard about multiple prior incidents at the San Ysidro Port of Entry, including an incident in August 2018 where Ross refused to obey an officer’s orders, which caused officers to have to deploy a “stop stick” in order to stop her car.

“Our courageous federal officers put their lives on the line every day to protect our country, and when they are attacked, we will respond appropriately,” said U.S. Attorney Robert Brewer. “This defendant assaulted multiple officers without provocation. That kind of violence is unacceptable. We are committed to vigorously prosecuting these cases.” Brewer commended the work of prosecutor Michael Deshong and agents from HSI and CBP for their excellent work.

“Homeland Security Investigations (HSI) is committed to investigating and bringing to justice any assault against a law enforcement officer, specifically our federal partners within the Department of Homeland Security,” said Cardell Morant, Special Agent in Charge for HSI in San Diego. “The message is very simple, if you become violent with a federal law enforcement officer performing their duties, you can expect swift and severe charges in federal court.”

“CBP officers serve their country with honor, vigilance and professionalism, and as part of their national security duties they face significant risks. We are extremely appreciative of the diligent work of U.S. Homeland Security Investigations (HSI) special agents and the U.S. Attorney’s Office Southern District of California in bringing this case to justice,” said Pete Flores, CBP Director of Field Operations in San Diego.

DEFENDANTS                                            Case Number 19cr3350-W  

Barbara L. Ross                                              Age: 39                       San Diego, CA

SUMMARY OF CHARGES

Assault on a Federal Officer with Physical Contact, in violation of Title 18, United States Code, Section 111(a)(1)

Maximum Penalty: Eight years in prison

AGENCIES

United States Customs and Border Protection

Homeland Security Investigations

Assistant U. S. Attorneys Valerie Chu and Paul Starita (619) 546-6750/7701

NEWS RELEASE SUMMARY – July 23, 2020

SAN DIEGO - San Diego-based clinical laboratory Progenity, Inc. admitted today that it submitted fraudulent bills to TRICARE, the Department of Defense health care benefit program that covers military service members and their dependents, and to the Federal Health Care Employee Benefits Program (FEHBP), for clinical tests that it knew were not covered or properly payable by either program.

In addition, Progenity, formerly known as Ascendant MDx, Inc., and previously headquartered in Carlsbad, California, admitted that it offered improper incentives to patients and doctors to use its laboratory services.  To account for its fraud, Progenity has agreed to pay a total of $49 million in civil settlements in federal courts in the Southern District of California (SDCA) and the Southern District of New York (SDNY), as well as to multiple states.

Progenity offered noninvasive prenatal testing (“NIPT”) to pregnant women. NIPT refers to a category of genetic tests that screen for fetal chromosomal abnormalities, through analysis of fetal DNA present in a pregnant woman’s blood.  This form of genetic testing, however, did not have FDA approval and was considered by TRICARE as a “laboratory-developed test.”  As a result, TRICARE did not cover NIPT tests for its beneficiaries.  Therefore, in order to get reimbursed by TRICARE, between April 1, 2013 and April 30, 2016, Progenity falsely and fraudulently used a medical billing code that TRICARE covered, but that Progenity knew did not accurately reflect that the NIPT test. 

The U.S. Attorney’s Office for SDCA launched both a criminal probe into Progenity’s fraudulent billing practices and a civil investigation of the false claims Progenity had submitted to TRICARE and the FEHBP. Separately, SDNY initiated its own investigation into misconduct by Progenity relating to the improper incentives provided to patients and doctors to use its laboratory services.  SDNY also coordinated with multiple state Attorneys General to investigate Progenity’s miscoding of NIPT to Medicaid programs in New York and several other states.

Progenity’s settlement agreement requires the company to pay $16.4 million to settle the SDCA civil matter, $19,449,316 to settle the SDNY civil matter, and $13,150,684 to settle the state civil allegations. The civil settlements were based on an ability-to-pay, payment-over-time basis, following an analysis of financial condition submissions made by Progenity.  In light of Progenity’s remedial efforts, cooperation with the investigation, and payment of restitution to TRICARE and the FEHBP, the criminal investigation was resolved via a non-prosecution agreement, requiring that Progenity admit its misconduct and be subject to additional terms and conditions for up to a 24-month period.   

U.S. Attorney Robert Brewer said, “San Diego is known for cutting-edge research and innovation, particularly in the biomedical sciences, that advances fields and improves people’s lives.  But in the quest for advancement and profit, companies must still engage in honest and straightforward dealing, and provide the information that allows federal programs to determine whether to pay for new technologies.” Brewer commended the work of the attorneys from the criminal and civil divisions of the office and agents from the FBI and DCIS, who successfully conducted these parallel proceedings and brought to bear the full range of enforcement options to address Progenity’s misconduct.

“Fraudulent billing practices undermines the confidence in our healthcare system and in this case, cheated the TRICARE program serving the men, women and families of our military,” said Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Field Office. “The FBI is committed to working with our partners and the public to stop fraud and ensure that healthcare dollars are used appropriately.”

“The settlement is a significant victory for the American public in that it returns ill-gotten proceeds to the U.S. Government and restores confidence in our healthcare system, including the U.S. military's TRICARE program,” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office.  “As in this case, any unprincipled actions by healthcare providers that tarnish and possibly corrupt the integrity of the TRICARE program will be reviewed and vigorously investigated by DCIS and its law enforcement partners.”

“Fraudulent billing is a theft from the FEHBP and the American taxpayer,” said Norbert E. Vint, Deputy Inspector General Performing the Duties of the Inspector General, Office of Personnel Management OIG. “I congratulate our investigators and law enforcement partners on this successful outcome. The OPM OIG will always work hard to investigate suspected fraud and abuse of the FEHBP.”

“Protecting and providing top quality health care to service members, veterans and their families is our primary mission at TRICARE,” said Lt. Gen. Ronald Place, USA, director, Defense Health Agency. “We thank the investigators who uncovered this fraudulent billing by a company trying to profit from taking advantage of our men and women on the front lines. We will continue to work with law enforcement and other state and federal agencies to ensure health care providers are held accountable for participating in any fraudulent practices.”

This case was handled by Assistant U.S. Attorneys Valerie Chu, Paul Starita, and Beth Clukey on behalf of the Southern District of California.

DEFENDANT                                                                      

Progenity, Inc.                                   

San Diego, CA

AGENCIES

Federal Bureau of Investigation

Defense Criminal Investigative Services

Assistant U. S. Attorneys Aaron P. Arnzen (619) 546-8384 and Andrew J. Galvin (619) 546-9721

SAN DIEGO – Gina Champion-Cain, a long-time San Diego business leader, restauranteur and real estate magnate, pleaded guilty in federal court today, admitting that she committed securities fraud by masterminding a massive, years-long Ponzi scheme with hundreds of victims throughout California and the United States.

Champion-Cain also admitted that she lied and forged documents to hide her scheme, obstructed justice by attempting to destroy evidence in the course of an investigation by the U.S. Securities and Exchange Commission, and conspired with employees of her own company and the local branch of a national title company to both commit the fraud and cover it up. The fraud was committed through her companies American National Investments, Inc., and ANI Development, LLC.

Crispin Torres, the former Chief Financial Officer of American National Investments, also pleaded guilty today to conspiring in the scheme by using funds received from investors to prop up Champion-Cain’s other businesses, some of which were failing. 

 “This is by far the largest Ponzi scheme discovered in this district,” said U.S. Attorney Robert Brewer. “Gina Champion-Cain constructed and maintained a house of cards that has come crashing down around her and all her victims. The scheme deprived many investors of their retirement savings, and cost at least one investor tens of millions of dollars and forced him into bankruptcy. And now it will cost the defendant her freedom. We will continue our aggressive efforts to root out corporate fraud and hold greedy criminals accountable.” 

Brewer commended the great work of prosecutors Aaron Arnzen and Andrew Galvin as well as FBI agents and the Securities and Exchange Commission for unraveling this complicated, document-intensive fraud.

“This federal investigation revealed a $400 million-dollar fraudulent investment scheme by Gina Champion-Cain, a purported San Diego business magnate who was trusted by hundreds of investors,” said Acting FBI Special Agent in Charge Omer Meisel. “The FBI is committed to investigating those who engage in criminal conduct that corrupts the financial markets and defrauds the public. Furthermore, fraudsters will not escape justice by covering up or destroying evidence of their own wrongdoing. Obstructing a federal investigation is a serious criminal violation that the FBI will vigorously pursue and prosecute.”

As Champion-Cain admitted in her plea agreement, she raised money from investors by promising to use their money to make loans to business owners who were attempting to acquire California liquor licenses.  Since 2012, Champion-Cain drew in approximately $400 million from investors based on promises that she would use their money to fund those loans, the investors’ money would be safe in an escrow holding account, and the invested funds would and could only be returned to the specific investor who deposited the funds or his/her intermediary.

Champion-Cain admitted today that these promises were all false.  She never used the funds to make liquor license loans.  Instead, she and her co-conspirators simply used investor funds to pay back other (usually earlier) investors, and embezzled funds to support Champion-Cain’s unrelated businesses and her lifestyle.  For example, Champion-Cain admitted that she used at least $60 million in investor funds to meet payroll and other expenses incurred by several businesses she owned, including the Patio restaurant chain, vacation rentals, a juice bar, and the now-defunct Mission Beach surf-themed clothing store Luv Surf Boutique.  She also spent investor funds to pay herself over $2 million in cumulative salary since 2012, and spent over $640,000 for box seats at San Diego Padres games, over $200,000 for box seats at San Diego Charges games, at least $745,000 to pay off her credit card bills, and hundreds of thousands of dollars for automobiles, jewelry, and similar personal luxuries.

The plea agreement also details how Champion-Cain and her co-conspirators succeeded in defrauding investors by hiding the truth.  They fabricated documents, forged signatures, and told investors lies through fake email accounts so that when investors attempted to double-check on their investments with people they thought were independent third parties, the investors were often really communicating with Champion-Cain or her employees.  For example, Champion-Cain emailed an escrow company employee when investors tried to ask questions: “I told them NEVER to call and bother you ladies,” and “if they call asking about escrow agreements and alcohol licenses, blah, blah, blah … just say ‘SURE WHATEVER NOW SHOW ME THE MONEY … HAHAHAHA.’”  The cover-up continued even after Champion-Cain and her co-conspirators learned of a government investigation into her scheme—in response to which they attempted to destroy evidence they knew was incriminating, including stacks of documents, emails, video surveillance footage, and accounting records.

Crispin Torres, who also pleaded guilty today, had been an accountant at American National Investments for years.  As Chief Financial Officer, Torres knew that Champion-Cain’s other businesses were strapped for cash, and requested that Champion-Cain transfer at least $60 million of investor funds from escrow accounts so that Champion-Cain could keep these businesses afloat.  Torres also established a bank account under a name that was similar to the national escrow company’s name, and knew that Champion-Cain tricked certain investors into depositing their funds into this account believing the money would be safe.  When those deposits arrived, Torres, at Champion-Cain’s instruction, fabricated receipts from the escrow company to send to investors.  The purpose was clear – to convince investors that a reliable national escrow company administered their funds.  In fact, the escrow company had no connection with this particular bank account. Champion-Cain and Torres had unfettered access to these investor funds and simply stole the money to further the Ponzi scheme. 

Champion-Cain and Torres are scheduled to appear for sentencing before U.S. District Judge Anthony Battaglia on October 13 at 9 a.m.

CLICK HERE - Slides presented at press conference
CLICK HERE - Champion-Cain Plea Agreement
CLICK HERE - Torres Plea Agreement

DEFENDANTS                                                                                           

Gina Champion-Cain              Case Number 20CR2115        Age: 55           San Diego, CA

Crispin Torres                         Case Number 20CR2114        Age: 53           National City, CA

 

SUMMARY OF CHARGES

 

Securities Fraud, Title 15, U.S.C. Sections 77q and 77x (Champion-Cain)

Maximum Penalty: Five years in prison

 

Obstruction of Justice, Title 18, U.S.C. Section 1505 (Champion-Cain)

Maximum Penalty: Five years in prison

 

Conspiracy, Title 18, U.S.C. Section 371 (Champion-Cain and Torres)

Maximum Penalty: Five years in prison

 

 

AGENCY

 

Federal Bureau of Investigation

Assistant U. S. Attorney Oleksandra Johnson (619) 546-9769    

NEWS RELEASE SUMMARY – July 22, 2020

SAN DIEGO – A local business owner pleaded guilty in federal court today to bank fraud and tax evasion charges, admitting that over the course of several years he evaded taxes by failing to report $498,612 of income to the IRS, and also orchestrated an illegal scheme to fraudulently obtain a mortgage for his $1.8 million residence using a third party.

As part of his plea agreement, David Daughtrey also agreed to pay over $1 million in restitution to the Internal Revenue Service. He is scheduled to be sentenced on November 16, 2020, before U.S. District Judge Larry A. Burns.

“People who cheat on their taxes are cheating all other law-abiding tax payers,” said U.S. Attorney Robert Brewer. “Mr. Daughtrey blatantly disregarded his tax obligations for years.  The defendant not only abused the tax system for his own financial benefit, but conspired to commit bank fraud in order to maintain this lifestyle.” Brewer commended the excellent work of prosecutor Oleksandra Johnson and FBI and IRS agents.

“The FBI is dedicated to ensuring that white collar crimes are uncovered and prosecuted,” stated FBI Acting Special Agent in Charge Omer Meisel. “Today, David Daughtrey has admitted to mortgage fraud and tax evasion.  This case illustrates that the FBI will continue to investigate those individuals that engage in fraudulent financial schemes that cause harm to our banking industry and defraud the government of tax revenue.”

“Our Nation’s tax system funds critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic,” Ryan L. Korner, Special Agent in Charge, IRS Criminal Investigation. “Honest Americans’ compliance with the tax laws is imperative. Rather than pay his fair share, David Daughtrey chose to live lavishly, while intentionally failing to report his true income and evading the payment of over $400,000 in taxes.  Today’s guilty plea demonstrates that the IRS will diligently continue our important enforcement efforts despite the ongoing challenges posed by Covid-19.  We will work alongside our law enforcement partners in a collective effort to enforce the law and ensure the public trust.”   

Daughtrey admitted that from July 2006 until April 2016, he conspired with others to commit bank fraud and tax evasion. As part of the bank fraud scheme, Daughtrey directed another individual to submit a mortgage application to Wells Fargo to purchase a $1.8 million five-bedroom residence, and to falsely claim that the funds used as down payment belonged to the third party and the residence would be used by the third party.  In reality, Daughtrey provided the funds, and the home was intended to be Daughtrey’s primary residence. Daughtrey made monthly mortgage payments of approximately $8,000 for his residence, but continued to represent to the bank that the third party owned the house.  Daughtrey later submitted a false hardship letter on behalf of the third party in an effort to get the bank to modify the terms of the loan on the home.  As part of the plea agreement, Daughtrey admitted he was the true owner of the residence at all relevant times, and promised to make a good faith effort to transfer the legal ownership of the home into his own name.

Daughtrey also admitted as part his plea that over several years, he and his spouse (who is not charged in the case) conspired to commit tax evasion by filing tax returns listing substantially less income than Daughtrey actually earned.  Daughtrey’s tax return for the year 2012 omitted at least $498,612 in income.  Daughtrey failed to report his total income in tax years 2013, 2014, and 2015, and did not file timely tax returns for subsequent years.  According to the plea agreement, the resulting tax loss to the IRS for the years 2012-2014 was $456,536.   Daughtrey agreed to pay $1,016,457.91 in restitution to the IRS, which includes the total tax loss plus penalties and interest.

DEFENDANTS                                            Case Number 20cr2113-LAB                                             

David Daughtrey                                            Age: 60                                   El Cajon, CA

SUMMARY OF CHARGES

Conspiracy to Commit Bank Fraud and Tax Evasion, 18 U.S.C. § 371 (count 1); and

Making a False Tax Return, 26 U.S.C. § 7206(1) (count 2).

Maximum penalty:

Five years’ imprisonment and $250,000 fine (count 1)

Three years’ imprisonment and a maximum fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest (count 2)

AGENCY

Federal Bureau of Investigation

Internal Revenue Service

 

 

Assistant U. S. Attorney Michelle L. Wasserman (619) 546-8431

NEWS RELEASE SUMMARY – July 16, 2020

SAN DIEGO – Daniel Wayne Gorman, a resident of San Diego, was sentenced to 15 years in custody on Monday as a result of mailing over two kilograms of pure methamphetamine to Guam and possessing over 500 counterfeit credit cards. 

According to Gorman’s plea agreement, on July 1, 2016, Gorman placed four packages, each containing a stuffed animal filled with methamphetamine, in the mail from the Jamul, CA Post Office.  According to court documents, Gorman used an alias “Daniel German” to mail the packages, which were intercepted in Barrigada, Guam.  In total the four packages contained 2.077 kilograms of actual methamphetamine.

Gorman was also sentenced on separate charges of credit card fraud.  As laid out in the United States’ sentencing memorandum, on March 29, 2018 officers searched Gorman’s residence and found significant evidence of identity theft and credit card fraud, including over 500 counterfeit credit cards, multiple fake Florida driver’s licenses bearing the defendant’s photograph but the personal identifying information of others, white plastic cards, magnetic strip readers, a card embosser, a tipping foil machine, and holograms.  Many of the credit cards in Gorman’s possession bore the names of real individuals who were not Gorman. 

“We aren’t going to allow the U.S. Mail to become a smuggling service for drug traffickers,” said U.S. Attorney Robert Brewer. “This case is the result of excellent work by Assistant U.S. Attorney Michelle Wasserman and agents from the U.S. Secret Service and U.S. Postal Inspection Service and the San Diego County Sheriff’s Department.”

“Today’s sentencing is a reminder that financial crimes against the American people will not go unpunished,” said James Anderson, Special Agent in Charge of the Secret Service San Diego Field Office.  “This case illustrates the strong partnership between the Secret Service, San Diego Police Department, the San Diego Sheriff’s Department, the Drug Enforcement Administration, the U.S. Postal Service and the U.S. Attorney’s Office.”

“For his role in distributing controlled substances, Daniel Gorman misused the U.S. Mail and is now paying a steep price,” said Patricia Armstrong, Inspector in Charge of the U.S. Postal Inspection Service, Los Angeles Division.  “By working closely with our law enforcement partners to dismantle operations like this, we can help stop drugs and associated violence from reaching the American public.”

As a result of Gorman’s significant criminal activity, U.S. District Judge John A. Houston sentenced him to 120 months custody as to the methamphetamine trafficking and 60 months, consecutive, as to the possession of counterfeit credit cards, for a total of 180 months or 15 years.

DEFENDANT                                               Case Number             18CR4083-JAH         

Daniel Wayne Gorman                                   Age: 33                       San Diego, CA

SUMMARY OF CHARGES

Distribution of Methamphetamine – Title 21, U.S.C., Section 841(a)(1)

Maximum penalty: Life imprisonment and $10 million fine

Possession of Counterfeit Access Devices – Title 18, U.S.C. Section 1029(a)(3)

Maximum penalty: Ten years’ imprisonment and a $250,000 fine

AGENCIES

United States Secret Service

United States Postal Inspection Service

San Diego County Sheriff

 

For Further Information, Contact:

Assistant U. S. Attorneys Emily W. Allen (619) 546-9738, Andrew Young (619) 546-7981, and Oleksandra Johnson (619) 546-9769

 

SAN DIEGO – Rabbi Yisroel Goldstein, former director at Chabad of Poway, and five of his associates pleaded guilty in federal court today and Monday to fraud charges, admitting that they participated in a complex, years-long, multi-million dollar tax-evasion scheme and other financial deceptions involving theft of public money.

According to his plea agreement, while Rabbi Goldstein was director of the Poway synagogue, he received at least $6.2 million in phony contributions to the Chabad and affiliated charities and secretly refunded up to 90 percent of the donations to the “donors.” After Rabbi Goldstein provided these donors with fake receipts, they illegally claimed huge tax deductions for these nonexistent donations, and the rabbi kept about 10 percent – more than half a million dollars over the course of the fraud - for himself. Tax losses to the IRS were more than $1.5 million. At least 20 taxpayers were involved in this and related tax-evasion schemes.

This case was under investigation for more than two years before Rabbi Goldstein was shot and wounded during the April 27, 2019 attack on worshippers at the Chabad. In that case, federal civil rights and hate crimes charges are pending against John T. Earnest of Rancho Peñasquitos.

The rabbi was aware of the investigation at the time of the shooting. FBI and IRS agents had searched his home in October of 2018, and he began cooperating with the investigation shortly after that time.

According to his plea agreement, Rabbi Goldstein has agreed to cooperate with ongoing investigations of uncharged co-conspirators and to forfeit $1 million in proceeds and pay restitution of $2.5 million.

“This case has brought us all a great deal of anguish because of the attack on Chabad of Poway,” said U.S. Attorney Robert Brewer. “But whatever a defendant’s dire personal circumstances, or stature in the community, we will always seek justice, first and foremost. We cannot, and will not, sweep serious criminal conduct under the rug. We cannot look the other way because a perpetrator of crime has suddenly become a victim of crime.”

“This case shows the FBI’s dedication to untangling the web of fraud in a complex, multi-million dollar charitable donation scheme that violated the trust of the Chabad of Poway and defrauded the United States government," said FBI San Diego Acting Special Agent-in-Charge Omer Meisel. “The FBI is committed to holding those accountable who use their position and stature in the community as a disguise to commit fraud.  All the defendants in this case, including Rabbi Yisroel Goldstein, have admitted their guilt in these fraudulent schemes and will no longer be able to use deceit and lies to cheat those who were intended to receive charitable funds and taxpayer dollars.”

“The Chabad of Poway, which has served its community for decades, was used by Rabbi Yisroel Goldstein and the five co-defendants to evade over $1.5 million in taxes over the last 8 years,” said Ryan L. Korner, Special Agent in Charge of the IRS’s Criminal Investigation Division. “The Chabad was further victimized in April 2019 when a shooter attacked its worshippers, and we recognize the pain that terrible event has caused for the Chabad, Rabbi Goldstein, and the community. Ultimately, the financial fraud schemes uncovered during this multi-year, multi-defendant investigation were egregious and IRS Criminal Investigation has a responsibility to bring to justice those who exploit and manipulate non-profit and religious organizations in order to benefit themselves.  The IRS is responsible for protecting honest taxpayers and serving the public by ensuring the integrity of our tax system, which funds our nation’s critical infrastructures and vital programs, including supporting our citizens and small businesses during the ongoing pandemic.  The hard work of our Special Agents will not stop despite the ongoing challenges posed by Covid-19.  We will continue to work alongside our law enforcement partners, and this week’s six guilty pleas demonstrate our collective efforts to continue to enforce the law and ensure the public trust.”

Five others who participated in the scheme with Rabbi Goldstein also entered guilty pleas in federal court this week, admitting that they knowingly participated by concealing their donations through the Chabad and making false deductions on their tax forms, or by recruiting new taxpayers to participate in the scheme. One taxpayer, defendant Bruce Baker, admitted that he began participating in this scheme with Rabbi Goldstein in the 1980s, and made millions of dollars in fictitious donations over the years.

Rabbi Goldstein admitted today that in one instance in late 2017, he attempted to disguise the source of more than $1.1 million in fraudulent donations by purchasing gold coins worth approximately $1 million. He then delivered the gold to the phony donor.

CLICK HERE - Press Presentation Graphics

There were many schemes within the broader tax-fraud and kickback scheme, dating back to 2010 or earlier and continuing through 2018.

Rabbi Goldstein admitted he defrauded three different Fortune 500 companies by tricking them into matching supposed charitable donations of their employees.  Working with the employees, Rabbi Goldstein fabricated fake receipts and then secretly returned their fake “donations.”  This allowed the employees to claim tax deductions for the completely fabricated donations, and allowed Rabbi Goldstein to collect the companies’ matching funds—including some that matched double their employees’ donations. Rabbi Goldstein helped to orchestrate this scheme with at least six taxpayer-employees and two other associates who helped recruit new donors or conceal the true recipient of the funds.  In total, Rabbi Goldstein defrauded the companies out of at least $134,000, and helped the taxpayer-employees to claim nearly as much in fictitious tax-deductible charitable contributions to the IRS.

Rabbi Goldstein admitted that he also helped an individual conceal more than $700,000 in income by allowing the individual to use Chabad bank accounts to deposit his income, thereby hiding it from the IRS.  As his cut, Rabbi Goldstein kept 10 percent of this individual’s income—more than $70,000. 

Separate and apart from the tax evasion scheme, Rabbi Goldstein and defendant Alexander Avergoon, who also pleaded guilty today, used false information and fabricated invoices and other records to pretend to be eligible for emergency funds, grants or donations, and private loans. These frauds on the Federal Emergency Management Agency (FEMA), the California Governor’s Office of Emergency Services (Cal OES), and private foundations resulted in losses to these programs of at least $875,000.  Rabbi Goldstein and Avergoon have agreed to pay restitution to recoup these losses and reimburse these programs.

The rabbi also admitted in his plea agreement that he defrauded San Diego County courts by falsely certifying that co-conspirators and associates had performed volunteer work at the Chabad or its affiliated entities, so that those associates could submit fake reports to the courts that they had fulfilled sentencing requirements for criminal offenses showing dozens or even hundreds of community service hours.  Finally, Rabbi Goldstein admitted that, along with Avergoon, he fraudulently obtained loans from banks and mortgage lending businesses by submitting false information in loan applications that they verified for one another.

“Sadly, the facts of this case show a willful, devious effort to deceive on the part of a trusted community leader,” Brewer said. “Evading taxes causes harm not just to the government, but also to one’s fellow citizens, who are forced to bear a heavier burden. Members of the Chabad of Poway are also victims of this crime, for those fake donations certainly did not benefit their congregation.

“There is no doubt that Rabbi Goldstein was the victim of a heinous hate crime that terrorized him and Chabad congregants,” Brewer said. “This is a mitigating factor, but this is no excuse. We acknowledge the rabbi’s cooperation and his community leadership in the wake of the shooting. But this illegal conduct had been going on for many years, and it cannot be ignored.”

U.S. Magistrate Judge Karen S. Crawford presided over today’s arraignment and guilty plea.  Rabbi Goldstein is next scheduled to appear at a sentencing hearing on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant.

The five related guilty pleas involve a series of fraud and tax evasion schemes by Rabbi Goldstein’s co‑defendants: 

1. Defendant Alexander Avergoon

Avergoon admitted that from 2010 to 2015, he recruited at least nine taxpayers who made more than $275,000 in fraudulent “donations” to the Chabad, then used Avergoon as a conduit to secretly return 90 percent of the money to the purported “donors.”  He also admitted that he joined Rabbi Goldstein in the grant fraud scam in which they obtained hundreds of thousands of dollars in misappropriated grant funds.  

As part of the government benefits fraud scheme, Avergoon used shell companies, including “Imagination Construction Company,” to create fictitious and backdated invoices for services like carpet installation, repairs to the Chabad of Poway’s HVAC system, and replacing damaged books and other supplies—even though Avergoon had never performed these services.  In some cases, Avergoon would give Goldstein several fake bids from different shell companies, so that Rabbi Goldstein could trick the grant program administrators into believing he had complied with their competitive bidding requirements.  Avergoon and Goldstein pretended that the government grant funds would be used for facilities upgrades, security systems, and community programs.  But in reality, the money often went straight to Goldstein’s and Avergoon’s pockets; other times they used portions of it to pay contractors who had in fact charged much lower prices than reflected on Avergoon’s phony paperwork.

Apart from his fraudulent partnership with Rabbi Goldstein, Avergoon also admitted to participating in separate real estate Ponzi schemes from 2010 to 2016, in which he cheated retirement investors out of a total of $12 million.  Avergoon was a San Diego-based real estate agent, and he used his industry knowledge and reputation to target trusting victims who would invest in what they thought was the purchase of rental property.  Avergoon promised monthly dividends that would be paid from rental income.  He created written investment materials like prospectus and projected income and expenses calculations, designed to give investors the false impression that their money would be safely tucked away in passive-income retirement investments.  But in truth, instead of using investors’ money to buy rental properties as he promised, Avergoon spent the money himself and just pretended that he had purchased the apartment buildings and office space he advertised.  In true Ponzi fashion, for a time, Avergoon made the promised dividend payments—but rather than using rent income, he funded those payments using new investor money.

Avergoon deceived more than a dozen unwitting investors, and convinced them to part with at least $5 million.  When an investor would ask to cash out, he encouraged them to re-invest, and at one point he pretended to “roll over” their retirement investments to purchase a multi-million dollar commercial building.  In reality, he bought that building with a loan, not with investor money, and again diverted their money to his own personal use.  He created fake partnership agreements, false purchase documents and deeds, and other fictitious records, and forged the signatures of his investors to conceal the fraud—then laundered the proceeds in order to disguise the true source and ownership of the money.

Avergoon did not stop there.  He convinced investors to part with another $5 million or more by pretending to use their money to fund short-term, low-risk loans supposedly secured by the borrowers’ high-end San Diego homes.  But in reality, there were no “borrowers”—Avergoon used his real estate connections to identify homes he could pose as collateral, and he simply doctored up fake loan agreements and forged the borrowers’ signatures.  In some cases, the individuals he claimed were the borrowers did not even own the homes that were purportedly used as collateral.  Avergoon made fake loan agreements, Deeds of Trust, mortgage Notes, and other official-looking documents, and he even created fake notary stamps and San Diego County Recorder’s Office markings to make the paperwork appear legitimate.  Once again, Avergoon used new investor money to make occasional payments to his victims, to make it appear that the “loans” were performing.  But in truth, he diverted the money to his own use and the “investments” were worthless.

Avergoon was indicted in August 2019 and apprehended in Latvia.  He was extradited to the United States in November 2019 and has remained in custody since his extradition and initial appearance in federal court in San Diego.  U.S. Magistrate Judge Barbara L. Major presided over his change of plea hearing today.  Avergoon is next scheduled to appear at a sentencing hearing on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant.

2. Defendant Bruce Baker

Bruce Baker pleaded guilty to conspiring with Rabbi Goldstein to defraud the IRS and file false tax returns beginning as early as the mid-1980s.  For three decades, Baker admitted that he used fabricated records from Goldstein to fraudulently reduce his tax liabilities by pretending he was eligible for tax deductions for millions of dollars in nonexistent “gifts to charity” he reportedly made to the Chabad.  In reality, Goldstein secretly returned 90 percent of Baker’s donations, and kept a 10 percent fee. 

This part of the scheme was especially complex and intricate.  Rather than simply paying cash or returning Baker’s money in direct payments, Goldstein would pay Baker’s creditors, make large purchases on his behalf, give money to Baker’s relatives, or pay off bills on behalf of his family.  To disguise the repayments, Rabbi Goldstein delivered the money in clandestine ways by, for example, paying:

• around $200,000 to Baker’s business partner to buy the partner’s share of their business assets on Baker’s behalf;
• more than $420,000 in tuition and fees for Baker’s son to attend dental school and a post-doctoral residency in dentistry; 
• at least $90,000 to a construction company for Baker’s benefit, another $200,000 directly to a building contractor working for Baker and $129,000 to a home builder, and more than $300,000 to Baker’s account at a construction and building supply company; and
• $200,000 from the proceeds of the sale of Goldstein’s property paid directly to Baker’s son.

Over the years, Baker admitted that he “donated” at least $2.6 million to Chabad of Poway, with at least $2.4 million secretly funneled back from Goldstein to Baker.  In total, Baker’s and Goldstein’s scheme cost the IRS around $644,000 in tax losses.

Separate from his dealings with Rabbi Goldstein, Baker also admitted that he engaged in a similar tax evasion scheme with the director of a separate religious congregation and community organization in San Diego.  In 2006, that individual offered Baker and his family an arrangement where they would pretend to make an “in-kind” donation to the religious organization of an ancient Iranian Torah—although no such Torah existed and the “in-kind” donation was a hoax.  This other director provided Baker with a fraudulent appraisal that valued the Torah at $1.2 million.  Baker and his family used the fake paperwork to claim exorbitant tax deductions, and gave the co-conspirator a 10 percent fee—or $120,000—in return.  On top of that, the director charged Baker $20,000 for the fake appraisal.

U.S. Magistrate Judge Karen S. Crawford presided over Baker’s arraignment and guilty plea on July 13, 2020.  Baker is scheduled for sentencing on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant.  He has agreed to make full restitution to the IRS including all unpaid taxes, penalties, and interest. 

3. Defendant Bijan Moossazadeh

Bijan Moossazadeh began participating in the tax evasion scheme with Rabbi Goldstein as early as 2012.  As he admitted in his plea agreement, between 2012 and 2018 he pretended to “donate” a total of around $290,000 to Chabad of Poway.  But instead of using the money for charitable purposes, Goldstein secretly funneled back 90 percent of the funds to Moossazadeh.  Even so, Goldstein generated fraudulent donation receipt letters for Moossazadeh, so he could fraudulently verify that the money was indeed a “gift to charity.”  Moossazadeh fraudulently reduced his tax liability—or intended to, before he learned of this investigation in 2018—by more than $91,500.

Goldstein concealed his repayments by giving Moossazadeh large cash payments that would be difficult to trace.  And he communicated in code when he had cash available, referring to his cash supplies as “challah” and his supplier as “the baker.”  In 2016, for example, Goldstein texted Moossazadeh to tell him he had cash: “I got a call from the Baker today he’s preparing for Friday how many Chalah do you need?”  Moossazadeh answered, “22”—by which he meant, $22,000.  The next day, Goldstein followed up: “Good morning[.] The baker came in earlier and has today 22 challa ready for pickup[.] Let me know what time?” Moossazadeh met Rabbi Goldstein at the Chabad on March 16, 2016, where he delivered a $22,000 check made payable to the Chabad (with “Contribution” written in the memo line), and in exchange Goldstein gave him $20,000 in cash (keeping the remaining $2,000).  Goldstein also gave Moossazadeh a fraudulent donation receipt thanking Defendant for his “generous tax deductible donation.”

They followed a similar pattern in 2018, when Goldstein again used coded text messages to alert Moossazadeh that he did not have cash ready and available: “Just got a call the baker is not baking challah this Friday-will be back next Friday and have the full order.”  A week later, Goldstein followed up: “Cook just finished . [] Come and pickup[.]”  Moossazadeh admitted in his plea agreement that he met Goldstein at the Chabad the next day and delivered a check for $33,000, made payable to the Chabad (again with “Contribution” written in the memo line). In exchange, Goldstein gave Moossazadeh $30,000 in cash (keeping the remaining $3,000), along with another fraudulent donation receipt. 

In August 2018—just at the time that court documents show Goldstein had offered to launder cash proceeds for an individual who he only later discovered was an undercover federal agent--—Rabbi Goldstein let Moossazadeh know he had more cash available.  He texted Moossazadeh: “I have a new baker who can bake many more challah almost unlimited[.] Let Joe [SHEMIRANI] know that a new baker came to town and to let me know how many challah to bake ? Can do as many as you need .. unlimited[.]”  But just a few months later in October 2018, Moossazadeh learned that Rabbi Goldstein was under investigation.  He did not attempt to deduct any of his 2018 purported donations to the Chabad.

U.S. Magistrate Judge Karen S. Crawford presided over Moossazadeh’s arraignment and guilty plea on July 13, 2020.  He is scheduled for sentencing on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant.  He has agreed to make full restitution to the IRS including all unpaid taxes, penalties (including a 75 percent fraud penalty), and interest. 

4. Defendant Yousef Shemirani

Yousef Shemirani admitted in his plea agreement that he participated in the tax scheme from 2011 to 2016, and in total he pretended to “donate” $137,650 to Rabbi Goldstein and the Chabad of Poway.  In return, Goldstein secretly funneled approximately 90 percent of the “donations” back to Shemirani, keeping 10 percent (around $13,765).  Shemirani’s participation in the scheme resulted in a tax loss to the IRS of more than $39,000.

As with Moossazadeh, Rabbi Goldstein used coded language to discuss the scheme with Shemirani, and he concealed his return of the “donations” by returning Shemirani’s payments in large amounts of cash.  As Shemirani admitted in his plea agreement, Goldstein texted him in June 2015 to alert him that he would have cash available: “The baker will be back in July and will have all the Chalah you need :)”  In July 2015, he followed up: “I just got a call from the Baker he may be in this Friday do you still need Chalah?”  A year later, Goldstein continued the disguise, alerting Shemirani: “The Baker came today and actually be a nice amount of fresh Chalah – you can come by today and pick it up.” 

Shemirani heard from Rabbi Goldstein again on October 20, 2018, when Goldstein appeared unannounced at Shemirani’s door.  As Shemirani admitted, Goldstein warned that he was under investigation and that his home and office had been searched by federal agents.  He alerted Shemirani that the next time they saw each other, Goldstein might be “wearing a wire.”  Shemirani understood this was a warning, and he took steps to amend his fraudulent tax returns in response. 

Shemirani was arraigned and entered a guilty plea on July 13, 2020, before U.S. Magistrate Judge Karen S. Crawford.  His sentencing is scheduled on October 19, 2020, at 9 a.m. before U.S. District Judge Cynthia Bashant.  He has agreed to make full restitution to the IRS including all unpaid taxes, penalties (including a 75 percent fraud penalty), and interest. 

5. Defendant Boris Shkoller

Boris Shkoller admitted that from 2015 to 2016, he “donated” $122,000 to Chabad of Poway and secretly received 90 percent—or $109,800—back from Goldstein.  Shkoller used Alexander Avergoon as a conduit to make the payments and receive the kickbacks.  Avergoon also passed along fraudulent and backdated donation receipt letters that fraudulently verified Shkoller’s “generous tax deductible donation[s].”  Shkoller admitted that he filed fraudulent tax returns for both years, resulting in tax losses to the IRS of more than $36,000. 

Shkoller was arraigned and pleaded guilty today before U.S. Magistrate Judge Karen S. Crawford.  His sentencing is scheduled on October 19, 2020 at 9 a.m. before U.S. District Judge Cynthia Bashant. He has agreed to pay $53,772 in restitution to the IRS for his tax underpayment, penalties, and interest. 

U.S. Attorney Brewer commended the excellent work of prosecutors Emily Allen, Andrew Young and Oleksandra Johnson as well as case agents from the FBI and IRS.
 

DEFENDANTS AND SUMMARY OF CHARGES                    

Yisroel Goldstein, Case Number 20CR1916-BAS             Age: 58           Poway
Conspiracy to Defraud the United States and Commit Wire Fraud, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison

Alexander Avergoon, Case Number 19CR2955-BAS       Age: 44           San Diego                  
Wire Fraud, in violation of Title 18, USC 1343
Maximum Penalty: Twenty years in prison

Aggravated Identity Theft, in violation of Title 18, USC 1028A
Maximum Penalty: Two years minimum consecutive term in prison

Money Laundering, in violation of Title 18, USC 1956(a)(1)(B)(i)
Maximum Penalty: Twenty years in prison

Bruce Baker, Case Number 20CR1912-BAS                     Age: 74           La Jolla
Conspiracy to Defraud the United States and file false tax returns, in violation of Title 18, USC 371
Maximum Penalty: Five years in prison

Bijan Moossazadeh, Case Number 20CR1893-BAS         Age: 63           San Diego
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison

Yousef Shemirani, Case Number 20CR1895-BAS            Age: 74           Poway
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison

Boris Shkoller, Case Number 20CR1913-BAS                  Age: 83           Del Mar
Filing a False Tax Return, in violation of Title 26, USC 7206(1)
Maximum Penalty: Three years in prison

INVESTIGATING AGENCIES:  Federal Bureau of Investigation, Internal Revenue Service

CLICK HERE - Avergoon Indictment

CLICK HERE -Goldstein Plea Agreement

CLICK HERE - Avergoon Plea Agreement

CLICK HERE - Shkoller Plea Agreement

CLICK HERE - Goldstein Information

CLICK HERE - Baker Information

CLICK HERE - Moossazadeh Information

CLICK HERE - Shemirani Information

CLICK HERE - Shkoller Information

 

Assistant U. S. Attorney Valerie H. Chu,  (619) 546-6750

SAN DIEGO – Dr. Marco Antonio Chavez was sentenced to 21 months in custody and ordered to pay restitution of $783,764.37 for defrauding TRICARE, the health care benefits program for military service members and their dependents. 

According to court documents, Chavez was a physician licensed by the State of California Medical Board. Chavez provided psychiatry services, including therapy and prescription medications for children and adults diagnosed with ADHD and depression, for San Diego patients whose health care was covered by TRICARE.  Chavez defrauded TRICARE by using the personal information of these patients to create and submit false and fraudulent claims for nonexistent appointments when he did not actually treat those patients.  And he routinely selected the billing code for the highest-level (and highest-reimbursement) patient visit for these fabricated appointments, to maximize the fraudulent reimbursements he received from TRICARE.  He swindled more than $783,000 from the taxpayer-funded health care program, and used these ill-gotten gains to buy himself luxuries including a red 2016 Jaguar and thousands of dollars’ worth of David Yurman jewelry.

Beginning in April 2013, Chavez became a network provider for TRICARE under contract with United Health Care Military & Veterans, West.  That August, Chavez became eligible to submit claims directly to TRICARE through XPressClaim (“XPC”), a web-based system.  Chavez used that access to help his scheme to defraud TRICARE, using his unique personal security key code to avoid review by other billing staff.  He then caused the payments to be electronically transferred into an account that was in his name, which he controlled.

For example, Patient A was taken by his/her mother to see Chavez on just three occasions: December 2, 2013, December 16, 2013, and January 13, 2014.  Records indicate that Chavez billed and was paid by TRICARE for 80 dates of service for Patient A, including for 21 dates before Patient A’s initial visit on December 2, 2013.  On each of the three dates that correspond to dates when Patient A actually saw Chavez, the claim was submitted to TRICARE via the billing system used by administrative staff in Chavez’s clinic.  But for the remaining 77 dates of service billed to TRICARE for Patient A, in which the patient did not actually see Chavez, the XPC code was used—indicating it was Chavez himself who submitted those fraudulent claims directly.

Similarly, Patient B was taken by his/her father to see Chavez on five occasions between May 2014 and August 2014.  Records indicate that Chavez billed and was paid by TRICARE for 76 dates of service for Patient B.  Each of the remaining 71 dates of service billed to TRICARE for Patient B, when the patient did not actually see Chavez, contained the XPC code, again indicating they were submitted by Chavez directly using XPressClaim.

Chavez tried to deflect attention and avoid detection of his fraudulent billing through a variety of deceptive means.  For example, he notified patients that they might see entries on their Explanation of Benefit (“EOB”) forms from TRICARE that they would not recognize. This was an attempt to prevent patients from complaining to TRICARE and drawing attention to the false bills. In reality, Chavez knew that the reason the patients would not recognize the entries on their EOBs was because they had not actually occurred – Chavez had simply made them up. 

When the TRICARE contractor conducted an audit and requested certain of Chavez’s patient files, Chavez falsely claimed that he had already sent the files, when he knew those files did not exist and could not have been sent.  Chavez also misrepresented that a member of the office staff had stolen his TRICARE checks and deposited them without his permission.

Over the course of his scheme, Chavez submitted approximately $928,800 in false and fraudulent claims to TRICARE via XPC, and was paid $783,764.37 on those claims by TRICARE. 

Separately, records of the State of California reflect that Chavez’s medical license was suspended in May 2018, upon the finding of an administrative judge that Chavez had treated patients while under the influence of a narcotic or alcohol.

The United States argued in its sentencing papers that Chavez exploited his privileged position as a physician, and his access to patients’ data, to commit his crime.  Patients went to Chavez seeking psychiatric treatment for a variety of issues, and trusted him with some of the most troubling and sensitive aspects of their lives.  Unbeknownst to them, Chavez saw the patients as his own personal piggy bank: billing opportunities to feed his lifestyle.  What is more, Chavez took advantage of TRICARE—a program built upon reliance and trust.  Chavez, as a medical provider, easily submitted claims under his name for services he claimed he provided, and got federal funds paid directly into his bank account. 

“Through flagrant fraudulent billing, Dr. Chavez stole a quarter of a million dollars from TRICARE and spent it on luxury items, including a Jaguar and designer jewelry.  But neither the citizens of this district nor the Department of Justice will stand for defrauding the government,” said U.S. Attorney Robert Brewer. “Anyone who uses TRICARE as a path to unjust enrichment will pay a heavy price, as we are 100 percent committed to protecting vital government health programs for our military and veterans.”

“Dr. Marco Chavez stole more than $780,000 from the TRICARE program which serves our veterans, military members and their families. This deliberate targeting of a healthcare program which solely aids our military troops and their families is appalling,” said Acting FBI Special Agent in Charge Omer Meisel.  “When medical professionals violate their oath to honest patient care for personal greed, it significantly damages the trust required within our health care system. In order to protect the integrity of the healthcare system and government programs like TRICARE that serve our military members, the FBI is committed to rooting out fraud within the healthcare industry. We urge anyone with information about suspected healthcare fraud to contact their local FBI Field Office.”

 “Dr. Chavez’ conduct is a particularly egregious example of fraud against the TRICARE program in that his greed clearly took priority over his patients’ trust and well-being,” said Bryan D. Denny, Special Agent in Charge of the Defense Criminal Investigative Service, Western Field Office.  “The doctor's sentencing should serve notice to other unscrupulous healthcare providers that any unprincipled actions that corrupt the integrity of the TRICARE program and ultimately degrade the quality of health care provided to military service members and their families will be vigorously investigated by DCIS and its law enforcement partners.”

U.S. Attorney Brewer commended Assistant U.S. Attorney Valerie Chu and the FBI and DCIS agents for their exemplary work on this case.

DEFENDANT                                  Case Number 18cr2930-L                                  

Marco Antonio Chavez                      Age: 40                          Brownsville, Texas

SUMMARY OF CHARGES

Health Care Fraud – Title 18, U.S.C., Section 1347

Maximum penalty: Ten years in prison and $250,000 fine

AGENCY

Federal Bureau of Investigation

Defense Criminal Investigative Service

 

NEWS RELEASE SUMMARY – July 8, 2020

SAN DIEGO – Jeffrey Fildey, founder and former CEO of San Diego startup GoFormz Inc. pleaded guilty today to stealing more than $1,500,000 from his own company for his personal benefit.  According to public records, GoFormz Inc., founded in 2012, is a San Diego company that provides online mobile forms and reporting products.

According to Fildey’s plea agreement, beginning on or before September 30, 2015 and continuing through August 12, 2017, Fildey used various methods to defraud GoFormz.  His deceptive ways included obtaining loans, supposedly on the company’s behalf, but then taking the funds for himself, putting personal expenditures on the GoFormz credit cards which the company then paid for, obtaining cash advances for himself on GoFormz credit cards, and simply stealing money directly from the company’s bank account.

As just one example, on September 1, 2016, Fildey obtained a business loan for GoFormz by misrepresenting the purpose of the loan.  The loan was approved and on September 7, 2016, $146,250 was wired to GoFormz’s bank account.  That same date, Fildey wired the entire amount to his personal bank account.  Fildey used the funds for personal expenses while GoFormz made payments on the loan.  Fildey took out a total of three unauthorized loans on behalf of GoFormz and each time transferred the funds to his personal bank account shortly after the loan funds were transferred to GoFormz.  In addition to the loans, Fildey withdrew over $700,000 in cash from the GoFormz bank account for his personal use, and made over $2,600 in unauthorized purchases on the GoFormz corporate credit card. 

“Defendant abused a position of trust to brazenly steal company assets, treating GoFormz Inc. as his own private slush fund,” said U.S. Attorney Robert S. Brewer.  “Thanks to the dedicated work of our law enforcement partners at the FBI, he will be held fully accountable for his fraudulent misdeeds.”

“The FBI identified and disrupted this fraud perpetrated by Jeffrey Fildey," said Acting Special Agent in Charge Omer Meisel.  “The FBI is committed to identifying and preventing fraud schemes that harm our financial and business sectors.”

Fildey admitted in his plea agreement that as a result of his fraud, GoFormz lost $1,544,147.  Fildey is next scheduled to appear before U.S. District Court Judge Larry Burns for sentencing on November 9, 2020. 

U.S. Attorney Brewer commended AUSA Michelle Wasserman for her work prosecuting this matter.

DEFENDANT                                                           Case Number   20cr1917-LAB         

Jeffrey Fildey                                      Age: 56                                   Las Vegas, NV

SUMMARY OF CHARGES

Wire Fraud – Title 18, U.S.C., Section 1343

Maximum penalty: 20 years’ imprisonment and $250,000 fine or twice the gross gain or loss from the offense, whichever is greater

AGENCY

Federal Bureau of Investigation

NEWS RELEASE SUMMARY – July 7, 2020

SAN DIEGO – The Department of Justice today announced $2.2 million in grant funding to law enforcement agencies and stakeholders through the Department’s Office of Community Oriented Policing Services (COPS Office) Community Policing Development (CPD) Microgrants Program. COPS Office Director Phil Keith announced 29 awards with award amounts ranging from $15,090 to $100,000. 

In the Southern District of California, the Chula Vista Police Department was chosen to receive a $97,500 grant to support its human trafficking program.  The agency is the only local law enforcement department in California to receive a CPD Microgrant award.

“Additional funds to respond to the threat of human trafficking are particularly important now,” said U.S. Attorney Robert Brewer.  “The coronavirus pandemic has young people spending countless hours on their phones, and unfortunately this renders them prey for human traffickers who exploit social media.”

“The CPD Microgrants Program is a critical resource to advance innovative community policing projects across the country,” said Director Keith.  “These strategic investments from the COPS Office pay huge dividends to state and local law enforcement agencies and the communities that they serve.”

CPD Microgrants Program funds are used to develop the capacity of local, state, and tribal law enforcement agencies to implement community policing strategies. Applicants were invited to propose demonstration or pilot projects to be implemented in their agency that offer creative ideas to advance crime fighting, community engagement, problem solving, or organizational changes to support community policing in one of the following areas:

• Human Trafficking
• Meeting Rural Law Enforcement Challenges
• Officer Safety and Wellness
• Recruitment, Hiring, and Retention

• School Safety
• Staffing and Allocation Studies
• Victim-Centered Approaches
• Violent Crime
• Youth Engagement 

 

Funding through this program is available for the first time since 2018, following the successful removal of a nationwide injunction. These awards are being announced at a critical time for our country, when community policing strategies are very much needed to improve police and community relations.

The complete list of awards can be found here https://cops.usdoj.gov/pdf/2020AwardDocs/cpdmicrogrants/Award_List.pdf. To learn more about CPD Microgrants, please visit https://cops.usdoj.gov/cpdmicrogrants.  For additional information about the COPS Office, please visit www.cops.usdoj.gov.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

 

Assistant U. S. Attorney Mark Pletcher (619) 546-9714

NEWS RELEASE SUMMARY – June 23, 2020

SAN DIEGO – Three former U.S. service members pleaded guilty in federal court today, admitting their roles in a fraud scheme that bilked the military healthcare program known as TRICARE out of more than $65 million.

Kyle Adams, Daniel Castro and Jeremy Syto are scheduled to be sentenced September 11, 2020 before U.S. District Court Judge Janis L. Sammartino.

At the same time, the alleged ringleaders of this scheme were charged with additional crimes. Jimmy and Ashley Collins, a civilian married couple living in Cleveland, Tennessee, were originally charged in January 2018. They were charged on June 9, 2020 with additional crimes related to their operation of the scheme that cheated the health care program that covers United States military service members, retirees, and their dependents. 

As Adams, Castro, and Syto admitted today, the defendants illegally recruited TRICARE patients to receive extraordinarily expensive and largely unnecessary prescription compounded drugs—which cost TRICARE an average of more than $14,500 per medication per month. They induced the patients to sign up by offering monthly payments to participate in a bogus “medical evaluation,” when, in fact, no medical evaluation was taking place.

“The military is very important to San Diego, and the U.S. Attorney’s Office and its law enforcement partners will ensure that military dollars are legally spent on necessary goods and services for military personnel,” said U.S. Attorney Robert Brewer. “Fraudsters, scammers, charlatans and thieves beware, there is no free passage through San Diego.”

“The theft of military health care dollars directly ‎harms our Warfighters and will not be tolerated,” said Michael Mentavlos, Special Agent in Charge, Southwest Field Office, Defense Criminal Investigative Service. “Today’s guilty pleas demonstrate that DCIS, in partnership with NCIS, IRS, and the FBI, will aggressively pursue those who pillage DOD resources.”

“NCIS and our law enforcement partners began to uncover this multimillion dollar scheme to defraud the military thanks to a tip from a single service member,” said NCIS Marine Corps West Field Office Special Agent in Charge Amy Murphy. “These results highlight how critically important it is for our military personnel and family members to remain vigilant and always report suspected fraud. NCIS is grateful to the Defense Criminal Investigative Service, the Internal Revenue Service, and the FBI for their exceptional efforts during this extensive investigation.”

Compounded medications are specialty medications mixed by a pharmacist to meet the specific medical needs of an individual patient. Although compounded drugs are not approved by the Food and Drug Administration (FDA), they are properly prescribed when a physician determines that an FDA-approved medication does not meet the health needs of a particular patient, such as if a patient requires a particular dosage or application or is allergic to a dye or other ingredient.

Adams, Castro, and Syto admitted today that between October 2014 and July 2015, they worked as recruiters for Jimmy and Ashley Collins. At the Collins’ direction, the defendants recruited TRICARE beneficiaries by promising to pay them to evaluate the medications as part of an ongoing medical study, when in reality, no study was taking place.  Once a recruiter convinced a TRICARE beneficiary to sign up to receive the compounded medications, the straw beneficiary’s information was sent to Choice MD, a Tennessee medical clinic co-owned and operated by Jimmy and Ashley Collins.  Doctors and medical professionals employed by the Collinses at Choice MD, including Dr. Susan Vergot, Dr. Carl Lindblad, and Candace Craven, then wrote prescriptions for the TRICARE beneficiaries, despite never conducting a medical review or examination of the patients in person. Once signed by the doctors, these prescriptions were not given to the straw beneficiaries, but sent directly to The Medicine Shoppe, a pharmacy in Bountiful, Utah, which filled the prescriptions and received massive reimbursement from TRICARE.

Between December 2014 and May 9, 2015 – the day that TRICARE stopped reimbursing for compounded medications – the doctors working for the Collinses at Choice MD authorized 4,442 prescriptions and billed TRICARE $65,679,512.00 for these prescriptions.

The owners of The Medicine Shoppe then paid kickbacks to the Collinses based on a percentage of the TRICARE reimbursement paid for the prescriptions referred by the Collinses’ recruiter network.  Between February and July 2015, these kickback payments to the Collinses totaled at least $45.7 million dollars.  The Collinses, in turn, paid kickbacks to the recruiters working as part of their network, including Adams, Castro, and Syto, among others. 

The Superseding Indictment also includes a lengthy list of forfeitable funds, property, and items purchased by the Collinses and others with the proceeds of the scheme, all of which has been previously seized or restrained by the United States. Included among these items is an 82-foot yacht, multiple luxury vehicles, including two Aston-Martins, dozens of pieces of farm equipment and tractor-trailer trucks, and three pieces of Tennessee real estate.

In addition to today’s guilty pleas from Adams, Castro, and Syto, both Dr. Vergot and Dr. Lindblad as well as Candace Craven, a nurse practitioner at Choice MD, have previously pleaded guilty for their roles in the conspiracy to commit healthcare fraud.  CFK, Inc., the corporate owner of the Medicine Shoppe, has also pleaded guilty and paid a fine as part of this investigation.   

Josh Morgan, another patient recruiter and former Marine from San Diego, pleaded guilty in March 2018 for his role in recruiting TRICARE beneficiaries to fraudulently receive these prescriptions, as did another former Marine, Bradley White, who admitted in July 2019 that he recruited patients who billed TRICARE over $7.6 million, for which he was paid over $195,000.

The next court date for defendants Jimmy and Ashley Collins is July 2, 2020.

DEFENDANTS                                           

Case Number 18CR0432                                                            

Jimmy D. Collins                                            Age: 56                                   Cleveland, TN

Ashley Collins                                                 Age: 33                                   Cleveland, TN

Kyle Adams                                                    Age: 33                                   Victoria, TX

Daniel Castro                                                  Age: 32                                   Oak Lawn, IL

Jeremy Syto                                                    Age: 26                                   Chula Vista, CA

SUMMARY OF CHARGES

Count 1:

Conspiracy to Commit Health Care Fraud – Title 18, U.S.C §§ 1349, 1347

Maximum Penalty: Ten years’ in prison and fine of higher of $250,000 or twice loss amount

Counts 2:

Conspiracy to Pay and Receive Illegal Remunerations

Conspiracy to Defraud the United States

Maximum Penalty:  Five years in prison and fine of higher of $250,000 or twice loss amount

Counts 3-7:

Receipt of Illegal Remunerations – Title 42 U.S.C. § 1320(a)-7b(b)(1)

Maximum Penalty (per count): Five years in prison; $250,000 fine

Counts 8-13:

Payment of Illegal Remunerations -- Title 42 U.S.C. § 1320(a)-7b(b)(2)(A)

Maximum Penalty (per count): Five years in prison; $250,000 fine

AGENCY

Defense Criminal Investigative Service

Naval Criminal Investigative Service

IRS Criminal Investigation Division, Gulfport, MS

Federal Bureau of Investigation - Jackson, MS Field Office

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

 

 

NEWS RELEASE SUMMARY – June 15, 2020

SAN DIEGO – Today, U.S. Attorney Robert S. Brewer, Jr. joined Attorney General William P. Barr and the entire Department of Justice in observing the 15th Annual World Elder Abuse Awareness Day. The Department echoes voices around the world condemning elder abuse, neglect and exploitation.

The COVID-19 pandemic has created unprecedented challenges for our country and the world, but among those most severely affected by the threat of the novel virus are our senior citizens. During this time when seniors are most vulnerable and isolated from their families and loved ones by social distancing and quarantine restrictions, bad actors have immediately exploited this international tragedy to prey on the elderly through a whole host of scam and fraud schemes. As the world takes this day to remember the elderly during these uncertain times, the Department of Justice remains relentlessly committed, through its department-wide Elder Justice Initiative, to prevent and prosecute fraud on America’s seniors.

The Department is aggressively prosecuting fraudsters exploiting the Covid-19 pandemic and targeting seniors offering them fake testing kits and fraudulent claims of assistance in obtaining stimulus and Paycheck Protection Program Funds. 

“On this day dedicated to recognizing our seniors, the Department of Justice sends a strong message that we are continuing our ongoing fight to keep seniors safe from elder abuse and exploitation.  Our district’s federal prosecutors recently joined AARP in holding a virtual town hall for seniors, to ensure that they are not defrauded of their hard-earned and sometimes limited resources on false claims of non-existent COVID-19 cures,” said U.S. Attorney Robert S. Brewer.  “With AARP’s collaboration, we successfully directed more than 4,500 listeners to best practices and available resources.” 

Attorney General Barr has declared “Prevention and Disruption of Transnational Elder Fraud” to be an Agency Priority Goal, making it one of the Department’s four top priorities.  The Southern District of California has brought federal charges targeting elder fraud, including the successful prosecution of Samuel Davalos Jr., who was sentenced in November 2019 to 18 months in prison after admitting to embezzling $117,305 from vulnerable older account holders at the Point Loma Credit Union where he worked as a teller.  Davalos, 28, pleaded guilty last year to one count of bank fraud, acknowledging that from July 2017 to March 2019, he used his account access to defraud the credit union and its members by processing unauthorized withdrawals from members’ accounts, even creating unauthorized checks and other instruments paid to himself and his accomplices.  Significantly, Davalos admitted that he purposely selected older members of the credit union as his victims because he believed they were less likely to notice the stolen funds.

The Department is conducting significant outreach to ensure that seniors recognize and report fraud and have prioritized the resulting investigations. Major strides have already been made to that end, including:

•              National Elder Fraud Hotline: 833-FRAUD-11

Earlier this year Attorney General Barr launched a National Elder Fraud Hotline. Staffed by experienced case managers who provide personalized support to callers, the hotline serves to assist elders and caretakers who believe they have been a victim of fraud by reporting and providing appropriate services.

•              Transnational Elder Fraud Strike Force: Established in June 2019 to combat foreign elder fraud schemes, the Strike Force is composed of the Department’s Consumer Protection Branch and six U.S. Attorneys’ Offices along with FBI special agents, Postal Inspectors, and numerous other law enforcement personnel.  Since its inception, prosecutors in Strike Force districts brought cases against more than 140 defendants.

•              Annual Elder Justice Sweep: In March of this year, the Attorney General announced the largest coordinated sweep of elder fraud cases in department history. The Department, together with every U.S. Attorney’s office, charged more than 400 defendants who collectively caused over $1 billion in loss through fraud schemes that largely affected seniors.

•              Money Mule Initiative: Since October 2018, the Department and its law enforcement partners began a concentrated effort across the country and around the world to disrupt, investigate, and prosecute money mule activity used to facilitate fraud schemes, especially those victimizing senior citizens. In 2019 actions were taken to halt the conduct of more than 600 domestic money mules, exceeding a similar effort against approximately 400 mules in the previous year. (Money mules are individuals who assist fraud schemes by receiving money from victims, many of them elderly, and forwarding proceeds to foreign-based perpetrators. While the fraud schemes vary greatly, they include imposters who call would-be victims claiming to represent some official entity such as the IRS or even a personal acquaintance such as the would-be victim’s grandchild. Scams are also conducted via email, with scammers trying to lure would-be victims to provide personal information, perhaps by claiming they have won prizes. In all cases, the end goal is to bilk unsuspecting victims of money.)

•              Holding foreign-based perpetrators and those that flee the United States accountable: Transnational criminal organizations are targeting our elder population in schemes including mass mailing fraud, grandparent scams, romance scams, lottery and sweepstakes scams, IRS and Social Security Administration imposter scams, and technical-support scams.

For more information on enforcement actions, training and resources, research, and victim services, please visit www.justice.gov/elderjustice.

 

 

NEWS RELEASE SUMMARY – June 15, 2020

SAN DIEGO – Mario Daniel Haro, a United States Citizen who resided in Rosarito, Mexico, was sentenced in federal court today to 57 months in prison and ordered to pay restitution for robbing a Chula Vista bank in 2019.

Haro pleaded guilty on February 3, 2020, admitting that he robbed a San Diego bank by presenting a demand note that threatened the teller. He fled the crime scene on a Lime electric scooter. This was Haro’s second federal conviction for bank robbery. In 2008, Haro was also convicted of robbing a Chula Vista bank in case number 08CR0649-BTM.

“Unfortunately this defendant failed to take advantage of his second chance and committed an additional violent crime,” said U.S. Attorney Robert Brewer. “As this case demonstrates, individuals who reoffend will be investigated, arrested and convicted and usually the sentence will be longer. Hopefully this time the defendant learned a lesson.”

In his plea agreement, Haro admitted that, on October 14, 2019, at approximately 3:00 p.m., he entered the Chase Bank at 2121 Olympic Parkway in Chula Vista, California, and approached a teller window. Haro told the teller he had a gun and presented the teller with a demand note, which read: “I have a GUN! Give me all money. NO INK Packages.” The teller fearing for her life, her co-workers, and the banks patrons’ safety, complied with the demands and provided Haro with approximately $1,000 in cash. After receiving the cash from the victim teller, Haro exited the bank and then fled the scene.

“The FBI's Violent Crimes Task Force (VCTF), which joins law enforcement personnel and resources, works to swiftly solve cases to prevent series bank robberies like this one,” commented Acting FBI Special Agent in Charge Omer Meisel.  “The safety of the San Diego community is a priority for the FBI VCTF.”

Brewer commended the prosecutor in this case, AUSA Matthew Brehm, the Chula Vista Police Department and the FBI for their diligent work in this investigation.  The Chula Vista Police Department’s spokesperson recognized “the collaboration and cooperation with the Federal Bureau of Investigation, United States Attorney’s Office and the Violent Crime and Human Trafficking (VCHT) Taskforce that led to the identification, arrest and successful prosecution of bank robbery suspect Mario Haro. The joint efforts by all involved have made for a safer community in Chula Vista and the San Diego region.”

This case is the result of the ongoing efforts of the Violent Crime and Human Trafficking (VCHT) Section.  Formed in 2019 by U.S. Attorney Robert Brewer, the VCHT is tasked with leading collaborations between federal and local law enforcement in the investigation and prosecution of cases involving violent crimes, firearms and gang cases; sex trafficking and child exploitation; civil rights, and labor trafficking. The VCHT Section oversees the Southern District of California Coordinators for Project Safe Neighborhoods, Human Trafficking, and Project Safe Childhood.

DEFENDANT                                               Case Number 19cr4747-W                          

Mario Daniel Haro                                          Age: 32                       Rosarito, Baja California, Mexico

SUMMARY OF CHARGES

Bank Robbery – Title 18, U.S.C., Section 2113(a)

Maximum penalty: 20 years’ imprisonment and $250,000 fine

AGENCY

Federal Bureau of Investigation

Chula Vista Police Department

 

 

NEWS RELEASE SUMMARY – June 15, 2020

SAN DIEGO – Science Applications International Corporation (SAIC), a major defense contractor headquartered in Reston, Virginia, has paid $5,982,865 to resolve allegations that it violated the federal False Claims Act.  The settlement arises out of a contract for SAIC to provide information technology support to the U.S. Army.

The United States Attorney’s Office for the Southern District of California and the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit (MPFU), with assistance from the Air Force Office of Special Investigations, began its investigation after SAIC self-disclosed certain time charging and contract administration irregularities associated with a U.S. Army contract. The contract in question was awarded to SAIC by U.S. Army Aviation and Missile Command Expedited Professional & Engineering Support Services (AMCOM EXPRESS). Specifically, SAIC was awarded a particular task order (the contract) for “Soldier Protection Lab Systems Engineering, Development, and Modeling Support.” Portions of the contract were performed in San Diego County, in part, for the benefit and training of Marines at Camp Pendleton.

The United States contended that SAIC employees misused administrative leave by working on contract requirements for a certain project before funding was available and then later clearing those charges by adding extra billing hours that were not worked to a separate project. The United States also contended that SAIC employees were provided charge codes for their hours to be recorded to projects with available funding, while they continued to work on tasks that were not funded. Once the new funding arrived, the employees working on a project that provided the original funding would then charge their hours to the new project. The United States contended that SAIC knowingly submitted to the government false claims for payment for the mischarging on these projects.

“As always, we are committed to doing our part in preserving the integrity of the government contracting process and protecting the tax payer,” said Robert Brewer, Jr., United States Attorney for the Southern District of California. He further noted that, “while it is encouraging to see a Fortune 500 corporation accept responsibility for its wrongdoing, we remain vigilant in our efforts to stem the tide of fraud, waste, and abuse that impacts our military.” On behalf of the Department of Justice, U.S. Attorney Brewer expressed gratitude to Assistant U.S. Attorneys Joseph Purcell and Paul Starita and the team of dedicated federal agents whose diligent work on this case led to the instant settlement. The U.S. Army Criminal Investigation Command’s MPFU was the lead investigative agency working with the Affirmative Civil Enforcement Section of the United States Attorney’s Office to bring this matter to a swift resolution. “We commend SAIC for coming forward with the contract discrepancies and working with law enforcement on this settlement,” said Frank Robey, Director of the U.S. Army Criminal Investigation Command’s MPFU. “The MPFU and our law enforcement partners, remain diligent in our efforts to ensure that those who disregard the law will be held accountable for their actions.”

This matter was investigated by Assistant U.S. Attorneys Joseph Purcell and Paul Starita and auditing personnel of the Affirmative Civil Enforcement Unit of the U.S. Attorney’s Office, in coordination with Special Agents of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit, Air Force Office of Special Investigations, and auditing personnel of the Defense Contract Audit Agency.

NEWS RELEASE SUMMARY – June 12, 2020

San Diego – Qingshan Li, a national of the People’s Republic of China, was sentenced in U.S. District Court today to three years in federal custody for attempting to send to China an export-controlled radio, which is designated as a defense article due to its certification by the National Security Agency for Top Secret wire and data communications.

At sentencing, Assistant U.S. Attorney Alexandra Foster noted that for weeks preceding his arrest, Li was communicating with a man identified by the Government as “AB.” Li wanted to buy specific U.S. military equipment from AB, including the Harris Falcon III AN/PRC 152A radio (the Radio). Li had previously purchased U.S. military equipment from AB. Li flew into San Diego from China on a tourist visa on June 28, 2019, with a return ticket for July 7,  2019. The next day, Li drove his rental car to AB’s storage unit in San Diego and purchased the Radio, along with other military radios, antennas, additional military equipment and a map of North Island Naval Air Station.  Li informed AB that Li planned to take the Radio to Tijuana, Mexico, and ship it to China from Tijuana in light of the lack of export-control rules in Mexico. Li agreed to pay AB 50,000 renminbi (approximately $7,200) for the Radio. Li gave AB a $600 cash down payment toward the purchase price of the Radio at the storage locker, with the promise of paying AB the remaining $6,600 at a later date.

AUSA Foster pointed out that this Radio was not a cheap make-believe radio meant for costume play. It was designated a defense article on the United States Munitions List and subject to ITAR (International Trafficking in Arms Regulations, Title 22, Code of Federal Regulations, Parts 120 et seq.). A license from the Department of State, Directorate of Defense Trade Controls, is required to export the Radio from the United States.  AUSA Foster emphasized that the Radio is designated export-controlled for a reason: it is certified by the National Security Agency for Top Secret wire and data communications. Any breach in these communications could mean deadly results for U.S. Navy SEALS and other U.S. Military personnel using this equipment in the field.

The record demonstrates that soon after law enforcement agents stopped Li with the Radio and other military equipment in his bag, they interviewed him. At that time, Li stated that he knew the Radio was export controlled, and he knew that it was illegal for the Radio to be transported to China. Li stated that he purchased the Radio with the intent to ship it to China, knowing he was violating United States law.

At the sentencing, U.S. District Court Judge Cathy Ann Bencivengo noted that there was nothing mistaken about this crime. Li intended to buy this Radio and get it to China. In doing so, he was endangering the lives of U.S. Military servicemembers. Judge Bencivengo noted that Li would be deported after he served his sentence and lose his visa, which would reduce the threat to the United States going forward. Accordingly, Judge Bencivengo sentenced Li to 36 months.

“The exportation of sensitive U.S. defense technology risks the lives of American military personnel and imperils our nation’s overall security,” said U.S. Attorney Robert Brewer. “Mr. Li’s sentence demonstrates this office’s ongoing commitment to holding fully accountable those who cavalierly violate our export control laws.”  U.S. Attorney Brewer specifically commended “AUSA Alexandra Foster and the stellar team of federal agents who diligently pursued justice in this case.”

“Our military technology and communication equipment is at the core of maintaining the safety of our US military personnel and the security of our nation," said Omer Meisel, FBI Acting Special Agent in Charge of the San Diego Field Office.  “The FBI is committed to working with our military and national security partners, including NCIS, to stop individuals, like the defendant in this case, from engaging in the theft of information and sensitive technology for a foreign government or at the direction of an agent of a foreign government.  Our country's national security is the highest priority, and the FBI will do everything in our power to protect it.”

“Mr. Li’s criminal attempt to obtain sensitive military communications technology and provide it to China posed a serious threat to the U.S. military’s warfighting capability,” said NCIS Southwest Field Office Special Agent in Charge Garrett Waugh. “The sentencing should serve as a warning that NCIS and our partner law enforcement agencies will always fully investigate and bring to justice nefarious actors like Mr. Li who seek to diminish the U.S. military’s strategic edge. We credit this investigative success to the outstanding collaboration among NCIS and our partner law enforcement agencies with support from the Naval Special Warfare Command.” 

This matter was investigated and prosecuted by Assistant U.S. Attorney Alexandra Foster, in coordination with the National Security Division of the Department of Justice, the FBI and NCIS.

DEFENDANT                                   Case Number: 19CR2564-CAB

Qingshan LI                                        Age: 34

SUMMARY OF CHARGE

Unauthorized Solicitation of Access Devices, 18 USC Sec. 371, Conspiracy to Attempt to Export Defense Articles Without a License.

Maximum Penalty: Five years in prison, three years’ supervised release, $250,000 fine, restitution.

AGENCIES

Federal Bureau of Investigation

Naval Criminal Investigative Service

DOJ National Security Division

NEWS RELEASE SUMMARY – June 11, 2020

SAN DIEGO – Former Calexico City Councilman David Romero and Bruno Suarez-Soto, a former commissioner on the city’s Economic Development and Financial Advisory Commission, pleaded guilty in federal court today to corruption charges, admitting that they accepted cash bribes in exchange for promises of official action by the city.

The defendants entered their pleas before U.S. Magistrate Judge Bernard G. Skomal, who set sentencing for September 4, 2020 before District Judge Cathy Ann Bencivengo. Romero and Suarez-Soto were allowed to remain free on $10,000 personal appearance bonds secured by their own signatures.

According to their plea agreements, Romero and Soto accepted $35,000 in cash bribes from an undercover FBI agent who they believed represented investors seeking to open a cannabis dispensary in Calexico. In return, Romero and Soto guaranteed the rapid issuance of a city permit for the dispensary, and to revoke or hinder other applicants if necessary to ensure that the bribe payer’s application was successful. Both men admitted they had taken bribes from others in the past. Referring to this $35,000 payment, they told the undercover agent, “This isn’t our first rodeo.”

In addition to being a councilman, Romero served as Calexico’s Mayor Pro Tem, meaning he was set to become Mayor in July 2020. Soto recently resigned from the City commission responsible for promoting business and community growth and coordinating with prospective developers to help them invest in the City of Calexico.  Romero resigned his position with the City of Calexico as part of his plea agreement, effective Monday, June 8.

“David Romero was about to become the highest-ranking public official in the city of Calexico, but he and his partner-in-crime sold their power and influence to the highest bidder in a secret pay-to-play scheme,” said U.S. Attorney Robert Brewer. “They are the ones who will pay now.”

“The corruption, lies, and greed of Romero and Suarez-Soto were uncovered by FBI Agents working in our Imperial Valley Office,” said  Omer Meisel, Acting FBI Special Agent in Charge of the San Diego Division and Imperial County Resident Agency.  “The community in Imperial Valley has a right to leaders who put the public's interest first and serve the community honorably. The FBI is committed to investigating those who violate their position of trust.”

According to their plea agreements, during a December 19, 2019 meeting at a restaurant in Calexico with the undercover FBI agent, Romero and Soto agreed to fast-track the agent’s purported application for a cannabis dispensary permit and guaranteed its rapid issuance in exchange for a $35,000 bribe. The defendants also offered to delay permit applications by competitors.

Toward the conclusion of the December 19, 2019 meeting, when the undercover agent asked if Romero and Soto might later ask for more than the $35,000 payment, Romero assured him that they would not, per court filings. “This is done. Set and sealed,” Romero said.  Romero explained that he and Soto would require the money to be paid up front, however, because they had done similar work for other people, and those people had not paid the agreed-upon fee after the favors had been rendered. Romero and Soto agreed to accept payment of the $35,000 from the agent in two installments, however: half up front, and half “when it’s a for sure thing.” 

At this meeting the undercover agent asked whether the payment of $35,000 would “get us in front of the line” of applicants.  Soto answered, “Hell yeah,” according to court records.  Romero added that he “didn’t want to say it in front of everybody, but it will.”

On January 9, 2020, Romero and Soto attended a second meeting with the undercover agent at a restaurant in El Centro, California.  During the meeting, according to court filings, Romero reminded the undercover agent how difficult it was to work with the City of Calexico, and how fortunate it was that the agent was working with Romero. Soto later added that in return for the bribe, Romero would cut through “so much bullshit [red] tape that exists” with the City.

During a discussion of the approval process for the permit application referenced in court records, Romero explained that the people who have to approve the undercover agent’s license were “my best friends at the entire City Hall.”  When asked if the “best friends” had already signed off on the plan, Romero responded “Fuck, yeah!” and laughed.

According to admissions in the plea agreements and documents filed in court, at the conclusion of the January 9, 2020 meeting, in the parking lot outside the restaurant, with Romero looking on, the undercover agent handed Soto $17,500 in cash and explained that he divided the first installment of the bribe into two envelopes: one with $8,800 and another with $8,700. The agent asked whether “we’re good,” and Romero responded, “Trust me” and added, “In my line of business, I can’t fuck up.  Which means he [Soto] can’t fuck up.”

The defendants accepted the second installment, $17,500 in cash, during a third meeting on January 30 in a parking lot outside a restaurant in El Centro, per the plea agreements. Both men also admitted to creating a shell corporation to launder the proceeds of their bribery scheme.

The charges filed in the case also allege that both men lied to the FBI when interviewed by agents at the conclusion of the January 30 meeting.  Romero falsely denied being part of any agreement with the undercover agent, and denied that anyone had made any “guarantees” to the agent.  Similarly, Soto falsely denied making any “guarantees” to the undercover agent and denied receiving any prior payments from the agent. 

U.S. Attorney Brewer praised Assistant U.S. Attorney Nicholas Pilchak, DOJ Public Integrity Section trial attorney Joshua Rothstein and FBI agents for working hard to achieve justice in this matter.

The case against Romero and Suarez-Soto is a public corruption investigation being conducted by the FBI and the U.S. Attorney’s Office. Any member of the public who has information related to this or any other public corruption matter in Imperial County or San Diego is encouraged to provide information to the FBI’s email tip line at tips.fbi.gov or to contact their local FBI Field Office. In Imperial County, the FBI can be reached 24 hours a day at 858-320-1800 or 1-877-NO-BRIBE (662-7423).

DEFENDANTS                                            Case Number 20cr1215                                           

Calexico City Councilman David Romero                 Age: 36                       Residence: Calexico, CA

Calexico City Commissioner Bruno Suarez-Soto      Age: 28                       Residence: Calexico, CA

SUMMARY OF CHARGES

Conspiracy to Commit Federal Program Bribery, in violation of Title 18, United States Code, Sections

371 and 666 (a) (1) (B)

Maximum Penalty: Five years in prison; $250,000 fine.

AGENCY

Federal Bureau of Investigation