Southern District of California

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

 

NEWS RELEASE SUMMARY – May 10, 2017

 

SAN DIEGO – Convicted felon Paul Joseph Holdy was arrested this morning and charged with multiple federal drug- and gun-related offenses after a long-term investigation revealed that he was allegedly trafficking heroin and firearms from his La Jolla residence.

As alleged in the complaint and search warrants unsealed today, the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Federal Bureau of Investigation began the investigation in the summer of 2016. Undercover agents conducted multiple controlled purchases of firearms and narcotics from Holdy, some of which Holdy manufactured himself from unfinished lower receivers. In total, law enforcement purchased 19 firearms, including short-barrel machine guns, assault rifles, and handguns, along with multiple silencers from Holdy.

 

Due to his prior felony conviction for possession of a controlled substance for sale, Holdy is prohibited from possessing a firearm or ammunition under federal law. ATF records showed that Holdy lacked a Federal Firearms License, which would allow him to engage in the business of importing, manufacturing, or dealing in firearms.

 

During the arrest today, investigators executed three search warrants and seized one additional machine gun and two gallons of suspected GHB. Holdy is scheduled to be arraigned before U.S. Magistrate Judge David H. Bartick at 10:30 a.m. tomorrow.

 

“Illegally manufacturing and brokering the sale of guns and drugs on the streets of San Diego poses a tremendous danger to our community,” said Acting U.S. Attorney Alana W. Robinson. “Prosecuting firearms offenses is a top priority for the U.S. Attorney’s Office, and we will continue our efforts to disrupt the availability of illegal guns in our city.”

 

“Firearms traffickers are responsible for the crimes committed with the guns they provide to felons and gang members,” said ATF Los Angeles Field Division Special Agent in Charge Eric Harden. “Felons cannot skirt the system by manufacturing and selling untraceable firearms from unfinished lower receivers. ATF will use its resources to strategically target and identify these criminals and interrupt the illegal flow of firearms to those who are prohibited from possessing firearms under the law.”

 

“Illegal firearms and narcotics trafficking cannot be tolerated on our streets,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI will continue to identify, disrupt and dismantle these traffickers in order to keep our communities safe.”

 

This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high-level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

 

DEFENDANT                                                                    Criminal Case No: 17MJ1397-DHB

 

Name

Age

Hometown

Paul Joseph Holdy

39

La Jolla, CA

 

SUMMARY OF CHARGES

 

Distribution of Heroin, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Felon in Possession of a Firearm, in violation of Title 18, U.S.C., Sec. 922(g)(1)

Dealing in Firearms Without a License, in violation of Title 18, U.S.C. Secs. 922(a)(1)(A), 923(a), 924(a)(1)(D)

 

Maximum Penalties:

For drug charges: Twenty years in prison and a $1 million fine.

For firearms charges: Ten years in prison and a $250,000 fine.

 

AGENCIES

 

Bureau of Alcohol, Tobacco, Firearms and Explosives

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.

Two former executives of a foreign defense contractor pleaded guilty in federal court today for participating in a conspiracy to submit bogus bids, claims and invoices to the U.S. Navy in an effort to steal tens of millions of dollars as part of a years-long corruption and fraud scheme.

 

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Alana W. Robinson of the Southern District of California, Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) and Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.

 

Neil Peterson, 39, and Linda Raja, 44, both Singaporean nationals, each pleaded guilty to one count of conspiracy to defraud the United States with respect to claims. Both defendants were arrested by authorities in Singapore at the request of the U.S. government and were extradited on Oct. 28, 2016. Sentencing for Peterson and Raja is set before the Honorable Janis L. Sammartino of the Southern District of California on Aug. 11, 2017.

 

Peterson and Raja worked for Singapore-based Glenn Defense Marine Asia (GDMA). Peterson served as the Vice President for Global Operations, and Raja served as General Manager for Singapore, Australia and the Pacific Isles. According to their pleas, Peterson and Raja conspired with Leonard Glenn Francis, the owner of GDMA, to defraud the U.S. Navy in order to financially benefit GDMA.

 

As part of their pleas, Peterson and Raja admitted that they and other members of GDMA’s management team created and submitted fraudulent bids. These bids were either entirely or partially fictitious. This ensured that GDMA’s quote would be selected by the U.S. Navy as the supposed lowest bidder. As a result, GDMA could control and inflate the prices charged to the U.S. Navy without engaging in any competitive bidding, as required.

 

Additionally, Peterson, Raja admitted that they and others knowingly created fictitious port authorities with fraudulently inflated tariff rates and approved the presentation of these fraudulent documents to the U.S. Navy. As a result, GDMA charged inflated prices to the U.S. Navy, rather than what GDMA actually paid to the port authorities. For example, in October 2012, Peterson and other members of GDMA’s core management team directed that false documents and inflated invoices be presented to the U.S. Navy for the U.S.S. Bonhomme Richard’s visit to Kota Kinabalu, Malaysia. The full amount billed to the U.S. Navy for this visit was $1,232,858, of which approximately $877,413 was fraudulently inflated.

 

Peterson and Raja admitted that the U.S. Navy suffered losses exceeding $34.8 million in total, as a result of the scheme.

 

Twenty U.S. Navy officials have been charged so far in the fraud and bribery investigation. Additionally, to date, five GDMA executives have been charged and pleaded guilty: (1) Alex Wisidagama, (2) Francis, (3) Edmund Aruffo, (4) Peterson and (5) Raja. Wisidagama was sentenced on March 18, 2016, to 63 months in prison and was ordered to pay $34.8 million in restitution to the U.S. Navy. Francis and Aruffo await sentencing.

 

A criminal complaint is merely an accusation, and the accused is presumed innocent unless proven guilty in a court of law.

 

The DCIS, NCIS and the Defense Contract Audit Agency are investigating this matter. Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case. The Criminal Division’s Office of International Affairs provided substantial assistance in this matter.

 

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

Assistant U. S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718

 

NEWS RELEASE SUMMARY – May 9, 2017

 

SAN DIEGO – Neil Peterson and Linda Raja, former executives of foreign defense contractor Glenn Defense Marine Asia (GDMA), pleaded guilty in federal court today to fraud charges, admitting that they conspired to submit bogus bids, claims and invoices to the U.S. Navy in an effort to win contracts and overcharge the Navy by tens of millions of dollars as part of a years-long corruption and fraud scheme.

 

Peterson, 39, and Raja, 44, both of Singapore, worked as chief deputies for foreign defense contractor Leonard Glenn Francis to fill the coffers of their company, Glenn Defense Marine Asia (GDMA), at the expense of the U.S. Navy. Peterson served as the Vice President for Global Operations for GDMA and Raja served as GDMA’s General Manager for Singapore, Australia, and the Pacific Isles.

 

Both defendants were arrested by authorities in Singapore at the request of the U.S. government and were extradited on Oct. 28, 2016. Sentencing for Peterson and Raja is set before U.S. District Judge Janis L. Sammartino on August 11, 2017 at 9 a.m.

 

According to Peterson’s and Raja’s plea agreements, they and other members of GDMA’s management team created and submitted fraudulent bids that were either entirely fictitious, contained falsified prices supposedly from actual businesses, or fraudulently stated that the business shown on the letterhead could not provide the items or services requested. In this manner, Peterson and Raja and other members of GDMA's core management team could ensure that GDMA's quote would be selected by the U.S. Navy as the supposed low bidder. GDMA could thus control and inflate the prices charged to the U.S. Navy without any true, competitive bidding, as required.

 

Peterson and Raja admitted that they and other members of the GDMA management team knowingly created and approved fictitious Port Authorities with fraudulently inflated Port Tariff Rates, and approved the presentation of such fraudulent documents to the U.S. Navy. GDMA thus charged inflated prices to the U.S. Navy, rather than what GDMA actually paid to the bona fide Port Authorities.

 

For example, for the visit of the U.S.S. Bonhomme Richard visit to Kota Kinabalu, Malaysia, in or about October 2012, under the direction of Peterson and other members of GDMA's core management team, false

documents and inflated invoices were presented to the U.S. Navy. The full amount billed to the U.S. Navy for this visit was $1,232,858, of which approximately $877,413 was fraudulently inflated.

 

Peterson and Raja admitted that losses to the United States Navy exceeded $34,800,000.

 

Twenty Navy officials have been charged so far in the fraud and bribery investigation.

 

In addition, five GDMA executives – Neil Peterson and Linda Raja as well as Francis, Alex Wisidagama, Ed Aruffo, – have been charged All five have pleaded guilty.Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing;

 

The Defense Criminal Investigative Service, Naval Criminal Investigative Service and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.

 

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

 

DEFENDANTS                              Case Number: 14-CR-3703-JLS

 

Neil Peterson                                   Age: 39                        Singapore

Linda Raja                                       Age: 44                        Singapore

 

SUMMARY OF CHARGES

 

Conspiracy to Defraud the United States with Respect to Claims, in violation of 18 U.S.C. § 286

Maximum Penalty: 10 years in prison, a $250,000 fine.

 

INVESTIGATING AGENCIES

 

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

 

Assistant U.S. Attorney Phillip L.B. Halpern (619) 546-6964

 

NEWS RELEASE SUMMARY – May 9, 2017

 

SAN DIEGO – U.S. Navy Port Engineer John Nasshan pleaded guilty today to a conflict of interest charge, admitting that he improperly administered projects at the Navy’s Southwest Regional Maintenance Center involving a defense contractor with whom he had a financial relationship.

 

According to his plea agreement, Nasshan made decisions and recommendations affecting Navy contracts with NevWest, Inc. even though he made personal loans to a company official, which is a conflict of interest.

Nasshan has been employed at Southwest Regional Maintenance Center as a Combat Systems Port Engineer since March of 2009. As a Combat Systems Port Engineer, Nasshan drafted technical direction letters, recommended which contractors were qualified for jobs and verified and certified work performed on Navy ships by contractors.

 

Among other things, San Diego-based NevWest provides combat systems engineering support, electronic technical support, enterprise management and application development services in command, control and communications, computers, combat systems, intelligence, surveillance and reconnaissance, and electronics space modernizations.

 

As detailed in government pleadings, between May 2011 and September 2015, Nasshan had a financial interest in the business affairs of NevWest. In particular, Nasshan loaned NevWest more than $30,000 at the same time that NevWest was engaged in numerous subcontracts with Southwest Regional Maintenance Center. Naashan made these loans despite recognizing that his job required that he administer NevWest subcontracts.

 

In order to hide and conceal their illegal activity, Nasshan and an official at NevWest agreed to keep their financial arrangement secret; to deal in cash when exchanging amounts over $10,000; and to structure the cash they were exchanging by dividing it up into amounts of $10,000 or less.

 

Nasshan also lied to both Naval Criminal Investigative Service and Federal Bureau of Investigation agents regarding his relationship with NevWest. For example, on November 13, 2015, he falsely told an FBI agent that he did not have a financial interest with NevWest; that he never gave a NevWest employee cash or a check; and he never loaned a company official or NevWest money.

 

“As in all phases of the Government contracting process, it is essential that the work performed by contractors be done free of undue influence, bias, or favoritism,” said Acting U.S. Attorney Alana W. Robinson. “Accordingly, government officials and employees are prohibited from working on any and all matters that would affect their personal financial position.”

 

“The successful prosecution of this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, our federal law enforcement partners and the U.S. Attorney's Office,” said Gunnar Newquist, Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should be a warning to those who would attempt to take advantage of the U.S. Navy, for personal gain. We are unified in our efforts to catch criminals who not only defraud the U.S. Navy, but specifically are stealing money from the American taxpayers at the direct loss to our warfighters.”

 

Chris Hendrickson, Special Agent in Charge of the Defense Criminal Investigative Service's Western Field Office said: “DCIS and its partner agencies will aggressively investigate Department of Defense personnel who abuse their positions of trust and corruptly advance their own interests. This behavior tarnishes the integrity of the Department's procurement processes and erodes the public's faith in government.”

 

“The FBI seeks truth and justice in our investigations,” commented FBI Special Agent in Charge Eric S. Birnbaum. “Today’s conviction shows that the FBI, along with our investigative partners, will ultimately uncover the truth despite roadblocks created by those who stand to personally benefit from their lies.”

 

DEFENDANT:                          Case Number 17cr1166-JLS

John Nasshan                              Age: 55 Jamul, CA

SUMMARY OF CHARGES

 

Conflict of Interest – Title 18, U.S.C., Section 208

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

 

AGENCIES

 

Federal Bureau of Investigation

Defense Criminal Investigative Service

Naval Criminal Investigative Service

 

 

Assistant U. S. Attorney Christopher Alexander (619) 546-6665

 

NEWS RELEASE SUMMARY – May 8, 2017

 

SAN DIEGO – Issac Mahatma Osuna-Sanchez, the ringleader of an alien smuggling crew, was sentenced in federal court Friday to three years in prison for bringing 14 undocumented immigrants into the United States from Mexico in a small boat off the coast of California.

 

Osuna-Sanchez and three others - Enrique Ramirez-Fernandez, Mario Alejandro Sainz-Avila, and Hector Velasquez – pleaded guilty in connection with the events of November 4, 2016, when the U.S. Coast Guard encountered and stopped a vessel on the open sea operating at night, without any navigation or running lights. They discovered the smugglers and the undocumented immigrants on board.

 

At sentencing, U.S. District Judge William Q. Hayes found that Osuna-Sanchez was a manager of the smuggling venture and his conduct created a substantial risk to the immigrants on board the vessel.

 

U.S. Border Patrol agents identified one of the vessel’s occupants as a citizen of Nicaragua; the remainder were citizens of Mexico. Border Patrol agents arrested all eighteen occupants and transported them to the Imperial Beach Border Patrol Station.

 

In addition to the smugglers, two of the others who were aboard the vessel - Ernesto Ignacio Madrigal-Garza and Danilo Alberto Mairena - had previously been deported to Mexico from the United States. They were prosecuted for unlawful reentry into the United States by a previously deported alien, in violation of Title 8, U.S.C., Section 1326. Madrigal-Garza’s prior criminal history involved felony convictions for access device fraud and one prior immigration offense. Mairena’s prior criminal history involved numerous misdemeanor and felony convictions involving violent crimes such as battery, assault, and numerous domestic violence related offenses.

 

The remaining twelve undocumented individuals, not charged as alien smugglers, were held as material witnesses.

 

Earlier, on April 19, 2017, Judge Hayes sentenced one of the vessel’s pilots, Mario Alejandro Sainz-Avila, to a prison term of 24 months, for his role in smuggling the fourteen undocumented aliens. In addition, Judge Hayes sentenced two others who aided in smuggling the aliens, Enrique Ramirez-Fernandez and Hector Velasquez, to thirteen months and one day.

 

DEFENDANTS                                           Case Number 16CR2752-WQH

Issac Mahatma Osuna-Sanchez                   Age: 22 Tijuana, B.C., Mexico

Enrique Ramirez-Fernandez                       Age: 27 Ensenada, Mexico

Mario Alejandro Sainz-Avila                     Age: 31 Navolato, Sinaloa, Mexico

Hector Velasquez                                       Age: 22 Navolato, Sinaloa, Mexico

 

SUMMARY OF SENTENCES

 

DEFENDANTS SENTENCE

 

Issac Mahatma Osuna-Sanchez                                   36 months of custody

Enrique Ramirez-Fernandez                                        13 months and one day of custody

Mario Alejandro Sainz-Avila                                      24 months of custody

Hector Velasquez                                                        13 months and one day of custody

 

 

SUMMARY OF CHARGES

 

Attempted Bringing in Undocumented Aliens for Financial Gain and Aiding and Abetting – Title 8, U.S.C., Section 1324(a)(2)(B)(ii), and Title 18, U.S.C., Section 2.

Maximum penalty: 10 years’ imprisonment and $250,000 fine.

 

Bringing in Undocumented Aliens and Aiding and Abetting – Title 8, U.S.C., Section 1324(a)(1)(A)(i) and (v)(II).

Maximum penalty: 10 years’ imprisonment and $250,000 fine.

 

AGENCIES

 

United States Coast Guard

United States Border Patrol

 

SAN DIEGO, CA – A crackdown on violent street gangs in San Diego County over the last 75 days has resulted in federal charges against more than 140 gang members and associates, many of whom are accused of terrorizing neighborhoods with shootings, robberies and other violent crimes.

 

More than 60 firearms and 30 pounds of methamphetamine, plus cash and other illicit drugs were seized by law enforcement during the course of four long-term gang investigations that culminated this spring with various indictments charging crimes such as racketeering, money laundering and gun, drug or sex trafficking.

 

“This is an unusually large number of gang members arrested in a very short period of time,” said Acting U.S. Attorney Alana W. Robinson. “The sheer number of arrests illustrates that gangs are a significant problem in this county. But it also underscores our enormous commitment to use every tool we have to attack this problem and restore communities to families who should not have to live in fear in their own homes.”

 

The most recent charges, unsealed this week in federal court, involve the prosecution of 16 members and associates of the Escondido-based Diablos street gang. The defendants are facing various drug trafficking offenses.

 

According to court records, in the last year the Diablos gang has been responsible for more than 25 gang-related shootings, multiple attempted murders, dozens of armed robberies, multiple instances of witness intimidation and the widespread distribution of narcotics and firearms in North San Diego County.

 

This investigation helped to identify and locate Dionicio Torrez, a Diablos gang member, as the suspected shooter of Cathy Kennedy, who was fatally wounded by gang gunfire March 7 as she drove home from church in Escondido.

 

The case involved a total of 13 wiretaps, the interception of over 20,000 telephone calls and text messages and the seizure of approximately 13 pounds of high-quality methamphetamine and 10 rifles and handguns, including 4 AR-15 type rifles, an AK-47 rifle, an SKS rifle and 2 handguns, one of which had an obliterated serial number.

 

The Diablos Enterprise claims control of the eastern and north central areas of Escondido. The approximate boundaries of the territory they claim is Lincoln Avenue to the north, Grand Avenue to the south, Midway Drive to the to the east and Escondido Boulevard to the west. There are approximately 311 documented members of the Diablos Enterprise and an additional 400 individuals who are “associates” of the Diablos Enterprise.

 

The four proactive gang cases involved months of federal wiretaps, extensive surveillance and scores of undercover drug and gun buys. Defendants were charged with crimes ranging from money laundering and racketeering to heroin, methamphetamine, firearms and sex trafficking.

 

“When members of criminal street gangs are arrested during joint operations, the San Diego County District Attorney’s Office reviews their criminal histories and coordinates with the U.S. Attorney’s Office to determine where a defendant would be most appropriately prosecuted,” said Chief Deputy DA Summer Stephan, who oversees the DA’s Gangs Division. “In essence, we collaborate to get the most effective bang for our prosecutorial buck and make sure justice is served, whether that happens on the state or federal side.”

 

Federal Bureau of Investigation Special Agent in Charge Eric S. Birnbaum stated, “Dismantling violent gangs is a continuing priority for the FBI. We share an unwavering commitment with our law enforcement partners to address the dangerous threat facing our communities today. The impact of our recent gang cases clearly demonstrates our focus and determination to strike at gang related enterprises and to eliminate the terror these groups inflict on our neighborhoods.”

 

“Our communities are safer because of ATF’s expanded efforts to target and dismantle criminal gangs and organized criminal enterprises that use firearms and violent acts to further their illegal gains,” said ATF Los Angeles Field Division Special Agent in Charge Eric Harden. “ATF and its partners are dedicated to carrying out our mission by ridding our communities of these gang members and associates who shatter families and destroy lives.”

 

“Our agency plays a unique role in federal law enforcement’s resolve to dismantle the criminal gang enterprises terrorizing our streets. Our agents target the profit and financial gains of these organizations, following the money in an effort to disrupt these organizations and restore order to our communities,” stated Special Agent in Charge R. Damon Rowe for IRS Criminal Investigation. “We are proud to provide this financial expertise as we work alongside our law enforcement partners to bring these criminals to justice."

 

The success of these cases is due to the collaborative effort of our federal, state and local partners working in task forces in order to leverage resources provided by the Office of National Drug Control Policy and the Organized Crime Drug Enforcement Task Force (OCDETF), which are federal anti-drug programs. The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's

battle against gangs, major drug trafficking rings, drug kingpins and money launderers.

 

Video file Video file

 

Video file Video file

Firearms

Red Devil Indictment

 

DEFENDANTS

Case Number: 17CR1071-BEN

Gustavo Cisneros Age: 38 Vista

Rafael Zamora Age: 33 Vista

 

Case Number: 17CR1070-BEN

 

Gustavo Cisneros Age: 38 Vista

Eduardo Rojo Age: 32 Tijuana, Mexico

David Bollschweiler Age: 55 Escondido

Jesus Salazar Age: 23 Chula Vista

 

Case Number: 17CR1069-BEN

 

Gustavo Cisneros Age: 38 Vista

David Bollschweiler Age: 55 Escondido

Leonel Ayala-Arambula Age: 47 El Cajon

 

Case Number: 17CR1068-BEN

 

Augustine Aragon Age: 23 Escondido

Francisco Torres-Cortez Age: 27 San Marcos

Sarah Hudgins Age: 27 San Marcos

 

Case Number: 17CR1067-BEN

 

Gustavo Cisneros Age: 38 Vista

Adrian Nieves Garcia Age: 22 San Diego

Fredy Cruz Age: 30 San Diego

 

Case Number: 17CR1066-BEN

 

Augustine Aragon Age: 23 Escondido

Marcia Cervantes Age: 27 Escondido

 

 

SUMMARY OF CHARGE COMMON TO ALL ABOVE CASES

 

Conspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C. Sections 846 and 841(a)(1).

Penalty: Mandatory-minimum of 10 years, up to life in prison.

 

DEFENDANTS Case Number: 17MJ1232

Charles Osterholtz Age: 55 Escondido

Justin Cartwright Age: 27 Escondido

David Trejo Age: 27 Escondido

 

SUMMARY OF CHARGE

 

Conspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C. Sections 846 and 841(a)(1).

Penalty: Mandatory-minimum of 5 years, up to 40 years in prison.

 

SUMMARY OF CHARGE

 

Conspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C. Sections 846 and 841(a)(1).

Penalty: Mandatory-minimum of 5 years, up to 40 years in prison.

 

INVESTIGATING AGENCIES

 

DEA

Escondido Police Department

ATF

San Diego County Sheriff’s Department

North County Regional Gang Task Force

 

*A complaint or indictment is not evidence that the defendants committed the crimes charged. The defendants are presumed innocent until the Government meets its burden in court of proving guilt beyond a reasonable doubt.

 

 

Assistant U. S. Attorneys Alexandra Foster (619) 546-6735 and Robert Ciaffa (619) 546-7748

 

NEWS RELEASE SUMMARY – May 2, 2017

 

SAN DIEGO – On the second anniversary of his victim’s death, David Enrique Meza of Imperial Beach was convicted by a federal jury this morning of fatally stabbing his boyfriend 24 times, slashing his throat twice and dumping his body in a ravine near Rosarito Beach, Mexico in order to inherit the boyfriend’s estate.

 

After two weeks of trial and seven days of deliberations, the jury found Meza guilty of murdering Texas retiree Jake Clyde Merendino in the early morning hours of May 2, 2015 in Mexico. Merendino’s body was found next to the highway between Rosarito and Ensenada in an area known as Los Arenales.

 

Meza was convicted of both charges, including one count of Interstate or Foreign Domestic Violence Resulting in Murder and one count of Conspiracy to Obstruct Justice. U.S. District Judge Jeffrey T. Miller, who presided over the trial, set sentencing for August 7, 2017 at 9 a.m.

“David Meza took the life of a man who cared for him, lavished him with expensive gifts and who wanted to create a life with him,” said Acting U.S. Attorney Alana W. Robinson. “On this day, the second anniversary of Jake Merendino’s death, we salute the jury for delivering justice to a greedy killer who will now have to answer for his cruelty.”

 

“The greed, lies, and brutality of this crime were stark,” said FBI Special Agent in Charge Eric S. Birnbaum. “Every day, the FBI works tirelessly, utilizing all resources, expertise and lawful methods to find justice for victims of crime. Today’s guilty verdict brings a measure of justice for Jake Merendino.”

 

According to evidence presented at trial, Meza, then 23, and Merendino, then 49, met online in June 2013 and were involved in a romantic relationship thereafter. At the same time, Meza was also involved in a long-term romantic relationship with Taylor Marie Langston, a Chula Vista High graduate who was pregnant with his child at the time of the murder. Prosecutors said Meza was living a double life.

 

Merendino’s death came two days after he closed escrow on a luxury oceanfront condominium at Palacio del Mar in Rosarito. Meza was the beneficiary. Within days of the murder, Meza produced a handwritten will written on hotel stationery that made him sole heir to Merendino’s estate.

 

Langston was also charged in the indictment, returned by a grand jury in December 2015. She pleaded guilty in February to obstruction of justice for her role in the cover-up. She admitted that she and Meza agreed to lie to law enforcement agents about her and Meza’s whereabouts on the night of the murder.

 

According to evidence presented at trial, Meza and Merendino drove to Mexico on April 30, 2015, so Merendino could close on his $273,000 ocean-view condominium at Palacio Del Mar in Rosarito

 

The next day, on May 1, Meza and Merendino returned to Baja, this time with Merendino driving his Range Rover and Meza following on a motorcycle (a 2014 Christmas gift from the victim). The new condo was not yet ready for occupancy, so they checked in to a room at Bobby’s by the Sea, a hotel nearby.

 

Meza went down to the lobby between 7 p.m. and 8 p.m. to open a bottle of wine. Then, at about 10:30 p.m., the hotel manager heard a motorcycle leaving the hotel parking lot, and Meza was captured on a border camera entering the U.S. at about 11 p.m.

 

Merendino was last seen alive in the early morning hours of May 2, when he drove out of Bobby’s by the Sea parking lot, telling the hotel security guard that he needed to help a friend stranded on the road. His body was found at around 3 a.m. by Mexican police officers. At 3:57 a.m. Meza crossed into the United States on his motorcycle; Langston crossed 25 minutes later, at 4:22 a.m. in a black SUV.

 

At 7 p.m. the same day as the murder, Meza and Langston returned to the Bobby’s by the Sea hotel in the black SUV. Meza told hotel staff he was there to pick up his personal items from the room he had shared with Merendino.

 

After the slaying, one of the victim’s friends filed probate paperwork for a will Merendino drew up in 1998 in Galveston, Texas. A few days later, Meza, through his lawyers, contested the 1998 will and filed the handwritten will on letterhead from the Hercor Hotel in Chula Vista, which he claimed was executed by Merendino in December of 2014, and left Meza “everything.”

 

Acting U.S. Attorney Robinson thanked law enforcement counterparts from Procuraduría General de Justicia del Estado - the Attorney General’s office in the state of Baja California - for their assistance in the investigation and prosecution of these crimes.

 

She also noted that in certain circumstances, the United States has legal jurisdiction to prosecute crimes committed in other countries when U.S. citizens are victimized. “The United States will use every tool at its disposal to investigate and prosecute offenders who prey on U.S. citizens abroad.”

 

DEFENDANT Case Number: 15CR3175-JM

 

David Enrique Meza Age: 25

 

SUMMARY OF CHARGES

 

Count One

Interstate or Foreign Domestic Violence Resulting in Murder, in violation of Title 18 United States Code, Section 2261 (a) (1).

Maximum Penalty: Life in prison

 

Count Two

Conspiracy to Obstruct Justice, in violation of Title 18, United States Code, Section 1512 (k).

Maximum Penalty: 20 years’ imprisonment

 

AGENCY

 

Federal Bureau of Investigation

 

 

Assistant U. S. Attorney Matthew Sutton (619) 546-8941, Jarad E. Hodes 546-7432 and Janaki S. Gandhi 546-8817

 

NEWS RELEASE SUMMARY – April 27, 2017

 

SAN DIEGO – Thirty-seven documented gang members and associates were charged this week in federal court with methamphetamine distribution and firearms trafficking. The defendants are accused of dealing in substantial quantities of methamphetamine and illegal guns, using Teralta Park in City Heights as their headquarters and operating throughout Mid-City San Diego.

 

As of today at 1 p.m., 29 of the thirty-seven defendants are either in federal or state custody. Twenty-two were arrested this week; the rest were already in custody. Authorities are continuing to search for eight defendants. During the two-day takedown, investigators executed ten search warrants and seized more than three pounds of methamphetamine, 17 firearms and over $25,000 in narcotics proceeds from the defendants. Many of the defendants are scheduled to be arraigned before U.S. Magistrate Judge Ruben B. Brooks at 2:00 p.m. today and tomorrow.

 

The yearlong investigation, dubbed “Seeing Blue,” was co-led by the Homeland Security Investigations Gangs & Weapons Group and the San Diego Police Department in partnership with the United States Marshals Service and the Drug Enforcement Administration. It involved months of federal wiretaps, dozens of undercover drug buys and extensive surveillance. Many of the defendants are documented members or associates of violent San Diego street gangs, including the Oriental Mafia Crips, West Coast Crips, Neighborhood Crips and Lincoln Park Piru.

 

As alleged in the indictments, complaints, and search warrants unsealed today, HSI began the investigation by targeting a prolific methamphetamine distribution network headed by OMC gang member Soulidao Chounlaboudy, aka “Lazy.” Investigators were able to introduce undercover agents to Chounlaboudy in order to purchase ounce quantities of methamphetamine, firearms, and stolen vehicles from him and his co-conspirators. During the course of the investigation of Chounlaboudy, agents also identified Ruben Contreras-Ramirez, a Claremont 13 gang member, as a firearms distributor involved in the manufacture of assault style semi-automatic firearms for illegal distribution.

 

Investigators subsequently targeted WCC gang member, John Quarles, aka “J-Money,” and his methamphetamine and crack cocaine drug distribution network. According to the charging documents, Quarles’ network was responsible for distributing dozens of pounds of methamphetamine and grossing tens of thousands of dollars in narcotics proceeds. His network utilized an array of distributors and sub-distributors, many of them convicted drug dealers and gang members, to distribute methamphetamine and crack cocaine from Teralta Park.

 

“Gangs and drugs are infesting many of our neighborhoods and creating a violent culture that is unsafe for residents,” said Acting U.S. Attorney Alana W. Robinson. “With today’s action, we are reclaiming these parks and streets for our families, our children and our communities.”

 

“ICE Homeland Security Investigations is committed to working jointly with its law enforcement partners to dismantle criminal gang networks that distribute narcotics on the streets and spread violence in our communities,” said Dave Shaw, special agent in charge for HSI San Diego. “As part of this joint investigation, our agents continue to fight against crime to help keep our communities safe.”

“This was a long, complex investigation and I couldn't be prouder of our detectives and all the other law-enforcement partners who have worked tirelessly on this case,” San Diego Police Chief Shelley Zimmerman said. “The bottom line is these arrests make our city and our region a safer place.”

 

“DEA will continue to support our law enforcement partners in any way possible,” said DEA San Diego Special Agent in Charge William R. Sherman. “Methamphetamine poses a huge threat to the fabric of our communities in San Diego. It is important to rid our neighborhoods of this dangerous drug, the people selling it, and the ancillary crime that follows drug trafficking.”

 

Acting United States Attorney Robinson also praised the coordinated federal and state team effort in the culmination of this investigation. Agents and officers from the Homeland Security Investigations Gangs & Weapons Group; San Diego Police Department; United States Marshals Service, the Drug Enforcement Administration, the Bureau of Prisons, Immigration and Customs Enforcement, Enforcement and Removal Operations; the Chula Vista Police Department; and the District Attorney’s Office collaborated on this investigation. Attorneys from the Department of Justice, Office of Enforcement Operations, Electronic Surveillance Unit, also provided critical assistance to the investigation.

 

This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

 

Operation Seeing Blue Defendant Information

 

DEFENDANTS Criminal Case No: 17CR1026-BTM

Name

Age

Hometown

SOULIDAO CHOUNLABOUDY (1),

aka “Lazy”

40

San Diego, CA

SOLIDEUANE CHOUNLABOUDY (2),

aka “Chewy”

39

San Diego, CA

JOHNNY HERRERA (3),

46

Chula Vista, CA

ELIZABETH ASHLEY ANDERSON (4)

28

San Diego, CA

RUBEN CONTRERAS-RAMIREZ (5),

aka “Tijuas”

36

Lemon Grove, CA

ANTHONY ERIC MOATS II (6)

37

San Diego, CA

LARRY MULDROW (7),

aka “Mojo”

40

San Diego, CA

NAOMI JEAN HILL (8)

33

El Cajon, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Felon in Possession of a Firearm and Ammunition, in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2);

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1);

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Maximum Penalties: For the drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a $250,000 fine.

 

DEFENDANTS Criminal Case No: 17CR1027-BTM

Name

Age

Hometown

JOHN ALBERT QUARLES JR. (1),

aka “J-Money”

47

San Diego, CA

ANTWAUN FORD (2),

aka “Ant”

27

San Diego, CA

DON VESTER POLLARD JR. (3)

27

San Diego, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Cocaine, in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Maximum Penalties: For drug charges: 20 years in prison and a 1 million dollar fine.

 

 

DEFENDANTS Criminal Case No: 17CR1028-BTM

Name

Age

Hometown

JOHN ALBERT QUARLES JR. (1),

aka “J-Money”

47

San Diego, CA

JOSE PEDRO ESTRADA, JR. (2),

aka “Boy”

31

San Diego, CA

TYRONE LORENZO JOHNSON (3),

aka “T-Ro”

47

San Diego, CA

WALTER BROWN (4),

aka “Pee Wee”

57

San Diego, CA

RICKY EVANS (5),

aka “Sweets”

57

San Diego, CA

KIMSAY DENNIS LEAUV (6),

aka “Gangster”

45

San Diego, CA

JARRETT MCGUIRE (7),

aka “Blue Jay”

36

San Diego, CA

PATRICK HEARD (8),

aka “Ace”

46

San Diego, CA

KITSANA XAYPANYA (9),

aka “Kelly”

35

San Diego, CA

MERRELL CEDRIC HEMPSTEAD (10),

aka “Popo”

56

San Diego, CA

EARL WOODS (11),

aka “Meech

42

San Diego, CA

THOMAS ADAMS (12),

52

National City, CA

GLEN RUSSELL (13),

aka “G-Rock

39

San Diego, CA

TIMOTHY JONES (14)

49

San Diego, CA

MICHAEL ELLIOT (15),

aka “Black”

48

San Diego, CA

PAUL JOSEPH JEFFREY (16),

42

San Diego, CA

ANDREW LASTER (17),

52

San Diego, CA

JAMES LANKFORD (18),

aka “Smiley”

47

San Diego, CA

CURTIS CLYDE OLIVER (19)

48

San Diego, CA

KIMBERLY EVETTE CUNNINGHAM (20),

51

San Diego, CA

DARREN DIMITRI KNIGHT (21),

23

San Diego, CA

PHYLICIA RENEE APPLEWHITE (22),

29

El Cajon, CA

RAYMOND BLACKWELL (23),

aka “Black Dog”

44

San Diego, CA

PABLO MAGDALENO VIELMA-RODRIGUEZ (24),

aka “Acapulco”

54

San Diego, CA

BRADLEY SCOTT PITTS (25),

48

El Cajon, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine, in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Felon in Possession of a Firearm and Ammunition, in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2);

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1);

Possession of Methamphetamine and Cocaine Base with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Maximum Penalties: For the drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a $250,000 fine.

 

DEFENDANTS Criminal Case No: 17MJ1212-RBB

Name

Age

Hometown

DELLA GUADALUPE MERCADO (1),

39

National City, CA

CHRISTINA THOMPSON (2),

40

San Diego, CA

 

SUMMARY OF CHARGES

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Secs. 841(a)(1);

Maximum Penalties: For drug charges: 20 years in prison and a 1 million dollar fine.

 

*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 Rebecca S. Kanter (619-546-7304) and Aaron P. Arnzen (619-546-8384)

 

NEWS RELEASE SUMMARY – April 21, 2017

SAN DIEGO, CA – Owners of local construction and telecommunications companies were arraigned in federal court today on charges that they fraudulently obtained more than $11 million in federal contracts specifically set aside for service-disabled veteran-owned businesses.

Andrew Otero, Roger Ramsey, and their companies – A&D General Contracting, Inc. (“A&D”) and Action Telecom, Inc. (“Action”) – were named in a fourteen-count indictment returned April 7 by a federal grand jury in San Diego.

The indictment alleges that the defendants participated in a conspiracy to defraud the government by forming a joint venture – Action-A&D, A Joint Venture (“the JV”) – and falsely representing that Action and the JV qualified as service-disabled veteran-owned small businesses (“SDVOSB”). Based on the false claim to SDVOSB eligibility, the conspirators fraudulently obtained approximately $11 million in federal government construction contracts or task orders with the Department of Veteran Affairs (“VA”) and the Army Corps of Engineers (“ACE”).

According to the indictment, the fraudulent conspiracy involved set-aside contracts that could only be bid upon by legitimate service-disabled veteran-owned small businesses – a designation that did not apply to Otero or A&D. To appear qualified, Otero (on behalf of A&D) and Ramsey (on behalf of Action) initially executed an agreement to create the JV (“the JV Agreement”), which stated that Ramsey’s company (Action) would be the managing venturer, employ a project manager for each of the set-aside contracts, and receive the majority of the JV’s profits.

However, six months later, Otero and Ramsey signed a secret side agreement that made clear the JV was ineligible under the SDVOSB program. For example, the side agreement said the parties created the JV so that A&D could simply “use the Disabled Veteran Status of Action Telecom” to bid on contracts. The side agreement also stated that A&D – not Action – would run the construction jobs. They also agreed that “A&D will keep 98% of every payment; Action Telecom will receive 2% of every payment.”

In addition to the secret side agreement, the indictment describes a variety of ways in which the JV did not operate as a legitimate SDVOSB, but was essentially controlled by Otero and A&D. For example, although Ramsey (a service-disabled veteran) nominally served as president of Action and the JV, he actually worked full-time for another telecommunications company. Otero and A&D, not Ramsey, controlled the day-to-day management, daily operation and long-term decision making of the JV. Among other things, Otero and A&D appointed an A&D employee as the project manager for every contract and task order. Consistent with their side agreement, Action received just a small fee for using Rasmey’s status as a disabled veteran.

The indictment also alleges several examples of the conspirators deceiving government agencies about the true nature of the JV. For example, on two separate occasions, A&D submitted the JV Agreement to (and withheld the side agreement from) the government in response to requests for information about the joint venture – despite the fact that the side agreement said on its face that it superseded the original JV Agreement.

Today’s indictment cites three contracts or task orders which the VA or ACE awarded to the JV, each worth over a million dollars, and one as high as $8.2 million. In addition to the conspiracy charge, all defendants were also charged with three counts of wire fraud relating to the payment of invoices on the three contracts or task orders, and with one or more counts of major government program fraud and false statements in connection with fraudulent certifications to the government. Today’s indictment also contains forfeiture allegations, which would require the defendants to forfeit to the government any property derived from the proceeds of the fraud scheme.

Acting United States Attorney Robinson said “One important way in which our country tries to repay the debt of gratitude we owe to our veterans is by setting aside some government contracts for those who have been disabled during their service. But unscrupulous contractors have abused this program through ‘rent-a-vet’ schemes, such as the one described in today’s indictment. The Department of Justice will work to ensure that criminals who abuse important contracting programs such as the SDVOSB are held to account.”

Rebeccalynn L. Staples, Resident Agent-in-Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, San Diego Resident Agency, stated, “This investigation demonstrates the OIG’s continued commitment to aggressively pursue individuals and companies that misrepresent themselves as Service-Disabled Veteran-Owned Small Businesses and deny legitimate disabled veterans the opportunity to be awarded VA set-aside contracts. The VA OIG will continue to work these cases in order to protect the integrity of the program. I urge anyone with knowledge of such an ongoing fraud to call the VA OIG’s Hotline at 1-800-488-8244.”

All four defendants are also facing civil charges in United States v. Otero, et al., Case No. 15CV0441-JAH, a case alleging violations of the false claims act based on the similar misconduct.

All defendants were ordered to appear before U.S. District Judge Roger T. Benitez for a motion hearing at 2 p.m. on June 5.

CORPORATE DEFENDANTS

 

A&D General Contracting, Inc., Santee, California

Action Telecom, Inc., Santee, California

 

INDIVIDUAL DEFENDANTS

 

Andrew Otero Age: 54 El Cajon, CA

Roger Ramsey Age: 57 Spring Valley, CA

 

Criminal Case No. 17CR0879-BEN

 

SUMMARY OF CHARGES

 

Count 1 (All): Conspiracy to defraud and commit offenses (18 U.S.C. § 371)

Maximum penalties: 5 years’ imprisonment; 3 years’ supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $10

 

Count 2 (Otero and A&D)

and Counts 3-4 (All): Major fraud against the United States (18 U.S.C. § 1031)

Maximum penalties: 10years’ imprisonment; supervised release; a fine of $1,000,000 per count ($5,000,000 total); and a mandatory special assessment of $100

 

Counts 5-7 (All): Wire fraud (18 U.S.C. § 1343)

Maximum penalties: 20 years’ imprisonment; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100

 

Counts 8-9 and 11-13

(Ramsey and Action),

10 (All), 14 (A&D): False statements (18 U.S.C. § 1001)

Maximum penalties: 5 years’ imprisonment; a fine; and a mandatory special assessment of $100

 

AGENCIES

 

Department of Veteran Affairs, Office of Inspector General

 

*The charges contained in this indictment are simply accusations, and not evidence of guilt. Evidence supporting the charges must be presented to a federal trial jury, whose duty is to determine guilt or innocence.

A San Diego, California tax return preparer was sentenced to 37 months in prison today for preparing fraudulent tax returns, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

 

According to documents filed with the court, Marla Lynn Cunningham owned and operated Cunningham’s Tax Service, a tax preparation business located in El Cajon, California. From 2010 through 2012, Cunningham prepared fraudulent returns for her clients that reported fake business losses, charitable contributions, and medical, dental, education and unreimbursed employee expenses. Cunningham caused a tax loss of approximately $1,237,943.

 

In addition to the term of prison imposed, Cunningham was ordered to serve one year of supervised release and will be ordered to pay $91,867 in restitution to the ternal Revenue Service (IRS). Cunningham pleaded guilty in December 2016 to three counts of preparing false tax returns.

 

Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS–Criminal Investigation, who conducted the investigation, and Trial Attorneys Matthew R. Hoffman and Benjamin J. Weir of the Tax Division, who are prosecuting the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office of the Southern District of California for their substantial assistance.

 

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

For Further Information, Contact: Assistant U.S. Attorney Joseph J.M. Orabona (619)546-7951 or Assistant U.S. Attorney Michael G. Wheat (619) 546-8437

 

NEWS RELEASE SUMMARY – April 13, 2017

 

SAN DIEGO – Jeffrey Spanier, former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was sentenced today by U.S. District Court Judge Roger T. Benitez to serve eight years in federal prison and pay approximately $20 million in restitution for his role in a $100 million elaborate stock-loan fraud scheme that bilked victims all over the world.

 

Spanier was also ordered to forfeit several million dollars in assets that were the proceeds of the fraud, including cash and securities held in brokerage accounts, and a luxury home in Florida. The case was investigated by the Federal Bureau of Investigation (FBI) over an extended period of time.

 

Following an appeal in a prior criminal case, Spanier was re-indicted in July 2016 and October 2016 and charged with multiple counts of conspiracy, mail fraud, wire fraud, and securities fraud involving a stock-loan fraud scheme that involved two other co-conspirators – Douglas McClain, Jr. and James Miceli. A federal jury returned guilty verdicts on similar charges against McClain on May 31, 2013, and he was later sentenced by U.S. District Judge Roger T. Benitez to serve 15 years in federal prison. Miceli committed suicide shortly before that trial. McClain is currently serving his sentence in federal prison. Upon his release, McClain has been ordered to pay approximately $81.7 million to the victims of the fraud.

 

Spanier’s re-trial was held in November 2016. After two-weeks of trial testimony, the jury deliberated for several hours and found Spanier guilty on all 16 counts, which included conspiracy, mail fraud, wire fraud, and securities fraud. The jury also returned a special verdict finding in favor of the United States as to the forfeiture of Spanier’s cash, securities, and property.

 

According to trial testimony, Spanier, through his entity Amerifund Capital Finance, partnered with McClain, Miceli, and Argyll Equities, and together with his partners fraudulently induced corporate executives to pledge millions of dollars’ worth of stock the executives held in publicly traded companies as collateral for loans by falsely representing that the borrowers' stock would not be sold unless there was a default on the loan.

 

The evidence presented at trial showed that Argyll, the purported lender, had no cash to lend and instead survived for years by immediately selling borrowers stock on the day after the stock was pledged as collateral. The proceeds from the sale of the stock were used to fund the loans creating the appearance that Argyll had plenty of cash to lend.

 

The evidence also showed that Spanier, McClain, and others fraudulently induced the borrowers to make monthly interest payments on their loans by falsely representing that their collateral was safe and would be returned as long as they did not default. At the end of the loan terms, the borrowers paid off their loans. Instead of returning the stock to the borrowers, Spanier and McClain kept the money and provided false excuses about why they could not return their stock.

 

The evidence further showed that the unauthorized sales of stock held by insiders of publicly traded companies caused the stock price to plummet which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.

 

During the trial, the government offered testimony from several executives, many of whom had faithfully paid off their loans over a period of years, completely unaware that their stocks had been sold. All testified about the frustration, emotional stress and grief they experienced when they unsuccessfully attempted to recover their stock once the loan balance was paid, and ultimately realized they were the victims of a massive fraud. Victims were located in the United States, Canada, Mexico, Panama, China, England, and Belgium.

 

The jury rejected defense claims that Spanier was merely a broker who was unaware of the fraud scheme.

 

“Today’s significant prison sentence sends a loud and clear message to those engaged in such brazen deception for personal gain that we are committed to working with our law enforcement partners to vigorously pursue and prosecute anyone who commits white-collar crimes,” said Acting U.S. Attorney Alana W. Robinson. “Jeffrey Spanier not only stole tens of millions of dollars from his own clients, but he victimized the public market when his actions caused stock prices to plummet. This significant sentence means Spanier’s days driving a Bentley and living in a gated country club community at the expense of others will soon be a distant memory.”

 

“Today's sentencing of Mr. Spanier serves as a stark warning to financial predators seeking riches through deceit and fraud,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI remains committed to the zealous pursuit of these criminals and delivering justice to their victims.”

 

At the conclusion of the sentencing hearing, the Court ordered that Spanier be remanded into custody immediately.

 

DEFENDANT                                         Criminal Case No. 16CR1545-BEN

 

Jeffrey R. Spanier                                     Age: 51 Delray Beach, Florida.

 

SUMMARY OF CHARGES:

 

Count 1 of the Superseding Indictment – Conspiracy (18 U.S.C. § 371)

Maximum Penalties: 5 years in prison and $250,000 fine

 

Count 2 of the Superseding Indictment – Securities Fraud (15 U.S.C. §§ 78j(b) and 78ff)

Maximum Penalties: 20 years in prison and $250,000 fine

 

Counts 2-7 of the Indictment – Mail Fraud (18 U.S.C. § 1341)

Maximum Penalties: 20 years in prison and $250,000 fine

 

Counts 8-13, 15 and 16 of the Indictment – Wire Fraud (18 U.S.C. § 1343)

Maximum Penalties: 20 years in prison and $250,000 fine

 

Criminal Forfeiture (real and personal property)

 

AGENCY

 

Federal Bureau of Investigation

 

 

 

 

Special Assistant U.S. Attorney Jeffrey D. Hill (619) 546-7924 or Assistant U.S. Attorney Nicholas Pilchak (619) 546-9709

 

NEWS RELEASE SUMMARY – April 13, 2017

 

SAN DIEGO – Swedish businessman Petter Magnus Karlsson, who had recently been living in Asia, pleaded guilty today to engaging in an international racketeering conspiracy that used the Lucky Lady Casino and Card Room in El Cajon as a legitimate front for illegal sports bookmaking and related criminal activity. Karlsson voluntarily travelled to the United States last week to face the charges that had been pending since July 2016.

 

As set out in his plea agreement, Karlsson helped provide financing to lead defendant Sanders Bruce Segal in order to bankroll Segal’s bookmaking operation, which took illegal sports bets from customers across the Southern District of California and in the District of Arizona. Karlsson also provided Segal and others in the enterprise with access to offshore sports gaming websites hosted in Costa Rica, the U.K., Hong Kong, and Curacao, so that they could place large illegal sports bets online while shielding their unlawful activity from U.S. authorities.

 

According to the plea agreement, the enterprise’s primary offshore sports gambling website, betmex.net, was owned and operated by co-defendant David Gregg Leppo. Karlsson supervised co-defendant Pablo Ballestero Frech in managing accounts for Segal at Leppo’s website and others. Frech returned from Canada to face charges and pleaded guilty to unlawful transmission of wagering information last October.

 

Karlsson, Segal, and others in the enterprise regularly used runners and other means to transfer large sums of cash between themselves to fuel their operation. On one occasion, according to the plea agreement, Karlsson and Frech personally picked up a shoebox full of $90,000 in cash proceeds directly from Segal on his front doorstep. As part of his plea, Karlsson agreed to forfeit $139,834, which represented direct proceeds of his participation in the offense.

 

Seven defendants in addition to Karlsson have thus far pleaded guilty to gambling charges as part of cases stemming from the investigation of the Lucky Lady: Pablo Ballestero Frech, Minh Triet Dinh Nguyen, James Heng Tear, Ken Pheng Keo, Jason D. Taylor, Jeffrey Alan Burke, and Ryan Richard Buchardt.

 

Acting U.S. Attorney Alana Robinson commented, “For too long, transnational criminal organizations have attempted to skirt United States laws by using offshore servers, networks of illicit cash couriers and complex financial transactions. But tycoons in the lucrative world of international sports gambling now have one sure bet: If your conduct violates American law, you will find yourself in a United States courtroom and be held to account.”

 

“Sophisticated racketeering organizations continually rely on the mistaken notion that they can move beyond the reach of the law by spreading their operations across international borders,” stated FBI Special Agent in Charge Eric S. Birnbaum. “Today’s guilty plea demonstrates that there are no safe havens. The FBI will work tirelessly with our international partners to ensure that criminals are brought to justice no matter where they hide.”

 

Karlsson’s sentencing is currently set for July 17, 2017 at 9 a.m. The remaining defendants are set for a motion hearing June 26, 2017 before Judge Roger T. Benitez.

 

DEFENDANTS—Case Number: 16CR1695-BEN Next Court Date

 

Sanders Bruce Segal Motion Hearing June 26, 2017

Stanley Samuel Penn Motion Hearing June 26, 2017

Petter Magnus Karlsson Sentencing

David Greg Leppo Motion Hearing June 26, 2017

Pablo Ballestro Frech Sentencing

Sydney Bruce Segal Motion Hearing June 26, 2017

Joseph Edward Spatafore Motion Hearing June 26, 2017

Minh Triet Dinh Nguyen Sentencing

James Heng Tear Sentencing

Ken Pheng Keo Sentencing

Jason D. Taylor Sentencing

Jeffrey Alan Burke Sentencing

 

SUMMARY OF CHARGES

 

Count 1: Racketeering Conspiracy to Conduct Enterprise Affairs (RICO Conspiracy), in violation of Title 18, United States Code, Sections 1962(c) & (d)

Maximum penalties: 20 years in prison, 3 years supervised release, and a $250,000 fine

Defendants 1-6

 

Count 2: Illegal Gambling Business, in violation of Title 18, United States Code, Section 1955

Maximum Penalties: 5 years in prison, 3 years supervised release, and a $250,000 fine

All defendants

 

Count 3: Transmitting Wagering Info, in violation of Title 18, United States Code, Section 1084(a)

Maximum Penalties: 2 years in prison, 1 year supervised release, and a $250,000 fine

Defendants 7 and 11

 

DEFENDANT—Case Number: 16CR1696-BEN Next Court Date

 

Robert Jay Zaben Motion Hearing June 26, 2017

 

AGENCIES

 

Federal Bureau of Investigation

San Diego Police Department

Internal Revenue Service – Criminal 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.

Heraclio Osorio-Arellanes, who is charged with participating in the murder of U.S. Border Patrol Agent Brian Terry, was taken into custody by Mexican authorities in Chihuahua, Mexico on Wednesday based on a provisional arrest warrant issued at the request of the United States.

“The Department of Justice is pleased that the suspected killer of Border Patrol Agent Brian Terry has been captured and will now face justice for this terrible crime,” said Attorney General Jeff Sessions. “We are grateful for the efforts of the Federal Bureau of Investigation, U.S. Marshals Service and U.S. Customs and Border Protection. I especially want to commend the government of Mexico and specifically the Mexican Navy (SEMAR) and Mexico’s Office of the Attorney General (PGR) for their courage and their outstanding work in the daring operation that apprehended this dangerous defendant. To anyone who would take the life of an American citizen, in particular an American law enforcement officer, this action sends a clear message: Working closely with our international partners, we will hunt you down, we will find you, and we will bring you to justice.”

Osorio-Arellanes is one of seven defendants charged in the District of Arizona with murder and other crimes arising from the murder of Agent Terry on Dec. 14, 2010. Osorio-Arellanes will be transported to Mexico City for extradition proceedings.

With Osorio-Arellanes’ arrest, six of the seven defendants in this case are in custody:

Defendants Ivan Soto-Barraza and Jesus Lionel Sanchez-Meza were arrested in Mexico and subsequently extradited to the United States in 2014. They were convicted by a jury of first-degree murder and other offenses in December 2015 following a jury trial and were sentenced to life in prison.

Defendants Manuel Osorio-Arellanes and Rosario Rafael Burboa-Alvarez pleaded guilty to first-degree murder; Osorio-Arellanes was sentenced to 360 months in prison, while Burboa-Alvarez was sentenced to 324 months.  Defendant Rito Osorio-Arellanes pleaded guilty to conspiracy to interfere with commerce by robbery and was sentenced to 96 months in prison.

Defendant Jesus Favela-Astorga is a fugitive in Mexico. The Federal Bureau of Investigation, the U.S. Marshals Service, and Mexican authorities are working to locate this defendant.

“Agent Terry gave his life protecting our country,” said Acting U.S. Attorney Alana W. Robinson for the Southern District of California. “While we cannot reverse this tragedy, we will not stop until justice is complete in this case.”

The case is being prosecuted by attorneys from the Southern District of California, Special Attorneys Todd W. Robinson and David Leshner. The U.S. Attorney’s Office for the District of Arizona is recused. The case was investigated by the FBI. The apprehension was a coordinated effort by the Mexican Navy (SEMAR), Mexico’s Office of the Attorney General (PGR), FBI, U.S. Marshals Service and U.S. Border Patrol with significant assistance provided by the Criminal Division’s Office of International Affairs.

Osorio-Arellanes Indictment

For Further Information, Contact: Assistant U.S. Attorney Joseph J.M. Orabona (619)546-7951 or Assistant U.S. Attorney Aaron Arnzen (619)546-8384

 

NEWS RELEASE SUMMARY – April 7, 2017

 

SAN DIEGO – Former Accounts Payable Supervisor Edward Abellana was sentenced today in federal court to two years in prison for abusing his position of trust at Argen Corporation, a San Diego-based metals company, in order to steal millions of dollars which he used to fund a lavish lifestyle.

 

U.S. District Court Judge Janis L. Sammartino also ordered Abellana to repay approximately $1,952,202 to Argen and pay approximately $661,000 to the Internal Revenue Service for unpaid taxes on the money he embezzled from Argen.

 

According to his plea agreement, Abellana worked as the Accounts Payable Supervisor from December 2011 until October 2015. While overseeing the metals company’s credit card accounts, Abellana used his access (between June 2012 and October 2015) to embezzle approximately $1.9 million which he used for a variety of purchases, including renting private jets; paying for luxury vacations to Hawaii, Las Vegas, and Disneyland, and paying for a trip to the Super Bowl and other sporting events.

For example, Abellana admitted he charged more than $70,000 to charter a private jet to take him, his family and friends to Hawaii.

 

Abellana also used his position to defraud Argen by issuing unauthorized checks against the company’s checking account to pay for personal expenses. In total, Abellana admitted that he issued more than $162,000 in fraudulent checks.

 

As further provided in his plea agreement, Abellana was able to carry out the embezzlement by virtue of his access to the full range of financial records and accounts. On most occasions, Abellana would simply use the company’s credit cards to make personal purchases. In order to conceal his fraud, he intercepted the credit card statements and used computer software to alter the statements. Thereafter, he falsified the company’s books and records by falsely characterizing his personal purchases as legitimate business expenses.

 

In addition to his embezzlement scheme, Abellana filed false tax returns. He failed to report the money he embezzled on his tax returns for tax years 2012 through 2015. Abellana admitted that he owes the Internal Revenue Service more than $661,000 in federal income taxes.

 

“Edward Abellana took advantage of his trusted position at the company in order to wire millions of dollars for his own personal benefit,” said Acting U.S. Attorney Alana W. Robinson. “When a trusted employee uses federal wires to feed his own greed, he will be vigorously investigated and prosecuted for his crimes – not only for stealing the money, but also for failing to report the income and pay taxes.”

 

“For several years Edward Abellana abused his fiduciary responsibility as an Accounts Payable Supervisor,” said Eric S. Birnbaum, Special Agent in Charge of the FBI’s San Diego Division. “In doing so, he took advantage of his position of trust and defrauded his employer in order to live his lavish lifestyle. The FBI and other law enforcement agencies rely heavily on the trust and cooperation of members of the business industry and citizens to assist us in performing our mission. Through this cooperative effort, we are able to identify and hold those individuals accountable for criminal acts driven by their personal greed.”

 

“Individuals thinking about participating in embezzlement schemes should stop in their tracks and simply look at the consequences of taking the next step,” stated Special Agent in Charge R. Damon Rowe for IRS Criminal Investigation. “As Mr. Abellana learned today, those consequences include going to prison, being branded a convicted felon and paying back all the taxes owed plus steep penalties and interest on the unreported income.”

 

At the conclusion of today’s hearing, Abellana was ordered to self-surrender on June 2, 2017.

DEFENDANT                                    Criminal Case No. 17CR0125-JLS

Edward K. Abellana                            Age: 40

SUMMARY OF CHARGES:

 

Count 1 – Wire Fraud (18 U.S.C. § 1343)

Maximum Penalties: maximum sentence of 20 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years

 

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

Maximum Penalties: maximum sentence of 3 years in prison; maximum fine of $250,000; maximum term of supervised release of 1 year

 

INVESTIGATING AGENCIES

 

Federal Bureau of Investigation

Internal Revenue Service – Criminal Investigations

 

Assistant U.S. Attorney Andrew J. Galvin (619) 546-9721

 

NEWS RELEASE SUMMARY – March 27, 2017

 

SAN DIEGO – Joshua Knaup, the founder and chief investment officer of EquityPro Capital, was sentenced Friday to 33 months in prison and ordered to pay $556,629 in restitution for stealing over half a million dollars from local investors.

In addressing Knaup, U.S. District Judge Cathy Ann Bencivengo said, “You didn’t steal from a stranger, you stole as a friend, and in this court’s opinion that’s even worse. That’s a theft that goes right to the heart and soul and stays with the victim for a very long time.” Knaup was remanded into custody at the conclusion of the hearing.

 

After losing his job as a FedEx driver, Knaup opened up EquityPro Capital, an investment management firm based in downtown San Diego. Near the end of 2013, Knaup falsely claimed to have established a new hedge fund and began soliciting investors. Knaup gave potential investors a prospectus that provided detailed information about his purported hedge fund, which Knaup called “The F2 Fund.” According to the prospectus, The F2 Fund derived its name “from a passage in the Bible about giving of the ‘First Fruits’ of your income.” In order to attract investors, Knaup guaranteed that investors would receive a certain return on their investment and falsely claimed to have invested his own money in the hedge fund.

 

According to court documents, Knaup conned victims into giving him hundreds of thousands of dollars. Knaup ingratiated himself with Lois and Henry Mathews, who live in Bankers Hill, while attending their 45th wedding anniversary celebration. Knaup promised to help Ms. Mathews retire and claimed that her $240,000 investment would be safe. Instead, Ms. Mathews, a small-business owner, lost it all. As she wrote to the court, “I am 72 years old and work very hard in a very physical and stressful business and I will have to continue to work this hard for the rest of my life because of what Josh [Knaup] stole from us.”

 

Knaup met another victim, Lewis Barnum from Coronado, at a Rotary Club meeting. Knaup boasted about his success in the stock market and promised a substantial return. Barnum ultimately lost over $130,000 to Knaup. Yet another victim met Knaup on the side of a freeway while changing a tire. Knaup talked a lot about his investment company, and the victim, a Border Patrol agent, decided to invest $10,000. When the victim told he was about to have a child and needed his money, Knaup wrote him a $10,000 check that bounced.

 

With the thousands of dollars he stole from investors, Knaup rented prime office space in a building near Petco Park. Inside the office, Knaup created a wall using 30 flat screen televisions that displayed stock trading information—a fact that duped investors would later mention as an apparent sign of the business’ legitimacy. Knaup even threw a party for the investors at the Hotel Indigo with sushi, an open bar and gift bags.

Despite these outward indications of success, The F2 Fund did not exist. Knaup had not even opened a brokerage account for the investors’ funds. Investors ultimately poured over half a million dollars into the non-existent hedge fund. Knaup did not invest a single dollar of investors’ funds, and instead used the money for personal and business purchases. In the fall of 2014, Knaup’s business began to unravel as investors realized that Knaup had not invested their money. Knaup fled to Mexico shortly thereafter, without ever repaying the victims he had defrauded.

 

“Mr. Knaup perpetrated a scheme weaved with facades and lies to prey on trusting, hard-working people intending to make legitimate investments," said Special Agent in Charge Eric S. Birnbaum. “Today's sentence will prevent Mr. Knaup from victimizing investors for a long while and serve as a reminder that the FBI will continue to protect the American public by pursuing fraudsters and bringing them to justice.”

 

DEFENDANT:                                 Case Number 16-CR-560-CAB

Joshua Knaup                                    Age: 41 Santa Rosa, CA

 

SUMMARY OF CHARGES

 

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

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

 

AGENCY

 

Federal Bureau of Investigation

 

 

 

 

 

 

 

 

 

 

 

 

 

Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718

 

NEWS RELEASE SUMMARY – March 14, 2017

 

SAN DIEGO – Retired U.S. Navy Rear Admiral Bruce Loveless and David Newland, chief of staff to the Commander of the Navy’s Seventh Fleet, along with seven other high-ranking Navy officers are charged in a federal grand jury indictment with acting as a team of moles for a foreign defense contractor, trading military secrets and substantial influence for sex parties with prostitutes, extravagant dinners and luxury travel.

 

According to a federal grand jury indictment unsealed today, the Navy officers worked together to help Singapore-based defense contractor Leonard Glenn Francis and his company, Glenn Defense Marine Asia, pull off a colossal fraud that ultimately cost the Navy – and U.S. taxpayers – tens of millions of dollars.

 

Navy officers were arrested early this morning in California, Texas, Florida, Colorado and Virginia. The United States will seek their removal to face charges in San Diego. Admiral Loveless was taken into custody at his home in Coronado and was expected to make his first appearance in federal court in San Diego at 2 p.m. before U.S. Magistrate Judge Mitchell D. Dembin. The other defendants are Captains David Newland, James Dolan, Donald Hornbeck and David Lausman; Marine Corps Colonel Enrico DeGuzman; Commander Mario Herrera; Lt. Commander Stephen Shedd and Chief Warrant Officer Robert Gorsuch. DeGuzman is also scheduled to appear before Judge Dembin today at 2 p.m.

 

The defendants face various charges including bribery, conspiracy to commit bribery, honest services fraud and obstruction of justice and making false statements to federal investigators when confronted about their actions. Two defendants – Shedd and Herrera - are active duty; the others are recently retired.

 

The indictment is a veritable 78-page list of allegations in which Francis spent tens of thousands of dollars on bribing the defendants and the actions the officers took to reciprocate. Francis plied the officers with things like foie gras terrine, duck leg confit, ox-tail soup, $2,000 boxes of cigars and $2,000 bottles of rare cognac, plus wild sex parties in fancy hotels.

 

For their part, the defendants allegedly worked in concert to help Francis and GDMA win and keep defense contracts to provide port services to U.S. Navy ships; to redirect ships to ports controlled by Francis in Southeast Asia so he could overbill the Navy for supplies and services such as food, water, fuel, tugboats, and sewage removal; to sabotage competing defense contractors; to recruit new members for the conspiracy by spreading the “Glenn Gospel” to incoming Seventh Fleet leaders; and to keep the conspiracy secret by using fake names and foreign email service providers.

 

Including today’s defendants, a total of 25 named individuals have been charged in connection with the GDMA corruption and fraud investigation. Of those, 20 are current or former U.S. Navy officials; five are GDMA executives. Thirteen have pleaded guilty; other cases are pending.

 

“This is a fleecing and betrayal of the United States Navy in epic proportions, and it was allegedly carried out by the Navy’s highest-ranking officers,” said Acting U.S. Attorney Alana W. Robinson. “The alleged conduct amounts to a staggering degree of corruption by the most prominent leaders of the Seventh Fleet – the largest fleet in the U.S. Navy - actively worked together as a team to trade secrets for sex, serving the interests of a greedy foreign defense contractor, and not those of their own country.”

 

“The defendants in this indictment were entrusted with the honor and responsibility of administering the operations of the U.S. Navy’s Seventh Fleet, which is tasked with protecting our nation by guarding an area of responsibility that spanned from Russia to Southeast Asia and the Indian Ocean,” said Acting Assistant Attorney General Kenneth A. Blanco. “With this honor and awesome responsibility came a duty to make decisions based on the best interests of the Navy and the 40,000 Sailors and Marines under their care who put their lives at risk every day to keep us secure and free. Unfortunately, however, these defendants are alleged to have sold their honor and responsibility in exchange for personal enrichment.”

 

“The allegations contained in today’s indictment expose flagrant corruption among several senior officers previously assigned to the U.S. Navy's Seventh Fleet. The charges and subsequent arrests are yet another deplorable example of those who place their own greed above their responsibility to serve this nation with honor‎,” said Dermot F. O'Reilly, Director, Defense Criminal Investigative Service.

 

“Naval Criminal Investigative Service, in concert with our partner agencies, remains resolved to follow the evidence wherever it leads, and to help hold accountable those who make personal gain a higher priority than professional responsibility,” Special Agent Andrew L. Traver, NCIS Director. “It's unconscionable that some individuals choose to enrich themselves at the expense of military security.”

 

Here’s a sampling of bribes alleged in the indictment:

 

-During the U.S.S. Blue Ridge’s port visit to Sydney Australia on June 17, 2007, Francis hosted and paid for a dinner event at the Altitude Restaurant within the Shangri-La Hotel. Some of the defendants dined on saute of scallops, foie gras, and beef loin for a cost of $11,898. During dinner, defendant Gorsuch handed Francis two floppy disks containing classified port visit information for many U.S. Navy ships, according to the indictment.

 

-In March 2007, Francis hosted and paid for a multi-course dinner for several of the defendants at the Oak Door in Tokyo, Japan. The menu included foie gras, Lobster Thermidor, Sendai Tenderloin, and for dessert, Liberte Sauvage, the winning cake of the 10th Coupe du Monde de la Patisserie 2007, followed by cognac and cigars. Each course was paired with fine champagne or wine. Attendees posed for photographs wearing custom-made GDMA neckties that Francis had given them as gifts.

 

-During one port visit in Singapore on March 9, 2006, Francis seduced the leaders of the Seventh Fleet with foie gras terrine, duck leg confit, ox-tail soup, roasted Chilean sea bass, paired with expensive wine and champagne, followed by digestifs and cigars. The extravagance included $600-a-bottle Hennessy Private Reserve, $2,000-a-bottle Paradis Extra and $2,000-a-box Cohiba Cigars.

 

According to the indictment, the group of officers referred to themselves using various terms, such as “the Cool Kids,” “the Band of Brothers,” “the Brotherhood,” “the Wolfpack,” “the familia,” and “the Lion King’s Harem.” The officers tried to conceal their corrupt relationships by using fictitious names to create email addresses using foreign-based email services.

 

This is the first time multiple officers are charged as working all together in a multi-layered conspiracy, pooling their individual and collective resources and influence on behalf of Francis.

 

In addition to performing various official acts in return for Francis’s booty, these officers are also accused of violating many of the sworn official duties required of them as Navy officers, including duties related to the handling of classified information and duties related to the identification and reporting of foreign intelligence threats.

 

The U.S. Navy’s Seventh Fleet represents a vital piece of the United States military’s projection of power as well as American foreign policy and national security. The largest numbered fleet in the U.S. Navy, the Seventh Fleet comprises 60-70 ships, 200-300 aircraft and approximately 40,000 Sailors and Marines. The Seventh Fleet is responsible for U.S. Navy ships and subordinate commands which operate in the Western Pacific Ocean throughout Southeast Asia, Pacific Islands, Australia, and Russia as well as the Indian Ocean territories, as well ships and personnel from other U.S. Navy Fleets that enter the Seventh Fleet’s area of responsibility. The U.S.S. Blue Ridge is the command-and-control ship of the Seventh Fleet and housed at-sea facilities for Seventh Fleet senior officials.

 

The Seventh Fleet’s motto: Ready Power for Peace.

 

In addition to the nine defendants charged today, the 11 Navy officials charged so far in the fraud and bribery investigation are: Admiral Robert Gilbeau; Captain Michael Brooks; Captain Daniel Dusek; Commander Jose Luis Sanchez; Commander Michael Misiewicz; Commander Bobby Pitts; Lt. Commander Gentry Debord; Lt. Commander Todd Malaki; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.

 

Gilbeau, Brooks, Dusek, Misiewicz, Sanchez, Debord, Malaki, Layug, Beliveau, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Gilbeau, Brooks, and Sanchez await sentencing. Pitts was charged in May 2016 and his case is pending.

 

Also charged are five GDMA executives – Francis, Alex Wisidagama, Edmund Aruffo, Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months in prison and $34.8 million in restitution to the U.S. Navy. Francis and Aruffo await sentencing. Peterson and Raja were extradited to the United States from Singapore in September 2016 and their cases remain pending.

 

The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.

 

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

 

DEFENDANTS                  Case Number: 17CR0623-JLS

 

Captain David Newland Age 60 San Antonio, Texas

Chief of Staff to the Commander of the Seventh Fleet

 

Colonel Enrico DeGuzman Age 58 Honolulu, Hawaii

Fleet Marine Office of the Seventh Fleet, responsible for coordinating the missions of the U.S. Marine Corps with the Seventh Fleet; and Assistant Chief of Staff of Operations for U.S. Marine Corps Forces, Pacific

 

Captain James Dolan Age 58 Gettysburg, Pennsylvania

Assistant Chief of Staff for Logistics for the Seventh Fleet, responsible for meeting the logistical needs of every ship within the Seventh Fleet’s area of responsibility

 

Captain Donald Hornbeck Age 56 United Kingdom

Deputy Chief of Staff for Operations for the Seventh Fleet, responsible for directing the operations of all combatant ships in the Seventh Fleet area of responsibility

 

Rear Admiral, Retired, Bruce Loveless Age 53 Coronado, CA

Previously a Captain and Assistant Chief of Staff for Intelligence for the Seventh Fleet, responsible for assessing and counteracting foreign intelligence threats within the Seventh Fleet’s area of responsibility

 

Captain David Lausman Age 62 The Villages, Florida

Executive Officer of the aircraft carrier U.S.S. Abraham Lincoln; Commanding Officer of U.S.S. Blue Ridge; Commanding Officer of U.S.S. George Washington

 

Lt. Commander Stephen Shedd Age 43 Colorado Springs, CO

Seventh Fleet’s South Asia Policy and Planning Officer, responsible for identifying ports that U.S. Navy ships would visit; and once promoted to Commander, served as Executive Officer and Commanding Officer of the U.S.S. Milius

 

Commander Mario Herrera Age 48 Helotes, Texas

Fleet Operations and Schedules Officer for the Seventh Fleet, responsible for scheduling the port visits for ships and submarines in the Seventh Fleet’s area of responsibility (Herrera was previously charged in February 2017 via complaint)

 

Chief Warrant Officer Robert Gorsuch Age 49 Virginia Beach, Virginia

Seventh Fleet’s Flag Administration Officer, responsible for providing administrative support to the Seventh Fleet Commander and other senior officers on the Seventh Fleet staff

 

SUMMARY OF CHARGES

 

Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371

Maximum Penalty: 5 years in prison, a $250,000 fine, or twice the gross pecuniary gain or twice the gross pecuniary loss, whichever is greater

 

Bribery, in violation of 18 U.S.C. § 201

Maximum Penalty: 15 years in prison, a $250,000 fine or twice the gross pecuniary gain or gross pecuniary loss from the offense, or three times the monetary equivalent of the thing of value, whichever is greater

 

False Statements, in violation of 18 U.S.C. § 1001

Maximum Penalty: 5 years in prison, a $250,000 fine

 

Obstruction of Justice, in violation of 18 U.S.C. § 1519

Maximum Penalty: 20 years in prison, a $250,000 fine

 

Conspiracy to Commit Honest Services Wire Fraud, in violation of 18 U.S.C. §§ 1349, 1346, 1343

Maximum Penalty: 20 years in prison, a $250,000 fine

 

 

INVESTIGATING AGENCIES

 

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

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

 

BREAKDOWN OF COUNTS

 

 

Counts

Code

Description

Defendant(s)

1

18 U.S.C. § 371

Conspiracy to Commit Bribery

All

2

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Newland

3

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

DeGuzman

4

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Hornbeck

5

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Dolan

6

18 U.S.C § 201(b)(2)(C)

Bribery

Loveless

7

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Lausman

8

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Herrera

9

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Shedd

10

18 U.S.C § 201(b)(2)(A) and (C)

Bribery

Gorsuch

11

18 U.S.C. § 1001(a)(2)

False Statements

Lausman

12

18 U.S.C. § 1519

Obstruction

Lausman

13

18 U.S.C. §§ 1349, 1346, and 1343

Conspiracy to Commit Honest Services Wire Fraud

All

 

 

 

 

 

 

 

 

Assistant U.S. Attorneys W. Mark Conover (619) 546- 6763  and Michelle L. Wasserman (619) 546-8431

 

NEWS RELEASE SUMMARY – March 14, 2017

 

SAN DIEGO – John Montano, a former Camp Pendleton defense contractor, pleaded guilty today to conspiring to steal over $250,000 worth of medical equipment that the military had planned to ship overseas to treat injured Marines.

 

Montano and his co-conspirators (many of whom have already pleaded guilty) worked in warehouses run by 1st Medical Logistics Company (“1st MEDLOG”) aboard USMC Camp Pendleton. 1st MEDLOG is the unit responsible for maintaining medical equipment and shipping necessary medical items to combat forces throughout the world. By virtue of his employment as a civilian defense contractor, Montano had access to sophisticated, expensive medical equipment stored at 1st MEDLOG warehouses. In his plea agreement, Montano admitted to participating in a conspiracy to steal expensive medical equipment from 1st MEDLOG, including anesthesia machines, autoclaves, ventilators, ultrasound machines, defibrillators and laryngoscopes among other items. Montano further admitted that he used his access to and knowledge of this medical equipment to help his co-conspirators steal the items from the warehouse. His co-conspirators then secretly removed the items from the base and sold them on the open market.

 

Acting U.S. Attorney Alana W. Robinson would like to remind the public that these charges were the result of ongoing efforts to root out corruption among our area defense contractors. She encouraged the public to contact the Naval Criminal Investigative Service (NCIS) at 1-800-264-6485 or www.ncis.navy.mil if they have information about the theft of equipment from Camp Pendleton or other Navy installations.

As part of his plea, Montano agreed to a restitution order of $250,000 to repay the U.S. Marine Corps for the value of the medical equipment that he stole. Montano will appear for sentencing on [DATE], 2017, at [TIME] before U.S. District Judge Cathy Ann Bencivengo.

 

DEFENDANTS                            Case Number: 16CR2053-CAB

 

John Montano                                Age: 44 Grants, New Mexico

 

SUMMARY OF CHARGES

 

Count 1: Conspiracy to Engage in Theft of Government Property, Title 18, United States Code, Section 371

Maximum penalties: 5 years in prison, $250,000 fine, term of supervised release of 3 years, restitution, and $100 special assessment.

 

INVESTIGATING AGENCY

 

Naval Criminal Investigative Service

 

For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403 and Brandon J. Kimura (619) 546-9614

 

NEWS RELEASE SUMMARY – March 13, 2017

 

SAN DIEGO – An alien smuggler whose crash while speeding away from Border Patrol last year resulted in the deaths of two of her customers was sentenced today in federal court to eight years in prison.

 

Lydiana Castro, of Calexico, California, pleaded guilty in July of 2016, admitting that on March 23, 2016, she picked up five undocumented aliens at a gas station in an area known as “Pilot’s Knob,” a mountainous area near Andrade, California. Approximately five minutes later, U.S. Border Patrol agents, who saw Castro picking up the undocumented aliens, activated their lights and sirens in an attempt to conduct a vehicle stop.

 

Castro admitted in her plea agreement that she saw Border Patrol and started to slow down as if to pull over but decided suddenly to take off. But she accelerated, driving off of the Andrade Road freeway entrance and onto an embankment. Her vehicle fishtailed and continued toward Interstate 8 while careening down the embankment. Castro drove onto the westbound lane of Interstate 8 and struck a passing semi-truck. The defendant’s vehicle became entangled with the semi-truck and was dragged along with the semi-truck until it stopped on the side of the Interstate.

 

U.S. Border Patrol and first responders arrived to the crash site to find one man hanging face down through the vehicle’s rear window and four other men seated in the second and third rows of the vehicle’s backseats in varying levels of traumatic medical conditions and non-responsive states. Two of the individuals in the vehicle were later pronounced dead at the scene. The remaining passengers were transported to a trauma hospital in Phoenix, Arizona. Of the three surviving passengers, one was deemed brain dead and was transported on life support back to Mexico at the family’s request; one permanently lost the use of both of his legs; and the third continues to live with the challenges of his injuries.
 

DEFENDANT                                                Criminal Case No. 16CR0731-BAS

 

Lydiana Castro, Calexico,                               CA Age: 31

 

SUMMARY OF CHARGES:

 

Count 1 – Transportation of Certain Aliens and Aiding and Abetting (8 U.S.C. § 1324(a)(1)(A)(ii), (v)(II), and (a)(1)(B)(iv)).

Maximum Penalties: maximum of life in prison; maximum of $250,000; a mandatory special assessment of $100.00; a term of supervised release of not more than 5 years.

 

INVESTIGATING AGENCIES

 

Homeland Security Investigations – U.S. Department of Homeland Security

U.S. Border Patrol – U.S. Department of Homeland Security

 

 

Assistant U. S. Attorney Orlando Gutierrez (619) 546-6958

 

NEWS RELEASE SUMMARY – March 9, 2017

 

SAN DIEGO – Adriana Morfin-Paniagua, a United States citizen living in Mexico, was arrested yesterday and charged with importing approximately 47,340 tablets of oxycodone in the largest seizure of what is believed to be oxycodone along the Southwest Border in at least five years. The street value of these tablets is approximately $1,420,000 dollars.

 

According to a criminal complaint filed in federal court, on March 8, 2017, Morfin-Paniagua entered the United States at the Otay Mesa Port of Entry as the driver and sole occupant of a 1999 Honda Accord. Following a secondary inspection of the Honda Accord, Custom and Border Protection Officials located thirty packages containing the oxycodone tablets inside a hidden, non-factory compartment.

 

These tablets have an illegal street value of $30 to $40 per tablet. At $30 each, the street value of 47,340 tablets is $1,420,200.00 dollars. When drugs are seized at the border, they are tested in the field, and these pills tested positive as oxycodone. The drugs are then forensically tested in a DEA lab to confirm those findings. Those tests can take about a week or sometimes more.

 

Morfin-Paniagua was subsequently charged with a violation of Title 21, United States Code, 952 and 960, importation of a controlled substance, and booked into the Metropolitan Correctional Center.

 

“This is one of the biggest seizures of oxycodone at a San Diego port of entry,” said Acting U.S. Attorney Alana Robinson. “Every pill we seize is one that we keep out of the mouths of abusers who are on a path to destruction.”

 

“HSI San Diego is committed to fully investigating criminal activity linked to the transnational movement of counterfeit pharmaceuticals,” said James Plitt, acting special agent in charge for HSI San Diego. “Our agents will continue to work diligently with our law enforcement and prosecutorial partners to counter this type of criminal activity.”

 

Morfin-Paniagua made her first appearance today before U.S. Magistrate Judge Jan Adler.

 

DEFENDANT Case Number: 17MJ0710

 

Adriana Morfin-Paniagua Age: 22 Tijuana, Mexico

 

SUMMARY OF CHARGES

 

Title 21, United States Code, 952 and 960, Importation of a Controlled Substance

Maximum Penalty: Twenty years in custody.

 

AGENCIES

 

Homeland Security Investigations

United States Customs and Border Protection

 

*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 Nicholas W. Pilchak (619) 546-9709

 

NEWS RELEASE SUMMARY – March 8, 2017

 

SAN DIEGO – Eleno Quinteros, Jr., the former Vice President of Operations for two airline mechanic staffing companies, was arraigned today on a federal indictment charging him with making false statements in support of legal permanent resident petitions for 20 of the companies’ mechanics.

 

The indictment alleges that Quinteros denied taking any payments from the mechanics, when in fact Quinteros had demanded and collected hundreds of thousands of dollars in fees from the employees in connection with their legal permanent resident applications. This practice is illegal.

 

According to the indictment, Quinteros regularly demanded and collected thousands of dollars in fees from employees, even though employers are prohibited by law from demanding payment for their fees—including attorneys’ fees—in connection with the charged applications. A portion of the fees collected by Quinteros were paid to attorneys assisting with the applications. The rest were pocketed by Quinteros and his wife, the indictment alleges.

 

Quinteros was vice president of two different staffing companies, and part owner of one of them. The companies’ staff performed heavy maintenance on aircraft at a variety of locations nationwide. Quinteros was responsible for recruiting Mexican airline mechanics to work in the United States for the companies, and for helping recruits to obtain work visas such as TN or H-2B visas.

 

According to the indictment, after Quinteros assisted recruits in obtaining work visas to come to the United States, he then arranged to help many of them pursue legal permanent residency—for at least several thousand dollars apiece. Quinteros directed many employees to pay the money to his wife’s bank account in order to conceal its source. The indictment alleges that Quinteros has directed dozens of recruits wishing to become permanent residents to deposit or transfer hundreds of thousands of dollars to him and his wife in order to secure his assistance with the process.

 

Quinteros is charged in the indictment with twenty counts of making a false claim in support of an immigration application, in violation of Title 18, United States Code, Section 1546(a), and twenty counts of making a false statement to a federal agency, in violation of Title 18, United States Code, Section 1001.

 

“Lying to get a green card is a serious offense, particularly when the lie is an employer’s false statement that he has not extracted prohibited fees from his employees,” said Acting U.S. Attorney Alana W. Robinson. “This Office is committed to combatting immigration fraud and preventing those in a position to exploit lawful immigrants from doing so.”

 

“As the lead agency in this four-and-a-half year investigation, the Diplomatic Security Service demonstrated its commitment to maintaining the integrity of U.S. travel documents. We will pursue those who fraudulently use temporary work visas, like the H2B, to manipulate and exploit foreign workers for personal gain,” said Michael Bishop, special agent in charge of the DSS Los Angeles Field Office. “Diplomatic Security Service’s strong relationship with our law enforcement partners as part of the Document Benefit Fraud Task Force continues to be essential in the pursuit of justice.”

 

“Our message is simple -- America’s legal immigration system is not for sale,” said Joseph Macias, special agent in charge for Homeland Security Investigations (HSI) Los Angeles. “In addition to posing significant security and safety vulnerabilities, visa fraud undermines the integrity of our legal immigration process and penalizes those who abide by the law. HSI will work closely with its law enforcement partners to ensure that those who would exploit our nation’s immigration system for their own enrichment are brought to justice.”

 

The charges and allegations contained in an indictment are merely accusations, and the defendant is considered innocent unless and until proven guilty.

 

DEFENDANT Case No. 17-cr-557-MMA

 

Eleno “Max” Quinteros, Jr. 45 years old Chula Vista, California

 

CHARGES

 

False Statement on an Immigration Document - 18 U.S.C. § 1546(a)

Maximum penalty: 10 years’ imprisonment and $250,000 fine

 

False Statement – 18 U.S.C. § 1001

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

 

AGENCIES

 

Department of State, Diplomatic Security Service

Internal Revenue Service, Criminal Investigations

 

 

Assistant U. S. Attorney Alexandra Foster (619) 546-6735

 

NEWS RELEASE SUMMARY – March 3, 2017

 

SAN DIEGO – A Florida man was arrested this morning on charges that he intentionally shut down a San Diego software company’s website and refused to restore it until the business paid him money.

 

Gerard “Jerry” M. McTear III was taken into custody in Ft. Myers, Florida this morning. In an indictment unsealed today, McTear was charged with threatening to damage and intentionally damaging computers. These computers hosted the San Diego software company’s website.

 

Specifically, on June 6, 2016, the defendant used the internet to shut down the software company’s website. He sought to extort cryptocurrency from the company in return for allowing the website to resume functioning. The company refused to pay the proffered bribe, and lost over $5,000 in business as they worked to get their website back on-line.

 

The defendant was arraigned today in the United States District Court for the Fort Myers Division, Middle District of Florida. The United States will seek his removal to the Southern District of California to face charges here.

 

“This kind of sabotage can be devastating for companies,” said Acting U.S. Attorney Alana W. Robinson. “We are prepared to go after every type of criminal, even if we have to chase him or her through cyberspace to safeguard businesses.”

 

“The FBI has the expertise and resources to investigate denial of service and other evolving cyber crimes,” said Eric S. Birnbaum, Special Agent in charge of the FBI’s San Diego Field Office. “This case is an example of the trend we continue to see involving traditional crimes migrating to cyberspace. The FBI will continue to educate and work with the business community to combat this growing crime trend.”

 

These type of cyber attacks have recently become widespread and cyber agents with the FBI are investigating similar cases. The FBI encourages businesses that have been victimized to ignore ransom demands in order to avoid appearing vulnerable and to avoid being targeted again for a higher amount. Anyone who feels they have been a victim of a cyber crime involving extortion or denial of service attacks is encouraged to contact their local FBI or to file a complaint through the Internet Crime Complaint Center at www.ic3.gov.

 

DEFENDANT Case Number: 17-CR-0501-JAH

 

Gerard “Jerry” M. McTear, III Age:29 Ft. Myers, FL

 

SUMMARY OF CHARGES

 

Count 1 – Fraud in Connection with Computers, in violation of 18 U.S.C. §§ 1030(a)(5)(A) and 1030(c)(4)(B)(i)

Maximum Penalty: 10 years and $250,000 fine

 

Count 2 – Threat to Damage a Computer, in violation of 18 U.S.C. §§ 1030(a)(7)(A) and 1030(c)(3)(A)

Maximum Penalty: 5 years and $250,000 fine

 

Count 3 - Threat to Injure Property Through Interstate Communications, in violation of 18 U.S.C. § 875(d)

Maximum Penalty: 2 years and $250,000 fine

 

AGENCY

 

Federal Bureau of Investigation: San Diego Division and Tampa Division - Fort Myers Resident Agency; Lee County Sheriff's Office; Fort Myers Police Department; and Cape Coral Police Department

 

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

OFFICE OF THE UNITED STATES ATTORNEY

SOUTHERN DISTRICT OF CALIFORNIA

San Diego, California

 

 

Acting United States Attorney

Alana W. Robinson

 

For Further Information, Contact:

Assistant U. S. Attorneys Matthew Sutton (619) 546-8941, Kyle Martin 546-8384, Carol Lee 546-7584 and Michael Heyman 546-9615

For Immediate Release

 

NEWS RELEASE SUMMARY – March 1, 2017

SAN DIEGO – Ten federal indictments unsealed today charge 55 defendants with crimes ranging from money laundering to heroin, methamphetamine and firearms trafficking in what officials have described as one of the most significant crackdowns in recent memory.

 

The defendants, including prominent drug dealers and documented gang members, were responsible for supplying a substantial portion of the heroin and methamphetamine distributed in North County.

 

Early this morning, more than 150 members of the North County Regional Gang Task Force plus other law enforcement agencies made numerous arrests and during the course of the investigation searched more than 20 locations in Oceanside, Vista, elsewhere in North County and in Kingman, Arizona.

As of today at noon, 46 of the fifty-five defendants are either in federal or state custody. Fourteen were arrested this morning; the rest were arrested earlier in the week or were already in custody. Authorities are continuing to search for seven defendants; two are in Mexico. Many of the defendants are scheduled to be arraigned before U.S. Magistrate Judge Karen S. Crawford at 2:00 p.m. today and tomorrow.

 

The yearlong investigation was led by the North County Regional Gang Task Force. It involved months of federal wiretaps, dozens of undercover drug and gun buys and extensive surveillance. Many of the defendants are documented members or associates of violent North County street gangs, including the Vista Home Boys, Varrio Fallbrook Locos, Varrio Carlsbad Locos, Encinitas Tortilla Flats, Varrio San Marcos and Escondido Viejo Diablos.

 

According to charging documents, the defendants were involved in a variety of crimes, including drug distribution, firearms trafficking, robberies, vehicle thefts, burglaries and assaults.

 

25 firearms including handguns, revolvers and assault rifles.

In total, authorities seized heroin, methamphetamine and 25 firearms, including handguns, revolvers and assault rifles. These drugs and guns were being stored and sold in our North County neighborhoods, including across the street from Vista High School.

 

The charging documents describe a trafficking organization allegedly led by a Mexico-based woman who used dozens of street gang members to distribute heroin. Defendant Yadira “Pini” Villalvazo attended Vista High School and was an associate of Vista Home Boys street gang before she was deported following a federal drug trafficking conviction in 2002. According to charging documents, Villalvazo is now running her own Sinaloa Cartel-linked organization from Tijuana. Her specialty is still heroin.

 

According to court records, this drug trafficking organization supplied at least 25 percent of the heroin sold and consumed in North County and grossed tens of thousands of dollars in proceeds that were sent back to Mexico. The Villalvazo network distributed heroin in North County and also supplied pound quantities of heroin to a prolific distribution ring in Kingman, Arizona.

 

During this investigation, the gang task force also targeted major methamphetamine distribution cells connected to North County street gangs, including rings allegedly led by Sabrina Yzaguirre, Ivan Bazan, aka “Dreamer,” and Jorge Enrique Jara Cervantes, aka “Scorpion.” In addition, the ring allegedly led by Jara shipped pound quantities of methamphetamine for distribution in Alabama and Tennessee.

 

Heroin deaths in San Diego County more than doubled in the last decade, from 40 in 2005 to 90 in 2015. And this is despite the use of naloxone, which first responders have used to save countless lives. In 2015 alone, paramedics used naloxone 1,340 times. Heroin treatment admissions have risen every year in San Diego County since 2011.

fugitives_no_worries.pdf  
Meth-related deaths increased more than 80% between 2011 and 2015. And about half of adults arrested in 2015 tested positive for meth at the time of their arrest.

 

“Today we’ve taken out one of North County’s largest heroin suppliers,” said Acting U.S. Attorney Alana Robinson. “This crackdown is our most significant response to date to the heroin epidemic ravaging our communities. We anticipate seeing a huge impact now that these defendants are removed from our community, particularly in the North County cities of Oceanside, Vista, San Marcos and other areas plagued by gangs.”

 

“The Sheriff's Department is committed to working with our law enforcement partners to keep the influence of drugs and gangs away from our children and out of our community,” said San Diego County Sheriff Bill Gore.

 

FBI Special Agent in Charge Eric S. Birnbaum stated, “This investigation demonstrates the complex, international and multi-faceted nature of the gang threat in North County where heroin, methamphetamine and firearms related crimes threaten our communities. The FBI will continue to work tirelessly alongside our law enforcement partners at the North County Regional Gang Task Force to restore these neighborhoods to the good citizens who live in them.”

 

Acting U.S. Attorney Robinson praised the task force for the coordinated team effort in the culmination of this investigation. Agents and officers from the Federal Bureau of Investigation, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons, Homeland Security Investigations. U.S. Marshals Service, California Highway Patrol, and the Escondido and Carlsbad Police Departments collaborated on this investigation. Attorneys from the Department of Justice, Office of Enforcement Operations, Electronic Surveillance Unit, also provided critical assistance to the investigation.

 

This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

 

The United States is represented in court by Assistant U.S. Attorneys Matthew J. Sutton, Kyle B. Martin, Carol Lee, and Michael J. Heyman.

 

Operation No Worries Defendant Information

DEFENDANTS Criminal Case No: 17CR0336-LAB

Name

Age

Hometown

Yadira Esmeralda Villalvazo,

aka “Pini”

38

Tijuana, MX

Andrea Ball

37

Vista, CA

Cristina Gomez

30

Vista, CA

Joel Villalvazo

25

Vista, CA

Joshua O’Brien

35

Fallbrook, CA

David Dominguez,

aka “Bandit”

36

Vista, CA

Tina Dominguez

35

Vista, CA

Fidel Jimenez

36

Oceanside, CA

Naomi Jimenez,

aka “Huera”

42

Vista, CA

Salvador Mendez

46

Fallbrook, CA

David Siladji

37

Vista, CA

Angel Serrato

55

Vista, CA

Alexander Mendoza

29

Carlsbad, CA

Rene Ramos

45

Kingman, AZ

Maria Sanchez

41

Kingman, AZ

Edivan Patino

27

Vista, CA

Richard Seffens

39

Poway, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Heroin, in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Conspiracy to Import Heroin, in violation of Title 21, U.S.C., Secs. 952, 960, and 963;

Conspiracy to Launder Monetary Instruments, in violation of Title 18, U.S.C., Secs. 1956(a)(2)(B)(i) and (h);

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Possession of Heroin with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Maximum Penalties: For the drug charges, life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For the money laundering charges, 20 years in prison and a fine of $500,000 or twice the value of the monetary instrument or funds involved.

 

DEFENDANTS Criminal Case No: 17CR0337-LAB

Name

Age

Hometown

Andrea Ball

37

Vista, CA

Travis Hensley

36

Fallbrook, CA

Aaron McCune

36

San Marcos, CA

Vanessa Rojas

44

Vista, CA

Edward Araiza

42

Oceanside, CA

 

 

SUMMARY OF CHARGES

Conspiracy to Distribute Heroin in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

 

 

 

DEFENDANTS Criminal Case No: 17CR0338-LAB

Name

Age

Hometown

Javier Castrellon,

Aka “Javi”

53

San Marcos, CA

Manuel Espinoza,

Aka “Manny

48

Encinitas, CA

James Caruthers

54

Oceanside, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a $10 million fine.

 

DEFENDANT Criminal Case No: 17CR0339-LAB

Name

Age

Hometown

Pedro Bret Cueva,

Aka “Largo

 

26

San Marcos, CA

 

SUMMARY OF CHARGES

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

 

DEFENDANT Criminal Case No: 17CR0340-LAB

Name

Age

Hometown

Julio Cesar Valverde,

Aka “Night Owl”

 

28

San Marcos, CA

 

SUMMARY OF CHARGES

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

 

 

DEFENDANT Criminal Case No: 17CR0482-JAH

Name

Age

Hometown

Noe Rene Lugo

Aka “No-No,” “Wolfie”

 

33

Vista, CA

 

SUMMARY OF CHARGES

Dealing in Firearms Without a License in violation of Title 18, U.S.C., Sec. 922(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

 

DEFENDANTS Criminal Case No: 17CR0483-LAB

Name

Age

Hometown

Jose Alejandre-Ruvalcaba,

Aka “Scrappy”

42

Tijuana, MX

Kristina Lee Rozzo

43

Vista, CA

 

SUMMARY OF CHARGES

Conspiracy to Import Methamphetamine in violation of Title 21, U.S.C., Secs. 952, 960 and 963.

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

 

DEFENDANTS Criminal Case No: 17CR0484-LAB

Name

Age

Hometown

Ivan Bazan

Aka “Dreamer”

32

Vista, CA

Brhandon Puga

20

Chula Vista, CA

Matthew Ortiz

35

Chula Vista, CA

Cheytan Siva,

Aka “Hawk”

36

Vista, CA

Luis Gonzalez,

Aka “Knockout”

32

Vista, CA

James Mathes

32

Oceanside, CA

Eva Corona

33

Carlsbad, CA

Randy Moraleja

35

Escondido, CA

Brett Mooney

37

Oceanside, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million dollar. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

 

DEFENDANTS Criminal Case No: 17CR0485-LAB

Name

Age

Hometown

Jorge Enrique Jara Cervantes

Aka “Scorpion”

28

Vista, CA

Jaime Orozco

30

Vista, CA

Gabriele Solis

26

Vista, CA

Alex Camou

27

Vista, CA

Morgan Peterson

25

Carlsbad, CA

Keith Collins

Aka “Lurch

32

Oceanside, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

 

DEFENDANTS Criminal Case No: 17CR0487-LAB

Name

Age

Hometown

Sabrina Yzaguirre

28

Vista, CA

Roberto Recendez,

Aka “Grandpa”

54

Vista, CA

Eduardo Oretga,

Aka “Lalo”

25

Oceanside, CA

Antonio Becerra,

Aka “Thief”

30

Vista, CA

Kimberly Arenas

41

Escondido, CA

Manuel Guerena

37

Escondido, CA

Marco Vasquez

Aka “No-No”

24

Vista, CA

 

 

 

 

 

 

Johnny Molina-Bailon

34

Vista, CA

Santiago Rios,

Aka “Jimmy”

35

Vista, CA

Alex Camou

27

Vista, CA

 

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For firearms charges: 10 years in prison, and a 250,000 dollar fine.

 

DEFENDANT Criminal Case No: 17MJ0467-NLS

Name

Age

Hometown

Linda Cowan

 

46

Oceanside, CA

 

SUMMARY OF CHARGES

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For firearms charges: 10 years in prison, and a 250,000 dollar fine.

 

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

 

AGENCIES

 

North County Regional Gang Task Force, which includes the Federal Bureau of Investigation, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons, Homeland Security Investigations, U.S. Marshals Service, California Highway Patrol, and the Escondido and Carlsbad Police Departments, San Diego County District Attorney’s Office

 

Ten federal indictments unsealed today charge 55 defendants with crimes ranging from money laundering to heroin, methamphetamine and firearms trafficking in what officials have described as one of the most significant crackdowns in recent memory.

The defendants, including prominent drug dealers and documented gang members, were responsible for supplying a substantial portion of the heroin and methamphetamine distributed in North County, California.

Early this morning, more than 150 members of the North County Regional Gang Task Force plus other law enforcement agencies made numerous arrests and during the course of the investigation searched more than 20 locations in Oceanside, Vista and elsewhere in North County in California as well as Kingman, Arizona.

As of today at noon, 46 of the 55 defendants are either in federal or state custody. Fourteen were arrested this morning; the rest were arrested earlier in the week or were already in custody. Authorities are continuing to search for seven defendants; two are in Mexico. Many of the defendants are scheduled to be arraigned before U.S. Magistrate Judge Karen S. Crawford at 2:00 p.m. today and tomorrow.

The yearlong investigation was led by the North County Regional Gang Task Force. It involved months of federal wiretaps, dozens of undercover drug and gun buys and extensive surveillance. Many of the defendants are documented members or associates of violent North County street gangs, including the Vista Home Boys, Varrio Fallbrook Locos, Varrio Carlsbad Locos, Encinitas Tortilla Flats, Varrio San Marcos and Escondido Viejo Diablos.

According to charging documents, the defendants were involved in a variety of crimes, including drug distribution, firearms trafficking, robberies, vehicle thefts, burglaries and assaults.

In total, authorities seized heroin, methamphetamine and 25 firearms, including handguns, revolvers and assault rifles. These drugs and guns were being stored and sold in our North County neighborhoods, including across the street from Vista High School.

The charging documents describe a trafficking organization allegedly led by a Mexico-based woman who used dozens of street gang members to distribute heroin. Defendant Yadira “Pini” Villalvazo attended Vista High School and was an associate of Vista Home Boys street gang before she was deported following a federal drug trafficking conviction in 2002. According to charging documents, Villalvazo is now running her own Sinaloa Cartel-linked organization from Tijuana. Her specialty is still heroin.

According to court records, this drug trafficking organization supplied at least 25 percent of the heroin sold and consumed in North County and grossed tens of thousands of dollars in proceeds that were sent back to Mexico. The Villalvazo network distributed heroin in North County and also supplied pound quantities of heroin to a prolific distribution ring in Kingman.

During this investigation, the gang task force also targeted major methamphetamine distribution cells connected to North County street gangs, including rings allegedly led by Sabrina Yzaguirre, Ivan Bazan, aka “Dreamer” and Jorge Enrique Jara Cervantes, aka “Scorpion.” In addition, the ring allegedly led by Jara shipped pound quantities of methamphetamine for distribution in Alabama and Tennessee.

Heroin deaths in San Diego County more than doubled in the last decade, from 40 in 2005 to 90 in 2015. And this is despite the use of naloxone, which first responders have used to save countless lives. In 2015 alone, paramedics used naloxone 1,340 times. Heroin treatment admissions have risen every year in San Diego County since 2011.

Meth-related deaths increased more than 80% between 2011 and 2015. And about half of adults arrested in 2015 tested positive for meth at the time of their arrest.

“Today we’ve taken out one of North County’s largest heroin suppliers,” said Acting U.S. Attorney Alana Robinson. “This crackdown is our most significant response to date to the heroin epidemic ravaging our communities. We anticipate seeing a huge impact now that these defendants are removed from our community, particularly in the North County cities of Oceanside, Vista, San Marcos and other areas plagued by gangs.”

“The Sheriff's Department is committed to working with our law enforcement partners to keep the influence of drugs and gangs away from our children and out of our community,” said County Sheriff Bill Gore of San Diego, California.

Special Agent in Charge Eric S. Birnbaum of the FBI stated, “This investigation demonstrates the complex, international and multi-faceted nature of the gang threat in North County where heroin, methamphetamine and firearms related crimes threaten our communities. The FBI will continue to work tirelessly alongside our law enforcement partners at the North County Regional Gang Task Force to restore these neighborhoods to the good citizens who live in them.”

Acting U.S. Attorney Robinson praised the task force for the coordinated team effort in the culmination of this investigation. Agents and officers from the FBI, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons and Homeland Security Investigations. U.S. Marshals Service, California Highway Patrol and the Escondido and Carlsbad Police Departments collaborated on this investigation. Attorneys from the Department of Justice, Office of Enforcement Operations, Electronic Surveillance Unit, also provided critical assistance to the investigation.

This case is also the result of the ongoing efforts by the Organized Crime Drug Enforcement Task Force (OCDETF) a partnership that brings together the combined expertise and unique abilities of federal, state and local law enforcement agencies. The principal mission of the OCDETF program is to identify, disrupt, dismantle and prosecute high level members of drug trafficking, weapons trafficking and money laundering organizations and enterprises.

The U.S. is represented in court by Assistant U.S. Attorneys Matthew J. Sutton, Kyle B. Martin, Carol Lee and Michael J. Heyman.

Operation No Worries Defendant Information

DEFENDANTS Criminal Case No: 17CR0336-LAB

Name

Age

Hometown

Yadira Esmeralda Villalvazo,

aka “Pini”

38

Tijuana, MX

Andrea Ball

37

Vista, CA

Cristina Gomez

30

Vista, CA

Joel Villalvazo

25

Vista, CA

Joshua O’Brien

35

Fallbrook, CA

David Dominguez,

aka “Bandit”

36

Vista, CA

Tina Dominguez

35

Vista, CA

Fidel Jimenez

36

Oceanside, CA

Naomi Jimenez,

aka “Huera”

42

Vista, CA

Salvador Mendez

46

Fallbrook, CA

David Siladji

37

Vista, CA

Angel Serrato

55

Vista, CA

Alexander Mendoza

29

Carlsbad, CA

Rene Ramos

45

Kingman, AZ

Maria Sanchez

41

Kingman, AZ

Edivan Patino

27

Vista, CA

Richard Seffens

39

Poway, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Heroin, in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Conspiracy to Import Heroin, in violation of Title 21, U.S.C., Secs. 952, 960, and 963;

Conspiracy to Launder Monetary Instruments, in violation of Title 18, U.S.C., Secs. 1956(a)(2)(B)(i) and (h);

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Possession of Heroin with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Maximum Penalties: For the drug charges, life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For the money laundering charges, 20 years in prison and a fine of $500,000 or twice the value of the monetary instrument or funds involved.

DEFENDANTS Criminal Case No: 17CR0337-LAB

Name

Age

Hometown

Andrea Ball

37

Vista, CA

Travis Hensley

36

Fallbrook, CA

Aaron McCune

36

San Marcos, CA

Vanessa Rojas

44

Vista, CA

Edward Araiza

42

Oceanside, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Heroin in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

DEFENDANTS Criminal Case No: 17CR0338-LAB

Name

Age

Hometown

Javier Castrellon,

Aka “Javi”

53

San Marcos, CA

Manuel Espinoza,

Aka “Manny

48

Encinitas, CA

James Caruthers

54

Oceanside, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a $10 million fine.

DEFENDANT Criminal Case No: 17CR0339-LAB

Name

Age

Hometown

Pedro Bret Cueva,

Aka “Largo

 

26

San Marcos, CA

SUMMARY OF CHARGES

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

DEFENDANT Criminal Case No: 17CR0340-LAB

Name

Age

Hometown

Julio Cesar Valverde,

Aka “Night Owl”

 

28

San Marcos, CA

SUMMARY OF CHARGES

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1)

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

DEFENDANT Criminal Case No: 17CR0482-JAH

Name

Age

Hometown

Noe Rene Lugo

Aka “No-No,” “Wolfie”

 

33

Vista, CA

SUMMARY OF CHARGES

Dealing in Firearms Without a License in violation of Title 18, U.S.C., Sec. 922(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

DEFENDANTS Criminal Case No: 17CR0483-LAB

Name

Age

Hometown

Jose Alejandre-Ruvalcaba,

Aka “Scrappy”

42

Tijuana, MX

Kristina Lee Rozzo

43

Vista, CA

SUMMARY OF CHARGES

Conspiracy to Import Methamphetamine in violation of Title 21, U.S.C., Secs. 952, 960 and 963.

Maximum Penalties: Life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine.

DEFENDANTS Criminal Case No: 17CR0484-LAB

Name

Age

Hometown

Ivan Bazan

Aka “Dreamer”

32

Vista, CA

Brhandon Puga

20

Chula Vista, CA

Matthew Ortiz

35

Chula Vista, CA

Cheytan Siva,

Aka “Hawk”

36

Vista, CA

Luis Gonzalez,

Aka “Knockout”

32

Vista, CA

James Mathes

32

Oceanside, CA

Eva Corona

33

Carlsbad, CA

Randy Moraleja

35

Escondido, CA

Brett Mooney

37

Oceanside, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million dollar. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

DEFENDANTS Criminal Case No: 17CR0485-LAB

Name

Age

Hometown

Jorge Enrique Jara Cervantes

Aka “Scorpion”

28

Vista, CA

Jaime Orozco

30

Vista, CA

Gabriele Solis

26

Vista, CA

Alex Camou

27

Vista, CA

Morgan Peterson

25

Carlsbad, CA

Keith Collins

Aka “Lurch

32

Oceanside, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a 10 million dollar fine. For firearms charges: 10 years’ in prison, and a 250,000 dollar fine.

DEFENDANTS Criminal Case No: 17CR0487-LAB

Name

Age

Hometown

Sabrina Yzaguirre

28

Vista, CA

Roberto Recendez,

Aka “Grandpa”

54

Vista, CA

Eduardo Oretga,

Aka “Lalo”

25

Oceanside, CA

Antonio Becerra,

Aka “Thief”

30

Vista, CA

Kimberly Arenas

41

Escondido, CA

Manuel Guerena

37

Escondido, CA

Marco Vasquez

Aka “No-No”

24

Vista, CA

Johnny Molina-Bailon

34

Vista, CA

Santiago Rios,

Aka “Jimmy”

35

Vista, CA

Alex Camou

27

Vista, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine in violation of Title 21, U.S.C., Secs. 841(a)(1) and 846;

Distribution of Methamphetamine, in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2).

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For firearms charges: 10 years in prison, and a 250,000 dollar fine.

DEFENDANT Criminal Case No: 17MJ0467-NLS

Name

Age

Hometown

Linda Cowan

 

46

Oceanside, CA

SUMMARY OF CHARGES

Possession of Methamphetamine with Intent to Distribute in violation of Title 21, U.S.C., Sec. 841(a)(1);

Felon in Possession of a Firearm in in violation of Title 18, U.S.C., Secs. 922(g)(1) and 924(a)(2)

Maximum Penalties: For drug charges: life in prison with a mandatory minimum sentence of 10 years and a $10 million fine. For firearms charges: 10 years in prison, and a 250,000 dollar fine.

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

AGENCIES

North County Regional Gang Task Force, which includes the FBI, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons, Homeland Security Investigations, U.S. Marshals Service, California Highway Patrol, and the Escondido and Carlsbad Police Departments, San Diego County District Attorney’s Office.

Assistant U.S. Attorney Rebecca S. Kanter (619-546-7304)

 

NEWS RELEASE SUMMARY – February 28, 2017

 

Jeffrey Harrington and Michael Mayer, the owners of several defense contracting firms, pleaded guilty before U.S. Magistrate Judge Karen Crawford this morning to conspiring to commit wire fraud and file false claims, and to making false statements on their federal income tax returns.

The defendants admitted obtaining money from the United States by making false representations and false claims to the Department of Defense (“DoD”) for payment on items defendants knew had not been sold to the Navy, but which had been substituted with other, unauthorized products. Three of the companies owned by Harrington and Mayer, including San Diego-based Veteran Logistics, Inc. (“VLI”), as well as two employees, also pleaded guilty to conspiracy for their role in the offense.

The three defense contractors – VLI, Industrial Xchange, Inc., and Boston Laser Technology, Inc. – regularly sold supplies to the DoD, the Department of Navy, the General Services Administration and other federal departments and agencies. Each company had multiple contracts with DoD’s Defense Logistics Agency (“DLA”) to sell products to the federal government through “EMALL,” a web-based electronic commerce site that allows authorized users to search, compare and purchase commonly used products. Each contract allowed the company to sell up to $5 million in pre-approved goods at set, maximum prices. As detailed in court filings, however, the defendants fraudulently manipulated the EMALL system to substitute unapproved, overpriced items for the materials purportedly sold to the government.

In one example, the defendants agreed on EMALL to supply Maritime Expeditionary Security Group Two at Norfolk Naval Shipyard with over 10,000 “Post-It” writing paper pads, but then replaced these approved items with 50 electronic transceivers they were not authorized to sell. By fraudulently substituting these products, the defendants were able to circumvent procurement controls and charge the military a 134% mark-up on the transceivers. The defendants repeatedly employed this fraudulent technique dozens of times, on a host of products, across a wide array of components in the military.

The scheme also allowed the defendants to conceal the sale of consumer electronics and other items that could be used to corrupt military officials. For example, in one contract VLI agreed to supply the USS Ronald Reagan aircraft carrier with industrial, motorized plumber snakes. VLI then fraudulently substituted that order with 100 29” Toshiba TVs, 60 32” Toshiba TVs and 160 TV tilt mounts. VLI purchased these items for only $39,558, but billed the government $66,807.

The plea agreements also detailed a series of transactions between October 2013 and April 2014, wherein IXI and another VLI-affiliated company, At Your Command (“AYC”), created approximately 20 EMALL carts for Navy Explosive Ordnance Disposal Group #2 (EODG-2) in Norfolk, Virginia, containing various items, including bags, canvas organizer bags, and pouches, for which the defendants billed DLA and received $1,303,024. In reality, the defendants actually provided EODG-2 with parachutes, altimeters and other sky diving gear purchased for approximately $924,252, realizing a profit of $378,772 by substituting improperly procured parachuting equipment.

The defendants were hugely successful in their fraud, and received approximately $45 million for EMALL sales related to over 12,000 transactions between approximately March 1, 2008 and January 31, 2015. On a small sample of 60 of those transactions between August 2009 and October 2013, totaling approximately $2,868,590 in sales, the loss to the Navy was approximately $1,417,395, indicating a fraud loss of approximately 50%.

Acting United States Attorney Robinson observed: “Not only did the defendants inflict financial harm on the taxpayers by charging obscene mark-ups on these items, but they potentially compromised combat readiness by providing unauthorized, non-conforming parts. What’s more, their scheme posed a significant danger of corrupting Navy personnel and others by essentially creating a ‘slush fund’ to purchase non-military items, such as televisions, computers, cameras, iPhones and other electronics. This Office will continue to use all the tools available, including the District’s Procurement Fraud Working Group, to prevent and deter those who pose the threat of fraud and corruption to our procurement process.”

“Corrupt contracting practices damage the public trust and ultimately undermine the efforts of the Department of Defense to support our men and women in uniform,” said Chris Hendrickson, Special Agent in Charge of the Defense Criminal Investigative Service Western Field Office. “Along with our law enforcement partners, we make the investigation of such offenses a top priority. Cases such as these are not motivated by need or other difficult personal circumstances; they are the product of simple greed.”

“The successful prosecution of this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, our Federal Law Enforcement partners and the U.S. Attorney’s Office,” said Gunnar Newquist, Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should be a warning to those who would attempt to take advantage of the US Navy, for personal gain.” As SAC Newquist observed, “We are unified in our efforts to catch criminals who not only defraud the US Navy, but specifically are stealing money from the American taxpayers at the direct loss to our warfighters.”

FBI Special Agent in Charge Eric S. Birnbaum stated, “Today’s convictions are a result of federal partners teaming together to stop the loss of millions of government dollars as well as the greed and deceit employed in this case.” SAC Birnbaum continued, “The FBI will continue to work to root out fraud against our government and uncover the schemes to steal federal taxpayer dollars.” The FBI encourages the public to report allegations of public corruption to the FBI public corruption hotline at telephone number (877) NO-BRIBE (662-7423).

In addition to the fraud charges, Harrington and Mayer also pleaded guilty to false statements on their tax returns for the tax years 2010 and 2014. Harrington and Mayer both used VLI to pay personal expenses in excess of $200,000 and $100,000, respectively, thereby underreporting their 2010 income on their personal tax returns. Both defendants, in contravention of the advice of their tax professionals, continued this behavior of using VLI to pay for personal expenses and not declaring the additional money as income, causing their 2014 income tax returns to under-report their income by approximately $436,017 and $674,704. By under-reporting their income, Harrington underpaid taxes by $141,113 and Mayer underpaid taxes by $299,511 for 2010 and 2014.

“IRS Criminal Investigation remains committed to investigating individuals who treat corporate funds as their personal piggy bank,” said Acting Special Agent in Charge Anthony J. Orlando, IRS Criminal Investigation. “As admitted in court today, Mr. Harrington and Mr. Mayer used their positions within VLI to defraud not just their own company, but the honest, hardworking Americans who pay their tax obligations.”

All defendants also agreed to forfeiture of the proceeds of their offense, and have collectively agreed to forfeit over $1.6 million in illegal proceeds. All defendants were ordered to return to court on May 19, 2017, at 8:30am, for a hearing before District Judge Gonzalo Curiel.

CORPORATE DEFENDANTS

 

Veteran Logistics, Inc.

Industrial Xchange, Inc.

Boston Laser Technology, Inc.

 

INDIVIDUAL DEFENDANTS Criminal Case No. 17CR0488-GPC

 

Jeffrey Harrington Age: 55 San Diego, CA

Michael Mayer Age: 63 San Diego, CA

Kimberlee Hewitt Age: 45 Ridgewood, New York

Natalee Hewitt Age: 49 Virginia Beach, Virginia

 

 

SUMMARY OF CHARGES

 

Count 1 (All): Conspiracy to commit wire fraud and file false claims (18 U.S.C. § 371).

Maximum penalties: 5 years’ imprisonment; 3 years’ supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $10.

 

Count 2 (Harrington): False Statement on Tax Return (26 U.S.C. § 7206(1)).

Maximum penalties: 3 years’ imprisonment; 1 year supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100.

 

Count 3 (Mayer): False Statement on Tax Return (26 U.S.C. § 7206(1)).

Maximum penalties: 3 years’ imprisonment; 1 year supervised release; a fine of $250,000 or twice the gross gain or gross loss resulting from the offense, whichever is greatest; and a mandatory special assessment of $100.

 

AGENCIES

 

Defense Criminal Investigative Service

Defense Logistics Agency, Office of Inspector General

Federal Bureau of Investigation

General Services Administration, Office of Inspector General

Internal Revenue Service, Criminal Investigation

Naval Criminal Investigative Service

 

 

Assistant U.S. Attorneys Nicholas W. Pilchak (619) 546-9709 and C. Seth Askins (619) 546-6692

 

NEWS RELEASE SUMMARY – February 27, 2017

 

SAN DIEGO – A former Lieutenant Colonel in the U.S. Marine Corps Reserves was sentenced to three months in custody followed by six months’ community confinement in a halfway house and ordered to pay forfeiture and restitution today for participating in a four-year wire fraud conspiracy to defraud the Marine Corps out of over $205,000.

 

Lieutenant Colonel Michael K. Strom pretended to rent the home of his fellow officer, former reservist Major Jason H. Wild, in order to claim reimbursements from the Marines when called to active duty at Camp Pendleton. Wild, in turn, pretended to rent Strom’s home. Both men submitted phony lease agreements and rental receipts to support their false claims. In truth, each man owned his own home next to Camp Pendleton and never paid any of the claimed rent.

 

During the sentencing hearing, U.S. District Judge Anthony J. Battaglia told the defendant: “Those that are so key to our country’s safety, our way of life, when they cross the line, it’s serious.” Strom pleaded guilty in October 2016 to conspiring to commit wire fraud, and filing false claims with the United States.

 

Co-defendant Wild, who was convicted by a jury at trial last November, was sentenced on February 21, 2017, to nine months in custody followed by six months’ community confinement in a halfway house. Judge Battaglia also imposed the same $205,628 forfeiture judgment and restitution order against Wild.

 

Wild owned his own home in Oceanside, California throughout the time he claimed rental benefits from the Marine Corps. Evidence at Wild’s trial, including witness testimony, credit card statements, tax returns, and bank records, established that Wild lived in his Oceanside home throughout the period he falsely claimed to pay $38,442 to rent Strom’s home in Laguna Niguel, California.

 

Five months after Wild’s “rental” concluded, Strom was activated at Camp Pendleton and falsely claimed for two years to rent Wild’s Oceanside home from Wild’s friend. Although Strom told the Marine Corps he paid $98,736 to rent Wild’s home, the evidence at trial demonstrated that Strom lived in his own home in Laguna Niguel throughout the sham “lease” period.

 

Financial records, including a bank analysis performed by the Naval Audit Service, established that neither defendant had paid a dollar of the claimed rent.

 

“Members of the armed forces who defraud the military out of its funds don’t just steal from taxpayers; they rob their comrades in arms of the resources they need to defend each other and our country,” said Acting U.S. Attorney Alana W. Robinson. “This Office will continue to investigate and prosecute those who put their own financial gain before the public trust they are sworn to uphold.”

 

Robinson commended the close coordination between the investigating agencies—the Department of Defense, Defense Criminal Investigative Service; the Naval Criminal Investigative Service; and the Department of Homeland Security, Office of the Inspector General—during the investigation of this case.

 

“The successful investigation and prosecution of these two former U.S. Marine Corp Reserve Officers, who prioritized greed over duty, demonstrates a commitment to hold accountable those who unlawfully divert precious resources needed to protect our Marines,” said Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service.

 

“The successful prosecution in this case was the direct result of collaborative teamwork between the Naval Criminal Investigative Service, its law enforcement partners, and the U.S. Attorney’s Office,” said Gunnar Newquist, Special Agent in Charge of the NCIS Southwest Field Office. “Convictions like this should serve as a deterrent to those who would put personal gain above their responsibility to American taxpayers and warfighters.”

 

“I am pleased with this successful investigation and prosecution,” said Amanda Thandi, Special Agent in Charge for the U.S. Department of Homeland Security, Office of the Inspector General. “We all suffer when federal programs are undermined by fraud. DHS OIG agents and our law enforcement partners will work aggressively to protect these vital programs and make sure that those who steal from them ultimately pay for their crimes.”

 

DEFENDANT Case No. 15-cr-2771-AJB

 

Jason H. Wild 45 years old Oceanside, California

Michael K. Strom 48 years old Laguna Niguel, California

 

CHARGES

 

Wire Fraud Conspiracy - 18 U.S.C. § 1349

Maximum penalty: 20 years’ imprisonment, $250,000 fine, three years’ supervised release, forfeiture and restitution.

 

False Claim – 18 U.S.C. § 287

Maximum penalty: 5 years’ imprisonment and $250,000 fine, three years’ supervised release, forfeiture and restitution.

 

AGENCIES

 

Department of Defense, Defense Criminal Investigative Service

Naval Criminal Investigative Service

Department of Homeland Security, Office of the Inspector General

 

 

Assistant U. S. Attorney Andrew Young (619) 546-7981

Assistant U.S. Attorney Todd Robinson (619)-546-7994

 

NEWS RELEASE SUMMARY – February 28, 2017

 

SAN DIEGO – Eleven people, including a former Corrections Officer at Richard J. Donovan (“RJD”) Correctional Facility, are charged in federal court as members of a network that smuggled methamphetamine, heroin, marijuana and cellular telephones into the prison.

 

The key defendant, Anibal Navarro, the former Corrections Officer at RJD, was arrested by FBI Agents and officials from the California Department of Corrections and Rehabilitations-Office of Internal Affairs on June 26, 2016 as he attempted to smuggle heroin, methamphetamine and cellular telephones into the prison.

 

Ten additional individuals, including inmates and their associates on the outside, were indicted by a federal grand jury on charges that they conspired with Navarro to smuggle drugs and cellular telephones into the prison. Navarro was released on bond.

 

Four defendants were arrested today in Los Angeles; six are already in custody in California state prisons.

 

According to the indictment, Martin Gomez, while an inmate at RJD in 2014, recruited Navarro to smuggle contraband into the prison. After Gomez was moved to another California state prison, he continued to coordinate and supervise the operation by conducting conference calls with Sylvia Gonzales, Gomez’s associate outside the prison, Navarro and others. During these calls, the conspirators arranged for narcotics, cellular telephones and cash to be delivered to Navarro at various locations in Southern California.

 

In addition to Gonzales, the smuggling operation was also aided by others outside the prison, including Everaldo Santana, Norma Alvardo-Medina and Vanessa Jackson, according to allegations in the indictment. These individuals provided Navarro with the narcotics and cellular telephones to smuggle into the prison. return, Navarro was paid between $1,000 and $2,000 each time he smuggled contraband into the prison. According to the dictment, this smuggling operation began in April 2014 and lasted nearly two years until it was dismantled in June 2016 with Navarro’s arrest.

 

The indictment alleges that after the contraband was smuggled into the prison, RJD inmates Agustin Aceves, Juan Gutierrez, John Price, Jeremy Gaither and Hugo Alvarado received and distributed the narcotics and cellular telephones to other inmates. The phones were used to coordinate criminal activity both inside and outside the facility.

 

Deputy United States Attorney Mark Conover said, “Corrections officers play a critical role in protecting the public from some of the most dangerous criminals. By placing greed above his duty, former Officer Navarro compromised the security of the public and enabled violent felons to continue committing crimes within the prison walls. We will continue to aggressively investigate and prosecute every individual involved in these criminal activities.”

 

FBI Special Agent Eric S. Birnbaum said, “The FBI is responsible for investigating corruption involving government officials and their entire criminal networks. Today’s arrests are an example of how our investigators work with our law enforcement and corrections partners to reveal the individuals fulfilling each role of the criminal network that affect the safety and security of our correctional facilities.”

 

The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).

 

DEFENDANTS Case No. 17cr0446-AJB

 

MARTIN GOMEZ Age 56 Lancaster Prison

 

SYLVIA GONZALES Age 57 Sylmar, California

 

EVERALDO SANTANA Age 25 Los Angeles, California

 

AGUSTIN ACEVES Age 42 Lancaster Prison

 

NORMA ALVARADO-MEDINA Age 33 El Monte, California

 

JUAN GUTIERREZ Age 42 Vacaville, California

 

JOHN PRICE Age 20 Salinas Valley Prison

 

VANESSA JACKSON Age 39 Pasadena, California

 

JEREMY GAITHER Age 33 Valley State Prison

 

HUGO ALVARADO Age 24 High Desert Prison

 

DEFENDANTS Case No. 16cr1664-AJB

 

ANIBAL NAVARRO Age 38 Chula Vista, California

 

SUMMARY OF CHARGES

 

Conspiracy to Distribute Controlled Substances – Title 21, U.S.C., Sections 841(a) (1) and 846

Maximum Penalty: Life in Prison

 

Conspiracy to Commit Honest Services Fraud – Title 18, U.S.C., Sections 1349

Maximum Penalty: 20 years in prison

 

AGENCY

 

Federal Bureau of Investigation – San Diego Field Office

 

California Department of Corrections and Rehabilitation’s Office of Internal Affairs

 

California Department of Corrections and Rehabilitation’s Investigative Service Unit

 

United States Postal Service – Inspection Service

 

San Diego 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.

Assistant U.S. Attorney Adam L. Braverman (619) 546-6717

 

NEWS RELEASE SUMMARY – February 23, 2017

 

Sinaloa Cartel leader Jaime Huerta-Tizoc pleaded guilty to drug trafficking and money laundering charges in federal court today, admitting that he was responsible for moving tons of cocaine and marijuana and millions of dollars in proceeds across the U.S.-Mexico border.

 

Huerta-Tizoc appeared before U.S. Magistrate Judge Mitchell D. Dembin. The defendant was charged in a sealed indictment on August 19, 2016. A sealed arrest warrant was issued that same day. On December 15, 2016, was arrested at the San Ysidro, California Port of Entry as he attempted to enter into the United States.

 

In connection with the entry of his guilty plea, Huerta-Tizoc admitted that he was a high-level leader of the Sinaloa Cartel and that his primary responsibility was transporting large quantities of narcotics on behalf of the Sinaloa Cartel for importation from Mexico into the United States. Huerta-Tizoc utilized a fleet of tractor-trailers to transport ton quantity levels of both cocaine and marijuana from Mexico into the United States, including the Southern District of California. He also admitted that he agreed to transport millions of dollars in narcotics proceeds from the United States to Mexico. As part of his plea agreement, Huerta-Tizoc agreed to forfeit $2 million in United States Currency as proceeds of this conspiracy.

 

“Any day a Sinaloa cartel leader is no longer free to bring ton quantities of life-crushing drugs to our communities is a good day,” said Acting U.S. Attorney Alana W. Robinson. “As long as people are dying from overdoses and lives are being destroyed by illicit drugs, we will pursue the cartels.”

 

“Today, a dangerous drug trafficker pleaded guilty to his crimes,” said DEA San Diego Special Agent in Charge William Sherman. “Keeping this poison off the streets of our neighborhoods is our number one priority in the face of the addiction epidemic we are facing in the U.S. today.”

 

Sentencing is set for May 12, 2017, at 9 a.m. before U.S. District Judge Dana M. Sabraw.

 

DEFENDANT                                Criminal Case No. 16-CR-1895-DMS

 

Jaime Huerta-Tizoc                        Age: 41

 

SUMMARY OF CHARGES

 

Conspiracy to Import Cocaine and Marijuana, in violation of Title 21, United States Code, Sections 952, 960 and 963.

 

Penalties: Mandatory Minimum 10 years and Maximum Life in Prison, $10,000,000 fine, $100 Special Assessment, Supervised Release up to Life

 

Conspiracy to Launder Money, in violation of Title 18, United States Code, Sections 1956(a)(2)(A) and (h).

 

Penalties: Maximum 20 years in prison, a fine of the greater of twice the value of the property involved in the transaction or $500,000, $100 Special Assessment, Supervised Release up to 5 years

 

INVESTIGATING AGENCIES

 

Drug Enforcement Administration

Customs and Border Protection Office of Field Operations

Customs and Border Protection Office of Border Patrol

San Diego Law Enforcement Coordination Center

Homeland Security Investigations

Internal Revenue Service

Assistant U. S. Attorney Sherri Hobson (619) 961-0287

 

NEWS RELEASE SUMMARY – February 23, 2017

 

SAN DIEGO – San Ysidro resident Ricard Lujan, who was arrested in November during a routine traffic stop when an Oceanside police officer discovered millions of dollars’ worth of methamphetamine and cocaine hidden inside his vehicle, entered a guilty plea in federal court today.

 

Lujan pleaded guilty to two counts of possession of controlled substances with intent to distribute before U.S. Magistrate Judge Barbara Lynn Major. Lujan was arrested on November 17, 2016, after the police officer discovered the drugs hidden inside the floorboards, door panels, center console and elsewhere in Lujan’s vehicle.

 

In his plea agreement, Lujan admitted that he drove his vehicle loaded with controlled substances from Mexico into the United States and that he intended to deliver the controlled substances to another person.

 

According to a federal complaint, the Oceanside Police Officer was conducting random vehicle registration checks at 12:40 a.m. on Harbor Drive in Oceanside. While doing this he noticed a car with expired tags. The officer then saw Lujan enter the Mitsubishi Endeavor SUV and attempt to leave the area. The officer stopped the vehicle. While talking to the officer, Lujan, the registered owner of the vehicle, appeared nervous and agreed to a search of his vehicle.

 

A Border Patrol canine handler responded to the traffic stop to assist Oceanside Police. The dog alerted to the odor of narcotics. Agents from the Drug Enforcement Administration, San Diego Narcotics Task Force, subsequently searched Lujan’s vehicle and found 99 packages that were vacuum sealed in plastic containers of cocaine and 58 rectangular vacuum sealed in plastic containers of methamphetamine. The agents seized approximately 89.50 kilograms of cocaine and approximately 68.90 kilograms of methamphetamine.

 

The estimated wholesale of the cocaine is $1.7 million dollars. The estimated wholesale value of the methamphetamine is $450,000.

 

Lujan is scheduled for sentencing on June 5, 2017 at 9 a.m. before U.S. District Judge Roger T. Benitez. He faces up to 20 years in custody.

 

DEFENDANT

 

Ricardo Lujan, age 44

San Ysidro, California

CHARGE

 

Criminal Case 16CR2910BEN

Two Counts of possession with intent to distribute controlled substances (cocaine and methamphetamine)

Title 21, United States Code, Section 841

Penalties: 20 years in custody, 3 years of supervised release, $500,000 fine; $100 special assessment

 

AGENCIES

 

Oceanside Police Department

Drug Enforcement Administration, San Diego Narcotics Task Force

U.S. Border Patrol, San Clemente Station

 

Assistant U. S. Attorney Sherri Walker Hobson (619) 961-0287

 

NEWS RELEASE SUMMARY – February 21, 2017

 

SAN DIEGO – Torrance airplane broker Hector Hernandez pleaded guilty in federal court today to money laundering charges, admitting that he helped hide the true origin of drug money through the purchase of airplanes for drug traffickers.

 

Hernandez, 48, entered his guilty plea before U.S. District Judge Michael M. Anello to conspiracy to launder drug proceeds and conspiracy to engage in monetary transactions. Sentencing is set for June 5, 2017 at 9 a.m. before Judge Anello.

 

Hernandez was the owner of Pacific Coast Aero at Zamparini Field, at Torrance Airport. In his plea agreement, he admitted that he facilitated the purchase of airplanes and airplane parts for exportation and deregistration to Mexico on behalf of third parties. Hernandez admitted that he arranged for delivery of substantial bulk cash to codefendant Vicente Contreras-Amezquita

 

According to an indictment, codefendant Contreras-Amezquita used 46 bank accounts at multiple U.S. financial institutions and made structured cash deposits in excess of $3 million dollars for the purchase of over 35 airplanes. As part of the scheme, Hernandez admitted that he facilitated the purchase of seven airplanes.

 

As part of his guilty plea, Hernandez admitted that knew that bulk cash was derived in part from unlawful proceeds that constituted a felony and were criminally derived. Hernandez believed that the proceeds or bulk cash were in part from drug trafficking activities and that the planes would be used for drug trafficking activities in Mexico, even though Hernandez was not personally involved in drug trafficking activities.

 

According to the indictment, codefendant Contreras-Amezquita and others facilitated the acquisition and purchase of the Cessnas and airplane parts, including auxiliary fuel tanks, heavy duty tires and landing gear for landing on clandestine airfields. Cessna 206s and 210s are types of airplanes preferred by drug-trafficking organizations operating in Mexico because of their reliability, speed and ability to carry heavy payloads over long distances.

 

Codefendant Vicente Contreras-Amezquita’s hearing was continued to March 16, 2017. His trial date is on April 25, 2017.

 

DEFENDANT                                              Case Number 15CR1144-MMA

 

Hector Hernandez                                         Age 48           Wilmington, California

 

GUILTY PLEA TO TWO CONSPIRACY CHARGES

 

Count 1

Conspiracy to Launder Money by avoiding transaction reporting requirements and concealing nature, location, source, ownership and control of drugs proceeds); Title 18, United States Code, Sections 1956(h), 1956(a)(1)(B)(i) and 1956(a)(1)(B)(ii); 20 years maximum, 3 years of supervised release; $100 special assessment; $500,000 fine

 

Count 2

Conspiracy to Engage in Monetary Transactions); Title 18, United States Code, Sections 1956(h) & 1957; 10 years maximum, 3 years of supervised release; $100 special assessment; $500,000 fine

 

AGENCIES

 

Internal Revenue Service –Criminal Investigations

Drug Enforcement Administration

 

*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 Alessandra P. Serano (619) 546-8104 and Connie V. Wu (619) 546-8592

NEWS RELEASE SUMMARY – February 22, 2017

 

SAN DIEGO, CA – Luther Gene Ray, aka “Pumpkin,” was sentenced in federal court today to 40 years in prison for sex trafficking a 16-year-old minor female by force in 2014.

 

Ray was found guilty after jury trial in December 2015 for one count of sex trafficking of a minor by force, fraud or coercion and one count increased penalties for sex offenders.

 

The victim was a runaway girl. She met Ray at a local retail store within 30 days of his release from federal prison. Ray had previously been convicted of the same crime in Los Angeles back in 2007 and thus, was required to register as a sex offender. Ray served just 8 years on the prior offense and was on supervised release during the time. Ray lured the victim to work as a prostitute as a way to make money for herself.

 

The evidence at trial demonstrated that the victim received none of the money she earned through prostitution while Ray received thousands of dollars from the victim as well as at least three other women working as prostitutes for Ray. Ray used social media such as Facebook to brag about his lifestyle. The victim testified that Ray assaulted her - and other women in front of her - if they even looked at another man who might be a pimp. Law enforcement was alerted to Ray’s illicit activities after the victim called police while in juvenile hall.

 

As a result of Ray’s status as a sex offender, U.S. District Court Judge Roger T. Benitez was required to impose an additional 10 years in custody. In imposing the 40-year sentence, Judge Benitez said the sentence will send a message that sexually exploiting women and girls through violence will not be tolerated.

 

“This defendant terrorized and traumatized his 16-year-old victim, and now he will pay a very serious price for his crimes,” said Acting U.S. Attorney Alana Robinson. “We will continue to work tirelessly with our law enforcement partners to detect and prosecute persons who engage in sex trafficking, a form of modern day slavery”.

 

FBI Special Agent in Charge Eric S. Birnbaum stated: “The sentence imposed on this defendant is a genuine reflection of both the horrific victimization suffered by these young girls and the terrible impact that this type of criminal behavior has on the life and the well-being of our communities. The FBI, along with our law enforcement partners, will continue to pursue the perpetrators of this type of heinous conduct with all of the resources available to us.”

 

DEFENDANT Criminal Case No. 15CR0498-BEN

 

Luther Gene Ray aka “Pumpkin” Age: 33 Hemet, CA

 

SUMMARY OF CHARGES

 

Count 1: Sex Trafficking by Force, Fraud or Coercion, in violation of 18 U.S.C. §1591

Maximum Penalties: Life in prison, mandatory minimum 15 years per count

 

Count 2: Increased Penalties for Registered Sex Offenders, in violation of 18 U.S.C. §2260A

Maximum Penalties: Ten years in prison consecutive

 

INVESTIGATING AGENCIES

 

Federal Bureau of Investigation

San Diego Police Department

 

 

 

 

 

A current U.S. Navy Commander was charged in a complaint unsealed today with accepting luxury travel, elaborate dinners and services of prostitutes from foreign defense contractor Leonard Francis in exchange for classified and internal U.S. Navy information.

Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division, Acting U.S. Attorney Alana Robinson of the Southern District of California, Director Andrew L. Traver of the Naval Criminal Investigative Service (NCIS) and Director Dermot F. O’Reilly of the Defense Criminal Investigative Service (DCIS) made the announcement.

Mario Herrera, 48, of Helotes, Texas, was charged with one count of conspiracy to commit bribery in connection with interactions with Leonard Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore.  Herrera was arrested in San Antonio, Texas, this morning and is scheduled to make his initial appearance in federal court in the Western District of Texas.  The United States will seek removal of Herrera to San Diego to face charges.

According to the complaint, Herrera participated in a bribery scheme with Francis in which he accepted luxury travel and entertainment expenses and the services of prostitutes in exchange for helping to steer lucrative U.S. Navy contracts to Francis and GDMA.  Herrera provided Francis with internal, proprietary U.S. Navy information and intervened on GDMA’s behalf in contract disputes.  According the complaint, Herrera directed ships to take alternative routes that benefitted GDMA on two separate occasions, costing the U.S. Navy $3.6 million.    

To date, a total of 17 individuals have been charged in connection with the scheme; of those, 13 have pleaded guilty, including: Admiral Robert Gilbeau, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Special Agent John Beliveau and U.S. Petty Officer First Class Daniel Layug.

Brooks, Gilbeau and Sanchez await sentencing.  In May 2016, Pitts was charged and his case is currently pending.  On Jan. 21, 2016, Layug was sentenced to 27 months in prison and to pay a $15,000 fine.   On Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine.  On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine.  On April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay  $95,000 in restitution to the Navy and a $100,000 fine.  On Oct. 14, 2016, Beliveau was sentenced to 12 years in prison and to pay $20 million in restitution.  On Dec. 2, 2016, Simpkins was sentenced to 72 months in prison, to pay $450,000 in restitution, to forfeit $150,000 and pay a $50,000 fine.  

A criminal complaint is merely an accusation, and the accused is presumed innocent unless proven guilty in a court of law.

DCIS, NCIS and the Defense Contract Audit Agency are investigating the case.  Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.  
            
Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

Assistant U.S. Attorney Joseph J.M. Orabona (619) 546-7951

 

NEWS RELEASE SUMMARY – February 16, 2017

SAN DIEGO – Two tax preparers and a recruiter working with those preparers pleaded guilty today in federal court, admitting to their involvement in a tax return scam that resulted in the filing of false returns, the use of stolen identities and the receipt of more than $880,000 in bogus tax refunds.

 

Rahim Ali Cummings and Ebrahim Ashamu were local tax preparers in El Cajon, California. Ashamu operated his tax preparation business as Vista Tax Services on El Cajon Boulevard. Rashad Abdul-Rahim worked with Cummings and Ashamu by recruiting customers and obtaining stolen identities to use in their fraudulent scheme. Cummings and Abdul-Rahim pleaded guilty to conspiracy and Ashamu pleaded guilty to filing false claims and aggravated identity theft before U.S. Magistrate Judge Nita L. Stormes.

 

According to the plea agreements, Cummings and Ashamu prepared and filed the false tax returns with the Internal Revenue Service between September 2011 and September 2012. Abdul-Rahim solicited and obtained the personal identifying information from the victims using false pretenses, such as informing the victims they could obtain “free” government money from alleged grant and senior programs. He concealed his intention to use the information to file false tax returns. Abdul-Rahim provided Cummings and Ashamu with the personal information of the victims in order for Cummings and Ashamu to prepare and file the false tax returns. The IRS uncovered the scheme because a majority of the refunds were mailed to addresses controlled by Cummings, Ashamu, and Abdul-Rahim.

 

The plea agreement for each defendant sets forth the amount of refunds directly deposited into bank accounts under their control. In particular, Cummings received approximately $470,042 in fraudulent refunds directly deposited into bank accounts he controlled. Ashamu received approximately $367,631. Abdul-Rahim received approximately $44,937 in fraudulent refunds and additional cash payments from Cummings and Ashamu for providing the victims’ information. As a result of their crimes, Cummings, Ashamu, and Abdul-Rahim caused approximately $882,610 in losses to the IRS. Each defendant has agreed to make full restitution to the IRS for the total amount of false refunds they each received.

 

Furthermore, as part of their plea agreements, Cummings, Ashamu, and Abdul-Rahim agreed to be permanently enjoined from preparing or filing federal income tax returns for anyone other than themselves. A civil complaint will be filed against them, and a permanent injunction will be entered to prevent Cummings, Ashamu, and Abdul-Rahim from acting as a tax preparer in the future.

 

With a new tax return filing season upon us, the public is reminded to always review a copy of any tax return prepared and filed on their behalf and to be skeptical of tax preparers that offer to obtain substantial tax refunds.

 

Cummings, Ashamu, and Abdul-Rahim are scheduled to be sentenced on May 1, 2017 at 9 a.m. before U.S. District Judge Roger T. Benitez.

 

DEFENDANTS                                                                                Criminal Case No. 16CR0768-BEN

Rahim Ali Cummings                                                                        Age: 47                  Detroit, Michigan

Ebrahim Ashamu                                                                               Age: 58                  El Cajon, California

Rashad Abdul-Rahim Age:                                                                Age: 46                  El Cajon, California

 

CHARGES THAT DEFENDANTS CUMMINGS AND ABDUL-RAHIM PLEADED GUILTY TO:

Count 1 – Title 18, United States Code, Section 286 B Conspiracy to Commit Mail Fraud, File False Claims, Fraudulently Use a Social Security Number of Another, and Aggravated Identity Theft

Maximum penalties: 5 years in prison, $250,000 fine, 3 years of supervised release.

 

CHARGES THAT DEFENDANT ASHAMU PLEADED GUILTY TO:

 

Count 33 – Title 18, United States Code, Section 287 B Filing False, Fictitious and Fraudulent Claims

Maximum penalties: 5 years in prison, $250,000 fine, 3 years of supervised release.

 

Count 56 – Title 18, United States Code, Section 1028A – Aggravated Identity Theft

Maximum penalties: Mandatory 2-year sentence, to be served consecutive to any other prison term, $250,000 fine, 3 years of supervised release.

 

INVESTIGATING AGENCIES

Internal Revenue Service-Criminal Investigation

United States Secret Service

 

 

Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718

 

NEWS RELEASE SUMMARY – February 16, 2017

 

SAN DIEGO – U.S. Navy Commander Mario Herrera was charged in a complaint unsealed today with accepting prostitutes, luxury travel, elaborate dinners and $1,800 steaks from foreign defense contractor Leonard Glenn Francis in exchange for classified and internal U.S. Navy information.

 

Herrera, the 12th U.S. Navy official to be charged so far, was arrested in San Antonio, Texas this morning and is scheduled to make his initial appearance in federal court in the Western District of Texas. The United States will seek removal of Herrera to San Diego to face charges.

 

According to the complaint, Herrera received bribes in return for sending U.S. Navy ship schedules and other proprietary information to Francis, sometimes through U.S. Navy Commander Jose Luis Sanchez, who was among the first officers charged in the massive bribery and fraud case in 2013. Sanchez pleaded guilty to bribery charges in January 2015 and awaits sentencing.

 

Hererra, Sanchez and other U.S. Navy 7th Fleet officers who were committed to doing the bidding of Francis in exchange for prostitutes and other perks called themselves the “Band of Brothers” and the “Wolf Pack,” the complaint said. In one email, Sanchez asked Francis to send pictures of prostitutes, saying “the brothers are ready to indulge.” A few days later in another email, Sanchez thanked Francis for the prostitutes and hotel accommodations during a port stop in Manila, Philippines: “A warm thank you from the brotherhood…we thoroughly enjoyed ourselves and had a great time.”

 

The complaint also alleges that Herrera made recommendations within the Navy to benefit Francis’ company, Glenn Defense Marine Asia, including on several occasions manipulating the movement of U.S. Navy ships and diverting them to ports financially lucrative to Francis. GDMA is a multinational corporation and longtime government contractor based in Singapore, which provides hundreds of millions of dollars of “husbanding” services for the U.S. Navy in at least a dozen countries throughout the Pacific. Husbanding involves supplying food, water, fuel, tugboats and fenders, security, transportation, trash and liquid waste removal, and other goods and services to ships and submarines in foreign ports.

 

So far, a total of 17 named individual defendants have been charged in connection with the GDMA corruption and fraud investigation. Of those, 12 are current or former U.S. Navy officials, including Herrera, Sanchez, Admiral Robert Gilbeau, believed to be the first active-duty U.S. Navy flag officer charged in a federal criminal case; Captain (ret.) Michael Brooks; Captain Daniel Dusek; Commander Michael Misiewicz; Commander Bobby Pitts; Lt. Commander Gentry Debord; Lt. Commander Todd Malaki; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.

 

Gilbeau, Brooks, Dusek, Misiewicz, Sanchez, Debord, Malaki, Layug, Beliveau, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Gilbeau, Brooks, and Sanchez await sentencing.

 

Pitts was charged in May 2016 and his case is pending.

 

Also charged are five GDMA executives – Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing; Peterson and Raja were extradited from Singapore in September 2016 and their cases are pending.

 

The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.

 

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

 

DEFENDANT Case Number: 17mj0424

Lieutenant Commander Mario Herrera Age 48 Helotes, Texas

 

SUMMARY OF CHARGES

 

Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371

Maximum Penalty: 5 years in prison, a $250,000 fine,

 

INVESTIGATING AGENCIES

 

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

 

Assistant U. S. Attorneys Alessandra P. Serano (619) 546-8104 or Joseph Orabona (619) 546-7951

NEWS RELEASE SUMMARY – February 10, 2017

 

SAN DIEGO – Eleven alleged gang members and associates of the Westside Crips street gang and the manager of two national brand hotels in Oceanside are charged in a federal grand jury indictment with participating in a racketeering conspiracy involving narcotics trafficking, prostitution and other crimes.

 

Early this morning, detectives and agents from the Narcotics Task Force, U.S. Drug Enforcement Administration and Oceanside Police Department, with assistance from other agencies, made five arrests in North County and one in New Mexico. One defendant remained at large at midday; five were already in state custody and will be transferred to federal custody.

 

Some of the local defendants are scheduled to make their first court appearances today at 2 p.m. before U.S. Magistrate Judge Barbara L. Major and Monday before U.S. Magistrate Judge Andrew G. Schopler.

 

The indictment, unsealed today, alleges that the defendants are associated with the Westside Crips, a criminal street gang that primarily operates in Oceanside. According to the indictment and other court documents, the members of the conspiracy were involved in drug trafficking, prostitution, attempted murder, assaults and robberies. The acts alleged date back to 2004 and continue to up to 2016.

 

According to court documents, members of Westside Crips are akin to a crime family, where all members work together committing various crimes for the purpose of making money. The indictment alleges that the defendants took on different responsibilities within the criminal enterprise. Some sold narcotics. Others managed prostitutes and transported them all over the country. The hotel manager provided a safe haven for the alleged gang members to conduct their illegal activities. For that reason, the defendants are charged with racketeering conspiracy—the statute traditionally used for organized-crime syndicates and mobsters.

 

This is the fourth time the U.S. Attorney’s office here has used the racketeering statute to charge large numbers of gang members, associates, and facilitators with operating a criminal enterprise that included drugs, human trafficking, and violence. In the first case, 39 Oceanside gang members and associates were charged with racketeering, and, to date, 35 have pleaded guilty. The second case involved gangs in North Park; that case is pending, with 21 guilty pleas so far and two guilty verdicts after a jury trial in July 2016. The third case involved 22 defendants as members and associates of the Tycoons street gang. To date, all 22 defendants in that case have pleaded guilty.

 

“This case, along with many others like it in our district, demonstrates that human and drug trafficking by criminal street gangs is rampant,” said Acting U.S. Attorney Alana Robinson. “Not only are we targeting the traffickers and customers, but we are also going after the businesses that facilitate this type of gang activity.”

 

“The members of the criminal street gang that were arrested today face serious charges,” said DEA San Diego Special Agent in Charge William Sherman. “It is critical to the safety of our citizens to get these violent drug traffickers off the streets.”

 

“The Oceanside Police Department continues to be committed to fighting gang crime and gang activity in our City,” said Chief Frank S. McCoy. “The arrests today are an example of our commitment to utilize law enforcement agencies at all levels to help us to that end. I am very proud of all the hard teamwork and commitment our officers and the other law enforcement agencies had in this operation to make it such a success.”

 

“Today's enforcement actions mark the beginning of the end for the Westside Crip street gang,” said IRS Criminal Investigation’s Acting Special Agent in Charge Anthony J. Orlando. “Our agency plays a unique role in federal law enforcement’s resolve to dismantle the criminal gang enterprises terrorizing our streets. Our agents target the profit and financial gains of these organizations, following the money in an effort to disrupt these organizations and bring their members to justice.”

 

DEFENDANTS Case Number 17cr0270-JAH

Corey Austin aka Westwood Age: 36 Oceanside, CA

William Bright aka “Slim” Age: 51 Oceanside, CA

Ameer Roby aka “Tiny Dum” Age: 36 Oceanside, CA

Michael Sullivan aka “Du-Low” Age: 33 Oceanside, CA

Peter Miranda aka “Lil’ Burger” Age: 33 Oceanside, CA

Shane Anderson aka “Tiny West” Age: 25 Oceanside, CA

Jasiri Lacey aka “Baby West” Age: 25 Oceanside, CA

Demetrius McFarland aka “Mecchi Ruu” Age: 23 Oceanside, CA

Travion McHenry aka “2Much” Age: 25 Oceanside, CA

Richard Cleveland aka “Face” Age: 37 Oceanside, CA

Larry Monroe Age: 59 Oceanside, CA

Umesh Oza aka “Kevin” Age: 32 Oceanside, CA

 

SUMMARY OF CHARGES

 

Title 18, United States Code, Section 1962(d) - Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity; Title 18, United States Code, Section 1963 - Criminal Forfeiture

Maximum Penalties: 20 years’ incarceration, a fine of $250,000, three years of supervised release

 

AGENCIES

 

North County Narcotics Task Force

Drug Enforcement Administration

Oceanside Police Department

Internal Revenue Service Criminal Investigation

U.S. Marshal’s Service

 

*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 Andrew J. Galvin (619) 546-9721

 

NEWS RELEASE SUMMARY – February 9, 2017

 

SAN DIEGO – The owner of a large butane supply company pleaded guilty to a drug charge today, admitting that his company illegally sold thousands of butane canisters to smoke shops, knowing that some of the butane would be used to illegally manufacture hash oil.

Bosco Kwon, the owner of BK Power Imports, Inc., admitted in his plea agreement that he knew the manufacture of hash oil, a marijuana concentrate, poses a significant risk of fires and explosions.

 

As part of his plea agreement, Kwon agreed to forfeit $1,026,614 and over 94,152 canisters of butane. Sentencing is scheduled for April 28, 2017 at 9 a.m. before U.S. District Judge Janis L. Sammartino.

Kwon pleaded guilty to a single count of selling drug paraphernalia. The Los Angeles-based business, which sold Power-branded butane, was the nation’s largest supplier of butane specifically designed for use in making hash oil.

 

Butane Hash Oil (BHO) is a marijuana concentrate, which is a Schedule I controlled substance. The manufacture of BHO is a violation of federal law, Title 21, US Code, Section 841. The manufacture of BHO is also a violation of California state law, Health and Safety Code, Section 11379.6

 

BHO is similar in appearance to honey or butter. It contains extremely high levels of tetrahydrocannabinol, or THC, and can be up to four times more potent than high grade marijuana. BHO is commonly manufactured by packing marijuana into a glass, plastic, or metal tube. Butane is then sprayed into the top of the tube. The butane strips the marijuana of its cannabinoid-containing oils, which drip from the bottom of the tube, often through a filter and into a holding container. The end product is highly-profitable and can be ingested as an oil, consumed in edibles, or solidified to make concentrated forms of cannabis known as “wax.”

 

According to admissions in Kwon’s plea agreement, BK Power Imports sold its butane to wholesalers and retailers in San Diego County and throughout the United States, including smoke shops “Greener Side of Life,” “Marry Jane House of Glass Inc,” “Twilight Zone,” “Smoke Tokes Inc,” “Puff and Stuff,” “Cali Kulture-Magic Glass,” and “The Grow Shop.” The butane was sold under the brand names Power, Power 5x, Power 7x, Power 9x, and Power 11x. Kwon imported in excess of 350,000 canisters of butane into the United States every month.

 

During the manufacture of BHO, butane, a flammable gas that is odorless, colorless, and heavier than air, can evaporate out of the substance and collect on the floor, accumulating to explosive levels without proper ventilation. This process creates an invisible, but very real, risk of fires, explosions, and chemical burns.

 

Since 2011, the manufacture of hash oil using Power butane has caused at least 54 fires and explosions, 29 serious injuries, and four deaths in California, Oregon, Nevada, and Washington, according to Homeland Security Investigations agents. In 2015, BK Power Imports and Kwon were sued because of an explosion and fire that occurred while two individuals made hash oil using Power butane. One of the individuals died while the other suffered third-degree and full-thickness burns over 40 percent of his body that kept him in an intensive care unit for nearly two months. Despite this lawsuit, Kwon continued to sell Power butane.

 

“Whatever one believes about marijuana use, the manufacture of hash oil is an extremely dangerous process and puts lives in danger,” said U.S. Attorney Alana Robinson. “We will do everything we can to safeguard the public.”

 

“Hash oil manufactured with butane gas has led to an alarming number of explosions and fires in recent years,” said Dave Shaw, special agent in charge for HSI San Diego. “HSI is committed to targeting the supply chains where butane gas is sold on the black market for use in hash oil labs. By going after the supply chains and the illicit proceeds, we are able to dismantle the distribution networks, which is a critical step toward shutting down a dangerous epidemic that has put the public’s safety in harm’s way for too long.”

 

This investigation follows the successful prosecution of the owners of the Newport Beach-based business Puretane. In that case, Puretane’s Chief Executive Officer and Chief Financial Officer admitted that they conspired to launder the proceeds of their illegal butane business. With these prosecutions, Homeland Security Investigations and the U.S. Attorney’s Office for the Southern District of California have shut down the nation’s two leading suppliers of butane designed for use in making hash oil.

 

DEFENDANT:                       Case Number 17CR331-JLS

Bosco Kwon                            Age: 53              La Habra, CA

 

SUMMARY OF CHARGES

 

Sale of Drug Paraphernalia – Title 21, U.S.C., Section 863

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

 

AGENCY

 

Homeland Security Investigations

 

*Reporters interested in interviews may contact Assistant U.S. Attorney Andrew Galvin, at (619) 546-9721, or ICE PAO Lauren Mack at 619 719 7921.

Special Assistant U.S. Attorney Ari D. Fitzwater (619) 546-8756 and Assistant U. S. Attorney Patrick J. Bumatay (619) 546-8450

 

NEWS RELEASE SUMMARY – February 1, 2017

 

SAN DIEGO – Christopher Switzer and Mark Gillette pleaded guilty in federal court today to conspiring to destroy their own vessel, the “Commander,” a 57-ft boat used for charter sport-fishing trips, in order to fraudulently collect an insurance payout.

 

According to their plea agreement, on October 11, 2016, Switzer and Gillette headed out to sea on the Commander from its homeport in Mission Bay and headed toward Long Beach. The two had planned to intentionally sink the Commander and submit a claim to their insurance company.

 

Switzer and Gillette admitted how they attempted to sink the Commander while off the coast of California by destroying plastic PVC piping in the ship’s engine room, which caused sea water to flood into the vessel. They also pumped sea water onto the vessel and punctured its bulkhead to let sea water spread faster throughout the boat.

 

After sea water had flooded the Commander and as it was starting to go under, Switzer and Gillette called the United States Coast Guard for help which promptly launched a helicopter to find the two. A Dana Point Harbor Patrol rescue fireboat later found the two boatmen atop the partially submerged ship. As part of their plea agreement, Switzer and Gillette acknowledged that their actions subjected themselves and the emergency responders to the risk of death or serious injury.

 

Upon their rescue, Switzer and Gillette gave a series of false statements to officials to cover their plot to sink the Commander for insurance money. They indicated the first sign of a problem on the Commander was a power failure and they could not figure out why the vessel was flooding.

 

Switzer and Gillette’s actions failed to completely sink the Commander and it was found adrift near Dana Point, California the next day. A commercial salvage company was able to successfully tow the Commander back to San Diego Bay, California, where investigators uncovered the scheme to intentionally sink the ship.

 

Switzer and Gillette pleaded guilty before U.S. Magistrate Judge Jill L. Burkhardt. They face a maximum penalty of 10 years in prison and a maximum $250,000 fine. As part of their plea, they are required to reimburse the U.S. Coast Guard over $15,000 for the price of launching the rescue helicopter and other costs.

 

Sentencing is scheduled for March 6, 2017 at 9 a.m. before U.S. District Judge Michael M. Anello.

 

DEFENDANTS                                             Case Number 17cr0251-MMA

 

Christopher Switzer                                        Age: 39

Mark Gillette                                                  Age: 37

 

SUMMARY OF CHARGES

 

Conspiracy to Destroy Vessels – Title 18, U.S.C., Section 2271

 

AGENCY

 

U.S. Coast Guard Investigative Service

 

 

 

 

 

 

 

 

 

Assistant U. S. Attorney Christopher P. Tenorio (619) 546-8413

NEWS RELEASE SUMMARY – January 30, 2017

SAN DIEGO – Deborah Tumlinson of Valley Center was sentenced yesterday to a year and a day in custody for her participation in a fraudulent scheme devised after the 2007 Witch Creek Wildfire. U.S. District Judge Janis L. Sammartino also ordered Tumlinson to pay restitution in the amount of $1,838.742.24.

 

On May 13, 2016, Tumlinson pleaded guilty to a wire fraud scheme that ran from May 2010 to April 2013. Part of the scheme involved obtaining loan proceeds from U.S. Claims (Lifeline Funding, LLC), a funding company based in Moorestown, New Jersey that provides loans for individuals who can use expected or actual lawsuit proceeds as collateral. To obtain a loan from U.S. Claims in the amount of $750,000, Tumlinson made false representations, and caused others to do the same.

 

On May 20, 2010, Tumlinson caused her attorney, Carter Johnston, to send a letter to her real estate broker, which misrepresented that Tumlinson and her husband had reached a settlement in their pending lawsuit against SDG&E. The lawsuit (Edward Malone, et al. v. SDG&E, et al., Case No. 37-2008-00081779-CU-PO-CTL in San Diego Superior Court) was based on allegations that the Tumlinsons’ former residence in Ramona, California, was damaged by the Witch Creek Wildfire on October 21, 2007. Tumlinson caused Johnston to send a second letter to her real estate agent on September 30, 2010, which misrepresented that the Tumlinsons had obtained funding for the purchase of a new residence in Valley Center, California. Mr. Johnston has since been disbarred by the State of California.

 

On October 2, 2010, Tumlinson caused Johnston to send a letter to U.S. Claims, misrepresenting that the Tumlinsons had settled the SDG&E lawsuit for $2,490,000. Three days later, Tumlinson falsely told U.S. Claims that a court-appointed mediator in the SDG&E lawsuit had already awarded $2.4 million to the Tumlinsons. The next day, the Tumlinsons signed a Purchase Agreement in support of a U.S. Claims loan application. The Purchase Agreement falsely provided that Johnston represented the Tumlinsons in connection with their “settled claim” in the SDG&E lawsuit when, in fact, they were represented at that time by other attorneys, and no settlement had been obtained which could be used as collateral to secure the U.S. Claims loan. The Tumlinsons received a loan from U.S. Claims in the amount of $750,000, which they never repaid.

 

After receiving the loan proceeds from U.S. Claims, Tumlinson wire-transferred $550,000 into escrow on October 8, 2010, for the purchase of the Valley Center property. Using the equity from the Valley Center property, Tumlinson sought a new loan from Seaside Funding Inc., a mortgage broker, based in Carlsbad, California. In December 2010, Tumlinson signed, and caused her husband to sign, Seaside Funding loan documents for a $250,000 home-equity loan. The application and supporting documents falsely represented that the Tumlinsons did not intend to live in the Valley Center property as their primary residence, and that it would be used as a rental property that generated income necessary to make loan payments. As a result of the misrepresentations, Seaside Funding funded the requested loan, which the Tumlinsons never repaid. The loan proceeds were later recovered when Seaside Funding foreclosed on the Valley Center property.

 

At sentencing, Judge Sammartino noted that Tumlinson’s property did receive some damage from the 2007 fire, but that her subsequent actions made her “pain and anguish spread to others.”

 

“The defendant suffered losses during a terrible wildfire, like many others did,” said Acting U.S. Attorney Alana W. Robinson. “But she exploited her own tragedy and the compassion of others, and in the process made sure it became someone else’s tragedy, too. The people she fleeced paid a high price, and for that, she will pay a high price.”

 

Special Agent in Charge Eric S. Birnbaum said, “The San Diego Division of the FBI remains committed to uncovering these complex fraud schemes and bringing those to justice who would attempt to cheat the banking system for personal gain.”

 

DEFENDANT Case Number: 14CR2978-JLS

 

Deborah Tumlinson Age: 55

 

SUMMARY OF CHARGE

Title 18, United States Code, Section 1343 (Wire Fraud Scheme)

Maximum penalty: 20 years of custody; $100,000 Fine

 

AGENCY

 

Federal Bureau of Investigation

Assistant U. S. Attorney Jennifer Gmitro (619) 546-9692

NEWS RELEASE SUMMARY – January 23, 2017

 

SAN DIEGO – Dylan Wayne Cowdrey was sentenced in federal court today to 46 months in prison for sexually abusing a 14-year-old old girl by coercing her through threatening text messages.

 

According to his October 2016 plea agreement, Cowdrey admitted to having sexual intercourse with the victim on a military base in the Southern District of California. He also admitted to engaging in undue influence to coerce her into the sexual acts. That is, between approximately June 5, 2016 and June 9, 2016, Cowdrey sent anonymous text messages to the victim threating to cause serious bodily harm to her family and loved ones if she did not perform sexual acts with him. Among other threats, Cowdrey stated that if the victim did not comply, she would “lose her love[d] ones and everyone else [she] knows.”

 

He also claimed that he was receiving threatening text messages from the same source. When the defendant met up with the victim and she told him she did not want to perform sex acts, he responded that he “didn’t want to die” as a result of her refusal. On the same day, the defendant engaged in sexual acts with the victim.

 

The defendant, then 22, admitted in his plea agreement he knew the victim was 14.

 

At sentencing, U.S. District Judge William Q. Hayes stated that the defendant’s conduct could only be described as “manipulative” and “diabolical.” Noting the youth of the victim, Judge Hayes added, “It is hard for me to understand the sense of betrayal” that the victim must feel, “to learn that all of it wasn’t true.”

 

“It is a despicable thing to deceive and abuse a child,” said Acting U.S. Attorney Alana W. Robinson. “This defendant will now pay a high price for striking fear in the heart of a child to the point where she believed she had to sacrifice herself to protect her family.”

 

DEFENDANT Criminal Case: 16CR1929-WQH

 

Dylan Wayne Cowdrey Age 23 San Diego, California

 

SUMMARY OF CHARGES

 

Sexual Abuse of a Minor within Maritime and Territorial Jurisdiction (18 U.S.C. § 2243(a))

Maximum penalty: 15 years in prison and $250,000 fine

 

AGENCY

 

Naval Criminal Investigative Service

 

Assistant U.S. Attorneys John Parmley (619) 546-7957 or Michael Kaplan (619) 546-7927

NEWS RELEASE SUMMARY – January 17, 2017

SAN DIEGO – Animal-rights activist Nicole Kissane was sentenced in federal court today to 21 months in prison for terrorizing the fur industry during cross-country road trips in which she and coconspirator Joseph Buddenberg caused hundreds of thousands of dollars in damage by vandalizing properties and releasing mink from commercial farms.

 

During today’s sentencing hearing, U.S. District Judge Larry A. Burns described Kissane’s conduct as a “calculated, premeditated reign of terror over those in the fur industry.” Judge Burns also ordered Kissane to pay $423,477 in restitution to the victims.

 

Kissane pleaded guilty on December 27, 2016, to Conspiracy to Violate the Animal Enterprise Terrorism Act. Buddenberg entered his guilty plea to the same charge earlier in the year, on February 9, 2016. He was sentenced on May 2, 2016 to two years in prison and $398,272 in restitution.

 

“Vandalizing homes and businesses with acid, glue and chemicals in the dark of night is a form of domestic terrorism,” said Acting U.S. Attorney Alana W. Robinson. “Whatever your feelings about the fur industry, these sentences are a pretty strong signal that this isn’t the right way to effect change.”

 

“Today’s sentence sends a message to those who commit crimes in an attempt to advance their personal agendas,” stated FBI Special Agent in Charge Eric S. Birnbaum. “The FBI and our Joint Terrorism Task Force (JTTF) partners work together, share intelligence, and are able to connect cases to expose individuals engaged in this, or any, form of domestic terrorism.”

 

According to her plea agreement, Kissane admitted that during the summer and fall of 2013, she and Buddenberg caused hundreds of thousands of dollars in damage during their crime spree.

 

The defendants were charged under the Conspiracy to Violate the Animal Enterprise Terrorism Act. They were arrested in Oakland by agents from the FBI’s San Francisco field office.

 

In one instance described in the indictment, the defendants traveled from Oregon to San Diego in their 2012 Honda Fit on July 15, 2013 and used paint, paint stripper, a super glue-type substance, butyric acid, muriatic acid and glass etchant to vandalize Furs by Graf, a retail furrier located in San Diego, as well as the Spring Valley and La Mesa residences and personal property of the current and former owners of the business.

 

To publicize their crimes, the defendants drafted “communiqués” describing their conduct and posted them on websites associated with animal rights extremists, the indictment said.

 

Among some of the incidents of vandalism cited in the indictment: The defendants slashed tires of a meat distributor’s truck in San Francisco; smashed windows and glued the door locks at a furrier business in Minneapolis, Minnesota; vandalized and attempted to flood the Sun Prairie, Wisconsin home of an employee of the North American Fur Auctions.

 

DEFENDANTS

 

Nicole Juanita Kissane Age: 30 Oakland, CA

Joseph Brian Buddenberg Age: 32 Oakland, CA

 

SUMMARY OF CHARGES

 

Conspiracy to Violate the Animal Enterprise Terrorism Act – Title 18, U.S.C., Section 43 (a) (1), (2) (c) and (b) (3) (A) Maximum penalty: Ten years in prison and $250,000 fine

 

AGENCIES

 

Federal Bureau of Investigation, San Francisco and San Diego Field Offices

Joint Terrorism Task Force

 

 

Assistant U.S. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718

 

NEWS RELEASE SUMMARY – January 12, 2017

 

SAN DIEGO – U.S. Navy Lieutenant Commander Gentry Debord, who was named U.S. Navy Supply Officer of the Year while he was secretly accepting bribes and prostitutes from a foreign defense contractor in exchange for confidential information, was sentenced in federal court today to 30 months in prison.

 

Debord, 41, who pleaded guilty in October 2016 to a bribery charge, was also ordered to pay a $15,000 fine and $37,000 in restitution to the Navy. Debord has admitted that he accepted cash, luxury hotels and prostitutes from foreign defense contractor Leonard Glenn Francis between 2007 and 2013. In return he provided proprietary Navy information that benefitted Francis’ company, Singapore-based Glenn Defense Marine Asia.

 

During today’s hearing, U.S. District Judge Janis L. Sammartino told the defendant that he picked the wrong side. “You were clearly on their team and not the Navy’s team.”

 

Acting U.S. Attorney Alana Robinson said: “This is a fitting sentence for a man who sullied his stripes with such despicable behavior. We will continue to move forward in this investigation until all involved are held accountable.”

 

According to his plea agreement, from November 2007 to January 2013, Debord provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests, as opportunities arose.

 

During the conspiracy, Debord was a supply officer aboard the U.S.S. Essex and later became a logistics officer for the Pacific Fleet. As a supply officer, Debord was responsible for procuring goods and services to meet the ship’s logistical and supply needs and for confirming that the U.S. Navy’s contractors provided these services. As logistics officer, he helped direct ship movements and port visits in the Western Pacific region.

 

As part of this conspiracy, Debord, Francis and others attempted to conceal the nature and extent of their relationship, by, among other things, using fictitious email accounts to communicate and using coded language and other means designed to obfuscate the true nature of their corrupt relationship, including referring to prostitutes as “cheesecakes” and “bodyguards.”

 

For example, on or about February 26, 2008, Debord emailed a GDMA executive to ask him to provide the services of prostitutes during the U.S.S. Essex’s upcoming port visit to Manila, Philippines: “[D]ouble checking to see if I will have my security for the 2nd and the 4th. I however do not want anyone to know I have a bodyguard.” The executive responded: “Bodyguards are standing by.”

 

About eight months later, around October 30, 2008, Debord emailed GDMA executives advising them that the U.S. Navy’s ship husbanding contract in the Philippines was “coming up for renew[al],” and asking that GDMA provide him with an apartment in conjunction with an upcoming port visit by the U.S.S. Essex to Hong Kong. Debord noted that he and another GDMA employee “had fun up [near Clark Air Force Base,] ate lots of cheesecake, even ate some in a group session.”

 

From May 2010 until December 2011, Debord was specially selected to attend the Naval Postgraduate School in Monterey, California, during which time he was not in direct contact with GDMA.

 

In December 2011, however, Debord accepted a position in Singapore, putting him again in close proximity to GDMA. On or about May 26, 2012, after recognizing Debord’s name on an email chain regarding fuel issues, GDMA’s Vice President of Global Operations Neil Peterson executive emailed another GDMA employee, “Look at who's the replenishment officer for ctf73, you remember sex crazy LT Debord from Essex!” Peterson emailed Debord on May 28, 2012 and invited him out for “cheesecake…just like the good ol days.”

 

So far, a total of 16 named individual defendants have been charged in connection with the GDMA corruption and fraud investigation. Of those, 11 are current or former U.S. Navy officials, including Debord, Admiral Robert Gilbeau, believed to be the first active-duty U.S. Navy flag officer charged in a federal criminal case; Captain (ret.) Michael Brooks; Commander Bobby Pitts; Captain Daniel Dusek; Commander Michael Misiewicz; Lt. Commander Todd Malaki; Commander Jose Luis Sanchez; Petty Officer First Class Daniel Layug; Naval Criminal Investigative Service Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee, who oversaw contracting in Singapore.

 

Debord, Brooks, Gilbeau, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug, and Simpkins have pleaded guilty. On Jan. 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine. On March 25, 2016, Dusek was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Misiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Beliveau was sentenced on October 14, 2016 to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on December 2, 2016 to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing.

 

Pitts were charged in May 2016 and his case are pending.

 

Also charged are five GDMA executives – Francis, Alex Wisidagama, Ed Aruffo and Neil Peterson and Linda Raja. Three have pleaded guilty; Wisidagama was sentenced on March 18, 2016 to 63 months and $34.8 million in restitution to the Navy. Francis and Aruffo await sentencing; Peterson and Raja were extradited from Singapore in September 2016 and their cases are pending.

 

In the government’s sentencing memorandum, Assistant U.S. Attorney Mark Pletcher wrote that Debord’s conduct was particularly galling considering he received a prestigious award while he was in cahoots with Francis. “Ultimately, that Debord was effectively working for GDMA and against the U.S. Navy in dereliction of his official duties at the same time as being awarded the Supply Officer of the Year Award is an unparalleled example of duplicity, even considering the high bar set by the industrious cast of defendants in this investigation.”

 

The Defense Criminal Investigative Service, Naval Criminal Investigative Service, and the Defense Contract Audit Agency are investigating. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California and Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section are prosecuting the case.

 

Anyone with information relating to fraud or corruption should contact the NCIS anonymous tip line at www.ncis.navy.mil or the DOD Hotline at www.dodig.mil/hotline, or call (800) 424-9098.

 

DEFENDANT                                                      Case Number: 16cr1457-JLS

Lieutenant Commander Gentry Debord                Age 41 San Diego

 

SUMMARY OF CHARGES

 

Conspiracy to Commit Bribery, in violation of 18 U.S.C. § 371

Maximum Penalty: 5 years in prison, a $250,000 fine,

 

INVESTIGATING AGENCIES

 

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

 

 

 

 

 

 

 

A U.S. Navy Lieutenant Commander was sentenced today to 30 months in prison for accepting cash, hotel expenses and the services of a prostitute from foreign defense contractor Glenn Defense Marine Asia (GDMA) in exchange for classified Navy information.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Alana Robinson of the Southern District of California, Director Dermot O’Reilly of the Department of Defense’s (DoD) Defense Criminal Investigative Service (DCIS) and Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) made the announcement.

In October 2016, Gentry Debord, 41, pleaded guilty to one count of conspiracy to commit bribery and admitted that in 2007 he began a corrupt relationship with Leonard Glenn Francis, the former president and CEO of GDMA, a company that provided port services to U.S. Navy ships and submarines throughout the Pacific.  In addition to his prison sentence, U.S. District Judge Janis L. Sammartino of the Southern District of California ordered Debord to pay a $15,000 fine and $37,000 in restitution to the Navy.  

As part of the scheme, between 2007 and 2013, Debord accepted cash, luxury hotels and the services of prostitutes from Francis in exchange for proprietary Navy information that benefitted GDMA.  During this period, Debord served as a supply officer aboard the U.S.S. Essex and later as a logistics officer for the Pacific Fleet.  Debord further admitted that he provided Francis and others with internal, proprietary U.S. Navy information; directed Francis and GDMA to inflate invoices to reflect services not rendered; advocated for the U.S. Navy to procure items from GDMA under its husbanding contracts; and otherwise used his position and influence in the U.S. Navy to advocate for and advance GDMA’s interests.

To date, a total of 16 individuals have been charged in connection with the scheme; of those, 10 have pleaded guilty, including Debord, Admiral Robert Gilead, Captain Michael Brooks, Commander Bobby Pitts, Captain Daniel Dusk, Commander Michael Mickiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez and U.S. Petty Officer First Class Daniel Layup.

On Jan. 21, 2016, Layup was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 2016, Malaki was sentenced to 40 months in prison and to pay $15,000 in restitution to the Navy and a $15,000 fine.  On March 25, 2016, Dusk was sentenced to 46 months in prison and to pay $30,000 in restitution to the Navy and a $70,000 fine; and on April 29, 2016, Mickiewicz was sentenced to 78 months in prison and to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy.  Beliveau was sentenced on Oct. 14, 2016, to 12 years in prison and to pay $20 million in restitution; Simpkins was sentenced on Dec. 2, 2016, to 72 months in prison; Brooks, Gilbeau and Sanchez await sentencing.  Pitts was charged in May 2016 and his case is pending.
           
DCIS, NCIS and the Defense Contract Audit Agency are investigating the case.  Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case.  

For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403

NEWS RELEASE SUMMARY – January 12, 2017

SAN DIEGO – Irma Perez, a former government contractor who worked in the lunchroom at the San Ysidro Port of Entry, was sentenced in federal court today to five years in prison for bribing a U.S. Customs and Border Protection officer to allow her to smuggle undocumented aliens into the U.S.

 

Perez pleaded guilty in August of 2016, admitting that she offered to pay approximately $4,000 per alien if Perez could use the officer’s lane to smuggle people into the United States. After the initial meeting, the officer immediately reported Perez’s bribery attempt to CBP-Office of Professional Responsibility. The officer continued to work with law enforcement, which led to Perez’s arrest during a smuggling event on May 16, 2016.

 

“This officer showed strength of character and bravery in coming forward to immediately report this crime,” said Acting U.S. Attorney Alana Robinson. “The officer put our nation’s security first, and as a result a smuggler who boldly attempted to corrupt a public official will be locked up for years.”

 

Perez’s arrest on May 16, 2016 stemmed from an investigation conducted by the Border Corruption Task Force (BCTF), which is composed of agents and officers working at the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, and U.S. Border Patrol.

 

During Perez’s change of plea hearing, she admitted that she knowingly bribed a U.S. Customs and Border Protection Officer to allow her to smuggle aliens through that officer’s lane without inspection on February 22 and May 16 of 2016. These smuggling events involved one Chinese national (on February 22, 2016) and three Brazilian nationals (on May 16, 2016). Perez later brought one of her children with her to meet with the CBP officer to pay the $4,000 bribery payment for the February 22, 2016 smuggling event. She also admitted that she used her children’s U.S. passports for the undocumented aliens.

 

In addition to the prison term, U.S. District Judge Janis L. Sammartino ordered Perez to pay a $15,400 special assessment and forfeiture of $4,000 for the bribery payment Perez paid the CBP officer on February 22, 2016. Judge Sammartino ordered that Perez be taken into custody at the conclusion of the sentencing hearing.

 

“The FBI, along with our law enforcement partners on the San Diego Border Corruption Task Force, will continue to leverage our resources to combat those who attempt to influence the security at our borders,” stated Special Agent in Charge Eric S. Birnbaum. “Let this case be a reminder that officers on the line uphold their duties with integrity and honor and attempts to tarnish that honor will not be tolerated.”

 

The FBI encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).

 

“Because this CBP officer came forward, Perez is being brought to justice for attempting to corrupt our officer and for her alien smuggling activities,” said CBP Director of Field Operations for San Diego, Pete Flores. “We count on CBP employees and officers to perform their duties with honor and distinction, working tirelessly every day to keep our country safe, and this CBP officer is no exception. This officer’s work and cooperation with the investigation after being approached, is exemplary.”
 

DEFENDANT                                                   Criminal Case No. 16CR1189-JLS

Irma Perez, Chula Vista, CA                              Age: 32

SUMMARY OF CHARGES:

Count 1 – Bribery of a Public Official (18 U.S.C. § 201(b)(1)(A) and (C))

Maximum Penalties: maximum of 15 years in prison; maximum fine of $250,000; mandatory special assessment of $100; maximum term of supervised release for 3 years

 

Counts 12 and 13 – Bringing in Certain Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))

Maximum Penalties: mandatory minimum of 3 years in prison; maximum sentence of 10 years in prison; maximum fine of $250,000 per count; maximum term of supervised release of 3 years per count; mandatory special assessment of $100; additional special assessment of $5,000 per count

 

Count 14 – Bringing in Unlawful Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))

Maximum Penalties: mandatory minimum of 5 years in prison; maximum sentence of 15 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years; special assessment of $100; additional special assessment of $5,000

 

INVESTIGATING AGENCIES

The Border Corruption Task Force (BCTF) is composed of the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Office of Field Operations, U. S. Border Patrol.

 

 

 

Assistant U. S. Attorneys Andrew P. Young (619) 546-7981,Benjamin Katz (619) 546-9604 or Mark W. Pletcher (619) 546-9714

NEWS RELEASE SUMMARY – January 10, 2016

SAN DIEGO – Owen Hanson, leader of the violent “ODOG Enterprise,” pleaded guilty today to conspiring to operate an international drug trafficking, gambling and money laundering enterprise in the United States, Central and South America and Australia from 2012 to 2016.

 

According to his plea agreement, ODOG Enterprise trafficked hundreds of kilograms of cocaine, heroin, methamphetamine, MDMA (also known as “ecstasy”), anabolic steroids and Human Growth Hormone (“HGH”). As Hanson admitted, ODOG Enterprise’s drug operation routinely distributed controlled substances at wholesale and retail levels, including selling performance enhancing drugs to numerous professional athletes. The ODOG Enterprise also operated a vast illegal gambling operation focused on high-stakes wagers placed on sporting events. The Enterprise used threats and violence against its gambling and drug customers to force compliance.

 

Three of Hanson’s associates also pleaded guilty today: Giovanni Brandolino (aka “Tank”), Marlyn Villarreal and Jeff Bellandi.

 

In one instance discussed in court papers, an individual who owed the ODOG Enterprise more than $2 million received a DVD showing a beheading, and a photo of his desecrated family’s gravestone, in an effort to collect the alleged debt. Hanson pleaded guilty today to conspiring to operate the ODOG enterprise, in violation of the Racketeer Influenced and Corrupt Organization (“RICO”) statute, and to conspiring to distribute controlled substances.

 

Brandolino, the second-highest ranking member of the ODOG Enterprise, pleaded guilty to conspiracy to violate RICO and conspiracy to commit money laundering. As part of the plea agreement Brandolino admitted that he assisted Hanson with the importation and distribution of hundreds of kilograms of cocaine and heroin. Brandolino specifically admitted establishing a drug distribution network in New Jersey and New York. Villarreal and Bellandi also pleaded guilty to conspiracy to commit money laundering.

 

So far, 16 of the 22 defendants charged in connection with this case have pleaded guilty, including Daniel Portley-Hanks, Jack Rissell, Kenny Hilinski, and Rufus Rhone. Portley-Hanks, a Los Angeles based private investigator who assisted Hanson with tracking down delinquent gamblers and other individuals who owed the enterprise money, pleaded guilty to extortion on December 27, 2016. Jack Rissell, labeled as an “enforcer” in the Superseding Indictment, also pleaded guilty to extortion on December 17, 2016. Kenny Hilinski, Hanson’s associate, pleaded guilty to the RICO conspiracy on May 24, 2016. Hilinski operated much of the gambling apparatus from Peru where he maintained various gambling websites, coordinated the collection of payments from various bookies and gamblers, and directed the organization’s runners to distribute the proceeds to Hanson through shell companies and cash deliveries. Portley-Hanks, Rissell, and Hilinski are awaiting sentencing.

 

Rhone, who pleaded guilty to conspiracy to distribute methamphetamine and cocaine early last year, was sentenced on September 19, 2016 to 72 months in prison.

 

The remaining defendants are set for trial on February 14, 2017. Luke Fairfield, a San Diego based Certified Public Accountant is accused of assisting Hanson with laundering the proceeds of his various illegal endeavors by, in part, setting up shell corporations and advising members of the Enterprise on how to structure bank transactions to avoid detection by bank security and law enforcement. Derek Loville, a former professional football player, is accused of distributing retail quantities of drugs for the ODOG Enterprise in Arizona. Dylan Anderson and Khalid Petras, the other two remaining defendants, are accused of running an illegal gambling business. charges against these four defendants are merely accusations, and they are considered innocent unless and until proven guilty.

 

The case arose out of a joint investigation by FBI, IRS and the New South Wales (Australia) Police Force in conjunction with the New South Wales Crime Commission. Hanson was initially indicted and arrested on September 9, 2015 after arranging the delivery of five kilograms of cocaine and five kilograms of methamphetamine. Eight individuals in Australia have been arrested in connection with Hanson’s global organization. Assistant U. S. Attorneys Andrew P. Young, Benjamin Katz and Mark W. Pletcher are prosecuting the case.

 

DEFENDANT Case Number: 15CR2310-WQH

 

Owen Hanson Age: 34

Luke Fairfield Age: 40

Kenny Hilinski Age: 39

Giovanni Brandolino Age: 42

Daniel Portley-Hanks Age: 70

Jack Rissell Age: 50

Derek Loville Age: 48

Chalie D’Agostino Age: 52

Marlyn Villareal Age: 32

Dylan Anderson Age: 34

Tim Bryan Age: 48

Jim Muse Age: 53

Jeff Bellandi aka “Jazzy” Age: 50

Curtis Chen Age: 33

James Duley Age: 41

Dee Foxx Age: 35

Khalid Petras Age: 55

Rahul Bhagat Age: 31

David Kipper Age: 35

Todd Oldham Age: 32

Daniel Ortega Age: 42

 

SUMMARY OF CHARGES

 

Count 1 (Defendants Hanson and Brandolino)

Racketeering Conspiracy to Conduct RICO Enterprise Affairs, 18 U.S.C. § 1962(d)

Maximum penalty: Life in prison, fine of $250,000 or twice the gross gain or loss caused by the offense, forfeiture of any property obtained or operated by RICO enterprise, five years of supervised release.

 

 

Count II (Defendants Bellandi and Villarreal)

Illegal Gambling Business, 18 U.S.C. § 1955

Maximum penalty: Five years in prison, fine of $250,000 or twice the gross gain or loss caused by the offense, forfeiture of proceeds, three years of supervised release.

 

Count 3 (Defendants Brandolino, Villarreal and Bellandi)

Money Laundering Conspiracy, 18 U.S.C. § 1956(h)

Maximum penalty: Twenty years in prison, fine of $500,000 or twice the gross gain or loss caused by the offense, forfeiture of property involved in the offense, three years of supervised release.

 

Count 4 (Defendant Hanson)

Conspiracy to Distribute Narcotics, 21 U.S.C. § 841(a)(1) and 846

Maximum penalty: Life in prison, fine of $20 million or twice the gross gain or loss caused by the offense, forfeiture of any proceeds, 10 years of supervised release.

 

 

AGENCY

Federal Bureau of Investigation – San Diego Field Office

Internal Revenue Service – San Diego

Australian Crime Commission

New South Wales Police Force

New South Wales Crime Commission

 

For Further Information, Contact: Assistant U.S. Attorney Lara A. Stingley (619)546-8403 or Assistant U.S. Attorney Joseph J.M. Orabona (619)546-7951

NEWS RELEASE SUMMARY – January 10, 2017

 

SAN DIEGO – U.S. Customs and Border Protection Officer Jose Luis Cota pleaded guilty in federal court today to bribery and alien smuggling, admitting that he accepted cash and sexual favors from smugglers in exchange for permitting them to bring undocumented aliens into the United States without inspection through Cota’s lane at the San Ysidro Port of Entry.

 

Miriam Juarez-Herrera and Gilberto Aguilar-Martinez, the two Mexican nationals working with Cota to commit these crimes, pleaded guilty last week.

 

Cota, a 15-year veteran with Customs and Border Protection, was arrested in September 2016 following an alien smuggling event with co-defendants Juarez-Herrera and Aguilar-Martinez. According to court documents, Cota confessed to his crimes at the time of his arrest.

 

The arrests of Cota, Juarez-Herrera and Aguilar-Martinez occurred after a lengthy investigation conducted by the Border Corruption Task Force (“BCTF”), which is composed of agents and officers working at the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Field Operations, and U.S. Border Patrol.

 

According to his plea agreement, Cota pleaded guilty to four separate crimes – three counts of bringing in unlawful aliens for financial gain and one count of bribery of a public official. In his agreement, Cota admitted that from at least November 2015 through September 2016, he conspired with Juarez-Herrera to smuggle and transport unlawful aliens from Mexico into the United States for financial gain – charging as much as $15,000 per person.

 

Cota and Juarez-Herrera had an agreement that as part of the criminal enterprise, Juarez-Herrera would locate and recruit undocumented aliens in Mexico who wanted to be smuggled into the United States. These undocumented aliens would then be smuggled through Cota’s vehicle primary lane at the San Ysidro, California Port of Entry.

 

Cota also agreed with Juarez-Herrera to obtain the highest smuggling fee from the undocumented aliens and to obtain fraudulent entry documents for the smuggling enterprise. Finally, Cota received bribes from Juarez-Herrera in the form of cash and sexual favors in exchange for permitting Juarez-Herrera and the undocumented aliens whom she smuggled to enter the United States without inspection through Cota’s primary vehicle inspection lane at the San Ysidro Port of Entry. Between November 2015 and September 2016, Cota admitted that he allowed Juarez-Herrera to successfully smuggle at least ten undocumented aliens from Mexico into the United States.

 

After Juarez-Herrera successfully crossed the undocumented aliens into the United States, Cota received his bribes, according to court documents. Following one event, Cota admitted to receiving $13,000 in cash for allowing two undocumented aliens to illegally enter the United States through his inspection lane. Cota agreed that the government could prove that he deposited more than $44,000 in cash bribes into his bank accounts at the time he was under investigation. In addition, federal agents seized more than $17,000 in cash bribes from Cota’s residence following a lawfully executed search warrant in September 2016. Pursuant to the terms of his plea agreement, all of this cash will be forfeited to the United States.

 

Acting United States Attorney Alana W. Robinson said, “This officer violated the public’s trust for his own personal benefit and financial gain, while risking our nation’s safety and security. Combatting this type of border corruption will remain one of our office’s highest priorities.” She also thanked the agents and officers working on the BCTF whose tireless work both uncovered this corruption and resulted in removing this corrupt official from our border security.

 

“The vast majority of CBP officers are highly skilled, hard-working professionals dedicated to our mission to protect the American public and we do not stand for those that would tarnish our badge,” said Pete Flores, Director of Field Operations in San Diego. “As in all corruption cases, we worked diligently alongside our law enforcement partners and I’m appreciative of the collaborative effort to bring Cota to justice.”

 

“This investigation was a collaborative effort among a number of federal law enforcement agencies and demonstrates our commitment to investigate DHS employees who choose to violate the core values they swore to uphold,” said Kathryn Butterfield, Special Agent in Charge for U.S. Customs and Border Protection, Office of Professional Responsibility, in San Diego. “Every CBP employee shares responsibility for promoting integrity and for meeting mission demands while sustaining the trust and confidence of the public we serve. An overwhelming majority of CBP employees do so on a daily basis by performing their duties with honor and distinction. However, like any preeminent law enforcement agency, we must be committed to identifying those who do not adhere to the highest standards of conduct. It’s a matter of personal and professional pride. DHS, Customs and Border Protection, Office of Professional Responsibility, will not tolerate those who tarnish the badge and the agency’s reputation.”

 

“Public corruption, which includes border corruption, is the number one criminal priority for the FBI because of the potential harm that actions, like Officer Cota’s actions, can have on our nation’s security,” commented FBI Special Agent in Charge Eric S. Birnbaum. “With this important mission, the San Diego Border Corruption Task Force will continue working with our law enforcement partners and combine our agencies’ resources to root out these corrupt actors.”

 

The San Diego FBI and the Border Corruption Task Force encourages the public to report allegations of public corruption to our hotline at (877) NO-BRIBE (662-7423).

 

A sentencing hearing for Cota has been scheduled for April 7, 2017 at 9:00 a.m. before U.S. District Judge Jeffrey T. Miller. Cota is currently out of custody on bond. Cota submitted a resignation letter to U.S. Customs and Border Protection effective today.

 

DEFENDANTS Criminal Case No. 16CR2280-JM

Jose Luis Cota Age: 50

 

SUMMARY OF CHARGES:

Counts 1-3 – Bringing in Unlawful Aliens for Financial Gain (8 U.S.C. § 1324(a)(2)(B)(ii))

Maximum Penalties: mandatory minimum of 3 years in prison for two or less aliens; mandatory minimum of 5 years in prison for three or more aliens; maximum sentence of 10 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years

 

Count 5 – Receiving Bribe by Public Official (18 U.S.C. § 201)

Maximum Penalties: maximum sentence of 15 years in prison; maximum fine of $250,000; maximum term of supervised release of 3 years

 

INVESTIGATING AGENCIES

The Border Corruption Task Force (BCTF) is composed of the Federal Bureau of Investigation, Customs and Border Protection – Office of Professional Responsibility, Customs and Border Protection – Field Operations, U.S. Border Patrol, Transportation Security Administration and Drug Enforcement Administration

Assistant U.S. Attorney Blanca Quintero (619) 546-7118

NEWS RELEASE SUMMARY – January 3, 2017

SAN DIEGO – Alvin Lee Neal was sentenced today by U.S. District Judge Anthony J. Battaglia to 46-months in prison for robbing a Wells Fargo Bank branch in downtown San Diego.  Judge Battaglia also ordered Neal to pay $565 in restitution to Wells Fargo Bank.

In his plea agreement, Neal, 56, admitted that on May 13, 2016, he entered the Wells Fargo bank located on 610 First Avenue, San Diego, and approached a teller. At first, Neal swiped his Wells Fargo debit card through the Wells Fargo customer card reader located at the counter.  Neal’s bank profile appeared on the teller’s computer screen.  When the teller asked Mr. Neil what he wanted to do at the branch, the defendant responded, “You’re being robbed.  Don’t make a mistake.” Neal also handed a note to the teller that read, “You’re being robbed no mistake [sic]” and further told the teller “You don’t want anyone to get hurt, don’t make a mistake.”  Neal took $565 and fled from the bank.

Based on the information from Neal’s customer profile, FBI agents and San Diego Police Department detectives established surveillance around Neal’s residential address and ultimately arrested Neal.

DEFENDANT                                  Case Number: 16CR1188-AJB

Alvin Lee Neal                                              Age: 56                      

SUMMARY OF CHARGE                                                                  

Bank Robbery, in violation of Title 18, United States Code, Section 2113(a)         

Maximum penalty: 20 years in prison

AGENCY

Federal Bureau of Investigation

San Diego Police Department

 

An El Cajon, California tax return preparer pleaded guilty today in the U.S. District Court for the Southern District of California, to three counts of aiding and assisting in the preparation of a false tax return, announced Principal Deputy Assistant Attorney General Caroline D. Ciraolo, head of the Justice Department’s Tax Division, and U.S. Attorney Laura Duffy for the Southern District of California.

According to documents filed with the court, Marla Cunningham, 50, of San Diego, California, owned and operated Cunningham’s Tax Service, a tax preparation business in El Cajon, California.  Cunningham admitted that she prepared false individual income tax returns for her clients for tax years 2008 through 2010 that included false charitable deductions, unreimbursed employee expenses, education credits, medical and dental expenses and business expenses.  Cunningham agreed that she caused a loss of more than $1.2 million.

Cunningham faces a statutory maximum sentence of three years in prison for each count of aiding and assisting in the preparation of a false return, a period of supervised release, restitution and monetary penalties at her sentencing scheduled for March 10, 2017.

Principal Deputy Assistant Attorney General Ciraolo and U.S. Attorney Duffy thanked special agents of IRS–Criminal Investigation, who conducted the investigation, and Trial Attorneys Matthew Hoffman and Benjamin Weir of the Tax Division, who are prosecuting the case.

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

Assistant U. S. Attorney Alessandra Serano (619) 546-8104 or Joseph Orabona (619) 546-7951

NEWS RELEASE SUMMARY – December 21, 2016

SAN DIEGO, CA – A member of a North Park-based criminal street gang was sentenced in federal court today for participating in a racketeering enterprise involving sex trafficking of minors, robbery and drug sales.

Tony “Lil’ Play Doh” Brown was sentenced by U.S. District Judge John A. Houston to 66 months in prison followed by three years of supervised release.

In July 2016, a jury found the defendant and his co-defendant, Robert “Pimpsy” Banks III, guilty of Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity at the conclusion of a two-plus week trial and about ten hours of deliberations. The jury also found both Brown and Banks guilty of three counts of sex trafficking of minors and one count of transportation of a minor for prostitution.

The two convicted defendants, members of the Black Mob/Skanless Enterprise, were arrested and charged in 2014 as part of a larger investigation involving 22 other defendants. Twenty-two have pleaded guilty.  Banks is set for a status hearing in January 2017.

“Sex trafficking is a crime that causes devastating long-term effects for victims,” said U.S. Attorney Laura Duffy. “Because of today’s sentence, and the numerous guilty pleas that preceded them, this gang member will no longer be able to subject women and girls to the pain, humiliation and suffering associated with sex trafficking. Unfortunately, more gangs are expanding from traditional pursuits like drug dealing into this lucrative business. These gangsters are preying upon our youth, and we are using every law enforcement resource to keep our children and our communities safe from these predators.”

“Today's sentence is a reminder of the terrible impact child exploitation has on our community,” said FBI Special Agent in Charge Eric S. Birnbaum.  “The FBI Innocence Lost Task Force will continue to work tirelessly on dismantling these greedy and ruthless criminal gangs who victimize our children.”

During this trial, prosecutors set out to show the jury how the defendants worked together as a criminal enterprise to sex traffic multiple women including four 15 and 16-year-old minors, and to commit drug sales and a robbery on behalf of the Black Mob/Skanless Enterprise.

This case was prosecuted by Assistant U.S. Attorneys Alessandra P. Serano and Joseph J.M. Orabona. These guilty verdicts are the fruit of the collaborative work by the San Diego Police Department and the FBI’s Innocence Lost Task Force. 

DEFENDANTS                                Case Number: 13CR4510-JAH

Tony “Lil Play Doh” Brown              Age: 33           Tolleson, Arizona

SUMMARY OF CHARGES

Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d) – Maximum Penalties: 20 years in Prison

Sex Trafficking of Children - Maximum Penalties: 20 years in Prison, Sex Offender Registration

Transportation of a Minor for Prostitution - Maximum Penalties: 20 years in Prison, Sex Offender Registration

INVESTIGATING AGENCIES

San Diego Police Department

Federal Bureau of Investigation

Assistant U.S. Attorneys Joseph J.M. Orabona (619)546-7951 or Michael Heyman (619) 546-9615

NEWS RELEASE SUMMARY – December 19, 2016

SAN DIEGO – Phillip E. Southwood, Jr., a 50-year-old former owner of Southwood Industries, Inc., a holding company for Jefferson Liquor in Poway, was sentenced in federal court today to 12 months and one day in prison for multiple bankruptcy-related crimes. Southwood was also ordered to pay $119,000 in restitution.

Following a referral from the U.S. Trustee’s Office and a lengthy investigation by the Federal Bureau of Investigation, Southwood was indicted on six counts of fraud involving his personal Chapter 7 bankruptcy, including bankruptcy fraud, making false oaths in bankruptcy, and making false statements under penalty of perjury in bankruptcy. After a two-week jury trial before U.S. District Judge M. James Lorenz in January 2016, the jury deliberated for several hours and found Southwood guilty on all 6 counts. 

According to the evidence proven at trial and court documents, Southwood devised a scheme to defraud his creditors by voluntarily filing a false and fraudulent bankruptcy petition. From at least December 2007 and continuing up to and including March 5, 2009, Southwood caused a number of acts to be undertaken in furtherance of his fraudulent scheme.

He drafted and executed a fraudulent Fictitious Business Name Statement for Southwood Industries, whereby he admittedly forged his father’s signature. Thereafter, Southwood caused his parents to open a bank account for the purpose of receiving and concealing proceeds from the sale of a liquor store. Southwood was not named on this account.

Then, Southwood caused to be deposited approximately $171,000 in cash from that sale into the account he directed his parents to open. Once the funds were deposited into this account, Southwood directed his parents to use the funds to pay for Southwood’s personal expenses and to give him cash at his request.  When he filed his bankruptcy on March 5, 2008, Southwood concealed the proceeds from the sale of the liquor store and the bank account opened by his parents at Southwood’s direction which was used to receive and disburse these funds.

During the bankruptcy process, Southwood testified falsely about his schedules and financial affairs, including the funds he received from the sale of the liquor store. Southwood made false statements about the amount of cash he had on hand on the date he filed his bankruptcy. Southwood also made false statements about the timing and amount of preferential payments he made to certain creditors, family members, and insiders prior to filing his bankruptcy. 

“The bankruptcy system is intended to provide eligible individuals an opportunity to obtain a fresh financial start. Unfortunately, in this case, the defendant used the bankruptcy system as a means to defraud his creditors by concealing a substantial amount of money that could have been used to pay off most of his debts,” said U.S. Attorney Laura Duffy. “Individuals who are contemplating bankruptcy are reminded that if they intentionally abuse the bankruptcy process, they will be investigated and prosecuted for their crimes.”

“Criminal bankruptcy fraud threatens the integrity of the bankruptcy system, as well as public confidence in that system,” said Tiffany Carroll, Acting U.S. Trustee for Southern California, Hawaii, and Guam (Region 15). “I am grateful to U.S. Attorney Laura Duffy and our law enforcement partners for their commitment to combating bankruptcy-related crimes, as demonstrated by today’s sentencing.”

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Region 15 is headquartered in San Diego, with an additional office in Honolulu.

DEFENDANT                                   Criminal Case No. 13CR0785-L

Phillip E. Southwood, Jr.                    Age: 50                       Poway, California 

SUMMARY OF CHARGES:

Count 1 – Bankruptcy Fraud (Title 18, United States Code, Section 157(1))

Maximum Penalties: 5 years in prison and $250,000 fine

Counts 2-3 – False Oath and Account in Bankruptcy (Title 18, United States Code, Section 152(2))

Maximum Penalties: 5 years in prison and $250,000 fine

Counts 4-6 – False Statement in Bankruptcy (Title 18, United States Code, Section 152(3))

Maximum Penalties: 5 years in prison and $250,000 fine

AGENCY

Federal Bureau of Investigation

 

 

 

           

Assistant U. S. Attorneys Alexandra Foster (619) 546-6735  and Sabrina Feve (619) 546-6786 

NEWS RELEASE SUMMARY – December 16, 2016

SAN DIEGO – Joseph Daniel Saucedo of Vista was arraigned in federal court yesterday on charges that he attempted to coerce two children, ages 11 and 16, into sending naked and sexually explicit photographs of themselves, and then threatened to expose them if they didn’t continue.

Saucedo was charged with production, attempted production and receipt of photographs of minors. U.S. Magistrate Judge Jill Burkhardt ordered him detained pending a hearing on December 22, 2016.

According to a complaint, Saucedo posed as a teenage girl and began communicating online with an 11-year-old Canadian boy. At first the two had normal conversations about everyday life. But then Saucedo, pretending to be “Amy,” sent naked pictures of young girls and asked the boy to communicate with her friend, an adult male, via telephone. “Amy” threatened to disparage the boy online if the boy did not contact her adult male friend.

After days of pressure from “Amy,” the boy relented and texted the adult male, who then called the boy using FaceTime and sent the boy photos of himself naked on his bed and other sexually explicit images. The Canadian boy continued to hang up on the adult male.

The harassment continued, and finally, on January 25, 2016, the boy received a message from “Amy” which included a video of a young boy masturbating. Amy threatened to leak the video and claim it depicted the Canadian boy.

Around this time, police in Calgary began investigating Saucedo’s online accounts that they had linked to child pornography. According to the complaint, they linked Saucedo to scores of illicit images and traced him to Vista, California.

They also discovered that Saucedo was carrying on a similar online relationship with a 16-year-old girl in Florida – this time pretending to be a modeling agent.

“As parents we need to be aggressively monitor what our children are doing online, and as prosecutors, we will aggressively go after predators who are coercing, extorting and harming our kids,” said U.S. Attorney Laura Duffy. Duffy asked that potential victims to please contact our Victim-Witness Coordinator, Polly Montano, at 619-546-8921.

“The tireless efforts and great investigative work by our special agents has lead us to serious charges against Mr. Saucedo,” said David Shaw, Special Agent in Charge for United States Homeland Security Investigations, San Diego. “Working hand in hand with our law enforcement partners, we continue to keep our children's safety as one of our top priorities.”

“The United States Secret Service will continue to work closely with our partners at Homeland Security Investigations, as well as our state, local and foreign law enforcement partners, in assisting them with investigations that involve sexually exploited children,” said David Murray, Special Agent in Charge, U.S. Secret Service San Diego Field Office. “With a collaborative effort, law enforcement has a greater impact on our communities, especially in stopping those who prey on innocent children.”

DEFENDANT                                   Case Number: 16-MJ-3834

Joseph Daniel Saucedo                       Age:25            Vista, CA

SUMMARY OF CHARGES

Count One

Attempted Use of a Child to Produce a Visual Depiction, in violation of 18 USC Sections 2251(a) and (e).

Minimum Penalty: 25 years

Maximum Penalty: 50 years

Count Two

Use of a Child to Produce a Visual Depiction, in violation of 18 USC Section 2251(a).

Minimum Penalty: 25 years

Maximum Penalty: 50 years

Count Three

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

Minimum Penalty: 15 years

Maximum Penalty: 40 years

AGENCY

United States Homeland Security Investigations

United States Secret Service

*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 Blair Perez (619) 546-7963    

NEWS RELEASE SUMMARY – December 16, 2016

SAN DIEGO – U.S. Attorney Laura E. Duffy announced today that the Southern District of California collected $20,557,036 in criminal and civil actions in Fiscal Year 2016. Of this amount, $11,664,495 was collected in criminal actions and $8,892,541 was collected in civil actions. Additionally, the Southern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $6,924,822 in civil actions pursued jointly with these offices.

“The U.S. Attorney’s Office is committed to making victims of crime whole and to protecting the federal fisc from fraud,” Duffy said. “Through robust enforcement of federal restitution statutes in criminal cases and rigorous affirmative civil enforcement of the False Claims Act and civil rights statutes, our federal prosecutors are successfully recovering property and funds for victims and the U.S. taxpayers.”

As an example of a civil recovery this past year, San Diego-based medical diagnostic laboratory, Pathway Genomics Corporation, paid $4,036,622.74 to resolve allegations that it violated the False Claims Act by paying improper kickbacks to physicians and physician groups in exchange for patient referrals.  The settlement resolved allegations that Pathway induced health care providers to refer Pathway genetic testing kits and services, and then received government reimbursement for those tests in violation of the law. The United States alleged that individual physicians received as much as $13,534 in improper reimbursements from Pathway.  It was further alleged that, as its referrals increased, Pathway billed the high costs of these laboratory analyses to federal health care programs such as Medicare and TRICARE.  Pathway has since voluntarily discontinued its physician reimbursement program.  The whistleblower in the case, a former Pathway employee, received $686,225 under the qui tam, or whistleblower, provisions of the False Claims Act.

And in July, the Southern District of California made another significant recovery – valuable coins – including 365 one-ounce American Eagle gold coins; 40 1/10 ounce American Eagle gold coins; and 712 one-ounce South African Krugerrand gold coins to apply to defendant Lloyd Irvin Taylor’s restitution.  Taylor was previously convicted of aggravated identity theft, violations of the tax code, and making false statements to financial institutions in connection with a gold purchasing scheme.  He was ordered to pay $2,241,691.08 in restitution to the victims of his criminal acts.  The recovered American Eagle and Krugerrand coins were auctioned under armed escort and the United States received over $1.4 million to apply to Mr. Taylor’s outstanding restitution.

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

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

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

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

Additionally, the U.S. Attorney’s office in Southern District of California, working with partner agencies and divisions, collected $10,628,622 in asset forfeiture actions in FY 2016.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.