Southern District of California

Assistant U.S. Attorney Michelle Pettit (619) 546-7972

NEWS RELEASE SUMMARY – December 15, 2016

SAN DIEGO – Two Navy contractors were arrested and arraigned Wednesday on charges that in unrelated cases, they gave false information about bogus bomb threats that resulted in mass evacuations of Navy ships and the pier where they were docked.

Contractor Joshua Rice, 26, is charged in a grand jury indictment with reporting to Navy security personnel that he saw an inscription of the word “bomb” on the inside of a portable toilet near three Naval vessels docked at Naval Base San Diego on the morning of May 17, 2016, when he knew there was no true threat. The false report caused a security response, shutting down all work on the nearby ships and the pier.  At the time, Rice was working as a contractor for American Marine.

Roberto Rubio, 22, is charged in a separate indictment with writing “9-24-16 400 bomb” on an interior wall onboard USS Cowpens and reporting it to another contractor on September 24, 2016.  At the time, USS Cowpens was undergoing maintenance on the San Diego Ship Repair Facility, and Rubio’s false report also caused the anticipated security response, shutting down all work on the ship until it could be verified that there was no bomb.  At the time, he was working as a welder for Navy contractor BAE Systems.

For each bomb threat, there is a security response that includes clearing the area and stopping all work, which has a significant negative impact on all affected personnel and Navy readiness.

“Everyone should know that making false bomb threats is taken very seriously by federal law enforcement, and it is a felony offense,” said U.S. Attorney Laura E. Duffy. “This is not a legal or smart way of getting out of work.”

“The bomb threats on and around Naval Base San Diego since November 2015 have had a huge negative impact on the efficiency and productivity of the shipyard's efforts to maintain Navy readiness,” said Gunnar Newquist, Special Agent in Charge of the Naval Criminal Investigative Service Southwest Field Office. “NCIS is appreciative of the tips received during the course of this ongoing investigation.”

Joshua Rice is scheduled to appear next on January 30, 2017, before Judge William Q. Hayes for a motion hearing and trial setting. 

Robert Rubio is scheduled to appear next on January 9, 2017, before Judge John A. Houston for a motion hearing and trial setting. 

DEFENDANT                                               Criminal Case No. 17CR2855-WQH

Joshua Rice                                                    Age: 26           San Diego, California

SUMMARY OF CHARGE

Count 1:Title 18, United States Code, Section 1038(a)(1): False Information and Hoaxes.

Maximum penalties: 5 years’ prison and a $250,000 fine.

DEFENDANT                                               Criminal Case No. 17CR2856-JAH

Robert Rubio                                                 Age: 22           San Diego, California

SUMMARY OF CHARGE

Count 1:Title 18, United States Code, Section 1038(a)(1): False Information and Hoaxes.

Maximum penalties: 5 years’ prison and a $250,000 fine.

INVESTIGATING AGENCY

Naval Criminal Investigative 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 Larry Casper (619) 546-6734    

NEWS RELEASE SUMMARY – December 15, 2016

SAN DIEGO – Osvaldo Contreras-Arriaga of Tijuana pleaded guilty in federal court today to managing and supervising a $20 million drug trafficking conspiracy in which multi-kilo quantities of cocaine were smuggled from Mexico to the United States.

Contreras-Arriaga, a 28-year-old Mexican National who was extradited from Colombia to the United States in June 2016, admitted that he arranged for drug smugglers to bring cocaine into the United States and ensured that smugglers were paid for transporting the cocaine. According to his plea agreement, he also arranged for U.S. bulk currency pickups from drug dealers so that these drug proceeds could be smuggled from the United States to Mexico.

As part of his plea agreement, Contreras-Arriaga agreed to an enhancement under the U.S. Sentencing Guidelines, which will result in him receiving an elevated Guidelines sentencing range.  Contreras-Arriaga admitted that, during the period charged, he was responsible for smuggling more than 50 kilograms (110 pounds) but less than 150 kilograms (330 pounds) of cocaine into the United States.

Contreras-Arriaga also admitted to working with co-defendant Omar Ayon-Diaz, 38, also a Mexican National, who owned and operated currency exchange houses in Tijuana and who was also extradited from Colombia in August 2016. On December 6, 2016, Ayon-Diaz pleaded guilty to conspiracy to commit international money laundering and admitted that he and his exchange houses knowingly received $24.5 million in smuggled proceeds from the sale of narcotics trafficking in the United States.

Joel Acedo-Ojeda, a money-laundering co-defendant, was also sentenced this week to 135 months in custody. At that sentencing, the prosecutor told the court that funds were believed to have been laundered for Sinaloa Cartel drug traffickers.

Contreras-Arriaga pleaded guilty before U.S. Magistrate Judge Barbara L. Major and Ayon Diaz pleaded guilty before U.S. Magistrate Judge Bernard G. Skomal.  Both Contreras-Arriaga and Ayon-Diaz will be sentenced on March 6, 2017 at 9:00 a.m. before U.S. District Judge Roger T. Benitez.

Contreras-Arriaga faces up to life in prison, a mandatory minimum of ten years in prison, and a $10 million fine.  Ayon-Diaz faces up to 20 years in prison, a maximum fine of $49 million (twice the value of the funds involved), and a forfeiture judgment of $24,500,000.

The U.S. Attorney’s Office is working this matter together with the Asset Forfeiture and Money Laundering Section of the Department of Justice in Washington, D.C.

DEFENDANT                                               Case Number 15cr0950-BEN                                 

Osvaldo Contreras-Arraiga                             Age: 28                       Tijuana, Mexico

SUMMARY OF CHARGES

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

Maximum Penalties: Life in prison and 10-year mandatory minimum sentence, and $10 million fine.

DEFENDANT

Omar Ayon-Diaz                                            Age: 38                       Tijuana, Mexico                     

SUMMARY OF CHARGES

Conspiracy to Commit International Money Laundering, in violation of Title 18, U.S.C., Sec. 1956(a)(2)(B)(i) and (h).

Maximum Penalties: 20 years in prison; $500,000 fine or twice the value of the funds involved.

AGENCY

Homeland Security Investigations

 

NEWS RELEASE SUMMARY – December 12, 2016

SAN DIEGO – Property manager Robert Walsh and his firm, Cornerstone Management Professionals, were charged with four counts of wire fraud in connection with a scheme to defraud a homeowners’ association of $247,000. Walsh made his first appearance in court today.

The indictment alleges that Cornerstone and Walsh falsely represented that Cornerstone could properly submit bids to the homeowners’ association for construction projects, and in submitting such bids, the defendants concealed the lower bids to make it appear as if Cornerstone was the low bidder in order to be awarded the projects.   The indictment seeks forfeiture of $247,000 of illegal proceeds.

The indictment further alleges that on March 26, 2015, the defendants sent an email, seeking a change order from the homeowner’s association to cover the cost of asbestos removal.  According to the indictment, the defendants then sent an email to the contractor working on the project on April 28, 2015, falsely representing that there was no asbestos present in order to induce the contractor to conclude the demolition project without involving an asbestos abatement firm so that the defendants could retain the entire value of the change order.

“The public health dangers of asbestos exposure are well known,” said Jay M. Green, Special Agent in Charge of EPA’s criminal enforcement program in California.  “Materials containing asbestos must be handled safely – and legally.  EPA and its law enforcement partners are committed to protecting the health and safety of workers and the communities in which they live.” 

“The FBI remains committed to rooting out fraud that affects homeowners in San Diego,” stated FBI Special Agent in Charge Eric S. Birnbaum. “This indictment is a stark reminder to those who reside in communities governed by Home Owners Associations (HOAs) to remain vigilant and engaged in the financial affairs of your communities.”

After his arraignment today, Robert Walsh was ordered to appear before U.S. District Judge Barry Ted Moskowitz on January 27, 2017 at 2:00 pm for a hearing on all motions.  A hearing for the arraignment and status of counsel for the corporate defendant was set for December 22, 2016, at 2:00 pm before U.S. Magistrate Judge Andrew G. Schopler.

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

Criminal Case Number 16cr2872-BTM

DEFENDANTS                                

Cornerstone Management Professionals, Inc.            Incorporated: 2012                  San Diego, California

Robert Walsh                                                              Age: 37                                   Ramona, California

SUMMARY OF CHARGES

Counts 1-4

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

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

AGENCIES

U.S. Environmental Protection Agency, Criminal Investigation Division;

Federal Bureau of Investigation

 

Assistant U. S. Attorney Larry Casper (619) 546-6734    

NEWS RELEASE SUMMARY – December 12, 2016

SAN DIEGO –A Culiacan, Mexico, man was sentenced today to 135 months in prison for conspiring to launder $20 million worth of drug trafficking proceeds.

Joel Acedo-Ojeda, 32, was sentenced today by U.S. District Judge Roger T. Benitez, who also ordered Acedo-Ojeda to forfeit $20 million and to pay a fine of $20,000.  Acedo-Ojeda pleaded guilty to conspiracy to commit international money laundering on June 23, 2015.

According to admissions made in connection with his guilty plea, between approximately April 2013 and April 2015, Acedo-Ojeda and his co-conspirators coordinated the smuggling of $20 million in bulk U.S. currency, which he knew to be the proceeds of drug trafficking, from the United States to Mexico.  Upon arrival in Mexico, the bulk currency was transferred to the drug smugglers who were supplying the narcotics either directly or by being smuggled back into the United States, placed into the financial system and then wired back into Mexico.

At sentencing, Assistant U.S. Attorney Larry Casper told the court that Acedo-Ojeda is believed to have laundered funds for Sinaloa Cartel drug traffickers.  The Sinaloa Cartel is one of the most notorious drug trafficking organizations operating in Mexico and imports and distributes hundreds of tons of cocaine, methamphetamine and marijuana into the United States each year.  Casper also noted that the investigation of this matter resulted in the seizure by U.S. law enforcement of more than $5 million dollars in United States currency as well as several hundred pounds each of cocaine and methamphetamine.                     

“Those who launder drug monies to further the flow of narcotics that have a devastating impact on our communities and citizens should pay a stiff price” said U.S. Attorney Laura Duffy.  “We will continue to aggressively pursue those individuals, wherever they may be located, who attempt to employ any means, financial or otherwise, in aid of efforts to move narcotics through our Southwestern border.”

“HSI is committed to stopping the flow of illicit drug proceeds across our borders that fill the coffers of the world’s most violent drug trafficking organizations,” said Michael Carney, acting special agent in charge of ICE Homeland Security Investigations (HSI) in San Diego. “Today’s sentencing highlights the commitment of HSI and our agents to bring these international money launderers to justice.”         

HSI investigated the case.  Assistant U.S. Attorney Larry Casper of the Southern District of California and Senior Trial Counsel Mark Irish of the Criminal Division’s Asset Forfeiture and Money Laundering Section.

DEFENDANTS                                            Case Number 15cr0950-BEN                                             

Joel Acedo-Ojeda                                           Age: 32           Culiacan, Mexico

SUMMARY OF CHARGES

Conspiracy to Commit International Money Laundering, in violation of Title 18, U.S.C., Sec. 1956(a)(2)(B)(i) and (h).

Maximum Penalties: 20 years in prison; $500,000 fine or twice the value of the funds involved in the offense.

AGENCY

Homeland Security Investigations

A Culiacan, Mexico, man was sentenced today to 135 months in prison for conspiring to launder $20 million worth of drug trafficking proceeds. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura Duffy of the Southern District of California and Acting Special Agent in Charge Michael Carney of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) made the announcement.

Joel Acedo-Ojeda, 32, was sentenced today by U.S. District Judge Roger T. Benitez of the Southern District of California, who also ordered Acedo-Ojeda to forfeit $20 million and to pay a fine of $20,000.  Acedo-Ojeda pleaded guilty to conspiracy to commit international money laundering on June 23, 2015. 

According to admissions made in connection with his guilty plea, between approximately April 2013 and April 2015, Acedo-Ojeda and his co-conspirators coordinated the smuggling of $20 million in bulk U.S. currency, which he knew to be the proceeds of drug trafficking, from the United States to Mexico.  Upon arrival in Mexico, the bulk currency was transferred to the drug smugglers who were supplying the narcotics either directly or by being smuggled back into the United States, placed into the financial system and then wired back into Mexico.
            
At sentencing, the government told the court that Acedo-Ojeda laundered funds for drug traffickers associated with the Sinaloa Cartel, one of the most notorious drug trafficking organizations operating in Mexico that imports and distributes hundreds of tons of cocaine, methamphetamine and marijuana into the United States each year.  As a result of the investigation, law enforcement seized more than  $5 million dollars in U.S. currency as well as several hundred pounds each of cocaine and methamphetamine.  

HSI investigated the case.  Senior Trial Counsel Mark Irish of the Criminal Division’s Asset Forfeiture and Money Laundering Section and Assistant U.S. Attorney Larry Casper of the Southern District of California prosecuted the case.

Special Assistant U.S. Attorney Jeffrey D. Hill (619) 546-7924

NEWS RELEASE SUMMARY – December 9, 2016

SAN DIEGO – Pamela Anita Thomas of Lemon Grove and Darla Ann Ausman, formerly of Henderson, Nevada, pleaded guilty in unrelated cases this week to stealing Social Security benefits intended for their parents who had died years earlier.

According to court documents, Thomas’ father began receiving Social Security retirement benefits via direct deposit into his bank account in 1998.  Although her father died in November 2001, Thomas made no effort to notify the Social Security Administration that the beneficiary of these retirement benefits had passed away, or to cancel the direct deposit.  Over more than a decade, Thomas allowed an additional $170,000 in benefits to be deposited into her deceased father’s bank account, and then repeatedly transferred the money for her own personal use.

Similarly, Ausman’s mother began receiving Social Security retirement benefits via direct deposit into her bank account in 1996, and died in May 2007. Ausman also failed to notify the Social Security Administration that the retirement benefits were no longer warranted, and allowed over $120,000 in benefits to continue to be deposited directly into her deceased mother’s bank account.

Both defendants admitted knowing that their respective parent’s Social Security retirement benefits should not have continued to be paid after their deaths.

“By collecting benefits that did not belong to them, these defendants took money away from those who need it most – elderly retirees, people with severe illnesses and widows and children of deceased wage earners,” said U.S. Attorney Laura Duffy.  “This office will continue to investigate and prosecute fraud and waste in these important government programs.”

“The Social Security Administration’s Office of the Inspector General is committed to pursuing those who violate the public trust,” said Robb Stickley, the Special Agent in Charge of the San Francisco Field Division, which is responsible for Southern California. “We will continue to uphold the integrity of Social Security’s benefit programs, which are a lifeline for so many Americans and their families.”

As a part of their plea agreements, Thomas and Ausman agreed to repay all the money that they stole from the Social Security Administration, but each still faces up to ten years in prison and a fine of up to $250,000.  Both were released on bail pending sentencing.

Thomas is scheduled to be sentenced on February 27, 2017, before U.S. District Court Judge Cynthia Bashant.  Ausman is scheduled to be sentenced on February 17, 2017, before Chief U.S. District Judge Barry Ted Moskowitz.

DEFENDANT                       Case Number 16cr2811-BAS                                  

Pamela Anita Thomas             Lemon Grove, CA

DEFENDANT                       Case Number 16cr2831-BTM                                 

Darla Ann Ausman                 Henderson, NV

SUMMARY OF CHARGES

Theft of Public Property – Title 18, U.S.C., Section 641
Maximum penalty: 10 years’ imprisonment, $250,000 fine, restitution

INVESTIGATING AGENCY

Social Security Administration’s Office of Inspector General

A former supervisory contracting officer was sentenced to 72 months in prison today for accepting bribe payments in exchange for steering U.S. Navy contracts to the president and chief executive officer of a defense contractor.   

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy 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. 

Paul Simpkins, 62, of Haymarket, Virginia, was sentenced by U.S. District Judge Janis L. Sammartino of the Southern District of California for his role in steering contracts to Leonard Francis, the president and CEO of Glenn Defense Marine Asia (GDMA).  Judge Sammartino also ordered Simpkins to pay $450,000 in restitution, to forfeit $150,000 and pay a $50,000 fine.  Simpkins pleaded guilty on June 23 to conspiracy to commit bribery and bribery.

“Paul Simpkins abused his position as a Navy contracting officer to obtain cash, air travel, hotel rooms and prostitutes,” said Assistant Attorney General Caldwell.  “Along with others convicted in this ongoing investigation, Simpkins tarnished the reputation earned by the U.S. Navy officers and enlisted and civilian personnel who honorably serve this nation every day.”

“With premeditation beyond that of many of the other defendants in this case, Simpkins methodically plotted to receive hundreds of thousands of dollars in bribe money and launder it through a secret foreign bank account in someone else’s name,” said U.S. Attorney Duffy.  “We tip our hat to the investigators who discovered this crime and brought the perpetrator to justice.  With the lengthy prison sentence imposed today, we take another step on this long journey toward deterring future misconduct and restoring the public’s trust in our most storied institutions.”

“Simpkins is yet another example of an individual forsaking his responsibility to American warfighters and taxpayers in favor of personal gain,” said Director Traver.  “As the GDMA investigation moves forward, NCIS will continue to fulfill our responsibility of holding people like Simpkins accountable for their actions.”

“Today’s sentencing of Paul Simpkins is yet another example of the continued dedication by DCIS and our law enforcement partners to bring to justice those individuals who would abuse their positions of trust within the Department of Defense,” said Director O’Reilly.  “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.”

According to admissions made as part of his plea agreement, Simpkins held a number of managerial-level contracting positions throughout the federal government, including positions as a supervisory contract specialist at the U.S. Navy Regional Contracting Center in Singapore from April 2005 through June 2007; a contracting officer assistant director with the Executive Office of U.S. Attorneys in Washington from June 2007 to December 2007; and as a supervisory manager in the Department of Defense’s (DoD) Office of Small Business Programs beginning in December 2007.  Simpkins admitted that from approximately May 2006 to September 2012, he participated in a bribery scheme with Francis in which he accepted travel and entertainment expenses, the services of prostitutes and at least $300,000 in exchange for helping to steer lucrative U.S. Navy contract to Francis and GDMA.  Simpkins provided Francis with internal, proprietary U.S. Navy information and intervened on GDMA’s behalf in contract disputes, he admitted. 

To conceal the true nature of wire transfers, Simpkins used an email account belonging to his mistress to advise Francis of the routing and account information for a bank account belonging to his wife.  In another email, Simpkins asked Francis to provide “some clean, disease free” women and in another email Simpkins advised Francis that he “will arrive in Singapore on 11 September.  Whats [sic] the plan to meet up and maybe do some honey’s? [sic]” 

Simpkins used his influence within the U.S. Navy to benefit GDMA, including by helping GDMA to secure valuable ship husbanding contracts to service U.S. Navy vessels in Thailand and the Philippines, he admitted.  In addition, Simpkins interceded on GDMA’s behalf in contract disputes with the U.S. Navy.  In one incident in 2006, for example, Simpkins’s subordinate recommended that GDMA’s husbanding contract in Thailand not be extended due to “many exceedingly high cost” items and concluded that the contract should be re-opened to competitive bidding, which would have allowed other firms to bid on the contract.  Simpkins overruled the subordinate and extended GDMA’s contract, he admitted.  In another example, Simpkins instructed U.S. Navy officials in Hong Kong to discontinue the use of meters that monitored the volume of liquid waste that GDMA removed from U.S. Navy ships under its husbanding contracts.  In June 2006, Simpkins instructed a U.S. Navy official not to review invoices that GDMA submitted in connection to a recent port call in Hong Kong after Francis complained that U.S. Navy personnel were asking questions, Simpkins admitted. 

To date, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation.  Francis has pleaded guilty and awaits sentencing.  As part of his plea agreement, Francis admitted to over-billing the U.S. Navy for over $35 million on ship husbanding contracts by, among other means, reporting that GMDA had removed more liquid waste from ships than it actually did.  Four other GDMA executives have also been charged, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja.  Wisidagama has pleaded guilty and was sentenced on March 18 to 63 months in prison and $34.8 million in restitution to the Navy.  Aruffo has pleaded guilty and awaits sentencing; Peterson’s and Raja’s cases are pending. 

The remaining 11 of the 16 individuals charged are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.

Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez and Layug have also pleaded guilty in connection with the scheme.  On Jan. 21, Layug was sentenced to 27 months in prison and a $15,000 fine; on Jan. 29, 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, 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, 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; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy.  Gilbeau and Sanchez await sentencing.  Pitts was charged in May 2016 and his case remains pending.

NCIS, DCIS and DCAA investigated 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.  

The Fraud Section plays a pivotal role in the Department of Justice’s fight against white collar crime around the country.  Those with information relating to fraud, corruption or waste in government contracting 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 Christopher P. Tenorio (619) 546-8413 

NEWS RELEASE SUMMARY – November 3, 2016

SAN DIEGO – Firas Majeed and Shatha Abbas were sentenced today to three years of probation and ordered to pay $18,270 in restitution for illegally withholding the passport of an Indonesian woman who worked in their home without pay.

            Majeed and Abbas were arrested on April 8, 2016, after the Indonesian woman – whose identity is being withheld – was rescued from their El Cajon home. On August 18, 2016, both Majeed and Abbas pleaded guilty before U.S. Magistrate Judge Jan M. Adler to procuring the victim’s passport without lawful authority in order to maintain her labor between November 2015 and March 2016. As part of the agreement, Majeed and Abbas agreed to pay the victim in full for her labor.

            The victim reported that she was previously held at a home belonging to relatives of Abbas in Dubai, United Arab Emirates. She explained that she was required to provide domestic services in Dubai for 20 hours a day, every day, without pay. The victim explained that, after five years in Dubai, she was instructed to travel to the United States and work at the home of Majeed and Abbas in El Cajon.

            The victim reported that, once in El Cajon, she was required to clean and provide other services for the entire household for up to 18 hours every day of the week. The victim explained that, again, she received no days off and was not paid for her services. She also reported she speaks no English, had no money, and was not allowed to leave the El Cajon residence alone, except to throw away the family’s trash.

            Agents from Immigration and Customs Enforcement’s Homeland Security Investigations rescued the victim from the residence of Majeed and Abbas on March 22, 2016, after receiving a translated note the victim surreptitiously gave to a healthcare worker who had visited the residence.

Investigators from the United States Department of Labor’s Wage and Hour Division determined that the victim was owed $18,270 in back wages for her labor (2,520 hours, plus 800 hours of overtime). The victim was provided $7,280 that was seized from the defendants’ home, and the defendants paid an additional $10,990 as a condition of their plea.

 “Forcing someone to work under these horrible conditions is slavery, pure and simple,” said U.S. Attorney Laura Duffy. “Victims of domestic servitude live in misery and fear. We stand ready to rescue victims and investigate and prosecute these crimes, but we need the public’s help to recognize and report these crimes.”

“Firas Majeed and Shatha Abbas’ reprehensible decision to dehumanize an innocent person has resulted in a justified sentence,” said David Shaw, special agent in charge of Homeland Security Investigations in San Diego. “It is impossible to quantify the extent of the harm done by Majeed and Abbas, but holding them accountable will continue to prove that our agents are dedicated to identifying and putting a stop to those engaged in human trafficking.”

“We have been seeing more and more of these types of domestic servitude cases involving unpaid wages of individuals of vulnerable communities,” said Rodolfo Cortez, district director of the U.S. Department of Labor’s Wage and Hour Division in San Diego. “We are committed to keep working together with the DOJ to fight against these bad actors. Our message is clear: if you are evading the law, you will be caught and held accountable.”

DEFENDANTS                                Case Number: 16CR0819-JMA

Firas Majeed (aka Firas Ghazi Majeed Al Tameemi)                                     Age: 45

Shatha Abbas (aka Shatha Yehia Abbas Hussain)                             Age: 39                      

SUMMARY OF CHARGE                                                                      

Title 18, United States Code, Section 1597 (Unlawful Conduct with Respect to Immigration Documents)           

Maximum penalty: 1 year of custody; $100,000 Fine

AGENCIES

Homeland Security Investigations

Department of Labor, Wage and Hour DivisionAssistant U. S. Attorney Christopher P. Tenorio (619) 546-8413 

Assistant U. S. Attorney Andrew R. Haden (619) 546-6961    

NEWS RELEASE SUMMARY – November 22, 2016

SAN DIEGO –Steven Doyle Burton, a documented Skyline PIRU gang member, was sentenced in federal court recently to 15 years in prison for possession of crack cocaine with intent to distribute and for being a felon in possession of firearms and ammunition.

Burton’s case is one of more than 100 prosecuted in federal court over the last three years under a renewed emphasis on gun crimes by the U.S. Attorney’s Office.

In 2013, U.S. Attorney Laura E. Duffy committed additional resources to the aggressive prosecution of firearms cases – particularly those involving career felons who would get more significant sentences in federal court versus state court. The aim was to work with the San Diego County District Attorney’s Office to use federal statutes to their fullest extent to protect communities from the most dangerous felons.

“This collaborative effort is working,” said U.S. Attorney Laura Duffy. “These career criminals are getting sentences that are as much as three times longer than what they would’ve received in state court, and that means our communities are safer.”

“Our gang prosecutors routinely coordinate and cooperate with the U.S. Attorney’s Office to reduce gang violence and keep our neighborhoods safer,” District Attorney Bonnie Dumanis said. “Our common goal is to determine which agency can best hold an offender accountable.”

Without the increased emphasis on firearms-related cases, Burton would have been prosecuted by the state, where he would have been eligible for a 50 percent reduction that didn’t apply on the federal side. In contrast, by statute all federal prisoners are required to serve a minimum of 85 percent of their prison sentence. 

Duffy tapped Assistant U.S. Attorney Andrew Haden to head the U.S. Department of Justice’s Project Safe Neighborhoods program in this district. The nationwide program aims to reduce gun and gang crime.  Duffy directed Haden to coordinate with the District Attorney’s Office and law enforcement agencies to aggressively prosecute firearms cases.

Since then, the U.S. Attorney’s Office has federally prosecuted more than one hundred cases involving firearms that would not typically have been pursued. 

In Burton’s case, a federal jury found him guilty earlier this year.

At trial, the jury heard the testimony of several officers from the San Diego Police Department’s Crime Suppression Team (CST) who had arrested Burton with approximately 38 grams of crack cocaine, along with multiple firearms and $35,700 in cash. 

A career criminal, Burton had been previously convicted in Superior Court in San Diego in 2005 and 2014 for dealing crack cocaine.  Burton was referred by the San Diego District Attorney’s Office Gang Unit for federal prosecution via the Project Safe Neighborhoods program after his most recent arrest.  He was sentenced on November 15, 2016.

The largest source of cases for the PSN program has been the San Diego District Attorney’s Office.  Specifically, the Gang Unit began to strategically refer cases involving firearms for federal prosecution.  In doing so, they have attempted to identify individuals that pose a significant threat to citizens of San Diego who – for a variety of reasons – are not being deterred by the California criminal justice system.

For example, the first firearms case brought under the renewed program was U.S. v. Catlin, 13-CR-1568-JLS.  Catlin was known to law enforcement as a prominent leader within the 5/9 Brim street gang in southeast San Diego.  Despite his notoriety, Catlin had been able to avoid a serious criminal conviction after receiving a five-year prison sentence for dealing crack cocaine in 2002.

In March 2013, Catlin was caught by officers from the San Diego Police Department in possession of a loaded firearm.  Because it had been more than a decade since his last criminal conviction, Catlin was perceived as likely to receive a probationary sentence in state court.  Instead, Catlin was prosecuted federally and was sentenced to 71 months in federal prison.

After the successful prosecution of Catlin, the San Diego Police Department Gang Suppression Team (“GST”) continued to refer cases for federal prosecution.  Those cases often highlighted the dangerous scenarios that officers face on patrol in southeast San Diego.

In another example, several officers from the GST, including Jonathon DeGuzman, testified at a federal trial in 2015 in support of U.S. v. Angulo, 15-CR-2713-GPC.  Angulo had been arrested during a traffic stop for being a felon in possession of a firearm.  After being convicted, Angulo was sentenced to 48 months in federal prison by U.S. District Court Judge Gonzalo P. Curiel.  Officer DeGuzman was killed in the line of duty approximately seven months later, on July 28, 2016. 

The Department of Homeland Security has also been a source of firearms cases prosecuted under the renewed PSN commitment.  Sergio Garcia-Rico from Chula Vista was sentenced to five years and eight months in prison after admitting to buying weapons and ammunition at gun shows across California intending to sell them to members of a drug cartel in Mexico.

Finally, although they have played a significant role in every federal firearms case brought via the PSN program, the Bureau of Alcohol Tobacco Firearms & Explosives (“ATF”) has also referred their own independent firearms investigations for prosecution. 

The cases referred by ATF have been diverse.  They have included cases involving individuals who illegally purchased firearms in Arizona and were transporting them to California, like former Border Patrol Agent Rene Martinez in U.S. v. Martinez, 16-CR-462.  ATF has also brought cases involving the illegal manufacturing and selling of assault-style firearms within San Diego, like U.S. v. Soukkeo, et al., 14-CR-3004-LAB.

Investigations into the unlawful sale of assault-style firearms often lead ATF to potentially larger criminal activity.  In April, Jessie Soto pleaded guilty in federal court to unlawfully selling assault-style firearms and for conspiring to have someone murdered by a Mexican hitman – who was actually an ATF agent working in an undercover capacity.  Soto is scheduled to be sentenced on December 16, 2016.  U.S. v. v. Soto, 16-CR-248-JLS. 

DEFENDANT                                               Case Number 16cr746-AJB                                    

Steven Doyle Burton                                      Age: 36                                   San Diego, CA

SUMMARY OF CHARGES

Possession of Crack Cocaine with Intent to Distribute, in violation of Title 21 US.C. 841(a)(1),

Maximum penalty: 40 years’ imprisonment and $5 million fine

Felon in possession of Firearms, in violation of Title 18 U.S.C. 922(g)(1)

Maximum penalty: 10 years’ imprisonment and $1 million fine

Felon in possession of Ammunition, in violation of Title 18 U.S.C. 922(g)(1)

Maximum penalty: 10 years’ imprisonment and $1 million fine

AGENCY

Bureau of Alcohol Tobacco Firearms & Explosives

Assistant U. S. Attorney Patrick J. Bumatay (619) 546-8450  

NEWS RELEASE SUMMARY – May 31, 2016

SAN DIEGO – Roberto Torres Jr., 22, pleaded guilty in federal court today to leading a drug smuggling ring that used young adults and teenagers to smuggle vast quantities of methamphetamine into the United States.

Torres, a U.S. citizen, admitted that he and his co-conspirators recruited dozens of minors, some as young as 15 years old, from Imperial Valley, California high schools and elsewhere to transport narcotics from Mexico into the United States. Torres used Facebook, the social networking platform, to coordinate the drug trafficking activity with his young smugglers. 

As part of his plea agreement, Torres agreed to a “use of a minor” enhancement under the U.S. Sentencing Guidelines, which will result in him receiving an elevated Guidelines sentencing range.

Several of Torres’ codefendants have already pleaded guilty to participating in the drug trafficking enterprise, including Genesis Flores De Anda, Hector Beltran-Garcia, Eleazar Sanchez-Aguilar, and Diana Carrillo.

Torres pleaded guilty before U.S. Magistrate Judge Bernard G. Skomal.  He will be sentenced on February 17, 2017 at 9 a.m. before U.S. District Judge Cathy Ann Bencivengo.  Torres faces up to life imprisonment, a mandatory minimum of ten years in prison, and a $10 million fine.

DEFENDANTS                                            Case Number 15cr2503-CAB/15CR3143-CAB                

Roberto Torres, Jr.                                          Age: 22          

Hector Beltran-Garcia                                     Age: 22          

Genesis Flores De Anda                                 Age: 20          

Diana Lizeth Carrillo                                      Age: 21

Eleazar Sanchez-Aguilar                                 Age: 39          

SUMMARY OF CHARGES

Conspiracy to Import Methamphetamine– Title 21, U.S.C., Sections 952, 960, 963

AGENCY

Homeland Security Investigations

Assistant U.S. Attorneys Aaron P. Arnzen (619) 546-8384 and Billy Joe McLain 619-546-6762

 

NEWS RELEASE SUMMARY – November 22, 2016

SAN DIEGO – David Aldrich pleaded guilty in federal court today to defrauding investors through litigation marketing company PLCMGMT LLC dba Prometheus.  Aldrich admitted that he conspired with James Catipay, who pleaded guilty on October 26, 2016, to lie to investors when convincing them to invest. 

Specifically, Aldrich and Catipay falsely told investors that they could redeem their investments at any time; that funds were available to pay both redemptions and hefty returns; and that their investments were secured by enforceable liens.  In reality, as Aldrich admitted, the investments were risky and unsecured and there was no existing source of funds to pay investor redemptions or returns.  

According to his plea agreement, Aldrich and Catipay established Prometheus in 2013. They then devised a business plan and began soliciting investors.  According to the business plan, Prometheus would use investor funds to pay for marketing efforts to recruit potential plaintiffs for tort actions against the manufacturers of prescription drugs and medical devices.  Any proceeds from those tort actions would fund investor redemptions and returns.

To convince investors to entrust Prometheus with their funds, Aldrich and Catipay created marketing materials for prospective investors.  The marketing materials falsely stated that the tort plaintiffs that Prometheus identified through its legal marketing would, as soon as the claims were filed, be entitled immediately to funds from legal actions that had already been settled and for which funds had been placed on escrow.

In fact, only 1% of the tort plaintiffs’ legal actions had been settled, and an overwhelming majority of the legal actions had not been litigated or successfully negotiated for settlement.  The marketing materials also represented that investor funds, once received by Prometheus, were “100%” secured by a legally enforceable lien and that investors could redeem their investments on demand.  The truth was that investor funds were never secured by a lien, and Prometheus had denied, and would continue to deny, a large majority of redemption demands received from investors.

In exchange for investing in a “Prepaid Forward Contract,” Prometheus promised to pay investors returns ranging from 100% to 300%, depending on the amount invested and the time horizon for the investment.   Based on these lies, and during the time the Aldrich was associated with Prometheus, approximately 200 investors entrusted Prometheus with more than $8.5 million.  Despite the defendant’s promises, Prometheus was only able to pay back approximately $300,000 of this amount.  Most investors, many of them retirees, lost their entire investments.

United States Attorney Laura E. Duffy reminded investors to exercise appropriate caution when presented with unproven investments and promises of exorbitant returns.  In a civil case filed by the Securities and Exchange Commission (SEC v. PLCMGMT LLC, et al., LACV16-02594-TJH), a District Court in the Central District of California has appointed a receiver to take control of Prometheus and recover investor funds.

“The FBI remains committed to uncovering fraud schemes that affect our community,” said FBI Special Agent in Charge Eric S. Birnbaum. “Today’s conviction is a reminder of the financial perils associated with high yield investment fraud scams.” If you believe you are a victim of or otherwise have information concerning an investment fraud scheme, you are encouraged to contact the FBI at 1-800-CALL-FBI.

Aldrich is scheduled to appear before District Judge John A. Houston on February 13, 2017 for sentencing. 

DEFENDANT                                   16CR2688-JAH                                            

David Aldrich                                     Age: 43                       San Diego, CA

SUMMARY OF CHARGES

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

Maximum Penalties: 5 years’ imprisonment, a maximum $250,000 fine (or twice the gross gain or loss caused by the offense), $100 special assessment, restitution.

AGENCIES

Federal Bureau of Investigation

Securities and Exchange Commission

 

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

NEWS RELEASE SUMMARY – November 22, 2016

SAN DIEGO – A former major in the U.S. Marine Corps Reserves was convicted by a federal jury yesterday for participating in a four-year conspiracy to defraud the Marine Corps out of more than $205,000.

Jason H. Wild pretended to rent the home of his fellow officer, former reservist Lieutenant Colonel Michael K. Strom, in order to claim reimbursements from the Marines when called to active duty at Camp Pendleton.  Strom, in turn, pretended to rent Wild’s home from Wild’s friend.  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.

Following a three-day jury trial before U.S. District Judge Anthony Battaglia, the jury deliberated for about 35 minutes before finding Wild guilty of wire fraud and making false claims. Strom pleaded guilty on October 28, 2016 before Judge Battaglia, admitting the wire fraud conspiracy and two counts of false claims.

Wild owned his own home in Oceanside, California throughout the time he claimed rental benefits from the Marine Corps.  Evidence at 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 at trial that neither defendant had paid a dollar of the claimed rent.   

“Military service members who choose to defraud the armed forces deprive our nation—and their fellow soldiers—of the resources they need to complete their difficult mission,” said U.S. Attorney Laura E. Duffy. “This Office will continue to vigorously pursue fraudsters in or out of uniform who seek to enrich themselves by diverting taxpayer money from the men and women defending this country.” 

Duffy 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 lengthy investigation of this case.  The Internal Revenue Service also provided valuable assistance.

“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 US Attorney's Office,” said Edward Denion, Assistant 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.”

“Yesterday’s guilty verdict should send a clear message that we intend to stop these types of fraudulent practices,” stated David Canez, Acting Special Agent in Charge for the U.S. Department of Homeland Security, Office of the Inspector General.  “This office will be vigilant in seeking prosecution of any cases in which federal officials and their conspirators cross the line into criminal activity.  DHS OIG and its law enforcement partners will continue to hold these shameless individuals accountable.”

“The guilty verdict of former U.S. Marine Corps Officer, Major Jason Wild, and related guilty plea of former Lieutenant Colonel Michael Strom demonstrates the Department of Defense's commitment to fight fraud, waste and abuse. This investigation exemplifies the dedication by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who seek to enrich themselves at the expense of the taxpayer,” said Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service.

Wild was ordered to appear on February 21, 2017 at 9:00 a.m. for sentencing before Judge Battaglia.  Strom was previously ordered to appear for his own sentencing on February 13, 2017.

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 and $250,000 fine

False Claim – 18 U.S.C. § 287

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

AGENCIES

Department of Defense, Defense Criminal Investigative Service

Naval Criminal Investigative Service

Department of Homeland Security, Office of the Inspector General

 

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

 

NEWS RELEASE SUMMARY – November 21, 2016

SAN DIEGO – Jeffrey Spanier, a 51-year-old former owner of Amerifund Capital Finance, LLC located in Boca Raton, Florida, was convicted by a federal jury today for his role in an elaborate stock-loan fraud scheme in which executives and shareholders of publicly traded corporations collectively lost over $100 million when the stock they pledged as collateral for loans was immediately sold in order to fund the loans.

After a two-week trial before U.S. District Judge Roger T. Benitez, the jury deliberated for several hours and found Spanier guilty on all 16 counts, which included conspiracy, mail fraud, wire fraud, and securities fraud.

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 pledged stock had been sold. All testified of 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 came from the United States as well as Canada, Mexico, China, Hong Kong, and the Netherlands.

Following a lengthy investigation conducted by the Federal Bureau of Investigation (FBI), Spanier was indicted on March 9, 2012, along with Douglas McClain, Jr. and James Miceli. All were charged with multiple counts of conspiracy, mail fraud, wire fraud, securities fraud, and money laundering. On May 31, 2013, a federal jury returned guilty verdicts on all counts in the indictment against McClain. Miceli committed suicide shortly before that trial.

McClain, president of Argyll Equities, Inc., was sentenced in September 2013 to 15 years in prison and ordered to pay $81,731,879.98 in restitution. He is currently serving his sentence in a federal prison.

Following an appeal in the prior criminal case, Spanier was re-indicted on July 1, 2016 on charges of conspiracy, mail fraud, wire fraud, and securities fraud.  According to the evidence presented at trial, Spanier and his company (Amerifund Capital Finance) conspired with McClain and Miceli to defraud clients by falsely representing that San Diego-based Argyll Equities, LLC was an institutional lender with significant cash to lend to corporate executives and other individuals.  Spanier and the co-conspirators falsely represented to borrowers that their stock would not be sold unless there was a default on the loan, and concealed from borrowers the truth about the fees Spanier was getting from deals.  In fact, much of the stock was immediately sold by the conspirators to fund the loans made to the clients, and Spanier earned millions of dollars in fees from these fraudulent loans.

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, when borrowers paid off their loans, 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 fall which defrauded purchasers of these publicly traded securities who purchased stock through public stock exchanges.

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

“This was a massive fraud that cost victims tens of millions of dollars and many years of emotional distress,” said U.S. Attorney Laura Duffy. “Because of dedicated investigators and prosecutors, this verdict means the defendant will be held accountable for such a brazen and destructive scheme.”

“This case demonstrates the FBI’s continued commitment to aggressively pursue those who would defraud the public through deceit and false claims,” said FBI Special Agent in Charge Eric Birnbaum.

In addition, the jury today returned special verdicts forfeiting millions in cash and property, including Spanier’s residence in Delray Beach, Florida, because proceeds were traceable to Spanier’s fraud.

Spanier was ordered to return for sentencing on February 27, 2017. 

DEFENDANT                                   Criminal Case No. 16CR1545-BEN

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

SUMMARY OF CHARGES:

Count 1 – Conspiracy (Title 18, United States Code, Section 371)

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

Counts 2-7 – Mail Fraud (Title 18, United States Code, Section 1341)

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

Counts 8-13, 15 and 16 – Wire Fraud (Title 18, United States Code, Section 1343)

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

Count 19 – Securities Fraud (Title 15, United States Code, Sections 78j(b) and 78ff)

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

Criminal Forfeiture (real and personal property)

AGENCY

Federal Bureau of Investigation

 

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

NEWS RELEASE SUMMARY – November 17, 2016

SAN DIEGO – San Ysidro resident Ricardo Lujan was charged in federal court today with a drug-related offense after an Oceanside police officer discovered millions of dollars’ worth of methamphetamine and cocaine hidden inside the floorboards, door panels, center console and elsewhere in Lujan’s vehicle.

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

Lujan is scheduled to appear in federal court before U.S. Magistrate Judge Barbara Major for arraignment hearing on November 18 at 2 p.m.

DEFENDANT

Ricardo Lujan, age 44

San Ysidro, California
 

CHARGE

Possession with intent to distribute

Title 21, United States Code, Section 841

AGENCIES

Oceanside Police Department

Drug Enforcement Administration, San Diego Narcotics Task Force

U.S. Border Patrol, San Clemente Station

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

A retired Navy Captain pleaded guilty today for his role in a massive bribery and fraud scheme involving a foreign defense contractor for the U.S. Navy. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Acting Director Dermot O’Reilly of the Department of Defense’s Defense Criminal Investigative Service (DCIS), Director Andrew Traver of the Naval Criminal Investigative Service (NCIS) and Director Anita Bales of Defense Contract Audit Agency (DCAA) made the announcement.

Michael Brooks, 57, of Fairfax Station, Virginia, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge Karen Crawford of the Southern District of California.  In May 2016, Brooks was charged in connection with his  interactions with Leonard Glenn Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore.  Brooks is scheduled to be sentenced on Feb. 17, 2017.

According to admissions made in connection with the plea agreement, from June 2006 to July 2008, Brooks served as the U.S. Naval Attaché at the U.S. Embassy in Manila, Philippines.  In exchange for travel and entertainment expenses, hotel rooms and the services of prostitutes, Brooks used his office to benefit GDMA and Francis, including by securing quarterly diplomatic clearances for GDMA vessels, which allowed GDMA vessels to transit into and out of the Philippines under the diplomatic clearance of the U.S. Embassy.  Brooks also allowed Francis to ghostwrite official U.S. Navy documents and correspondence, which Brooks submitted as his own.  In addition, Brooks provided Francis with sensitive, internal U.S. Navy information, including billing information belonging to a GDMA competitor and U.S. Navy ship schedules.   

So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation.  Including Brooks, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.

Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug and Simpkins have also 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; 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; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy.  Gilbeau, Sanchez and Simpkins await sentencing.  Pitts was charged in May 2016 and his case remains pending.

Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja.  Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy.  Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.

The NCIS, DCIS and DCAA are conducting the ongoing investigation.  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. 

Those with information relating to fraud, corruption or waste in government contracting 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 – November 15, 2016

SAN DIEGO – Retired U.S. Navy Captain Michael Brooks pleaded guilty today for his role in a massive bribery and fraud scheme involving a foreign defense contractor. 

Brooks, 57, a retired Navy Captain, of Fairfax Station, Virginia, pleaded guilty to one count of conspiracy to commit bribery before U.S. Magistrate Judge Karen Crawford. In May 2016, Brooks was charged in connection with his interactions with Leonard Francis, the former CEO of Glenn Defense Marine Asia (GDMA), a defense contracting firm based in Singapore. Brooks is scheduled to be sentenced on February 17, 2017.

According to admissions made in connection with the plea agreement, from June 2006 to July 2008, Brooks served as the U.S. Naval Attaché at the U.S. Embassy in Manila, Philippines. In exchange for travel and entertainment expenses, hotel rooms and the services of prostitutes, Brooks used his office to benefit GDMA and Francis, including by securing quarterly diplomatic clearances for GDMA vessels, which allowed GDMA vessels to transit into and out of the Philippines under the diplomatic clearance of the U.S. Embassy. Brooks also allowed Francis to ghostwrite official U.S. Navy documents and correspondence, which Brooks submitted as his own. Brooks also provided Francis with sensitive, internal U.S. Navy information, including billing information belonging to a GDMA competitor and U.S. Navy ship schedules.   

So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation.  Including Brooks, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, former NCIS Supervisory Special Agent John Beliveau II, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.

Gilbeau, Debord, Dusek, Misiewicz, Malaki, Beliveau, Sanchez, Layug and Simpkins have also 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; 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; and on Oct. 14, 2015, Beliveau was sentenced to serve 144 months in prison and ordered to pay $20 million in restitution to the Navy. Gilbeau, Sanchez and Simpkins await sentencing.  Pitts was charged in May 2016 and his case remains pending.

Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja.  Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy.  Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.

The NCIS, DCIS and DCAA are conducting the ongoing investigation. 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, corruption or waste in government contracting 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: 16-CR-1206                                     

U.S. Navy Captain Michael Brooks, retired               Age 57            Fairfax Station, Virginia

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. Attorney Melanie K. Pierson (619) 546-7976

NEWS RELEASE SUMMARY – November 10, 2016

SAN DIEGO – A former Long Beach firefighter pleaded guilty in federal court today to conspiring to illegally dispose of sewage underground, in violation of the Safe Drinking Water Act.

Kyle Vestermark admitted that he and the company he owned, Dunes Edge Storage, illegally discharged sewage from recreational vehicles (RVs) stored at Dunes Edge Storage in Brawley, California, as well as another location, Dunes Toy Storage in Holtville, California, without a permit from June of 2004 through April of 2015. 

Vestermark acknowledged that he and his company obtained a permit in 2004 for a 10,000 gallon holding tank for RV sewage at the Dunes Edge location from the Imperial County Public Health Department, which specifically prohibited the installation of underground leach lines (an issue which Vestermark had raised during the permitting process). Vestermark further admitted that he also obtained a Conditional Use Permit from the Imperial County Planning Department in 2005 from the Imperial County Planning Board for the Dunes Toy Storage location in Holtville, which also specifically prohibited the installation of underground leach lines for the disposal of the RV sewage.  The permits required Vestermark to hire a septage firm to pump out the RV sewage from the holding tanks and dispose of it at a wastewater treatment plant. 

In spite of the specific prohibitions, Vestermark admitted that he used heavy equipment in 2005 and 2006 to install underground leach lines at both locations which would permit the RV sewage to leach out underground for disposal.  Vestermark admitted that he used heavy equipment himself to install the leach lines, and hit the water table when installing the dump station at the Dunes Edge location – meaning that the sewage would contaminate the local water supply. The leach lines were removed in 2015 after Vestermark’s actions were discovered by Imperial County authorities. Vestermark also agreed to forfeit up to $200,000, if determined by the court to be the proceeds of the offense.

U.S. Magistrate Judge Barbara L. Major set a sentencing hearing February 17, 2017 at 9:30 a.m.

DEFENDANTS  

Dune Edge Storage, LLC                   Incorporated: 2006                              Brawley, California                            

Kyle Vestermark                                 Age: 46                                               Long Beach, California

SUMMARY OF CHARGES

Count 1

Conspiracy to Illegally Discharge Sewage – Title 18, U.S.C., Section 371

Maximum penalty: Five years in prison and $250,000 fine ($500,000 for a corporation)

Counts 2-8

Unlawful Injection of Sewage – Title 42, U.S.C., Section 300h-2(b)(2)

Maximum Penalty – 3 years in prison and a $250,000 fine

AGENCY

U.S. Environmental Protection Agency, Criminal Investigation Division; Bureau of Land Management, Office of Law Enforcement

 

Assistant U. S. Attorneys Sherri Hobson (619) 546-6986, Brandon Kimura (619) 546-9614, Kevin Mokhari (619) 546-8402 and Lara Stingley (619) 546-8403

NEWS RELEASE SUMMARY – November 7, 2016

SAN DIEGO –   One fentanyl smuggler was sentenced in federal court today to 10 years in prison while another pleaded guilty in an unrelated case involving a deadly drug that has become an extremely dangerous public safety threat.

In the first case, Graciela Poteciano, of Chula Vista, was sentenced by U.S. District Judge Roger T. Benitez to 120 months in prison for attempting to smuggle more than 26 pounds of fentanyl, methamphetamine and heroin.

Also today, U.S. District Judge Cynthia Bashant accepted the guilty plea of another defendant, Jose Arturo Acevedo, who attempted to smuggle 5,857 pills containing fentanyl, 55 pounds of methamphetamine, 24 pounds of cocaine, and 12 pounds of heroin. The blue pills had markings and the physical dimension of oxycodone, but the Drug Enforcement Administration lab determined that they contained fentanyl. 

Poteciano, 43, of Tijuana, Mexico, was convicted by a federal jury in July 2016 of three counts of smuggling into the United States approximately 26.59 pounds of fentanyl, 10 pounds of methamphetamine, and 6.57 pounds of heroin, following her jury trial in July 2016. Poteciano was charged with importation of controlled substances into the United States. in violation of Title 21, United States Code, Sections 952 and 960.

According to evidence presented at trial, Potenciano entered the San Ysidro Port of Entry on May 24, 2016, as the driver of a Chevy Avalanche. U.S. Customs and Border Protection officers discovered the drugs in a spare tire located in the under carriage.  The seized methamphetamine had a retail value of up to 80,000; the seized heroin had a retail value of up to $78,840;  the seized fentanyl had a retail value of up to $510,000.

In sentencing Poteciano today, Judge Benitez remarked about the dangers of the deadly fentanyl and how fentanyl was connected to multiple overdoses in the nation.  When fentanyl, a Schedule II synthetic opioid painkiller, is produced in clandestine laboratories, it can be 100 times more potent than morphine. Exposure to even a trace amount of fentanyl through inhalation or absorption through the skin can be fatal.

According to his plea agreement, Acevedo entered the San Ysidro Port of Entry on July 19, 2016 in his vehicle, which contained 24 packages of drugs concealed in a speaker box lying on the floor of the vehicle behind the front seats near the passenger door. He is scheduled to be sentenced on January 30, 2016 before Judge Bashant.

“Fentanyl remains an extremely dangerous public safety threat,” said U.S. Attorney Laura Duffy. “I continue to be alarmed by the number of fentanyl seizures we are seeing at our borders, which can only mean more tragic deaths if users don’t wake up and take these warnings to heart.”

Last year, the Drug Enforcement Administration released a nationwide public health alert on Fentanyl, a Schedule II synthetic opioid painkiller. Fentanyl is anywhere from 25 to 50 times more potent than heroin. DEA investigations reveal that the Mexican drug cartels, including Sinaloa, are producing fentanyl from precursors sourced from China.

DEFENDANTS       

Graciela Potenciano               Age 43            Chula Vista, California           Criminal Case:  16CR1285

Jose Arturo Acevedo             Age 35            Tijuana, Mexico                      Criminal Case:  16CR1877

SUMMARY OF CHARGES

Importation of Controlled Substances (21 U.S.C. 952 and 960)

Maximum penalty:  20 years’ imprisonment and $500,000 fine

AGENCY

Customs and Border Protection

Homeland Security Investigations

 

Assistant U. S. Attorney Mark Conover (619) 546-6763    

NEWS RELEASE SUMMARY – November 7, 2016

SAN DIEGO – North Park resident Dania Olivero was arrested and charged yesterday with harboring and hiding 44 undocumented immigrants, some of whom reported that they were locked in a small backyard shed with dozens of others - without light, ventilation or a bathroom.

According to a complaint filed in federal court, the San Diego Police Department received calls from neighbors who were concerned about two vehicles dropping off multiple individuals who then nervously and hurriedly entered the home in the 4900 block of University Avenue in North Park.

When police arrived to investigate, defendant Olivero told officers that she had invited the people over to drink beer. Officers found people who appeared to be nervous, not drinking unopened beer in front of them. Some of the people ran to the back yard when they saw the officers.

Police suspected the people were undocumented immigrants and asked the U.S. Border Patrol for assistance. When Border Patrol officers questioned the people in the house, all but two identified themselves as Mexican nationals without legal status in the U.S.; the other two said they citizens of Guatemala without legal status in the U.S. All were taken into custody.

Seven remained in custody as material witnesses; the remainder are in the custody of immigration authorities pending immigration proceedings.

DEFENDANT                                   Case Number 16mj3460                                                                  

Dania Olivero                                      Age: 51                                   Cuba

SUMMARY OF CHARGES

Harboring and Concealing – Title 18, U.S.C., Section 1324(a)(1)(A)(iii)

Maximum penalty: 10 years in prison and $500,000 fine

INVESTIGATING AGENCIES

U.S. Border Patrol

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. Attorneys Emily W. Allen (619) 546-9738 and Andrew J. Galvin (619) 546-9721

NEWS RELEASE SUMMARY – November 7, 2016

SAN DIEGO – Mazen Alzoubi, a longtime Southern California real estate investor, was sentenced today to 75 months in custody by U.S. District Judge Cynthia Bashant for leading a scheme to steal title to homes and then “sell” the properties to unsuspecting buyers – before the buyers realized who the true owners were and before the true owners could put a stop to the sale.

From September 2012 through his arrest in November 2014, Alzoubi fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million that actually never belonged to him. On at least ten occasions, he was successful—earning illicit proceeds of nearly $2.2 million. 

Alzoubi pleaded guilty in January 2016 to fraud, money laundering, and identity theft.  As part of this plea, he admitted that he forged deeds that would make it appear the true owners of property had sold the home to a sham “investment” business Alzoubi controlled, when, in reality, the true owners were entirely unaware of Alzoubi’s actions.

Alzoubi would then record the forged deeds at county recorder’s offices, to make them appear legitimate.  Once the fraudulent documents were recorded in the chain of title, Alzoubi would pose as the new owner—using a web of aliases and sham businesses (with names like “Land Investments 01”) and immediately try to sell the properties.  Alzoubi worked with co-conspirators to set up bank accounts for the sham companies, so that the proceeds could be diverted directly to them.  In this way, Alzoubi collected all the proceeds of the sale, and the true owners were left with nothing.

Alzoubi and his co-conspirators assumed the identities of others in order to keep the scheme going, setting up dummy email accounts and obtaining fake driver’s licenses.  They also forged the signatures and notary stamps of real notaries to make fake documents look legitimate, and forged the signatures of real lawyers to prepare and file fraudulent court documents.  Alzoubi, the ringleader of the scheme, assumed multiple fake identities to keep the fraud going.  He also posed as real people, pretending on one occasion that he was the attorney for one of the true owners.  (Unbeknownst to Alzoubi at the time, he was talking to an undercover federal agent.)  As a result, Alzoubi was charged with, and pled guilty to, aggravated identity theft, which carries a mandatory sentence of 2 years in prison in addition to his sentence for the fraud and money laundering.

Alzoubi’s co-conspirator Daniel Deaibes pleaded guilty in March 2015, admitting that he participated in the scheme according to Alzoubi’s directions. He used the alias “John Moran” to pose as the seller’s representative in several of the fraudulent sales. Deaibes went so far as to introduce himself as “Moran” and present a fake driver’s license to two notaries public in 2014.  He admitted that he signed fraudulent documents using this alias in an effort to sell or encumber properties that belonged to unsuspecting owners.  On October 24, 2016, Judge Bashant sentenced Deaibes to 24 months in custody for his role in the scheme.

Mohamed Daoud, another co-conspirator, pleaded guilty in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme.  They used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties.  Daoud received approximately $270,000 in proceeds.  In December 2015, before he was sentenced, Daoud fled the country and is now a fugitive.

Most of the properties the co-conspirators “sold” were post-foreclosure homes owned by banks or institutions such as Fannie Mae and Freddie Mac.  Fannie Mae and Freddie Mac are government sponsored enterprises with a mission to provide liquidity, stability, and affordability to the United States housing and mortgage markets.  As part of this mission, Fannie Mae and Freddie Mac purchase residential mortgages in the secondary market, enabling lenders to replenish their funds to finance additional single family loans.  Fannie Mae and Freddie Mac can become the property owners if they own the mortgage loan at the time a home is foreclosed.

“The strength of our housing market and public confidence in our economy depends on strong enforcement efforts to root out schemes like this,” said U.S. Attorney Laura Duffy.  “The lengthy sentence in this case is a loud, clear message to anyone inclined to prey on the fallout from the devastating economic meltdown: your crimes will not be tolerated or go unpunished.”

Federal Housing Finance Agency – Office of Inspector General Special Agent in Charge Leslie DeMarco said, “Mazen Alzoubi and his co-conspirator’s greedy scheme undermines the stability of the housing market, which in turn places additional burden on innocent taxpayers.  Alzoubi earned the sentence he received today, and he has no one to blame but himself.  We will continue to root out bad actors and work to protect the housing market.”

“This fraud scheme involved each co-defendant playing a role in a tangled web of deceit.  Today’s sentencing of Mr. Alzoubi highlights the ability and commitment of law enforcement to untangle the web in order to protect innocent victims and ultimately the taxpayers from mortgage fraud schemes,” said FBI Special Agent in Charge Eric S. Birnbaum. “We are proud to be a part of the multi-agency effort to hold accountable those who engage in mortgage and bank fraud.”

 “Identity theft fraud schemes are a growing problem that victimizes both the United States government and individuals who are law-abiding consumers.  IRS Criminal Investigation takes these complex schemes very seriously,” stated Acting Special Agent in Charge Anthony J. Orlando.  “As today’s sentence shows, the government will hold accountable those who use fraud and deceit to line their pockets with money, especially when that money represents taxpayer dollars and causes harm to U.S. financial institutions.”

In addition to his jail sentence, Alzoubi was ordered to pay $2,506,414 in restitution to the victims of the fraud. 

DEFENDANT:

Mazen Alzoubi, 14CR3325-BAS                 Age: 33           Rancho Cucamonga, CA     

COUNT ONE: Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 1349.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution, and forfeiture.

COUNT TWO: Mail fraud, in violation of 18 U.S.C. § 1341.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

COUNTS THREE AND FOUR: Aggravated identity theft, in violation of 18 U.S.C. § 1028A.

Maximum Penalties: mandatory 2 years’ imprisonment, consecutive to any other term of imprisonment, $250,000 fine, $100 special assessment, restitution.

COUNT FIVE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h).

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

CO-DEFENDANTS:

Daniel Deaibes, 14CR3325-BAS                 Age: 38           Rancho Cucamonga, CA     

COUNT ONE: Mail fraud, in violation of 18 U.S.C. § 1341

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

Mohamed Daoud, 14CR3326-BAS             Age: 53           Norway

COUNT ONE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h)

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

AGENCIES

Federal Housing Finance Agency – Office of Inspector General

Federal Bureau of Investigation

Internal Revenue Service, Criminal Investigation

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

NEWS RELEASE SUMMARY – October 25, 2016

SAN DIEGO – Drug kingpin Victor Emilio Cazares Gastellum, who for years was one of the United States’ most-wanted Mexican drug trafficking suspects, was sentenced in federal court today to 180 months in custody for his role as the leader of a large-scale narcotics trafficking organization.

Cazares, also known as “El Licenciado,” was indicted by a federal grand jury in San Diego in 2007, along with 18 of his suspected lieutenants and foot soldiers. Cazares’ organization shipped multi-ton quantities of drugs from Colombia and Venezuela through Central America to Mexico. The narcotics were then smuggled across the Southwestern border, eventually making their way throughout the United States.

During today’s sentencing hearing before U.S. District Judge William Q. Hayes, Cazares was also ordered to forfeit $10 million which he admitted represented proceeds from his drug distribution activities. Prior to his sentencing, Cazares provided the government with $150,000 cashier’s check as a partial initial payment.

According to his plea agreement, Cazares admitted he was the head of a large-scale Mexico-based drug distribution organization referred to as the “Cazares Organization.” The Cazares Organization was a vertical drug trafficking organization responsible for purchasing and coordinating the importation and distribution of controlled substances from Mexico into the United States.

Cazares admitted that during the course of the conspiracy, he was responsible for distributing more than 450 kilograms of cocaine within the Southern District of California. Cazares utilized a narcotics transportation cell that imported Cazares’s controlled substances into the United States.

The United States issued a provisional arrest warrant for Cazares following his indictment, and the U.S. Department of State offered a reward of up to $5 million for information leading to his arrest and/or conviction. Cazares was captured by Mexican authorities about five years later, on April 8, 2012, at a highway checkpoint near the western city of Guadalajara. 

Cazares was believed to be aligned with Joaquin “Chapo” Guzman, former leader of the Sinaloa drug cartel, one of the most notorious and violent drug trafficking organizations operating in Mexico. The Sinaloa Cartel imports and distributes hundreds of tons of cocaine, methamphetamine, and marijuana into the United States each year.

The underlying indictments were announced at a news conference in San Diego by then Attorney General Alberto Gonzales. The 22-month sting, code-named “Operation Imperial Emperor,” resulted in the nationwide arrests of 402 people suspected of working for the cartel, more than $45 million in cash and tons of cocaine, heroin and marijuana.

DEFENDANT                                               Case Number: 07CR0449

Victor Emilio Cazares Gastellum                   Age: 53                      

SUMMARY OF CHARGES

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

AGENCIES

Drug Enforcement Administration

El Centro Police Department

 

 

 

 

Assistant U. S. Attorney Melanie Pierson (619) 546-7976    

NEWS RELEASE SUMMARY – October 25, 2016

SAN DIEGO – Two German shipping companies that owned and operated the Motor Vessel “Nils B” pleaded guilty to an environmental crime in federal court today, admitting that they knowingly failed to keep records related to the discharge of sludge into the ocean.

W. BOCKSTIEGEL REEDEREI GmBH & CO. KG (which operated the vessel) and W. Bockstiegel GmBH & Co. Reederei KG MS “NILS B” (which owned the vessel), pleaded guilty to one felony violation of the Act to Prevent Pollution from Ships, 33 U.S.C. § 1908(a), for failing to accurately maintain an Oil Record Book for the Motor Vessel (M/V) Nils B.

By not maintaining an accurate Oil Record Book, the firms failed to disclose that oil contaminated water had been discharged into the ocean from the vessel without the use of pollution prevention equipment. As admitted at the time of the plea, on August 5, 2014, personnel from the United States Coast Guard boarded the vessel after its entry into the Port of San Diego, California.  Once onboard, the Coast Guard discovered that the crew had failed to keep an Oil Record Book for a significant period of time, modifications had been made to piping coming from the Oil Water Separator, and oil was discovered in discharge piping that should not have been present.

The defendant acknowledged that Coast Guard examiners took oil samples from the Oil Water Separator’s overboard discharge valve and from the vessel’s sludge tank and the samples from the two locations matched.  Sludge is never to be discharged through an Oil Water Separator; only machinery space bilge water may be discharged in that manner. The Coast Guard also discovered a black hose near the Oil Water Separator that contained slightly weathered light fuel oil mixed with lubricating oil. In the industry, such a hose is known as a “magic hose” because it makes the oil and sludge disappear like magic.

The defendants, in pleading guilty, admitted that the Oil Record Book on board the vessel did not disclose any discharges of sludge between the time that the overboard discharge valve had been cleaned (while the vessel was in dry dock in June of 2014) and its entry into the Port of San Diego in August.

According to the plea documents, the company and the United States agree to recommend that the Court impose a total criminal penalty of $750,000, of which $250,000 will be a community service payment for the benefit of the Tijuana River National Estuarine Research Reserve to further research related to the effects of pollution on the marine estuarine environment.

This case was investigated by U.S. Coast Guard Investigative Service and U.S. Environmental Protection Agency, Criminal Investigation Division personnel in San Diego, California.  The case was prosecuted by Senior Trial Attorney Kenneth E. Nelson of the Environmental Crimes Section of the Environment and Natural Resources Division of the Department of Justice, and Assistant U.S. Attorney Melanie Pierson of the U.S. Attorney's Office for the Southern District of California.

Sentencing is scheduled for November 3, 2016 at 9:30 a.m. before U.S. District Judge Dana Sabraw.

DEFENDANTS                                            Case Number 16cr2440                                           

W. Bocksteigel GmBH & Co., Reederei KG MS “NILS B”

Emden, Germany

W. Bockstiegel Reederei GmBH & Co. KG

Emden, Germany

SUMMARY OF CHARGES

Failure to Maintain Accurate Oil Record Book– Title 33, U.S.C., Section 1908(a)

Maximum penalty for a corporation: $500,000 fine

AGENCY

U.S. Coast Guard Investigative Service

U.S. Environmental Protection Agency, Criminal Investigation Division

 

 

Assistant U. S. Attorney Marietta Geckos (619) 546-6952

NEWS RELEASE SUMMARY – October 21, 2016

SAN DIEGO - The United States Attorney’s Office, in partnership with San Diego Unified School District, has launched a law-related elementary school program aimed at giving fifth-grade students the tools to sharpen positive decision-making skills and resist pressures to join gangs, take drugs or partake in other harmful behaviors. The program is designed to teach kids that their decisions have consequences.

More than 30 volunteers from the U.S. Attorneys’ Office, including federal prosecutors and administrative staff, and the U.S. Coast Guard, are spending time in local classrooms, teaching a program called “Project LEAD” to 270 fifth graders in nine classes at five schools.   

The eight-week curriculum, which includes class discussion, short skits and small-group activities, is designed to help the children develop the skills to reject alcohol, drugs, gang membership, criminal activity, truancy, bigotry, bullying and other behaviors that have extremely negative consequences for youth.

The program also serves as an informal mentoring program where students are guided by volunteers with either government, administrative, community service, criminal justice, or military backgrounds, who encourage the students to reach high for their goals.  

“We can’t solve all of society’s problems by prosecuting and incarcerating people,” said U.S. Attorney Laura Duffy. “The best way to stop crime is to prevent it. This is a program that gives children the tools they need to choose a positive path for a productive, happy life. These fifth-graders will be our leaders in 20 years. There is no greater investment our society can make.”

The participating elementary schools for the inaugural launch of this U.S. Attorney-administered program are Valencia Park, Johnson, Emerson-Bandini, Logan and St. Rita’s.

The program is patterned after the original 20-week Project LEAD that goes back to 1993 – and is a collaboration between the Los Angeles District Attorney’s Office and the Constitutional Rights Foundation.  Project LEAD is taught in 46 Los Angeles elementary schools and has become a national model. 

Project LEAD arrived in San Diego in 2012 at the urging of U.S. District Judge Gonzalo P. Curiel.  While a federal prosecutor in Los Angeles from 2002-2006, Judge Curiel was a volunteer for Project LEAD in Los Angeles.

After his appointment to the San Diego Superior Court, he encouraged the San Diego County District Attorney’s Office and La Raza Lawyers Association in San Diego to sponsor classrooms at Laura Rodriguez Elementary and Johnson Elementary schools.

Judge Curiel has supported LEAD since 2002 because it offers positive role models to children who may not have any and helps them avoid bad choices such as using drugs, joining gangs and skipping school.  “This program shows kids they can be anything they want to be – a lawyer, a doctor, an engineer, an architect - anything.”

This year, U.S. Attorney Duffy sought to create a federal version of Project LEAD and expand the number of children participating in San Diego by dispatching teams of volunteers to five elementary schools in an effort to replicate the successes of Los Angeles. Duffy credited San Diego Unified Superintendent Cindy Marten, the principals of the five elementary schools and a team of over 30 enthusiastic volunteers with making the program possible.  

This implementation of Project LEAD in San Diego is a collaboration between the U.S. Attorney’s Office, the San Diego Unified School system and the San Diego Commission of Gang Intervention and Prevention which adopted this prevention program in July 2016.   

Duffy hopes to expand the program to additional school next fall.

Since 2013, President Obama and then-Attorney General Eric Holder have stressed that federal law enforcement entities should make a stronger commitment to prevention and reentry efforts, in addition to the more traditional role of law enforcement through the various facets of the “Smart on Crime” initiatives.  Prevention, one of the tenants of Smart on Crime, is the main goal for Project LEAD.

For more information, contact:

Assistant U. S. Attorney Marietta I. Geckos (619) 546-6952

Rosa Vazquez, Guidance Counselor at Logan Elementary School.  619-344-6500 x3055

Mike Candelario, Counselor at Valencia Park Elementary School.  619-344-3500 x 3557

Rev. Rickey Laster, Executive Director of the City of San Diego’s Commission on Gang Prevention and  Intervention.  619-533-4873.  RLaster@sandiego.gov  

Lt. Timothy Nicolet, United States Coast Guard Public Affairs.  Timothy.g.nicolet@uscg.mil 619-278-7020

Jennifer Rodriguez, San Diego Unified School District – Public Affairs – 619-725-5598

Kerry Bigornia, Public Affairs Division Chief, Los Angeles District Attorney’s Office, 213-257-2966

 

 

 

 

 

 

 

 

Assistant U.S. Attorney Emily W. Allen (619) 546-9738

NEWS RELEASE SUMMARY – October 24, 2016

SAN DIEGO – Daniel Deaibes was sentenced today to 24 months for his role in a scheme to steal title to Southern California homes and then “sell” the properties to unsuspecting buyers – before the buyers realized who the true owners were.

From September 2012 through their arrest in November 2014, Deaibes and his co-conspirators, including co-defendants Mazen Alzoubi and Mohamed Daoud, fraudulently sold or attempted to sell at least 15 homes worth more than $3.6 million that actually never belonged to them. On at least 10 occasions, they were successful—earning illicit proceeds of nearly $2.2 million. 

Deaibes pleaded guilty in March 2015 to participating in the fraud and was sentenced today by U.S. District Judge Cynthia Bashant. As part of this plea, Deaibes admitted that he used aliases to deceive escrow and title officers into believing that he was “John Moran,” and that he was the true owner of property that was being marketed for sale. In fact, “John Moran” did not exist, and Deaibes and his co-conspirators planned to fraudulently sell the properties, divert the proceeds to their own bank accounts, and then quickly disburse the money overseas.  On at least three occasions, Deaibes, posing as “Moran” and presenting a fake driver’s license, appeared before notaries to sign title documents and property deeds.

To make it appear that they owned these properties, the co-conspirators generated forged deeds that made it appear the true property owner had sold his or her home to a sham real estate “investment” business the co-conspirators controlled. They forged the true owners’ signatures on the deeds, and used forged notary stamps to make them appear legitimate. In reality, though, the true owners were entirely unaware of the pretend sales. Once the fraudulent documents were recorded in the chain of title, Alzoubi (using aliases and stolen identities) listed the properties for sale, posing to buyers, escrow companies, and title officers as the new owner.  In this way, the co-conspirators collected all the proceeds of the sale, and the true owners were left with nothing. 

Alzoubi, the ringleader of the fraudulent scheme, assumed multiple fake identities to keep the scheme going.  He also posed as real people, pretending on one occasion that he was an attorney for one of the true owners.  (Unbeknownst to Alzoubi at the time, he was talking to an undercover federal agent.)  As a result of his greater role in the scheme, Alzoubi was charged with, and in January 2016 pleaded guilty to, aggravated identity theft, which carries a mandatory sentence of two years in prison in addition to his sentence for the fraud and money laundering.  His sentencing is scheduled for November 7, 2016, at 9:00 am, before Judge Bashant.

Mohamed Daoud also pleaded guilty, in July 2015, admitting that he helped Alzoubi launder the proceeds of the scheme. They used Daoud’s company, “Norway LLC,” to pretend to acquire title to some of the properties. Daoud received approximately $270,000 in proceeds. In December 2015, before he was sentenced, Daoud fled the country and is now a fugitive.

Most of the properties the co-conspirators “sold” were post-foreclosure properties owned by banks or institutions such as Fannie Mae and Freddie Mac. Fannie Mae and Freddie Mac are government-sponsored enterprises with a mission to provide liquidity, stability, and affordability to the United States housing and mortgage markets.  As part of this mission, Fannie Mae and Freddie Mac purchase residential mortgages in the secondary market, enabling lenders to replenish their funds to finance additional single family loans.  Fannie Mae and Freddie Mac can become the property owners if they own the mortgage loan at the time a home is foreclosed.

“Schemes like this one undermine the public’s confidence in their most personal and important investment, their homes,” said U.S. Attorney Laura Duffy. “I am committed to prosecuting people who continue to prey on the victims of the devastating mortgage meltdown, and sending those criminals to prison.”

“This scheme was designed to literally rip home ownership right out of the hands of innocent victims, and for those victims the costs were far greater than a title to a house,” said Leslie P. DeMarco, Special Agent in Charge, Western Region. “This scheme is callous and the perpetrators deserve the punishment set out for them. FHFA-OIG remains committed to our relentless pursuit of individuals who try to profit from the aftermath of the housing crisis.” 

“Fraud targeting a family’s home, the heart of a family’s financial investment, has a ripple effect through our nation’s economy,” said FBI Special Agent in Charge Eric S. Birnbaum.  “The FBI is committed to investigate and uncover schemes by those who defraud homeowners.”

In addition to his jail sentence, Deaibes was ordered to pay $1,819,591 in restitution to the victims of the fraud. 

DEFENDANT:

Daniel Deaibes, 14CR3325-BAS                 Age: 38           Rancho Cucamonga, CA     

COUNT ONE: Mail fraud, in violation of 18 U.S.C. § 1341

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

CO-DEFENDANTS:

Mazen Alzoubi, 14CR3325-BAS                 Age: 33           Rancho Cucamonga, CA     

COUNT ONE: Conspiracy to commit mail fraud and wire fraud, in violation of 18 U.S.C. § 1349.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution, and forfeiture.

COUNT TWO: Mail fraud, in violation of 18 U.S.C. § 1341.

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary gain or loss resulting from the offense, $100 special assessment, restitution.

COUNTS THREE AND FOUR: Aggravated identity theft, in violation of 18 U.S.C. § 1028A.

Maximum Penalties: mandatory 2 years’ imprisonment, consecutive to any other term of imprisonment, $250,000 fine, $100 special assessment, restitution.

COUNT FIVE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h).

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

Mohamed Daoud, 14CR3326-BAS             Age: 53           Norway

COUNT ONE: Conspiracy to launder money, in violation of 18 U.S.C. § 1956(h)

Maximum Penalties: 20 years’ imprisonment, $500,000 fine or twice the value of the property involved in the transaction, $100 special assessment, restitution, and forfeiture.

AGENCIES

Federal Housing Finance Agency – Office of Inspector General

Federal Bureau of Investigation

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

NEWS RELEASE SUMMARY – October 14, 2016

SAN DIEGO – Former Naval Criminal Investigative Service supervisory special agent John Beliveau II was sentenced in federal court today to 12 years in prison for disclosing sensitive law enforcement reports to a foreign defense contractor who was the target of a criminal fraud investigation in exchange for cash, luxury travel and the services of prostitutes. 

Beliveau, 47, of York, Pennsylvania, was sentenced by U.S. District Judge Janis L. Sammartino, who also ordered Beliveau to pay $20 million in restitution to the Navy. Beliveau pleaded guilty on December 17, of 2013 to conspiracy to commit bribery and bribery. Beliveau was immediately taken into custody at his own request.

According to admissions made in his plea agreement, Beliveau helped former Glenn Defense Marine Asia (GDMA) CEO Leonard Glenn Francis perpetrate a massive fraud scheme on the U.S. Navy by providing information that allowed Francis to evade and thwart criminal investigations into misconduct by GDMA.

During the sentencing hearing, Judge Sammartino said Beliveau’s position of trust as a law enforcement agent, plus the immeasurable impact of his betrayal on NCIS and the Navy, warranted a strong sentence. “A great deal of harm occurred as a result of your conduct,” she told the defendant.

“John Beliveau’s reprehensible decision to provide sensitive information to the targets of ongoing fraud investigations in exchange for bribes tragically tarnished his badge and the reputation of NCIS,” said Andrew Traver, director of the Naval Criminal Investigative Service (NCIS). “It is impossible to quantify the extent or duration of the harm done by Beliveau, but holding him accountable will further signal that NCIS is committed to rebuilding the trust he damaged.”

“John Beliveau’s deceit was a devastating blow to the U.S. Navy and ultimately the nation that he was sworn to protect,” said U.S. Attorney Laura Duffy. “While this disgraced agent serves what may be the longest prison sentence ever handed down to a federal agent in a corruption case, his colleagues are left to rebuild the trust and credibility that he singlehandedly destroyed.”

“Beliveau tarnished his NCIS badge and sold sensitive law enforcement information for envelopes of cash, luxury travel and tawdry entertainment,” said Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division. “His actions risked an important criminal investigation and the safety of witnesses who agreed to cooperate with law enforcement under the belief that their identities would be protected.  Today’s sentence reflects the gravity of those crimes [if multiple counts] and makes clear that we will not tolerate law enforcement corruption.”

“Today’s sentencing sends a resounding message that justice will be served regardless of rank or position." Said Dermot O’Reilly, director of the Department of Defense’s Defense Criminal Investigative Service. “The conduct of former NCIS Supervisory Special Agent Beliveau is reprehensible. The foundation of our criminal justice system relies on the public's trust in the law enforcement community. Whenever a law enforcement member breaches that trust, it leaves an indelible stain on those who serve to enforce our nation’s laws. The Defense Criminal Investigative Service and its law enforcement partners will relentlessly pursue any individual who places at risk the safety and security of our armed forces personnel.”

“We are proud to be part of the team that has been investigating the criminal allegations in the Glenn Defense Marine Asia case. It is especially troubling that someone in his role is on the wrong side of the investigation,” said Anita Bales, Director, Defense Contract Audit Agency.

According to his plea agreement, Beliveau acknowledged that he regularly searched confidential NCIS databases for reports of investigations related to Francis and GDMA. Over the course of years, he helped Francis avoid multiple criminal investigations by providing copies of these reports. These reports not only tipped off Francis that he was the target of a criminal investigation, but provided sensitive law enforcement information about the ongoing investigation, including the identities of the subjects of the investigations; information about witnesses, including identifying information about cooperating witnesses and their testimony; the particular aspects of GDMA’s billings that were of concern to the investigations; the fact that the investigations had obtained numerous email accounts and the identities of those accounts; the reports to prosecutors and their interactions with the investigations; and planned future investigative activities.

Beliveau regularly demanded money and prostitutes from Francis. “I will always be your friend, but you will get nothing else…until I get what you promise,” he said in an email to Francis in April 2012. “You give whores more money than you give me…I can be your best friend or your worst enemy. I am not an amateur.”

Beliveau admitted that he attempted to cover up his involvement by asking Francis to delete incriminating emails and deactivate an email account, and warned Francis about indictments and a warrant on his email account.

Beliveau also admitted that he counseled Francis on how to perpetuate his fraud scheme and evade detection. In July 2011, Beliveau advised Francis to respond to the pending NCIS investigation into GDMA’s submission of a fraudulent claim to the U.S. Navy for dockage and wharfage fees for certain U.S. Navy ship visits to Thailand.

In return for providing him with information, Francis provided Beliveau with envelopes containing cash, luxury travel from Virginia to Singapore, the Philippines and Thailand. On many occasions, beginning in 2008 and continuing through 2012, while Beliveau was posted in Singapore, Francis provided him with prostitutes, lavish dinners, entertainment and alcohol at high-end nightclubs. The tab for each of these outings routinely ran into the thousands of dollars.

So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation. Including Beliveau, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Captain (ret.) Michael Brooks, Lt. Commander Gentry Debord, 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.

Gilbeau, Debord, 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.  Gilbeau, Sanchez and Simpkins also await sentencing.  Brooks and Pitts were charged in May 2016 and their cases are pending.

Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja. Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy. Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.

DCIS, NCIS and the Defense Contract Audit Agency are investigating.  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.

DEFENDANT          

Case Number: 13cr3781

John Bertrand Beliveau II                  44        Woodbridge, Virginia

SUMMARY OF CHARGES

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

Maximum of 5 years in prison; a maximum $250,000 fine, or twice the gross gain or loss from the offense, whichever is greater

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

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

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Homeland Security Investigations

Defense Contract Audit Agency

 

A former Naval Criminal Investigative Service (NCIS) supervisory special agent was sentenced in federal court today to 144 months in prison for disclosing sensitive law enforcement reports to a defense contractor who was the target of a criminal fraud investigation in exchange for cash, luxury travel and the services of prostitutes. 

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Director Andrew Traver of the Naval Criminal Investigative Service (NCIS), Director Dermot O’Reilly of the Department of Defense’s (DoD) Defense Criminal Investigative Service (DCIS) and Director Anita Bales of the Defense Contract Audit Agency made the announcement.

John Bertrand Beliveau II, 47, of York, Pennsylvania, was sentenced by U.S. District Judge Janis L. Sammartino of the Southern District of California, who also ordered Beliveau to pay $20 million in restitution to the Navy.  According to admissions made as part of his plea agreement, Beliveau helped former Glenn Defense Marine Asia (GDMA) CEO Leonard Francis perpetrate a massive fraud scheme on the U.S. Navy by providing information that allowed Francis to avoid, stall and thwart criminal investigations into misconduct by GDMA. 

“Beliveau tarnished his NCIS badge and sold sensitive law enforcement information for envelopes of cash, luxury travel and tawdry entertainment,” said Assistant Attorney General Caldwell.  “His actions risked an important criminal investigation and the safety of witnesses who agreed to cooperate with law enforcement under the belief that their identities would be protected.  Today’s sentence reflects the gravity of those crimes and makes clear that we will not tolerate law enforcement corruption.”

“John Beliveau’s deceit was a devastating blow to the U.S. Navy and ultimately the nation that he was sworn to protect,” said U.S. Attorney Duffy.  “While this disgraced agent serves what may be the longest prison sentence ever handed down to a federal agent in a corruption case, his colleagues are left to rebuild the trust and credibility that he singlehandedly destroyed.”

“John Beliveau’s reprehensible decision to provide sensitive information to the targets of ongoing fraud investigations in exchange for bribes tragically tarnished his badge and the reputation of NCIS,” said Director Traver.  “It is impossible to quantify the extent or duration of the harm done by Beliveau, but holding him accountable will further signal that NCIS is committed to rebuilding the trust he damaged.”

“Today’s sentencing sends a resounding message that justice will be served regardless of rank or position." said Director O’Reilly.  “The conduct of former NCIS Supervisory Special Agent Beliveau is reprehensible.  The foundation of our criminal justice system relies on the public’s trust in the law enforcement community.  Whenever a law enforcement member breaches that trust, it leaves an indelible stain on those who serve to enforce our nation’s laws.  The Defense Criminal Investigative Service and its law enforcement partners will relentlessly pursue any individual who places at risk the safety and security of our armed forces personnel.”

“We are proud to be part of the team that has been investigating the criminal allegations in the Glenn Defense Marine Asia case,” said Director Bales.  “It is especially troubling that someone in his role is on the wrong side of the investigation.”

According to his plea agreement, Beliveau acknowledged that he regularly searched confidential NCIS databases for reports of investigations related to Francis and GDMA.  Over the course of years, he helped Francis avoid multiple criminal investigations by providing copies of these reports.  These reports not only tipped off Francis that he was the target of a criminal investigation, but provided sensitive law enforcement information about the ongoing investigation, including the identities of the subjects of the investigations; information about witnesses, including identifying information about cooperating witnesses and their testimony; the particular aspects of GDMA’s billings that were of concern to the investigations; the fact that the investigations had obtained numerous email accounts and the identities of those accounts; the reports to prosecutors and their interactions with the investigations; and planned future investigative activities.

Beliveau admitted that he attempted to cover up his involvement by asking Francis to delete incriminating emails and deactivate an email account, and warned Francis about indictments and a warrant on his email account.

Beliveau also admitted that he counseled Francis on how to perpetuate his fraud scheme and evade detection.  In July 2011, Beliveau advised Francis to respond to the pending NCIS investigation into GDMA’s submission of a fraudulent claim to the U.S. Navy for dockage and wharfage fees for certain U.S. Navy ship visits to Thailand. 

In return for providing him with information, Francis provided Beliveau with envelopes containing cash, luxury travel from Virginia to Singapore, the Philippines and Thailand.  On many occasions, beginning in 2008 and continuing through 2012, while Beliveau was posted in Singapore, Francis provided him with prostitutes, lavish dinners, entertainment and alcohol at high-end nightclubs.  The tab for each of these outings routinely ran into the thousands of dollars.

So far, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation.  Including Beliveau, 11 of those are current or former U.S. Navy officials, including Admiral Robert Gilbeau, Captain (ret.) Michael Brooks, Lt. Commander Gentry Debord, Commander Bobby Pitts, Captain Daniel Dusek, Commander Michael Misiewicz, Lt. Commander Todd Malaki, Commander Jose Luis Sanchez, Petty Officer First Class Daniel Layug and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.

Gilbeau, Debord, 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.  Gilbeau, Sanchez and Simpkins also await sentencing.  Brooks and Pitts were charged in May 2016 and their cases are pending.

Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja.  Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy.  Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.

DCIS, NCIS and the Defense Contract Audit Agency are investigating.  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.

A U.S. Navy lieutenant commander pleaded guilty today to a bribery charge in federal court and admitted to accepting cash, luxury hotels and prostitutes from a foreign defense contractor in exchange for proprietary Navy information.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy 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.

Gentry Debord, 41, who is based in Singapore, pleaded guilty before U.S. Magistrate Judge Bernard G. Skomal of the Southern District of California.  He is scheduled to be sentenced on Jan. 13, 2017.

In pleading guilty, Debord, who served in several logistical and supply positions in the Western Pacific, admitted that he instructed Glenn Defense Marina Asia (GDMA) executives to inflate their invoices to the Navy to cover the cost of various illicit gifts provided to him.  From November 2007 to January 2013, Debord provided former GDMA CEO Leonard Glenn Francis and others with internal and proprietary U.S. Navy information.  This information included inside Navy information about competitors’ bids and information about an investigation into GDMA’s billing practices.  Debord also admitted to misusing his position and influence in the Navy to advocate for and advance GDMA’s interests, including by approving inflated invoices for services never rendered that he directed Francis to submit.

According to admissions made in connection with his plea, as part of this conspiracy, Debord, Francis and others attempted to conceal the bribes given to Debord as well as the nature and extent of his relationship with Francis.  This was done by, for example, using coded language in communications referring to prostitutes as “cheesecake” or “bodyguards.”  Debord also requested that GDMA executives provide him with an apartment for a port visit.

In addition, Debord admitted to asking a GDMA executive to provide him with three hotel rooms, two cell phones, a van and 2,000 Singapore dollars.  Debord instructed the executive to recover the value of these items by inflating the amount that GDMA would invoice the U.S. Navy for potable water and trash removal service for the U.S.S. Essex port visit to Singapore, which GDMA proceeded to do.

So far, a total of 16 individuals 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, 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.

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 is scheduled to be sentenced tomorrow; and Gilbeau, Sanchez and Simpkins also await sentencing.  Brooks and Pitts were charged in May 2016 and their cases are pending. 

Also charged are five GDMA executives: Francis, Alex Wisidagama, Ed Aruffo, Neil Peterson and Linda Raja.  Wisidagama has pleaded guilty and was sentenced on March 18, 2016, to 63 months in prison and $34.8 million in restitution to the Navy. Francis and Aruffo have pleaded guilty and await sentencing; Peterson’s and Raja’s cases are pending.  An indictment is merely an allegation and all defendants are presumed innocent unless and until they are found guilty beyond a reasonable doubt 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. Attorneys Mark W. Pletcher (619) 546-9714 and Patrick Hovakimian (619) 546-9718

NEWS RELEASE SUMMARY – October 13, 2016

SAN DIEGO – U.S. Navy Lieutenant Commander Gentry Debord pleaded guilty to a bribery charge in federal court today, admitting that he accepted cash, luxury hotels and prostitutes from foreign defense contractor Leonard Glenn Francis in exchange for proprietary Navy information that benefitted Francis’ company, Glenn Defense Marine Asia.

Debord was so happy to receive lavish gifts that GDMA executives described him as “over the moon” and joked that Debord swallowed their bribes, “hook, line and sinker,” according to instant messages quoted in the plea agreement.

Debord also admitted that he instructed GDMA executives to inflate their invoices to the Navy to cover the cost of various illicit gifts provided to him.

“This conduct is a disgrace to the U.S. Navy and an affront to U.S. taxpayers who were left to foot the bill for parties and prostitutes,” said U.S. Attorney Laura Duffy. “We are pressing forward in this investigation until we are certain that all involved have been held accountable.”

The guilty plea was entered before U.S. Magistrate Judge Bernard G. Skomal, who set sentencing for January 13, 2017 at 9 a.m. before U.S. District Judge Janis L. Sammartino.

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.

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.”

On or about February 22, 2010, Debord asked a GDMA executive to provide him with three hotel rooms, two cell phones, a van and $2,000 Singapore dollars and instructed the executive to recover the value of these items by inflating the amount that GDMA would invoice the U.S. Navy for potable water and trash removal service for the U.S.S. Essex port visit to Singapore from February 22-25, 2009.

Francis approved the payment to Debord, and as instructed by Debord, GDMA fraudulently inflated its invoice to the U.S. Navy to account for the things of value given to Debord.

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, 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 is scheduled to be sentenced tomorrow; Gilbeau, Sanchez, and Simpkins also await sentencing.

Brooks and Pitts were charged in May 2016 and their cases 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’s and Raja’s 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: 16cr1457                                          

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

 

 

 

 

 

 

 

Assistant U.S. Attorney Emily W. Allen (619) 546-9738

NEWS RELEASE SUMMARY – October 4, 2016

SAN DIEGO – Stuart Teshima, the former Chief Financial Officer of a large San Diego-based Department of Defense contracting firm, pleaded guilty today to embezzling more than $825,000 from the company over the course of eight years.  Teshima admitted that he stole the money while he was employed as Vice President, then Senior Vice President, and finally as the CFO of the victim company. 

Teshima, who oversaw the company’s credit card program, admitted that he misused his corporate credit card to pay for personal expenses including airfare and other personal travel, jewelry, gifts for family members, furniture, lavish dinners, and even his personal income tax bill.

Before submitting invoices for reimbursement, Teshima would conceal the personal spending by altering his account statements to replace the personal items with fictitious business expenses.  He falsely reported to company representatives that the statements he submitted were generated directly from his credit card account, when in fact he altered the records himself before submitting them for reimbursement.

Teshima admitted that he started the fraud in early 2008, and continued to charge thousands of dollars per month of personal expenses until he left his employment in August 2015.  By then, he had racked up unauthorized personal charges of more than $825,000.

The victim company serves the U.S. Department of Defense and other government agencies to provide a wide variety of services including ship building and repair, nuclear operations support, and information technology.  It has offices across the country and employs more than 1,000 people.

“Corporate insiders and officers owe a special duty of honesty to their employer and its owners.  By misusing his senior executive positions for his own personal gain, former CFO Teshima inflicted serious harm on his employer, his fellow employees and defense contracting community.  I am committed to ensuring that professionals who abuse the trust of their employers are held accountable, pay full restitution, and face stiff consequences for their misconduct,” said U.S. Attorney Laura E. Duffy.

“Mr. Teshima used his high ranking positions and violated the trust of his employer in order to feed his personal lifestyle,” said FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI is committed to investigating those insiders who act on their greed and steal money from businesses in our community.”

This case was investigated by the San Diego Division of the Federal Bureau of Investigation.  Teshima entered his plea before U.S. Magistrate Judge Louisa S. Porter.  He is scheduled to be sentenced on December 19, 2016 at 9 a.m. before U.S. District Judge Anthony J. Battaglia. 

As part of his plea, Teshima has agreed to pay restitution of $825,341. 

DEFENDANT

Stuart Teshima, 16CR2223-AJB        Age: 50           San Diego, CA

CHARGE

Wire Fraud, in violation of 18 U.S.C. § 1343

Maximum Penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

 

Assistant U.S. Attorney Emily W. Allen (619) 546-9738

NEWS RELEASE SUMMARY – September 23, 2016

SAN DIEGO – Former SeaWorld San Diego manager Wilfred David Joseph Jobin-Reyes (known as “Sebastian Jobin”) was sentenced today to 30 months in custody for embezzling $818,000 from SeaWorld over more than eight years while he was employed there. 

Jobin-Reyes created fake invoices for a sham company he secretly owned, called “SJ Merchandise.”  He then used his management position to approve the payments on behalf of SeaWorld.  He also created an alias along with a dummy email account he used to correspond with SeaWorld officials, pretending to be SJ Merchandise owner “John Caldwell.”  In fact, Jobin-Reyes used his work computer to generate the fraudulent invoices, for disposable goods like “wildlife animal bookmarks,” “sea creature rings,” and “purple shiny ornaments” that were difficult to trace or verify in SeaWorld’s inventory.  Over time, his invoices grew larger, so that by 2015 he was requesting fraudulent payments for amounts just under the $10,000 threshold that would have triggered further review by his bosses at SeaWorld.  SeaWorld eventually discovered the fraud, but only after Jobin-Reyes had pocketed more than $800,000 in payments to his fake company. 

Jobin-Reyes’ fraud did not stop with SeaWorld.  He also used the sham merchandise company to cheat the IRS by claiming fake expenses on his tax returns. By pretending that his business was underwater with hefty losses, Jobin-Reyes reduced the amount of taxes he claimed he owed, and underpaid more than $200,000 for tax years 2010 through 2014. In fact, none of the claimed expenses were true, because SJ Merchandise didn’t conduct any real business at all.

In addition to the fabricated “John Caldwell,” Jobin-Reyes also stole the identity of a real person, his friend and former roommate who had once given Jobin-Reyes access to his personal information.  Jobin-Reyes convinced his friend to open business banking and credit accounts, using the friend’s social security number and good credit, then used those accounts to receive and disburse the illegal proceeds from SeaWorld.  He then went on to use the friend’s social security number to open several new credit cards, without the friend's knowledge.  Jobin-Reyes admitted that he left his friend with unpaid and overdue balances of at least $177,000.

Jobin used the money he stole from SeaWorld, the taxpayers, and his friend’s credit cards to fund a lavish lifestyle he could not otherwise afford. He spent the proceeds on cruises, plane tickets, hotels, restaurants, and shopping.  In the year preceding his arrest, according to court documents, he traveled around the country from New Orleans to Hawaii, spending the stolen money. He even arranged to have credit cards printed for his family members, secretly racking up more debt on his friend’s credit. 

“Business insiders who abuse the trust of their employers and the community should be warned that they face serious consequences and will be brought to justice,” said U.S. Attorney Laura E. Duffy.  “We are dedicated to protecting our local businesses, citizens, and taxpayers from corruption and deceit.”

U.S. Secret Service Special Agent in Charge David Murray said, “Today’s sentencing is a reminder to those who engage in financial fraud and identity theft, that the U.S. Secret Service and its law enforcement partners will actively investigate and pursue prosecution of those who violate the trust of their employers for their own personal gain.”

“As today’s sentencing of Mr. Jobin-Reyes demonstrates, defrauding your employer, your friend, and deceiving the IRS results in serious consequences, both financially and in terms of one’s freedom,” stated IRS-Criminal Investigation Acting Special Agent in Charge Anthony J. Orlando.  “IRS-Criminal Investigation is committed to working with our law enforcement partners, as well as with members of the local community, to identify, investigate, and prosecute those who commit fraud for their own personal financial gain.”

Jobin-Reyes was arrested in Dallas, Texas in March 2016, and since arrest he has been detained in federal custody as a flight risk. He was sentenced by U.S. District Judge Jeffrey T. Miller.  In addition to the prison sentence, Jobin-Reyes was ordered to pay $818,000 in restitution to SeaWorld and $177,000 to the victim of the identity theft.  He also is obligated to pay hundreds of thousands of dollars in back taxes and penalties to the IRS.

DEFENDANT:

Wilfred David Joseph Jobin-Reyes, 16CR0811-JM              Age: 48           San Diego, CA

CHARGES

Wire Fraud, in violation of 18 U.S.C. § 1343

Maximum Penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

Filing False a Tax Return, in violation of 26 U.S.C. § 7206(1)

Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

AGENCIES

United States Secret Service

Internal Revenue Service Criminal Investigation

Assistant U.S. Attorney Alessandra Serano (619) 546-8104

NEWS RELEASE SUMMARY – September 30, 2016

SAN DIEGO, CA – Antonio Glen Boleware, a 39-year-old convicted sex offender and former Marine, was sentenced in federal court today to 158 months in prison for child pornography-related offenses.

According to statements made in court, Boleware was communicating with his girlfriend, 44-year-old Joanna Olson, of Washington State, who was taking illicit photos of a three-year old girl and sending them to Boleware. Boleware was distributing those images and other illicit images to other individuals using an online texting application.

Olson, who pleaded guilty to distribution of child pornography, was sentenced in July to five years in prison for her role in the child pornography exchange. The prosecutor in that case in federal court in Washington state wrote in court papers that the abuse has had a devastating impact on the child.

Boleware was previously convicted of lewd and lascivious acts with a minor under 14 years in 2004.

During Boleware’s sentencing hearing, U.S. District Judge Gonzalo P. Curiel stated that Boleware’s distribution of the photos “magnified the seriousness of the offense” because “the material is on the internet forever, available to predators.” 

Before the sentence was handed down, Assistant U.S. Attorney Alessandra Serano urged Judge Curiel to impose the maximum 20-year prison term given Boleware’s “continued involvement in the exploitation of minors over several years.”

In this case, Boleware pleaded guilty in October 2015, admitting to possession of child pornography with a prior sex offense conviction.

“This defendant has continually victimized children who are unable to protect themselves,” said U.S. Attorney Laura Duffy. “There is no higher priority than protecting children from predators like Mr. Boleware.”

DEFENDANT                                               Criminal Case No. 15CR2462-GPS

Antonio Glen Boleware                      Age: 39                       San Diego

SUMMARY OF CHARGES

Possession of Child Pornography with a Prior Sex Offense, in violation of 18 U.S.C. §2252(a)(2)

Maximum Penalties: Twenty years in prison, mandatory minimum 10 years                      

INVESTIGATING AGENCY

Federal Bureau of Investigation

 

 

 

 

 

Assistant U. S. Attorneys Kevin Mokhtari (619) 546-8402 Sherri Hobson (619) 961-0287  

NEWS RELEASE SUMMARY – September 22, 2016

SAN DIEGO – A Tijuana man was arraigned this morning in federal court on charges that he smuggled into the United States almost 6,000 pills containing the ultra-deadly drug fentanyl in a case that signals an alarming trend.

In recent weeks, law enforcement officials have become increasingly concerned over the number of fentanyl seizures at the Ports of Entry by Customs and Border Protection Officers and at the United States Border Patrol checkpoints.  When fentanyl, a Schedule II synthetic opioid painkiller, is produced in clandestine laboratories, it can be 100 times more potent than morphine. Exposure to even a trace amount of fentanyl through inhalation or absorption through the skin can be fatal.

In federal court in San Diego today, defendant Jose Arturo Acevedo, 35, of Tijuana, Mexico, was arraigned before U.S. Magistrate Judge William V. Gallo.  Acevedo was indicted by a federal grand jury Wednesday on multiple counts related to the smuggling of 5,857 pills containing fentanyl, 55 pounds of methamphetamine, 24 pounds of cocaine, and 12 pounds of heroin. His next court appearance is scheduled for October 24, 2016 at 2 p.m. before U.S. District Judge Cynthia A. Bashant.

The blue pills had markings and the physical dimension of oxycodone, but the Drug Enforcement Administration lab determined that they contained fentanyl. Acevedo was charged with four counts of importation of a controlled substance, in violation of 21, United States Code, Section 952 and 960. According to the complaint originally filed in the case, Acevedo entered the San Ysidro Port of Entry on July 19, 2016, in his vehicle that contained 24 packages of drugs concealed in a speaker box lying on the floor of the vehicle behind the front seats near the passenger door.

In the last two weeks, there have been three additional law enforcement seizures of fentanyl in powder form by Border officials.

On September 9, 2016, defendant Philip Randolph Lilien, 64, a Denver resident living temporarily in Mexico at the time of the offense, was charged with smuggling 19 pounds of fentanyl and 20 pounds of heroin through the San Ysidro Port of Entry. He was apprehended by Customs and Border Protection Officers. According to charging documents, the CBP officers found 11 packages of drugs which were concealed in a spare tire located inside the cargo area of Lilien’s vehicle.  He is scheduled to appear in court for a preliminary hearing on September 22, 2016, before U.S. Magistrate Judge Bernard Skomal. Lilien is currently charged with importation of controlled substances, in violation of Title 21, United States Code, Sections 952 and 960.

On September 12, 2016, defendant David Martinez-Carrillo, age 26, of Mexico, was arrested at the United States Border Patrol checkpoint in Pine Valley after agents found 18 pounds of fentanyl and eight pounds of methamphetamine in his vehicle.  Martinez-Carrillo has been charged with possession of controlled substances with intent to distribute, in violation of Title 21, United States Code, Section 841(a)(1).  He is set for a preliminary hearing on October 11, 2016 before U.S. Magistrate Judge Jill L. Burkhardt.

And most recently, on September 16, 2016, Arturo Torres-Carballo, 28, from El Centro, California, and Erik Alejandro Dominguez, 23, of Mexico, were arrested near the United States Border Patrol checkpoint on Highway 86.  According to charging documents, Border Patrol Agents found 33 pounds of fentanyl concealed in 13 packages located in a secret compartment under the rear speaker area of the vehicle.  On September 19, 2016, the defendants appeared in court for arraignment on a felony charge of possession with intent to distribute, in violation of 21 United States Code, Section 841(a)(1). They are set for a preliminary hearing on September 29, 2016 before U.S. Magistrate Judge Peter C. Lewis in El Centro, California.

“We are extremely troubled by the number of fentanyl seizures we’ve seen recently,” said U.S. Attorney Laura Duffy. “Drug users, listen up! This is life or death. If you are buying painkillers on the street and not the pharmacy, your drugs might contain fentanyl, and even miniscule amounts of fentanyl can have devastating consequences for those who abuse it or literally even touch it. The extreme danger of fentanyl cannot be overstated.”

“Drug users seeking illicit prescription pills on the street can no longer be sure that they are getting a pharmaceutical product and may be getting fentanyl instead,” said DEA San Diego Special Agent in Charge William Sherman. “Fentanyl is not a better high, it is a potential death sentence.”

“Fentanyl has clearly become a growing epidemic,” said Chief Patrol Agent Richard A. Barlow, of the U.S. Border Patrol, San Diego Sector.  “The hazard that it poses is deeply concerning and for that reason, it must be aggressively addressed by the law enforcement community.”

“Fentanyl has increasingly infiltrated our community, imposing a serious and harmful threat as it becomes more common and easily accessible,” said Dave Shaw, special agent in charge for ICE Homeland Security Investigations in San Diego.   “Our agents are working closely with local law enforcement partners to identify the criminals responsible and cut off the channels that support this arising threat.”

Last year, the Drug Enforcement Administration released a nationwide public health alert on fentanyl. Fentanyl is anywhere from 25 to 50 times more potent than heroin. The drug and its analogues are being produced to a large extent in China.  DEA investigations reveal that the Mexican drug cartels, including Sinaloa, are purchasing fentanyl directly from China and producing fentanyl from precursors sourced from China. 

In some parts of the country, heroin is being spiked with fentanyl or being replaced by fentanyl.   There are a number of reasons why, but it mainly comes down to economics.  Fentanyl generates greater profits than heroin. 

DEFENDANTS       

Jose Arturo Acevedo             Age 35   Mexico                     Criminal Case No. 16CR2167

Philip Randolph Lilien           Age 64   Denver, CO              Criminal Case No.  16MJ2825

David Martinez-Carrillo         Age 26   Mexico                     Criminal Case No. 16MJ2857

Arturo Torres-Carballo           Age 28   El Centro, CA          Criminal Case No.  16MJ8788

Erik Alejandro Dominguez     Age 23   Mexico                     Criminal Case No. 16MJ8788

SUMMARY OF CHARGES

Possession with Intent to Distribute Controlled Substances (21 U.S.C. 841(a)(1)

Importation of Controlled Substances (21 U.S.C. 952 and 960)

Maximum penalty:  20 years’ imprisonment and $500,000 fine

AGENCY

Customs and Border Protection

U.S. Border Patrol

Drug Enforcement Administration

Homeland Security Investigations

*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 Susan L. Park (619) 546-6760

NEWS RELEASE SUMMARY – September 20, 2016

SAN DIEGO – Eric Watkins, aka “Crank Moe” and “Cali Made Crankk,” was sentenced Monday to 120 months in prison for conspiracy to commit sex trafficking of children in San Diego and Oceanside.

            Between September 11, 2014 and September 13, 2014, Watkins (age 21) and his co-defendant Ricardo Bojorquez (age 24) conspired to commit sex trafficking of two 15-year old females.  Watkins and Bojorquez approached young girls and women on the trolley and used Facebook and other social media sites to recruit young girls and women for the purpose of prostitution.

            In carrying out the conspiracy, Watkins and Bojorquez detained a minor female (age 15) at Bojorquez’s apartment in San Diego, California, for the purpose of prostitution.  They forced her to call her father to tell him she would not be coming home and then took away her cell phone.  She was threatened and told that she was not free to leave and would make money for them as a prostitute.  Also present was a second minor female (age 15) who had a long history of prostituting herself for Watkins’ benefit.  Watkins had his pimp moniker tattooed on the second minor female’s neck.  Watkins, who has served as the pimp for several young girls and women, also assisted Bojorquez in posting online escort advertisements containing images of the two minor females.

            On September 13, 2016, Watkins and Bojorquez took both minors from San Diego to Oceanside, California, for the purpose of making money through commercial sex acts committed by the two minors.  After being told again that she had to prostitute herself, the first minor female, who was present against her will, was able to flee to a bar in Oceanside and called her father to pick her up.

            Ricardo Bojorquez was sentenced to 78 months in prison on April 25, 2016.  Following their release from prison, both Watkins and Bojorquez will be placed on eight years of supervised release and lifetime registration as sex offenders.

            This case was the result of the collaborative work by the Federal Bureau of Investigation’s Child Exploitation Task Force and the San Diego Police Department.

DEFENDANTS                                            Case Number 14CR3661                 

Eric Watkins                                                   Age:  21                      Hometown:  Chula Vista, Calif.

Ricardo Bojorquez                                          Age:  24                      Hometown:  San Diego, Calif.

SUMMARY OF CHARGE OF CONVICTION

Conspiracy to Commit Sex Trafficking of Children, in violation of Title 18, U.S.C., Section 1594(c)

AGENCY

San Diego Police Department

Federal Bureau of Investigations

            Victims of human trafficking can be anyone, including men, women, children, adults, foreign nationals, or U.S. citizens.  Victims are protected under the law.  Please get help for yourself or a suspected victim from the National Human Trafficking Resource Center toll free, 24/7 Hotline: 888-373-7888 or TEXT BeFree or 233733.  Individuals can also call the San Diego Human Trafficking Task Force tip-line at 858-495-3611 with any non-emergency information.  For emergencies please call 911 or the local law enforcement agency in your area.  To learn more, check: www.FightHumanTraffickingSD.org 

 

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

NEWS RELEASE SUMMARY – September 15, 2016

SAN DIEGO, CA – Two former executives of foreign defense contractor Glenn Defense Marine Asia have been charged with participating in a conspiracy to submit fraudulent information, price quotes, claims and invoices to the U.S. Navy in an effort to steal millions of dollars as part of a years-long corruption and fraud scheme.

Neil Peterson, 38, and Linda Raja, 43, 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 have been arrested and are currently being held in custody in Singapore, awaiting extradition to the United States to answer charges relating to their participation in the massive scheme to defraud the U.S Navy.

The indictment, unsealed yesterday by order of U.S. District Judge Janis L. Sammartino in the Southern District of California, alleges that Peterson and Raja submitted false claims of well over $5 million to the U.S. Navy. According to the indictment, in addition to the submission of fraudulent claims and invoices, Peterson and Raja worked to perpetuate and cover up their fraud by consistently misrepresenting to the U.S. Navy the cost of providing services to its ships in Asia, even going so far as to submit false price quotes from non-existent companies, on letterhead created from graphics cut and pasted from the Internet.

Peterson and Raja are each charged with one count of conspiracy to defraud the United States with respect to claims; one count of conspiracy to commit wire fraud; and multiple counts of making false claims.

Including Peterson and Raja, 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 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; Lt. Commander Gentry Debord; 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.

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 ordered 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 ordered 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 ordered to pay a fine of $100,000 and to pay $95,000 in restitution to the Navy. Gilbeau, Beliveau, Sanchez, and Simpkins await sentencing.

Brooks, Pitts and Debord were charged in May 2016 and their cases are pending.

Also charged are three additional GDMA executives – Francis, Alex Wisidagama and Ed Aruffo.  All 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.

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. The Justice Department’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.

DEFENDANTS                                                        Case Number: 14-CR-3703-JLS                             

Neil Peterson                                       38                    Singapore

Linda Raja                                          43                    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.

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

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

False Claims, in violation of 18 U.S.C. § 287

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

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

 

 

 

 

 

 

 

Two former executives of a foreign defense contractor have been charged in an indictment unsealed today with participating in a conspiracy to submit fraudulent information, price quotes, claims and invoices to the U.S. Navy in an effort to steal millions of dollars as part of a years-long corruption and fraud scheme.

Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, U.S. Attorney Laura E. Duffy of the Southern District of California, Acting 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.

Neil Peterson, 38, and Linda Raja, 43, both of Singapore, were each charged with one count of conspiracy to defraud the United States with respect to claims; one count of conspiracy to commit wire fraud; and multiple counts of making false claims.  Both defendants have been arrested by authorities in Singapore at the request of the U.S. government.

According to the indictment, Peterson and Raja worked for Singapore-based Glenn Defense Marine Asia (GDMA) and conspired with Leonard Glenn Francis, the owner of GDMA, in order to defraud the U.S. Navy for GDMA’s financial benefit.  The indictment alleges that 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. 

The indictment alleges that Peterson and Raja submitted more than $5 million in false claims and invoices to the U.S. Navy.  In addition, Peterson and Raja allegedly worked to perpetuate and cover up their fraud by consistently misrepresenting to the U.S. Navy the cost of providing services to its ships in Asia, even going so far as to submit false price quotes from non-existent companies on letterhead created from graphics cut and pasted from the internet.

Including Peterson and Raja, a total of 16 individuals have been charged in connection with the GDMA corruption and fraud investigation.  Of those, 11 are current or former U.S. Navy officials, including Admiral Robert Gilbeau; Captain (ret.) Michael Brooks; Commander Bobby Pitts; Lt. Commander Gentry Debord; Captain Daniel Dusek; Commander Michael Misiewicz; Lt. Commander Todd Malaki; Commander Jose Luis Sanchez; Petty Officer First Class Daniel Layug; NCIS Supervisory Special Agent John Beliveau; and Paul Simpkins, a former DoD civilian employee who oversaw contracting in Singapore.

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 ordered 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 ordered 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 ordered to pay $95,000 in restitution to the Navy and a $100,000 fine.  Gilbeau, Beliveau, Sanchez and Simpkins await sentencing.

Brooks, Pitts and Debord were charged in May 2016 and their cases are pending.

Also charged are three additional GDMA executives: Francis, Alex Wisidagama and Ed Aruffo, and all three have pleaded guilty.  Wisidagama was sentenced on March 18, 2016, to 63 months in prison and was ordered to pay $34.8 million in restitution to the Navy.  Francis and Aruffo await sentencing.

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

DCIS, NCIS and the Defense Contract Audit Agency are investigating.  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 Justice Department’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 Orlando B. Gutierrez and Daniel C. Silva at (619) 546-9713

NEWS RELEASE SUMMARY – September 7, 2016

SAN DIEGO – A grand jury for the Southern District of California returned a six-count superseding indictment this morning against San Diego businessman Lakhwinder Singh “aka” Victor and his business Lovely Singh, Inc. for their role in a criminal conspiracy to distribute controlled substances, and for structuring approximately $3,938,976 into bank accounts all throughout San Diego County.   

As set forth in the superseding indictment, Singh, along with his co-defendant, Alejandro Nava, are charged with conspiring to distribute controlled substances, oxycodone, which is a Schedule II Controlled Substance. Singh owned and operated Postal Annex stores in La Mesa and Lemon Grove. In addition to distributing the controlled substances, the Postal Annex stores operated as agents for an international money transmitting business. With the cash generated from the Postal Annex stores, Singh is alleged to have conducted hundreds of cash deposits for less than $10,000 in an effort to evade the law requiring the filing of a Currency Transaction Report (a “CTR”).

Federal laws and regulations require a domestic financial institution that engages in a currency transaction involving more than $10,000 in United States currency to file a CTR with the United States Department of the Treasury. It is an offense to cause or attempt to cause a domestic financial institution to fail to file a CTR, or for a person to “structure” cash transactions with the same purpose.

“Structuring” includes conducting one or more financial transactions in currency, in any amount, at one or more financial institutions, on one or more days, in any manner, for the purpose of evading CTRs. Federal laws and regulations define “in any manner” to include the breaking down of a single sum of currency exceeding $10,000.00 into smaller sums, as well as conducting a series of transactions, including transactions “at or below $10,000.” 

“In this investigation, federal agents uncovered a very serious public health threat that should serve as a warning to those who put consumers at risk for their own financial gain,” said Dave Shaw, Special Agent in Charge for Immigrations and Customs Enforcement (ICE), Homeland Security Investigations (HSI) in San Diego. “HSI is committed to working closely with our law enforcement partners, here and abroad, to prevent imposter drugs from being smuggled into the U.S. and distributed via unregulated pharmaceutical supply chains on the Internet.”

“People who facilitate the illegal shipment of pills and make a profit are called drug dealers,” said DEA San Diego Special Agent in Charge William R. Sherman. “Thirty milligram oxycodone pills are the most abused prescription painkiller in the United States. DEA will continue to conduct investigations so that these dangerous pills do not make it to the streets for people to abuse.”

“Federal laws that regulate the reporting of financial transactions are designed to detect and stop illegal activities. As an agent for a money service business, Singh has the responsibility to comply with federal regulations and have anti-money laundering policies in place,” stated Anthony J. Orlando, Acting Special Agent in Charge for IRS Criminal Investigation. “This investigation continues to demonstrate our efforts to ensure that the financial services industry will operate in a fair and honest manner to promote public trust.”

In total, the Superseding Indictment alleges that Singh conducted 651 cash deposits between December 2011 and January 2014, for approximately $3,938,976.33; all with the intent to evade the filing of a CTR. The Superseding Indictment also contains forfeiture allegations in the same amount.

DEFENDANTS                               

Lakhwinder Singh “aka” Victor                                

Alejandro Nava                                                          

Lovely Singh, Inc.                                                     

SUMMARY OF CHARGES

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

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

Structuring and Attempt to Evade the Filing of a CTR – Title 31, U.S.C., Sections 5324(a)(1) and (a)(3)

Maximum penalty: 10 years’ imprisonment and $500,000 fine (individual), $1,000,000 fine (corporation),                                and forfeiture

AGENCIES

Homeland Security Investigations

Drug Enforcement Administration

Internal Revenue Service – Criminal Investigation

Contact: Assistant U. S. Attorney Orlando B. Gutierrez, 619-546-6958

NEWS RELEASE SUMMARY – August 31, 2016

SAN DIEGO – Physician Naga Raja Thota, a pain specialist with an office in El Cajon, was arrested this morning and charged with distributing oxycodone and other highly addictive drugs without any legitimate medical purpose in exchange for sex acts.

The doctor was taken into custody by San Diego Drug Enforcement Administration agents at his practice. He is scheduled to make his first appearance in federal court at 2 p.m. before U.S. Magistrate Judge Bernie Skomal.

The complaint said at least two young women received prescriptions for opioids without a legitimate medical purpose on numerous occasions in exchange for sex acts. The complaint also shows a pattern in which sexually-explicit texts are exchanged by the doctor and the women, followed by prescriptions written for them by Thota.  

According to the complaint, one victim said she met Thota when she was hospitalized for withdrawal symptoms for Hydrocodone and Alprazolam. Thota agreed to treat her but documented that his treatment was for pain even though this victim did not suffer from any medical condition that caused chronic or ongoing pain. This victim also stated that Thota kept increasing the dosage.

This victim, who was twenty years old when she met Thota, said she felt that if she did not submit to sexual acts with Thota he would not have provided her with additional opioid prescriptions. After being exposed to greater dosage levels of opioids by Thota, the young woman started using an even stronger opioid – heroin.     

“Prescription drug abuse and overdoses have reached alarming levels,” said U.S. Attorney Laura Duffy. “We are going after doctors who abuse their power to prescribe and exploit the desperation of addicts for their own gratification.”

“Doctors who exploit patients are the worst kind of predators.” said DEA San Diego Special Agent in Charge William Sherman. “DEA recognizes the trust the citizens of San Diego place in their doctors.  We will continue to ensure that physicians who are abusing that trust by bartering sex for prescriptions will be arrested and prosecuted.”

If anyone has information regarding other victims or if you believe you were victimized by Dr. Thota, we urge you to contact DEA at (858) 616-4100 and ask for the Diversion Duty Agent.  

Under Title 21, United States Code, Section 841, and Title 21, United States Code of Federal Regulations, Section 1306.04(a), a medical doctor may not prescribe a controlled substance unless there is a legitimate medical purpose.

DEFENDANT                      CRIMINAL CASE NO. 16MJ2679

Naga Raja Thota                     Age: 62                       San Diego, CA

SUMMARY OF CHARGES

Counts 1-7                              Title 21, United States Code, Sections 841(a)(1)– Dispensing Controlled Substances Without a Legitimate Medical Purpose.  Maximum penalties: 20 years of custody, $1 million fine, life-term of supervised release.

INVESTIGATING AGENCY

U.S. Drug Enforcement Administration

Assistant U.S. Attorneys Emily W. Allen (619) 546-9738, Valerie Chu (619) 546-6750

NEWS RELEASE SUMMARY – August 29, 2016

SAN DIEGO – San Diego telemarketer Charles Rose was sentenced today to eight months in custody for his role in a fraudulent loan modification scheme that employed as many as 30 telemarketers to sell bogus legal services to hundreds of struggling homeowners.  In reality, this “law firm” had just one figurehead attorney, and did not perform any legal services for the 1,000 clients they swindled. 

The telemarketers, who reported to Rose and followed his example to make sales, recruited new customers using a series of lies designed to lure them into paying a hefty $3,500 fee to the “law firm” of Haffar & Associates. Using scripts, form letters, and his own recorded sales calls, Rose taught his telemarketing staff how to use a variety of false statements to get desperate homeowners to pay the exorbitant fees.  Among the lies used by Rose and his staff were claims of  the firm’s “98% success rate,” clean record with the California State Bar, special access and success with “just about every lender,” and specialized staff and “lawyers” who would conduct a “forensic audit” of the clients’ loan documents. 

Rose and his co-schemers falsely told victims that their attorneys had “never” lost a client’s home to foreclosure, and that although the firm had a “100% money back guarantee,” no customer had “ever asked for a refund.”  In fact, as Rose and figurehead attorney Mohamed Haffar have both admitted, Haffar & Associates did not have anything close to a 98% success rate, did not have any special connections with banks or their legal departments, did not successfully complete loan modifications, and many of their dissatisfied customers never received the refunds they requested.

One of Rose’s co-schemers, Michael Nazarinia, did actually supervise the “case managers” who submitted some loan modification applications to banks.  But in contrast to the representations made to clients, attorney Haffar did not directly supervise Nazarinia’s case managers – instead, they dealt with clients without any input or direction from Haffar.  The schemers understood that Haffar’s fees were intended to compensate him for the risk he took in allowing Nazarinia and Rose to use his name, bar license, and law firm to execute the scheme.

After Haffar & Associates stopped doing new business, Rose and Nazarinia started a new company, called “REST Report Matters,” charging even more money for a product they claimed would facilitate the review of applications for loan modifications.  Rose admitted that he made false representations to potential clients in order to induce them to sign up and pay their fees. 

In addition to his fraudulent loan modification scheme, Rose was also charged with tax offenses for failing to report over $120,000 in income from Haffar & Associates to the IRS.

United States Attorney Laura Duffy condemned the conduct in this case, noting that “these individuals preyed on the vulnerability of some of our neediest citizens during their time of hardship and suffering.  Our law enforcement partners will continue to root out these scams to punish people who enrich themselves by exploiting others.”

“Charlie Rose aggressively pursued distressed mortgage holders, offering a false sense of hope while he enriched himself,” said Robert Wemyss, Postal Inspector in Charge of the Los Angeles Division. “When criminals use the mail to perpetrate fraud, postal inspectors, with the full cooperation of their law enforcement partners, will actively pursue them until they are brought to justice.”

Anthony J. Orlando, Acting Special Agent in Charge of IRS Criminal Investigation said, “Using the promise of a law firm to represent its clients, the defendants preyed on financially desperate homeowners struggling to keep a roof over their heads. As today’s sentence shows, those who brazenly enrich themselves on the backs of distressed homeowners will be held accountable for their crimes.”  

 “Charles Rose preyed on others’ misfortune to line his own pockets,” said Special Agent in Charge Leslie DeMarco of the Federal Housing Finance Agency – Office of Inspector General. “The sentence he received today provides justice and will hopefully act as a deterrent to anyone else who might be tempted to engage in similar conduct.”

Three co-defendants were also convicted on federal charges in the scheme.  In addition to stipulating to his disbarment, attorney Mohamed Haffar pleaded guilty to tax charges relating to the venture in August 2014, and was later sentenced by U.S. District Judge Houston to three months. Michael Nazarinia pleaded guilty in November 2015 to mail fraud and tax offenses, admitting that he generated a fraudulent lease agreement in order to deceive a client’s mortgage holder and fraudulently delay eviction. Nazarinia also admitted to filing false income tax returns and failing to pay more than $30,000 in taxes. Nazarinia was sentenced to nine months in prison, also by Judge Houston.  And in May 2015, Stacy Tuers pleaded guilty on tax charges and admitted that he knew the telemarketers were making false statements to potential clients, but continued to sell Haffar & Associates loan modification services.

DEFENDANT:

Charles Rose, 15CR1786-JAH                       Age: 32           San Diego, CA

CHARGES

Mail fraud, in violation of 18 U.S.C. § 1341

Maximum Penalties: 20 years’ imprisonment, $250,000 fine or twice the pecuniary loss or gain, $100 special assessment, restitution.

Subscribing to a false tax return, in violation of 26 U.S.C. § 7206(1)

Maximum Penalties: 3 years’ imprisonment, $250,000 fine, $100 special assessment, restitution.

DEFENDANTS PREVIOUSLY CHARGED:

Michael Nazarinia, 15CR2718-JAH               Age: 41           San Diego, CA

Mohamed Haffar, 14CR2251-JAH                Age: 36           San Diego, CA           

Stacy Tuers, 15CR1342-JAH                         Age: 54           San Diego, CA

AGENCIES

United States Postal Inspection Service

Internal Revenue Service – Criminal Investigation

Federal Housing Finance Agency – Office of Inspector General

NEWS RELEASE SUMMARY – August 19, 2016

Assistant U.S. Attorneys Rebecca S. Kanter (619-546-7304) and Andrew Galvin (619-546-9721)

SAN DIEGO – A former Navy Facilities Engineering Command (“NAVFAC”) civilian employee and a defense contractor pleaded guilty yesterday to charges relating to their conspiracy to defraud the Navy by filing false claims related to government contracts. Bentley faces a maximum sentence of ten years in prison, while Cioe faces a maximum of five years.

Joseph Bentley, who was previously a civilian employee at NAVFAC Southwest, supervised crews that did roofing, welding, paving, fencing and other types of construction repair, and maintenance work for the Navy and U.S. Marine Corps. As part of his job duties, he was responsible for requesting and/or authorizing the purchase of materials, supplies and labor from local suppliers and contractors. One of the individuals he arranged for the Navy to contract with was Eugene Cioe, the owner of Alcem Fencing Company, which operated out of National City, California until May 2013, and the owner of Cioe Fencing Consultant and Material Sales after May 2013.

As detailed in Cioe’s plea agreement, Bentley and Cioe agreed that Bentley would recommend, authorize or otherwise arrange for Defendant to receive orders for purchases from the Navy in exchange for Cioe providing Bentley with a kickback – money in payment for codefendant Bentley’s assistance in directing business to Defendant.  For example, as Cioe admitted to Magistrate Judge Jan Adler in court today, in June 2011, Bentley arranged for Alcem to receive over $7,000 for a job on Building 322 on Naval Base San Diego (“NBSD”) through a Napa Auto Parts purchase in exchange for a $1,500 payment to codefendant Bentley from Defendant’s company. After billing the Navy and receiving $7,151.64 in government funds for materials for Building 322 on NBSD, Cioe  paid Bentley $1,500. In February 2013, codefendant Bentley arranged for Alcem to receive another job with the Navy in exchange for an illegal payment from Defendant to codefendant Bentley, specifically, Alcem cashier’s check number 664152 on February 12, 2013 for $5,000.

Both defendants admitted that the conduct continued into the following year, when Cioe presented false claims to the United States Navy for core-drilling work that was in fact performed by NAVFAC employees.  Specifically, between May 14 and June 4, 2014, Bentley arranged for Cioe to receive two orders for material, labor and equipment to drill 48 holes and set fencing posts at the Naval Base Coronado (“NBC”).   Cioe then invoiced the Navy $4,764 for the core-drilling project, and was paid by the Navy for the work.  Both defendants admitted in court today that they knew that in truth, neither Cioe nor anyone working for Cioe Material Sales actually performed the work reflected on the invoices in exchange for the $4,764 in total payments; in fact, the work was performed by NAVFAC employees.

In addition to the false claims admitted to by both defendants, Bentley further admitted to using the Navy to purchase $3,545 in roofing materials, falsely claiming that they were for a roofing project on Building 618 on NBC, which Bentley then stole to install on his personal residence in Imperial Beach.  Then, after Bentley became aware of the government’s investigation, he asked a co-conspirator who had installed the roof to give the investigators false information about the roofing order.  Specifically, he told his co-conspirator to falsely tell the investigating agents that his (Bentley’s) father was still alive when the roof was installed and asked the co-conspirator to backdate a receipt for the demolition of the old roof by approximately six months. Both of these lies would have had the effect of creating false evidence that the roof was actually installed long before the ABC order for the NBC project, thus, providing Bentley a possible defense to the charge that the roofing materials on his father’s house were the same materials paid for by the Navy in January 2013.

U.S. Attorney Laura Duffy commented, “Our office will continue to prosecute government insiders and military contractors who abuse and corrupt the procurement process to line their own pockets. This case is an excellent example of the continued success our federal law enforcement agencies have had in rooting out corruption through their cooperative joint investigations.”

FBI Special Agent in Charge Eric S. Birnbaum stated, “The FBI will continue to work with our law enforcement partners to root out corrupt individuals who use their government positions and associations with the government for personal gain.”

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).”

Bentley and Cioe will be sentenced by United States District Judge Jeffrey T. Miller on December 2, 2016 at 9:00 a.m.

---

DEFENDANTS

 

Case Number: 15CR0195-JM

Joseph H. Bentley

Age: 55

Imperial Beach, California

Eugene Cioe

Age: 59

El Cajon, California

 

CHARGES

Bentley: Counts 3 & 4: False, Fictitious and Fraudulent Claims (18 U.S.C. § 287). Count 5: Theft of Public Property (18 U.S.C. § 641)

Cioe: Count 1: Conspiracy to Make False, Fictitious and Fraudulent Claims (18 U.S.C. § 371).

MAXIMUM PENALTIES

False, Fictitious and Fraudulent Claims (18 U.S.C. § 287) – maximum 5 years’ prison, $250,000 fine, $100 mandatory special assessment, 3 years’ supervised release

Conspiracy to Make False, Fictitious and Fraudulent Claims (18 U.S.C. § 371) – maximum 5 years’ prison, $250,000 fine, $100 mandatory special assessment, 3 years’ supervised release

Theft of Public Property (18 U.S.C. § 641) – maximum 10 years’ prison, $250,000 fine, $100 mandatory special assessment, 3 years’ supervised release

 

 

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Federal Bureau of Investigation

Internal Revenue Service, Criminal Investigations

Naval Criminal Investigative Service

 

 

 

NEWS RELEASE SUMMARY – August 15, 2016

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

SAN DIEGO, CA – A member of the Black Mob/Skanless Enterprise, which consisted of two North Park-based criminal street gangs, was sentenced to 11 years in prison today for his leadership role in a racketeering enterprise involving sex trafficking of minors and adults as well as assault and robbery. 

Aaron Dwayne Pittman, aka “Q-Tip” or “Lil’ Q-Tip,” acting as a pimp, supervised, managed, and maintained adult females as they engaged in prostitution in San Diego, Phoenix, Orlando, Honolulu, and other cities throughout the United States. He was sentenced on the charge of RICO conspiracy before U.S. District Court Judge John A. Houston.

As detailed in his plea agreement, Pittman, a member of the Black Mob criminal street gang, conspired with other members of the Black Mob/Skanless Enterprise from at least the late 1990s through December 2013 to engage in a pattern of racketeering activities, including sex trafficking, robbery, and assault, in San Diego County and elsewhere in the United States.  In carrying out the conspiracy, Pittman purchased flights, posted online ads, and promoted prostitution of females working for him – which Pittman referred to as “Team Tip.”  As part of the conspiracy, Pittman admitted he robbed one of his prostitutes and forcefully assaulted another individual outside of a night club in San Diego.  Pittman also admitted that the Black Mob/Skanless Enterprise enriched its members through recruiting and maintaining minor and adult females to work as prostitutes. 

In imposing the 11-year sentence, Judge Houston stated that Pittman’s conduct was “not victimless criminal activity.”  Judge Houston also noted that Pittman made a “lavish living out of pimping” and that Pittman had “little regard for the women who [he] controlled.”  In addition to sentencing Pittman to 11 years in prison, Judge Houston also ordered the forfeiture of several vehicles, computers, other electronic devices, and pimp-related paraphernalia (i.e., ornate cups known as “pimp cups” which are commonly possessed by pimps as symbols of their status).  Following his release from prison, Pittman will be placed on three years of supervised release.

“Sex trafficking is a crime that has long-lasting and devastating effects on the women and girls who are controlled by pimps like Mr. Pittman,” said U.S. Attorney Laura Duffy.  “The 11-year sentence imposed for one of the leaders of the Black Mob criminal street gang demonstrates the seriousness of this crime and will hopefully deter other criminal street gangs from engaging in such activity.” 

“This sentence sends a message that lives are not to be bought and sold,” said FBI Special Agent in Charge Eric S. Birnbaum. “The FBI, along with our partners, work tirelessly to rescue those forced into this modern day slavery and hold accountable those who wish to profit from the abuse of others.  If you have information about human trafficking, we urge you to contact the Child Exploitation Task Force/San Diego FBI at 858-320-1800; or the National Human Trafficking Resource Center at 1-888-373-7888.”

The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because the gangs are increasingly acting as organized criminal enterprises especially in sex trafficking and prostitution.

This case was the result of the collaborative work by the Federal Bureau of Investigation’s Child Exploitation Task Force and the San Diego Police Department.

DEFENDANT                                  Criminal Case No. 13CR4510-JAH

Aaron Dwayne Pittman (1)                 Age: 34           San Diego, CA           

  aka “Q-Tip,” “Lil’ Q-Tip”

SUMMARY OF CHARGES THAT DEFENDANT VEGA PLEADED GUILTY TO:

Count 1 – Title 18, United States Code, Section 1962(d) B Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity

Maximum penalties: 20 years in prison, $250,000 fine, 3 years of supervised release.

INVESTIGATING AGENCIES

Federal Bureau of Investigation

San Diego Police Department

 

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

NEWS RELEASE SUMMARY – July 27, 2016

SAN DIEGO – Fourteen men are charged in federal grand jury indictments with participating in a sophisticated bookmaking ring that used the Lucky Lady Casino and Card Room on El Cajon Boulevard as a legitimate front for the illicit operation.

More than 100 agents and detectives from the FBI, San Diego Police Department and IRS Criminal Investigation arrested 9 of the 14 defendants through coordinated actions in California, Nevada and Kentucky.

The FBI’s Organized Crime Squad also executed search warrants at multiple locations in San Diego, including the Lucky Lady Card Room itself. The joint FBI-San Diego Police Department investigation began in 2014, and employed wiretaps and undercover agents to infiltrate the alleged racketeering enterprise and uncover defendants’ illegal gambling activities. Additional subjects remain at large in Canada and Thailand.

Three grand jury indictments were unsealed today. In the first, a dozen defendants are charged with various crimes, including Racketeering Conspiracy to Conduct Enterprise Affairs (RICO), running an Illegal Gambling Business and Transmission of Wagering Information.

According to that indictment, the lead defendant, Sanders Bruce Segal, and others were charged with operating “Segal’s Lucky Lady Sports Book” – an illegal enterprise that connected bookies, sub-bookies and significant bettors with sports gambling websites located outside the United States, some of which were owned and controlled by members of the enterprise.

The other defendants are Stanley Samuel Penn, Petter Magnus Karlsson, David Greg Leppo, Pablo Ballestero Frech, Sydney Bruce Segal, Joseph Edward Spatafore, Minh Triet Dinh Nguyen, James Hang Tear, Ken Pheng Keo, Jason D. Taylor and Jeffrey Alan Burke.

A second indictment charges Ryan Richard Buchardt with Travel Act, Phone and Internet Use in Aid of Racketeering Enterprise; and the third indictment charges Robert Jay Zaben with Transmission of Wagering Information.

According to the indictments, the Lucky Lady Card Room is a licensed gambling establishment offering tightly regulated card games. The Lucky Lady provided a legitimate front for illegal bookmaking operations principally led by Sanders Segal, with the coordination and help of Stanley Samuel Penn, the owner of the Lucky Lady.  Sydney Bruce Segal, Sanders’ son, was the manager of the “cage” at the Lucky Lady, and used his position to commingle cash generated from the card room’s lawful gambling operation with the proceeds from the unlawful sports betting. 

The Segals and Penn depended upon the collaboration of international businessmen, Petter Magnus Karlsson, Pablo Ballestro Frech, and David Greg Leppo, to provide an avenue for United States customers to illegally place bets on sports gambling websites.  Karlsson financed Segal’s Lucky Lady Sports Book and partnered with Leppo, who owned and operated several sports gambling websites hosted outside the United States.  Karlsson also employed Frech to, among other things, manage bets placed by and through Sanders Segal and his betting customers on sports gambling websites.  Karlsson and Leppo met personally with Segal and others in order to transfer cash generated by their illegal bookmaking operation and to coordinate their enterprise. 

Segal’s Lucky Lady Sports Book relied on a network of bookies, including Minh Triet Dinh Nguyen, Ken Pheng Keo, and Sanders Segal himself, who operated out of the Lucky Lady.  Bookie Jason D. Taylor took high-stakes bets from Joseph Edward Spatafore, and mailed illegal bookmaking proceeds to and from Sanders Segal, who connected Spatafore and other select clients with the websites provided by Karlsson, Frech, Leppo and others. Spatafore, a high-stakes bettor, was permitted by the enterprise to collect and place bets for other bettors, and was sometimes granted direct access to the international gambling websites used by the enterprise. 

According to the indictment, sub-bookies James Hang Tear and Jeffrey Alan Burke each managed a “package” of customer accounts, recruited customers, paid off winning bets, collected on losing bets, and delivered payments to their managing bookies. 

Segal’s Lucky Lady Sports Book recruited customers in the Southern District of California and elsewhere, provided them with betting odds, took their bets, and placed them on sports gambling websites.  Bets were placed on the websites either through the bookies’ accounts or, for significant customers, through individual accounts that allowed bettors to directly wager for themselves.  The enterprise also used “runners” to transport profits and proceeds.  The indictment further alleges that the enterprise generated almost a million dollars in illegal bookmaking proceeds. 

“By grafting onto legitimate businesses, organized criminals and shady bookies have too long shielded themselves from law enforcement scrutiny and hidden huge illegal bookmaking profits,” said U.S. Attorney Laura Duffy. “These indictments demonstrate the Department’s commitment to stemming the influence of racketeering activity in San Diego.”

“This case is a classic example of how a legitimate business can be infiltrated and used to facilitate criminal activity by members of a criminal enterprise,” said FBI Special Agent in Charge, Eric S. Birnbaum.  “The FBI is committed to disrupting and dismantling criminal enterprises that seek to use legitimate businesses as a platform for their criminal activity.”

Two defendants were arraigned this afternoon before U.S. Magistrate Judge Nita L. Stormes, the remaining defendants who are in custody are expected to be arraigned tomorrow afternoon.

DEFENDANTS                                                        Case Number: 16CR1695-BEN 

Sanders Bruce Segal

Stanley Samuel Penn

Petter Magnus Karlsson*

David Greg Leppo*

Pablo Ballestro Frech*

Sydney Bruce Segal

Joseph Edward Spatafore

Minh Triet Dinh Nguyen*

James Hang Tear

Ken Pheng Keo

Jason D. Taylor

Jeffrey Alan Burke

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 

Ryan Richard Buchardt

SUMMARY OF CHARGES

Counts 1-7: Travel Act / Phone or Internet Use in Aid of Racketeering Activities, in violation of Title 18, United States Code, Section 1952

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

DEFENDANT                                                          Case Number: 16CR1697-BEN 

Robert Jay Zaben*

Counts 1-5: 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

AGENCIES

Federal Bureau of Investigation

San Diego Police Department

Internal Revenue Service – Criminal Investigation

*Still at large

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 Jose Castillo (619) 546-6745 and Stephen Wong (619) 546-9464

NEWS RELEASE SUMMARY – July 26, 2016

SAN DIEGO – West Coast Crips gang member Randy Alton Graves was sentenced in federal court this morning to life in prison for multiple drug-related crimes.

The U.S. Attorney’s Office elected to seek an enhanced sentence based on his egregious conduct over decades. At the sentencing hearing, the court noted that Graves has more than a dozen felony and misdemeanor convictions from 1976 to 2012, ranging from voluntary manslaughter to gun crimes to multiple drug offenses. The enhancement raised the mandatory minimum sentence for Graves’ crimes to life in prison.

Graves was convicted by a federal jury on April 4, 2016 of conspiracy to distribute more than 50 grams of methamphetamine; conspiracy to distribute more than 1,000 kilograms of marijuana; and possession with intent to distribute more than 50 grams of methamphetamine. Following a five-day trial, the jury deliberated for about three hours before returning its verdict.

During sentencing, U.S. District Judge Dana Sabraw noted that he also considered Graves’ role in the murder of a government witness, sex trafficking, possession of firearms, and other instances of drug dealing in determining that a life sentence was appropriate - even without a mandatory minimum requirement.

According to evidence presented at trial, Graves sold methamphetamine to a confidential informant on four occasions between August and October of 2013.  The government also played for the jury intercepted phone calls in which Graves recruited three men to travel to Lompoc, California, to unload a boat carrying 5,000 pounds of marijuana from Mexico.  The government also presented evidence obtained from a search warrant executed on Graves’ residence which showed Graves in possession of 79 grams of methamphetamine found in Graves’ refrigerator and two loaded guns.

Graves was initially indicted in June 2014 with racketeering charges connected to the West Coast Crips criminal street gang.  The racketeering activity alleged in that indictment included several homicides, drug, and sex trafficking crimes.  Graves’ case was severed from the larger racketeering trial and proceeded to trial only on certain drug charges.

This case was prosecuted by Assistant U.S. Attorneys Jose Castillo and Stephen Wong.

This guilty verdict is the fruit of the collaborative work of the FBI’s East County Regional Gang Task Force and the Violent Crimes Gang Task Force, the San Diego Police Department’s gang and homicide units; the ATF; the El Cajon Police Department; the La Mesa Police Department; San Diego County Probation; the IRS; U.S. Postal Inspectors; the San Diego County Sheriff’s Department; and the California Highway Patrol.

This investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's battle against major drug trafficking rings, drug kingpins, and money launderers.

DEFENDANT                                              Case Number 14CR1288-DMS                                          

Randy Alton Graves                                       Age: 53                       El Cajon, CA

SUMMARY OF CHARGES

Count One

Conspiracy to distribute methamphetamine – Title 21, U.S.C., Section 851

Count Two

Conspiracy to distribute marijuana – Title 21, U.S.C., Section 851

Count Three

Possession with the intent to distribute methamphetamine– Title 21, U.S.C., Section 851

Maximum penalty: Life in prison

AGENCIES

San Diego Police Department Gang and Homicide Units

East County Regional Gang Task Force

Violent Crimes Task Force - Gang Group

Task Force agencies include:

FBI

San Diego Police Department

ATF

El Cajon Police Department

La Mesa Police Department

San Diego County Probation

IRS Criminal Investigation

U.S. Postal Inspectors

San Diego County Sheriff’s Department

California Highway Patrol

 

Contact Assistant U.S. Attorneys Todd Robinson (619) 546-7994 and David Leshner (619) 546-7921

NEWS RELEASE SUMMARY – July 20, 2016

SAN DIEGO, CA – West Coast Crips gang member Wilbert Ross was sentenced in federal court today to life in prison for his role in a racketeering enterprise involving execution-style murders, a takeover robbery, witness intimidation and sex trafficking.

Ross is the first of four West Coast Crips members to be sentenced following conviction by a federal jury in March. The jury found defendants Ross, Terry Carry Hollins, Jermaine Gerald Cook and Marcus Anthony Foreman guilty of Conspiracy to Conduct Enterprise Affairs through a Pattern of Racketeering Activity at the conclusion of a five-week trial and about eight hours of deliberations. The jury also found Ross guilty of two counts of sex trafficking.

U.S. District Judge Dana Sabraw sentenced Ross to life on the RICO conspiracy count, 10 years for sex trafficking of a minor and 15 years for sex trafficking by force, fraud or coercion.  The judge also ordered Ross to pay $42,803 in restitution resulting from multiple homicides.

Hollins is scheduled to be sentenced on Wednesday July 27 at 9:30 a.m.; Cook and Foreman are set for sentencing on August 26 at 1 p.m., all before U.S. District Judge Dana M. Sabraw,

The four convicted defendants were arrested and charged in 2014 as part of a larger investigation involving 36 other defendants. Thirty-four have pleaded guilty. One, Cleotha Young, went to trial in June 2015, was convicted by a jury and sentenced to 20 years in prison. The lead defendant, Randy Graves, was convicted by a jury on April 4, 2016, and is scheduled to be sentenced on July 26 at 9:30am.

“It’s a relief to know that this ruthless gang member will never again bring violence into San Diego neighborhoods,” said U.S. Attorney Laura Duffy. “This life sentence is a strong signal to gangs that you are not invincible, and you will be held accountable.”

“Today’s life sentence sends a strong message to all gang members who commit acts of violence and threaten the safety of our community,” said FBI Special Agent in Charge, Eric S. Birnbaum. “The FBI will continue to work tirelessly to dismantle violent street gangs that victimize our community.”

The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because the gangs are increasingly acting as organized criminal enterprises.

During this trial, prosecutors set out to show the jury how the defendants worked together as a criminal enterprise to commit six murders, to use a 15-year-old girl and another female as prostitutes, and to commit robbery on behalf of the West Coast Crips.

The government called about 100 witnesses, including several street gang members, a shooting victim, friends and associates of the defendants, representatives from the Medical Examiner’s Office and dozens of San Diego Police Department homicide and gang detectives, police officers and criminalists.

The evidence presented by the government included court-authorized wiretap interceptions and recordings of telephone, cell phone and jailhouse conversations between the defendants and others, as well as cell phone videos of the defendants celebrating their West Coast Crips membership and discussing the crimes they were committing.

This case was prosecuted by Assistant U.S. Attorneys Todd Robinson, David Leshner, Jose Castillo and Stephen Wong.

These guilty verdicts are the fruit of the collaborative work of the FBI’s East County Regional Gang Task Force and the Violent Crimes Gang Task Force, the San Diego Police Department’s gang and homicide units; the ATF; the El Cajon Police Department; the La Mesa Police Department; San Diego County Probation; the IRS; U.S. Postal Inspectors; the San Diego County Sheriff’s Department; and the California Highway Patrol.

This investigation was coordinated by an Organized Crime Drug Enforcement Task Force (OCDETF). The OCDETF program was created to consolidate and coordinate all law enforcement resources in this country's

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

DEFENDANTS                                           

Case Number: 14mj1494

Wilbert Ross                                       Age: 32                                   Chula Vista

Terry Carry Hollins                             Age: 33                                   San Diego

Jermaine Gerald Cook                                    Age: 31                                   San Diego

Marcus Anthony Foreman                  Age: 28                                   San Diego

SUMMARY OF CHARGES

All Defendants:

Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, U.S.C. Section 1962 (d)

Maximum Penalty, based on the underlying racketeering crimes: Up to life in prison.

Defendant Ross:

Sex Trafficking of a Minor, in violation of 18 USC 1591

Maximum Penalty: Life in prison

Sex Trafficking by Force, Fraud or Coercion, in violation of 18 USC 1591

Maximum Penalty: Life in prison

INVESTIGATING AGENCIES

San Diego Police Department Gang and Homicide Units

East County Regional Gang Task Force

Violent Crimes Task Force - Gang Group

Task Force agencies include:

FBI

San Diego Police Department

ATF

El Cajon Police Department

La Mesa Police Department

San Diego County Probation

IRS

U.S. Postal Inspectors

San Diego County Sheriff’s Department

California Highway Patrol.

 

Assistant U. S. Attorneys Seth Askins (619) 546-6692 and Steve Miller (619) 546-7938    

NEWS RELEASE SUMMARY – July 18, 2016

SAN DIEGO – Three defendants have been sentenced for their roles in an alien harboring and hostage taking conspiracy involving two Mexican nationals, one of whom was severely beaten when the conspirators’ ransom demands were not met.

In late July 2015, the two victims were smuggled into the United States from Mexico and stashed at a hotel in El Centro, presumably to await further transportation to their ultimate destination within the United States.

While waiting at the hotel, the victims were discovered by defendant Robert Covarrubias, who transported them by foot to the home of co-defendant Xochitil Victoria Otero, where they were initially locked in a shed before being taken into the house. Once inside Otero’s residence, Covarrubias was joined by co-defendant David “Smokz” Chavez, and the two of them contacted the victims’ family and demanded money for their release.

At one point, Chavez and Covarrubias threatened the male victim with a firearm, forcing him to beg his mother to send money to the defendants for fear of being killed.  When it became apparent that their plan was destined to fail, Otero drove Chavez, Covarrubias and the two victims to a remote location in Imperial Valley where Chavez and Covarrubias severely beat the male victim with a crowbar before releasing them. The male victim sustained serious injuries to his head, face and hands as a result of the beating.  Fortunately, the victims were able to make contact with a farmworker in an adjacent field, who helped them contact law enforcement.

Chavez and Covarrubias pleaded guilty to hostage taking, in violation of 18 U.S.C. § 1203(a), and Otero pleaded guilty to Alien Harboring, in violation of 8 U.S.C. § 1324(a)(1)(A)(iii) and (v)(II).  On May 31, 2016, Chavez was sentenced to 168 months (14 years) in prison, while Otero was sentenced to 40 months for her lesser role in the offense.  Today, Covarrubias was sentenced to 144 months (12 years) in prison for his role in the offense.  The sentences were imposed by U.S. District Judge John A. Houston.  A hearing to determine restitution for the victims is set for August 29, 2016.

The successful federal prosecution of this violent crime was a collaborative effort by Homeland Security Investigations Imperial Valley Border Enforcement Task Force and the U.S. Attorney’s Office.  The case was prosecuted by Assistant U.S. Attorneys Seth Askins and Steve Miller.

DEFENDANTS                                            Case Number 15cr2097-JAH                                              

David Chavez, aka “Smokz”                          Age:  29                                  Calexico, CA

Robert Covarrubias                                         Age:  20                                  El Centro, CA

Xochitil Victoria Otero                                   Age:  24                                  El Centro, CA

SUMMARY OF CHARGES

Conspiracy to Take a Hostage and Hostage Taking – Title 18, U.S.C., Section 1203(a)

Maximum penalty:  Life imprisonment and $250,000 fine

Alien Harboring – Title 8, U.S.C., Section 1324(a)(1)(A)(iii) and (v)(II)

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

AGENCY

Homeland Security Investigations Imperial Valley Border Enforcement Task Force

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

NEWS RELEASE SUMMARY – July 14, 2016

SAN DIEGO, CA – Two members of the Black Mob/Skanless Enterprise which consisted of two North Park-based criminal street gangs were convicted by a federal jury yesterday afternoon of participating in a racketeering enterprise involving sex trafficking of minors and adults as well as robbery and drug sales.

The jury found defendants Robert “Pimpsy” Banks III and Tony “Lil’ Play Doh” Brown 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. U.S. District Judge John A. Houston set sentencing for October 3, 2016 at 8:30 a.m. The defendants face up to twenty years in prison for each count.

The two convicted defendants were arrested and charged in 2014 as part of a larger investigation involving 22 other defendants. Twenty-two have pleaded guilty.  

“Sex trafficking is a crime that causes devastating long-term effects for victims,” said U.S. Attorney Laura Duffy. “Because of today’s verdicts, and the numerous guilty pleas that preceded them, these gang members 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.”

The federal racketeering statute known as “RICO” historically has been used to prosecute mobsters and organized crime, but federal prosecutors have been using the statute on street gangs in recent years because the gangs are increasingly acting as organized criminal enterprises especially in sex trafficking and prostitution.

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

Robert “Pimpsy” Banks III                Age: 33           San Diego, CA

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. Attorney Stephen H. Wong (619) 546-9464

NEWS RELEASE SUMMARY – June 24, 2016

EL CENTRO – Eleven people have been charged with drug-trafficking and gun crimes in two indictments unsealed late yesterday. The drug trafficking organization used internal body carriers to smuggle drugs through the Calexico, California Ports of Entry into the United States and on to El Centro, San Diego, and Los Angeles.

Following an eleven-month investigation that concluded yesterday afternoon, all 11 defendants were in custody and seven firearms were taken off the streets. A coalition of federal agencies also conducted searches at six locations – including sites in Brawley and Calipatria, California. Many of these locations are homes where drugs and guns were stored and sold.

The two indictments describe two separate but overlapping conspiracies. According to indictments and other court documents, most defendants were drug traffickers selling methamphetamine, heroin, and PCP. Some were felons in possession of firearms and had ties to criminal street gangs.

“We are absolutely committed to making Imperial Valley neighborhoods safe from drug traffickers,” said U.S. Attorney Laura Duffy. “This operation successfully removed guns and drugs from the streets and intercepted hard-to-get smugglers who use the insides of their bodies as vessels for dangerous contraband.”

“HSI is committed to working jointly with its law enforcement partners to pursue and dismantle drug smuggling networks that distribute narcotics on the streets and spread violence in our communities,” said Dave Shaw, special agent in charge for ICE Homeland Security Investigations in San Diego. “This investigation uncovered a gang-affiliated drug smuggling ring extending from Mexicali to the Imperial and Riverside counties. I commend the outstanding work by HSI and our law enforcement partners at the U.S. Border Patrol’s El Centro Sector for the joint effort during the enforcement operation.”

DEFENDANTS       Criminal Case No: 16-CR-01283-MMA

Name

Age

Hometown

Emanuel Nunez,

aka “Meno”

35

El Centro, CA

Monica Aguirre

36

El Centro, CA

Jose Juan Valles,

aka “Nacho”

aka “Freddy”

49

El Centro, CA

David Valencia,

aka “Woody”

43

National City, CA

Raymond Ferrel,

aka “Mochis”

52

Brawley, CA

Edward Lucero,

aka “Gato”

36

Calexico, CA

Blanca Aguirre

37

El Centro, CA

Rayshan Thomas,

aka “Bones”

44

Brawley, CA

SUMMARY OF CHARGES

Conspiracy to Import Controlled Substances (Title 21, U.S.C., Secs. 952, 960, 963); Conspiracy to Distribute Methamphetamine (Title 21, U.S.C., Secs. 841(a)(1) and 846); Conspiracy to Distribute Heroin (Title 21, U.S.C., Secs. 841(a)(1) and 846); Felon in Possession of a Firearm (Title 18, U.S.C., Sec 922(g)(1)). Carrying a Firearm During and in Relation to a Drug Trafficking Crime (Title 18, U.S.C., Sec 924(c))

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

DEFENDANTS  Criminal Case No: 16-CR-01284-MMA

Name

Age

Hometown

Rayshan Thomas,

aka “Bones”

44

Brawley, CA

Melinda White

49

El Cajon, CA

Devernie Ford

Aka “Dolla”

56

Calipatria, CA

Damian Partida

31

Brawley, CA

SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine (Title 21, U.S.C., Secs. 841(a)(1) and 846); Conspiracy to Distribute Phencyclidine ((PCP) (Title 21, U.S.C., Secs. 841(a)(1) and 846); Felon in Possession of a Firearm (Title 18, U.S.C., Sec 922(g)(1))

Maximum Penalties: Life in prison with a mandatory minimum sentence of 5 years and a 10 million dollar fine.

AGENCIES

Homeland Security Investigations

Brawley Police Department

Customs and Border Protection

United States Border Patrol

Bureau of Alcohol, Tobacco, Firearms and Explosives

United States Marshal Service

El Cajon Police Department

California Highway Patrol

El Centro Police Department

Fontana Police Department

Imperial County Narcotics Task Force

*An indictment or complaint itself 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. 

 

 

 

 

 

 

 

 

 

 

 

A former Department of Defense (DoD) supervisory contracting officer pleaded guilty today to charges that he accepted bribes from the owner of the foreign defense contractor at the center of a massive bribery and fraud scandal.  

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

Paul Simpkins, 61, of Haymarket, Virginia, was a senior DoD contracting official who supervised contracting officers responsible for awarding and administering U.S. Navy contracts.  Sentencing was set for Sept. 9, 2016.

According to admissions made in connection with his plea, from approximately May 2006 until September 2012, Leonard Glenn Francis, owner of Singapore-based Glenn Defense Marine Asia (GDMA), provided cash, travel expenses and the services of prostitutes in return for Simpkins’s efforts to steer contracts to GDMA and intervene on GDMA’s behalf in contracting disputes with the U.S. Navy.  Simpkins admitted that during the years-long scheme, Francis provided him with hundreds of thousands of dollars through wire transfers to a bank account in Japan controlled by Simpkins’s former wife.  After Francis transferred the funds to Simpkins’s wife’s account, Simpkins caused payments to be remitted to a U.S. bank account held in his own name.     

According to his plea, Simpkins admitted that, in return, he used his influence within the U.S. Navy to benefit GDMA.  Among other things, Simpkins admitted that he extended GDMA’s contract after a subordinate recommended the contract not be extended due to high costs; instructed U.S. Navy officials in Hong Kong to discontinue using meters that ensured proper accounting of the amount of waste that GDMA removed from U.S. Navy ships to ensure that no overbilling occurred; and instructed a U.S. Navy official to ignore invoices that GDMA submitted after Francis complained that U.S. Navy personnel were asking questions. 

Including Simpkins, 14 individuals have been charged in connection with this scheme; of those, 11 have pleaded guilty, including Rear Admiral Robert Gilbeau, Captain (Select) Michael Misiewicz, Captain Daniel Dusek, Lieutenant Commander Todd Malaki, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and Petty Officer First Class Dan Layug.  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 18, 2016, Alex Wisidagama, a former GDMA employee, was sentenced to 63 months in prison and to pay $34.8 million in restitution to the Navy; 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 forfeit $95,000 in proceeds for the scheme.  Francis and Ed Aruffo, a former GDMA employee, as well as GDMA, the corporate entity, have pleaded guilty and await sentencing.  Retired Captain Michael Brooks, Commander Bobby Pitts and Lieutenant Commander Gentry Debord were charged by a federal grand jury on May 25, 2016, and their cases remain pending. 

The ongoing investigation is being conducted by NCIS, DCIS and DCAA.  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. 

Those with information relating to fraud, corruption or waste in government contracting 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 – June 23, 2016

SAN DIEGO, CA – Former Department of Defense supervisory contracting officer Paul Simpkins pleaded guilty today to charges that he accepted bribes from Leonard Glenn Francis, the foreign defense contractor at the center of a massive bribery and fraud scandal.  

Paul Simpkins, 62, of Haymarket, Virginia, supervised contracting officers responsible for awarding and administering U.S. Navy contracts. According to admissions made in his plea agreement, from approximately May 2006 until September 2012, Francis provided cash, travel expenses and the services of prostitutes in return for Simpkins’s efforts to steer contracts to his company, Glenn Defense Marine Asia (GDMA), and intervene on GDMA’s behalf in contracting disputes with the U.S. Navy. Simpkins admitted that during the years-long scheme, Francis provided him with hundreds of thousands of dollars through wire transfers to a bank account controlled by Simpkins’s former wife.

Sentencing is scheduled for September 9, 2016 at 9 a.m. before Judge Janis L. Sammartino.

Including Simpkins, 14 individuals have been charged in connection with this scheme; of those, 11 have pleaded guilty, including Rear Admiral Robert Gilbeau, Captain (Select) Michael Misiewicz, Captain Daniel Dusek, Lieutenant Commander Todd Malaki, NCIS Special Agent John Beliveau, Commander Jose Luis Sanchez and Petty Officer First Class Dan Layug.

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 18, 2016, Alex Wisidagama, a former GDMA employee, was sentenced to 63 months in prison and to pay $34.8 million in restitution to the Navy; 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 forfeit $95,000 in proceeds for the scheme.

Francis and Ed Aruffo, a former GDMA employee, as well as GDMA, the corporate entity, have pleaded guilty and await sentencing. Retired Captain Michael Brooks, Commander Bobby Pitts and Lieutenant Commander Gentry Debord were charged by a federal grand jury on May 25, 2016, and their cases remain pending. 

The investigation is being conducted by NCIS, DCIS and DCAA. Assistant U.S. Attorneys Mark W. Pletcher and Patrick Hovakimian of the Southern District of California are prosecuting the case along with Assistant Chief Brian R. Young of the Criminal Division’s Fraud Section.                   

Those with information relating to fraud, corruption or waste in government contracting 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: 15-CR-0530                         

Former Department of Defense supervisory contracting officer Paul Simpkins        Age 62

SUMMARY OF CHARGES

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

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

Bribery, in violation of 18 U.S.C. § 201 (b) (2) (A) and (C)

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

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency

 

Assistant U.S. Attorney Melanie K. Pierson (619) 546-7976

NEWS RELEASE SUMMARY – June 21, 2016

SAN DIEGO – A Long Beach fireman and his firm were charged today in an eight count indictment with the illegal disposal of sewage underground, in violation of the Safe Drinking Water Act. 

Kyle Vestermark and his firm, Dunes Edge Storage, allegedly discharged sewage illegally from recreational vehicles (RVs) stored at Dunes Edge Storage location in Brawley, California, as well as another location known as Dunes Toy Storage in Holtville, California, without a permit during the period from October of 2011 through April of 2015.

According to the indictment, Vestermark obtained a permit in 2004 for a 10,000 gallon holding tank for the RV sewage at the Dunes Edge location from the Imperial County Public Health Department which specifically prohibited the installation of underground leach lines (an issue which Vestermark had raised during the permitting process). The indictment further alleges that Vestermark also obtained a Conditional Use Permit from the Imperial County Planning Department in 2005 from the Imperial County Planning Board for the Dunes Toy Storage location in Holtville, which also specifically prohibited the installation of underground leach lines for the disposal of the RV sewage.

The permits required Vestermark to hire a septage firm to pump out the RV sewage from the holding tanks and dispose of it at a wastewater treatment plant.  In spite of the specific prohibitions, it is alleged that Vestermark used heavy equipment in 2005 and 2006 to install underground leach lines at both locations which would permit the RV sewage to leach out underground for disposal.  According to the indictment, the leach lines were removed in 2015 after Vestermark’s actions were discovered by Imperial County authorities. The indictment also seeks the forfeiture of approximately $380,000, alleged to be the proceeds of the offenses.

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

DEFENDANTS  

Dune Edge Storage, LLC                   Incorporated: 2006                 Brawley, California                            

Kyle Vestermark                                 Age: 46                                   Long Beach, California

SUMMARY OF CHARGES

Count 1

Conspiracy to Illegally Discharge Sewage – Title 18, U.S.C., Section 371

Maximum penalty: Five years in prison and $250,000 fine ($500,000 for a corporation)

Counts 2-8

Unlawful Injection of Sewage – Title 42, U.S.C., Section 300h-2(b)(2)

Maximum Penalty – 3 years in prison and a $250,000 fine

AGENCY

U.S. Environmental Protection Agency, Criminal Investigation Division; Bureau of Land Management, Office of Law Enforcement

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

NEWS RELEASE SUMMARY – June 9, 2016

SAN DIEGO - U.S. Navy Rear Admiral Robert Gilbeau pleaded guilty today in federal court to felony  charges that he lied to federal investigators to conceal his illicit years-long relationship with Leonard Glenn Francis, the foreign defense contractor at the center of a massive bribery and fraud scandal.

Admiral Gilbeau is the highest-ranking U.S. Navy officer charged in the investigation so far, and is believed to be the first active-duty Naval flag officer ever charged in federal criminal court.

In his plea agreement, Admiral Gilbeau admitted that he lied when he told agents from Defense Criminal Investigative Service and Naval Criminal Investigative Service that he had never received any gifts from Leonard Glenn Francis, owner of Singapore-based Glenn Defense Marine Asia. Francis has pleaded guilty to plying scores of other U.S. Navy officials with gifts such as luxury travel and meals, cash and electronics and and parties and prostitutes.

According to his plea agreement, Admiral Gilbeau lied when he told investigators that he “always paid for half of the dinner” when he and Francis met about three times a year. When Gilbeau became aware that Francis and others had been arrested in connection with the fraud and bribery offenses in September 2013, he destroyed documents and deleted computer files.

Admiral Gilbeau is scheduled to be sentenced on Aug. 26 at 9 a.m. before U.S. District Judge Janis L. Sammartino. At today’s hearing, U.S. Magistrate Judge William V. Gallo set bond at $75,000 secured by real property.

Most of the other Navy officials charged in this case so far have faced allegations that in return for cash, lavish entertainment and travel expenses, the services of prostitutes and other illicit gifts, they brazenly used their public offices to heap benefit after benefit upon Francis and GDMA, including passing on classified U.S. Navy information to advance GDMA’s business interests and advocating for GDMA at every turn.

Gilbeau was charged via information with deliberately and knowingly making false statements, from November 2012 to October 2013, about the nature of his relationship with Francis and his receipt of things of value over the course of years from Francis.

According to charging documents, in 2003 and 2004, Gilbeau was the supply officer on the USS Nimitz, where he was responsible for procuring all goods and services necessary for operation of the ship. He later served as head of the Tsunami Relief Crisis Action Team in Singapore, heading the Navy’s logistics response to the Southeast Asia tsunami in December 2004. In June 2005, Gilbeau was assigned to the office of the Chief of Naval Operations as the head of aviation material support, establishing policies and requirements for budgeting and acquisitions for the Navy’s air forces.

After he was promoted to admiral, Gilbeau assumed command in August 2010 of the Defense Contract Management Agency International, where he was responsible for the global administration of the Defense Department’s most critical contracts performed outside the United States.

“Of those who wear our nation’s uniform in the service of our country, only a select few have been honored to hold the rank of Admiral – and not a single one is above the law,” said U.S. Attorney Laura Duffy. “Admiral Gilbeau lied to federal agents investigating corruption and fraud, and then tried to cover up his deception by destroying documents and files. Whether the evidence leads us to a civilian, to an enlisted service member or to an admiral, as this investigation expands we will continue to hold responsible all those who lied or who corruptly betrayed their public duties for personal gain.”

“As a flag level officer in the U.S. Navy, Admiral Gilbeau understood his duty to be honest with the federal agents investigating this sprawling bribery scheme,” said Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division. “By destroying documents and lying about the gifts that he received, Admiral Gilbeau broke the law and dishonored his uniform.”

“The guilty plea of Rear Admiral Robert Gilbeau is an unfortunate example of a dishonorable naval flag officer who has betrayed his shipmates, the U.S. Navy and his country,” said Dermot F. O’Reilly, Acting Director, Defense Criminal Investigative Service. “Admiral Gilbeau's guilty plea should be a resounding message that DCIS, Naval Criminal Investigative Service, and the Department of Justice will continue to investigate and seek to prosecute any individual, regardless of position or rank, who would put our mission of 'Protecting America's Warfighters' at risk.”

“This investigation demonstrates that corruption, conspiracy, and the release of sensitive information puts Department of the Navy personnel and resources at risk,” said Special Agent Andrew Traver, Director of the Naval Criminal Investigative Service, “and in concert with our partner agencies, NCIS remains resolved to follow the evidence, to help hold accountable those who make personal reward a higher priority than professional responsibility.”

Anita Bales, director of Defense Contract Audit Agency, said, “DCAA is proud to stand in partnership with our law enforcement allies and make a meaningful contribution to the outcome in this egregious case. It is very disappointing that this high-ranking individual lost sight of his responsibility as a government official. We look forward to continuing our support of this significant investigation.”

So far, a total of 14 people have been charged in connection with the case.

Of those, 11 are current or former U.S. Navy officials, including Admiral Gilbeau; Captain (ret) Michael Brooks; Commander Bobby Pitts; Lt. Commander Gentry Debord; Captain Daniel Dusek; Captain (select) Michael Misiewicz; Lt. Commander Todd Malaki; NCIS Special Agent John Beliveau; Commander Jose Luis Sanchez; Petty Officer First Class Daniel Layug; and Paul Simpkins, a former DoD civilian employee.

Gilbeau, Dusek, Misiewicz, Malaki, Beliveau, Sanchez and Layug have pleaded guilty. On January 21, 2016, Layug was sentenced to 27 months in prison and a $15,000 fine; on January 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.

Brooks, Pitts and Debord were charged last week and their cases are pending; Simpkins awaits trial.

Also charged are three GDMA executives – Francis, Alex Wisidagama and Ed Aruffo. All 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.

GDMA, the corporate entity, was also charged and has pleaded guilty.

NCIS, DCIS and DCAA are conducting the investigation. 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. 

Those with information relating to fraud, corruption or waste in government contracting 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: 16cr1313-JLS                                  

U.S. Navy Rear Admiral Robert Gilbeau                   Age 55                        Burke, Virginia

SUMMARY OF CHARGES

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

Maximum Penalty: 5 years in prison

INVESTIGATING AGENCIES

Defense Criminal Investigative Service

Naval Criminal Investigative Service

Defense Contract Audit Agency