Southern District of California

San Diego, CA – Marco Polo Cortes, a San Diego-based lobbyist, made an initial appearance in federal district court today on charges that he conspired to finance political campaigns using money from an illegal foreign source.

Cortes was arrested by FBI Agents on Tuesday, January 21, 2014 in the Little Italy section of San Diego, pursuant to an arrest warrant. According to the complaint, filed by an FBI Special Agent and unsealed by U.S. Magistrate Judge William V. Gallo, Cortes conspired with Ravneet Singh and Ernesto Encinas—each of whom were named in a similar complaint unsealed yesterday—to funnel more than $500,000 of illegal foreign money into San Diego municipal and federal campaigns, primarily in 2012 and 2013. The source of the illegal foreign money, the complaint stated, was a person referred to as “the Foreign National.”

As set forth in the complaint, Cortes has lobbied San Diego Police Department officials, city council members and mayoral staff. In 2012, Cortes and a coconspirator approached a representative of a person running for federal elective office during the 2012 general election cycle. But one of the candidate’s representatives informed Cortes that the Foreign National would need to at least show proof of a green card, and emailed Cortes a link to the Federal Election Commission’s rules on foreign contributions. Despite this, Cortes and a coconspirator helped the Foreign National contribute in the Straw Donor’s name instead.

Later, Cortes joined together with Singh and other coconspirators to facilitate illegal in-kind contributions to a candidate for the office of mayor during the 2012 general election cycle. Finally, in September 2013, Cortes met with a confidential informant to discuss the possibility of arranging additional contributions from the Foreign National to a candidate for the office of mayor during the 2013 special election.

Acting United States Attorney Cindy M. Cipriani praised the continuing efforts of 3 the FBI and IRS, noting “we will not tolerate fraud in our elections at any level, and we will root out the influence of foreign money in our electoral processes and on our elected leaders.”

Complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.

DEFENDANT   Case Number:

Marco Polo Cortes
Age: 44
San Diego, CA

  14MJ0171   SUMMARY OF CHARGES AND MAXIMUM PENALTIES

Count 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371.
Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service
San Diego Police Department

United States Attorney Laura E. Duffy announced today that former convict, turned fraud investigator and pastor, Barry Minkow, admitted embezzling and defrauding the San Diego Community Bible Church (“SDCBC”) and its congregation out of more than $3 million. Minkow, who is currently in custody after his conviction on unrelated securities fraud charges, entered a guilty plea today in federal court in San Diego before the Honorable William Gallo, United States Magistrate Judge.

As part of his guilty plea, Minkow admitted to a litany of improper conduct, including opening unauthorized bank accounts on behalf of the SDCBC, forging signatures on SDCBC checks, using funds drawn on legitimate church accounts for his personal benefit, and charging unauthorized personal expenses on church credit cards. In addition, Minkow confessed to diverting SDCBC member donations for his own benefit and embezzling money intended as church donations. In all, Minkow admitted purloining – and concealing from the IRS – at least $3 million from SDCBC’s parishioners and lenders. As described in court documents, Minkow’s conduct continued for over a decade.

U.S. Attorney Laura E. Duffy remarked: “Barry Minkow is again convicted of fraud, this time for stealing money from the parishioners of San Diego Community Bible Church. With our law enforcement partners, we stand vigilant against those who cheat and steal without regard to the consequences wrought on their victims and their communities.” The U.S. Attorney observed that in the course of each fraudulent transaction, Minkow abused the position of trust bestowed upon him by SDCBC and its congregation.

Acting Special Agent in Charge of Internal Revenue Service Criminal Investigation for the Los Angeles Field Office, Joel P. Garland stated, "Barry Minkow pled guilty today to embezzling over $3.0 million in money intended as church donations (while employed as a pastor) and concealing it all from the IRS. Barry Minkow has admitted not only his fraud, but his omission of over $890,000 in unreported income and over $250,000 in tax. Today's court action reaffirms IRS Criminal Investigation's commitment to investigating crimes involving tax and other financial crimes."

The fraud on SDCBC is just the latest fraud perpetrated by Minkow. In December 1988, Minkow was convicted of running a Ponzi scheme related to his ZZZZ Best carpet cleaning enterprise, a NASDAQ-traded entity. In that case, Minkow bilked banks and investors of millions of dollars, for which he was sentenced to 25 years in prison. While incarcerated, Minkow became involved in the Christian ministry, and upon his release in 1995 after having served approximately seven and a half years, he went to work at the Church at Rocky Peak in Chatsworth, California.

In 1997, Minkow became the pastor at SDCBC and soon thereafter founded the Fraud Discovery Institute (“FDI), a for-profit entity, which allegedly was aimed at the detection and prevention of fraudulent business practices. Through the work of FDI, Minkow soon garnered national media attention as a fraud detection expert, and his turn-around story was profiled on 60 Minutes in August 2006.

Yet even while working through FDI to detect fraud, Minkow was engaged in manipulating the stock prices of the companies he was investigating. Most prominently in 2009, Minkow released a report accusing major homebuilder Lennar of massive accounting irregularities and fraud. In the wake of this report, Lennar’s share price was sliced in half – from 11.57 a share to $6.55 a share. According to court records, unbeknownst to the public, Minkow shorted Lennar stock in advance of the issuance of his report. Based on these transactions, Minow was charged with conspiracy to commit securities fraud, and on March 30, 2009, he pled guilty in Miami to conspiring to manipulate Lennar’s share price, for which he was sentenced to serve five years in prison and to pay $583.5 million in restitution to Lennar. Minkow is currently serving that sentence at the Federal Medical Center in Lexington, Kentucky.

After pleading guilty today, Minkow faces a maximum of five years in prison, a fine of up to $250,000, and the payment of restitution to his victims. Sentencing is scheduled for April 7, 2014 before U.S. District Court Judge Michael Anello.

U.S. Attorney Laura E. Duffy praised the exacting effort and close cooperation of the Federal Bureau of Investigation and IRS Criminal Investigations -- the investigative agencies on this case.

DEFENDANT   Case Number:

Barry Minkow

  14CR0153-MMA   SUMMARY OF CHARGES

Conspiracy To Commit Mail Fraud, Wire Fraud, Bank Fraud and To Defraud the United States, in violation of Title 18, United States Code, Section 371 - Maximum penalties: Five years in prison, $250,000 fine, term of supervised release of three years, restitution, and $100 special assessment.

  INVESTIGATING AGENCY

Federal Bureau of Investigation
IRS Criminal Investigations

As part of conspiracy, Former SDPD Detective Ernesto Encinas Allegedly Sought to Fire the SD Chief of Police and Pick His Replacement

SAN DIEGO, CA - Ravneet Singh, the proprietor of Washington, D.C.-based ElectionMall, Inc., was arraigned today on charges that he conspired to finance political campaigns using money from an illegal foreign source. Singh was arrested by FBI Agents on Friday, January 17, 2014, pursuant to an arrest warrant. According to the complaint, filed by an FBI Special Agent, unsealed by U.S. Magistrate Judge William V. Gallo, Singh conspired with former San Diego Police detective Ernesto Encinas and others to funnel more than $500,000 of illegal foreign money into San Diego municipal and federal campaigns, primarily in 2012 and 2013. Singh’s company, ElectionMall, Inc., was also charged as a defendant.

According to the complaint, Singh, who styled himself the “campaign guru,” was the President, Chief Executive Officer and founder of ElectionMall, Inc., a company that provided social media services and other campaign and election products to political candidates throughout the world. Encinas was the owner of a private security and consulting business in San Diego who oversaw the protection detail of a person identified in the complaint only as “the Foreign National.” Between approximately 2011 and 2013, Singh and Encinas helped the Foreign National donate hundreds of thousands of dollars to a series of candidates for elective office—including during the 2012 San Diego mayoral election, a 2012 Congressional campaign and the 2013 San Diego special mayoral election (up to, but not after, December 2013).

Despite the Foreign National’s willingness to contribute funds, he could not legally donate to any of these campaigns. Under federal law, “foreign nationals” are prohibited from making any contributions or expenditures in connection with any American electoral campaign—whether at the federal, state or local level. Knowing this, Singh and Encinas allegedly used a series of increasingly complex techniques to hide the fact that the Foreign National was the true source of these illicit campaign funds.

According to the complaint, Encinas—among other devices—helped mask the Foreign National’s contributions through the use of shell companies.

Similarly, Singh used his expertise to facilitate the donation of social media services to political candidates that the Foreign National favored. The complaint alleges that these contributions—sometimes classified as “in-kind contributions”—were not reported in any campaign filings and totaled nearly $300,000.

According to the complaint, the Foreign National’s illegal contributions included:

 A $100,000 contribution to a SuperPAC
 $100,000 in unreported compensation for campaign services
 A $30,000 contribution to a political party committee
 Another $190,000 in unreported compensation for campaign services
 A $150,000 contribution to another SuperPAC
 A $30,000 contribution to another political party committee
 The promise of a “mill” in additional contributions

According to the complaint, Encinas wanted the next mayor to fire the Chief of Police and replace him with a person of Encinas’s choosing in exchange for the Foreign National’s financial help.

Complaints are not evidence that the defendant committed the crime charged. All defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.

DEFENDANT   Case Number: 14MJ0201

Ravneet Singh
Age: 41
Washington, D.C.

ElectionMall, Inc.

Ernesto Encinas
Age: 57
San Diego, CA

      SUMMARY OF CHARGES AND MAXIMUM PENALTIES

Count 1: Conspiracy to Commit Offenses against the United States – 18 U.S.C. § 371. Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service Criminal Investigation
San Diego Police Department

SAN DIEGO, CA - United States Attorney Laura E. Duffy announced that Judge John A. Houston imposed custodial sentences on twin brothers Anthony Donald Casias and Leo Ronald Casias, Jr. for defrauding local sports fans through their company, “L & T Sports Events, Inc.” Anthony Casias received a sentence of 36 months in custody and 3 years of Supervised Release. Leo Casias was sentenced to 33 months in custody and 3 years of Supervised Release.

According to court documents, clients of L&T Sports paid in advance for travel, lodging, transportation, and game tickets to out-of-town sporting events, such as San Diego Chargers “away” games, other NFL games, and collegiate sporting events. The brothers told sports fans that in return for their payments to L&T Sports, the company would purchase flights, game tickets and hotel accommodations. The defendants even promised clients that L&T Sports obtained tickets in specific seating areas (for example, “lower level corner end zone” or “club level” seating), accommodations at specified hotels, and seats on specific airline flights, to reassure clients that the services clients paid for would be provided when the clients arrived at the game destinations.

For example, the brother’s victims included over a dozen local fans who arranged to watch the San Diego Chargers play the Chicago Bears in Chicago, Illinois in November 2011. These clients paid in advance for flights, hotels, and football game tickets. Although L&T Sports provided the airline tickets to Chicago; they provided little else. As a result, their customers showed up in Chicago without hotel rooms or game tickets for which they had already paid for in advance. Fortunately, some committed fans were able to find hotel accommodations and purchase tickets from local ticket brokers so they could watch the Chargers play.

Similar disappointments befell other customers. For example, one fan paid the Casias brothers in advance so that he could take his son to watch the Chargers play the Oakland Raiders at the Coliseum. Once again, L&T Sports provided a one-way flight but nothing else. Stranded in the Bay Area on New Year’s Eve 2011 with no hotel room, no game tickets, and no flight home, the two disappointed fans ended up driving back down to San Diego in a rental car and watching the game on TV.

Tony and Leo Casias did not limit their fraud to local sports fans. Residents of South Dakota, Philadelphia, and Colorado also arranged trips to see football games, only to find their money taken and no hotels, game tickets, and/or flights home provided. The Casias brothers even arranged trips to the annual NFL game in London, England, offering special extensions to Paris and Rome. Some clients were stranded overseas with no hotel rooms, game tickets, or flight home. What is worse, according to sentencing documents, the Casias brothers used those clients’ credit cards to rack up other charges while those clients were overseas in Europe.

For example, the United States provided evidence in court hearings that Tony and Leo Casias made unauthorized credit card charges on at least 4 individuals’ credit cards. They typically got authorization from the credit card holder to make limited charges – say, to pay the costs of a client’s trip, or a $400.00 loan – but then used those credit cards without authorization to pay for travel services for other clients, or, in some cases, to make their own car payments, pay their cell phone bills, and, adding insult to injury, pay for their own delinquent Chargers season tickets.

Public records indicate that the Casias brothers were convicted in the early 1990’s for a similar scheme involving travel services to middle school students. In that case, the brothers offered educational trips to the East coast, and required students to pay in advance. Defendants collected over $275,000 in advance payment from schools, students, and parents, but used the funds to pay for prior business and personal debts instead of paying for the trips. One parent chaperone from that memorable trip informed the sentencing court in a letter that she accompanied 193 junior-high aged children on a trip to Washington D.C. The students held multiple fundraisers and had to complete projects, research, and presentations before they could go on the trip. She called it “craven” that Leo and Tony Casias accompanied the group to the airport to see them off, knowing that the students would soon be stranded on the east coast thousands of miles from home, with no hotel rooms, local transportation, or return flights home. She recalls that the students ended up staying on cots in military barracks.

In addressing the defendants, Judge Houston chastised them for what he described as their “continuous fraud and manipulation to people you thought were less than you...You are not Madoff. This was not a sophisticated scheme. This was an old fashioned, salt of the earth swindle. [These were] good people [including] your mother's rosary group . . . You were heartless. You just didn't care."

The defendants will next appear in court on February 8, 2014, before Judge Houston for a hearing to determine the amount of restitution they will owe to victims.

DEFENDANT   Criminal Case No. 12CR4966-JAH

Anthony “Tony” Donald Casias
36 months in custody

Leo Ronald Casias, Jr.
33 months in custody

San Diego, California

San Diego, California

    SUMMARY OF CHARGE

Count 1: Title 18, United States Code, Section 1349 - Conspiracy to Commit Wire Fraud. Maximum penalties: 20 years’ imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release, mandatory restitution to victims.

  INVESTIGATING AGENCY

Federal Bureau of Investigation

SAN DIEGO, CA - United States Attorney Laura E. Duffy announced that Kathryn Sylvester of San Diego pleaded guilty today to participating in a mortgage fraud conspiracy in which she and several co-conspirators caused over $6 million in losses associated with various properties in San Diego County and elsewhere. Sylvester entered her guilty plea to one count of wire fraud and one count of conspiracy to commit wire fraud before Magistrate Judge William V. Gallo, and is scheduled to appear before U.S. District Court Judge Cathy Ann Bencivengo on April 1, 2014 for sentencing.

As defendant admitted in today’s hearing and in court documents, between June 2005 and May 2008, she recruited “straw buyers” to submit falsified mortgage loan applications to purchase properties and obtain home equity loans. Sylvester herself provided false documents to support the straw buyers’ misrepresentations regarding their income and employment, and added straw buyers to unrelated bank accounts so they could inflate the value of their assets on loan applications. Sylvester helped convince lending institutions to fund loans for which Sylvester and the straw buyers would not otherwise qualify. Although Sylvester promised some straw buyers that she would “flip” a number of the properties for a 2 profit, she systematically drained equity from the properties for her own benefit. The straw buyers included Claudia Montes, Tad Lent, and Roderick Michener, all residents of San Diego.

Montes, a former notary public, notarized the signatures of other straw buyers on the loan applications. On April 12, 2013, Montes pleaded guilty to a two-count information (13CR1313-JLS) before Magistrate Judge William McCurine, Jr. She admitted conspiring with Sylvester to submit false loan applications to lenders to obtain the properties and transferring proceeds to Sylvester. She is scheduled to be sentenced before U.S. District Court Judge Janis L. Sammartino on February 14, 2014.

Michener pleaded guilty before Magistrate Judge Barbara L. Major on April 4, 2013, to conspiring with Sylvester to commit bank fraud (13CR1130-CAB). Michener admitted that he permitted co-conspirators to claim an ownership interest in his bank account in order to include the account as an asset on their respective mortgage loan applications. He also admitted transferring fraud proceeds to Sylvester. Michener is scheduled to be sentenced before District Court Judge Cathy A. Bencivengo on March 14, 2014.

Lent pled guilty to conspiring with Sylvester to submit falsified loan applications to mortgage lenders by misrepresenting the amount of his assets (12CR3744-L). Lent entered his guilty plea on January 28, 2013, before District Court Judge M. James Lorenz, and is scheduled to be sentenced on January 21, 2014.

United States Attorney Duffy added, “As our economy slowly improves, it is important for us to address criminal conduct that helped spawn the financial crisis. These mortgage fraud cases are further evidence of our dedication to investigating and prosecuting the fraud that plagued the mortgage loan processes for too long.”

DEFENDANT   Case Number: 13CR1355-CAB Kathryn Sylvester Age: 44     SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 1349 (conspiracy to commit wire fraud and bank fraud)
Maximum penalty: 30 years of custody; $1,000,000 fine

Count 5: Title 18, United States Code, Section 1343 (wire fraud)
Maximum penalty: 20 years of custody; $250,000 Fine

  AGENCY

Federal Bureau of Investigation

United States Attorney Laura E. Duffy announced today that San Diego-based Vector Planning & Services, Inc. (“Vector”) entered into an agreement with the United States Attorney’s Office in which it admits to criminally defrauding the Defense Department, and in which it agrees to pay restitution. Vector, which also has offices in Chantilly, Virginia, entered the agreement this afternoon in federal court in San Diego before U.S. Magistrate Judge William McCurine, Jr.

As part of the agreement, referred to as a deferred prosecution agreement, Vector admitted that its former CEO and majority owner submitted five years’ worth of false cost claims to the Defense Department, resulting in losses to the Defense Department of over $3.6 million.

The case concerns Vector’s accounting practices in connection with certain cost-reimbursement contracts that it held with the Defense Department. Under a cost-reimbursement contract, a contractor is entitled to reimbursement for both its direct allowable costs, such as the cost of labor on that contract, and a prorated portion of its indirect allowable costs, such as the cost of rent for the contractor’s office space. Because indirect costs must be pro-rated across multiple contracts, they cannot be precisely determined until the end of the fiscal year. Accordingly, under a cost-reimbursement contract, a contractor initially submits claims for indirect costs based on “provisional” or estimated rates, and later submits its actual indirect costs to the government for review, reconciliation, and approval. This later submission, known as an “Incurred Cost Submission” or “Incurred Cost Proposal,” reflects what the contractor certifies were its actual allowable costs for the prior fiscal year.

In this case, Vector admits that after claiming and being paid for direct costs in connection with other, firm-fixed-price and time-and-materials contracts, Vector systematically reclassified these same costs in its accounting system to make it appear as if the costs were indirect costs that were incurred in connection with its cost-reimbursement contracts, thereby inflating its indirect cost rates. These inflated rates were then used by Vector to justify the rates claimed in its Incurred Cost Proposals submitted to the Navy. The effect of these fraudulent submissions was, in essence, to pay Vector twice for the same expenses, amounting to “double dipping” or “double billing” at government expense.

Vector admits to submitting these false Incurred Cost Proposals for costs incurred in 2005 through 2009, with a total loss to the Defense Department of $3,672,756. As described in Vector’s agreement, Vector made these false submissions in 2010, 2011, and 2012.

When faced with a Defense Department audit in late 2011, Vector falsified its electronic accounting entries, and prepared and backdated fake invoices in order to support those falsified accounting entries. Vector admits that the direction for the fraud came from its then-CEO, who is now deceased.

As part of the agreement, Vector agrees to make payments in the amount of $6.5 million, which includes restitution to the Defense Department for losses Vector caused. Vector also agrees to maintain a 3 compliance and ethics program. In exchange, the United States Attorney’s Office has agreed to postpone a prosecution for felony false claims against Vector for a period of three years; in the event Vector complies with all the terms of the agreement, the criminal case will be dismissed at the end of that period.

In addition to the criminal deferred prosecution agreement, Vector is entering into a civil settlement with the Civil Division of U.S. Attorney’s Office and the Justice Department’s Civil Division. In all, Vector will pay $6.5 million to resolve its criminal and civil cases. These criminal and civil settlements are the result of a coordinated effort involving, as investigative agencies, the Federal Bureau of Investigation, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, and the Naval Criminal Investigative Service.

U.S. Attorney Laura E. Duffy stated, “Those companies that choose to defraud our nation’s armed services will be found and held accountable.” Duffy praised the close cooperation of the investigative agencies on this case.

FBI Special Agent in Charge, Daphne Hearn, commented, “This case involved several complex fraudulent schemes to defraud the Department of Defense and ultimately American taxpayers. If not for the outstanding investigative efforts by agents and prosecutors in this matter, these schemes would have gone undetected and millions of dollars of taxpayer's dollars wasted. Today's settlement is an example of the FBI's continued commitment to working with our law enforcement partners to ensure our precious tax dollars are protected from waste, fraud and abuse.”

Chris Hendrickson, Special Agent in Charge, Defense Criminal Investigative Service, Western Field Office said, “We are extremely pleased at this outcome, which yet again sends the message that fraud will be vigorously investigated and violators held accountable. Whether it is a complicated manipulation of accounting rules or a straight theft of DoD funds, fraud of this nature harms our national security and erodes public confidence. The Defense Criminal Investigative Service and our law enforcement partners will use all tools available to protect taxpayers' interests.”

DEFENDANT     Vector Planning & Services, Inc.       SUMMARY OF CHARGES

False claims, in violation of Title 18, United States Code, Section 287 - Maximum penalties for corporate defendant: Five years of probation, fine, restitution and $400 special assessment.

  INVESTIGATING AGENCY

Federal Bureau of Investigation
Defense Criminal Investigative Service
Defense Contract Audit Agency
Naval Criminal Investigative Service

SAN DIEGO – Former San Ysidro School District Superintendent Manuel Paul was sentenced today to two months in custody, a $5,000 fine, one year of supervised release and 120 hours of community service for threatening to withhold the awarding of contracts unless he received political contributions.

U.S. Magistrate Judge William V. Gallo said he imposed a sentence that included jail time because Paul failed the children of his district. Judge Gallo stated, “Thousands of children relied on you for sound judgment.” He later added, “Abuse of trust is a mortal sin that is difficult to excuse.”

Paul was ordered to report to the federal Metropolitan Correctional Center downtown on January 27.

Paul worked in the San Ysidro School District (“SYSD”) for 38 years as a teacher, principal, and superintendent, a post he held from 2007 until his resignation in 2013. According to court documents, he served several duties as superintendent, including recommending contractors for consideration and approval by the SYSD Governing Board for SYSD construction projects.

In entering his plea, Paul admitted requesting that a contractor (“Contractor A”) make $3,600 in campaign contributions to three political candidates for the 2010 Board election, identified in charging documents as Candidates A, B, and C. Paul admitted that he made clear that Contractor A’s inclusion on the list of potential contractors for future District building projects was contingent on Contractor A making the payment.

According to the plea agreement, shortly thereafter – and only two months before the 2010 Board election – Paul accepted $2,500 in cash from Contractor A in the parking lot of a Chula Vista restaurant. Paul admitted that he then contributed a portion of the $2,500 to the political campaigns of Candidates A, B, and C by purchasing campaign signs from a print shop in Tijuana.

According to court documents, Candidates A, B, and C won the three open seats.

In addition to his guilty plea, Paul has also entered into a stipulation with California’s Fair Political Practices Commission, in which he admitted to receiving a gift in excess of the annual gift limit by accepting the $2,500 from Contractor A. As part of his settlement with the FPPC, Paul has agreed to pay a $5,000 fine.

United States Attorney Laura E. Duffy stressed that her office will continue to pursue vigorously any criminal activity that seeks to introduce illegal money into campaigns. “Today’s sentence is a stark reminder that illegal money in our elections – regardless of the amount – is a threat to the very fabric of our democratic form of government and will be treated as such by our office. All citizens of our district have the right to elections free from corruption.”

FBI Special Agent in Charge, Eric S. Birnbaum, commented, “The obligation to deal honestly and truthfully is the responsibility of all who serve the public. Today's sentencing holds Mr. Paul accountable for his actions." 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).

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DEFENDANTS   Case Number: 14CR2351-WVG Manuel Paul Age: 63 Bonita, CA CHARGES

Deprivation of Benefit for Political Contribution – Title 18, U.S.C., Section 601
Maximum penalty:      1 year imprisonment and $100,000 fine

  INVESTIGATING AGENCIES

Federal Bureau of Investigation

SAN DIEGO - U.S. Attorney Laura E. Duffy announced today that the Southern District of California collected $15,576,798.02 in criminal and civil actions in Fiscal Year 2013. Of this amount, $11,799,803.27 was collected in criminal actions and $3,776,994.75 was collected in civil actions.

Additionally, the Southern District of California worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $12,727,907.87 in cases pursued jointly with these offices. This amount was collected in joint civil actions.

Attorney General Eric Holder also announced today that the Justice Department collected approximately $8.1 billion in civil and criminal actions in the fiscal year ending Sept. 30, 2013. The more than $8 billion in collections in FY 2013 represents nearly three times the appropriated $2.76 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.

“The department’s enforcement actions help to not only ensure justice is served, but also deliver a valuable return to the taxpayer,” said Attorney General Holder. “It is critical that Congress provide the 2 resources necessary to match the department’s mounting caseload. As these figures show, supporting our federal prosecutors is a sound investment.”

U.S. Attorney Laura Duffy said, “Restitution to victims is justice in its simplest form. The Southern District of California strives to keep up with the rapidly increasing restitution debt and works hard to increase the amount collected each year.”

This past June, the Southern District of California recovered approximately $1.2 million in restitution and $500,000 in fines as part of the criminal case in U.S. v. Joel Bernstein, M.D., Inc., 13CR0119-CAB. In a related civil case, U.S. v. Joel Bernstein, M.D., Inc., 13CV0153-BEN, the United States recovered $2.2 million in a settlement agreement that was offset by the criminal restitution. Dr. Bernstein, a La Jolla, CA oncologist, defrauded Medicare by purchasing unapproved foreign cancer drugs and billing it to Medicare. In the related civil False Claims Act lawsuit filed by the United States, Dr. Bernstein was permitted to pay $2.2 million to settle the lawsuit and have that amount applied to criminal restitution owed to Medicare.

The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.

The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

Additionally, the U.S. Attorney’s office in Southern District of California, working with partner agencies and divisions, collected $11,968,370.00 in asset forfeiture actions in FY 2013. Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

SAN DIEGO – Twenty-two people, including suspected drug traffickers and associates of the Mexican Mafia prison gang, are charged in numerous indictments and complaints unsealed today with crimes ranging from racketeering conspiracy to heroin and methamphetamine dealing.

The indictments are the result of “Operation Corridor,” a continuing investigation involving a team of federal, state, and local agencies focusing on the activities of the Mexican Mafia operating in the Southern District of California. So far the investigation has resulted in the charging of 68 people since April 2012.

In all, five indictments and three complaints were unsealed today. The main indictment charges 11 people with participating in a racketeering conspiracy that involved the commission of both state and federal crimes, including conspiracy to commit murder, assault with a deadly weapon, extortion, money laundering and drug trafficking violations.

The indictments were handed up by a federal grand jury in San Diego on December 19, 2013. As of today, 18 of the twenty-two defendants are either in federal or state custody. Six were arrested today and yesterday; the rest were already in custody.

As set forth in the indictments, most of the defendants are associates of the Mexican Mafia operating primarily in Oceanside and Vista, California, and multiple San Diego Sheriff’s Office Detention Facilities and California State Prisons, including Donovan, Centinela and Ironwood.

Using electronic surveillance, intercepted phone lines and other sophisticated tools, this continuing investigation targeted a broad criminal conspiracy to extort money and control the illegal narcotics trade in both north San Diego County and various California State Prisons. The investigation is ongoing.

"We will continue to target gangs operating on the streets of our communities in conjunction with associates operating in jails and prisons,” said U.S. Attorney Laura Duffy. “Their criminal behavior will not be tolerated. Along with our state and local partners, we will continue to tirelessly pursue them at every level. I commend the efforts of all involved and appreciate their hard work and commitment to bringing these criminals to justice."

United States Attorney Duffy praised the North County Regional Gang Task Force (NCRGTF) for the coordinated team effort in the culmination of this investigation. Agents and officers from the Federal Bureau of Investigation, San Diego County Sheriff's Office, Oceanside Police Department, Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Department of Corrections and Rehabilitation, Bureau of Prisons, Homeland Security Investigations. U.S. Marshals Service, California Highway Patrol, and the Escondido and Carlsbad Police Departments collaborated on this investigation.

The investigation was conducted in conjunction with the Organized Crime Drug Enforcement Task Force. The OCDETF program was created to consolidate and utilize all law enforcement resources in this country's battle against organized crime and major drug trafficking organizations.

“The collaboration between federal and local law enforcement in San Diego is unparalleled, and Operation Corridor is a fine example of utilizing our strategic law enforcement partnerships to combat an increasingly dangerous fusion of violent gangs and organized crime,” said Derek Benner, special agent in charge for ICE’s Homeland Security Investigations in San Diego. “With dozens of violent street gang members and associates off the streets, we have delivered on our commitment to public safety so that the law abiding people living and working in our neighborhoods are safe.”

DEFENDANTS
  Criminal Case No. 13CR4514-BEN Leonard Delgado, aka Spanky
Steven Amador, aka Insane
Isaac Ballesteros, aka Lazy
Julio Rodriguez, aka Sniper
Roberto Sotelo, aka PoPo, Top Hat
Ruben Savala, aka Boxer
Robert Collazao, aka Weasel
George Garibay, aka Scooby
Rachel Morales, aka Rachel Ruvalcaba
Margaret Cano
Angelica Ibanez       SUMMARY OF CHARGES

Conspiracy to Conduct Enterprise Affairs Through a Pattern of Racketeering Activity, in violation of Title 18, United States Code, Section 1962(d) ; Conspiracy to Distribute Methamphetamine and Heroin, in violation of Title 21, United States Code, Sections 841 and 846. Maximum Penalties: Life in prison.

In addition to the RICO portion of “Operation Corridor,” 11 defendants were charged in six related cases for various drug trafficking and firearm offenses. Those cases and defendants include:

  DEFENDANTS
  Criminal Case No. 13CR4512-BEN Luis Cuevas, aka Youngster
Helen Robles       SUMMARY OF CHARGES

Conspiracy to Possess with Intent to Distribute Heroin. Maximum Penalties: 20 years in Custody and $1 million fine.

  DEFENDANTS
  Criminal Case No. 13CR4513-BEN Priscilla Lopez, aka Gata
Eva Madueno, aka Shady       SUMMARY OF CHARGES

Conspiracy to Possess with Intent to Distribute Methamphetamine and Heroin
Maximum Penalties: 40 years in Custody and $5 million Fine

  DEFENDANTS
  Criminal Case No. 13CR4515-BEN Juan Ybarra, aka Listo
Sherri Pelayo
Michael Vaughn       SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine; Conspiracy to Launder Money. Maximum Penalties: Life in
Custody and $10 million fine.

  DEFENDANT
  Criminal Case No. 13CR4511-JLS Hector Aguilar, aka Flaco       SUMMARY OF CHARGES Felon in Possession of a Firearm
Maximum Penalties: 10 years in Custody and $250,000 fine DEFENDANT
  Criminal Case No. 14MJ0038 Kenneth Coleman, aka Lucky Age: 35     SUMMARY OF CHARGES

Conspiracy to Possess with Intent to Distribute Methamphetamine and Heroin
Maximum Penalties: 20 years in Custody and $1 million fine.

  DEFENDANT
  Criminal Case No. 14MJ0039 Ricardo Chavez, aka Droopy       SUMMARY OF CHARGES Possession of Methamphetamine with Intent to Distribute
Maximum Penalties: 20 years in Custody and $1 million fine. DEFENDANT
  Criminal Case No. 14MJ0038 Chayo Moreno       SUMMARY OF CHARGES

Conspiracy to Distribute Methamphetamine; Maximum Penalties: 20 years in Custody and $1 million Fine.

  INVESTIGATING AGENCIES

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

*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.

SAN DIEGO – Twenty-four alleged North Park gang members and associates are charged in an indictment unsealed today as members of a racketeering conspiracy that involved cross-country sex trafficking of underage girls and women plus murder, kidnapping, robbery and drug-related crimes.

Early this morning detectives and agents from the San Diego Police Department and the FBI, with assistance from other agencies, made 17 arrests in San Diego, Arizona and New Jersey and served 11 search warrants in San Diego and Arizona. Four defendants were already in custody on other charges. The local defendants are scheduled to make their first court appearances tomorrow at 1:30 p.m. before U.S. Magistrate Judge Barbara Major. Three defendants are fugitives.

According to the federal grand jury indictment, the primary business of the gang was sex trafficking in 46 cities across 23 states. The organization was known as “BMS,” which is a combination of “Black MOB” and “Skanless” gangs, and these members are also allegedly aligned with other streets gangs, including Neighborhood Crips, Lincoln Park and West Coast Crips, among others.

The BMS gang was formed as a result of cooperation between these gangs and the members took on different responsibilities within the criminal enterprise, according to the indictment. Some managed the prostitutes and transported them all over the country; some forcefully coerced these women into prostitution and maintained their obedience and loyalty through acts of violence; some handled the money; some placed advertisements to generate business or booked motel rooms in which acts of prostitution took place; and others distributed drugs.

The defendants are charged with racketeering conspiracy - the statute traditionally used for organized-crime syndicates and mobsters. But as criminal street gangs such as these join forces and become more sophisticated and prolific in their illicit business pursuits, this statute is an effective tool to address all aspects of the criminal conduct.

This is the second time the U.S. Attorney’s office in this district has used the racketeering statute to charge dozens of gang members with operating a criminal enterprise that included drugs, human trafficking and violence. In the first case, 39 Oceanside gang members and associates were charged with racketeering, and to date, 34 have pleaded guilty.

“Together with our law enforcement partners, we have rescued scores of sex trafficking victims from the grips of gangsters and we have restored a higher level of safety to the gang’s operational base – the community of North Park - and beyond,” said U.S. Attorney Laura Duffy.

“The kind of sex trafficking described in this indictment is nothing less than modern-day slavery,” Duffy said. “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.”

“This RICO investigation was truly a joint effort between the San Diego Police Department, the U.S. Attorney’s Office and the FBI,” said San Diego Police Chief William Lansdowne. “I am extremely proud of the detectives and the investigative personnel who worked tirelessly on this case which has increased the safety of our community. Thousands of hours were spent on intelligence gathering, undercover operations, and interviews of victims and witnesses. Due to the investigative efforts of all involved, girls and women were rescued from a life they were being forced into. In addition, numerous gang members and associates of this criminal organization have been indicted and/or arrested.”

FBI Special Agent in Charge Daphne Hearn, commented, "Today's arrests are the result of a long term multi-agency investigation conducted under the FBI's Innocence Lost National Initiative (ILNI). One of the goals of the FBI's ILNI is to disrupt and dismantle criminal enterprises responsible for the victimization of children through prostitution. Through the efforts of the ILNI, more than 2,300 children that were forced into prostitution have been located and recovered, and more than 1,200 subjects have been convicted. Today's arrest in San Diego and federal racketeering charges filed in this case exemplifies the FBI's continued effort to work with our law enforcement partners to disrupt and dismantle criminal enterprises that seek to profit from the sexual exploitation of our nation's children.

“The collaboration between federal and local law enforcement in San Diego is unparalleled, and this case is another fine example of utilizing our strategic law enforcement partnerships to combat an 3 increasingly dangerous fusion of violent gangs and organized crime, said Derek Benner, special agent in charge for ICE’s Homeland Security Investigations in San Diego. “ With this group of violent street gang members, drug dealers, sex traffickers, and other criminals off the streets, we have delivered on our commitment to public safety so that the law abiding people living and working in our neighborhoods are safe.”

The indictment alleges that these defendants recruited girls and women from El Cajon Boulevard and elsewhere to work as prostitutes. And they also used social media like Instagram, Facebook, YouTube and Twitter to lure unwitting young girls into the lifestyle with rap videos and promises of a glamorous life. Many of these videos are posted on YouTube.

The gang members allegedly forced many of the trafficking victims into prostitution through threats or actual violence. According to the indictment, they branded their prostitutes as if they were property - with tattoos of gang monikers, bar codes, or a pimp’s name. Members of BMS sold, traded and gifted these girls and women among each other.

All of the 60 female sex trafficking victims, including 11 minors, were offered resources to help them start a new life.

U.S. Attorney Duffy urged parents and school administrators to be vigilant in tracking the online activities and academic performance of girls who could fall prey to gang members who would manipulate them.

According to court documents, some defendants attended parties known as “Players’ Balls,” which are invitation-only gatherings for pimps held in San Diego and around the country glorifying gang life, prostitution and pimping. One of the defendants in this indictment, Robert Banks, received an award at a national "Players’ Ball" function.

After a “Players Ball” last month in Las Vegas, a photo was posted on Facebook of Banks posing with a “Pimp Cup” and a “Pimp stick” and a woman on each arm – including a known prostitute. According to court documents, it is common for pimps to have chalices and scepters, known as Pimp Cups and sticks, made to symbolize their status as a pimp. These items are typically worth thousands of dollars, as they are commonly made of gold, decorated with jewels, and designed with the pimp’s moniker, gang name or gang number.

Pimps often have dental “grills” made that can be permanently affixed or removable. Typically, they are made of gold and can cost thousands of dollars.

According to the indictment, the government is seeking forfeiture of these items and others purchased with illicit proceeds generated from the enterprise’s alleged criminal activities.

During today’s searches, law enforcement officials seized two firearms; 20 to 30 marijuana plants; six luxury cars; flat screen televisions; several thousand dollars in cash; numerous pimp paraphernalia such as cups, sticks and hats; more than 50 pairs of Air Jordan shoes.

DEFENDANTS   Criminal Case No. 13CR4510-JAH Aaron Dwayne Pittman
Alvin Bernard Mitchell
Robert Banks III
Hakeem Tayari Dunn
Marcus Anthony Stevenson
Labarron Carnell Coker
Malik Hassan Kelly
Harold Randolph Martin
Anthony Dwayne Edmond
Tony Brown
Jakari Deandrez Blake
Dante Levell Grant*
Ronald Ledon Jackson*
Jonathan Devon Price
Bradley West Reynolds
Akili Lynn Cobb
Antwon Ruason Hollingsworth*
Christopher Michael Wall
Everett Burdette Williams
Marcus John Anthony Griffin
Edward Reynolds
Nicole Lee Rice
Yasenia Armentaro
Nadine Davis     *Fugitive
**The following defendants face the possibility of life in prison due to special allegations in the
indictment, which increase the maximum penalty: Tony Brown, Robert Banks, Hakeen Dun, Everette
Williams, Dante Grant, Chris Wall, Aaron Pittman, Nicole Rice, Malik Kelly, Harold Martin, Ronal
Jackson, Marcus Stevenson, Alvin Mitchell, Labarren Coker. The special allegations are that these
defendants committed conduct that formed the basis of (1) sex trafficking of a minor, (2) sex trafficking
by force, or (3) transportation of minors for prostitution.   SUMMARY OF CHARGES

Title 18, United States Code, Section 1962(d)—Conspiracy to Conduct Enterprise Affairs Through a
Pattern of Racketeering Activity; Title 18, United States Code, Section 1963—Criminal Forfeiture.
Maximum Penalties: 20 years’ incarceration, a fine of $250,000, three years of supervised release.

  INVESTIGATING AGENCIES

San Diego Police Department
Federal Bureau of Investigation
Homeland Security Investigations

*An indictment 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.

SAN DIEGO – Real estate agent Teresa Rose, of Ramona, California, was sentenced today to 15 months in custody by U.S. District Judge John A. Houston for her role in an investment and mortgage loan fraud scheme that generated tens of millions of dollars in fraudulent loans and millions in illegal kickbacks to the participants. In addition, Rose was ordered to pay more than half a million dollars in restitution to victims of the offense.

Rose was charged with participating in the scheme along with five others: Mary Armstrong, an unlicensed mortgage broker who orchestrated the scheme; William Fountain, Armstrong’s assistant; John Allen, a mortgage loan processor from Laguna Hills; Justin Mensen, a straw buyer who later recruited others and helped launder the funds; and Audrey Yeboah, a Los Angeles-based tax preparer who generated fake paperwork to support the loans.

Rose’s coconspirators, including Mary Armstrong, recruited real estate “investors” through advertisements in the Los Angeles Times, Monster.com, and elsewhere. They offered these “investors” the opportunity to purchase homes using their good credit with no money down. In order to get these “investors” to participate in the loan fraud, the participants in the fraud promised to make the mortgage payments on their behalf using rental income from the properties.

In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. Rose helped secure mortgages on the properties by falsifying loan applications for the straw buyers. Among other things, the loan applications she helped to falsify claimed that the borrowers had exorbitant income from fake employers, and assets that they did not own. Rose and others used sham employers in order to verify the borrowers’ fabricated employment histories. In addition, Armstrong arranged for the borrowers to obtain 100% financing – and thus avoided having to make any down payment on the properties.

Rose acted as both the buyers’ and sellers’ real estate agent on a number of these sales, and convinced the sellers of each property to inflate the purchase price by $100,000 or more. These inflated amounts were allegedly for construction to improve the properties. In fact, no construction work was performed and the funds were diverted (or “kicked back”) to bank accounts controlled by Rose’s coconspirators. In this way, the conspirators pocketed nearly $15 million in kickbacks, made few if any mortgage payments, and allowed nearly all of the properties to swiftly fall into foreclosure. Rose earned real estate sales commissions from both the sellers and buyers on each transaction, and took home more than $200,000 for arranging the sales of nine properties in Ramona. In total, Armstrong arranged the purchase of approximately $100 million in loans through this scheme, resulting in estimated losses between $7 million and $20 million to the mortgage lenders and secondary purchasers Fannie Mae and Freddie Mac.

All of the defendants pled guilty to participating in the scheme and were sentenced by Judge Houston. Armstrong was sentenced to 100 months in custody. Fountain and Allen were sentenced to 42 months and 12 months in custody, respectively. Mensen and Yeboah were each sentenced to probation with terms of home detention or house arrest.

United States Attorney Laura Duffy said the American public is the actual victim of this type of widespread mortgage fraud, which played such a significant role in destabilizing the country’s financial situation and neighborhoods rocked by foreclosures and abandoned homes. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact the San Diego branch of the Federal Bureau of Investigation at (858) 565-1255 or the Federal Housing Finance Agency - Office of Inspector General hotline at (800) 793-7724.

This matter was investigated jointly by agents from the FBI and FHFA-OIG. The case is being prosecuted by FHFA-OIG Investigative Counsel and Special Assistant U.S. Attorney Emily W. Allen and Assistant U.S. Attorney Valerie Chu of the Southern District of California.

DEFENDANTS   Criminal Case No. 12CR1848-JAH Mary Armstrong
Teresa Rose
William Fountain
John Allen       DEFENDANT   Criminal Case No. 12CR1458-JAH Justin Mensen       DEFENDANT   Criminal Case No. 12CR4322-JAH Audrey Yeboah       SUMMARY OF CHARGES

Mary Armstrong, Teresa Rose, and William Fountain

Count 1: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to
Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of
$250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Mary Armstrong

Count 2: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Counts 3-5: Title 18, United States Code, Section 1956(a)(1)(B)(I) -- Money Laundering -- statutory maximum sentence of 15 years’ custody, a maximum fine of $500,000 or twice the value of the property involved in the transaction, and $100 special assessment.

Justin Mensen

Information: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and
$100 special assessment.

Audrey Yeboah

Information: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

  AGENCIES

Federal Bureau of Investigation
Federal Housing Finance Agency - Office of Inspector General

SAN DIEGO –Jose Rodrigo Arechiga-Gamboa, also known as “Chino Antrax” and “Norberto Sicairos-Garcia,” was arrested Monday, December 30, 2013, at the Schiphol Airport in Amsterdam, Netherlands at the request of the United States.

A federal grand jury in San Diego returned a sealed indictment on December 20, 2013, charging Arechiga-Gamboa with Conspiracy to Distribute Controlled Substances Intended for Importation and Conspiracy to Import Controlled Substances. That same day, the Clerk of the Court issued a sealed warrant for his arrest. The indictment was unsealed today.

Archiga-Gamboa was taken into custody at the airport under a fraudulent name as he deplaned from KLM Flight 686 from Mexico City, Mexico to Amsterdam. The United States made formal requests for assistance from foreign authorities via a provisional arrest warrant and an Interpol Red Notice.

The United States Attorney is currently seeking his extradition to face charges in the Southern District of California.

DEFENDANT   Criminal Case No. 13-CR-4517-DMS Jose Rodrigo Arechiga-Gamboa, aka “Chino Antrax,” aka “Norberto Sicairos-Garcia”       SUMMARY OF CHARGES

Count 1: Title 21, United States Code, Sections 959, 960 and 963 - Conspiracy to Distribute Controlled
Substances Intended for Importation

Count 2: Title 21, United States Code, Sections 952, 960 and 963 - Conspiracy to Import Controlled
Substances

  INVESTIGATING AGENCIES

Drug Enforcement Administration
Customs and Border Protection Office of Field Operations
Customs and Border Protection Office of Border Patrol
San Diego Law Enforcement Coordination Center
Homeland Security Investigations
Internal Revenue Service
Interpol

SAN DIEGO – Jose Luis Ramirez-Dorantes was sentenced today to 55 years in prison for his participation in the July 2009 robbery and murder of United States Border Patrol Agent Robert Rosas, Jr.

Ramirez, a 46-year-old Mexican national, pleaded guilty on January 10, 2013, admitting he was one of five armed individuals who conspired to rob a Border Patrol agent of his night vision device, which resulted in Agent Rosas being fatally shot during a struggle. He pleaded guilty to conspiracy to commit robbery and kidnaping and use and carrying of a firearm during the commission of a crime of violence.

Court filings indicate that in July 2009, Ramirez and four others plotted to rob a Border Patrol agent of his night vision device. On July 23, 2009, the group, bearing firearms, traveled by car and foot to the international border near Campo, California. Ramirez stood watch on the Mexican side of the border while three co-conspirators sneaked into the United States at night and waited for a Border Patrol agent to arrive in the area. After Agent Rosas arrived in the area and exited his vehicle, he was detained at gunpoint. Agent Rosas resisted and, during the ensuing struggle, Ramirez’s co-conspirators shot Agent Rosas multiple times, killing him. The coconspirators then stole the agent’s firearm, night vision device, and other equipment and fled back to Mexico.

In June 2010, Mexican officials arrested Ramirez in Naucalpan, Mexico, near Mexico City, at the request of the United States. Ramirez was extradited to the United States in December 2010.

Ramirez is the third defendant to be sentenced for Agent Rosas’s murder. In April 2010, United States District Judge M. James Lorenz sentenced Christian Daniel Castro-Alvarez to 40 years of imprisonment. On November 14, 2013, he sentenced Marcos Rodriguez-Perez to 56 years to run consecutive to a two-year sentence Rodriguez is currently serving for violating his supervised release from a prior alien smuggling conviction. One other defendant, Emilio Samyn Gonzales- Arenazas, has pleaded guilty to participating in the murder and is scheduled to be sentenced on January 23, 2014. The last defendant, Jose Juan Chacon-Morales, remains a fugitive, and there is a reward of up to $100,000 for information leading to his arrest or location.

After Ramirez’s sentencing, United States Attorney Laura E. Duffy expressed her condolences to Agent Rosas’s family and colleagues at the Border Patrol: “We hope that in some small way, these successful prosecutions can make a difference to members of the Rosas family who have suffered such a tragic, irreparable loss. Ramirez and the others will pay a high price for their unconscionable actions that terrible night.”

Duffy also expressed her gratitude to the Federal Bureau of Investigation and Homeland Security Investigations who conducted the investigation. “Since July 2009, the investigating agents have displayed exceptional diligence and tenacity to bring these four men to justice, despite the length and complexity of this cross-border investigation. The expertise and resolve of the agents in this case, demonstrate that if a law enforcement officer is harmed in any way, the United States will dedicate its full resources to catching the perpetrators and bringing them to justice.”

Chief Patrol Agent Paul A. Beeson of the U.S. Border Patrol’s San Diego Sector said, “On behalf of all Border Patrol agents, we extend our deepest appreciation for the resolve and professionalism of the U.S. Attorney’s Office for their work on the prior convictions and this sentencing. We will always remember Border Patrol Agent Robert Rosas as a good father, loving husband, and a patriot to his country.”

FBI Special Agent in Charge, Daphne Hearn, commented, "Today's sentencing sends a message that the FBI is committed to bringing to justice those responsible for the death of U.S. Border Patrol Agent, Robert Rosas. Agent Rosas served his country with dedication, honor and courage and was killed while protecting our nation's borders. The FBI recognizes that no punishment will lessen Agent Rosas' death, but we hope today's sentencing will help bring some closure to the family.”

DEFENDANT   Criminal Case No. 10CR1793-L Jose Luis Ramirez-Dorantes       SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 371: Conspiracy to commit robbery and kidnaping

Count 5: Title 18, United States Code, Section 924(c)(1): Discharging firearms during and in relation to a crime of violence

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Homeland Security Investigations

SAN DIEGO, CA – A special agent with the Naval Criminal Investigative Service (NCIS) pleaded guilty today to participating in a massive international fraud and bribery scheme, admitting he shared with a foreign Navy contractor confidential information about ongoing criminal probes into the contractor’s billing practices in exchange for prostitutes, cash and luxury travel.

U.S. Attorney Laura E. Duffy of the Southern District of California and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division made the announcement after the plea was entered before U.S. Magistrate Judge Jan Adler. The plea is subject to acceptance by U.S. District Judge Janis Sammartino. Sentencing was set for March 7 at 9 a.m. before Judge Sammartino.

In his plea agreement, Supervisory Special Agent John Bertrand Beliveau Jr., 44, pleaded guilty to conspiracy to commit bribery, which carries a maximum penalty of five years in prison, and bribery, which carries a maximum penalty of 15 years in prison. In his plea agreement, Beliveau acknowledged that he regularly searched confidential NCIS databases for reports of investigations related to the contractor, Leonard Glenn Francis, chief executive of Singapore-based Glenn Defense Marine Asia (GDMA). Beliveau admitted that, over the course of years, he helped Francis dodge multiple criminal investigations by providing copies of these reports plus advice and counsel on how to respond to, stall, and thwart the NCIS probes.

Beliveau is one of five Navy officials and civilian contractors who are implicated so far in the widening corruption case involving hundreds of millions of dollars of Navy contracts. In addition to Beliveau and Francis, also charged are U.S. Navy Commanders Michael Vannak Khem Misiewicz and Jose Luis Sanchez and GDMA executive Alex Wisidagama. The charges against Francis, Misiewicz, Sanchez and Wisidagama are merely allegations, and the defendants are presumed innocent until and unless proven guilty.

“Instead of doing his job, John Beliveau was leaking confidential details of investigations to the target himself,” said U.S. Attorney Laura Duffy. “This is an audacious violation of law for a decorated federal agent who valued personal pleasure over loyalty to his colleagues, the U.S. Navy and ultimately his own country. His admissions are a troubling reminder that corruption may exist even among those entrusted with protecting our citizens and upholding our laws.”

U.S. Attorney Duffy praised law enforcement partners, and in particular she acknowledged Defense Criminal Investigative Service, NCIS and the Navy for taking extraordinary measures to weed out corruption from its ranks. “The Navy has extended enormous cooperation and assistance in this investigation, and we have worked closely to achieve justice, to protect national security and to safeguard American defense dollars.”

“Today, John Beliveau has admitted to accepting lavish gifts in exchange for revealing sensitive law enforcement information to a primary target of this massive bribery investigation," said Acting Assistant Attorney General Raman. “For nearly two years, Beliveau deliberately leaked the names of cooperating witnesses, reports of witness interviews, and plans for future investigative steps. Through his corrupt conduct, Beliveau helped the target of the investigation evade the reach of law enforcement, and cost the U.S. Navy millions of dollars. Thanks to the Navy's extensive cooperation and assistance, and the hard work of the NCIS and DCIS agents assigned to this ongoing investigation, we have now been able to hold him to account.”

“John Beliveau's reprehensible actions, providing sensitive information to the targets of ongoing fraud investigations and accepting bribes, tragically tarnished his NCIS badge,” said NCIS Director Andrew Traver. “Nevertheless, the tireless and dedicated work of NCIS and DCIS effectively brought this to a halt, and these agencies continue to vigilantly protect Department of Navy personnel and resources.”

“Today's guilty plea of former NCIS Special Agent John Beliveau is part of an ongoing joint effort by the Defense Criminal Investigative Service, the Naval Criminal Investigative Service and our enforcement partners to identify, investigate and bring to justice those seeking to enrich themselves at the expense of U.S. taxpayers,” said James B. Burch, Deputy Inspector General for Investigations, Office of the Inspector General, Department of Defense. “While the conduct of a vast majority of those in the U.S. Navy and law enforcement community is beyond reproach, we will vigorously pursue those individuals who put the safety and security of U.S. Navy personnel at risk. The conduct of former Special Agent Beliveau is reprehensible and today's guilty plea demonstrates the Defense Criminal Investigative Service will continue to pursue allegations of fraud and corruption that puts the Warfighter at risk.”

According to the plea agreement, Beliveau’s criminal conduct began in January of 2011 when he was stationed in Singapore, and continued for more than two years, even after Beliveau returned to the NCIS office in Quantico, Virginia, in April of 2012.

Among the law enforcement-sensitive information provided by Beliveau to Francis were 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 particulars about bank records and financial information sought by the investigations; the reports to prosecutors and their interactions with the investigations; and planned future investigative activities.

According to information provided in court, when authorities became aware of Beliveau’s duplicity, they began planting bogus reports in the system, including one that falsely indicated the investigations of Francis were going to be closed. Soon after that, an emboldened Francis came to San Diego from Singapore for a meeting with Navy brass, and Francis was arrested. Beliveau was taken into custody the same day in Virginia.

All told, Beliveau leaked information to Francis about criminal investigations into GDMA’s overbilling scheme that cost the Navy at least $7 million in fraudulent overpayments for “husbanding” services such as food, fuel and other supplies and services to the ships, according to the plea agreement.

In return for leaks of internal NCIS information and advice from Beliveau, Francis allegedly provided the agent with envelopes containing cash on at least five occasions, along with luxury travel from Virginia to Singapore, the Philippines and Thailand, the plea agreement stated. On many occasions, beginning in 2008 and continuing through 2012 while Beliveau was posted in Singapore, Francis allegedly provided the NCIS agent 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.

According to court records, in April of 2012 Beliveau complained to Francis, saying, “You give whores more money than you give me,” and, “I can be your best friend or worst enemy.”

Beliveau admitted that he and Francis tried to hide their illicit activity by employing techniques that Beliveau had learned from his specialized training as a law enforcement agent. These steps included deleting emails, changing email accounts, creating covert email accounts shared by Beliveau and Francis, not transferring funds through the normal banking channels, and using Skype chat and calls to transmit information.

This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service (DCIS) and the Defense Contract Audit Agency. Significant assistance was provided by the Drug Enforcement Administration, Homeland Security Investigations and the DOJ Criminal Division’s Office of International Affairs, the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore. This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Director of Procurement Fraud Catherine Votaw and Trial Attorney Brian Young of the Criminal Division’s Fraud Section, as well as Special Trial Attorney Wade Weems on detail to the Fraud Section.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tipline at www.ncis.navy.mil, or the DoD Hotline at www.dodig.mil/hotline or should call (800) 424-9098.

DEFENDANT     Case Number: 13-MJ-3456
John Bertrand Beliveau II       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

SAN DIEGO - Armando Villareal Heredia, who was extradited to the United States from Mexico last year to face federal racketeering and drug charges, was sentenced today to 30 years in prison for his role as a leader in the Fernando Sanchez Arellano (FSO) drug trafficking organization and his participation in cartel activities such as murder, kidnapping and the importation and sale of methamphetamine.

Villareal, who was sentenced by U.S. District Judge William Q. Hayes, pleaded guilty in September to Conspiracy to Conduct Enterprise Affairs through a Pattern of Racketeering Activity (RICO conspiracy) and Conspiracy to Distribute Controlled Substances.

“This sentence is a major blow to the Fernando Sanchez Arellano organization,” said U.S. Attorney Laura Duffy. “We and our law enforcement partners are committed to keeping cartel violence out of our communities.”

Villareal acknowledged in his plea agreement that the FSO’s activities included assaults on law enforcement officers attempting to arrest FSO members, bribing public officials to release FSO members from prison, and payments to public officials for confidential law enforcement information.

According to the plea agreement, Villareal also admitted that the cartel attempted to keep rival traffickers, potential informants, witnesses against the cartel, law enforcement, the media and the public in fear through intimidation, threats of violence, assaults and murders, and the organization “taxed” other criminals who operated within FSO territory, which includes Tijuana and parts of San Diego.

Villareal, aka “El Gordo,” was arrested in Sonora, Mexico in July of 2011 and extradited to the U.S. in May of 2012. Villareal is the lead defendant in a 43-defendant prosecution which has been ongoing in the Southern District of California since July 2010. Villareal was arrested by Mexican law enforcement officers at the request of the United States.

To date, 40 of 42 defendants have entered guilty pleas in the case. Like Villareal, those defendants admitted to participating in a violent transnational racketeering enterprise controlled by Fernando Sanchez-Arellano, and to committing murders, kidnappings, robberies, assaults, money laundering and a wide range of drug trafficking offenses. Among those who have pleaded guilty is Jesús Quiñónez Màrquez, then- international liaison officer with the Baja California Attorney General’s Office.

Two defendants remain fugitives.

The indictment in this case resulted from a long-term investigation conducted by the multi-agency San Diego Cross Border Violence Task Force (CBVTF). The CBVTF was formulated to target those individuals involved in organized crime-related violent activities affecting both the United States and Mexico. Law enforcement personnel assigned to the CBVTF made extensive use of court-authorized wiretaps and other sophisticated investigative techniques to develop the significant evidence which led to the charges in this case.

United States Attorney Duffy praised the Mexican government for their assistance in the extradition of Villareal. She also commended the Organized Crime Drug Enforcement Task Force (OCDETF) for the coordinated team effort in handling this investigation, “Operation Luz Verde.” Agents and officers from the Federal Bureau of Investigation, San Diego Police Department, Drug Enforcement Administration, San Diego Sheriff’s Office, Chula Vista Police Department, U.S. Marshals Service, Bureau of Alcohol, Tobacco and Firearms, San Diego District Attorney’s Office, and California Department of Justice participated in this OCDETF investigation. The OCDETF program was created to consolidate and utilize all law enforcement resources in this country’s battle against organized crime and major drug trafficking organizations.

DEFENDANT   Case Number 10CR3044-WQH Armando Villareal Heredia       SUMMARY OF CHARGES

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

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

Title 21, United States Code, Sections 846 and 841(a)(1) - Conspiracy to Distribute Methamphetamine

Maximum penalties: Mandatory Minimum of 10 years in prison; Maximum of Life in prison; Maximum
$10 million fine; 5 years of supervised release

  AGENCIES

Federal Bureau of Investigation
San Diego Police Department
Drug Enforcement Administration
San Diego Sheriff's Office
Chula Vista Police Department
U.S. Marshals Service
Bureau of Alcohol Tobacco and Firearms
California Department of Justice
San Diego District Attorney's Office

Today United States Attorney Laura E. Duffy announced the sentencing of Brian Nels Peterson, the head of a mortgage company called Terra Finance in San Diego, California, for originating millions of dollars in fraudulent mortgage applications generated between 2005 and 2007, many for properties in two neighborhoods in San Diego County. District Court Judge John A. Houston sentenced Peterson today to 41 months in custody, ordered him to pay a $50,000 fine, and ordered restitution in the amount of $542,075 to Citi Mortgage.

Peterson admitted that he devised a scheme to procure mortgage funds through deceptive means, including falsifying income on applications to qualify borrowers for loans. Terra Finance facilitated loans in several San Diego neighborhoods, including the expensive then-new “Ivy Gate” housing development in North County’s 4S Ranch, and the “Rolling Hills” development in southern San Diego County. Court documents indicate that in its heyday, Terra Finance generated between $80 million and $100 million worth of residential mortgage loans. Peterson, who held a broker’s license with the California Department of Real Estate, personally signed most of the fraudulent loan applications containing false income, employment, asset, and liability information submitted under his license number.

Peterson earned over $1 million from his fraudulent loan business through broker’s fees, kickbacks from cash-out refinances, and other sources in 2006 alone. He admitted that he failed to report his over $1 million income in 2006, and that he evaded paying taxes by arranging to be paid in cash, and other means.

According to court documents, Peterson orchestrated the fraudulent conduct of employees, borrowers, and industry professionals as the head of Terra Finance. Peterson recruited a cadre of loan officers, loan processors, office staff, real estate “investors” and other industry professionals to participate in his scheme, including appraisers, tax preparers, and lender representatives. These knowing participants included people who made up job titles and income figures so borrowers would appear to qualify for a loan, added borrowers to another person’s bank account and then had the borrowers falsely claim the funds in the account as assets, fabricated false “verifications” of phony information in the loan applications, and prepared appraisals “to order” based on the property value Peterson sought. Borrowers used a succession of fake loan applications to purchase multiple properties that they could not afford. The initial loans were often re-financed – through fraudulent loan applications -- to fund additional purchases, in an upward spiral of home ownership built on a foundation of fraud.

Peterson’s real estate empire eventually crumbled, resulting in millions of dollars of losses, dozens of foreclosures, numerous neighborhoods depressed – and the indictment of 26 loan officers, loan processors, appraisers, borrowers, and a lender representative, all who participated in loans with Terra Finance. In a related case, United States v. Berkenfield, case number 11CR3486-JAH, 13 out of 25 arrested defendants have pled guilty and have been sentenced to penalties ranging from probation and home confinement to 5 months in custody. Twelve defendants remain pending in that case. (One defendant remains a fugitive.)

DEFENDANT   Criminal Case No. 11CR3486-JAH Brian Nels Peterson    

Count 1- Wire Fraud (Title 18, United States Code, § 1343): 41 months custody; 3 years of supervised release; $50,000 fine; $542,075 restitution; $100 special assessment.

Count 2 – Willful Failure to File Tax Return (Title 26, United States Code, § 7203): 12 months custody; 1 year of supervised release, $10 special assessment, all to run concurrently with Count 1.

PARTICIPATING AGENCIES

Department of Homeland Security, Immigration and Customs Enforcement, Office of Professional Responsibility
Internal Revenue Service – Criminal Investigations
Federal Bureau of Investigation

San Diego, CA - United States Attorney Laura E. Duffy announced that John G. Rizzo, the CEO of iTrackr Systems, was sentenced to 30 months in prison by U.S. District Judge Larry Alan Burns for illegally manipulating the stock market in connection with millions of shares of his Florida-based company. Judge Burns also sentenced Rizzo to pay restitution to the victims in the amount of $2,669,353.

As set forth in his Plea Agreement, in early 2006, Rizzo agreed to raise money for a Florida software company called iTrackr, which developed software to track inventory of electronics, such as the Xbox or other gaming systems, at retail stores. Beginning in late 2008, Rizzo and his co-conspirators used the services of offshore “boiler rooms” to solicit investments for the company’s “penny stock.” Unknown to investors, the boiler rooms failed to disclose that only 20% of each investment would go to iTrackr, with the rest being paid to the boiler rooms as commission.

As part of that scheme, Rizzo used a shell company in the British Virgin Islands (“BVI”), and a bank account in Belize. Rizzo sold millions of shares of iTrackr stock through his BVI company in order to avoid U.S. securities registration requirements and disguise the fact that almost all the investor funds were being diverted to the boiler rooms. In addition, Rizzo used a complex array of different entities to conceal the fact that he was the one selling the shares, rather than the shares being sold by independent third party investors. One of the business entities used by Rizzo to transfer funds in furtherance of the scheme was located in San Diego.

During 2009 alone, approximately 120 victims in the United Kingdom invested a total of approximately $2.5 million in iTrackr through Rizzo’s scheme.

Also sentenced today in a related case was Maureen Marant, who worked as Rizzo’s administrative assistant at iTrackr. Marant pleaded guilty to conspiring with Rizzo to commit wire fraud. In her Plea Agreement, she admitted to posing as the director of a fictitious escrow company; and interacting with the victim investors by sending them stock purchase agreements, wiring instructions, and other paperwork. For her role in the scheme, Marant was sentenced to five years of probation, and ordered to pay restitution in the amount of $333,755.

On October 15, 2013, in another related case, Judge Burns imposed sentence on David Bahr, a Rancho Santa Fe consultant who conspired to fraudulently manipulate and artificially inflate iTrackr’s stock. In his Plea Agreement, Bahr admitted that he arranged for the sale to a broker of $2.5 million in shares of iTrackr, and agreed to pay that broker a secret kickback of $750,000. The purpose of the arrangement was to artificially inflate iTrackr stock as part of a “pump and dump” scheme. After pleading guilty to conspiring to commit securities fraud, Bahr was sentenced by Judge Burns to 18 months in prison, and ordered to pay a fine of $65,000.

United States Attorney Laura E. Duffy once again cautioned the public that they need to be vigilant against all forms of illegal stock manipulation, especially in the penny stock markets. Duffy praised the hard work of the agents from the Federal Bureau of Investigation and the Internal Revenue Service for their efforts, and the continuing support of the Securities and Exchange Commission for their expertise and guidance.

FBI Special Agent in Charge Daphne Hearn, commented, “Today's sentencing sends a clear message to those who would defraud the public through deceit and false claims. The FBI and our law enforcement partners will aggressively pursue you and stop you from lining your pockets at the expense of others.” The public can contact the FBI at telephone number (858) 320-1800, to report investment fraud scams and other criminal activity.

DEFENDANT     Case No. 13-CR-2823-LAB John G. Rizzo    

Convicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Wire Fraud. Sentenced to 30 months in prison; three years of supervised release; restitution of $2,669,353; special assessment of $100.

  RELATED CASES     Case No. 13-CR-2861-LAB Maureen Marant Age: 47 Lantana, Florida

Convicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Securities fraud. Sentenced to five years of probation; restitution of $333,755; special assessment of $100.

  Case No. 13-CR-2198-LAB David Bahr Age: 54 Rancho Santa Fe, California

Convicted of violating Title 18, United States Code, Section 1349 - Conspiracy to Commit Securities fraud. Sentenced to 18 months in prison; three years of supervised release; fine of $65,000; special assessment of $100.

  PARTICIPATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service

SAN DIEGO – Three Mexican drug cartel members were sentenced today by U.S. District Judge William Q. Hayes for their roles in a conspiracy to kidnap San Diego drug dealers and spirit them away to Mexico for violent revenge over unpaid drug debts.

Carlos Alberto Andrade-De La Cruz was sentenced to 130 months in prison plus five years of supervised release; Luis Miguel Salas-Rodriguez and Antonio Zermeno-Garcia were sentenced 92 months each plus five years of supervised release.

According to sentencing documents, the defendants suspected other drug dealers in San Diego of stealing their methamphetamine. The trio plotted to kidnap their targets from the United States, take them back to Mexico, and use violence to collect on their debts. The defendants were arrested in San Diego after the leader of this plot, defendant Andrade-De La Cruz, illegally crossed into the United States from Mexico and met the others in front of the home of the first intended victim.

The investigation began in March 2012 when the Cross-Border Violence Group of the Federal Bureau of Investigation learned of a plot to kidnap and extort three unidentified drug debtors in San Diego. Acting on this information, the FBI sought and obtained judicial authorization to wiretap the telephone of one of the leaders of this plot.

Based on the intercepts, the FBI learned that the defendants blamed three San Diego-based drug dealers for stealing their methamphetamine. As a result, one of the enforcers was initially ordered either to extort money from these debtors or to take high-end, luxury vehicles from the debtors by force. Wiretap conversations revealed that as the defendants discussed various plans to collect on the debt, defendant Andrade-De La Cruz became frustrated with delay. He ultimately gave the “green light” for co-defendant Zermeno-Garcia to kidnap the first of the drug debtors. Wiretaps revealed that Zermeno-Garcia told his conspirators that a debtor could be turned into “pozole” – a term used by drug cartels to describe a “soup” made by dissolving a human body in acid.

On March 14, 2012, the defendants intended to carry out the kidnapping. Andrade-De La Cruz illegally crossed into the United States from Mexico with fraudulent documents and met up with Salas-Rodriguez and Zermeno-Garcia. The FBI tracked each of the three defendants to a location near the residence of the first intended victim. Because of an imminent threat to life, the FBI’s SWAT Team immediately arrested all three defendants. The FBI located the intended victim who told agents that he would have ended up in the trunk of a vehicle if the FBI had not intervened.

At the sentencing hearing, Judge Hayes described the defendants’ plan as “cold blooded.” In imposing the lengthy terms of incarceration, Judge Hayes stated that he believed that the defendants had every intention to take the victims to Mexico to exact violence.

This case was investigated by the Federal Bureau of Investigation’s Cross-Border Violence Group and highlights the close connection between narcotics trafficking and violence. The Cross-Border Violence Group is a FBI-led task force comprised of federal and local law enforcement from the FBI, DEA, Border Patrol, San Diego Sheriff’s Department, San Diego District Attorney’s Office Bureau of Investigation and the Chula Vista Police Department. Created in 2009, this task force was designed to respond to immediate threats posed by transnational criminal organizations. The Cross-Border Violence Group responds to numerous kidnapping events each year, which are complicated by the fact that threats often arise outside of the United States.

DEFENDANTS   Criminal Case No. 12-CR-1244-WQH Carlos Alberto Andrade-De La Cruz
Luis Miguel Salas Rodriguez
Antonio Zermeno Garcia       SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 1201(c) - Conspiracy to Commit Kidnapping; Maximum penalty: Life Imprisonment

  INVESTIGATING AGENCIES

Federal Bureau of Investigation’s Cross-Border Violence Group

SAN DIEGO - James Rick Mitchell, a retired teacher and counselor in the San Diego Unified School District, was sentenced today by U.S. District Judge Janis L. Sammartino to 84 months in prison, followed by five years of supervised release, for a child pornography offense. He is expected to self-surrender to serve his sentence by February 7, 2014.

According to documents filed in court, Mitchell collected 947,542 images and 4,751 videos depicting minors engaged in sexually explicit conduct. Mitchell was identified as a collector of child pornography in an investigation conducted by the United States Postal Service into a commercial distributor of child pornography images and videos.

The investigation revealed that Mitchell had purchased videos and images from the company over an approximately 5 year period between 2006 and 2011, spending approximately $4,300 to purchase dozens of illicit images and videos. Based on that information, United States Postal Inspectors executed a search 2 warrant at Mitchell’s residence, where they uncovered the trove of child pornography that Mitchell had collected.

Mitchell was employed by the San Diego Unified School District for 34 years between 1969 and 2003. He worked as a physical education teacher and counselor at Einstein Junior High School; as a math teacher and track coach at Point Loma High School; and for 24 years between 1979 and 2003 at University City High School as a math teacher, counselor and track coach. Judge Sammartino told Mitchell that he had cast a “pallor” on his career as an educator with his actions and noted that possession of child pornography results in acute harm to the children depicted in the images.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse, launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.

DEFENDANT   Criminal Case No. 13-cr-667-JLS James Rick Mitchell       SUMMARY OF CHARGES

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

Maximum Penalties: 5 year mandatory minimum, 20 year maximum; 5 years of supervised release

  AGENCIES

United States Postal Service
San Diego Internet Crimes Against Children Task Force

SAN DIEGO, CA – A federal judge today dismissed a lawsuit against the federal government filed by Cynthia Sommer, widow of U.S. Marine Sgt. Todd Sommer, rejecting claims that Naval Criminal Investigative Service agents acted with negligence and malice in the investigation that eventually resulted in her conviction for his murder.

A jury in state court convicted Sommer of first-degree murder in 2007, but the trial judge overturned the verdict, ruling that prosecutors' description of her party "lifestyle" following her husband’s death in 2002 was so inflammatory that it deprived Sommer of a fair trial. In preparation for a retrial, additional tissue samples were tested, and experts found no arsenic. The District Attorney ultimately dismissed the murder case without prejudice.

Sommer filed a lawsuit in federal court in 2009, alleging in part that NCIS agents intentionally inflicted emotional distress upon her and failed to conduct a proper investigation because they disapproved of her partying lifestyle. Sommer also claimed that agents improperly arrested her, withheld key evidence and failed to disclose relevant facts that could have benefitted Sommer’s defense.

In a ruling issued today, U.S. District Judge Cathy Ann Bencivengo rejected all of Sommer’s claims. “The evidence does not support plaintiff’s theory that NCIS agents fabricated evidence or knowingly withheld evidence that they understood to be exculpatory,” the judge wrote in her ruling.

The judge later added: “Plaintiff argues that NCIS agents investigated her because they wanted to punish her for her lifestyle choices. However, because…there is no evidence showing NCIS willfully acted in a wrongful manner (e.g., that it fabricated evidence), Plaintiff’s abuse of process claim fails.”

Judge Bencivengo noted in her ruling that the parties do not dispute the validity of results of the tests conducted by the Armed Forces Institute of Pathology lab (AFIP), which found evidence of arsenic; rather, the plaintiff argued that the federal lab should have performed additional testing to rule out contamination given the extremely high levels of arsenic found.

“The evidence shows they were valid,” the judge wrote, later adding: “There is no actual evidence of contamination that the AFIP disregarded.”

Judge Bencivengo said the scientists in the government lab were well qualified and had the knowledge and experience to test human tissue for trace elements of metals and metalloids, and they followed standard procedures and maintained the chain of custody.

“There is evidence before the Court showing that the AFIP met its standard of care for producing reliable test results...Based on the record before the Court, there is and was no evidence of contamination that the AFIP ignored.”

NCIS agents were involved in the investigation because the death occurred in Navy housing at Marine Corps Air Station Miramar and Sommer was an active-duty Marine.

United States Attorney Laura E. Duffy announced today that Alvarado Medical Plaza Pharmacy, Inc. (“Alvarado Pharmacy”) and its owner, William Burdine, pleaded guilty to healthcare fraud charges involving the illegal importation and sale of unapproved cancer drugs to Medicare patients in San Diego.

Alvarado Pharmacy and Burdine entered the pleas before U.S. Magistrate Judge Nita L. Stormes, and are scheduled to return to court on February 21, 2014, for a sentencing hearing before U.S. District Judge Janis L. Sammartino. The guilty pleas must be accepted by Judge Sammartino before becoming final.

In pleading guilty to a charge of Health Care Fraud, Alvarado Pharmacy admitted that between May 2010 and June 2011, it ordered $752,688.00 of unapproved prescription oncology drugs from a Canadian distributor, Quality Specialty Products (“QSP”). The drugs ordered from QSP were unapproved versions of drugs sold in the United States as Avastin, Eloxatin, Gemzar, Neupogen, Rituxin, Taxotere, and Zometa, and were shipped from Canada to Alvarado Pharmacy in San Diego. The pharmacy admitted that it was aware that the drugs were not intended for sale in the United States because (a) the packaging and shipping documents indicated that the drugs were shipped from outside the United States; (b) many of the invoices identified the origin of the drugs and intended markets for the drugs as countries other than the United States; (c) the labels did not bear the “RX Only” language required by the Food and Drug Administration (“FDA”); (d) the labels did not bear the National Drug Code numbers found on the labels of the drugs intended for the U.S. market; (e) many of the labels had information in foreign languages; (f) the drugs were purchased at a substantial discount; and (g) the packing slips indicated that the drugs came from Canada.

Alvarado Pharmacy further admitted that it supplied the unapproved foreign oncology drugs purchased from QSP to doctors pre-mixed, in an infusion bag, without advising the doctors that the drugs came from abroad and were not approved for use in the United States. The pharmacy admitted that it was aware that some of these drugs from QSP would be administered to Medicare patients, and doctors would bill Medicare for those drugs using the reimbursement code for the FDA-approved drugs. As Medicare provides reimbursement only for drugs approved for use in the United States, Alvarado Pharmacy caused scores of such false claims for Medicare reimbursement to be submitted by doctors. Indeed, between May 2010 and June 2011, Alvarado Pharmacy caused Medicare to be defrauded out of $1,004,284.04 in unapproved foreign drugs.

William Burdine, the owner of Alvarado Pharmacy and a pharmacist licensed in the State of California, also pleaded guilty today to unlawfully importing the unapproved oncology drugs into the United States. Burdine admitted that he ordered the unapproved oncology drugs from QSP in Canada, knowing that it was unlawful to import into the United States drugs that have not been approved by the FDA for use and sale in this country.

Individuals who are concerned about oncology drugs they may have received from Alvarado Pharmacy or William Burdine are encouraged to contact their treating physician.

DEFENDANTS   Criminal Case No. 13cr4295-JLS Alvarado Medical Plaza Pharmacy, Inc.
William Burdine       SUMMARY OF CHARGES

Alvarado Medical Plaza Pharmacy Inc.

Health Care Fraud, in violation of Title 18, United States Code, Section 1347.
Maximum Penalty for a corporation: 5 years’ probation, a $500,000 fine and $400 special assessment.

William Burdine

Importation Contrary to Law, in violation of Title 18, United States Code, Section 545.
Maximum Penalty: 10 years in custody, $250,000 fine and a $100 special assessment

  AGENCY

U.S. Food and Drug Administration, Office of Criminal Investigations

United States Attorney Laura E. Duffy announced today that Las Vegas resident Eric Russell was sentenced by the Honorable Roger T. Benitez to time served (approximately six months) in custody for dumping thousands of gallons of raw sewage on Bureau of Land Management (BLM) land in Imperial County. Russell, who has been in custody since June 2013 after absconding from authorities, was also ordered to pay $21,244.19 in restitution.

Russell had been a driver for All-in-One Environmental Services of Havasu, Arizona. On January 3, 2012, Russell was driving an All-in-One waste disposal truck along Highway 72 in Imperial County. In order to save the time it would take to drive to a lawful disposal site and properly dispose of his cargo, Russell illegally dumped approximately 1,500-2,000 gallons of domestic sewage onto BLM land alongside Highway 72. BLM rangers responded to the scene, and saw Russell’s sewage tanker truck stuck in a wash along Highway 78 (SR 78), near mile post 66 in Imperial County, and smelled a strong stench of sewage. Russell, the driver of the truck, told the ranger that the trunk contained nothing but water, but he declined to take a sip of the “water” himself. The passenger in the sewage truck advised the ranger that they had ended up in the wash after pumping out the holding tanks at a commercial center in the Imperial Sand Dune Recreation Area. But the passenger also indicated that Russell’s stepfather directed him to dump the sewage, and it was their practice to drive 10-15 miles outside of Blythe and dump waste on Red Cloud Road. BLM had to send a team to remediate the dump site, at a cost to the taxpayers of $21,244.19

Another All-in-One Environmental Services driver, Dennis Johnson (Russell’s stepfather) previously pleaded guilty to dumping sewage on the ground in Imperial County and was sentenced to probation and a fine (12-cr-05096).

“Dumping sewage in the middle of nowhere is not only disgusting and harmful to the environment but it is a federal crime that is worthy of time in custody,” said U.S. Attorney Duffy. “These defendants couldn’t be bothered to do the right thing, and now they are paying a price.”

“Untreated sewage contains bacteria and other pathogens that can cause a wide variety of acute illnesses, which is why sewage disposal is a regulated activity that must be done legally and safely,” said Jay M. Green, Special Agent-in-Charge of EPA’s criminal enforcement program in California. “Rather than abide by the law, the defendants in these cases devised a scheme to indiscriminately and dangerously dump untreated sewage onto federal lands located in Imperial County, California - saving them money and time. Today’s sentencing is a reminder that those who try to profit by committing environmental crimes will be held responsible for their actions.”

The BLM manages public lands -- many of which are remote areas that attract illegal dumping. Every year, California BLM Field Offices spend thousands of dollars to reverse the damage caused by abandoned automobiles, dumping and littering. In the California Desert District around 100-tons of solid waste was removed from public lands in 2013 according to Sterling White, Hazardous Materials Program Specialist. Illegally dumped wastes found on BLM lands are primarily nonhazardous materials that are dumped to avoid either disposal fees or the time and effort required for proper disposal. These materials typically include: (1) construction and demolition waste such as drywall, roofing shingles, lumber, bricks, concrete, and siding, (2) abandoned automobiles, auto parts, and scrap tires, (3) appliances or "white goods," (4) furniture, (5) yard waste, (6) household trash, and (7) tires. Such wastes end up being illegally dumped because they are banned from certain landfills, or because it costs money to properly dispose of them. BLM reminded the public that if they see anyone dumping these or other prohibited waste on public lands, please contact the nearest BLM Field Office or contact BLM through its web site, www.blm.gov.

DEFENDANT   Criminal Case No. 13cr1273-BEN Eric Russell       SUMMARY OF CHARGES

Unlawful Disposal of Sewage, in Violation of Title 33, United States Code, Sections 1319 and 1345.

Maximum Penalties: 3 years in custody and $50,000 fine/day of violation, a minimum fine of $5,000/day of violation, $100 special assessment.

  AGENCIES

Bureau of Land Management
U.S. Environmental Protection Agency, Criminal Investigations Division

United States Attorney Laura E. Duffy announced today that United States District Court Judge M. James Lorenz sentenced La Jolla resident Mark Hagen to serve six months in prison for bankruptcy fraud.

Hagen pleaded guilty to fraudulently concealing assets in bankruptcy proceedings, in violation of Title 18, United States Code, Section 152(1), on September 12, 2013. According to Mr. Hagen’s plea agreement, Hagen admitted to knowingly and fraudulently defrauding the Bankruptcy Court and his creditors by hiding and lying about more than $45,000 in federal tax refunds. Specifically, in April 2008, Hagen filed a voluntary Chapter 11 petition that was then converted to a Chapter 7 petition in the United States Bankruptcy Court for the Southern District of California. Despite instructions to turn over his tax refunds and questions about their whereabouts, Hagen repeatedly concealed more than $45,000 of tax refunds that he had received from the United States – stating falsely that he had not received any tax refunds during bankruptcy proceedings in May 2009, July 2009, October 2009, and July 2010. In truth, the United States had issued the tax refunds to Hagen in February 2009, and Hagen had endorsed and arranged for the tax refunds to be deposited into a bank account that he controlled in February 2010.

United States Attorney Duffy observed that bankruptcy protection is a privilege afforded to honest individuals who have suffered financial setbacks and not a means to allow the unscrupulous to get out of paying their debts. The United States Attorney=s Office will not turn a blind eye simply because the fraudulently concealed assets are not valued in the millions of dollars. United States Attorney Duffy stated, “Individuals should be put on notice that the bankruptcy process cannot be used to lie to, cheat, and steal from legitimate creditors.”

FBI Special Agent in Charge, Daphne Hearn, commented, "The bankruptcy process is based on the honor system and when used appropriately allows many debtors to get a fresh start. However, when this trust is abused by debtors intentionally making false statements to the bankruptcy court, the FBI will work with the U.S. Attorney's Office and Bankruptcy Trustee to hold them accountable to ensure the public's continued trust in the bankruptcy process."

The U.S. Trustee Program is the component of the Justice Department that protects the integrity of the bankruptcy system by overseeing case administration and litigating to enforce the bankruptcy laws. Acting U.S. Trustee Tiffany L. Carroll stated: “Concealing assets in a bankruptcy proceeding is a crime that threatens the integrity of the bankruptcy process and public confidence in that process. We are grateful to the U.S. Attorney’s Office and the Federal Bureau of Investigation for their commitment to combating bankruptcy fraud and abuse.”

CASE NUMBER: 13-CR-3345-L DEFENDANT     Mark Hagen       SUMMARY OF CHARGES

Charge: Concealment of Assets in Bankruptcy, in violation of Title 18, United States Code, Section 152(1)

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

  INVESTIGATING AGENCY

Federal Bureau of Investigation

SAN DIEGO – U.S. Attorney Laura Duffy will host a special screening of “Out of Reach,” a short documentary about prescription drug abuse created by a teen filmmaker, on Wednesday evening, November 20, at Junipero Serra High School.

This is the first “Out of Reach” screening to take place on the West Coast. Cyrus Stowe, a 17-year-old high school student, interviews friends, classmates, community members and others about prescription drug abuse and their views of what it means to abuse prescription drugs. It was created in collaboration with director Tucker Capps (of A&E’s “Intervention”) and The Partnership at Drugfree.org's Medicine Abuse Project.

The film screening will be followed by a panel discussion moderated by U.S. Attorney Duffy. Local experts will examine the scope of the problem and what’s being done in San Diego County to reduce prescription drug abuse.

In an effort to raise awareness of the disturbing trends, U.S. Attorney Duffy has joined The Partnership at Drugfree.org in The Medicine Abuse Project, a five-year action campaign that aims to prevent half a million teens from abusing medicine by the year 2017 and advises parents and others to take a pledge to take control of their medicine cabinets.

WHAT: Screening of “Out of Reach,” a teen-made documentary on prescription drug abuse

WHO: MODERATOR: Laura Duffy, United States Attorney for the Southern District of California

PANELISTS: Tom Lenox, Supervisory Special Agent Tactical Diversion Squad, Drug Enforcement Administration San Diego

Dr. Roneet Lev, Director of Operations, Scripps Mercy Hospital Emergency Department, San Diego County Prescription Drug Abuse Medical Task Force

Sherrie Rubin, Director, The Hope2Gether Foundation, Prescription Medication, Drug and Alcohol Education and Awareness

WHEN: Wednesday, November 20th, 2013

WHERE: Junipero Serra High School, 5156 Santo Road, San Diego, 92124.

WHY: One out of five high school juniors in San Diego County say they’ve misused prescription drugs. In the last five years, unintentional deaths caused by prescription drugs rose by 22 percent in San Diego County, according to the latest Report Card issued by the Prescription Drug Abuse Task Force earlier this month.

SAN DIEGO – Basaaly Saeed Moalin, a cabdriver who was convicted by a federal jury of providing material support to the terrorist group al-Shabaab, was sentenced today by U.S. District Judge Jeffrey T. Miller to 18 years in prison.

Also sentenced at the same hearing were Mohamed Mohamed Mohamud, the imam at a popular mosque frequented by the city’s immigrant Somali community, to 13 years in prison; and Issa Doreh, who worked at a money transmitting business that was the conduit for moving the illicit funds, to 10 years in prison.

In sentencing Moalin, Judge Miller acknowledged the defendant’s considerable support from the Somali community, his childhood scars from violence in war-torn Somalia and his philanthropy as a naturalized American. However, he noted Moalin’s virtuous behavior “is substantially offset” by his collaboration with al-Shabaab and one of its most prominent leaders - Aden Hashi Ayrow.

Judge Miller said he imposed part of the sentence consecutively – making it three years longer - because Moalin went beyond financial assistance and provided a house to Ayrow. Judge Miller described that action as “an offense of a different magnitude,” noting that Moalin personally offered the home in Mogadishu to advance the agenda of al-Shabaab and to help hide weapons. “This count went beyond financial support and entered into another realm,” Judge Miller said.

At trial, the United States played for the jury a recorded telephone conversation in which Moalin gave the terrorists in Somalia permission to use his house, telling Ayrow that “after you bury your stuff deep in the ground, you would, then, plant trees on top.” Prosecutors argued at trial that Moalin was offering a place to hide weapons.

“These men willfully sent money to a terrorist organization, knowing al-Shabaab’s extremely violent methods, and knowing the U.S. had designated it as a foreign terrorist organization,” said U.S. Attorney Laura Duffy. “Months of intercepted phone conversations included discussion of suicide bombing, assassinations and Jihad. We are satisfied that because of this investigation and prosecution, we have furthered our mission to safeguard national security by blocking financial support to this dangerous group.”

FBI Special Agent in Charge, Daphne Hearn, stated: "I want to commend the work of the FBI's Joint Terrorism Task Force (JTTF) and the U.S. Attorney's Office who worked countless hours to successfully investigate and prosecute this case. As demonstrated in this case, the multi-agency partnerships which make up the JTTF continue to play a critical role in the day-to-day protection of our communities and our national security.”

“Today’s sentencing underscores HSI’s commitment to aggressively investigate those who engage in or attempt to support the financing of foreign terrorist organizations,” said Nick Annan, acting Special Agent in Charge for ICE HSI in San Diego. “I commend all of our partners on the San Diego Joint Terrorism Task Force for their exhaustive efforts to dismantle the plot that aimed to provide support to terrorists who wish to harm us.”

Moalin and his co-conspirators were found guilty during a three-week trial in February. The United States presented evidence that Moalin, Mohamud, Doreh and a fourth defendant, Ahmed Nasiri Taalil Mohamud, conspired to provide money to al-Shabaab, a violent and brutal militia group that engages in suicide bombings, targets civilians for assassination, and uses improvised explosive devices. In February, 2008, the U.S. Department of State formally designated al-Shabaab as a foreign terrorist organization.

At trial, the jury listened to dozens of the defendants’ intercepted telephone conversations, including many between Moalin and Ayrow. In those calls, Ayrow implored Moalin to send money to al-Shabaab, telling Moalin that it was “time to finance the Jihad.”

Ayrow told Moalin, “You are running late with the stuff. Send some and something will happen.” Ayrow was subsequently killed in a missile strike on May 1, 2008.

According to evidence at trial, the defendants conspired to transfer the funds from San Diego to Somalia through the Shidaal Express, a now-defunct money transmitting business in San Diego.

The fourth defendant, Ahmed Nasiri Taalil Mohamud, a cabdriver from Anaheim, is scheduled to be sentenced January 31, 2014 at 10 a.m. before Judge Miller.

This case was prosecuted in federal court in San Diego by Assistant U.S. Attorneys William Cole and Caroline Han and Department of Justice Trial Attorney Steven Ward. This case was investigated by the San Diego Joint Terrorism Task Force; the Federal Bureau of Investigation; the Department of Homeland Security, Immigration and Customs Enforcement; and the Department of Homeland Security, Customs and Border Protection.

DEFENDANTS   Criminal Case No. 10CR4246-JM Basaaly Saeed Moalin
Mohamed Mohamed Mohamud
Issa Doreh
Ahmed Nasir Taalil Mohamud       SUMMARY OF CHARGES

Count 1 (all defendants) : Title 18, United States Code, Section 2339A(a)(1) - Conspiracy provide material support to terrorists; Maximum penalties: 15 years in prison

Count 2 (all defendants): Title 18, United States Code, Section 2339B(a)(1) - Conspiracy provide material support to foreign terrorist organization; terrorists; Maximum penalties: 15 years in prison

Count 3 (all defendants): Title 18, United States Code, Section 1956(h) – Conspiracy to launder monetary instruments; Maximum penalties: 15 years in prison

Count 4 (Basaaly Moalin) Title 18, United States Code, Section 2339A(a) – Providing material support to terrorists; Maximum penalties: 15 years in prison

Count 5 (defendants Basaaly Moalin, Mohamed Mohamed Mohamud and Issa Doreh) Title 18, United
States Code, Section 2339B(a)(1) – Providing material support to foreign terrorist organization; Maximum penalties 15 years in prison

  INVESTIGATING AGENCIES

San Diego Joint Terrorism Task Force
Federal Bureau of Investigation
Homeland Security Investigations, Immigration and Customs Enforcement
Homeland Security Investigations, Customs and Border Protection

SAN DIEGO – Marcos Rodriguez-Perez was sentenced today to 56 years in prison for his participation in the July 2009 robbery and murder of United States Border Patrol Agent Robert Rosas, Jr.

Rodriguez-Perez, a 28-year-old Mexican national, pleaded guilty in August, admitting he was one of three gunmen who lured the agent into a trap to steal his night-vision goggles and then fatally shot him during a struggle. He pleaded guilty to conspiracy to commit robbery and kidnaping, robbery of personal property of the United States, and use and carrying of a firearm during the commission of a crime of violence.

United States District Judge M. James Lorenz also ordered that Rodriguez’s sentence run consecutive to a two-year sentence Rodriguez is currently serving for violating his supervised release from a prior alien smuggling conviction. Prosecutors noted in court that because Rodriguez is almost 29 years old, the combined sentences likely mean Rodriguez will spend the rest of his life in prison.

Court filings indicate that in July 2009, Rodriguez and four others plotted to rob a Border Patrol agent of his night vision device. On July 23, 2009, the group, bearing firearms, traveled by car and foot to the international border near Campo, California. Rodriguez and two others sneaked into the United States at night and waited for a Border Patrol agent to arrive in the area, while the remaining two members of the group stood watch in Mexico. After Agent Rosas arrived in the area and exited his vehicle, Rodriguez and other conspirators detained Rosas at gunpoint. Agent Rosas resisted and, during the ensuing struggle, Rodriguez and his co-conspirators shot Agent Rosas multiple times, killing him. Rodriguez and his co-conspirators then stole the agent’s firearm, night vision device, and other equipment and fled back to Mexico.

In April 2011, Mexican officials arrested Rodriguez in Tijuana, Baja California, Mexico, at the request of the United States. Rodriguez was extradited to the United States in October 2011.

Rodriguez is the second defendant to be sentenced for Agent Rosas’s murder. In April 2010, Judge Lorenz sentenced Christian Daniel Castro-Alvarez to 40 years of imprisonment. Two other defendants, Jose Luis Ramirez-Dorantes and Emilio Samyn Gonzales-Arenazas, have pleaded guilty to participating in the murder and are scheduled to be sentenced in December 2013 and January 2014 respectively. The last defendant, Jose Juan Chacon-Morales, remains a fugitive, and there is a reward of up to $100,000 for information leading to his arrest or location.

After Rodriguez’s sentencing, United States Attorney Laura E. Duffy expressed her condolences to Agent Rosas’s family and colleagues at the Border Patrol: “Nothing can change what happened to Robert on that horrible night, and we realize that. I hope, however, that seeing these men brought to justice and sent to prison for decades helps his family and friends, in some way, as they cope with his loss and move forward.”

Duffy also praised the agents of the Federal Bureau of Investigation and Homeland Security Investigations who conducted the investigation. “This has been a lengthy and extraordinarily difficult investigation, but it’s a testament to the diligence and resolve of those agents as well as the people of the United States, that four men were arrested in a foreign jurisdiction and are now sitting in U.S. prisons. If a law enforcement officer is harmed, we’ll use every resource we have to catch the perpetrators, and never let it be doubted: We will find them.”

Chief Patrol Agent Paul A. Beeson of the U.S. Border Patrol’s San Diego Sector said, “On behalf of the Border Patrol agents of San Diego Sector and all Border Patrol agents nationwide - I want to express our deepest gratitude for the tenacity, persistence, and hard work expended by the honorable men and women of law enforcement involved in this compelling case resulting in Rodriguez-Perez’ arrest, conviction, and sentencing. This sentencing is tempered with the sobering reality of the senseless loss of a fine man, husband and father who was Border Patrol Agent Robert Rosas.”

FBI Special Agent in Charge, Daphne Hearn, commented, "Today's sentencing sends a message that the FBI is committed to bringing to justice those responsible for the death of U.S. Border Patrol Agent, Robert Rosas. Agent Rosas served his country with dedication, honor and courage and was killed while protecting our nation's borders. The FBI recognizes that no punishment will lessen Agent Rosas' death, but we hope today's sentencing will help bring some closure to the family."

DEFENDANT   Criminal Case No. 10CR1793-L Marcos Rodriguez-Perez       SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 371: Conspiracy to commit robbery and kidnaping
Count 2: Title 18, United States Code, Section 2112: Robbery of U.S. property
Count 5: Title 18, United States Code, Section 924(c)(1): Discharging firearms during and in relation to a crime of violence

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Homeland Security Investigations
United States Border Patrol

SAN DIEGO, CA - A third senior U.S. Navy official was charged in a complaint unsealed today with accepting prostitutes, luxury travel and $100,000 cash from a foreign defense contractor in exchange for classified and internal U.S. Navy information, announced U.S. Attorney Laura E. Duffy and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division.

U.S. Navy Commander Jose Luis Sanchez, 41, was arrested in Tampa, Florida, this morning and made his initial appearance in federal court in the Middle District of Florida this afternoon. The United States will seek removal of Sanchez to San Diego to face charges. Also named in the complaint is Leonard Glenn Francis, 49, of Malaysia, the CEO of Glenn Defense Marine Asia (GDMA), who was arrested September 16, 2013, in San Diego.

Two other senior Navy officials – Commander Michael Vannak Khem Misiewicz, 46, and Naval Criminal Investigative Service Supervisory Special Agent John Bertrand Beliveau II, 44 – have been charged separately in connection with bribery allegations. GDMA executive Alex Wisidagama, 40, of Singapore, has also been charged with participating in a related scheme to overbill the Navy for services provided in ports throughout Southeast Asia.

“According to the allegations in this case, a number of officials were willing to sacrifice their integrity and millions of taxpayer dollars for personal gratification,” said U.S. Attorney Laura Duffy. “While the overwhelming majority of the 400,000 active duty Navy personnel conduct themselves in a manner that is beyond reproach, we and our law enforcement partners at Naval Criminal Investigative Service and Defense Criminal Investigative Service continue to investigate the allegations of fraud and corruption that tarnish the stellar reputation of the U.S. Navy.”

“As described in the corruption charges unsealed today, senior officials with the United States Navy abused their trusted positions as leaders in our armed forces by peddling favorable treatment -- and even classified government information -- for their personal benefit,” said Acting Assistant Attorney General Raman. “In turn, the GDMA executives who illicitly sought information and favors from those Navy officials boasted about their unlawful access to those officials and then traded on the influence that they illegally bought. Day by day, this massive Navy fraud and bribery investigation continues to widen, and as the charges announced today show, we will follow the evidence wherever it takes us.”

“The arrest and criminal complaint against Commander Sanchez is the result of an ongoing investigation by the Defense Criminal Investigative Service and its law enforcement partners to identify and prosecute those individuals who would abuse their positions of trust within the Department of Defense,” said Chris D. Hendrickson, Special Agent In Charge, Office of the Inspector General, Department of Defense, Defense Criminal Investigative Service Western Field Office. “Allegations like these against Commander Sanchez can tarnish the reputation of honest and hardworking government personnel and put military personnel defending our nation around the globe at risk. The mission of DCIS is to ‘Protect America’s Warfighters’ and we will continue to relentlessly identify and investigate those individuals seeking to enrich themselves at the expense of the U.S. taxpayers.”

According to the complaint, Sanchez received bribes in return for sending sensitive U.S. Navy information to Francis, and making recommendations within the Navy to benefit Francis’s company, GDMA. GDMA is a multinational corporation and longtime government contractor based in Singapore, which provides hundreds of millions of dollars of “husbanding” services for the U.S. Navy in at least a dozen countries throughout the Pacific. Husbanding involves supplying food, water, fuel, tugboats and fenders, security, transportation, trash and liquid waste removal, and other goods and services to ships and submarines in foreign ports.

Like Sanchez, Misiewicz is accused of providing sensitive Navy information to Francis and secretly working on behalf of GDMA in exchange for prostitutes and luxury travel. GDMA, which has operating locations in Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States, allegedly overcharged the Navy and submitted bogus invoices for millions of dollars in services, the complaint said. Beliveau, the NCIS agent, is charged in another complaint with illegally supplying Francis with sensitive information, including reports of investigations by NCIS into possible fraud committed by GDMA in billing the U.S. Navy under its contracts. Wisidagama is charged with conspiracy to defraud the United States related to the overbilling.

According to court records, Sanchez allegedly provided Francis with internal Navy information, such as U.S. Navy ship schedules – some of which were classified - and information about husbanding issues that could affect GDMA – some of which was classified – in order to help GDMA win and maintain Navy business.

Court records allege that Sanchez regularly emailed Francis internal Navy discussions about GDMA, including legal opinions, and made recommendations in GDMA’s favor about port visits and Navy personnel assignments. In return, Francis gave Sanchez over $100,000 in cash, together with travel expenses and prostitutes. Court records allege that the conspiracy started in January 2009, when Sanchez was the Deputy Logistics Officer for the Commander of the U.S. Navy Seventh Fleet in Yokosuka, Japan, and continued when he was transferred to serve as Director of Operations for Fleet Logistics Command in Singapore, until he transferred to Florida in April 2013.

Sanchez and Francis allegedly communicated regularly via email and Facebook. Sanchez referred to Francis as “Lion King” and “Boss” in the emails, while Francis called Sanchez “brudda.” For his part, Francis allegedly hired female escorts for Sanchez and friends on multiple occasions.

According to court records, in an email exchange on Oct. 16, 2009, Sanchez and Francis allegedly discussed a trip Sanchez planned to take to Kuala Lumpur and Singapore with Navy friends he called his “Wolf Pack.” They discussed the number of rooms the “Wolf Pack” needed, and Sanchez asked Francis for pictures of prostitutes for “motivation.” Francis replied: “J, got it we will hook up after the FLAG dinner, will arrange a nest for you guys and some birds [women].” A few days later, on Oct. 19, 2009, Sanchez sent a Facebook message to Francis saying, “Yummy . . . daddy like.” In an Oct. 23, 2009, Facebook message, Sanchez asked Francis, “Where r we staying in KL [Kuala Lumpur]? No pictures to get our spirits up?”

Between Aug. 26 and 28, 2011, Francis allegedly communicated through email to the address of an escort whom Francis had previously hired for Sanchez. Francis wrote: “Hey Love, Jose is in Manila at the Diamond Hotel go and see him he needs some love asap room.” The escort responded to Francis, “Papi, I'm here jose's fon is not answering. I'm here [h]aving dri[n]ks at the lobby. Call him:: (( maybe his sleeping?” Later that day, she emailed Francis, “I'm with h[i]m already heehhe.”

Court records allege that Francis sent an email on Oct. 20, 2011, asking Sanchez to help “swing” business his way regarding a U.S. Navy ship’s need to refuel at a port in Thailand. The Navy can use “sea cards” to purchase fuel for its ships at a price negotiated by the Defense Logistics Agency for Energy, as opposed to procuring fuel at usually higher prices from the husbanding contractor. In an email from Sanchez the next day, he told Francis: “Ask and you shall receive...we worked this out this morning…” According to court records, the USS Mustin did conduct a port visit to Laem Chabang, Thailand, during which it purchased fuel from GDMA, not via “sea cards.” As a result, the USS Mustin allegedly paid more than $1 million for fuel – more than twice what the fuel would have cost through use of the “sea card.”

The criminal complaint alleges that in an alleged Dec. 2, 2011, email discussion in which Sanchez told Francis about the status of an investigation of GDMA, Francis replied: “I have inside Intel from NCIS and read all the reports. I will show you a copy of a Classified Command File on me from NCIS ha ha.”

This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service and the Defense Contract Audit Agency. Significant assistance was provided by the Drug Enforcement Administration, Homeland Security Investigations, the DOJ Criminal Division’s Office of International Affairs, the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore. This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Catherine Votaw, Director of Procurement Fraud for the Criminal Division’s Fraud Section and Brian Young, Trial Attorney, of the Criminal Division’s Fraud Section.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tipline at www.ncis.navy.mil, the DoD Hotline at www.dodig.mil/hotline or call (800) 424-9098.

DEFENDANTS    

Case Number: 13-MJ-4027

Leonard Glenn Francis
Jose Luis Sanchez

Case Number: 13-CR-3781

Leonard Glenn Francis
John Bertrand Beliveau II

Case Number: 13-CR-3782

Leonard Glenn Francis
Michael Vannak Khem Misiewicz

Case Number: 13-MJ3783

Alex Wisidagama

      SUMMARY OF CHARGES

Case Number: 13-MJ-4027

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

Case Number: 13-CR-3781

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

Case Number: 13-CR-3782

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

Case Number: 13-MJ-3783

Conspiracy to Defraud the United States in violation of 18 U.S.C. § 371

  INVESTIGATING AGENCIES

Defense Criminal Investigative Service
Naval Criminal Investigative Service
Defense Contract Audit Agency

*A complaint 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.

United States Attorney Laura E. Duffy announced that Jaime Cuadra, the former Chief Financial Officer of Oceanic Enterprises, Inc., was sentenced today by United States District Judge Marilyn L. Huff to serve 41 months in custody based on his conviction of wire fraud and filing a false federal income tax return. The charges stemmed from Cuadra’s embezzlement of $1,089,813.26 from Oceanic and its parent company, Umami Sustainable Seafood, Inc., a San Diego-based, publically traded company. Judge Huff also ordered Cuadra to pay back the $1,089,813.26 stolen from Umami and to pay $387,347.58 in back taxes to the Internal Revenue Service.

According to court documents, Cuadra embezzled the money from 2010 to 2013, by taking advantage of his access to one of Oceanic’s business accounts as the company’s CFO. In his guilty plea, Cuadra admitted that he carried out the scheme, in part, by falsifying Oceanic’s financial records by coding illicit transfers and expenditures as legitimate business expenses.

Court records show that during the period of the fraud, Cuadra not only served as Oceanic’s CFO, but also as the President and CEO of a fledgling football league. As a result of this conviction, Cuadra resigned from both organizations. Cuadra converted Oceanic’s funds to financially support the football league as well as for his personal benefit. Specifically, Cuadra used stolen funds to develop the football league and attract investors by paying league executives, as well as the league’s marketing, consulting, and public relations fees. For example, Cuadra directed over $200,000 to a woman who served as the league’s Chief Marketing Officer and Executive Vice President at the time. Cuadra’s use of embezzled funds for his personal expenditures included: (1) support for other outside business ventures (including a T-shirt business); (2) leasing a Porsche Cayenne; (3) travel, hotels, and meals; (4) a variety of miscellaneous purchases, including artwork, designer clothing, computers and entertainment systems, and tickets to sporting events; and (5) transfers to several personal accounts.

Court documents also described Cuadra’s falsification of his tax returns during the years in which he defrauded Oceanic and Umami. In particular, Cuadra failed to report his embezzled income on his 2010, 2011, and 2012 federal tax returns. And, in one instance, he wrote off an expense he had paid with embezzled funds as a “partnership loss,” which further reduced his adjusted gross income. In his guilty plea, Cuadra admitted that his false tax returns resulted in a cumulative tax loss of $387,347.58.

United States Attorney Laura E. Duffy praised the hard work of the agents from the Federal Bureau of Investigation and the Internal Revenue Service and reiterated her support of financial-crime prosecutions: "Mr. Cuadra’s brazen theft of corporate funds from one of our local companies was born from base motives – ego and greed. Such crimes shake the foundations of our businesses and cause investors to lose confidence in the markets. Our office will forge ahead with our commitment to investigate and prosecute this sort of fraud wherever it may occur.”

FBI Special Agent in Charge, Daphne Hearn, commented, "This case is about greed and taking advantage of a position of trust. Mr. Cuadra betrayed the trust of the company's investors and then tried to cover it up by falsifying corporate financial records. Today's sentencing should send a clear message that the FBI will continue to work with the U.S. Attorney's Office and our law enforcement partners to protect the American public from insider corporate fraud."

“Jaime Cuadra used his position of trust as the CFO of Oceanic Enterprises and Umami Sustainable Seafood to defraud them of over $1 million and failed to report his embezzled funds to the Internal Revenue Service,” said Joel P. Garland, IRS Criminal Investigation Acting Special Agent in Charge, Los Angeles Field Office. “Cuadra’s crimes caused a tax loss of more than $387,000. As a result, his future includes a period of imprisonment, being branded a convicted felon for the rest of his life, and paying restitution for all the taxes owed (plus penalties and interest). Today's sentencing of Jaime Cuadra emphasizes IRS Criminal Investigation’s aggressive pursuit of those who methodically use their position of trust to commit tax crimes for their own personal benefit."

DEFENDANT   Criminal Case No. 13CR2298-H Jaime Cuadra       SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 1343 B Wire Fraud
Count 2: Title 26, United States Code, Section 7206(1) B Filing a False Federal Income Tax Return

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service

San Diego, CA – United States Attorney Laura E. Duffy announced today that Los Angeles-based businessman Sunil Jiwat Mirwani was sentenced to 27 months in prison for evading customs duties on more than $30 million in Chinese-made wearing apparel. The sentence, handed down by U.S. District Judge Michael M. Anello, also required Mirwani to forfeit his interest in over $30,000 in cash, the contents of a Hong Kong-based bank account—plus an inventory of more than 220,000 pairs of blue jeans valued at more than $1 million. In addition, Judge Anello sentenced Mirwani’s corporation, M Trade, Inc., to five years of probation.

According to the evidence presented at a trial in June 2012, Mirwani hired a group of San Diego-based businessmen and logistics professionals to initiate shipments of Chinese-made merchandise from ports in China to the Port of Long Beach, California. When the goods arrived at Long Beach, Mirwani and his conspirators would ensure that the merchandise was classified as “in bond”—a special customs classification meaning that they had to be shipped directly to Mexico. However, rather than complete the shipment to Mexico as promised, Mirwani and his conspirators forged documents and falsified database entries, allowing them to send the merchandise to warehouses in the Los Angelesarea. Mirwani would then sell his jeans, shorts and skirts throughout the United States— effectively tax-free. In this way, Mirwani could sell more jeans at cheaper prices than his law-abiding competitors—including domestic American manufacturers of similar goods who, unlike Mirwani, could not rely on cheap Chinese labor to keep costs low.

Mirwani profited handsomely from the scheme, laundering his ill-gotten gains through a complex web of international wire transfers. According to evidence introduced at trial, Mirwani transmitted nearly $10 million from M Trade, Inc.’s bank account to the account of Mirvana International, a Hong Kong-based company that Mirwani shares with his Hong Kong-based twin brother. In addition, Mirwani transmitted similar sums to the Mirvana International account through a series of intermediary accounts in the United States and Mexico—and even sent money from M Trade Inc.’s account directly to accounts in mainland China. These international wire transfers served to hide Mirwani’s ill-gotten gains as well as to help fund future fraudulent shipments.

Mirwani’s sentencing was the culmination of a years-long effort by prosecutors and special agents. Following a lengthy wiretap investigation, a federal grand jury indicted Mirwani and M Trade, Inc. in June 2012. One year later, in June 2013, Mirwani and M Trade, Inc. were convicted after a one-week jury trial. Yet Mirwani and M Trade, Inc. were just two of 11 defendants charged in July 2012 as part of a larger conspiracy to fraudulently import foreign-made textiles, cigarettes, snack foods, and Salmonella-infected produce. In the past year, several other defendants have pled guilty and been sentenced for their role in the scheme, including Gerardo Chavez, the former President of the San Diego Customs Brokers Association, who is currently serving a 37-month prison sentence. Two defendants—Joel Erasmo Varela Gonzalez and Jose Porter—are fugitives and remain at large.

U.S. Attorney Duffy commended the efforts of special agents and prosecutors: “Thanks to special agents from the Department of Homeland Security and the IRS, working in conjunction with customs officers, a far-reaching commercial fraud conspiracy has been completely dismantled. This prosecution underscores our commitment to protecting the economic health of the United States and ensuring that no one exploits American and international markets for their personal gain.”

“Today’s sentencing serves as a reminder to those who attempt to exploit our commercial trade corridor in San Diego,” said Derek Benner, Special Agent in Charge for ICE’s Homeland Security Investigations in San Diego. “HSI is committed to using our expertise to investigate suspected customs fraud and dishonest business practices in the international trade arena. We will seek the highest penalty possible for those who game the system for their own illicit gain.”

Trial Exhibit 53 – Fraudulently Imported Blue Jeans

Trial Exhibit 52 – Summary of Mirwani’s Wire Transfers

DEFENDANTS   Case Number: 12CR3137-MMA

Sunil Jiwat Mirwani

M Trade, Inc.
Los Angeles, CA

      SUMMARY OF CHARGES AND MAXIMUM PENALTIES

Count 1: Conspiracy to Defraud the United States – 18 U.S.C. § 371. Maximum penalties: 5 years in prison, 3 years of supervised release, $250,000 fine and a $100 special assessment

Counts 2 and 4: Entry of Goods by Means of False Statements – 18 U.S.C. § 542. Maximum penalties: 2 years in prison, 1 year of supervised release, $250,000 fine and a $100 special assessment

Count 57: Conspiracy to Launder Monetary Instruments – 18 U.S.C. § 1956(a)(2)(A) and (h). Maximum penalties: 20 years in prison, 3 years of supervised release, $500,000 fine (or a fine worth twice the amount of the laundered money) and a $100 special assessment.

  INVESTIGATING AGENCIES

Immigration and Customs Enforcement – Homeland Security Investigations
Internal Revenue Service – Criminal Investigations
United States Food and Drug Administration

SAN DIEGO – Mary Armstrong, the mastermind of a $100 million mortgage fraud that generated almost $15 million in illegal kickbacks, was sentenced today to 100 months in prison by U.S. District Judge John A. Houston.

Armstrong’s former boyfriend, William Fountain, was sentenced on Friday to serve 42 months in prison for his participation in the scheme. In addition, both Armstrong and Fountain were ordered to pay more than $500,000 in restitution to victims of the offense.

“These are significant sentences for serious crimes,” said U.S. Attorney Laura Duffy. “Mortgage fraud is one of the fastest growing financial crimes in the country, and we can add these two defendants to a long list of fraudsters who have landed in prison as a result of our crackdown.”

FBI Special Agent in Charge, Daphne Hearn, stated, "Today's sentencing signifies the continued effort of the FBI, U.S. Attorney's Office and Federal Housing Finance Agency to investigate and prosecute those who commit mortgage fraud. The FBI is committed to holding those accountable who line their own pockets at the expense of the American taxpayers and we hope that today's sentencing will help deter future fraud."

Acting Inspector General Stephens of the Federal Housing Finance Agency stated, “Armstrong participated in a fraudulent scheme involving over $100 million in mortgage loans, many of which ultimately defaulted, to the detriment of Fannie Mae, Freddie Mac and the American taxpayers. We are proud to support our law enforcement partners in investigating and prosecuting this case.”

Armstrong, Fountain and their co-conspirators recruited real estate “investors” through advertisements in the Los Angeles Times, Monster.com, and elsewhere. They offered these “investors” the opportunity to purchase homes using their good credit with no money down. In order to get these “investors” to participate in the loan fraud, Armstrong promised to make the mortgage payments on their behalf using rental income from the properties.

In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. Armstrong (who was not a licensed mortgage broker) secured mortgages on the properties by falsifying loan applications for the straw buyers. Among other things, the loan applications falsely claimed exorbitant income from fake employers and used sham companies, which Fountain helped to create, in order to verify the borrowers’ fabricated employment and rental histories. Armstrong and her co-conspirators used these loan applications to obtain mortgages with 100% financing – and thus avoided having to make any down payment on the properties.

Armstrong earned millions of dollars in profits by convincing the sellers of the properties to inflate the purchase price by $100,000 or more per property. These inflated amounts were allegedly for construction to improve the properties. In fact, no construction work was performed and the funds were diverted (or “kicked back”) to bank accounts controlled by Armstrong’s co-conspirators. Armstrong then had Fountain and other co-conspirators launder the funds back to her in cash payments or official checks, so that the money could not be traced. In this way, she pocketed nearly $15 million in kickbacks, made few if any mortgage payments, and allowed nearly all of the properties to swiftly fall into foreclosure. Armstrong arranged the purchase of approximately $100 million in loans through this scheme, resulting in estimated losses between $7 million and $20 million to the mortgage lenders and secondary purchasers Fannie Mae and Freddie Mac.

Armstrong and Fountain were charged with participating in the scheme along with four others: Teresa Rose, a Ramona real estate agent; John Allen, a mortgage loan processor from Laguna Hills; Justin Mensen, a straw buyer who later recruited others and helped launder the funds; and Audrey Yeboah, a Los Angeles-based tax preparer who generated fake paperwork to support the loans. All of the defendants have pled guilty to participating in the scheme. Allen was sentenced by Judge Houston on September 16, 2013, to one year in custody. Audrey Yeboah is scheduled for sentencing on December 2, 2013, and Teresa Rose and Justin Mensen are scheduled for sentencing on December 9, 2013, all before Judge Houston.

United States Attorney Duffy explained that the American public is the actual victim of this type of widespread mortgage fraud, which played such a significant role in destabilizing the country’s financial situation. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact San Diego FBI Field Office at telephone number (858) 320-1800 or the Federal Housing Finance Agency - Office of Inspector General hotline at (800) 793-7724.

This matter was investigated jointly by agents from the FBI and FHFA-OIG. The case is being prosecuted by FHFA-OIG Investigative Counsel and Special Assistant U.S. Attorney Emily W. Allen and Assistant U.S. Attorney Valerie Chu of the Southern District of California.

DEFENDANTS   Criminal Case No. 12CR1848-JAH Mary Armstrong
Teresa Rose
William Fountain
John Allen       DEFENDANT   Criminal Case No. 12CR1458-JAH Justin Mensen       DEFENDANT   Criminal Case No. 12CR4322-JAH Audrey Yeboah       SUMMARY OF CHARGES

Mary Armstrong, Teresa Rose, and William Fountain

Count 1: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Mary Armstrong

Count 2: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Counts 3-5: Title 18, United States Code, Section 1956(a)(1)(B)(I) -- Money Laundering -- statutory maximum sentence of 15 years’ custody, a maximum fine of $500,000 or twice the value of the property involved in the transaction, and $100 special assessment.

Justin Mensen

Information: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Audrey Yeboah

Information: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

  AGENCIES

Federal Bureau of Investigation
Federal Housing Finance Agency - Office of Inspector General

A massive case of organized tax and bank fraud culminated today with the unsealing of four federal grand jury indictments accusing 55 people of participating in one or more illicit schemes, including the theft of more than 2,000 identities that were used to claim more than $20 million in bogus IRS tax refunds. As a result the IRS paid out more than $7 million – even issuing payments in the names of dead people.

The charges are the result of a two year-long investigation by federal and local authorities in San Diego and Los Angeles. Twenty-two defendants were arrested this morning during sweeps in Los Angeles, San Diego, Las Vegas and Maryland. Hundreds of federal, state, and local law enforcement officers participated in the takedown. Thirty-three defendants remain at large, including 21 who are believed to be out of the country. During searches at 12 locations, authorities seized $13,000 in cash and four handguns, including three that were unregistered.

“This case is staggering in terms of the number of victims, its level of sophistication, its audacious methods and the callous disregard for victims,” said U.S. Attorney Laura Duffy. “These arrests are the first strike back on behalf of taxpayers and more than 2,000 victims who now have to reclaim their good names – a frustrating task that can take years. We will continue to make these cases a priority.”

“Individuals who commit refund fraud and identity theft of this magnitude and with this degree of dishonesty and deceit, deserve to be punished to the fullest extent of the law,” said Richard Weber, Chief, IRS Criminal Investigation. “IRS Criminal Investigation, along with our law enforcement partners and the United States Attorney's Office, remain vigilant in identifying, investigating and prosecuting individuals involved in these schemes.”

FBI Special Agent in Charge, Daphne Hearn, commented, “This investigation involved multiple complex fraudulent schemes resulting in significant losses to financial institutions and American taxpayers. Today's arrests...send a clear message to those involved in stealing money from American taxpayers. The FBI and our partners will aggressively pursue those involved in stealing precious taxpayer money through fraudulent schemes.”

Tax refund fraud involving the use of stolen identities has emerged as such a fast-growing crime category that it has earned an acronym – SIRF – for Stolen Identity Refund Fraud. The Department of Justice issued a new directive last year to coordinate, expedite and streamline the prosecutorial efforts of the Tax Division and U.S. Attorneys offices nationwide.

The various schemes are described in four separate indictments:

- The largest indictment – involving the identity theft and bogus tax refunds - charges 29 people and involved the alleged filing of about 2,000 fraudulent tax returns. The coconspirators filed two types of fraudulent returns – those that claimed refunds from fabricated gambling winnings and losses, and those based on made-up wages and withholdings. The returns sought $17 million in undeserved refunds.

This scheme involved the participation of scores of San Diego-based foreign nationals from former Soviet bloc countries - including Russia, Kazakhstan, and Turkmenistan - who were visiting San Diego using J-1 and F-1 visas. The visas allow foreigners to come to the United States for a short period of time to study, work, and travel.

However, instead of studying or working, the almost two dozen foreign nationals charged today allegedly worked primarily as foot soldiers for criminal organizations operating in Los Angeles and elsewhere. Leaders of the identity theft ring, many of whom are Armenian nationals or Armenian-American, exploited the popular student visa program in part because the visa holders would not be here long. In fact, many have since returned to their countries.

The alleged leaders of the stolen identity fraud schemes were Arthur Grigorian, Ernest Soloian and Hovhannes Harutyunyan. One of the defendants, Yvonne Mihailescu, used her position as an of Wells Fargo Bank to open bank accounts which were used to receive the fraudulent tax refunds launder the proceeds, according to the indictment.

While here, they rented apartments in San Diego and elsewhere, opened post office boxes and bank accounts at the San Diego branches of Bank of America and Wells Fargo, and collected fraudulent tax refunds through the receipt of refund checks and direct deposits from the U.S. Treasury. Some of the refund checks were mailed to apartments on University Avenue and El Cajon Boulevard in San Diego.

The indictment indicates that the coconspirators employed sophisticated methods to cover their tracks. For instance, they took steps to disguise their Internet Protocol (IP address) when filing tax returns electronically, making it difficult for law enforcement to determine the location. In addition, they used code language when communicating and referred to each other only by nicknames, such as “Anaconda” and “Blondie.” They used prepaid cell phones which they changed on a regular basis.

- A second indictment charges three people who are accused of filing more than 400 false returns using stolen identities which claimed more than $3 million in fraudulent refunds. Armen Eritsian and Hovhannes Harutyunyan are the alleged leaders of the scheme.

- A third indictment charges eight people, led by Hovakim Sogomonian and Harout Gevorgyan, and describes an elaborate ruse in which defendants obtained bank account and other personal information about wealthy Wells Fargo customers and then sent imposters to branches to withdraw large sums of money. The imposters altered their appearances with haircuts and new clothes and prepared by role-playing. In all they attempted to withdraw more than $3 million, and succeeded in obtaining $551,842, the indictment said. The imposters instructed tellers to wire large sums of money to the account of a gold dealer, and then they picked up gold coins from the dealer and delivered them to the other defendants.

- Finally, a fourth indictment charges 18 defendants, led by Karen Galstian and Vahag Stepanyan, with a scheme to defraud Bank of America of more than $600,000 by writing bad checks. This scheme also utilized stolen identities to further the fraud.

The FBI and IRS recommend that individuals take the following steps to minimize the chance of becoming a victim of identity theft:

 Don’t carry your Social Security card or any document with your SSN on it.
 Don’t give a business your SSN just because they ask. Give it only when required.
 Protect your financial information.
 Check your credit report every 12 months.
 Secure personal information in your home.
 Protect your personal computers by using firewalls, anti-spam/virus software, update security patches, and change passwords for Internet accounts.
 Don’t give personal information over the phone, through the mail or on the Internet unless you have initiated the contact or you are sure you know who you are dealing with.

All of the defendants arrested in today’s operation are expected to make their initial appearances in federal court either today or tomorrow in the district where they were arrested. Following the defendants’ initial appearances, the next scheduled court date is Oct. 3, 2013, at 2 p.m., before United States Magistrate Judge Mitchell D. Dembin.

*U.S. Attorney Duffy, the IRS’ Anthony J. Orlando and the FBI’s Darrell Foxworth will be available for interviews this afternoon. If you are interested, please contact Kelly Thornton at 619-546-9726.

DEFENDANTS   Case Number: 13cr3479 *ARTHUR GRIGORIAN
*ERNEST SOLOIAN
*HAROUT GEVORGYAN
HOVHANNES HARUTYUNYAN
SUKHROB MUSAYEV
STANISLAV MELNIKOV
RENAT TALANOV
*YVONNE MIHAILESCU
MADLEN OSPANOVA
MERUYERT AKHMETOVA
INDIRA AKHMETOVA
*VYACHESLAV LAZAREV
YEVGENIY IVANOV
KARINA POLOZOVA
ZHASSULAN SHILIKBAY
SAGIT BATCHAEV
PATIMAT MAGALIYEV
KURBAN MAGALIYEV
ILYAS ABDRAKHAY
YERMEK DOSSYMBEKOV
VYACHESLAV TSOY
KONSTANTIN IVANOV
NURBEK AKHMADIYEV
ALISHER OMAROV
KSENIA CHABANOVA
*YELENA SKLYAROVA
ULAN ZAKIROV
TAIYR ZHURYN
YEVGENIY SOTNIKOV       DEFENDANTS   Case Number: 13cr3480 *ARMAN ERITSIAN
HOVHANNES HARUTYUNYAN
MARSAL MEDET       DEFENDANTS   Case Number: 13cr3481

*KAREN GALSTIAN
*VAHAG STEPANYAN
*GEORGE KARAPETIAN
ARA ADAMYAN
*CHRISTOPHER BUCKELY
*CARLOS FERRUFINO, Jr.
*AKOP GALSTIAN
*FARBOB GOLHASSANI
PAUL T. GONNELLY, Jr.
*TATYANA KARBACHINSKAYA
MARIA KHARITONOVA
ALISA NOVIKOVA
*DAVID MEGUERIAN
*ASHOT MNATSAKAMYAN
SEDRAK MOVSESYAN
ROBERT T. RODRIGUEZ
*CHRISTOPHER RUIZ
*VARDGES VARDANYAN

      DEFENDANTS   Case Number: 13cr3482

*HOVAKIM SOGOMONIAN
*HAROUT GEVORGYAN
*TIGRAN ERITSYAN
*EMIL STEPANYAN
SAGIT BATCHAEV
*KONSTANTIN YUGAY
*BAGDASAR BAGDASARYAN
*MAE BARBARA WEISSBERGER

*In Custody

      SUMMARY OF CHARGES

The following crimes are charged in at least one of the four indictments. For charges against each defendant, please see indictments.

Conspiracy – Title 18, U.S.C., Section 371
Maximum penalty: 5 years’ imprisonment and $250,000 fine

Mail Fraud – Title 18, U.S.C., Section 1341
Maximum penalty: 20 years’ imprisonment and $250,000 fine

Wire Fraud – Title 18, U.S.C., Section 1343
Maximum penalty: 5 years’ imprisonment and $250,000 fine

Money Laundering – Title 18, U.S.C. § 1956
Maximum penalty: 5 years’ imprisonment and $250,000 fine

Aggravated Identity Theft – Title 18, U.S.C., Section 1028A
Maximum penalty: 2 years’ imprisonment consecutive to underlying offense

Conspiracy to Commit Bank Fraud – Title 18, U.S.C., Section 1349
Maximum penalty: 30 years’ imprisonment and $1,000,000 fine

Criminal Forfeiture – Title 18, U.S.C., Section 981(a)(1)(C) and Title 28, U.S.C., Section 2461(c) Maximum penalty: Forfeiture of proceeds

  AGENCIES

Federal Bureau of Investigation
Internal Revenue Service Criminal Investigation
Los Angeles Police Department

An indictment 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.

Former Merrill Lynch Stock Broker Gary Yin pled guilty today and admitted obstructing justice and laundering money for former Qualcomm Executive Vice President and President of Global Business Operations, Jing Wang (charged elsewhere).

According to his plea agreement, Yin agreed to assist Jing Wang in concealing Wang’s illegal insider trading using a secret, nominee brokerage account at Merrill Lynch. Yin also agreed to Wang’s request that he obstruct an ongoing SEC investigation into Wang’s activities, and to launder the proceeds of Wang’s insider trading. Among other things, Yin agreed to conceal evidence that Wang had engaged in insider trading by setting up a shell company in the British Virgin Islands, opening a brokerage account in the name of the shell company (but actually controlled by Wang), and laundering the illegal insider trading profits by moving them into the British Virgin Islands account.

At Wang’s direction, Yin also obstructed justice by removing account documents (subject to an SEC subpoena) from the United States and taking them to China. In China, Yin delivered the documents to Jing Wang’s brother, Bing Wang. Once delivered, Yin rehearsed a false cover story with Bing, concocted by his brother. In order to make the cover story credible, Yin also reviewed the trading history in the offshore account with Bing Wang to enable him to lie successfully to the authorities in the United States.

Finally, in order to hide the proceeds of Wang’s illegal trades, and to distance Wang from the trades, Yin transferred money from one shell company’s brokerage account to another. All told, Yin transferred approximately $525,000 from accounts related to shell companies in the British Virgin Islands.

Yin entered his guilty plea before U.S. Magistrate Judge Nita Stormes, and is next expected in court on December 16 at 9 a.m. for his sentencing before U.S. District Court Judge William Q. Hayes.

DEFENDANT   CRIMINAL CASE NO. 13cr3488-WQH Gary Yin       SUMMARY OF CHARGES

Title 18 U.S.C. Section 371 – Conspiracy to commit offenses against the United States.
Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and
$100 special assessment.

  DEFENDANT   Criminal Case No. 13CR3487-H Jing Wang
Bing Wang       SUMMARY OF CHARGES

Title 15 U.S.C. Sections 78j(b), 78ff and 17 C.F.R. § 240.10b-5—Securities Fraud (Insider Trading). Maximum Penalty: 20 years custody, a maximum fine of $5 million, five years supervised release, and $100 special assessment.

Title 18 U.S.C. Section 371 – Conspiracy (Obstruction of Justice and Money Laundering). Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and $100 special assessment.

Title 18 U.S.C. Section 1512(c)(1) and (c)(2) -- Obstruction of Official Proceedings. Maximum Penalty: 20 years custody, a maximum fine of $250,000 years supervised release, and $100 special assessment.

Title 18 U.S.C. 1956 – Money Laundering. Maximum Penalty: 20 years custody, a maximum fine of $250,000 years supervised release, and $100 special assessment.

Title 18 U.S.C. 1028A – Aggravated Identity Theft. Maximum Penalty: Mandatory two years custody consecutive to any other sentence.

  DEFENDANT   Criminal Case No. 13CR3487-H Bing Wang       SUMMARY OF CHARGES

Title 18 U.S.C. Section 371 – Conspiracy (Obstruction of Justice and Money Laundering).
Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and $100 special assessment.

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service-Criminal Investigation

United States Attorney Laura E. Duffy announced that Adel Afkarian and Atef Afkarian each entered a guilty plea in federal court in San Diego today to count one of an information charging them with conspiracy to commit mail fraud and wire fraud, in connection with a fraud scheme involving sales of million-dollar homes in San Diego and Del Mar, California.

In connection with the entry of their guilty pleas, both defendants, who worked through entities known as The Better Mortgage Company and Elite Coast Realty, admitted that they fraudulently obtained the entire proceeds of the sales of homes in Del Mar, La Jolla, and San Diego from innocent purchasers who were unaware that the defendants had hidden the existence of outstanding liens on the properties held by institutional lenders. The defendants also acknowledged that they used sham entities to execute and record documents falsely purporting to affect the legal title to the properties, including fraudulent deeds of trust and reconveyances that falsely purported to totally eliminate the existing debt to institutional lenders secured by the properties. During the course of the scheme the defendants sold their own property and properties of others with a combined sales price of more than $4,000,000.

Defendants Adel Afkarian and Atef Afkarian will appear before United States District Judge John A. Houston for sentencing on March 17, 2014, at 8:30 a.m.

DEFENDANTS   Criminal Case No. 13CR1469-JAH Adel Afkarian
Atef Afkarian       SUMMARY OF CHARGES

Count 1: Title 18, United States Code, Section 371 - Conspiracy
Maximum penalties: 5 years' imprisonment, $250,000 fine or twice the gross pecuniary gain or twice the gross pecuniary loss (whichever is greatest), $100 special assessment, 3 years of supervised release

  INVESTIGATING AGENCY

Federal Bureau of Investigation

United States Attorney Laura E. Duffy announced that twin brothers Anthony Donald Casias and Leo Ronald Casias, Jr., pled guilty to a scheme to defraud local sports fans through their company, "L & T Sports Events, Inc."

According to court documents, clients of L&T Sports paid in advance for travel, lodging, transportation, and game tickets to out-of-town sporting events, such as San Diego Chargers "away" games, other NFL games, and collegiate sporting events. The brothers told customers that L&T Sports purchased specific flights, game tickets, and hotel accommodations for them for a set amount of money. The defendants even promised clients that L&T Sports obtained tickets in specific seating areas (for example, "lower level corner end zone" or "club level" seating), accommodations at specified hotels, and seats on specific airline flights, to reassure clients that the services clients paid for would be provided when the clients arrived at the game destinations.

The defendants admitted today that once the clients paid the advance fees in reliance on the brothers' statements, the defendants fraudulently diverted the funds to other uses, thereby leaving clients stranded in other cities without hotel accommodations, transportation, game tickets, and flights back to San Diego.

Court documents indicate that on at least one occasion the defendants used one individual's credit card to pay for another L&T Sports client's trip to Hawaii. Furthermore, according to individuals who addressed the court at today's guilty plea, the defendants borrowed money from victims, claiming that the funds would be used to purchase specific travel-related services to keep the business afloat. Instead, the brothers used the money for personal expenses, such as car payments and cable bills, and failed to repay the victims. One elderly individual informed the court that the brothers had obtained from him the money he had saved for his own cremation.

The court remanded both defendants into custody. The defendants will next appear before Judge John A. Houston on October 4, 2013, at 1:00 p.m. for a further hearing on whether they will remain in custody pending sentencing. They will appear before Judge Houston for sentencing on January 6, 2014, at 8:30 a.m.

If you are a victim of L&T Sports, please contact the FBI at (858)320-1800.

DEFENDANTS   Criminal Case No. 12CR4966-JAH Anthony "Tony" Donald Casias
Leo Ronald Casias, Jr.       SUMMARY OF CHARGE

Count 1: Title 18, United States Code, Section 1349 - Conspiracy to Commit Wire Fraud. Maximum penalties: 20 years' imprisonment, $250,000 fine, $100 special assessment, 3 years of supervised release, mandatory restitution to victims.

  INVESTIGATING AGENCY

Federal Bureau of Investigation

United States Attorney Laura Duffy announced today that Douglas McClain, Jr. ("McClain"), President of Argyll Equities, Inc., was sentenced today by United States District Court Judge Roger T. Benitez to serve 15 years in federal prison and ordered to pay $81,731,879.98 in restitution, for his role in a multi-million dollar stock loan fraud scheme which defrauded victims in the United States, Canada, Mexico, Panama, China, England, and Belgium. McClain was also ordered to forfeit several million dollars in assets that were the proceeds of the fraud, including cash and securities held in brokerage accounts, a luxury home in Florida, a houseboat, and diamond jewelry.

On April 13, 2012, McClain was charged in an indictment with 27 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.

According to the evidence presented a trial, McClain owned and controlled several entities that did business in San Diego, California, Florida, Texas, and Georgia under the name "Argyll." Beginning in at least 2004, McClain conspired with loan brokers to defraud the public, and borrowers, by falsely representing that Argyll was an institutional lender with significant cash to lend to corporate executives and other individuals. According to court records, McClain, and others, fraudulently induced corporate executives to pledge millions of dollars’ worth of stock the executives held in publicly traded companies as collateral for loans by falsely representing that the borrowers' stock would not be sold unless there was a default on the loan.

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

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

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

United States Attorney Duffy praised the efforts of the FBI for its investigation of the case. U.S. Attorney Duffy stated, “The evidence at trial showed how McClain was able to steal publicly traded securities from unsuspecting corporate insiders through an elaborate scheme involving an international network of loan brokers that deceived the public into believing that McClain’s entities were legitimate lenders. This case is a reminder to the public to be extremely cautious when pledging property to unregulated third party lenders.”

FBI Special Agent in Charge, Daphne Hearn, commented, “This investigation highlights the need for consumers to do their own homework before entering into business arrangements and not simply take the word of the other person, especially when it comes to pledging stocks, bonds or other negotiable instruments as collateral. I commend the U.S. Attorney's Office and the FBI Agents and professional employees who worked so diligently to bring this matter to justice.”

This case was investigated by the Federal Bureau of Investigation-San Diego Division.

DEFENDANT   Case Number: 12cr0918BEN Douglas A. McClain, Jr.       SUMMARY OF CHARGES

Count 1: Conspiracy (Title 18, United States Code, Section 371): Counts 2-8 Mail Fraud (Title 18, United States Code, Section 1341
Counts 9-23 Wire Fraud (Title 18, United States Code, Section 1343)
Count 24 Securities Fraud (Title 15, United States Code, Sections 78j(b) and 78ff)
Counts 32-35 Money Laundering (Title 18, United States Code, Section 1957)

  INVESTIGATING AGENCY

Federal Bureau of Investigation

SAN DIEGO – Jing Wang, a former Executive Vice President and President of Global Business Operations for Qualcomm, Inc. (NASDAQ: QCOM) was charged with insider trading in shares of both Qualcomm and Atheros Communications, Inc. (“Atheros”) using a secret brokerage account and an offshore shell company in the British Virgin Islands.

Wang, 51, of Del Mar, is also charged with conspiring with his brother, co-defendant Bing Wang, and his former Merrill Lynch stock broker, Gary Yin, to obstruct an ongoing SEC investigation, and laundering the proceeds of his insider trading using a second offshore shell company and secret brokerage account.

United States Attorney Laura E. Duffy and Acting Assistant Attorney General for the Justice Department’s Criminal Division Mythili Raman announced that Wang was taken into custody at the Federal Bureau of Investigation earlier today on these charges, and is expected to make his initial appearance in federal court in the Southern District of California at 2 p.m. before U.S. Magistrate Judge Nita Stormes. A warrant has been issued for the arrest of Bing Wang, 53, who is believed to be a citizen and resident of China.

Yin, the former stock broker, was charged in a criminal information filed today in the Southern District of California, and is expected to make his initial appearance on Tuesday, September 24, at 10:00 a.m. in federal court in San Diego, also before Judge Stormes.

“When there are two sets of rules – one for the powerful insiders and one for everybody else – the public quickly loses confidence in the stock market,” Duffy said. “We intend to restore confidence in our markets by making sure that everyone is playing by the same rules.”

FBI Special Agent in Charge, Daphne Hearn, commented, "Insider trading investigations are important, because our nation's economy is increasingly dependent on the success and integrity of the stocks and commodities markets. The FBI's message is simple, if your information is inside information, you can't trade on it."

“Mr. Wang has been charged with using offshore entities and secret brokerage accounts to conceal and disguise illicit profits from insider trading. Our special agents are experts in following the financial transactions that unravel complex schemes where individuals who use nominee offshore accounts believe they are out of the reach of the IRS,” said Richard Weber, Chief, IRS Criminal Investigation. “These individuals face severe consequences including imprisonment and substantial fines.”

“Insider trading is an insidious crime. It undermines ordinary investors’ faith in our financial markets, and the Justice Department has zero tolerance for it,” said Acting Assistant Attorney General Raman. “Today’s charges show that you cannot trade on inside information, pocket the profit, and expect to get away with it. The Criminal Division has had a terrific partnership with the U.S. Attorney’s Office for the Southern District of California in this important investigation, and through partnerships like these throughout the country, we will continue to root out fraud in our markets at every level.”

According to the indictment, Wang used his Merrill Lynch broker (Yin) to create the offshore entity, Unicorn Global Enterprises (“Unicorn”), in the British Virgin Islands and to open a brokerage account for Unicorn at Merrill Lynch. Wang provided documents to Yin to create the false impression that his brother, Bing Wang, controlled the account, when in fact Qualcomm’s Wang was the true owner of the account. This allowed Wang to conceal his true ownership and control of the assets in the account and to avoid reporting to U.S. tax authorities. Significantly, it also allowed Wang to disguise his transfer of large sums of money to China.

The indictment alleges that after the creation of the Unicorn account, Wang was named an Executive Vice President of Qualcomm and fell within the company’s insider trading restrictions for officers. As an officer, Wang was exposed to Qualcomm’s confidential business information, and was repeatedly notified that he was not permitted to use material, non-public information to engage in stock transactions.

Among the inside information learned by Wang because of his senior position was the fact that in the first quarter of 2010, Qualcomm was poised to announce an increased quarterly dividend and a stock repurchase program. On March 1, 2010, Wang allegedly acted on this material nonpublic information and directed Yin to purchase as much Qualcomm stock as possible in the Unicorn account before the information became public. After the close of trading on that same day, Qualcomm issued a press release announcing the dividend increase and stock repurchase program, and the company’s stock appreciated approximately 10 percent in value.

According to the indictment, Wang next engaged in insider trading when he learned that Qualcomm was interested in purchasing Atheros. On December 1, 2010, acting on this information, Wang met with Yin and instructed him to sell all Qualcomm shares in the Unicorn account. Wang then told Yin to make preparations to purchase Atheros with the funds in the account, but to wait for further confirmation. Wang’s broker proceeded to liquidate all of the illegally held Qualcomm stock in the Unicorn account, resulting in ill-gotten gains of approximately $94,709 from the earlier insider trading.

The indictment alleges that on December 6, 2010, while attending a meeting of Qualcomm’s Board of Directors in Hong Kong, Wang learned that the board authorized Qualcomm to make a non-public offer to purchase Atheros for $45 per share. Later that same day, Wang called Yin in San Diego and instructed him to use all available funds in the secret Unicorn account to purchase Atheros stock, the indictment said. The broker followed Wang’s instructions and purchased 10,800 shares at approximately $34 per share for a total of $366,766.

Qualcomm’s offer to purchase Atheros remained confidential until an article appeared in the Dealbook section of the New York Times’ website on January 4, 2011, and Qualcomm made an official announcement of the deal on January 5, 2011. Between the close of trading on January 3, 2011, and the close of trading on January 5, 2011, the price of Atheros stock jumped from approximately $37 to $44.50 – an increase of close to 20 percent.

The indictment alleges that Wang engaged in a third incident of insider trading on January 25, 2011, when he learned that Qualcomm was about to release record financial results. Immediately prior to announcement of those earnings, Wang directed Yin to sell all the Atheros stock in the Unicorn account and purchase Qualcomm stock. The broker sold all of Wang’s illegally purchased Atheros stock for $44.60 per share, and used all of the proceeds to purchase Qualcomm stock at $50.87 per share. The following day, after Qualcomm announced the record earnings results, Qualcomm’s stock price increased by approximately $4 per share. All told, Wang illegally gained approximately a quarter of a million dollars from these three illegal transactions.

The indictment and criminal information further alleges that in order to conceal his insider trading, Wang conspired with his brother, Bing Wang, and Yin, to conceal Wang’s control of the Unicorn account and his illegal purchases of Qualcomm and Atheros stock. Yin and Bing Wang allegedly agreed to assist Wang, and the three defendants engaged in a number of activities to obstruct any investigation of the trades, as well as to conceal Wang’s control of the Unicorn account. These obstructive acts included concocting a false cover story that would blame Bing Wang for the illegal trades in Qualcomm and Atheros, concealing Wang’s actual control of the Unicorn account from Merrill Lynch, and transferring the proceeds of Wang’s insider trading to another offshore entity nominally owned by Wang’s mother.

For example, in carrying out the obstruction, the indictment alleges that in January 2012, Wang forged the signature of his mother and used her identification documents to create another British Virgin Islands entity called Clearview Resources, Ltd (“Clearview”). At Wang’s instruction, Yin created a Merrill Lynch account for Clearview, and attempted to further distance Wang from the transactions by transferring all of the money in the Unicorn account to the Clearview account in a series of structured transactions.

Another example of obstructive conduct alleged in the indictment took place in March 2012, when Wang met with Yin and explained that the SEC was investigating Qualcomm. At that time, Wang told Yin he was worried that his control of the Unicorn account and insider trading would be discovered. By that time, the SEC had already issued a subpoena to Wang calling for him to produce information about any brokerage accounts he controlled. Wang allegedly pressed Yin to stick to the false cover story he had created earlier – that his brother Bing Wang was the person who made the illegal trades, not him. Soon afterwards, Wang gave Yin a number of Merrill Lynch documents related to his Unicorn account and directed his broker to take the documents to China, give them to Bing Wang, and help his brother use them to corroborate the false cover story. Yin agreed, and during two trips to China in 2012, Yin met with Bing Wang, provided him with Unicorn documents removed from the United States, and rehearsed the false cover story. The indictment further alleges that after these meetings, Bing Wang and Yin sent emails to each other containing false and misleading statements in order to make it appear that Bing Wang actually controlled the Unicorn and Clearview accounts.

United States Attorney Duffy praised the efforts of the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation for piecing together this complex, international insider trading scheme. United States Attorney Duffy also thanked the SEC’s Los Angeles Regional Office for its assistance, and noted that the SEC had today filed a civil complaint against Wang and Yin in federal court in San Diego.

*The public is reminded that indictments and informations are not evidence that the defendants committed the crime charged. The defendants are presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.

DEFENDANT   Criminal Case No. 13CR3487-H Jing Wang
Bing Wang

Age: 51
Age: 53

Del Mar, CA
China   SUMMARY OF CHARGES

Title 15 U.S.C. Sections 78j(b), 78ff and 17 C.F.R. § 240.10b-5—Securities Fraud (Insider Trading). Maximum Penalty: 20 years custody, a maximum fine of $5 million, five years supervised release, and $100 special assessment.

Title 18 U.S.C. Section 371 – Conspiracy (Obstruction of Justice and Money Laundering). Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and $100 special assessment.

Title 18 U.S.C. Section 1512(c)(1) and (c)(2) -- Obstruction of Official Proceedings. Maximum Penalty: 20 years custody, a maximum fine of $250,000 years supervised release, and $100 special assessment.

Title 18 U.S.C. 1956 – Money Laundering. Maximum Penalty: 20 years custody, a maximum fine of $250,000 years supervised release, and $100 special assessment.

Title 18 U.S.C. 1028A – Aggravated Identity Theft. Maximum Penalty: Mandatory two years custody consecutive to any other sentence.

  DEFENDANT   Criminal Case No. 13CR3487-H Bing Wang

Age: 53

China   SUMMARY OF CHARGES

Title 18 U.S.C. Section 371 – Conspiracy (Obstruction of Justice and Money Laundering).
Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and $100 special assessment.

  DEFENDANT   Criminal Case No. 13CR3488 Gary Yin

Age: 54

San Diego   SUMMARY OF CHARGES

Title 18 U.S.C. Section 371 – Conspiracy to commit offenses against the United States.
Maximum Penalty: 5 years custody, a maximum $250,000 fine, three years supervised release and $100 special assessment.

    INVESTIGATING AGENCIES

Federal Bureau of Investigation
Internal Revenue Service-Criminal Investigation

United States Attorney Laura E. Duffy announced today that Timothy James Hensley was sentenced to serve 70 months in federal prison, in addition to five years of supervised release, and to register as a sex offender, by United States District Court Judge Irma E. Gonzalez. Hensley, a former local middle school teacher at Bell Middle School, in San Diego, pled guilty on May 16, 2013 to a five count indictment charging him with receipt and possession of child pornography.

As part of his guilty plea, Hensley admitted to receiving images of a minor female approximately 10 years of age engaged in sexually explicit conduct as well as to possessing an iMac computer and computer disks containing images depicting minors engaged in sexually explicit conduct, in violation of Title 18, United States Code, Section 2252(a)(2) and (4)(B). According to court records, several of these images depicted prepubescent minors engaged in sexually explicit conduct. The defendant was arrested by special agents with Homeland Security Investigations on January 15, 2013, following the execution of a federal search warrant at Hensley’s residence.

This case stems from an investigation by the Department of Homeland Security, Immigration and Customs Enforcement's Homeland Security Investigations.

This case was brought as part of the Department of Justice’s Project Safe Childhood, and ICE's Operation Predator, both are nationwide initiatives launched to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys' Office and the Criminal Division's Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. For more information about Internet safety education, please visit www.usdoj.gov/psc and click on the tab "resources." For more information about on Operation Predator, please visit www.ice.gov.

DEFENDANT   Criminal Case No. 13cr0393-IEG Timothy James Hensley   CA   SUMMARY OF CHARGES

Three Counts: Title 18, United States Code, Section 2252(a)(2) (Receipt of Child Pornography)

Two Counts: Title 18, United States Code, Section 2252(a)(4)(B) - Possession of Child Pornography

  INVESTIGATING AGENCY

Immigration and Customs Enforcement’s Homeland Security Investigations

United States Attorney Laura E. Duffy announced today that Jan C. Seski, M.D. & Associates, P.C., an oncology practice based in Pittsburgh, Pennsylvania, pleaded guilty to a criminal charge of having caused the introduction of an unapproved drug into interstate commerce and was ordered to pay a $100,000 fine. Magistrate Judge Karen S. Crawford also ordered the defendant to place ads in two medical journals, warning of the dangers of unapproved drugs.

In pleading guilty earlier today before Judge Crawford, the medical practice admitted that between December 4, 2008 and May 25, 2011, the practice ordered $973,795 worth of foreign versions of the oncology drugs Eloxatin7, Gemzar7 and Taxotere7 from GlobalRxStore.com, and had them shipped through Oberlin Medical Supply of San Diego. The drugs ordered by the practice were determined to be foreign versions of these drugs and were not approved by the Food and Drug Administration for use in the United States.

According to sentencing documents filed with the court, this case came to light in May of 2011, when federal agents visited Oberlin Medical Supply's offices in San Diego. Maher Idriss, (charged in Criminal Case No. 12cr1775-WQH) the owner of Oberlin Medical Supply, had been working in conjunction with Martin Bean (charged in Criminal Case No. 12cr3734-WQH) and others of GlobalRxStore.com (GlobalRx) to supply foreign oncology drugs to doctors throughout the United States. At Oberlin, the agents discovered numerous boxes of oncology drugs that bore labeling indicating that the products had been manufactured outside of the United States and were not approved for use in this country.

The medical practice provided agents with a copy of a label for boxes of Gemzar received from GlobalRx. The labeling indicated that the product was manufactured by Eli Lilly in Fegershaim, France. The labeling was partially in English and partially in Turkish. The labels did not bear the words "Rx only" as required by the FDA, and did not bear the National Drug Code ("NDC") numbers used for Medicare billing in this country. Moreover, the labels were different in color from the FDA-approved labeling for the U.S. product.

The medical practice later provided to the government one of the vials of drugs that was in the box. When tested, the vial was found to have the active ingredient used in the manufacture of Gemzar. However, without such testing there is no assurance that other foreign drugs purchased by the defendant (outside of the closed chain system established by the FDA to protect patients in this country) all contain the active ingredient. Just recently, in February, 2013, the FDA warned doctors about batches of counterfeit Avastin (an oncology drug) that had been sold to U.S. doctors that did not contain any of the active ingredients, the third such incident in several months.

DEFENDANT   Criminal Case No. 13cr3316-KSC Jan C. Seski, M.D. & Associates, P.C.
Pittsburgh, Pennsylvania   Date of Incorporation: 1973   SUMMARY OF CHARGES

Introduction into Interstate Commerce of an Unapproved Drug, a misdemeanor, in violation of Title 21, United States Code, Section 331(d), 333(a)(1) and 355(a)

  AGENCIES

Food and Drug Administration, Office of Criminal Investigations
Federal Bureau of Investigation

SAN DIEGO, CA – Three individuals – a commander in the United States Navy, a special agent for the Naval Criminal Investigative Service (NCIS) and the CEO of a multinational defense contractor – were charged in criminal complaints unsealed today in connection with two separate bribery schemes.

The complaints allege that Leonard Glenn Francis, the CEO of Singapore-based Glenn Defense Marine Asia Ltd. (GDMA), paid U.S. Navy Commander Michael Vannak Khem Misiewicz and NCIS Supervisory Special Agent John Bertrand Beliveau II with luxury travel and prostitutes in exchange for confidential information and other assistance in relation to hundreds of millions of dollars in Navy contracts.

Francis was arrested in San Diego yesterday evening and made his initial appearance in federal court this afternoon before U.S. Magistrate Judge Karen S. Crawford. Also yesterday, Misiewicz and Beliveau were arrested in Colorado and Virginia, respectively. The next date in the cases is a hearing set for Friday, September 20, 2013 at 9:30am before U.S. Magistrate Judge William McCurine Jr., in federal court in San Diego, to determine whether Francis should be detained as a flight risk and as a risk to obstruct justice. Francis will remain in custody without bond pending Friday’s hearing. The United States will seek the removal of Misiewicz and Beliveau to San Diego to face the charges.

U.S. Attorney Laura E. Duffy of the Southern District of California and Acting Assistant Attorney General Mythili Raman of the Justice Department’s Criminal Division made the announcement after the complaints were unsealed.

As set forth in the complaints, Francis, a Malaysian national who resides in Singapore, is the chief executive officer and president of Glenn Defense Marine Asia Ltd. (GDMA), a multi-national corporation with headquarters in Singapore and operating locations in other countries, including Japan, Singapore, Thailand, Malaysia, Korea, India, Hong Kong, Indonesia, Australia, Philippines, Sri Lanka and the United States. GDMA provides hundreds of millions of dollars in “husbanding” services to the U.S. Navy, which involves the coordinating, scheduling and procurement of items and services required by ships and submarines when they arrive at port. These services include, for example, providing tugboats and fenders; paying port authority and customs fees; furnishing security and transportation; supplying provisions, fuel and water; and removing trash and collecting liquid waste.

Misiewicz, 46, is a commander and captain-select in the U.S. Navy, assigned to U.S. Northern Command located at Peterson Air Force Base in Colorado Springs, Colo. Before this position, he served as the deputy operations officer for the U.S. Commander, Seventh Fleet aboard the USS Blue Ridge. The Seventh Fleet’s area of operations consists of 48 million square miles extending from Japan to Diego Garcia in the Indian Ocean and from Vladivostok, Russia, to Australia. As the deputy operations officer, Misiewicz had high-level exposure to the operational planning for ships in the Seventh Fleet and for any U.S. Navy ship traveling through the Seventh Fleet’s area of responsibility. He also held influence in determining or modifying the schedule of port visits for U.S. Navy vessels.

Beliveau, 44, is a supervisory special agent for NCIS at Quantico, Va. In that position, he has had access to the internal NCIS database containing investigative reporting, including reports into an investigation by NCIS into possible fraud committed by GDMA in billing the U.S. Navy under its contracts.

According to one of the criminal complaints, Misiewicz and Francis allegedly engaged in a conspiracy to commit bribery. As part of the conspiracy, Misiewicz sent to Francis information that the Navy had classified as “Confidential,” including schedules reflecting the movements of Navy ships months in advance. Misiewicz also operated as an advocate within the Navy for GDMA’s interests, urging decisions about port visits and contractor usage that were designed to benefit GDMA. In return, Francis provided Misiewicz with paid travel, luxury hotel stays and prostitution services. To communicate with Francis privately, Misiewicz set up a special personal email account with a name that included Francis’s initials.

As set forth in another complaint, Beliveau and Francis allegedly entered into a separate bribery conspiracy. As part of that conspiracy, Beliveau provided Francis with confidential information about the NCIS criminal fraud investigation into GDMA by secretly downloading reports from the NCIS database and conveying the information to Francis. Beliveau also allegedly provided Francis guidance as to how to deal with NCIS inquiries. In exchange, Francis provided Beliveau with, among other things, paid travel, luxury hotel stays and prostitution services.

Each defendant was charged with conspiring to commit bribery, which carries a maximum penalty of five years in prison. A criminal complaint is merely an allegation, and every defendant is presumed innocent until proven guilty beyond a reasonable doubt.

This ongoing investigation is being conducted by NCIS, the Defense Criminal Investigative Service, the Defense Contract Audit Agency, and the Drug Enforcement Administration. The Criminal Division’s Office of International Affairs provided significant assistance in this matter, and the Royal Thai Police and the Corrupt Practices Investigation Bureau Singapore also provided law enforcement assistance. This case is being prosecuted by Assistant U.S. Attorneys Mark Pletcher and Robert Huie of the Southern District of California and Catherine Votaw, Director of Procurement Fraud for the Criminal Division’s Fraud Section.

Those with information relating to fraud, corruption or waste in government contracting should contact the NCIS anonymous tipline at www.ncis.navy.mil or call the DoD Hotline at (800) 424-9098.

DEFENDANTS    

Case Number: 13-MJ-3456
Leonard Glenn Francis
John Bertrand Beliveau II

Case Number: 13-MJ-3457
Leonard Glenn Francis
Michael Vannak Khem Misiewicz

      SUMMARY OF CHARGES

Case Number: 13-MJ-3456
Conspiracy to Commit Bribery in violation of 18 U.S.C. § 371

Case Number: 13-MJ-3457
Conspiracy to Commit Bribery in violation of 18 U.S.C. § 371

  INVESTIGATING AGENCIES

Defense Criminal Investigative Service
Naval Criminal Investigative Service
Homeland Security Investigations
Drug Enforcement Administration

Grants awarded to hire law enforcement positions

SAN DIEGO – The Department of Justice awarded grants totaling $925,235 to two cities in the Southern District of California, aimed at creating six new law enforcement positions, announced United States Attorney Laura E. Duffy.

The Department of Justice Community Oriented Policing Services (COPS) Hiring Program offers grants to state, local and tribal law enforcement agencies to hire or rehire community policing officers. The program provides salaries and benefits for officer and deputy hires for three years. Grantees for the 2013 hiring program were selected based on their fiscal needs, local crime rates, and community policing plans.

This year’s COPS grantees within the Southern District are the City of Brawley, located in Imperial County, will receive $425,235 and the City of Chula Vista, located in San Diego County, will receive $500,000.

U.S. Attorney Duffy noted that these grants will provide additional resources to address public safety in this District. We are pleased that the Department is recognizing and supporting the efforts of local law enforcement in Chula Vista and Brawley.

The COPS Office is responsible for advancing community policing nationwide. Since 1995, COPS has awarded over $14 billion to advance community policing, including grants awarded to more than 13,000 state, local, and tribal law enforcement agencies to fund the hiring and redeployment of approximately 125,000 officers and provide a variety of knowledge resource products including publications, training, and technical assistance.

Additional information about the 2013 COPS Hiring Program can be found on the COPS website at www.cops.usdoj.gov.

SAN DIEGO – United States Attorney Laura E. Duffy and Federal Housing Finance Agency Inspector General Steve A. Linick announced that John Allen, a mortgage loan processor based in Laguna Hills, was sentenced today to one year in custody by U.S. District Court Judge John A. Houston for his participation in an investment and mortgage loan fraud scheme that generated nearly $15 million in kickbacks.

Allen worked with Mary Armstrong, a self-described but unlicensed mortgage broker, and several other co-conspirators to steal money from real estate purchase transactions. Armstrong recruited “investors” through advertisements in the Los Angeles Times, Monster.com, and elsewhere, and offered them the opportunity to purchase homes using their good credit with no money down. In reality, these so-called investors were nothing more than straw buyers who were promised $10,000 for each property purchased as part of the scheme. Allen helped to secure mortgages for the properties by falsifying loan applications. Among other things, the loan applications falsely claimed exorbitant income from fake employers and used fabricated documents, which Allen helped to create, in order to support the claims. The defendants used these loan applications to obtain mortgages with 100% financing – and thus avoided having to make any down payment on the properties.

The defendants earned millions of dollars in profits by convincing the sellers of the properties to inflate the purchase price by $100,000 or more, which was allegedly to be used for construction to improve the properties. In fact, no construction work was ever performed and the funds were instead diverted (or “kicked back”) to bank accounts controlled by the defendants. Allen helped to identify properties to purchase as part of the scheme, and inflated the prices by $100,000 or more to fund the kickbacks. All together, the defendants pocketed nearly $15 million in kickbacks in this way, and allowed nearly all of the properties to swiftly fall into foreclosure. Through this scheme, the defendants arranged the purchase of approximately $100 million in mortgages, resulting in estimated total losses between $7 million and $20 million to the mortgage lenders and secondary purchasers Fannie Mae and Freddie Mac.

Allen was charged with participating in the scheme along with five others: Armstrong, Teresa Rose, a Ramona real estate agent; William Fountain, Armstrong’s assistant; Justin Mensen, a straw buyer who went on to recruit others and help to launder the funds; and Audrey Yeboah, a Los Angeles-based tax preparer who generated fake paperwork to support the loans. All of the defendants have pled guilty to participating in the scheme. Allen was the first defendant to be sentenced. Fountain is scheduled for sentencing on September 20, 2013, and Armstrong is scheduled for sentencing on September 30, 2013, both before Judge Houston.

United States Attorney Duffy explained that the American public is the very real victim of this type of widespread mortgage fraud that played such a significant role in destabilizing the country’s financial situation. She emphasized that her office would aggressively prosecute such crimes and urged anyone in the community who has information relating to these charges to contact the San Diego branch of the Federal Bureau of Investigation at (858) 565-1255 or the Federal Housing Finance Agency - Office of Inspector General hotline at (800) 793-7724.

This matter was investigated jointly by agents from the FBI and FHFA-OIG. The case is being prosecuted by FHFA-OIG Investigative Counsel and Special Assistant U.S. Attorney Emily W. Allen and Assistant U.S. Attorney Valerie Chu of the Southern District of California.

DEFENDANTS   Criminal Case No. 12CR1848-JAH Mary Armstrong
Teresa Rose
William Fountain
John Allen       DEFENDANT   Criminal Case No. 12CR1458-JAH Justin Mensen       DEFENDANT   Criminal Case No. 12CR4322-JAH Audrey Yeboah         SUMMARY OF CHARGES

Mary Armstrong, Teresa Rose, and William Fountain

Count 1: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Mary Armstrong

Count 2: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Counts 3-5: Title 18, United States Code, Section 1956(a)(1)(B)(I) -- Money Laundering -- statutory maximum sentence of 15 years’ custody, a maximum fine of $500,000 or twice the value of the property involved in the transaction, and $100 special assessment.

Justin Mensen

Information: Title 18, United States Code, Section 371 -- Conspiracy to Commit Wire Fraud and to Launder Money -- statutory maximum sentence of 5 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

Audrey Yeboah

Information: Title 18, United States Code, Section 1343 -- Wire Fraud -- statutory maximum sentence of 20 years custody, a maximum fine of $250,000 or twice the gain derived from or loss caused by the offense, and $100 special assessment.

  AGENCIES

Federal Bureau of Investigation
Federal Housing Finance Agency - Office of Inspector General

United States Attorney Laura E. Duffy announced that Nawal Talia of Spring Valley pled guilty today and admitted recruiting patients as part of a multi-year fraud scheme to falsify medical certifications to the federal government.

As revealed in her guilty plea, Talia recruited patients for the mastermind of the health care fraud scheme, Dr. Roberto Velasquez. Earlier this year, Velasquez was sentenced to 21 months in prison, and ordered to pay more than $1.5 million in restitution to the Social Security Administration — the largest single restitution order in Social Security’s history.

For the past several years, Talia served as a paid advocate for immigrants seeking assistance in obtaining U.S. citizenship or Social Security benefits. In this role, Talia submitted documents to federal agencies on behalf of her clients, certifying that her clients were mentally disabled. Rather than obtaining benefits legitimately, Talia and Velasquez worked together to falsify medical certifications and fabricate patient histories. In her plea, Talia admitted that she helped Velasquez falsify two different types of disability reports: (1) Medical Certification for Disability Exception Forms (Forms N-648), which are used by the Department of Homeland Security during the naturalization process; and (2) Medical Letters, which are used by the Social Security Administration to award Supplemental Security Income and disability payments. On each of these forms, Talia lied about the length of time her clients had been under the care of Velasquez. In one case, Talia certified that a patient had been treated by Dr. Velasquez for a year, when the patient had actually only met Velasquez once. In another, she filed a Social Security appeal, falsely certifying that the patient had been treated by Dr. Velasquez for 11 months. In reality, Talia simply made up that number so that her client appeared to be eligible for disability benefits, when in fact Talia knew he was not.

The fraud was uncovered through an undercover operation conducted jointly by the Department of Homeland Security, Immigration and Customs Enforcement/Homeland Security Investigations, and the Office of Inspector General, Social Security Administration. Although Talia held herself out as a legitimate patient advocate, the investigation revealed her blatant disregard for federal disability requirements. Investigators established that Talia repeatedly lied about the duration of the treatment in order to create a “track record” that would satisfy reviewers at the Social Security Administration and Citizen and Immigration Services (“CIS”).

This prosecution is a part of the United States Attorney’s ongoing Health Care Fraud initiative. United States Attorney Duffy noted, “Combating health care fraud is a top priority of the Department of Justice. Patient recruiters like Talia help perpetuate fraud when they falsify documents and corrupt the integrity of the system.” The United States Attorney noted that this type of fraud is particularly egregious as it improperly helps undeserving individuals obtain citizenship and other benefits that may then not be available to the truly deserving.

Sentencing was set for December 16, 2013, at 9 a.m. before U.S. District Judge Marilyn L. Huff

DEFENDANT   CRIMINAL CASE NO. 13cr3393-H Nawal Talia       SUMMARY OF CHARGES

Count One - Title 18, United States Code, Section 1546 – False Statements in Immigration Documents
Count Two - Title 42, United States Code, Section 1383a(a)(2) - False Statements in Applications for SSI Disability Benefits

  INVESTIGATING AGENCIES

United States Immigration and Customs Enforcement’s Homeland Security Investigations
Office of Inspector General, Social Security Administration

San Diego – A former reserve Imperial County Sheriff’s Deputy was sentenced today to serve a term of 30 months in prison for smuggling illegal aliens, including a minor, in the trunk of her car as she drove through a Border Patrol checkpoint wearing her uniform and department-issued firearm.

While serving as a reserve Deputy Sheriff of Imperial County, Elizabeth Hernandez and her co-defendant, Edna Yanie Calderon, were arrested on April 17, 2013 for transporting illegal aliens. On June 25, 2013, Hernandez and Calderon pled guilty to transporting illegal aliens, and consented to the forfeiture of proceeds and assets associated with their crimes.

According to her plea agreement, Hernandez abused her position of public trust by using her Imperial County Sheriff Department’s uniform and loaded firearm to facilitate the transportation of illegal aliens through the Highway 86 checkpoint operated by Border Patrol. From at least October 2012 through April 17, 2013, Hernandez earned at least $90,000 from transporting illegal aliens in the United States, the court records said.

In addition, Hernandez admitted that she used proceeds from alien smuggling to purchase several vehicles, including a 2013 Dodge Charger, a 2012 Polaris off-road recreational vehicle, and a 2008 GMC Sierra pickup truck. In addition, Hernandez consented to the forfeiture of approximately $20,000 in cash that was found on her at the time of arrest and at her residence following a search warrant, which were proceeds from her alien smuggling.

U.S. District Court Judge Janis L. Sammartino found that Hernandez’s use of her uniform and firearm made her conduct more egregious and distinguished her from Calderon. Judge Sammartino agreed that Hernandez’s abuse of her position of public trust provided the smuggling organization with a “guaranteed method” to transport illegal aliens through the Border Patrol checkpoint. In addition to imposing a 30-month prison sentence, Judge Sammartino ordered forfeiture of several vehicles and $20,000 in proceeds from alien smuggling. Following her prison sentence, Judge Sammartino placed Hernandez on three years of supervised release.

Hernandez was ordered to self-surrender to her designated prison facility by no later than November 5, 2013 at 12:00 p.m. A status hearing regarding Hernandez’s self-surrender is scheduled for November 8, 2013 at 9:00 a.m, before Judge Sammartino. Hernandez’s co-defendant, Calderon, is scheduled to be sentenced by Judge Sammartino on October 4, 2013 at 10:30 a.m.

DEFENDANTS   Criminal Case No. 13CR1794-JLS Elizabeth Hernandez
Edna Yanie Calderon       SUMMARY OF CHARGES

Title 8, United States Code, Section 1324(a)(1)(A)(ii) B Transportation of Illegal Aliens
Maximum Penalties: 10 years of imprisonment and $250,000 fine

  AGENCY

United States Border Patrol-El Centro Sector

Martell Davis, who was wearing a T-shirt that read "I MAKE PIMPIN' LOOK EASY…" when he arrived to pick up his 17-year-old prostitute from a hotel and was arrested, admitted in federal court today that he was, indeed, a pimp.

Davis pleaded guilty before U.S. Magistrate Judge Ruben B. Brooks to transportation of a minor to engage in prostitution. In his plea agreement, Davis admitted that he acted as pimp for a 17-year-old girl when he drove her from San Diego to Yuma, Arizona, so she could engage in commercial sex acts.

According to court records, Davis' arrest was the result of an undercover operation by San Diego vice cops. A detective, responding to an online prostitution ad, set up an $80 "date" for July 26 at a Best Western hotel in Mission Valley. The girl was arrested.

While in the hotel room, the detective used the girl's phone to text a person they believed was her pimp. Posing as the girl, the detective texted the pimp, asking how much she should charge for a particular sex act. The person on the other end responded, "Break the bank." And later, the person using the phone of the suspected pimp inquired how much she’d made from the sex act. The detective texted back "5," meaning $500. The person responded via text, "damn cool."

Using the girl’s phone, the detective asked when the suspected pimp would pick her up. The person responded that he would come to get her. Moments later, defendant Martell Davis arrived at the room where the date was set up with the undercover detective. Davis was arrested at approximately 12:30 am on July 27, 2013, while wearing the T-shirt that read “I MAKE PIMPIN’ LOOK EASY….”

Davis was scheduled to be sentenced December 13, 2013, at 9am before U.S. District Judge Janis L. Sammartino.

DEFENDANT   Case Number: 13cr3149 Martell Davis       SUMMARY OF CHARGES

Transportation of a Minor to Engage in Prostitution, in violation of Title 18, United States Code, Section
2423(a) – Maximum Penalties: Life in prison, with mandatory minimum 10 years.

  INVESTIGATING AGENCY

San Diego Police Department

United States Attorney Laura E. Duffy announced today that Martin Paul Bean III of Boca Raton, Florida, was sentenced by the Hon. William Q. Hayes to serve 24 months in custody for his role in a scheme to sell unapproved foreign oncology drugs to doctors in the United States. Bean had pled guilty to conspiracy to commit a number of federal offenses, including wire fraud, mail fraud, selling unapproved drugs, selling misbranded drugs, and importing merchandise contrary to law. Bean was further ordered to forfeit the Jaguar XJ he purchased with the proceeds of the scheme, and to pay restitution of $19,270 to one of the victims of his scheme.

In pleading guilty, Bean admitted that between February 24, 2005, and October 30, 2011, he operated a business (GlobalRx Store) from his residence in Florida, and unlawfully sold over $7 million of prescription oncology drugs to doctors throughout the United States. Bean ordered unapproved drugs from foreign sources, including sources in Turkey, India and Pakistan, and sold them to doctors within the United States at substantially discounted prices. Among the misbranded and unapproved drugs sold by Bean were versions of drugs marketed in the United States as Gemzar®, Taxotere®, Eloxatin®, Zometa® and Kytril®.

Bean ordered the unapproved drugs from foreign sources, and directed them to be shipped in bulk to a location in San Diego, California, where a co-conspirator would repackage and ship individual orders to specific doctors throughout the country. Accompanying the shipments to doctors would be invoices from a California wholesale pharmacy (Oberlin Medical Supply) which helped create the false and misleading appearance that the drugs were approved for use in the United States. Bean and his co-conspirators also operated a call center in Winnipeg, Canada, using toll free numbers, where orders from doctors in the United States for oncology drugs were accepted by telephone, facsimile and electronic mail.

According to court papers filed in connection with today's sentencing hearing, the investigation began in early 2010, when the Medicines & Healthcare Regulatory Agency ("MHRA," the equivalent of the FDA in the United Kingdom) advised the FDA that they had intercepted a shipment of an unapproved form of Gemzar sent from a company in Pakistan to Oberlin Medical Supply in San Diego. Gemzar is a prescription oncology drug produced by the pharmaceutical company Eli Lilly. The only FDA-approved manufacturing site for Gemzar to be sold in the United States at that time was in Indianapolis, Indiana. Gemzar is labeled and packaged in Japan, Mexico and Brazil for exclusive use in those countries, and Gemzar is also manufactured in France for all other international markets.

After further investigation, federal agents visited the business location of Oberlin and discovered numerous boxes of oncology drugs, including Eloxatin, Taxotere and Zoldria (a generic form of Zometa not approved for use in the United States), in addition to the Gemzar. The boxes bore labeling indicating that the products had been manufactured outside of the United States, and certain boxes had labels in languages other than English. None of the drugs bore the wording "Rx only," as required by U.S. law. In addition, there were boxes of Abraxane, manufactured in Illinois, which bore a stamp which said, "Imported and Marketed by Biocon Limited, Bangalore, India."

After the visit from federal agents, Oberlin Medical Supply processed no further orders on behalf of Global Rx. The lack of shipments and payments prompted Bean to contact Oberlin repeatedly, during which the owner of Oberlin (Maher Idriss) advised Bean that the sale of the imported prescription pharmaceuticals in the United States was not lawful. Idriss went so far as to forward to Bean an email from the FDA which stated that "the Food, Drug and Cosmetic Act does not permit you to import pharmaceutical drugs manufactured in a foreign country which are not intended for the U.S. market."

In spite of these warnings, Bean continued to press Idriss to return the remaining inventory of unapproved oncology drugs and pay Oberlin's outstanding balances. On May 25, 2011, Bean arrived at Oberlin and picked up 12 boxes containing the inventory of imported pharmaceuticals. Bean then drove the contraband to a hotel in the Mission Valley area, where he was later seen loading the boxes into a vehicle driven by another man.

The individual was later approached by federal agents, and surrendered to them the boxes of unapproved pharmaceuticals and a check for $300 he had received from Bean. Bean later called that individual and offered him another $2,500 to deliver some of the pharmaceuticals to doctors in and around Fremont, California. Although Bean acknowledged that one of the drugs (Zoldria) was not approved for use in the United States (a fact he had verified on the FDA's website), he nonetheless requested that the drug be delivered to several doctors in California.

After the end of their association with Oberlin, Bean and his co-conspirators renamed their company "My Rx Store," and sent promotional material to doctors in the same format as Global Rx, offering the same unapproved drugs as Global Rx, and using the same toll-free number. Bean personally received over $865,000 from the scheme.

"This defendant blithely put the public's health at risk so he could line his own pockets," said Derek Benner, special agent in charge for Homeland Security Investigations San Diego. "This sentence should serve as a stern reminder about the potential consequences facing those who deal in imposter drugs with no regard for the dangers they pose to patients and consumers. HSI will continue to work with its law enforcement partners here and abroad to prevent the distribution of counterfeit and misbranded pharmaceuticals."

The prosecution of Bean is related to United States v. Maher Idriss, Criminal Case No. 12cr1775-WQH, in which Idriss pleaded guilty to conspiring to import merchandise contrary to law. At the time of his plea, Idriss admitted that between 2006 and 2011, he conspired with the owners and operators of Global Rx Store to import and distribute medication (primarily oncology drugs) not intended for sale in the United States. Idriss acknowledged that the owners of Global ordered the foreign oncology drugs intended for sale in countries such as Turkey, Pakistan, India and the United Kingdom and arranged for them to be shipped directly from the foreign source to Oberlin. Idriss admitted that he received the foreign oncology drugs, stored them and later shipped them out to doctors within the United States, as directed by the owners of Global. After receiving payment from the ordering doctors, Idriss wire transferred payments to the source of the drugs abroad and to an account in Canada controlled by Bean and his co-conspirators. Idriss is scheduled to be sentenced before District Judge Hayes on October 21, 2013 at 9:00 a.m.

The Food, Drug & Cosmetic Act ("FDCA") is intended to assure, among other things, that all drugs manufactured and distributed within the United States are safely manufactured, made from appropriate ingredients, and properly labeled. To enforce this law, the FDA regulates the manufacture, processing, labeling, and distribution of all drugs shipped and received in interstate commerce, including the wholesale distribution of prescription drugs. Under the FDCA, anyone manufacturing, preparing, compounding, or processing prescription drugs for sale and use in the United States must annually register with the FDA as a drug establishment, and provide a list to the FDA of the drugs which they manufacture for commercial distribution, and a copy of all labeling. This registration requirement applies equally to drug establishments located outside of the United States that import their drugs into the United States. Under the FDCA, a drug is deemed misbranded if it was manufactured at any domestic or foreign establishment and that drug was not annually listed with the FDA by the establishment as one of the drugs which was manufactured for commercial distribution in the United States at that location.

Under the FDCA, no person may offer for sale in the United States any drug not approved by the FDA. The approval process addresses the chemical composition of the drug, the drug's safety and effectiveness, and elements of the drug's distribution, such as the methods used in, and the facilities and controls used for, the manufacture, processing, and packing of the drug, as well as the labeling to be used for the drug. The approval process is specific to each manufacturer and each product and its labeling. Drugs manufactured outside the United States which are not intended for use in the United States do not go through this approval process and are considered unapproved drugs.

Any prescription drug that does not bear the label "Rx only" is deemed to be misbranded. Moreover, all wording required by the FDCA to appear on drug labels and labeling sold in the continental U.S. must be in the English language. If a drug is manufactured in the United States and exported to other countries, is unlawful for anyone other than the original manufacturer to bring that same drug back into the United States.

DEFENDANT   Case Number: 12cr3734-WQH Martin Paul Bean, III       SUMMARY OF CHARGES

Count 1 - Conspiracy, in violation of Title 18, United States Code, Section 371. Maximum Penalty: 5 years in custody and/or $250,000 fine.

  INVESTIGATING AGENCY

Food and Drug Administration, Office of Criminal Investigations; Department of Homeland Security, Immigration and Customs Enforcement; Federal Bureau of Investigation; Postal Inspection Service

Federal grand jury indictments were unsealed today charging 12 San Diego County residents with federal drug trafficking and firearms offenses. The charges are part of a 10-month investigation by federal and local authorities that culminated with the arrests of dozens of people during raids this morning in the North County.

Of those charged federally, 10 were taken into custody during today’s sweep and two were still at large. Dozens of additional defendants will be prosecuted by the San Diego County District Attorney’s Office as part of the investigation, dubbed “Operation Mountain Shadow.”

The federal charges against the twelve defendants are the result of an intensive ten-month long investigation led by the Violent Trafficker Team (VTT) from DEA's San Diego division. Most of the defendants were arrested in today’s massive law enforcement operation involving more than 150 federal, state, and local law enforcement officers. Officers also executed federal search warrants at six residences and businesses during the operation.

All of the federal defendants are charged with distributing methamphetamine or conspiring with others to distribute methamphetamine. Several are also charged with illegally possessing firearms, and one is charged with discharging a firearm in furtherance of a drug trafficking crime.

Those in federal custody include Paulino Aguirre, Johnny Castillo, Christopher Maldonado, John Caudle, Oscar Rodriguez-Torres, Miguel Rodriguez-Torres, Todd Young, Jose Tyoran and Israel Ornelas. Tyoran and Ornelas appeared in federal court this afternoon; they entered not-guilty pleas and a detention hearing was set for Sept. 12 at 9:30 a.m. before U.S. Magistrate Judge David Bartick. The two federal fugitives are Vasquez and Juan Aguirre are not yet in custody.

The DEAs Violent Trafficker Team was created to respond to violent drug trafficking organizations in local communities throughout the nation. The Violent Trafficker teams are deployed on a temporary basis to assist state and local law enforcement in the disruption and dismantling of drug trafficking organizations. The Violent Trafficker Team’s deployment in Poway and Ramona was intended to address a surge in violent crime and drug overdoses, particularly among young people, in those communities. The surge was directly connected to narcotics and firearms trafficking in the area.

During the Violent Trafficking Team’s ten-month investigation, agents conducted multiple seizures of methamphetamine and also seized firearms including several 12-gauge shotguns, one sawed off shotgun, and several semi-automatic rifles.

DEFENDANTS   Case Number: 13cr3310

Juan Aguirre
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)
Unlawful possession of firearm (18 U.S.C. § 922(g)(1))
Discharge of a firearm in furtherance of a drug trafficking offense (18 U.S.C. § 924(c))

Paulino Aguirre
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

DEFENDANTS   Case Number: 13cr3311

Johnny Castillo
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)
Unlawful possession of firearm (18 U.S.C. § 922(g)(1))

DEFENDANTS   Case Number: 13cr3312

Jose Ernesto Dinero
Charges: Distribution of methamphetamine (21 U.S.C. §§ 841(a)(1))

DEFENDANTS   Case Number: 13cr3313

Christopher Maldonado
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

Jose Tyoran
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

John Caudle
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

Michelle Vasquez
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

Israel Ornelas
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

DEFENDANTS   Case Number: 13cr3314

Oscar Rodriguez-Torres
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)
Unlawful possession of firearm (18 U.S.C. § 922(g)(5)

Miguel Rodriguez-Torres
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)

DEFENDANTS   Case Number: 13cr3315

Todd Young
Charges: Distribution of methamphetamine and conspiracy (21 U.S.C. §§ 841(a)(1) and 846)
Unlawful possession of firearm (18 U.S.C. § 922(g)(1))

SUMMARY OF CHARGES

Conspiracy to Distribute Controlled Substances B Title 21, United States Code, Sections 841(a)(1) and 846
Maximum penalty: Life imprisonment and $4,000,000 fine

Distribution of Controlled Substances B Title 21, United States Code, Section 841(a)(1)
Maximum penalty: Life imprisonment and $4,000,000 fine

Unlawful Possession of Firearm B Title 18, United States Code, Section 922(g)
Maximum penalty: 10 years= imprisonment and $10,000 fine

Criminal Forfeiture B Title 21, United States Code, Section 853
Maximum penalty: Forfeiture of proceeds

  AGENCIES

Drug Enforcement Administration
Alcohol, Tobacco, Firearms and Explosives
United States Border Patrol
United States Marshals Service
San Diego County Sheriff's Department

An indictment 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.

Former Customs and Border Protection Officer Hector Rodriguez was sentenced today by U.S. District Judge Roger T. Benitez to serve 78 months in federal prison followed by three years of supervised release for bribery, bringing in aliens for financial gain and conspiracy.

Rodriguez, who pleaded guilty on March 28, also forfeited a 2009 Jaguar, 12 luxury watches – including five Rolexes - jewelry, televisions, cash, and computers that were obtained as a result of his criminal activity.

Two of Hector Rodriguez’s accomplices were also sentenced today. Codefendant Gerardo Rodriguez was sentenced to 60 months in prison followed by three years of supervised release and he forfeited a 2005 Mercedes, 2006 Harley Davidson, $60,000, televisions, and computers that were obtained as a result of his criminal activity. Codefendant Maria Guerrero was sentenced to 30 months in federal prison followed by three years of supervised release and ordered to pay a $40,000 fine.

The case was investigated by the multi-agency Border Corruption Task Force.

According to court records, defendant Hector Rodriguez agreed that from around 2010 until his arrest on July 13, 2012, he received bribes from codefendants Gerardo Rodriguez and Maria Guerrero, in the form of cash money, use of luxury vehicles, and use of an apartment, in return for failing to enforce U.S. immigration laws by admitting illegal aliens into the U.S. through his inspection lane at the San Ysidro Port-of-Entry.

Defendant Hector Rodriguez provided his lane assignment information to codefendants who would then drive vehicles containing illegal aliens from Mexico to the United States through his assigned inspection lane. On their date of arrest, July 13, 2012, codefendant Gerardo Rodriguez drove a vehicle containing eight illegal aliens and codefendant Vanessa Moya drove a vehicle containing six illegal aliens through defendant Hector Rodriguez’s inspection lane. To conceal the smuggling, defendant Hector Rodriguez would enter into the government database false information about who was driving the vehicle and the number of occupants, thereby concealing the fact that the vehicles contained illegal aliens.

(Codefendant Vanessa Moya was previously sentenced on May 13, 2013 to five years of probation and ordered to pay a $2,500 fine.)

United States Attorney Laura E. Duffy stated, “The honesty and integrity of those who protect our borders are an integral part of the security equation. Corrupt officials who violate the public’s trust and jeopardize the security of our borders will not be tolerated and will be brought to justice.”

Pete Flores, director of CBP field operations for San Diego, said: “The sentencing of this former officer sends a message both to the community at large and to those in trusted positions in federal law enforcement who would contemplate participating in corrupt and unlawful behavior. We will not tolerate corruption within our workforce and we will actively ferret out and prosecute to the fullest extent of the law any employees who commit unethical or unlawful acts that violate that special trust.”

FBI Special Agent in Charge (SAC) Daphne Hearn commented, "Public corruption tears at the fabric of our communities and our national security. The FBI will continue to work with our partners in the Border Corruption Task Force (BCTF) to root out corruption along the Southwest Border and ensure those who violate the public's trust are held accountable." The public can report alleged instances of corruption to the FBI hotline at 1-800-NO BRIBE.

DEFENDANTS   Case Number: 12cr2997-BEN/12cr4462-BEN Hector Rodriguez
Gerardo Rodriguez
Vanessa Moya
Maria Guerrero       SUMMARY OF CHARGES

Title 8, United States Code, Section 371- Conspiracy to Bring In Aliens For Financial Gain and Bribery; Title 8, United States Code, Section 1324(a)(2)(B)(ii)- Bringing In Illegal Aliens For Financial Gain; and
Title 18, United States Code, Sections 201(b)(1), 201(b)(2) – Bribery.

  INVESTIGATING AGENCIES

The Border Corruption Task Force is composed of the Federal Bureau of Investigation, Customs and
Border Protection - Internal Affairs, Customs and Border Protection - Field Operations, Border Patrol, Transportation Security Administration, and Drug Enforcement Administration.

United States Attorney Laura E. Duffy announced that, on Tuesday, August 26, 2012, a jury returned guilty verdicts on all counts in an indictment charging Brian Curtis Hile, a resident of Michigan, with Interstate Stalking, in violation of Title 18, United States Code, Section 2261A(1).

According to evidence presented at trial and the investigation by the Federal Bureau of Investigation and the Computer and Technology Crime Hi-Tech Response Team, Hile travelled to San Diego from Michigan in August 2011, with the intent to kill a female victim and her boyfriend. Prior to travelling from Michigan to San Diego, Hile engaged in an online relationship, which spanned a couple of years. During the course of that online relationship, Hile exchanged romantic communications and explicit photographs with someone he believed to be a woman. However, when Hile learned that his online paramour was in fact a man residing in South Africa, and that his romance was nothing more than a “Cat fishing” scheme, Hile became enraged and initiated what he termed “an investigation” to find the woman in the photographs used in the scheme.

Trial evidence revealed that as part of his investigation, Hile conducted an extensive search of the Internet, utilizing chat rooms and online gaming blogs to identify and locate the woman in the photographs, a resident of San Diego County, who years earlier had her online “Photo Bucket” account comprised resulting in her photographs being disseminated over the Internet.

The evidence presented at trial showed that after a diligent search, Hile not only identified the woman in the photograph, but obtained personal information for her as well as her boyfriend, the victim’s family members and friends. Hile was arrested in San Diego within miles of the victim’s home. At the time of his arrest, Hile was in possession of the victim’s address, telephone numbers, email addresses, telephone contacts, contact information for the victim’s favorite restaurant and the names and addresses for educational institutions that the victim had previously attended. Forensic evidence presented at trial showed that Hile retrieved the victim’s confidential information by hacking into the victim’s email account. Hile was also found in possession of duct tape, zip ties, and a to-do list that included additional supplies he needed to obtain to complete his plan to kill the female victim and her boyfriend, including a trench coat, knife, and chloroform.

United States Attorney Duffy noted, “This prosecution demonstrates the potential for stalkers to use information from the Internet to prey on their victims, and reaffirms the Department’s commitment to ensure the safety of all of the people in our community.” U.S. Attorney Duffy also praised the efforts of the Federal Bureau of Investigation and the Computer and Technology Crime Hi-Tech Response Team. The Computer and Technology Crime High-Tech Response Team (CATCH) is a multi-agency task force formed in June 2000 to apprehend and prosecute all criminals who use technology to prey on the citizens of San Diego and Imperial and Riverside Counties.

Hile is next scheduled to appear in court at his sentencing hearing on November 22, 2013 at 9:00 a.m., before the Honorable Janis L. Sammartino, United States District Court Judge.

DEFENDANT   Case Number: 12CR1687JLS Brian Curtis Hile       SUMMARY OF CHARGES

Counts: 2: Title 18, United States Code, Section 2261A(1) -Interstate Stalking

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Computer and Technology Crime Hi-Tech Response Team

San Diego, CA - United States Attorney Laura E. Duffy announced that Kevin Kelso, a former Director of Finance at the Westin San Diego, was arraigned yesterday in Los Angeles on charges involving his embezzlement of more than $500,000 from the Westin San Diego.

According to the indictment, Kelso served as the Director of Finance at the Westin San Diego between approximately December 2010 and September 2012. During that time, he embezzled funds using several different methods, including: (1) taking advantage of the hotel’s change order process – by which they converted larger denomination currency into smaller bills in order to make change for customers; (2) using an unauthorized corporate American Express card to pay personal expenses; (3) submitting duplicate expense reports to obtain undeserved reimbursement; (4) reversing charges at the Westin San Diego for his friends and acquaintances; and (5) writing Westin checks to improperly pay himself and third parties.

The defendant was arrested by U.S. Secret Service agents on August 27, 2013, at another hotel, his current place of employment. He was arraigned in the Central District of California before Magistrate Judge Ralph Zarefsky and pled not guilty. Magistrate Judge Zarefsky set bail at $100,000 and ordered the defendant to appear in the Southern District of California in the courtroom of Magistrate William V. Gallo on September 4, 2012 at 2 p.m.

The public is reminded that an indictment is not evidence that the defendant committed the crime charged. The defendant is presumed innocent until the United States meets its burden in court of proving guilt beyond a reasonable doubt.

DEFENDANT   Criminal Case No. 13CR3017-DMS Kevin Kelso       SUMMARY OF CHARGES

Counts 1-6: Title 18, United States Code, Section 1343 – Wire Fraud

Forfeiture: Title 18, United States Code, Sections 981(a)(1)(C) and Title 28, United States Code, Section 246

  INVESTIGATING AGENCY

United States Secret Service

SAN DIEGO - A 28-year-old Mexican national entered a guilty plea today in federal court in connection with the July 2009 murder of U.S. Border Patrol Agent Robert Rosas, Jr., admitting he was one of three gunmen who lured the agent into a trap to steal his night-vision goggles and then fatally shot him during a struggle.

Marcos Rodríguez-Perez was arrested by Mexican authorities on April 11, 2011, in Tijuana, Baja California, Mexico and was extradited from Mexico on October 13, 2011, escorted by special agents of the Federal Bureau of Investigation and Immigration and Customs Enforcement’s Homeland Security Investigations. Rodríguez-Perez pleaded guilty to conspiracy to commit robbery and kidnaping, robbery of personal property of the United States, and use and carrying of a firearm during the commission of a crime of violence. The plea agreement calls for a sentence of 58 years in prison.

According to the plea agreement, Rodríguez-Perez admitted that on July 23, 2009, he and four others - Jose Juan Chacon-Morales, Jose Luis Ramirez-Dorantes, Christian Daniel Castro Alvarez, and Emilio Samyn Gonzales-Arenazas - traveled by car and foot to a remote area on the Mexican side of the U.S.-Mexico border near Campo, California. All five were carrying firearms and, once at the border, entered into an agreement to rob a U.S. Border Patrol agent of his night vision device.

As Agent Rosas, in uniform and performing his official duties, responded to the area, the defendant entered the U.S. with Castro-Alvarez and Gonzales-Arenazas through a hole in the border fence, while Chacon-Morales and Ramirez-Dorantes remained in Mexico and stood watch. After Agent Rosas exited his vehicle, the defendant, Castro-Alvarez, and Gonzales-Arenazas detained Agent Rosas at gunpoint.

Agent Rosas resisted, and during the ensuing struggle, the defendant, Castro-Alvarez and Gonzales-Arenazas fired multiple shots at Agent Rosas, killing him. The three men “stole Agent Rosas's bag, firearm, handcuffs, and night vision device, among other things…and fled back to Mexico,” the plea agreement said. They rejoined Chacon-Morales and Ramirez-Dorantes, and all five fled the area.

To date, three defendants besides Rodríguez-Perez have pleaded guilty: Christian Daniel Castro-Alvarez was sentenced to 40 years of imprisonment; Emilio Samyn Gonzalez-Arenazas and Jose Ramirez-Dorantes are scheduled to be sentenced in November. Jose Juan Chacon-Morales remains a fugitive.

Rodriguez-Perez pleaded guilty before U.S. District Court Judge M. James Lorenz. Sentencing was set for November 14, 2013, at 2:00 p.m.

The Federal Bureau of Investigation (“FBI”) and Immigration and Customs Enforcement’s Homeland Security Investigations (“ICE-HSI”) are jointly investigating Agent Rosas’ murder.

DEFENDANT   Criminal Case No. 10CR1793-L-3 Marcos Rodriguez-Perez       SUMMARY OF CHARGES

Conspiracy - Title18, United States Code, Section 371; Robbery of personal property of the United States - Title 18, United States Code, Section 2112; Use and carrying of a firearm during the commission of a crime of violence - Title18, United States Code, Section 924(c)(1)(A)

  INVESTIGATING AGENCIES

Federal Bureau of Investigation
Immigration and Customs Enforcement’s Homeland Security Investigations