Western District of Washington

Tacoma - A former Port Angeles, Washington, naturopathic physician was convicted late last week of a federal felony related to his misbranding of products he claimed could prevent and treat numerous serious diseases, including COVID-19 and MRSA, announced U.S. Attorney Nicholas W. Brown.   Richard Marschall, 68, was convicted following a 4-day trial.  The jury found Marschall guilty of Introduction of Misbranded Drugs into Interstate Commerce, his third conviction for the same crime following earlier prosecutions in 2011 and 2017.  Sentencing in front of U.S. District Judge Benjamin H. Settle likely will occur in early 2022.

According to records filed in the case, in late March, 2020, Food and Drug Administration criminal investigators began reviewing complaints from the public about Facebook posts for Marschall’s products.   Investigators reviewed Marschall's Facebook page which included claims that his product the “Dynamic Duo” could “crush” viruses, including the coronavirus.  Marschall billed himself as a retired naturopath and “Health Coach.”  Marschall’s Facebook page also claimed that his products could eliminate MRSA and other infections “even if there is antibiotic resistance.”

On March 30, 2020, an FDA investigator spoke to Marschall on the telephone in an undercover capacity explaining to Marschall that she was worried about COVID-19.  Marschall told the investigator that the “Dynamic Duo” contained garlic extract and larch tree starch, and further represented that one of the substances “doesn’t boost the immune system, it just kills the virus.”  Marschall represented that the second substance would boost the production of white blood cells that attack infections.  The undercover agent ultimately ordered the “Dynamic Duo” for $140 plus shipping. 

On the call with the FDA investigator, Marschall also referred to himself as “Dr. Rick Marschall.” His Facebook posts and other marketing materials for the “Dynamic Duo” also referred to Marschall as “N.D.” and “N.D. retired.” But Marschall did not have a license to practice naturopathy. In 2018, the Washington State Department of Health permanently revoked his credential to practice as a naturopath. 

FDA investigators received Marschall’s “Dynamic Duo” products in early April 2020, along with documents.  The products themselves were not made by Marschall but by other manufacturers.  The manufacturers’ labels for the substances do not claim to kill viruses, but still Marschall included documents that stated the substances can “crush 30 different viral infections, including those in the Corona family, like in China Corona-19.”

The jury found that Marschall misbranded the drugs because his marketing was false or misleading and because his products were not listed with the FDA.

In 2011 and again in 2017, Marschall was convicted and sentenced in federal court for distributing misbranded drugs.  For the current conviction, Marschall faces up to three years in prison and a $250,000 fine. 

The case was investigated by the FDA Office of Criminal Investigation (FDA-OCI).  The case was prosecuted by Assistant United States Attorneys Nicholas Manheim, Michelle Jensen, and Brian Werner.

Seattle – A prolific drug trafficker, who sold deadly fentanyl-tainted pills, was sentenced this week in U.S. District Court in Seattle to 66 months in prison and three years of supervised release.  Raoul V. Normandia, Jr., 30, was arrested April 24, 2020, near his Federal Way, Washington, residence.  At his sentencing hearing U.S. District Judge Robert S. Lasnik said Normandia, “was a drug dealer…. He was making a large amount of money selling drugs…. It was a pattern of criminal activity that he chose to do.”

“Fentanyl-tainted pills are flooding Western Washington and resulting in record high overdose rates and deaths,” said U.S. Attorney Nick Brown. “Fatal fentanyl overdoses are up 82% in the first six months of 2021 as compared to 2020. We must do all we can to stop the distribution of these pills. They are made to look like oxycodone but are far more powerful and deadly.”

The investigation in this case began April 18, 2020, when a Navy sailor was found dead in his workspace aboard a Navy ship.  In his pocket were two counterfeit pills that were laced with fentanyl.  The Naval Criminal Investigative Services (NCIS) were able to identify former Navy sailor Ivan Armenta, 21, as the sailor who provided the pills to the sailor who died. Armenta had distributed the pills to three other sailors as well: Two became ill and one was revived by Narcan.  Armenta was sentenced to 4 years in prison last month.

The investigation into the source of the pills revealed Chase Friedrich, 29, had supplied the pills to Armenta.  He was arrested April 21, 2020, at his Des Moines, Washington, apartment.  A search of Friedrich’s apartment revealed cocaine, a handgun, and a bag of approximately 100 counterfeit pills.  Friedrich pleaded guilty in May 2021, and today he was sentenced to 3 years in prison and 3 years of supervised release. 

Investigators determined that Raoul Normandia had supplied the pills to Friedrich.  Law enforcement arrested Normandia in his car a few blocks from his Federal Way residence.  In his vehicle was cocaine.  During a court‑authorized search of Normandia’s residence, law enforcement recovered cocaine, MDMA, firearms (including an assault rifle), ammunition, body armor, narcotics, and various signs of the drug trade, including scales, baggies, heat sealers, Moneygram receipts, and twenty cell phones.

Normandia pleaded guilty in April 2021 to conspiracy to distribute fentanyl, possession of MDMA and cocaine with intent to distribute, and possession of a firearm in furtherance of a drug trafficking crime. 

In asking for a 7-year prison sentence, prosecutors wrote to the court, “Counterfeit prescription pills containing fentanyl… pose a unique and substantial danger of overdose. The fact that these pills are manufactured to look like a Precocet increases the likelihood that they will be taken not only by those who intend to take fentanyl, but also by individuals who believe they are taking nothing more potent than an oxycodone. This danger is particularly acute in light of the fact that fentanyl cannot be detected by smell or taste, and someone cannot tell if there is fentanyl in a pill merely by looking at it.”

Judge Lasnik noted that it is the families of the sailor who died, and of the defendants, who suffer from the conduct. “There is so much tragedy in this case…. There’s four families that are rendered to their knees by these actions,” the Judge said.  Judge Lasnik said he reduced Normandia’s sentence, in part, because Normandia has been in custody throughout the pandemic -- suffering with the illness and through long-term lockdowns in the Bureau of Prisons.

The case was investigated by NCIS and the Kitsap County Sheriff’s Office as a part of the West Sound Narcotics Enforcement Team (WestNET) and was prosecuted by Assistant United States Attorney Lyndsie Schmalz.

Seattle – Twelve tribal communities and various sexual assault and domestic violence treatment providers have been awarded DOJ grants totaling more than $6 million to support services to victims.  The funding is from DOJ Office of Victims of Crime (OVC) and the Office of Violence against Women (OVW).

“As we observe Domestic Violence Awareness Month, it is important to highlight the good work being done to assist victims of violence, sexual assault, and child abuse,” said U.S. Attorney Nick Brown. “These funds are targeted at culturally appropriate services for communities that for too long have been ignored and marginalized.”

The Washington State Native American Coalition against Domestic Violence and Sexual Assault was awarded $341,347 to increase awareness and enhance response to sexual assault and domestic violence in tribal communities.  Individual tribes also received funding aimed at victim services including:

Jamestown S’Klallam Tribe - $354,375

Confederated Tribes of the Chehalis Reservation - $372,817

Shoalwater Bay Indian Tribe - $354,375

Hoh Tribe - $354,375

Muckleshoot Indian Tribe -$422,695

Stillaguamish Tribe of Indians - $354,375

Puyallup Tribe of Indians -$693,278

Lummi Nation - $422,695

Suquamish Tribe - $422,695

Nisqually Indian Tribe - $412,733

The Tulalip Tribes received a $421,267 grant specifically for services to child victims of sexual assault and abuse.

Harborview Medical Center received $499,999 in funding under the Rural Sexual Assault, Domestic Violence, Dating Violence, and Stalking Program to develop services in rural areas.  The Rural Program funds projects that implement, expand, and establish cooperative efforts among law enforcement officers, prosecutors, victim service providers, and other related parties to investigate and prosecute incidents of sexual assault, domestic violence, dating violence, and stalking; provide treatment, advocacy, counseling, legal assistance, or other victim services to victims in rural communities; or develop or strengthen programs addressing sexual assault, such as Sexual Assault Response Teams.

API CHAYA received $300,000 in funding under the Culturally Specific Services for Victims of Sexual Assault, Domestic Violence, Dating Violence, and Stalking Program.  The funding is to support culturally specific community-based organizations in addressing the critical needs of sexual assault, domestic violence, dating violence, and stalking victims in a manner that affirms a victim’s culture.

Detailed information on use of the grant money is available from the recipient or via web resources here: https://www.justice.gov/grants

Seattle – The U.S. Department of Justice and Kaiser Foundation Health Plan of Washington (KFHPW) today resolved allegations from several complainants that it repeatedly failed to provide interpreters to patients who are deaf or deaf-blind, in violation of the Americans with Disabilities Act (ADA), announced U.S. Attorney Nicholas W. Brown.  The settlement establishes a $1 million fund to pay claims to those patients whose rights were violated.  KFHPW also agrees to update and improve procedures for evaluating the need for interpreters, contracting with interpreters, and training staff surrounding those procedures.

“When health care facilities fail to provide interpreters to patients and their families, including those who are who are deaf or hard of hearing, it creates a major barrier to safe and appropriate medical care.” said U.S. Attorney Brown.  “Our investigation uncovered evidence of systemic failures to provide interpreters when necessary, leading patients to delayed care and problems with communication. This settlement is a necessary step to ensuring that people receiving care through this system are able to communicate timely and effectively about their medical needs.”

An investigation by the U.S. Attorney’s Office revealed that in approximately 400 instances over a 4-year period, an interpreter was requested by KFPW staff, but none was provided, or other problems related to effective communication were raised by patients or their companions.

Under the terms of the settlement, KFHPW will establish a third-party claims administrator to allocate the settlement funds based on the harm suffered by each complainant.  The administrator will work with KFHPW records to locate claimants.  The U.S. Attorney’s Office will review the allocations after the claims have been submitted and reviewed.

For a two-year period, the U.S. Attorney’s Office will review new procedures and training of KFHPW staff to ensure patients who are deaf or deaf-blind receive appropriate interpreter services at the 41 medical facilities it operates in Northwest Washington, Central Washington, Eastern Washington, the Coastal and Olympic region, and Puget Sound.

Under the settlement some of the changes include: consistent screening of patients for the need of interpreter services; contracting with two interpreter services companies per facility to better provide services; contracting with video interpreter services for those occasions when in-person interpretation is not possible.  The policies surrounding interpreter services will be posted on the KFHPW website as well as in KFHPW facilities. KFHPW will keep logs of interpreter requests and how they were fulfilled.

In addition to the $1 million fund for claimants, KFHPW will pay $85,000 to the United States to resolve the allegations.

The investigation in this case was conducted by Assistant United States Attorney Christina Fogg, the Civil Rights Program Coordinator for the U.S. Attorney’s Office for the Western District of Washington.

Seattle – A False Claims Act/Anti-Kickback Statute civil matter was resolved today with an agreed $1.1 million payment by the former Chief Executive Officer of a now defunct medical testing lab, announced U.S. Attorney Nicholas W. Brown.  Jae Lee, 50, of Bellevue, Washington, served as the CEO of Northwest Physicians Laboratory (NWPL) from January 1, 2013, until July 30, 2015.  Lee has agreed to pay $500,000 within 30 days of the settlement agreement, with additional payments annually until full payment is made. 

“Resolving this civil case, as well as Mr. Lee’s guilty plea in the criminal case last year, are major milestones in this health care fraud investigation,” said U.S. Attorney Brown.  “The Anti-Kickback statute is aimed at protecting the public by keeping fraud from inflating our health care costs. When, as in this case, a whistleblower brings fraud to our attention the U.S. Attorney’s Office will vigorously pursue an investigation.”

The settlement with Jae Lee is the third such settlement involving the kick-back scheme and NWPL.  In July 2020, the U.S. Department of Justice reached a $12 million settlement with Sterling Healthcare Opco, LLC d/b/a/Cordant Health Solutions (Cordant) of Tacoma and Denver.  In December 2018,Vancouver, Washington, testing lab MTL agreed to pay $1,777,738 to settle allegations that it violated the False Claims Act by paying illegal kickbacks to obtain referrals for government healthcare insurance programs.  

According to those settlements, and the one signed today with Jae Lee, between January 2013 and July 2015, both MTL and Sterling/Cordant made payments to NWPL in exchange for referrals of Medicare and TRICARE program business, in violation of the Anti-Kickback Statute.  Paying remuneration to medical providers or provider-owned laboratories in exchange for referrals encourages providers to order medically unnecessary services.  The False Claims Act and the Anti-Kickback Statute function, in part, to discourage such behavior. NWPL was physician-owned, and for that reason could not test urine samples for patients covered by government health programs such as Medicare, Medicaid, and TRICARE.  In order to conceal the payment of the kickbacks, MTL, Sterling/Cordant and NWPL described the fees as being for marketing services; however, no marketing services were performed. 

“The payment or acceptance of kickbacks run counter to the goals of Federal health care programs,” stated Steven Ryan, Special Agent in Charge with the U.S. Department of Health and Human Services Office of Inspector General. “Providers are trusted to select patient services based on medical necessity and their sound judgement, not their greed. Stamping out kickbacks in these programs remains a top priority for our agency and partners.”

“The announced settlement concludes a multi-year civil investigation that clearly demonstrates the government’s commitment to hold accountable those whose actions tainted the integrity of federal healthcare programs, including the Department of Defense's TRICARE program,” said Bryan D. Denny, Special Agent in Charge for the Department of Defense Office of Inspector General, Defense Criminal Investigative Service (DCIS), Western Field Office.  “As exemplified in this case, DCIS will continually work with its law enforcement partners to defend against questionable business practices in order to protect taxpayer dollars and the health care interests of our military members and their families, as well as the American public.”

The whistleblower in this case will receive 15% of the funds as is common under the qui tam statute.

The criminal case concerning the kickback scheme remains ongoing.  Richard Reid, 52, of Astoria, Oregon, Kevin Puls, 56, of Bellevue, are scheduled for trial in January 2022.  Former NWPL CEO Jae Lee and MTL Vice-President Steve Verschoor have pleaded guilty and are scheduled for sentencing in March 2022.  NWPL as a corporate entity was sentenced in May 2021, and ordered to pay $8,114,417 in restitution joint and several with the other defendants. 

The case is being investigated by the FBI, Health and Human Services Office of Inspector General (HHS-OIG), and the Defense Criminal Investigative Service (DCIS).

The civil case was handled by Assistant United States Attorney Kayla Stahman. 

Seattle – A dozen cities in Western Washington will receive funding from the U.S. Department of Justice for specific community safety needs identified by their local police departments, announced U.S. Attorney Nicholas W. Brown.  The grants from DOJ’s Bureau of Justice Assistance, are aimed at preventing crime and assisting criminal justice programs based on local needs identified by the jurisdiction.

“From innovative communication APPs, to de-escalation and implicit bias training and less lethal equipment, our cities have identified ways these grant funds will make our communities safer,” said U.S. Attorney Brown.  “I congratulate them on successfully competing for this federal funding.”

Both Seattle and Tacoma are receiving large grants aimed at reducing violence.  Seattle will receive $771,127 under the Byrne Grant program.  Tacoma will receive $303,790 to enhance their community violence intervention program.  Other grantees include:

Vancouver - $107,942 to fund a crime prevention, domestic violence task force.

Puyallup - $12,968 to purchase officer safety/less lethal equipment

Kitsap County - $42,903 for training and equipment

Olympia -$25,269 for de-escalation training

Marysville -$15,768 for “stop sticks” in police vehicles

Lynnwood- $11,868 for a community engagement APP

Lakewood -$42,903 for a crime scene mapping scanner

Everett -$41,370 for equipment

Bremerton -$18,035 for the community resource unit

Bellingham -$38,736 for training in implicit bias and community policing

Additionally, Washington State received $3,644,335 in Byrne grant funding. The monies will be funneled to state and local organizations supporting a variety of initiatives including anti-gang and drug task forces, crime prevention, and officer safety.

The Byrne Grants are named in honor of New York City Police Officer Edward R. Byrne, who was killed in the line of duty on February 26, 1988. Officer Byrne was just 22 years old.

Seattle – A 22-year-old Mount Vernon, Washington, man was sentenced today in U.S. District Court in Seattle to 100 months in prison and 4 years of supervised release for conspiracy to distribute fentanyl, announced U.S. Attorney Nicholas W. Brown.  Defendant Jiovanni Nunez supplied counterfeit oxycodone pills tainted with fentanyl to an associate, who distributed them in Skagit and Whatcom Counties.  The pills are connected to at least two overdoses, including the overdose death of a Bellingham 17-year-old.  At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez said, “This entire case is tragic… the victim’s family continues to suffer as a direct consequence of the defendant’s actions.”

“Far too many people are dying from these fentanyl tainted pills — especially the young and vulnerable,” said U.S. Attorney Brown.  “It is critical that we not only stem the flow of the drugs into our community, but also remind people that using these pills often leads to death and devastation, with families left to mourn.”

Nunez and co-conspirator, Rosaliana Lopez-Rodriguez, 23, of Mount Vernon, were arrested in late 2019 after an investigation to track down the source of the tainted pills.  According to records filed in the case, a family member found the 17-year-old victim unresponsive on November 9, 2019.  Despite efforts of emergency responders to resuscitate him, the victim died; his cause of death was later determined to be fentanyl overdose.  Investigators found a whole and a partial pill near the 17-year-old victim.  The pills were designed to look like oxycodone 30-milligram pills, with “M” and “30” stamped on them.  But they were fakes tainted with fentanyl.  Similar pills have been linked to other overdose deaths throughout the Puget Sound region.  In fact, a friend of the 17-year-old victim nearly died after smoking one of the pills on November 2, 2019.  Nunez’s co-conspirator knew of that near-fatal overdose when she sold the 17-year-old victim more pills a week later, on November 9, 2019.

During this investigation, law enforcement executed court-authorized search warrants at each defendant’s residence.  At Nunez’s residence, law enforcement found a safe containing more than 900 fake oxycodone pills that matched the appearance of the fentanyl-laced pills linked to the fatal overdose.  Co-conspirator Lopez-Rodriguez admitted that Nunez supplied her with the pills that killed the Bellingham 17-year-old. 

Speaking to the court today, the victim’s mother talked about her son as a bright light for many people.  Her son’s death left “a big hole of grief we carry that nothing can fill.” The mother noted that Nunez “knew how deadly the pills were,” and continued “dealing lethal poison in our community.”

Lopez-Rodriguez was sentenced to 84 months in prison in August 2021.

The case was investigated by the Drug Enforcement Administration (DEA), the Whatcom County Sheriff’s Office, the Skagit County Interlocal Drug Enforcement Unit (SCIDEU), and the Whatcom County Drug and Gang Task Force, which is made up of members of the Whatcom County Sheriff’s Office, Washington State Department of Corrections, U.S. Customs and Border Protection, and Homeland Security Investigations. 

The case was prosecuted by Assistant United States Attorney Jonas Lerman.

Seattle – A 34-year-old former resident of Buckley, Washington, was convicted late Friday, October 8, 2021, of attempted enticement of a minor, announced U.S. Attorney Nicholas W. Brown.  Taylor J. Matson was arrested in February 2019, following an undercover investigation by the Seattle Police Department Internet Crimes Against Children (ICAC) task force.  The jury deliberated about three hours following a three-day trial.  U.S. District Judge James L. Robart scheduled sentencing for January 25, 2022.

According to records filed in the case and testimony at trial, Matson responded to an advertisement posted on the internet ostensibly from the mother of three young children.  The ad used terms to imply the children would be made available for sex with adults.  The advertisement was actually posted by an undercover detective.  Matson made clear, via his communication both online and via text message, that he wanted to sexually assault the fictitious 12-year-old girl.  Matson met with the undercover detective at a bar to further the plan.  He fulfilled various requirements posed by the detective, such as obtaining sexually transmitted disease (STD) testing, and bringing condoms to the scheduled meet.  On February 6, 2019, Matson went to a hotel in south Seattle where he believed he would have sex with the child.  He was arrested when he entered the hotel room.

Enticement of a minor is punishable by a mandatory minimum 10 years in prison and up to life in prison.   Judge Robart will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the Seattle Police Department and the FBI.

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 United States 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.justice.gov/psc.

The case was prosecuted by Assistant United States Attorney Cecelia Gregson and Special Assistant United States Attorney Laura Harmon.  Ms. Harmon is a King County Deputy Prosecutor specially designated to prosecute child exploitation cases in federal court.

Seattle – The U.S. Department of Justice and the University of Washington have settled allegations that a professor in the College of Engineering falsified documentation provided to the National Science Foundation associated with a grant that UW received from the Foundation.  The University will pay the government $801,756, to resolve allegations under the False Claims Act, which includes restitution and a penalty.

According to settlement documents, between August of 2018 and September 2019, the principal investigator on the grant submitted false documents regarding the grant to the National Science Foundation.  The grant was part of the highly competitive “Designing Materials to Revolutionize and Engineer our Future” program. 

“Academic integrity demands accurate reports to grant funders,” said U.S. Attorney Nicholas Brown.  “This is an expensive, but critical, lesson that researchers must accurately report who worked on a project, as well as the results from their research.”

“The National Science Foundation Office of Inspector General is committed to ensuring the integrity of our grant recipients by holding accountable those who choose to engage in false claims and misrepresentation schemes. We appreciate the efforts of the Department of Justice in pursuing this matter and will continue to vigorously pursue oversight of taxpayer funds devoted to scientific research,” said Inspector General Allison Lerner.

The investigation began with a whistleblower complaint regarding work performed under the grant and the grant application.

Assistant United States Attorneys Ashley Burns and Kayla Stahman handled the case for the U.S. Attorney’s Office. 

WASHINGTON – Deputy Attorney General Lisa O. Monaco today announced that the Department of Justice has doubled the $1 million reward for information leading to the arrest and conviction of those responsible for the October 2001 murder of Seattle Assistant U.S. Attorney Thomas Wales.

With the inclusion of reward funds raised by the National Association of Former U.S. Attorneys, the total reward now stands at approximately $2.5 million. Wales worked as a federal prosecutor in the Western District of Washington for 18 years before he was shot and killed in his home the evening of Oct. 11, 2001.

“The Department of Justice will never forget Tom’s contributions to the department and the cause of justice, nor will we forget the tragedy of his death,” said Deputy Attorney General Monaco. “Although two decades have passed, the Department of Justice remains committed to this investigation. Somebody knows something about this murder, and we want to do everything we can to encourage them to come forward now.”

In addition to doubling the reward, the department announced steps to redouble its efforts to pursue justice in the investigation. The U.S. Attorney’s Office for the Western District of Washington will be joining the Seattle Prosecutor Murder (SEPROM) Task Force. The department will augment the prosecution effort with additional Seattle-based resources, including personnel with expertise in homicide investigations.

 “The addition of these resources, including attorneys and investigators from the U.S. Attorney’s Office for the Western District of Washington and FBI, will put the department in the strongest possible position to solve Tom’s murder,” said Deputy Attorney General Monaco.

The SEPROM Task Force is now a joint effort by the FBI, the Seattle Police Department, the Department of Justice, the U.S. Attorney’s Office for the Western District of Washington and the King County Prosecuting Attorney’s Office. The task force is also leveraging emerging and evolving technologies in the effort.

Anyone with information is encouraged to contact the FBI and can do so confidentially by phone at (206) 622-0460 or by e-mail at walestips@fbi.gov. Tips can also be sent to the FBI at 1110 Third Avenue, Seattle, WA, 98101. The complete library of information, including multi-media materials for download and use, the FBI Seeking Information poster, details about the tip lines and more can be found at https://www.fbi.gov/wanted/seeking-info/thomas-crane-wales.

###

U.S. Attorney Nicholas Brown participates in tree planting in memory of AUSA Tom Wales

 

Deputy Attorney General Lisa O. Monaco today announced that the Department of Justice has doubled the $1 million reward for information leading to the arrest and conviction of those responsible for the October 2001 murder of Seattle Assistant U.S. Attorney Thomas Wales.

With the inclusion of reward funds raised by the National Association of Former U.S. Attorneys, the total reward now stands at approximately $2.5 million. Wales worked as a federal prosecutor in the Western District of Washington for 18 years before he was shot and killed in his home the evening of Oct. 11, 2001.

“The Department of Justice will never forget Tom’s contributions to the department and the cause of justice, nor will we forget the tragedy of his death,” said Deputy Attorney General Monaco. “Although two decades have passed, the Department of Justice remains committed to this investigation. Somebody knows something about this murder, and we want to do everything we can to encourage them to come forward now.”

In addition to doubling the reward, the department announced steps to redouble its efforts to pursue justice in the investigation. The U.S. Attorney’s Office for the Western District of Washington will be joining the Seattle Prosecutor Murder (SEPROM) Task Force. The department will augment the prosecution effort with additional Seattle-based resources, including personnel with expertise in homicide investigations.

 “The addition of these resources, including attorneys and investigators from the U.S. Attorney’s Office for the Western District of Washington and FBI, will put the department in the strongest possible position to solve Tom’s murder,” said Deputy Attorney General Monaco.

The SEPROM Task Force is now a joint effort by the FBI, the Seattle Police Department, the Department of Justice, the U.S. Attorney’s Office for the Western District of Washington and the King County Prosecuting Attorney’s Office. The task force is also leveraging emerging and evolving technologies in the effort.

Anyone with information is encouraged to contact the FBI and can do so confidentially by phone at (206) 622-0460 or by e-mail at walestips@fbi.gov. Tips can also be sent to the FBI at 1110 Third Avenue, Seattle, WA, 98101. The complete library of information, including multi-media materials for download and use, the FBI Seeking Information poster, details about the tip lines and more can be found at https://www.fbi.gov/wanted/seeking-info/thomas-crane-wales.

Seattle – Nicholas W. Brown was sworn in today as U.S. Attorney for the Western District of Washington. Mr. Brown previously served as an Assistant United States Attorney in the office from 2007 to 2013. From 2013 to 2017, Mr. Brown served as General Counsel to Governor Jay Inslee, and was a partner with Pacifica Law Group in Seattle when he was nominated by President Joe Biden to be U.S. Attorney 0n July 26, 2021. Mr. Brown’s nomination was approved by the full U.S. Senate on September 30, 2021. Today, Chief U.S. District Judge Ricardo S. Martinez administered the oath of office.

“I am humbled to return to the U.S. Attorney’s Office and my outstanding colleagues, who devote their careers to seeking justice and public service,” said U.S. Attorney Brown. “The work of the office is vitally important and incredibly challenging, and the issues facing our justice system today require our full dedication. As the chief law enforcement officer in Western Washington, I am excited about working with our communities and federal partners to improve public safety and to ensure civil rights for all our residents.”

U.S. Attorney Brown leads an office comprised of both criminal prosecutors and civil litigators. The civil division is tasked with defending the government in a variety of litigation and bringing affirmative cases to protect civil rights and in cases of waste, fraud and abuse. U.S. Attorney Brown will also oversee an appellate unit that handles litigation before the 9th Circuit Court of Appeals.

In his previous five years with the U.S. Attorney’s Office, Mr. Brown handled more than 100 cases ranging from complex firearm and drug trafficking matters, to child sexual abuse in Indian Country, and financial fraud. As General Counsel to Governor Inslee, Mr. Brown was involved in a wide range of critical issues including high-priority litigation, criminal justice policy, tribal gaming and Indian law, and clemency petitions. For Pacifica Law Group, Mr. Brown focused his practice on assisting public and private clients with complex civil and regulatory litigation, public policy, municipal law, and political matters.

An Army veteran, Mr. Brown served in the Judge Advocate General Corps from 2003 to 2007 at Joint Base Lewis McChord (JBLM), Fort Bliss, Texas, and Bagdad, Iraq. He was awarded the Bronze Star Medal in 2005.

Mr. Brown has volunteered his time for a number of public service and non-profit organizations, including Seattle Ethics and Elections, the Campaign for Equal Justice, the Washington State Bar Association Leadership Institute, Seattle Works, and Treehouse. Mr. Brown is also active in the Federal Bar Association.

A Western Washington native, Nicholas Brown received his BA Magna Cum Laude from Morehouse College in 1999, and his JD from Harvard Law School in 2002. He graduated from Steilacoom High School in 1995.

Mr. Brown takes over as U.S. Attorney from Acting U.S. Attorney Tessa M. Gorman.  She previously served as First Assistant United States Attorney under U.S. Attorney Brian Moran, who left the office in February 2021, with the change in administration. Ms. Gorman remains with the office.

   

Seattle –A former Seattle resident, who prior to his arrest resided in Tacoma, was sentenced today U.S. District Court in Seattle to two years in prison for setting fire to the outside of the Seattle Police East Precinct during the occupied protest known as ‘CHOP’, announced Acting U.S. Attorney Tessa M. Gorman.  Isaiah Thomas Willoughby, 36, used a can of gasoline to set the fire just feet from where protestors were camped, putting them at risk.  U.S. District Judge John C. Coughenour imposed three years of supervised release to follow the prison term.

According to the plea agreement, in the early morning hours of June 12, 2020, Willoughby was wearing distinctive clothing when he was captured on surveillance video near debris piled next to the wall of the Seattle Police East Precinct.  Willoughby admits he used a small gas can to pour gasoline on the debris.  Willoughby steps away from the debris pile for a moment, then reappears with something that he lights on fire and tosses on the debris pile.  The pile begins to burn, and Willoughby is seen walking away.  The fire scorched the side of the building, but was extinguished by those nearby using fire extinguishers, and pulling the flaming debris away from the building. 

After the Seattle Police Department released pictures of the arson suspect, various people recognized Willoughby and noted that the distinctive sweatshirt came from a clothing line he represents.  Relatives of Willoughby reported to police that he was in Seattle in the Capitol Hill Organized Protest Zone (CHOP) at the time of the fire.  Following the fire, Willoughby took steps to remove posts from his social media accounts that may have linked him to the arson.  However, at least some of his Facebook posts remain, noting his anger at police and his knowledge of the East Precinct building. 

Willoughby has been in custody at the Federal Detention Center at SeaTac since his arrest on July 14, 2020.

In asking for a three-year sentence, prosecutors noted that Willoughby planned the crime, posting about his anger and intent on Facebook.  The fire itself put peaceful protestors in danger and they were the ones who quickly acted to put the fire out.  The fire “was counterproductive to what the protestors were trying to accomplish,” Assistant United States Attorney Todd Greenberg told the court.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the FBI and the Seattle Police Department.

The case was prosecuted by Assistant United States Attorney Todd Greenberg.

Tacoma – A 36-year-old Port Angeles, Washington, man pleaded guilty and was sentenced this morning to probation and home confinement in connection with a September 26, 2016, laser pointer strike on a U.S. Coast Guard helicopter, announced Acting U.S. Attorney Tessa M. Gorman.  Randall Muck pleaded guilty to misdemeanor assault on a federal officer.  U.S. District Judge Benjamin H. Settle told Muck, “What you did was extremely reckless, even if you didn’t intend to strike the helicopter.”   Judge Settle ordered Muck to be on 90 days home confinement with electronic monitoring as part of his one-year period of probation.

Muck was indicted in May 2019, charged with aiming a laser pointer at an aircraft and making false statements to government agents.  In pleading guilty to assault on a federal agent, Muck admitted that on the evening of September 26, 2016, he pointed a high-powered laser beam at a Coast Guard helicopter.  According to reports of the incident, the MH-65 Dolphin helicopter was descending when it was hit by a laser that originated near Fourth and Hill Streets in Port Angeles.  Laser light can cause temporary loss of vision and force an air crew to abort its mission.  In this incident, no one suffered permanent damage, but the crew had to return to base and be assessed medically before returning to duty.  In the sentencing memo, prosecutors noted that because the helicopter crew was grounded for a time, the region was without a local emergency response helicopter crew.

Sentencing documents reveal Muck was identified as a suspect, when coworkers reported he had been bragging about the incident at work.  Later when Muck learned of the criminal investigation, he made statements that co-workers should not report his involvement to law enforcement, or he would retaliate.  Muck is no longer employed by that company.

The case was investigated by U.S. Coast Guard Investigative Service and the FBI.  The case was prosecuted by Assistant United States Attorneys Grady Leupold and Erika Evans. 

Seattle – A 47-year-old Everett, Washington, man was sentenced today in U.S. District Court in Seattle to 2 years in prison for his embezzlement scheme that stole more than $1 million from a commercial flooring business he co-founded with a friend, announced Acting U.S. Attorney Tessa M. Gorman.  David M. Gluth, founded Gluth Commercial Flooring with a friend who put up $500,000 to start the company. Between 2011 and 2016, Gluth and a co-conspirator raided the company accounts to pay for everything from a home mortgage, to luxury vacations, to Nordstrom bills, and liquor purchases.  At the sentencing hearing U.S. District Judge Richard A. Jones told Gluth “You treated the victim like your personal ATM…. Your return on (your friend’s) investment was to orchestrate a significant and devastating fraud” upon the victim.

According to records filed in the case, Gluth conspired with company bookkeeper, Jodi Hamrick, to not only raid company funds, but to defraud financial institutions by taking out loans and obtaining credit lines without the knowledge or permission of the company’s co-owner.  The two used the company funds for a variety of personal expenses. The lies and deceit in this scheme involved forged signatures, forged documents, altered records, secret bank accounts, secret credit cards, false bookkeeping entries, and false statements in declarations and court filings.  The evidence in the case includes years of Skype instant messages between Gluth and Hamrick, showing the planning and execution of the fraud in minute detail.

Ultimately, the company co-owner had to go to court to try to get the truth about the embezzlement from the company.  And even as that litigation was underway, Gluth continued to hurt his one-time business partner by scheming to start a new flooring business and taking pending jobs and income with him.  Even after a King County Superior Court Judge barred the two from having anything to do with the company, they violated the order by attempting to modify a personal loan by placing it in the company name.

The flooring company went bankrupt in 2016, and the victimized business partner was left with nothing but debt.

Judge Jones noted that the damage to the victim was more than financial saying the victim “lost his ability to trust other people . . . that can never be restored . . . a breach of trust like that can’t be recovered.  That’s a permanent loss”

Gluth was charged in November 2020, and pleaded guilty in January 2021.  Gluth has agreed to a restitution figure of $325,000. 

The case was investigated by the FBI.  The case was prosecuted by Assistant United States Attorney Michael Dion and Special Assistant United States Attorney Jessica Ly.

Tacoma – A 27-year-old Washougal, Washington, man pleaded guilty today in U.S. District Court in Tacoma to two federal felonies for making videos of his rape of two infant children, announced Acting U.S. Attorney Tessa M. Gorman.  Steven Rian Price faces a mandatory minimum 15 years in prison when sentenced by U.S. District Judge Benjamin H. Settle on January 3, 2022.  Under the terms of the plea agreement, both the prosecution and defense will recommend a 20-year prison term and lifetime supervised release to follow prison.

According to the plea agreement, Price was residing with his spouse and an infant child in a motel in Washougal.  In summer 2019, Price used his smartphone to videotape the rape of the infant child. Later that year, Price used the online communication platforms Discord and Skype to share videos depicting his rape of the infant.  Also in the summer of 2019, Price filmed himself sexually assaulting a second infant – the child of an acquaintance who had also resided at the motel.  In October 2019, the day after one of the videos was uploaded, Discord alerted law enforcement and Vancouver Police moved quickly to arrest Price.  Prior to this criminal conduct, Child Protective Services (CPS) had terminated the parental rights of Price and his spouse and had four children removed from their care.  CPS was unaware of the birth of the victim in this case.

Production of child pornography is punishable by a mandatory minimum 15 years in prison and up to 30 years in prison.  Judge Settle will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the Vancouver Police Department Digital Evidence Cybercrimes Unit.

The case is being prosecuted by Assistant United States Attorney Angelica Williams.

Seattle – The leader of a Neo-Nazi hate group ‘Atomwaffen’ was convicted today in U.S. District Court in Seattle of five federal felonies for his conspiracy to send threatening posters to journalists and employees of the Anti-Defamation League.  Kaleb Cole, 25, of Montgomery, Texas, was convicted of conspiracy, three counts of mailing threatening communications, and one count of interfering with a federally protected activity. The jury deliberated about 90 minutes following the two-day trial.  U.S. District Judge John C. Coughenour scheduled sentencing for January 11, 2022.

According to records in the case and testimony at trial, Cole, and other members of Atomwaffen participated in a plot to intimidate journalists and others by mailing threatening posters or gluing the posters to victims’ homes.  The group focused primarily on those who are Jewish or journalists of color.  Kaleb Cole created the posters, which told the recipients that “you have been visited by your local Nazis.”  The posters contained threatening images, such as a hooded figure preparing to throw a Molotov cocktail at a house.  Another poster contained the words “Death to Pigs,” which is the same message that followers of Charles Manson scrawled in victims’ blood during a home invasion murder. 

In January 2020, the coconspirators printed and delivered or mailed the posters to journalists or others the group was targeting.  In the Seattle area, the posters were mailed to a TV journalist who had reported on Atomwaffen, and to two individuals associated with the Anti-Defamation League (ADL).  In Tampa, the group targeted a journalist, but delivered the poster to the wrong address.  In Phoenix, the poster was glued to a bedroom window at the residence of the editor of a Jewish lifestyle magazine.

At trial, the victims described how receiving the posters impacted them.  Some moved from their homes for a time, and installed security systems.  One purchased a firearm and took a firearms safety class. Another started opening her mailbox with a stick due to fear of what might be inside. One left her job as a journalist.

In his closing argument, Assistant United States Attorney Thomas Woods told the jury that Cole “was not simply sending a message of hate, he was sending a statement of terror.”  Assistant United States Attorney Seth Wilkinson added, “All of the images (in the posters) were selected by Kaleb Cole to send one message ‘We can get you in your home.’  Cole wanted to terrorize them with threats of physical harm.”

Conspiracy is punishable by up to 5 years in prison.  Mailing a threatening communication is punishable by up to 5 years in prison.  Interference with a federally protected activity is punishable by up to 10 years in prison.

Three other coconspirators have pleaded guilty and been sentenced.  In August 2021, Cameron Shea, 25, of the Seattle area was sentenced to 3 years in prison.

The case was investigated by the FBI’s Joint Terrorism Task Forces in Tampa, Seattle, Houston, and Phoenix with assistance from the Seattle Police Department.

The case is being prosecuted by Assistant U.S. Attorneys Thomas Woods and Seth Wilkinson for the Western District of Washington, and Civil Rights Division Trial Attorney Michael J. Songer, with assistance from U.S. Attorneys’ Offices in the Middle District of Florida, Southern District of Texas, District of Arizona, and Central District of California.

Seattle – A 26-year-old Tacoma, Washington, woman pleaded guilty today to arson for burning five Seattle P0lice vehicles parked in the area of Sixth and Pine in downtown Seattle on Saturday, May 30, 2020, announced Acting U.S. Attorney Tessa M. Gorman.  Margaret Aislinn Channon was arrested June 11, 2020, following an investigation by the FBI, ATF, and Seattle Police Department.  She is scheduled for sentencing by U.S. District Judge John C. Coughenour on January 18, 2022.

According to the plea agreement, Channon appears in videos from the protest in downtown Seattle wearing distinctive clothing and showing tattoos on her hands and arms. Channon is captured on video using fire and aerosol cans to light five Seattle Police Department vehicles on fire.  She is also shown entering various stores and removing items of clothing.  She admits smashing the window at the Verizon Store, and entering a sandwich shop and destroying the electronic cash register.  Investigators identified Channon based on her clothing, tattoos, and information from her various social media accounts.

Law enforcement executed a search warrant at Channon’s Tacoma residence and seized clothing and accessories that appear in some of the videos from the arsons.

Under the terms of the plea agreement, Channon is responsible for restitution.  The amount will be determined at sentencing. 

Arson is punishable by a mandatory minimum 5 years in prison and up to 20 years in prison.  Both sides have agreed to recommend 5 years in prison.  The ultimate sentence is up to Judge Coughenour, who will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case is being investigated by the FBI, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), and the Seattle Police Department.

The case is being prosecuted by Assistant United States Attorney Todd Greenberg.

Tacoma – A Ridgefield, Washington, man was sentenced today in U.S. District Court in Tacoma to 20 years in prison and lifetime supervised release, for multiple federal felonies for his scheme to entice and pressure young teens into sending him sexually explicit photos and videos, announced Acting U.S. Attorney Tessa M. Gorman.  Joshua Henry Punt, 39, pleaded guilty in April 2021, to using the messaging apps ‘Kik’ and ‘Snapchat’ to connect with teens while posing as a teenager.  Punt then enticed and pressured young teens to send him sexually explicit photos and videos.  Victims have been identified across the U.S., including in New York, Arkansas, California, Texas, Nevada, Kentucky, Pennsylvania, and West Virginia.

At today’s sentencing hearing, U.S. District Judge Benjamin H. Settle said, “There are no words to express how serious this crime is.  The weight of the damage will go on for scores of decades – rippling through lives….” To Punt, Judge Settle said, “You could see the pain in those girls, and you continued to do it – to eight precious, innocent young girls – you tortured them.”

“This predatory defendant infiltrated our homes, using electronic access and social media to deceive, pressure and sexually exploit young girls across the country,” said Acting U.S. Attorney Gorman.  “We warn our children about the ‘dangerous stranger’ they might encounter on the street – we must be equally vigilant about the ones who are lurking online.”

According to records filed in the case, Punt presented himself in his social media accounts as an attractive teenager by using profile pictures of youthful YouTube personalities.  After innocuous preliminary communications with his intended victims, Punt demanded sexually provocative and/or sexually explicit photos and videos.  Unbeknownst to his victims, Punt recorded their videos and images on a second phone.  So, for example, when a victim believed she was sending a “snap,” which would automatically delete or notify the sender if an attempt was made to copy it, Punt surreptitiously recorded the images and videos for future use.  When victims inevitably became uncomfortable with his behavior and attempted to exit the “relationship,” Punt threatened to send the videos/images to members of their local communities–including schools, coaches, and others‑‑if they did not comply with his demands, which included production of additional sexually explicit videos and images.  The victims range in age from 12 to 16 years of age.

At the sentencing hearing one mother said of her daughter, “She met a monster disguised as a boy, and her life will be changed forever…. She now knows what evil looks like.”

“Collaborative law enforcement work ensures child predators will not be allowed to weaponize online communication tools to fulfill their perverse desires,” said Special Agent in Charge Robert Hammer, who oversees HSI operations in the Pacific Northwest. “As HSI seeks to protect communities from child exploitation crimes, parents and their children should be especially cautious with who they are interacting with online.”

“Mr. Punt is a prime example of what is referred to as a ‘Sextortionist,’” said Special Agent in Charge Donald Voiret, FBI Seattle. “While he will be serving time in a federal penitentiary for his actions, I would encourage parents everywhere to engage with their children about the risks of online predators.”

Punt was arrested on May 21, 2019.  He was originally charged in Clark County Superior Court.  He was charged federally on November 7, 2019.

In a separate investigation, the FBI identified Punt as the administrator of a child pornography distribution group on Kik.  As an administrator, Punt actively patrolled the group – demanding that new members share content and banning those that failed to share child pornography.  An FBI online covert employee followed links posted by Punt leading to a cache of child pornography. 

On April 27, 2021, Punt pleaded guilty to production of child pornography, enticement of a minor, distribution of child pornography, and advertisement of child pornography. Punt will be required to register as a sex offender following prison. 

The case was investigated by the Vancouver Police Department’s Digital Evidence Cybercrime Unit, in conjunction with Homeland Security Investigations.  The FBI investigated Punt’s activity administering a site for the trading of images of child abuse and molestation.  Law enforcement agencies in other jurisdictions also assisted this investigation.

Assistant U.S. Attorneys Angelica Williams and Cecelia Gregson prosecuted the case.

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 United States 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.justice.gov/psc.

Seattle —An Edmonds, Washington, business owner pleaded guilty today to wire fraud related to the April 30, 2018, fire at her business, CJN Miniatures & More, a dollhouse, miniatures, collectibles, and antiques shop, announced Acting U.S. Attorney Tessa M. Gorman.  Connie L. Bigelow, 53, is scheduled for sentencing by U.S. District Judge Robert S. Lasnik on December 17, 2021 at 10am.

In the plea agreement, Bigelow admits she set fire to her business to collect insurance money as the store was struggling to make enough money to pay the rent.  Bigelow moved her business, CJN Miniatures LLC, into the building at 23030 Highway 99, in Edmonds in September 2017.  The store maintained an inventory of miniatures and collectables for sale, consigned items on behalf of other individuals, and rented out space to other vendors.  Between October 2017 and April 2018, the business fell behind in rental payments and payments to consigners. 

Bigelow carried an insurance policy with State Farm Fire and Casualty Company that covered up to $100,000 in loss of business personal property, as well as loss of income.  The policy did not cover loss arising from arson.

Bigelow set the fire underneath three Thomas Kinkade paintings worth thousands of dollars.  In May 2018, Bigelow initiated a claim to State Farm for the losses arising from the fire.  On May 3, 2018, Bigelow communicated with the insurance agent via email as part of the wire fraud scheme.  Bigelow made false statements to law enforcement, as well as representatives of State Farm as part of the scheme to defraud.

As part of the plea agreement, Bigelow agrees to make full restitution.  Currently the restitution is over $195,000 but may grow as further losses are calculated in advance of sentencing.

Wire fraud is punishable by up to 20 years in prison and a $250,000 fine. Judge Lasnik will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case is being investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), along with the Snohomish County Fire Marshals’ Office.  The case is being prosecuted by Assistant United States Attorney Amy Jaquette.

Tacoma – A former employee of Washington State’s Employment Security Department has been charged in a 20-count indictment for his scheme to exploit his employment for personal enrichment and to fraudulently distribute at least $360,000 in pandemic-related unemployment benefits, announced Acting U.S. Attorney Tessa M. Gorman.  Reyes De La Cruz, III, 47, of Moses Lake, Washington, is alleged to have personally enriched himself by at least $130,000 with his scheme.   De La Cruz was arrested this morning in Moses Lake, and will make his initial appearance on the indictment Monday in Spokane and on a later date will appear in U.S. District Court in Tacoma where the case is filed.

“Dedicated investigators continue to build criminal cases against those who sought to unlawfully enrich themselves during our country’s pandemic crisis,” said Acting U.S. Attorney Tessa M. Gorman.  “In this case, an insider used his official access and knowledge to illegally enrich himself. Even as ESD faced the challenges of processing the high volume of legitimate claims, he chose to take advantage of his position to worsen the unprecedented fraud on unemployment benefits.”

According to the indictment, De La Cruz was hired as an intake agent in April 2020 to help the Employment Security Department (ESD) deal with the crush of filings for pandemic unemployment benefits.  De La Cruz had previously worked for ESD, from 1996 to 2003.

The indictment alleges De La Cruz used his access to the ESD claims database to defraud the benefits system in three different ways.  First, he filed claims using other people’s personal information and then had the benefits paid to debit cards that were mailed to Moses Lake, Washington addresses where De La Cruz could retrieve them.  Even after his employment with ESD terminated on October 1, 2020, De La Cruz attempted to restart claims payments to these debit cards to take advantage of additional federal pandemic benefits.  De La Cruz went so far as to impersonate a claimant in recorded phone calls with ESD and a bank.  He impersonated another claimant in handwritten correspondence that he then faxed to ESD.  In this way he defrauded ESD of more than $110,000. 

Second, De La Cruz also accepted bribes in exchange for engineering benefit payments for his friends, family, or acquaintances by making false entries in the claims database.   In many cases, the person did not qualify for benefits, but De La Cruz manipulated the claims database so that the claimants received lumpsum retroactive payments that sometimes amounted to tens of thousands of dollars.  The claimants would then pay De La Cruz a portion of the lumpsum.

Third, in some instances, when claimants refused or resisted paying De La Cruz, he threatened to terminate the claim if they did not pay him. 

In total, De La Cruz enriched himself at least $21,000 through kickback payments. 

The Employment Security Department uncovered evidence of fraud, terminated De La Cruz, and referred the case to the Department of Labor Office of Inspector General (DOL-OIG).  The FBI joined the investigation.  The Moses Lake Police Department and Washington State Department of Corrections assisted with today’s arrest.

De La Cruz is charged with six counts of wire fraud. He is charged with nine counts of bribery of an agent of an organization receiving federal funds. De La Cruz is charged with one count of extortion under color of official right, and four counts of aggravated identity theft.

Wire fraud that relates to a presidentially declared major disaster or emergency is punishable by up to 30 years in prison.  Bribery of an agent receiving federal funds is punishable by 10 years in prison. Extortion under the color of official right is punishable by 20 years in prison.  Aggravated identity theft is punishable by a two-year sentence consecutive to any other sentence imposed in the case.

The pandemic related fraud on ESD is being investigated cooperatively by the FBI, DOL-OIG, Social Security Office of Inspector General, U.S. Secret Service, the United States Postal Inspection Service, and the Internal Revenue Service Criminal Investigations.  The Washington Employment Security Department is cooperating in the investigations.

This case is being prosecuted by Assistant United States Attorneys Cindy Chang and Seth Wilkinson.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud.  The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts.  For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

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

de_la_cruz_indictment.pdf

 

Seattle – A 58-year-old resident of Pacific, Washington, was convicted late yesterday in U.S. District Court in Seattle, of 14 counts of aiding and abetting the filing of false tax returns, announced Acting U.S. Attorney Tessa M. Gorman.  Jean Mpouli worked for 25 years as an aviation inspector for the Federal Aviation Administration (FAA), while on the side he ran a tax preparation business with hundreds of clients, offering his services primarily to African immigrants.  At the 3-day trial prosecutors showed how Mpouli falsely increased deductions for unreimbursed business expenses and educational expenses to boost his clients’ tax refunds.  Mpouli took a percentage of the refund as his fee, so the higher the refund, the larger the fee.  On his personal tax returns, Mpouli hid over $200,000 of revenue generated from his illegal side business.  The jury deliberated less than two hours before returning the guilty verdicts.

Mpouli faces up to 3 years in prison per count of conviction when sentenced by U.S. District Judge John C. Coughenour on January 11, 2022.

“Even as he was employed by the federal government, this defendant sought to cheat the government out of tax revenue,” said Acting U.S. Attorney Gorman. “He drew his clientele from his community, which consisted of hard-working immigrants from Africa and their children.   He filed the false returns largely without the knowledge of the immigrants who sought his help – leaving them to deal with the IRS when the false entries were uncovered.”

According to records filed in the case and testimony at trial, in late 2016 an analyst with the IRS noted that an unusually large number of returns prepared by Mpouli claimed deductions for unreimbursed business expenses.  In 2017, the IRS Criminal Investigation Division sent an undercover officer into the business to get an up-close look at how Mpouli prepared tax returns.  Using the W-2 information the undercover officer supplied, Mpouli rightly determined the agent owed approximately $800 in taxes.  However, Mpouli then offered to enter in approximately $34,000 in fraudulent expenses in order to boost the undercover officer’s refund to more than $5,600.  Mpouli explained that the undercover officer should consider the refund as a “loan” in the event the officer was audited by the IRS.  Mpouli then accepted $250 in cash as his fee for preparing the fraudulent return.

When agents executed court authorized search warrants on the business in September 2017, they found more than 1,200 personal tax returns on Mpouli’s computers.  Hundreds of the tax returns show suspiciously high amounts of unreimbursed business expenses and education expenses.  In one example, Mpouli claimed a client had driven more than 33,000 miles for business in one year.  However, the client did not own a vehicle, did not have a driver’s license, and had never driven a vehicle in the U.S.

When investigators contacted a random sampling of the clients who had used Mpouli’s services, they said they were not aware of the extent of the deductions he had claimed on their behalf.  Many did not own vehicles even though Mpouli listed unreimbursed car expenses.  Others never attended the educational institution listed on the returns.  In some instances, he claimed children were attending the secondary education institution, even though the children were actually enrolled in daycare or elementary school.  The clients said Mpouli did not discuss the returns with them before filing, and when they were notified that they were being audited, he refused to assist them.

“Mpouli brazenly ripped off taxpayers while simultaneously collecting a paycheck from the tax-paying public. As a tax return preparer, he had an obligation to his clients to prepare accurate tax returns that comply with the law. Instead, he took advantage of their trust and pocketed a percentage of each fraudulent refund,” said IRS Criminal Investigation’s Special Agent in Charge Bret Kressin. “Return preparer fraud is a top priority for IRS Criminal Investigation and special agents will continue to investigate tax preparers who defraud the government, their clients, and the tax-paying public.”

According to financial records, during the time period of the fraud, Mpouli was sending more than $300,000 to his native Cameroon to pay for the construction of an apartment building.

The case was investigated by Internal Revenue Service: Criminal Investigation.  The case is being prosecuted by Assistant United States Attorneys Lyndsie Schmalz and Frances Franze-Nakamura.

Seattle – A 29-year-old Seattle-area resident pleaded guilty today to four federal felonies that carry a mandatory minimum 10-year prison term, announced Acting U.S. Attorney Tessa M. Gorman. Steve Godina Ochoa was arrested in February 2020, after a 13-year-old runaway disclosed to counselors that Godina Ochoa repeatedly sexually assaulted her.  When sentenced by U.S. District Judge John C. Coughenour on January 11, 2022. Godina Ochoa faces a mandatory minimum term of ten years in prison and up to life in prison.

According to the plea agreement, in November 2019, the Bellevue Police Department Sexual Assault Unit began investigating Godina Ochoa after disclosures from a young victim.  When Godina Ochoa and his vehicles were located, law enforcement seized quantities of methamphetamine and heroin and three firearms.  Two of the firearms had been reported stolen – one from Federal Way and the other from Snohomish County.  Godina Ochoa had more than $4,500 cash in the car – the proceeds from his drug dealing.  Godina Ochoa was prohibited from possessing firearms due to prior convictions for arson and unlawful possession of a firearm.

When law enforcement seized and analyzed Godina Ochoa’s electronic devices they found images of the sexual assault on the young victim.  The images constitute child pornography.

Godina Ochoa faces up to 20 years in prison for possession of child pornography.  Possession of methamphetamine with intent to distribute is punishable by a mandatory minimum 5 years in prison and up to 40 years in prison.  Possession of a firearm in furtherance of a drug trafficking crime is punishable by a mandatory 5-year prison term consecutive to any other sentence imposed in the case.  Unlawful possession of a firearm is punishable by up to 10 years in prison.

Under the terms of the plea agreement, both prosecutors and defense attorneys will recommend the mandatory minimum 10-year prison term. Judge Coughenour will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the Bellevue Police Department and the FBI.

The case is being prosecuted by Assistant United States Attorney Cecelia Gregson.

Tacoma – A 48– year-old Mason County, Washington resident pleaded guilty today in U.S. District Court in Tacoma to three federal felonies related to a smuggling scheme and possession of child pornography, announced Acting U.S. Attorney Tessa M. Gorman.   Christopher M. Cox pleaded guilty to: smuggling goods into the U.S.; making false statements related to the Clean Air Act; and possession of child pornography.  Cox will be sentenced by U.S. District Judge Robert J. Bryan on December 10, 2021.

According to the plea agreement, between approximately 2015 and January 2019, Cox falsified the required paperwork on two dozen vehicles he imported from overseas.  Many of the vehicles were extremely light vehicles imported from Japan that did not meet U.S. safety standards.  Cox sold some of the vehicles to contract mail carriers he knew from his job.  Cox falsified the forms that claimed the vehicles met both safety standards and Environmental Protection Agency (EPA) Clean Air Act standards.  Cox used his identification as a contract mail carrier to circumvent inspections at the Port of Tacoma and took the vehicles from the Port without proper inspections.  The total value of the imported vehicles exceeds $55,000.  Those who bought the vehicles were not told that they failed to meet federal safety and pollution standards.

When law enforcement officers served search warrants on Cox’s electronic accounts, they observed images of child pornography.  Some of the images are known series of images of child rape and abuse manufactured outside the State of Washington.  When officers executed search warrants on Cox’s residence and obtained his electronic devices, they located 142 images and 2 videos of child molestation, rape and abuse.

Smuggling of goods into the U.S. and possession of child pornography are both punishable by up to 20 years in prison.  Making false statements related to the Clean Air Act is punishable by up to 2 years in prison.

Under the terms of the plea agreement, the government will recommend no more than 63 months in prison.  Judge Bryan will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by Homeland Security Investigations with critical assistance from U.S. Customs and Border Protection (CBP).

The case is being prosecuted by Assistant United States Attorney Cecelia Gregson.

Tacoma – A 36-year-old Kent, Washington, man was sentenced today in U.S. District Court in Tacoma to 87 months in prison for the August 2020 rape of a 14-year-old, announced Acting U.S. Attorney Tessa M. Gorman. Christopher James Kuna was at a gathering with family and close friends in Olympic National Park when he provided alcohol to the victim and committed the sexual assault.   At the sentencing hearing U.S. District Judge Benjamin H. Settle said, “It is hard to describe a more serious case than this.  The rape of a 14-year-old.  The facts are egregious.  The victim has a life sentence and that cannot be changed.”

According to records filed in the case, Kuna was a trusted family friend of the victim and the victim’s family.  During the evening hours of August 24 and early morning of the 25th, Kuna plied the victim with alcohol causing intoxication to such an extent that the victim vomited.  Kuna then sexually assaulted the victim.  Because he was more than 20-years older and much larger than the victim, the victim was fearful of resisting Kuna.  Kuna told the victim he had been thinking about the assault for a long time.  

A trusted family friend assisted the family in making a report to local law enforcement. Upon realizing jurisdiction lay within a national park, local law enforcement referred the matter to the National Park Service investigative services branch who took over the investigation.

Kuna will be required to register as a sex offender following any prison term.  He will be on 15 years of supervised release following prison.

The case was investigated by the National Park Service and the FBI.

The case was prosecuted by Assistant United States Attorneys Angelica Williams, Jonas Lerman, and Hilary Stuart.

Seattle – A former U.S. Navy sailor was sentenced today in U.S. District Court in Seattle to 4 years in prison and 3 years of supervised release for distribution of fentanyl, announced Acting U.S. Attorney Tessa M. Gorman.  Ivan Armenta, 21, was separated from the Navy and taken into federal custody August 7, 2020.  Armenta provided pills tainted with fentanyl to another sailor who died of a drug overdose.  At the sentencing hearing, U.S. District Judge Robert S. Lasnik noted that Armenta had been warned the pills could be deadly, but still shared them with his friends.

“The overdose statistics are grim and staggering: in King County alone fentanyl overdose deaths are up 82 percent in the first half of 2021,” said Acting U.S. Attorney Gorman.  “These pills are manufactured to look like a legitimate pharmaceutical, but as in this case, result in death to the user.  Law enforcement is working hard to take such pills off the street.” 

The investigation began April 18, 2020, when a Navy sailor was found dead in his workspace aboard a Navy ship.  In his pocket were two counterfeit pills that were laced with fentanyl.  The Naval Criminal Investigative Services (NCIS) were able to identify Armenta as the sailor who provided the pills to the victim.

The investigation revealed that Armenta himself became ill after taking the pills.  Further Armenta had received a warning from a contact in Southern California that the pills were causing fatal overdoses.  Nevertheless, Armenta purchased more pills from his source and provided the pills to four Navy sailors.  Two became ill, one was revived by Narcan, and one sailor was found dead.

As prosecutors wrote in their sentencing memo: “Counterfeit prescription pills containing fentanyl, like those distributed by Mr. Armenta, pose a unique and substantial danger of overdose. The fact that these pills are manufactured to look like a Percocet increases the likelihood that they will be taken not only by those who intend to take fentanyl, but also by individuals like the victim who believe they are taking nothing more potent than an oxycodone.”

Prosecutors have also charged those who distributed the pills to Armenta.  Chase Friedrich, 29, supplied the pills to Armenta.  He was arrested April 21, 2020, at his Des Moines, Washington, apartment.  A search of Friedrich’s apartment revealed cocaine, a handgun, and a bag of approximately 100 counterfeit pills.

His drug supplier, Raoul V. Normandia, Jr., 29, was arrested April 24, 2020, near his Federal Way, Washington, residence.  In his vehicle was cocaine.  During a court‑authorized search of Normandia’s residence, law enforcement recovered cocaine, MDMA, firearms, ammunition, body armor, narcotics, and various signs of the drug trade, including scales, baggies, heat sealers, Moneygram receipts, and twenty cell phones.

Normandia pleaded guilty in April 2021 to conspiracy to distribute fentanyl, possession of MDMA and cocaine with intent to distribute, and possession of a firearm in furtherance of a drug trafficking crime.  He is scheduled for sentencing October 21, 2021,

Friedrich pleaded guilty May 17, 2021 to conspiracy, distribution of fentanyl, possession of cocaine and fentanyl with intent to distribute, and possession of a firearm in furtherance of a drug trafficking crime. He is scheduled for sentencing on October 22, 2021. 

The case was investigated by NCIS and the Kitsap County Sheriff’s Office as a part of the West Sound Narcotics Enforcement Team (WestNET) and is being prosecuted by Assistant United States Attorney Lyndsie Schmalz.

Seattle –A resident of Pakistan was sentenced today in the Western District of Washington to 12 years in prison for his leadership role in a seven-year scheme to unlawfully unlock phones to defraud AT&T Inc. (AT&T).  At the sentencing hearing U.S. District Judge Robert S. Lasnik noted that Fahd had committed a “terrible cybercrime over an extended period,” even after he was aware that law enforcement was investigating.

Beginning in 2012, Muhammad Fahd, 35, conspired with others to recruit AT&T employees at a call center located in Bothell, Washington, to unlock large numbers of cellular phones for profit. Fahd recruited and bribed AT&T employees to use their AT&T credentials to unlock phones for ineligible customers.  Later in the conspiracy, Fahd had the bribed employees install custom malware and hacking tools that allowed him to unlock phones remotely from Pakistan.  In September 2020, he pleaded guilty to conspiracy to commit wire fraud.

“This defendant is a modern-day cybercriminal who combined his technological expertise with old-school techniques such as bribery, intimidation, and exploitation to run a criminal organization causing $200 million in losses,” said Acting U.S. Attorney Tessa M. Gorman.  “And the damage was not just financial. Sadly, he persuaded and pressured young people into engaging in criminal conduct, spreading the damage of his greedy scheme to others.”

Cellular phones such as iPhones cost hundreds of dollars. To make the phones more affordable, during the relevant time, AT&T subsidized the purchase cost of phones or sold phones to customers under installment plans. Unlocking a phone effectively removes it from AT&T’s network, thereby allowing the account holder to avoid having to pay AT&T for service or to make any payments for purchase of the phone.

According to records filed in the case, in approximately June or July of 2012, using the alias “Frank Zhang,” Fahd contacted an AT & T employee through Facebook. Fahd offered the employee significant sums of money if the employee would help Fahd secretly unlock phones at AT&T. Fahd also asked the employee to recruit other AT&T employees to help with the unauthorized unlocks. Fahd needed additional AT&T employees to join the scheme, because Fahd wanted someone to be always available to expand his ability to do unauthorized unlocks.

Fahd also instructed the recruited employees to set up fake businesses, and bank accounts for those businesses, to receive payments, and to create fictitious invoices for every deposit made into the fake businesses’ bank accounts to create the appearance that the money was payment for genuine services.

In the spring of 2013, AT&T implemented a new unlocking system that made it more difficult for the bribed employees to unlock IMEIs for Fahd. In response, Fahd hired a software developer to design malware that could be installed without authorization on AT&T’s computer system to unlock phones more efficiently and in larger numbers. At Fahd’s request, the employees provided confidential information to Fahd about AT&T’s computer system and unlocking procedures to assist in this process. Fahd also had the employees install malware on AT&T’s computers that captured information about AT&T’s computer system and the network access credentials of other AT&T employees. Fahd provided the information to his malware developer, so the developer could tailor the malware to work on AT&T’s computers.

AT&T’s forensic analysis shows the total number of cellular telephones fraudulently unlocked by members of the scheme was 1,900,033 phones. AT&T has further determined that the loss it suffered because customers, whose cellular phones were illegally unlocked, failed to complete payments for their cellular telephones was $201,497,430.94.

Judge Lasnik ordered restitution of $200,620,698.  (The difference between this amount and the total loss reflects restitution ordered against bribed AT&T employees in related prosecutions.)

Fahd was indicted in 2017, and arrested in Hong Kong in 2018.  He was extradited and appeared in U.S. District Court in Seattle in August 2019.  He pleaded guilty to conspiracy to commit wire fraud in September 2020.

This case is the result of an investigation conducted by the Seattle field office of the United States Secret Service, IRS-CI, and the U.S. Department of Justice. The Justice Department’s Office of International Affairs provided significant assistance.

This case was prosecuted by Assistant U.S. Attorneys Andrew Friedman and Francis Franze-Nakamura of the Western District of Washington, and Senior Counsel Anthony Teelucksingh of the Criminal Division’s Computer Crime and Intellectual Property Section.

Tacoma – An Olalla, Washington man was sentenced today in U.S. District Court in Tacoma to 25 months in prison for wire fraud and aggravated identity theft for his decades-long theft of his missing brother’s identity and benefits, announced Acting U.S. Attorney Tessa M. Gorman.  Chris Harvey Sayler, 74, began fraudulently collecting his missing brother’s Social Security Disability benefits since at least 1998.  Over the last twenty years, those benefits total more than $388,000.  At the sentencing hearing, U.S. District Judge Robert J. Bryan said, “This is a sad case for all concerned – including the public…. It’s a crime against all the citizen taxpayers in the country.”  Judge Bryan noted that but for Sayler’s age, health and military service, he would have faced a much longer sentence.

“Over the course of this investigation, the defendant has made conflicting statements about when he last saw his brother – who was reported missing in 1989,” said Acting U.S. Attorney Gorman.  “Our hope was that the investigation could shed light on what happened to Jarvis Sayler.  While that has not happened, we are able to hold his brother accountable for stealing benefits from government programs that are designed to help the most needy in our community.”

According to records in the case, Chris Sayler’s brother, Jarvis L. Sayler, traveled from his home in Missouri to the Vancouver, Washington area in 1988.  He told relatives that he planned to visit Chris Sayler, then return to Missouri to build a home on property there.  Jarvis Sayler was born with partial eyesight, and had been receiving Social Security disability benefits since 1977.  Jarvis Sayler wrote a few letters to Missouri between June and September 1988, but that was the last anyone heard from him.  A third brother in Missouri reported Jarvis Sayler missing in March of 1989.  The Clark County Sheriff’s Office interviewed Chris Sayler at that time about his brother’s whereabouts.  Sayler claimed his brother moved from his home after the two had an argument. That was the last reported sighting of Jarvis Sayler.

In 2013, a person claiming to be Jarvis Sayler attempted to renew a Washington State ID card, but the renewal was denied because facial recognition software indicated the person in the ID photo was the same as in a drivers license photo of Chris Sayler. When Sayler went to a Department of Licensing Office to renew a license (in his own name) years later, he claimed that he and Jarvis were twins and that was the reason for the facial recognition report.  The clerk pointed out that the two men’s birthdates were four years apart, but Sayler said it is a “rare twin situation” that does occur.  The investigation has revealed that Sayler and Jarvis Sayler are not biologically related. 

In 2019, the Department of Licensing referred the matter to the Social Security Office of Inspector General (SSA-OIG) for investigation.  The investigation revealed that as early as 1998, Sayler’s photo appears on Jarvis Sayler’s identification card and that the addresses on Jarvis’ cards and other identifying documents are associated with Chris Sayler. 

Since at least 1998, Jarvis Sayler’s Social Security benefits went to a bank account opened with an address in Vancouver, Washington.  When Chris Sayler moved to Olalla, the address on the account was updated to the new address as well. ATM withdrawal records and debit card records from retailers such as Costco and Fred Meyer show Sayler withdrawing money or making purchases with the debit card associated with Jarvis Sayler’s account.

Speaking with family members in September 2019, Sayler claimed he had not seen his brother in more than 15 years.  When interviewed by law enforcement at the time of his arrest in October 2019, Sayler claimed he had last seen his brother in 2016 and before that in 2012.

In court today Sayler said, “I’m sorry that I caused all this problem.  I shouldn’t have done it.”

In asking for the 25-month prison sentence, Assistant United States Attorney Benjamin Diggs noted that the ultimate loss to Social Security was likely more than $500,000, but records only exist from as far back as 1998.  “The fraud loss of hundreds of thousands of dollars reflects the fact that this crime involves not an isolated incident of dishonesty or a brief lapse in judgment during a difficult period, but rather a separate decision to steal, month after month, for nearly 30 years, resulting in hundreds of separate acts of theft,” prosecutors wrote in their sentencing memo.

“Misusing Social Security benefits intended for another person is a Federal crime —one we will continue to aggressively pursue,” said Gail S. Ennis, Inspector General for the Social Security Administration. “I want to thank our law enforcement partners for joining us in this investigation and the U.S. Attorney’s Office for prosecuting this case.”

The Clark County Sheriff’s Office remains interested in hearing from anyone who has information on Jarvis Sayler and his disappearance. 

The case was investigated by the Social Security Office of Inspector General (SSA-OIG), Health and Human Services Office of Inspector General (HHS-OIG), and Homeland Security Investigations (HSI) as part of the Document and Benefit Fraud Task Force in Seattle. Investigative assistance was also provided by the FBI and Sheriff’s Offices for Clark County, Cowlitz County, and Kitsap County.

The case was prosecuted by Assistant United States Attorney Benjamin Diggs.

Muhammad Fahd, a citizen of Pakistan and Grenada, was sentenced today to 12 years in prison for his leadership role in a seven-year scheme to unlawfully unlock nearly 2 million phones to defraud AT&T Inc. (AT&T), inflicting more than $200 million in losses. At the sentencing hearing U.S. District Judge Robert S. Lasnik for the Western District of Washington noted that Fahd had committed a “terrible cybercrime over an extended period,” even after he was aware that law enforcement was investigating.

Beginning in 2012, Fahd, 35, conspired with others to recruit AT&T employees at a call center located in Bothell, Washington, to unlock large numbers of cellular phones for profit. Fahd recruited and bribed AT&T employees to use their AT&T credentials to unlock phones for ineligible customers. Later in the conspiracy, Fahd had the bribed employees install custom malware and hacking tools that allowed him to unlock phones remotely from Pakistan. In September 2020, he pleaded guilty to conspiracy to commit wire fraud.

Cellular phones such as iPhones cost hundreds of dollars. To make the phones more affordable, during the relevant time, AT&T subsidized the purchase cost of phones or sold phones to customers under installment plans. Unlocking a phone effectively removes it from AT&T’s network, thereby allowing the account holder to avoid having to pay AT&T for service or to make any payments for purchase of the phone.

According to records filed in the case, in approximately June or July of 2012, using the alias “Frank Zhang,” Fahd contacted an AT&T employee through Facebook. Fahd offered the employee significant sums of money if the employee would help Fahd secretly unlock phones at AT&T. Fahd also asked the employee to recruit other AT&T employees to help with the unauthorized unlocks.

Fahd instructed the recruited employees to set up fake businesses and bank accounts for those businesses, to receive payments and to create fictitious invoices for every deposit made into the fake businesses’ bank accounts to create the appearance that the money was payment for genuine services.

In the spring of 2013, AT&T implemented a new unlocking system that made it more difficult for the bribed employees to unlock IMEIs for Fahd. In response, Fahd hired a software developer to design malware that could be installed without authorization on AT&T’s computer system to unlock phones more efficiently and in larger numbers. At Fahd’s request, the employees provided confidential information to Fahd about AT&T’s computer system and unlocking procedures to assist in this process. Fahd also had the employees install malware on AT&T’s computers that captured information about AT&T’s computer system and the network access credentials of other AT&T employees. Fahd provided the information to his malware developer, so the developer could tailor the malware to work on AT&T’s computers.

AT&T’s forensic analysis shows the total number of cellular telephones fraudulently unlocked by members of the scheme was 1,900,033 phones. AT&T has further determined that the loss it suffered because customers, whose cellular phones were illegally unlocked, failed to complete payments for their cellular telephones was $201,497,430.94.

Judge Lasnik ordered restitution of $200,620,698. (The difference between this amount and the total loss reflects restitution ordered against bribed AT&T employees in related prosecutions.)

Fahd was indicted in 2017 and arrested in Hong Kong in 2018. He was extradited and appeared in U.S. District Court in Seattle in August 2019. He pleaded guilty to conspiracy to commit wire fraud in September 2020.

This case is the result of an investigation conducted by the Seattle field office of the U.S. Secret Service, IRS-CI and the U.S. Department of Justice. The Justice Department’s Office of International Affairs provided significant assistance.

This case was prosecuted by Assistant U.S. Attorneys Andrew Friedman and Francis Franze-Nakamura of the Western District of Washington and Senior Counsel Anthony Teelucksingh of the Criminal Division’s Computer Crime and Intellectual Property Section.

Seattle – Dr. Gerald Lee, a Seattle physician, has agreed to pay $150,000 to resolve allegations that he violated the Controlled Substances Act and False Claims Act, announced Acting U.S. Attorney Tessa M. Gorman.  Specifically, the United States alleges that from January 2016 to September 2017, Dr. Lee violated the Controlled Substances Act by writing 23 prescriptions for controlled substances, primarily opioids and benzodiazepines, outside the usual course of his professional practice, to a patient with whom he was having a sexual relationship.  The United States also alleges that Dr. Lee violated the False Claims Act by causing claims for the patient’s treatment and prescriptions to be submitted to Medicare.  

In addition to agreeing to pay the $150,000 settlement, Dr. Lee has also agreed not to reapply for a controlled substances registration with the Drug Enforcement Administration (“DEA”) for a period of two years.  Without the DEA registration, Dr. Lee will not be able to prescribe controlled substances during this time. 

“Submission of false Medicare claims is an attempt to pilfer taxpayer money meant to serve community members needing health-sustaining services,” said Steven Ryan, Special Agent in Charge with the U.S. Department of Health and Human Services. “Our agency and partners are unwaveringly dedicated to pursing and holding accountable providers who place their self-interests above the law.”

“We are charged with protecting our citizens and keeping our communities safe,” stated DEA Special Agent in Charge Frank Tarentino.  “This investigation demonstrates the need for strict accountability of the rogue healthcare programs and professionals who abuse their position for profit by exploiting the patients and programs our law-abiding public deserves.  This cooperative and coordinated law enforcement operation exemplifies the DEA’s relentless commitment to safeguarding the safety of patients and the reliability of the health care industry.”

In the settlement agreement, Dr. Lee does not admit any wrongdoing or liability, and the government maintains that its allegations are well founded. 

The case was investigated by the DEA and HHS and Assistant U.S. Attorney Ashley Burns handled the matter for the United States Attorney’s Office. 

Seattle – A 39-year-old Lynnwood, Washington, man was sentenced today in U.S. District Court in Seattle to 10 years in prison for federal charges stemming from his drug and gun trafficking, announced Acting U.S. Attorney Tessa M. Gorman.  Jose L. Casablanca and co-defendant, Jessie N. Cruz, were arrested in late July 2020, following a lengthy undercover investigation.  In May 2021, Casablanca pleaded guilty to conspiracy to distribute controlled substances, possession of a machine gun, and possession of a firearm in furtherance of a drug trafficking crime.  At the sentencing hearing, U.S. District Judge Robert S. Lasnik said, “This is your last chance… When you come out in your 40s you will have missed many events with your daughters.” Judge Lasnik urged Casablanca to choose a new path.

“This defendant sold heroin, methamphetamine, and fentanyl, three of the most deadly and addictive controlled substances available, that have ravaged communities and families in Western Washington,” said Acting U.S. Attorney Gorman. “Add to that his firearms trafficking – including possessing a machine gun – and this defendant has demonstrated he is a danger to the community.”

Records filed in the case detail how two detectives with the Snohomish Regional Drug Task Force (SRDTF) posed as drug and gun buyers to gather information about the pair’s drug trafficking activity.  The undercover detectives made purchases of heroin, methamphetamine, and fentanyl pills from Casablanca and Cruz.  They also purchased a fully automatic firearm, classified as an illegal machine gun, and other firearms from the pair.  Casablanca is a convicted felon and prohibited from possessing firearms, so the two discussed with undercover officers how Cruz transported the guns to the sale location so that Casablanca would not be caught with a firearm.

Casablanca and Cruz confided to the undercover detectives where they had hidden a massive amount of fentanyl in their Lynnwood home.  On the day they were arrested at a regional airport, they met with yet another undercover officer who was posing as someone who could get them access to a pill press to make fentanyl tainted pills from their large stash of the potentially deadly drug.  A court-authorized search warrant at the Lynnwood home resulted in the seizure of large amounts of heroin, fentanyl, multiple firearms, and ammunition, as well as body armor.

At the time of their arrest, law enforcement searched the Maserati the couple used in their drug trafficking activities and found both narcotics and a firearm.

Co-defendant Cruz was sentenced in April 2021 to 7 years in prison.  Both will be on three years of supervised release following prison.

The case was investigated by the Snohomish Regional Drug Task Force and the United States Marshals Service Violent Offender Task Force, with assistance from the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).

The case is being prosecuted by Assistant United States Attorney Kate Crisham.

Seattle – A 28-year-old Bellingham, Washington woman was convicted today in U.S. District Court in Seattle of violence against a railroad carrier, announced Acting U.S. Attorney Tessa M. Gorman.  Ellen Brennan Reiche, was one of two people arrested on the BNSF Railway tracks near Bellingham, near midnight on November 28, 2020.  Reiche was convicted of placing a ‘shunt’ – a device that interferes with train signals – on the tracks.  The jury deliberated about three hours following the two-day trial.  Reiche faces up to 20 years in prison when sentenced by Chief U.S. District Judge Ricardo S. Martinez on December 17, 2021. 

According to records in the case and testimony at trial, on the night of November 28, 2020, Reiche and co-defendant Samantha Frances Brooks, 24, were observed on video surveillance walking on the tracks near a crossing in Bellingham.  Whatcom County Sheriff’s deputies responded to the scene.  The defendants were detained for trespassing, and a shunt was found on the tracks near where the deputies had first encountered them.  Reiche was carrying a paper bag containing wire, a drill with a brush head, a magnetic adhesive and gloves.  The wire was similar to the wire used in the shunting incidents.  The shunt that was placed on the tracks could have interfered with the railroad crossing guard at Cliffside Drive in Bellingham.  A train carrying crude oil, among other cargo, was scheduled to come through that area soon after this incident.

In her closing argument, Assistant United States Attorney Sok Jiang told the jury, Reiche “disrupted the signal system designed to stop trains from crashing into each other or crashing into cars…. A car driving through the intersection (near the shunt) would not have warning that a train was coming.”

The FBI’s Joint Terrorism Task Force worked with BNSF police to investigate the placement of 41 shunts on the BNSF tracks since January 19, 2020.  The shunt is comprised of wire that is stretched between the rails and often fastened with magnets, disrupting the systems that indicate a train is on the tracks.  On ten occasions, shunts were placed in areas that disrupt the crossing guards where the tracks cross streets, so vehicles could have tried to cross the tracks unaware of the oncoming train.  On the night of October 11, 2020, multiple shunts were placed in three different locations in Whatcom and Skagit Counties.  The shunts triggered an automatic braking system on a train that was transporting hazardous and combustible material.  The emergency braking then caused a portion of the train to decouple from the engine.  Decoupling has the potential to cause a derailment—in this case—of tanker cars of flammable gas in a residential area. 

Co-defendant Brooks pleaded guilty July 9, 2021, to interference with a railroad signaling system.  Brooks faces up to 20 years in prison when sentenced by Chief U.S. District Judge Martinez on October 8, 2021.  Chief Judge Martinez will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the FBI’s Joint Terrorism Task Force, which includes agents from Customs and Border Protection (CBP), in connection with the BNSF Railway Police.  Critical investigative assistance is being provided by the Whatcom County Sheriff’s Office.

The case is being prosecuted by Assistant United States Attorneys Philip Kopczynski and Sok Tea Jiang.

Seattle – A federal jury today convicted 38-year-old Harbans Singh, of Kent, Washington, of three federal felonies related to false statements he made on a visa application and during an asylum interview, announced Acting U.S. Attorney Tessa M. Gorman.  The jury deliberated for about two hours following the two-day trial. U.S. District Judge Richard A. Jones scheduled sentencing for December 10, 2021.

According to records filed in the case and testimony at trial, Singh was arrested twice in November 2014 in the United Kingdom for three instances of sexually touching young girls while riding on a public bus.  Just six days after his second arrest, Singh applied for a visa to travel to the U.S.  On his visa application, he stated that he had never been arrested for a crime.  Based on that false statement, Singh was granted a visa, and traveled to the United States in January 2015.  Singh did not board his return flight to the U.K.

In July of 2015, Singh applied for asylum in the U.S.  In his asylum application, Singh failed to disclose anything about the sexual assault charges in the United Kingdom.  Then, in a September 2017 interview, Singh again denied, this time under oath, having ever been arrested or charged in the U.K.

While Singh was in the U.S., he was convicted in absentia in the U.K. of the crimes related to illegal touching of minors.  He was sentenced, in absentia, to one year in prison. 

Singh has been in immigration custody since his arrest in July of 2020.

The jury convicted Singh of False Statement on Immigration Document (Visa Application), Acceptance or Possession of Immigration Document Procured by Fraud, and False Statement – (Asylum Interview).

The charges are punishable by up to 10 years in prison.  Judge Jones will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The case was investigated by the Homeland Security Investigations (HSI) within the Department of Homeland Security.  The U.S. Attorney’s Office also extends its gratitude to Sergeant Richard Lewington of the Essex Police Department, who arrested Singh in the U.K. in 2014 and traveled to the United States to testify at his trial.

The case is being prosecuted by Assistant United States Attorneys William Dreher and Natalie Walton-Anderson.

Seattle – A 30-year-old enrolled member of the Lummi Nation was sentenced today in U.S. District Court in Seattle to 52 months in prison for assault with a dangerous weapon and two counts of assault causing serious bodily injury, announced Acting U.S. Attorney Tessa M. Gorman.  Talin Lee Morris, was arrested May 14, 2019, after assaulting three people with an aluminum baseball bat on the Lummi Indian Reservation.  At the sentencing hearing, Chief U.S. District Judge Ricardo S. Martinez said, “The community deserves to be safe from someone who is a danger to them.”

According to records filed in the case, Morris visited friends on a property on the Lummi Reservation.  After shooting up with methamphetamine, he grew agitated and broke a window with an aluminum baseball bat.  As one of his friends led him outside, he hit the friend on the back of the head with the bat and continued to strike his friend while he was on the ground.  When two other people came to assist the victim, Morris used the bat to strike them.  The first victim suffered a concussion, head wound and fracture to his scapula. The second victim had his arm broken in two places and required surgery with bolts and metal plates.  The third victim suffered bruising and swelling where she was hit with the bat.  Morris was arrested by Lummi Police a short time later.

Morris was indicted in July 2019.  Morris pleaded guilty in May 2021.  Morris has been in custody since his arrest.

In asking for a 5-year prison sentence, Assistant United States Attorney J. Tate London noted that at the time of the assault, Morris had just been released from custody for another assault. Morris “has a lengthy criminal history dating back to his late teens that involve convictions for assaults, including assaults of law enforcement officers,” London wrote in his sentencing memo. 

Morris will serve three years of supervised release following his prison term.

The case was investigated by the Lummi Nation Police Department and the FBI.

The case was prosecuted by Assistant United States Attorney J. Tate London, who serves as a Tribal Liaison for the Western District of Washington.

Tacoma – Two Tacoma residents were sentenced today in U.S. District Court in Tacoma to lengthy prison terms for gun and drug-distribution crimes, announced Acting U.S. Attorney Tessa M. Gorman.  Tyson Lloyd, 33, was sentenced to 10 years in prison, and Cole Hornbeck, 25, was sentenced to 6 years in prison.  Both defendants conspired to distribute controlled substances, including methamphetamine.  Both men also illegally possessed firearms in connection with their drug-dealing activity.  At the sentencing hearing, U.S. District Judge Benjamin H. Settle said, “There is nothing good about methamphetamine – it destroys lives.  People are harmed, people suffer.  And not just the user – it is families of users who are harmed as well.”

“These defendants were dealing substantial quantities of methamphetamine – a drug linked to overdoses and deaths nationwide,” said Acting U.S. Attorney Tessa Gorman.  “And these defendants conducted their drug business while illegally possessing firearms – a dangerous combination.”

According to the plea agreements, Lloyd supervised Hornbeck as a distributor in his drug-trafficking network.  In April 2020, the defendants agreed to sell methamphetamine to a person who, unbeknownst to them, was working with law enforcement.  The defendants sold this person $5,000 worth of methamphetamine and made plans for another drug deal the following week.  Ultimately, the defendants and a potential supplier were arrested in Auburn, Washington, during a deal for a large quantity of methamphetamine.  When law enforcement subsequently searched Lloyd and Hornbeck’s shared residence under a court-authorized search warrant, investigators seized more methamphetamine, cocaine, and other drugs that the defendants planned to distribute.  Law enforcement also found two firearms in the residence: a shotgun and a stolen .45‑caliber pistol. 

In addition to the drug-conspiracy charges, Lloyd pleaded guilty to possessing firearms as a felon; he has multiple Washington State convictions for crimes such as burglary, car theft, and identity theft.  Hornbeck pleaded guilty to possessing firearms as an unlawful user of controlled substances.  Both firearm offenses are punishable by up to 10 years in prison.

Lloyd and Hornbeck have been in custody at the Federal Detention Center at SeaTac since their arrests on April 29, 2020.  Once they complete their prison terms, Lloyd will serve a five-year term of supervised release, and Hornbeck will serve a four-year term of supervised release.

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

The case was investigated by the Drug Enforcement Administration (DEA) Tacoma Resident Office, the Lewis County Joint Narcotics Enforcement Team (JNET), and the Grays Harbor Drug Task Force (GHDTF).  The case was prosecuted by Assistant United States Attorney Jonas Lerman.

Seattle – A former Netflix software engineer, and his brother pleaded guilty today in U.S. District Court in Seattle to securities fraud for their roles in an insider trading ring that generated more than $1 million in illegal proceeds, announced Acting U.S. Attorney Tessa M. Gorman. Sung Mo Jun, 49, of Bellevue, Washington, and his brother, Joon Jun, 45, of Issaquah, Washington, were charged along with two others earlier this month with insider trading in Netflix securities.  The Jun brothers are scheduled to be sentenced by U.S. District Judge Richard A. Jones on December 3, 2021.

According to the plea agreement, from July 2016 to February 2017, Sung Mo Jun was employed by Netflix as a software engineer.  He had access to subscriber data and had been trained by the company that such data was material, non-public information.   Nevertheless, Jun disclosed that information to his brother Joon Jun, and his close friend, Junwoo Chon, 50, of Bellevue, Washington, with the knowledge that the two intended to use the information to profit on the purchase and sale of Netflix securities.  After Chon made significant profits on the securities, he secretly provided Sung Mo Jun with $60,000 in cash as Sung Mo Jun’s share of the profits.

After Sung Mo Jun left Netflix, he obtained additional non-public information about subscriber data from another Netflix employee, software engineer Ayden Lee, 33, of San Jose, California.  Jun not only passed that information on to his brother and Chon, he also used it to make his own trades.  Between April 2017 and July 2019, Sung Mo Jun made a profit of $434,086 by trading in Netflix stock and options with this inside information.  Between July 2016 and April 2017, Jun’s brother, Joon Jun, made $215,419 and co-conspirator Junwon Chon made $521,400.  All told, the insider trading attributable to Sun Mo Jun in Netflix securities resulted in an illicit gain of $1,170,905.

Sung Mo Jun also obtained insider information from a “tipper” he knew at another tech company, and shared this information with his brother and Chon.  Their profits from trading on that inside information was less than $2,000.

Joon Jun is responsible for illicit profits of $1,106.208.  Chon is responsible for illicit profits of $1,642,855, and Lee is connected to illicit profits of $453,465.

Chon pleaded guilty August 18, 2021. Lee is the last to have a plea hearing, which is not yet scheduled.

Insider trading is punishable by up to 20 years in prison and a $5 million fine.  The judge will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Securities and Exchange Commission (SEC) has filed a separate civil enforcement action against the defendants who have each entered into settlements with the SEC. 

The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Justin Arnold.

Tacoma – A former Pierce County Housing Authority executive was sentenced today in U.S. District Court in Tacoma to 51 months in prison for wire fraud in connection with her scheme to steal nearly $7 million, announced Acting U.S. Attorney Tessa M. Gorman. Cova Campbell pleaded guilty in January 2021, admitting that between March 2016 and July 2019, she used a variety of schemes to divert $6.9 million in public money to her own bank accounts.  At the sentencing hearing U.S. District Judge Robert J. Bryan ordered Campbell into custody immediately, and said “There is a substantial question about your remorse… On one level you were a highly competent public servant, but you had a dark side that allowed you to lose your moral compass.”

“At a time when housing resources in our community are in historically high demand, this defendant stole from the poor and vulnerable who most needed assistance,” said U.S. Attorney’s Office Criminal Chief Sarah Vogel.  “Her greed meant there were less resources for the elderly, the disabled, the veterans, and the children in Pierce County who count on the Housing Authority to provide safe and secure shelter.”

According to records filed in the case, Campbell was a 20-year trusted employee of the Pierce County Housing Authority, and repeatedly betrayed that trust over a 3-year period.  Campbell initiated wire transfers of as much as $500,000 from Pierce County Housing Authority accounts to her own bank accounts.  One of the transfers was in connection with the purchase of land in Oklahoma.  Campbell also prepared and submitted false invoices to PCHA and made them appear they were from an outside vendor.  PCHA paid the invoices, and the money went into Campbell’s bank accounts.  Campbell covered up her fraud by labeling these fraudulent charges as “investments,” “insurance,” or “maintenance” in the PCHA accounting records.

According to the plea agreement, Campbell used the money to pay for land and improvements to that property in Oklahoma, for improvements to her home in Lakewood, Washington, and for travel including trips to Las Vegas and the chartering of a private jet.  She used some of the money for the purchase of two cars.  She also diverted large amounts of the money for gambling and internet gaming.

The Washington State Auditor’s Office uncovered the financial irregularities, and Campbell’s employment was terminated by the Housing Authority on August 8, 2019.

Campbell was arrested in March 2020 in Redbird, Oklahoma.

In asking for a 5-year prison sentence, prosecutors noted that Campbell had abused her position of trust, and even brought her co-workers under suspicion.  “Then, once it became clear that Ms. Campbell acted alone, the employees felt blame and shame for failing to stop their boss’s criminal acts…. This money was intended to expand and improve housing options in our community.… The crime was a devastating theft from vulnerable residents of Pierce County based on greed,” Assistant United States Attorney Brian Werner wrote in his sentencing memo.

One of the Commissioners of the Housing Authority Board spoke at the hearing saying, “The fraud limits the ability of the authority to assist the community.”  Commissioner Mark Martinez also said Campbell had not explained what happened to about 60 percent of the stolen money and had turned over few assets voluntarily, forcing the Housing Authority to spend time and money trying to get those assets via civil litigation.

Due to some of the amounts recovered in the civil litigation, the amount of restitution Campbell still owes is $5,299,976. 

The case was investigated by the FBI and HUD-OIG.  The case was prosecuted by Assistant United States Attorney Brian Werner.

Seattle — A repeat offender, who had just been released to a half-way house from federal prison, was sentenced today in U.S. District Court in Seattle to 137 months in prison for attempted sex trafficking of a juvenile and attempted enticement of a minor, announced Acting U.S. Attorney Tessa M. Gorman.  Prentice C. Hollingsworth, 45, was indicted in August 2020 and pleaded guilty in December 2020.  At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez noted that Hollingsworth was unknowingly communicating with an undercover agent, but that did not “lessen the fact that he was trying to traffic a minor, someone he knew was very vulnerable…. The fact that the Defendant was on federal supervision and state supervision and still went right back to this behavior is very telling,” the Chief Judge said.

“This defendant’s adult life has been spent either incarcerated or sexually assaulting young women and attempting to force vulnerable juveniles into prostitution,” said Acting U.S. Attorney Gorman. “The predatory nature of his crimes means the community is safe only when he is removed from society with a lengthy prison sentence.”

According to records filed in the case, Hollingsworth was released to a federal halfway house in Tacoma in December 2019.  Less than a month later, he began communicating with an undercover Seattle Police Officer he had contacted via a web application.  In these communications, Hollingsworth attempted to recruit the undercover officer, who presented herself as a 15-year-old girl, to work for him as a prostitute.  Hollingsworth discussed many aspects of the prostitution business, including the fee he would charge the “juvenile” for his services as a pimp and the prices she should charge for various sex acts.  Hollingsworth also advised the “juvenile” that she could earn more money from sex buyers because of her age, and he encouraged her to leave school so she could devote more time to earning money in the sex trade.

In January 2020, Hollingsworth was arrested at the halfway house in Tacoma shortly after he arranged for the “juvenile” to check into a hotel room in Fife, Washington, for the purpose of prostitution.  

Hollingsworth has prior convictions for rape, promoting prostitution, and communicating with minors for an immoral purpose. Due to these prior convictions he is required to register as a sex offender.  Following this prison term, he will be on lifetime supervised release.

The case was investigated by the Seattle Police Department.  The case was prosecuted by Assistant United States Attorney Kate Crisham.

Seattle – A 51-year-old Seattle man was sentenced today in U.S. District Court in Seattle to 13 years in prison for drug and gun crimes announced Acting United States Attorney Tessa M. Gorman.  Clyde McKnight was convicted May 21, 2021, of possession of controlled substances with intent to distribute, and two counts of being a felon in possession of firearms, following a 5-day jury trial.  The case stemmed from a 6-month investigation in 2017 by the Seattle Police Department and Drug Enforcement Administration, of significant drug trafficking in Seattle’s Pioneer Square neighborhood. At the sentencing hearing, U.S. District Judge Thomas S. Zilly ordered McKnight to also pay a $36,000 fine and serve five years of supervised release following prison.

“This defendant was a significant drug dealer in Seattle’s Pioneer Square neighborhood, spreading addiction, despair, and potentially deadly fentanyl throughout our community,” said Acting U.S. Attorney Gorman. “He has been involved with crime for decades, and did significant state prison time for attempted murder.  This federal sentence is necessary to protect the public from the defendant’s callous disregard for community safety.”

According to records filed in the case and testimony at trial, Clyde McKnight was arrested outside a Portland, Oregon motel in January 2018.  The arrest followed the seizure of 2.6 kilos of cocaine, 1.5 kilos of heroin, 607 grams of crack cocaine, 42 grams of methamphetamine and 180 grams of fentanyl from McKnight’s vehicle in Seattle.  At the time of his arrest, McKnight had $36,000 and a handgun with him.   

McKnight had been observed by law enforcement using a Chrysler 300 sedan as a storage location for drugs – crack cocaine, powder cocaine, heroin, and fentanyl.  McKnight parked the vehicle in various locations in the Mount Baker neighborhood.  On the night of January 2, 2018, the Seattle Police Department impounded the car and obtained a search warrant.  In the early morning of January 3, 2018, McKnight made numerous panicked calls to 9-1-1 to report the vehicle stolen.  Ultimately, he was informed the vehicle had been impounded and was in the police evidence yard.  McKnight immediately tried to flee the state, traveling to Portland, Oregon where he was arrested.

A search of McKnight’s apartment in downtown Seattle turned up another firearm – a loaded Glock.  McKnight is prohibited from possessing firearms due to prior convictions – including one for attempted murder.  The jury reached separate verdicts following the drug conviction, finding that McKnight was also guilty of being a felon in possession of the two firearms.

Four other conspirators were charged, convicted, and sentenced as part of the case:

Patrick Tables, 56, was sentenced to 10 years in prison.

Jonathon Rushing, 42, was sentenced to 8 and a half years in prison.

Michael Turner, 52, was sentenced to 5 years in prison

Marvin Traylor, 52, was sentenced to one year in prison.

After multiple requests by the defendant for delays in the trial, McKnight’s trial was scheduled for April 2020.  The pandemic closure of the U.S. District Courthouse to in-person appearances delayed the trial further.  The case was the first one scheduled for trial as the courthouse returned to limited jury trials. 

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

The case was investigated by the Seattle Police Department and the Drug Enforcement Administration (DEA) with assistance from the Port of Seattle Police Department and the FBI crime lab at Quantico, VA.

The case was prosecuted by Assistant United States Attorneys Vince Lombardi and Casey Conzatti.

Seattle – A federal grand jury today returned an indictment charging a 44-year-old Battle Ground, Washington man with two federal felonies for illegal firearms possession, announced Acting U.S. Attorney Tessa M. Gorman.  Lynn Manley Cargile was arrested on December 26, 2019, following a six-hour stand-off with police.  Cargile was in state custody until earlier this month serving a 29-month prison sentence for domestic violence stemming from the same incident.  He is now in federal custody and will be arraigned on the federal charges.

According to the criminal complaint from March 2020, and the indictment handed up today, police were called to Cargile’s home by a 9-1-1 call from his ex-wife who had been assaulted.  After a lengthy wait, officers used ‘flash-bang’ devices to get Cargile to leave the house and he was taken into custody.  When officers entered the home to secure it for officer safety, they noted numerous firearms.  After obtaining a court authorized search warrant, law enforcement discovered a Smith and Wesson AR-15 style rifle with a swastika on the rifle butt and a Black Rain Ordinance short-barreled rifle.  Investigators also found two silencers.  The short-barreled rifle and silencers are illegal under federal law unless properly registered in the National Firearms and Transfer Record.  Additionally, Cargile is prohibited from possessing firearms due to prior felony convictions in Clark County Washington for attempting to elude (2002 and 2003) and illegal firearms possession (1999 and 2002).

Cargile is indicted for being a felon in possession of a firearm, and possession of unregistered firearms.  Both counts are punishable by up to ten years in prison.

The charges contained in the indictment are only allegations.  A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

The case was investigated by the Battle Ground Police Department and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).

The case is being prosecuted by Assistant United States Attorney Angelica Williams.

cargile_indictment.pdf

Seattle – A Washington tech executive was sentenced today to 2 years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Mukund Mohan, 48, of Clyde Hill, pleaded guilty to charges of wire fraud and money laundering on March 15, 2021. According to court documents, Mohan submitted eight fraudulent disaster loan applications seeking over $5.5 million. In support of the fraudulent loan applications, Mohan submitted fake and altered documents, including fake federal tax filings and altered incorporation documents. For example, Mohan misrepresented to a lender that, in 2019, his company Mahenjo Inc. had dozens of employees and paid millions of dollars in employee wages and payroll taxes. In support of Mahenjo’s loan application, Mohan submitted false incorporation documents and tax forms suggesting the company had been in business prior to 2020. In truth, Mohan purchased Mahenjo in May 2020 and, at the time he purchased the company, it had no employees and no business activity. The incorporation documents he submitted to the lender were altered and the federal tax filings he submitted were fake. Five of Mohan’s eight fraudulent loan applications were approved, and he fraudulently obtained nearly $1.8 million in COVID-19 relief funds.

In addition to the prison sentence, Mohan was ordered to pay a fine in the amount of $100,000 and $1,786,357 in restitution.

“When individuals like Mr. Mohan abuse the benefit programs under the CARES act to unjustly enrich themselves, they are stealing from those that are the most vulnerable,” said Acting Special Agent in Charge Corinne Kalve of IRS Criminal Investigation (IRS:CI). “Today, Mr. Mohan is being held accountable for the harm his greed has caused our friends, our families, and our communities.”

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington; Acting Inspector General Phyllis Fong of the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG); Acting Special Agent in Charge Corinne Kalve of Internal Revenue Service Criminal Investigation (IRS-CI); Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA); and Special Agent In Charge Jeff Pittano of the Federal Deposit Insurance Corporation Office of Inspector General  (FDIC-OIG), made the announcement.

This case was investigated by FHFA-OIG, IRS-CI, TIGTA, and FDIC-OIG.

Assistant U.S. Attorney Andrew Friedman of the Western District of Washington and Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at: https://www.justice.gov/criminal-fraud/ppp-fraud.

On May 17, 2021, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the Department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

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

Seattle – Cameron Shea, 25, a leader of the neo-Nazi group Atomwaffen Division, was sentenced today in the United States District Court for the Western District of Washington to 3 years in prison for federal conspiracy and hate crime charges for threatening journalists and advocates who worked to expose anti-Semitism, announced Acting U.S. Attorney Tessa M. Gorman.   At the sentencing hearing, U.S. District Judge John C. Coughenour said, “This conduct cannot be tolerated.  This kind of conduct has consequences… It is so serious that it requires a serious sentence.”

“The Justice Department will continue to aggressively prosecute threats motivated by religious intolerance, and to prosecute defendants like this one who threatened violence against individuals who work to end discrimination,” said Assistant Attorney General Kristen Clarke for the Justice Department’s Civil Rights Division. “The Justice Department is committed to prosecuting to the full extent of the law, violent neo-Nazis and other perpetrators of hate crimes.” 

“This hate-filled conduct strikes at the heart of our communities,” said Acting U.S. Attorney Gorman.  “This defendant’s goal was to make people fearful in their own homes, and he recruited and cheered on others who joined his sick scheme.  This federal prison sentence underscores the human damage from his crimes.” 

Shea pleaded guilty in April 2021, to one count of conspiring to commit three offenses against the United States:  interference with federally protected activities because of religion; mailing threatening communications; and cyberstalking.  He also pleaded guilty to one count of interfering with a federally protected activity because of religion.

Shea and three co-defendants were charged with conspiring via an encrypted online chat group to identify journalists and advocates they wanted to threaten in retaliation for the victims’ work exposing anti-Semitism. The group focused primarily on those who are Jewish or journalists of color. The group created posters, which featured Nazi symbols, masked figures with guns and Molotov cocktails, and threatening messages, to deliver or mail to the journalists or advocates the group targeted. Shea messaged the group that he wanted Atomwaffen members in different locations to place posters on their victims’ homes on the same night to catch journalists off guard and accomplish a “show of force.” The posters were delivered to victims in Tampa, Seattle and Phoenix. Shea mailed posters to several victims, including a poster sent to an official at the Anti-Defamation League (ADL) that depicted a Grim Reaper-like figure wearing a skeleton mask holding a Molotov cocktail outside a residence, with the text “Our Patience Has Its Limits . . . You have been visited by your local Nazis.”

Two of Shea’s co-defendants previously pled guilty to the conspiracy charge and were sentenced. A fourth defendant pled not guilty and is awaiting trial in September 2021.

The case is being investigated by the FBI’s Joint Terrorism Task Forces in Tampa, Seattle, Houston, and Phoenix with assistance from the Seattle Police Department.

The case is being prosecuted by Assistant U.S. Attorneys Thomas Woods and Seth Wilkinson for the Western District of Washington, and Civil Rights Division Trial Attorney Michael J. Songer, with assistance from U.S. Attorneys’ Offices in the Middle District of Florida, Southern District of Texas, District of Arizona, and Central District of California.

Tacoma – A 39-year-old civilian resident of Joint Base Lewis McChord pleaded guilty today in U.S. District Court in Tacoma to abusive sexual contact with a child under 12, and sexual abuse of a child, announced Acting U.S. Attorney Tessa M. Gorman.  Shawn Matthew Wilcher faces up to life in prison when sentenced by U.S. District Judge Benjamin H. Settle on November 15, 2021.

According to the plea agreement and other records filed in the case, Wilcher is the spouse of an active-duty enlisted Army soldier.  Between October 2015 and January 2018, Wilcher resided with his spouse on Hickam Air Force Base in Hawaii.  Between October 1, 2018 and May 21, 2019, Wilcher and his spouse resided on Joint Base Lewis McChord (JBLM).  Wilcher admits in his plea agreement that he sexually molested a young child left in his care during his residence at both military bases.  The abuse came to light in May 2019, when the victim disclosed the abuse to a friend who reported it to a school counselor.  Army Criminal Investigative Division (CID) and the FBI immediately investigated the case.  Wilcher has been in custody since his arrest on May 25, 2019.

The charges in the District of Hawaii and the Western District of Washington are both resolved by this plea agreement. Under the terms of the plea agreement, the prosecutors will recommend a sentence of not more than 27 years in prison.  Judge Settle is not bound by the plea agreement and is free to impose any sentence allowed by law up to life in prison.  The defense and prosecution have both agreed that Wilcher will be on lifetime supervision following any prison term and will be required to register as a sex offender.

The case was investigated by the FBI and Army CID.

The case is being prosecuted by Assistant United States Attorneys Grady Leupold and Matt Hampton for the Western District of Washington, and Morgan Early for the District of Hawaii.

Seattle – A 23-year-old Mount Vernon, Washington, woman was sentenced today in U.S. District Court in Seattle to 7 years in prison for conspiracy to distribute fentanyl, announced Acting U.S. Attorney Tessa M. Gorman.  Rosaliana Lopez-Rodriguez sold counterfeit oxycodone pills tainted with fentanyl in Skagit and Whatcom Counties.  The pills were connected to at least two overdoses, including the overdose death of a Bellingham 17-year-old.  At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez urged the friends and loved ones of the victim and the defendant to spread the word about the dangers of fentanyl.  “Think what you can do to keep your family and friends as safe as you possibly can,” the Chief Judge said.

“This defendant continued to sell deadly fentanyl pills to a teenager, even after learning that the teenager’s friend almost died from an overdose,” said Acting U.S. Attorney Gorman.  “Overdose deaths in this country are at an all-time high from fentanyl.  Those who sell it with such a casual disregard for human life need to face significant sanctions.”

Lopez-Rodriguez and her supplier, 22-year-old Jiovanni Nunez, were arrested in November and December 2019 after an investigation to track down the source of the deadly pills.  Both defendants have been in custody since their arrests.

According to records filed in the case, a family member found the 17-year-old victim unresponsive on November 9, 2019.  Despite efforts of emergency responders to resuscitate him, the victim died; his cause of death was later determined to be fentanyl overdose.  Investigators found a whole and a partial pill near the 17-year-old victim.  These pills were designed to look like oxycodone 30-milligram pills, with “M” and “30” stamped on them.  But they were fakes tainted with fentanyl.  Similar pills have been linked to other overdose deaths throughout the Puget Sound region.  In fact, a friend of the 17-year-old victim nearly died after smoking one of the pills on November 1, 2019.  Lopez-Rodriguez knew of that near-fatal overdose when she sold the 17-year-old victim more pills on November 9, 2019.

As part of her plea agreement, Lopez-Rodriguez also admitted selling an undercover law-enforcement officer fentanyl pills, which Lopez-Rodriguez stated she had received from Jiovanni Nunez.  In addition, Lopez-Rodriguez admitted that during this investigation, law enforcement served court-authorized search warrants at each defendant’s residence.  At Lopez-Rodriguez’s residence, in her bedroom, law enforcement found two and a half fentanyl pills.  At the co-conspirator’s residence, law enforcement found a safe containing hundreds of fake oxycodone pills that matched the appearance of the fentanyl-laced pills linked to the fatal overdose.  Lopez-Rodriguez admitted that Jiovanni Nunez had provided her with the pills that killed the Bellingham 17-year-old.

The victim’s sister told the court at sentencing that she is haunted by the memory of finding her brother’s body, and she said that Lopez-Rodriguez had shown “blatant disregard for human life.” The victim’s mother described the pain she lives with every day.  She expressed her anger at the defendant for selling the pills that killed her son and said, “That’s all his life was to her, a few bucks.”

Jiovanni Nunez is scheduled for sentencing October 1, 2021.

The case is being investigated by the Drug Enforcement Administration (DEA); the Whatcom County Sheriff’s Office; the Skagit County Interlocal Drug Enforcement Unit; and the Whatcom County Drug and Gang Task Force, which includes members of the Whatcom County Sheriff’s Office, Bellingham Police Department, U.S. Customs and Border Protection, and Homeland Security Investigations.  The case is being prosecuted by Assistant United States Attorney Jonas Lerman.

Seattle – A 50-year-old Bellevue, Washington man who made more than $1.5 million dollars using inside information to trade in Netflix securities pleaded guilty today in U.S. District Court in Seattle, announced Acting U.S. Attorney Tessa M. Gorman.  Junwoo Chon, is one for four men charged in the scheme that involved two former Netflix software engineers illegally providing proprietary subscriber data in advance of Netflix’s earnings announcements.  Chon is scheduled to be sentenced by U.S. District Judge Richard A. Jones on December 3, 2021.

The others charged by Information in the case are Netflix software engineers Ayden Lee, 33, of San Jose, California, and Sung Mo Jun, 49, of Bellevue, Washington.  Jun’s brother, Joon Jun, 45, of Issaquah, Washington is also charged in the case.  The Jun brothers are scheduled for plea hearings on August 30, 2021.

“Insider trading is not a victimless crime,” said Acting U.S. Attorney Gorman.  “When someone on one side of the trade has non-public information, they have an advantage over the person on the other side – the person who ultimately loses money on their securities trade.  The integrity of our financial markets demands a fair and level playing field.”

According to the records filed in the case, from July 2016, to February 2017, Sung Mo Jun was employed by Netflix as a software engineer.  He had access to Netflix’s internal subscriber data and had been trained by the company that such data was material, non-public information.   Nevertheless, Jun disclosed that information to his close friend, Junwoo Chon, and his brother, Joon Jun, with the knowledge that the two intended to use the information to profit on the purchase and sale of Netflix securities.  Between July 2016 and April 2017, Jun’s brother, Joon Jun, made $215,419 and co-conspirator Junwon Chon made $521,400.  After Chon made these significant profits on the illegal insider trading, he secretly provided Sung Mo Jun with $60,000 in cash as Sung Mo Jun’s share of the profits.

After Sung Mo Jun left Netflix, he obtained additional non-public information about subscriber data from another Netflix employee, software engineer Ayden Lee, 33, of San Jose, California.  Jun not only passed that information on to his brother and Chon, he also used it to make his own trades.  Between April 2017 and July 2019, Sung Mo Jun made a profit of $434,086 by trading in Netflix stock and options with this inside information. 

In his plea agreement, Junwoo Chon also admitted to receiving inside information from Sung Mo Jun concerning another technology company located in California.  He also admitted that he received inside information from a source at a third technology company located in Seattle and traded on the inside information with respect to those technology companies. Chon’s profits from trading on that inside information was less than $2,000.

All told the insider trading attributable to insider Sun Mo Jun in Netflix securities resulted in an illicit gain of $1,170,905.  Joon Jun is responsible for illicit profits of $1,106.208.  Chon is responsible for illicit profits of $1,642,855 and Lee is connected to illicit profits of $453,465. 

Insider trading is punishable by up to 20 years in prison and a $5 million fine.  The judge will determine the appropriate sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The Securities and Exchange Commission (SEC) has filed a separate civil enforcement action against the defendants. 

The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorney Justin Arnold.

A Washington State man was sentenced today to two years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Austin Hsu, 46, of Issaquah, pleaded guilty on Jan. 21. According to court documents, Hsu submitted nine fraudulent disaster loan applications seeking over $1.1 million. Hsu, the owner and CEO of a company named Blackrock Services P.S. dba Back 2 Health Bellevue (Back 2 Health), received EIDL and PPP funds for Back 2 Health, and then used the names of Back 2 Health’s current and former employees to apply for additional PPP loans under the names of four other companies that he owned and controlled. In support of the fraudulent PPP loan applications, Hsu submitted fake federal tax filings. 

Hsu also incorporated a company named Blueline Capital LLC (Blueline) in June 2020 for the purpose of applying for an EIDL loan in July 2020, and then misrepresented to the SBA that Blueline had been in business since 2017 and that, as of Jan. 31, 2020, Blueline had nine employees and gross receipts of over $1.5 million. In truth, Blueline had no business or operations.

Six of Hsu’s nine fraudulent loan applications were approved, and he fraudulently obtained more than $700,000 in COVID-19 relief funds.

In addition to the prison sentence, Hsu was ordered to pay a fine in the amount of $25,000 and $709,104.97 in restitution.

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington; Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA); Inspector General Gail S. Ennis of the Social Security Administration (SSA); Inspector General Hannibal “Mike” Ware of the SBA; and Special Agent in Charge Cardell Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) made the announcement.

This case was investigated by the TIGTA, SSA – Office of Inspector General (OIG), SBA – OIG, and HSI.

Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Masada of the Western District of Washington are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at: https://www.justice.gov/criminal-fraud/ppp-fraud.

In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

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

 

Seattle —A 33-year-old Kent, Washington man was sentenced today in U.S. District Court in Seattle to two years in prison for being a felon in possession of a firearm during civil unrest and looting in downtown Seattle, announced Acting U.S. Attorney Tessa M. Gorman.  Al M. Talaga was arrested in September 2020, following an investigation of events that began June 1, 2020.  At the sentencing hearing today U.S. District Judge James L. Robart told him, “You can’t have guns.  We’re talking about a phenomenon plaguing our city.”

“This defendant was one of a fairly small number of people who hijacked otherwise lawful protests, intended to highlight the issue of racial injustice, to vandalize and steal merchandise from a small business that had been closed for months due to COVID-19,” said Acting U.S. Attorney Gorman. “He chose to make the situation even more dangerous by bringing loaded firearms into the area.”

According to the criminal complaint, on June 1, 2020, Seattle Police officers responded to reports of a break-in and looting at the Sneaker City store on Pike Street in downtown Seattle.  When police arrived, various suspects were running away from the store.  Witnesses said some of the looters had loaded merchandise into a Dodge Magnum that was parked near the store.  In checking the car for suspects, police officers noted a number of items that appeared to have been taken from the store, as well as a firearm in the driver’s side door panel of the car.

Police impounded the car and traced its ownership to Talaga.  A court-authorized search of the car revealed that there were two firearms in the car.  In addition to the loaded .40 caliber Glock in the side pocket of the door, investigators found a second loaded handgun under the floor mat on the passenger side of the car.  A law enforcement database check verified that the .40 caliber pistol under the floor mat had been reported stolen in 2019 from a residence in Tacoma during a home invasion robbery.

Talaga is prohibited from possessing firearms due to a 2005 conviction in King County Superior Court for Second Degree Robbery.

In asking for a 30-month sentence Assistant United States Attorney Kate Crisham wrote in her sentencing memo, “In this case, Talaga had two easily accessible, loaded firearms in an unlocked car that he and others used as a receptacle for the stolen merchandise they looted from the store. A witness observed the looters make multiple trips to Talaga’s car with stolen merchandise. As the Probation Officer noted, if security or responding law enforcement officers had confronted the looters near the car, the firearms very well could have come in to play.”

The case was investigated by the Seattle Police Department and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).

The case is being prosecuted by Assistant United States Attorney Kate Crisham.

Seattle – A Washington State man was sentenced today to two years in prison for perpetrating a scheme to fraudulently obtain COVID-19 disaster relief loans guaranteed by the Small Business Administration (SBA) through the Economic Injury Disaster Loan (EIDL) and the Paycheck Protection Program (PPP) under the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Austin Hsu, 46, of Issaquah, pleaded guilty on Jan. 21. According to court documents, Hsu submitted nine fraudulent disaster loan applications seeking over $1.1 million. Hsu, the owner and CEO of a company named Blackrock Services P.S. dba Back 2 Health Bellevue (Back 2 Health), received EIDL and PPP funds for Back 2 Health, and then used the names of Back 2 Health’s current and former employees to apply for additional PPP loans under the names of four other companies that he owned and controlled. In support of the fraudulent PPP loan applications, Hsu submitted fake federal tax filings. 

Hsu also incorporated a company named Blueline Capital LLC (Blueline) in June 2020 for the purpose of applying for an EIDL loan in July 2020, and then misrepresented to the SBA that Blueline had been in business since 2017 and that, as of Jan. 31, 2020, Blueline had nine employees and gross receipts of over $1.5 million. In truth, Blueline had no business or operations.

Six of Hsu’s nine fraudulent loan applications were approved, and he fraudulently obtained more than $700,000 in COVID-19 relief funds.

In addition to the prison sentence, Hsu was ordered to pay a fine in the amount of $25,000 and $709,104.97 in restitution.

Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division; Acting U.S. Attorney Tessa M. Gorman for the Western District of Washington; Inspector General J. Russell George of the U.S. Treasury Inspector General for Tax Administration (TIGTA); Inspector General Gail S. Ennis of the Social Security Administration (SSA); Inspector General Hannibal “Mike” Ware of the SBA; and Special Agent in Charge Cardell Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) made the announcement.

This case was investigated by the TIGTA, SSA – Office of Inspector General (OIG), SBA – OIG, and HSI.

Trial Attorney Christopher Fenton of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Steven Masada of the Western District of Washington are prosecuting the case.

The Fraud Section leads the department’s prosecution of fraud schemes that exploit the PPP. In the months since the PPP began, Fraud Section attorneys have prosecuted more than 100 defendants in more than 70 criminal cases. The Fraud Section has also seized more than $65 million in cash proceeds derived from fraudulently obtained PPP funds, as well as numerous real estate properties and luxury items purchased with such proceeds. More information can be found at: https://www.justice.gov/criminal-fraud/ppp-fraud.

In May, the Attorney General established the COVID-19 Fraud Enforcement Task Force to marshal the resources of the Department of Justice in partnership with agencies across government to enhance efforts to combat and prevent pandemic-related fraud. The Task Force bolsters efforts to investigate and prosecute the most culpable domestic and international criminal actors and assists agencies tasked with administering relief programs to prevent fraud by, among other methods, augmenting and incorporating existing coordination mechanisms, identifying resources and techniques to uncover fraudulent actors and their schemes, and sharing and harnessing information and insights gained from prior enforcement efforts. For more information on the department’s response to the pandemic, please visit https://www.justice.gov/coronavirus.

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

Tacoma – A drug dealer who tried to use an explosive device to stop a witness from testifying about his criminal activity was sentenced last week to 100 months in prison, announced Acting U.S. Attorney Tessa M. Gorman. David Nathaniel Hoffman, 38, pleaded guilty April 13, 2021, to three counts of possession of controlled substances with intent to distribute and one count of assault resulting in serious bodily injury.  At the sentencing hearing U.S. District Judge Benjamin H. Settle called Hoffman’s conduct “extremely disturbing.”

“This defendant was not just spreading poisons in our community, he tried to use fear and intimidation to thwart being brought to justice,” said Acting U.S. Attorney Gorman.  “Such conduct – using an explosive to damage a witness’ car– resulted in a longer federal sentence.”

According to records filed in the case, Hoffman was caught three times by law enforcement with distribution quantities of narcotics.  In November 2017, Hoffman was on Department of Corrections supervision and was found to have methamphetamine and heroin in his Olympia residence.  In January 2019, following a traffic stop, Hoffman was found to have methamphetamine in his car.  And in September 2019, Hoffman was stopped in Shelton, Washington and was found to have methamphetamine, various narcotic pills and an improvised explosive device in his car.

In his plea agreement, Hoffman admitted that before he was taken into federal custody in November 2019, he had confronted and threatened a person with knowledge of his drug dealing and had an associate use an explosive device to damage a car outside the person’s home.  Further, in the plea agreement he also admitted he assaulted a fellow inmate at the FDC causing serious facial and head injuries.

In asking for a sentence at the high end of the guidelines range, Assistant United States Attorney Kate Crisham wrote in her sentencing memo, “Hoffman’s attempt to intimidate a potential witness against him by detonating a bomb on a car in front of her home strikes at the heart of our criminal justice system…. his behavior was intended to weaken our criminal justice system’s delicate reliance on witnesses.  His conduct was egregious.”

Hoffman has been in custody since his arrest on November 19, 2o19.

Following prison, he is to serve three years of supervised release.

The case was investigated by Homeland Security Investigations and the Thurston County Narcotics Task Force, with assistance from the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), Thurston County Sheriff’s Office, and the Washington State Department of Corrections. The FBI investigated the assault at the Federal Detention Center. 

The case was prosecuted by Assistant United States Attorneys Kate Crisham and Ye-Ting Woo.

Seattle – Three men were convicted late yesterday of multiple federal felonies for distributing fentanyl disguised as oxycodone pills in Snohomish, Skagit and Whatcom Counties, announced Acting U.S. Attorney Tessa M. Gorman.  The leader of the drug ring, Bradley Woolard, 42, of Arlington, was convicted of 28 counts involving conspiracy to distribute controlled substances, conspiracy to commit money laundering, money laundering, illegal gun possession, and possessing drugs with the intent to distribute them.  Co-defendants Anthony Pelayo, 34, of Marysville, and Jerome Isham, 40, of Everett, were also convicted of conspiracies related to drug distribution and illegal gun possession.

The jury deliberated for two days following the ten-day trial.  The men are scheduled for sentencing by U.S. District Judge John C. Coughenour on November 16, 2021.

According to testimony and exhibits during trial, the case began in the summer of 2018, when law enforcement officers from the Drug Enforcement Administration and the Snohomish Regional Drug and Gang Task Force obtained multiple court-authorized search warrants for Woolard’s home.  On July 28, 2018, they found more than 12,000 fentanyl pills designed to look like 30 mg oxycodone prescription narcotic.  The pills ultimately tested positive for furanyl fentanyl, an analogue of fentanyl and a controlled substance. 

The pills were pale blue in color and had “M” printed on one side and “30” on the other side.  Over the course of multiple searches, law enforcement seized more than $1 million in cash and gold from Woolard’s five-acre compound, including cash hidden  behind drywall, in the ceilings of outbuildings, and in a hole beneath a dishwasher. Investigators also discovered a hidden room containing 29 firearms ranging from handguns to assault rifles, including four firearm silencers and several thousand rounds of ammunition.

Testimony at trial revealed that in 2015 and 2016, Woolard began buying fentanyl and furanyl fentanyl powder from China after researching how to do so on the Dark Web. He bought a pill press and mixing materials from websites such as Amazon and eBay and taught himself how to make homemade pills. Testimony at trial established that Woolard’s pill making operation was capable of producing more than 2.5 million pills containing fentanyl and furanyl fentanyl, and that he regularly provided thousands of pills to other conspirators for distribution. In 2017, Woolard turned the pill press operation over to Pelayo, who continued the manufacturing at a rural compound in Snohomish County.  Woolard retained the role of ordering the fentanyl from China and continued to help Pelayo make and distribute the pills. Woolard continued to distribute the pills while seeking treatment for his own drug addictions at spa-like resorts in Costa Rica and Mexico which cost him between $30,000 and $50,000 per month, which he paid for with the profits of his illicit pill operation.

Jerome Isham was one of the conspiracy’s top distributors. Evidence at trial established that he was responsible for re-distributing close to 100,000 illegal fentanyl and furanyl fentanyl pills over a one-year period between July 2017, and June 2018. Isham also recruited people to receive the shipments of powdered fentanyl and furanyl fentanyl from China. Woolard and Pelayo paid for the drugs by recruiting co-conspirators to wire money to China or by paying with bitcoin.

Pelayo was also convicted of two money laundering conspiracies and multiple counts of money laundering, including using $100,000 of his cash drug proceeds to purchase a luxury RV. He was also convicted of possessing a firearm in furtherance of his drug trafficking – resulting in a 5 year consecutive prison term to any other sentence imposed in the case.

Woolard was convicted of being a drug user and drug addict in possession of firearms. Isham was convicted of being a felon in possession of a firearm.

Conspiracy and possession of fentanyl with intent to distribute is punishable by a mandatory minimum ten years in prison and up to life in prison.  Being a felon in possession of a firearm, or a drug user and drug addict in possession of firearms, is punishable by up to ten years in prison.  Money laundering is punishable by up to twenty years in prison.

This effort is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) operation. OCDETF identifies, disrupts, and dismantles the highest-level criminal organizations that threaten the United States using a prosecutor-led, intelligence-driven, multi-agency approach. Additional information about the OCDETF Program can be found at https://www.justice.gov/OCDETF.  The investigation is being led by the Drug Enforcement Administration (DEA) with assistance from the Snohomish Regional Drug and Gang Task Force (SRDGTF) and the Whatcom County Drug and Gang Task Force. A total of eleven defendants were charged in this case. Eight have pleaded guilty, and two have been sentenced. Woolard, Pelayo, and Isham were the final three defendants in this conspiracy to proceed to trial.

The case is being prosecuted by Assistant United States Attorneys Karyn Johnson and Mike Lang.