Western District of Washington

          A former Washington State Correctional Officer from the Monroe Correctional Complex was sentenced today in U.S. District Court in Seattle to 18 months in prison for his scheme to smuggle contraband into the prison, announced U.S. Attorney Annette L. Hayes. MICHAEL W. BOWDEN, 31, of Everett, Washington pleaded guilty January 9, 2017, to extortion under color of official right. At the sentencing hearing today U.S. District Judge Richard A. Jones told BOWDEN, “you were in a position of trust and power and it was abused. You compromised the safety of everyone in the facility.”

 

          “We rely on correctional officers to do their difficult jobs with the utmost in integrity,” said U. S. Attorney Annette L. Hayes. “When this defendant allowed contraband into the Twin Rivers Unit of the Monroe correctional facility, he breached the public’s trust in ways that harmed Twin Rivers staff and prisoners alike. The fact is that in 2016, the Twin Rivers Unit where this defendant worked saw a 600% increase in inmates testing positive for drugs. We simply can’t have prison staff be a part of that problem, and are committed to holding those who are to account.”

 

          According to records in the case, the Department of Corrections Intelligence and Investigations Unit asked the FBI to become involved in the investigation of contraband smuggling in December 2015. Using confidential sources inside and outside the Monroe Correctional Complex, agents determined BOWDEN was accepting bribes of up to $1,000 to smuggle contraband into the prison. On three different occasions between July and September 2016, BOWDEN smuggled tobacco, a SIM card, and what he believed was methamphetamine into an inmate at the prison. In each of those three instances, the inmate turned the contraband over to investigators.

 

          “The Washington Department of Corrections appreciates the efforts and expediency of the U.S. Attorney’s office in prosecuting former Officer Bowden,” said Assistant Secretary Stephen Sinclair of the Washington Department of Corrections. “Our correctional system prides itself on the safety and security of our officers, staff, and incarcerated population. We have no tolerance for misdeeds committed by the few, and appreciate the hard, dutiful work of the thousands of uniformed and non-uniformed staff in our facilities.”

 

          In a letter to the court, the head of the Monroe Correctional Complex described how contraband puts people at risk. He noted that shortly before BOWDEN smuggled sham methamphetamine into the prison, an inmate had died of a meth overdose at the facility, when he tried to hide his stash of the drug. That incident was well known to BOWDEN even as he made arrangements to smuggle more meth into the facility. “Any contraband inside a prison is a serious issue, however, the specific presence of methamphetamine inside the prison endangers inmates and staff to additional risk as trades are made and debts are accrued, which often leads to increased violence,” Michael Obenland, Superintendent of the Monroe Correctional Complex wrote to the court.

 

          The case was investigated by the FBI in partnership with the Washington State Department of Corrections Intelligence and Investigations Unit.

 

          The case is being prosecuted by Assistant United States Attorney Justin Arnold.

 

WASHINGTON – Bingham Fox, owner of the fishing vessel Native Sun, was convicted today in U.S. District Court in Seattle of discharging oily waste directly into coastal waters of the State of Washington, a felony violation of the Clean Water Act. The jury deliberated six hours following a five-day trial. U.S. District Judge Robert S. Lasnik scheduled sentencing for July 11, 2017.

According to court documents, Bingham Fox, and others associated with the Native Sun, repeatedly discharged oily wastes into the ocean using unapproved submersible pumps and hoses. According to evidence presented at trial, the Native Sun had multiple, long-term, mechanical problems that put substantial amounts of oil in its bilges. In addition, the vessel was leaky, so the bilges were constantly filling with a mixture of oil and seawater. Bingham Fox had at least one illegal pump installed on board and directed others to regularly dump oily waste from the bilges, even in port.

“This criminal conviction clearly shows that treating our oceans as a dump has serious consequences,” said Acting Assistant Attorney General Jeff Wood of the Justice Department’s Environment and Natural Resources Division (ENRD). “Law-abiding vessel operators know the importance of compliance with our nation’s environmental laws, but those that flout those laws will face justice.”

“This case highlights the great collaborative efforts of Sector Puget Sound, Coast Guard Investigative Service and the Department of Justice, in holding those who pollute our waters accountable,” said Captain Linda A. Sturgis, Commander, Coast Guard Sector Puget Sound. “The results announced today are a prime example of the importance of the Coast Guard's marine environmental protection mission and the effectiveness of the Act to Prevent Pollution from Ships.”

Bingham Fox faces up to five years in prison and a criminal fine of up to $250,000 for this conviction. On March 17, 2017, his son Randall Fox pleaded guilty to conspiring with others to discharge oily wastes into the ocean when the Native Sun was offshore. Those acts violated the Act to Prevent Pollution from Ships (APPS), which specifically prohibits the discharge of machinery space bilge water, unless it has been properly treated, and meets rigorous oil pollution standards. APPS implements America’s obligations under an international treaty to control pollution by ocean-going vessels. On at least one occasion, a discharge under Randall Fox’s command left a large oily sheen in the wake of the Native Sun, which was video recorded by a crewmember, who reported the crime to authorities. Randall Fox faces a maximum of six years in prison for the APPS count and five years in prison for the conspiracy count. He also faces a criminal fine of up to $250,000 for each count. His sentencing is scheduled for June 16, 2017.

This case was investigated by the U.S. Coast Guard. The case is being prosecuted by trial attorneys Todd W. Gleason and Stephen Da Ponte of ENRD’s Environmental Crimes Section.

          Two Ecuadoran brothers are indicted in the Western District of Washington for ten felony counts related to distribution of heroin and laundering the proceeds of their drug sales, announced U.S. Attorney Annette L. Hayes. FREDY RAMON GUTAMA-GUTAMA, 25, and FABIAN MARTIN GUTAMA-GUTAMA, 20, both of Lynnwood, Washington, were observed by law enforcement between May 2016 and January 2017 making drug sales near various parks in north Seattle and hiding their drug supply in various public locations. The men will make their initial appearance on the indictment in Seattle today.

 

          “Heroin is wreaking havoc across every kind of community in western Washington– rural, suburban and urban,” said U.S. Attorney Annette L. Hayes. “In this case, the defendants were peddling this devastating drug in and around public parks in North Seattle and elsewhere. The investigation uncovered the fact that the defendants–in an apparent effort to shield themselves from arrest–stored significant quantities of their heroin supply in public places near parks where they operated.”

 

          According to records filed in the case, the defendants repeatedly sold heroin to a person working with law enforcement and sent the cash proceeds both across the country and to Ecuador. While under law enforcement surveillance, the conspirators stashed some of their drugs in a rockery in the Roosevelt neighborhood of north Seattle that was very near the park and children’s playground at the Ravenna-Eckstein Community Center. Law enforcement seized the drugs. The conspirators were also observed making drug sales at Green Lake Park and in Northacres Park. The men hid their drugs in a public place to reduce their risk of being caught by law enforcement with significant quantities of heroin in their possession.

 

          FREDY RAMON GUTAMA-GUTAMA is charged in all ten counts: conspiracy to distribute heroin; conspiracy to commit money laundering; five counts of distribution of heroin; and three counts of distribution of heroin with intent to distribute. FABIAN MARTIN GUTAMA-GUTAMA is charged in both conspiracy counts and in three counts of distribution of heroin and two counts of possession of heroin with intent to distribute.

 

          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.

 

          This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. The investigation was led by the Drug Enforcement Administration and is being prosecuted by Assistant United States Attorneys Sarah Vogel and Kate Vaughan.

 

          A Bellevue man who defrauded a small bank, Apple Inc., and various shippers of more than $3 million was sentenced today in U.S. District Court in Seattle to five years in prison, announced U.S. Attorney Annette L. Hayes. MAZIAR REZAKHANI, 27, lived a lavish lifestyle in a Bellevue penthouse with luxury collector cars in the garage–all financed by his fraud. At the sentencing hearing, U.S. District Judge James L. Robart said REZAKHANI “embarked on a life of crime because of greed and arrogance.”

 

          “This is the familiar story of unrelenting greed and lies winning out over hard work,” said U.S. Attorney Annette L. Hayes. “This defendant could have had all the cars and fancy apartments he wanted by running an honest and successful business. Instead, he deceived everyone in his path resulting in more than $3 million dollars of loss and a lot of innocent bank employees losing their jobs.”

 

          According to records filed in the case, between 2014 and 2015, MAZIAR REZAKHANI changed his business of reselling iPhones overseas to a fraud scheme where he ordered thousands of iPhones and then claimed the actual phones had been stolen from the shipment. In September 2014, REZAKHANI placed an order for 128 cartons of iPhones–1280 phones in all. REZAKHANI paid for the order by charging some of the cost to four different credit cards. REZAKHANI had the phones shipped to a business he co-owned in Portland, Oregon. After picking up the phones, REZAKHANI called Apple in a panic claiming he had discovered that in each carton instead of a phone, there were tiles cut to the size of an iPhone. When Apple refused to give REZAKHANI a refund, he got three of the four credit card companies to reverse the charges making Apple responsible for $342,710. Evidence in the case revealed that REZAKHANI had purchased the tiles himself at local warehouse home improvement stores. REZAKHANI used the stolen iPhones in his reselling business.

 

          In addition to the iPhone fraud, REZAKHANI submitted falsified tax and bank records to Bellevue’s Foundation Bank to get a multi-million dollar line of credit. In all REZAKHANI withdrew some $6.5 million in loan funds from the bank and used some of the money for his personal expenses such as $25,000 for a monthly rent payment for a penthouse; various luxury cars: a BMW, Ferrari Speciale, Ferrari Spider and a Mercedes-Benz; and to pay off more than $400,000 in credit card debt. Some of the money was paid back to Foundation Bank, but REZAKHANI defaulted on $2.8 million. The small bank was sold, and many employees lost their jobs.

 

          Even as that fraud was uncovered by the bank, REZAKHANI tried to start another fraud –this time attempting to defraud a shipper and insurance company. REZAKHANI shipped 116 boxes via Federal Express to a Delaware address. REZAKHANI claimed the boxes contained more than $5 million worth of iPhones. When the boxes were opened they contained a type of pumice brick. REZAKHANI claimed the iPhones had been stolen from Federal Express. But again, REZAKHANI had purchased the pumice brick at a local store. He filed claims with Federal Express, with the insurance company, and with a shipping subcontractor and made complaints to the FBI, FTC, and State of California Department of Insurance. No claims were ever paid.

 

          In July 2016, REZAKHANI pleaded guilty to two counts of mail fraud, one count of bank fraud, and one count of filing a false income tax return. He agreed to a restitution amount of $3,567,756 and is forfeiting the luxury cars and more than $100,000 in cash. Because REZAKHANI substantially underreported his income for 2009-2012, he may owe back taxes and penalties.

 

          The case was investigated by the FBI, Internal Revenue Service Criminal Investigation (IRS-CI) and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

 

          The case was prosecuted by Assistant United States Attorneys Brian Werner and Matthew Hampton.

 

          A former Tukwila and Snoqualmie Police Officer was sentenced today in U.S. District Court in Seattle to nine months in prison and one year of supervised release for Deprivation of Rights Under Color of Law for an attack on a handcuffed man at a Seattle hospital, announced U.S. Attorney Annette L. Hayes. NICHOLAS HOGAN, 36, pleaded guilty in November 2016, and as part of that plea agreement is prohibited from seeking employment as a police officer or security guard for fifteen years. At sentencing U.S. District Judge John C. Coughenour called the criminal conduct “simply unacceptable . . . . The trust of the community in our law enforcement officers is very fragile and it is damaged by this conduct.”

          “This officer was a bad apple – plain and simple,” said U.S. Attorney Annette L. Hayes. “Holding him to account and making sure he cannot return to law enforcement work protects the public and everyone’s constitutional rights. It also ensures that the overwhelming majority of officers who do their often difficult and dangerous jobs in an exemplary way get the respect that they need and deserve.”
 

          According to the plea agreement, on May 20, 2011, HOGAN responded to a report of a fight on Pacific Highway South in Tukwila. A man was taken into custody on a misdemeanor warrant, but because of his injuries, the King County Jail instructed HOGAN to take the man to Harborview. HOGAN admits in his plea agreement that the man was handcuffed and refusing to get out of the patrol car. HOGAN physically removed the man from the car and when the man grabbed HOGAN’s arm, HOGAN pulled away and repeatedly struck the man in the head with his knee.

          Taking the man into the Harborview emergency room, HOGAN repeatedly shoved the man until he fell and then HOGAN dropped on top of him restraining him with a knee in his back. The man was placed on the gurney in four point restraints so that he could not move his arms or legs. While the man was in a treatment area and surrounded by a curtain, HOGAN remained alone with him. HOGAN used pepper spray on the restrained man. In his plea agreement, HOGAN admits he knew that the spray was not necessary to protect himself or others at the hospital and thus not reasonable under the circumstances. As a result, HOGAN admits he violated the constitutional rights of the detainee to be free of unreasonable seizure.

          Under the terms of the plea agreement HOGAN surrenders any law enforcement commission and agrees not to seek reinstatement of any law enforcement commission, or seek a new law enforcement commission, or seek employment in any law enforcement agency or law enforcement related employment, including, but not limited to any city, county, state, or federal policing or corrections positions, or that of a private security guard, or any position that requires the carrying of a firearm, for a period of 15 years.

          The FBI investigated the case. Assistant United States Attorney Bruce Miyake prosecuted the case for the Western District of Washington and Trial Attorneys Rose Gibson and Jared Fishman of the Civil Rights Division for the Department of Justice.

          The leader of a drug trafficking organization who admits his connection to the Los Zetas drug cartel was sentenced today in U.S. District Court in Seattle to 12 years in prison, announced U.S. Attorney Annette L. Hayes. ENRIQUE AGUILAIR VALENCIA, 55, who resided in Fremont, California led a drug distribution ring that distributed large amounts of methamphetamine, heroin and cocaine throughout western Washington. Much of the distribution was via stash houses in Skagit and Snohomish Counties. At the sentencing hearing U.S. District Judge John C. Coughenour said he was concerned about the very large quantities of drugs and the guns involved in the case.

 

          “This defendant has shown nothing but contempt for the laws of the United States,” said U.S. Attorney Annette L. Hayes. “When law enforcement took down this significant drug ring, along with large quantities of heroin and meth, they found multiple firearms including one with a silencer. The community is safer with this defendant and his long history of sex and drug crimes behind bars.”

         

          According to records filed in the case, AGUILAIR VALENCIA is the last of six defendants prosecuted as part of this drug distribution ring. In March, April and May 2015, a person working with law enforcement purchased heroin and methamphetamine from various distributors in the conspiracy. The purchases were set up in recorded telephone calls with AGUILAIR VALENCIA. The person working with law enforcement recorded conversations with AGUILAIR VALENCIA discussing his ability to provide large amounts of drugs for distribution in the U.S. and Canada. The conspirators laundered drug proceeds though bank accounts controlled by AGUILAIR VALENCIA. While AGUILAIR VALENCIA resided in California, he controlled stash houses for his drugs, guns and money in Mt. Vernon, Bow, and Stanwood, Washington.

 

          AGUILAIR VALENCIA had no legal status in the United States, and had prior convictions for kidnapping, rape, assault with a deadly weapon (California 1986), lewd acts with a child and failure to register as a sex offender (California 2008), and illegal reentry after deportation (California 2011).

 

          AGUILAIR VALENCIA was arrested when law enforcement moved in on the ring in June 2015. At AGUILAIR VALENCIA’s various stash houses law enforcement seized a total of over 30 pounds of meth and heroin and numerous firearms including one with a silencer. At AGUILAIR VALENCIA’s home in California, agents seized nearly $32,000 in cash.

 

          On November 23, 2016, AGUILAIR VALENCIA pleaded guilty to conspiracy to distribute controlled substances and conspiracy to launder money.

 

          The other defendants in the case and their sentences include: Gustavo Garcia-Valencia (five years); Juan Diego Vasquez-Cardenas (three years); Rafael Marin-Macias (eight years); Guadalupe Farias-Savala (four years) and Efran Villalobos-Gonzalez (five years).

 

          This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. The investigation was led by the Drug Enforcement Administration (DEA) in cooperation with the Skagit County Interlocal Drug Enforcement Unit and the Whatcom Gang and Drug Task Force.

 

         The case was prosecuted by Assistant United States Attorneys Steven Masada and Grady Leupold.

 

 

          A 36-year-old Steilacoom, Washington woman was sentenced today in U.S. District Court in Tacoma to 60 days home confinement and 100 hours of community service for defrauding Social Security Disability and the U.S. Army healthcare system of more than $100,000 in benefits, announced U.S. Attorney Annette L. Hayes. maria sanchez-kountz pretended to have terminal cancer to secure prescription opiates and Social Security disability benefits. At the sentencing hearing, U.S. District Judge Benjamin H. Settle noted that SANCHEZ-KOUNTZ is the sole parent to two children and imposed five years of probation and ordered her to pay $102,932 in restitution.

 

          According to records filed in the case, between February 2012 and July 2016, sanchez-KOUNTZ received disability payments because she claimed she could not work due to terminal cancer. She also received benefit payments for her children as part of her disability claims. SANCHEZ-KOUNTZ falsely reported a history of ovarian cancer that was treated with surgery, followed by chemotherapy and radiation. When SANCHEZ-KOUNTZ visited doctors between 2011 and 2015, she described to them her false history of cancer, and that description was memorialized in her medical records, which she used as further proof of her condition. She repeatedly told doctors that she did not want any more chemotherapy or radiation, electing only palliative care that included prescription narcotics for her self-reported chronic pain and nausea. With this scheme sanchez-KOUNTZ, who at the time was married to a member of the U.S. military, stole more than $82,000 in disability payments and more than $20,000 in military medical benefits.

 

          In fact, sanchez-KOUNTZ was working for a Lakewood, Washington company as a seamstress during some of the period when she was collecting disability benefits. She even had a tailoring business that she promoted on a website by falsely claiming she was a cancer survivor. SANCHEZ-KOUNTZ’s scheme became known when medical professionals could not locate any records related to her prior treatment at medical facilities where she claimed to have been a patient.

 

          The case was investigated by the Cooperative Disability Investigations Unit (CDIU), which is a disability fraud task force comprised of the Social Security Administration, Office of Inspector General (SSA-OIG), the Social Security Administration (SSA), the Washington State Patrol (WSP) and the Washington State Department of Social and Health Services, Disability Determination Services (DDS). The case was prosecuted by Special Assistant United States Attorney Benjamin Diggs. Mr. Diggs is an attorney with the Social Security Administration, specially designated to prosecute fraud cases in federal court.

          A long-time Bellevue investment advisor pleaded guilty today in U.S. District Court in Seattle to wire fraud and making false statements, announced U.S. Attorney Annette L. Hayes. CHRIS YOUNG YOO, 44, admitted he raised millions of dollars in investments by promising to invest his clients’ money in funds he managed. However, YOO admitted, he never actually invested the money of certain clients, and instead used their money to pay his own living and business expenses, resulting in a loss of over $3.6 million to those clients. YOO also admitted to providing false information to Securities and Exchange Commission (SEC) regulators in connection with an SEC investigation. When sentenced by U.S. District Judge Thomas S. Zilly on June 22, 2017, both the prosecution and defense will recommend an 80-month prison term.

 

          According to records filed in the case, between 2006 and 2015, YOO was the majority owner and operator of Summit Asset Strategies, a Bellevue investment company. The company operated two funds that invested primarily in South Korea. After opening Summit, YOO realized that the management fees he was permitted to charge investors would not support his company or lifestyle, so he began funneling some investors’ money into a separate bank account, rather than into the Summit investment funds as promised. YOO misused the investments of 17 investors in this manner.

 

          In 2014, YOO was required to disclose all of his bank accounts to the SEC as part of an SEC investigation into YOO’s management of two investment funds. YOO submitted misleading documents to the SEC to conceal the bank account he was using to commit his fraud. YOO falsely claimed the account belonged to a relative and that payments to clients from that account were loan payments. In 2015, YOO reached a settlement with the SEC in which he was ordered to pay restitution and forbidden from committing further fraud. Even after this settlement, YOO continued to fraudulently solicit investments and use the funds for his own purposes. In all, some 17 investors were defrauded of $3,660,216.

 

          The case was investigated by the FBI and the Washington State Department of Financial Institutions. The case is being prosecuted by Assistant United States Attorney Seth Wilkinson.

            A registered sex offender who committed new crimes against children while on supervised release was sentenced today in U.S. District Court in Seattle to 15 years in prison and lifetime supervised release.  JAMES WILLIAM STILSON, 40, of Everett, has previous convictions for possession of child pornography and failing to register as a sex offender.  Chief U.S. District Judge Ricardo S. Martinez imposed the sentence.

            According to records filed in the case, STILSON was taken into custody in December 2015, when his federal probation officer became concerned that STILSON had multiple electronic devices for accessing the internet – something prohibited under the terms of his supervision.  Forensic examination of his devices revealed that he had images of children engaged in sexually explicit conduct.  Additionally, STILSON was using a messaging service popular with teens to try to convince young girls to send him sexually explicit pictures.  STILSON was posing as a teen-age boy to try to get the girls to send the photos.  In one instance, STILSON sent a young girl an image of child pornography in an attempt to convince her to send him explicit photos.

            STILSON’s original conviction for possession of child pornography was in 2004 in New Mexico.  His supervision was transferred to Western Washington and in 2009, computer monitoring equipment required on his electronic devices revealed he had been accessing websites devoted to child pornography.  Before law enforcement could arrest STILSON, he absconded to Mexico.  When he attempted to sneak back into the U.S., STILSON was arrested and was convicted in 2012 for failing to register as a sex offender.  Some two years into his most recent term of supervised release, his probation officer conducted a home inspection and observed STILSON through a window using a smart phone – something he was not supposed to have.  Law enforcement brought in ‘Bear’ - - the Seattle Police canine trained to find electronic devices - - who searched the home and found three smart phones and other digital devices.

            The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Seattle Police Department.  Critical assistance was provided by the U.S. Probation Office.

            The case is being prosecuted by Assistant United States Attorney Matthew Hampton. 

           

            Three citizens from Mexico who were living in Aberdeen and Federal Way, Washington without legal status, were sentenced to prison today in U.S. District Court in Seattle for conspiracy to violate immigration laws for financial gain, announced U.S. Attorney Annette L. Hayes.  MIGUEL ARCEF-FLORES, 42, was sentenced to 40 months in prison; ANGEL SANDOVAL MONDRAGON, 37, was sentenced to 36 months in prison; and MARBELLA SANDOVAL MONDRAGON, 38, was sentenced to 34 months in prison.  Following their incarceration each will likely be deported from the U.S.  U.S. District Judge James L. Robart imposed the sentences, saying that the “extreme and abusive conduct of the Defendants” took the case “well outside the heartland of the typical alien smuggling case.”

            “The defendants promised the world, and then stole the childhood of a 14-year-old girl,” said U.S. Attorney Annette L. Hayes. “They preyed on a vulnerable relative for their own selfish and depraved reasons. Victims should know that they can safely come forward and report human trafficking crimes and all of us in law enforcement will work to ensure the perpetrators of such crimes are brought to justice.”

            “No one should be forced to live in a world of isolation, servitude and terror as this young victim was, particularly in a country that prides itself on its freedoms,” said Brad Bench, special agent in charge of HSI Seattle. “It’s a sad reflection on human greed and heartlessness, that people believe they can engage in this kind of egregious exploitation with impunity. This sentence should send a message to those who traffic in human beings – that HSI and its federal law enforcement partners are committed to protecting those who cannot protect themselves.”

            According to records filed in the case and evidence before the Court, in December 2004, ANGEL SANDOVAL MONDRAGON, who had recently been voluntarily removed from the United States to Mexico, began recruiting his then 14-year-old niece to travel with him from Mexico into the United States.  ANGEL SANDOVAL MONDRAGON and his family, including his sister, MARBELLA SANDOVAL MONDRAGON, and her husband, MIGUEL ARCEF-FLORES, and their children, had been living illegally in the Aberdeen, Washington area.  ANGEL SANDOVAL MONDRAGON promised the young girl a better life with an education and a home with his family.  In early 2005, ANGEL SANDOVAL MONDRAGON smuggled the young teen across the border from Mexico with the help of a “coyote.”  ANGEL SANDOVAL MARBELLA SANDOVAL MONDRAGON and MIGUEL ARCEF-FLORES picked them up and transported them to Aberdeen, where the three defendants shared a home with their five children and another teenage niece, who had previously been smuggled into the United States.  The young girl was then informed that she would not be enrolling in school, but was instead expected to work to pay off a smuggling debt. 

           ANGEL SANDOVAL MONDRAGON obtained false documents for the teen and helped her procure employment at various low wage temporary jobs at local companies in the Seattle area, including Plush Pippin and Seattle Gourmet Food.  The teenager was required to give all the money she earned to the three defendants to pay for rent, food, and household expenses.  The teenager and her cousin were sexually molested and threatened with deportation if they told anyone about their situation.  They were also denied food and medical care.

            In approximately May 2006, the victim’s employment with the temporary staffing agency was terminated because she was physically unable to work.  The defendants sent the victim and her teenage cousin back to Mexico.  The defendants continued to tell the victim that she owed them money for the costs incurred in bringing her to, and harboring her in the United States.  

            A few years later, in 2009, MARBELLA SANDOVAL MONDRAGON recruited her two younger brothers, both of whom were juveniles, to travel from Mexico to live with her and MIGUEL ARCE FLORES in the Seattle area.  After the juveniles arrived they were told they had incurred smuggling debts and had to repay her.  MARBELLA SANDOVAL MONDRAGON took custody of one of the juvenile brother’s identification documents and told him that he would not get the documents back until he had paid his debt in full.

            All three defendants were indicted in December 2015 and have been in custody since their arrests on December 7, 2015.

            The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Seattle Police Department, the Federal Way Police Department, and the Aberdeen Police Department. The Department of Labor Wage and Hour Division also assisted with restitution calculations.

            The case was prosecuted by Assistant United States Attorneys Kate Crisham and Bruce Miyake.

  

          A long-time professional fishing guide who attempted to conceal the fact that he had killed two protected wild salmon was fined $7,500 today in U.S. District Court in Tacoma for violating the Endangered Species Act, announced U.S. Attorney Annette L. Hayes. BILLY SWANN, 52, owner and operator of Swanny’s Guided Fishing service which operates on the Lower Columbia and Cowlitz rivers, pleaded guilty to the misdemeanor charge last year. At the sentencing hearing Magistrate Judge Karen Strombom described his conduct as “shocking” and told him, “You had a responsibility and you failed miserably at it.”

          “With so many putting so much into bringing back our cherished wild salmon runs in the Pacific Northwest, this conduct is particularly offensive,” said U. S. Attorney Annette L. Hayes. “A salmon fishing guide who makes his living off our natural resources should have respected the rules that are meant to ensure those resources will always be there for all of us. The fact that he was willing to ignore those rules knowing others were watching makes his conduct all the more troubling.”

          According to records filed in the case, on October 1, 2014 SWANN led a promotional fishing trip on the Cowlitz River with the top salespeople from a national fishing bait company. The trip was being broadcast over the internet. SWANN encouraged two men on the trip to catch two native Coho salmon. Native Coho on the Cowlitz are protected by the Endangered Species Act and Washington law, and may not be removed from the water. After the clients landed the fish, SWANN clubbed both of them and then cut off the adipose fins on each fish to make it appear they were hatchery fish and therefore legal to catch and keep. However, the catching and clubbing of the wild and protected fish was caught on the web broadcast, and the illegal conduct was reported to the Washington State Department of Fish and Wildlife. When contacted by authorities, SWANN first lied about the conduct saying the photos of the fish with the adipose fin still intact could have been ‘photo-shopped’.

          “NOAA Fisheries has worked hard to rebuild the salmon population in the Pacific Northwest,” said Samuel D. Rauch III, acting assistant administrator for NOAA Fisheries. “This kind of illegal action by a guide, who should be setting an example, undermines the progress we’ve made in restoring salmon and squanders an invaluable resource that belongs to all of us.”

          The case was investigated by the NOAA Fisheries Office of Law Enforcement with assistance from the Washington State Department of Fish and Wildlife - Police.

          The case was prosecuted by Assistant United States Attorney Seth Wilkinson.

 

          A 24-year-old Seattle man who admits being a member of a violent street gang, was sentenced today in U.S. District Court in Seattle to nine years in prison and five years of supervised release, announced U.S. Attorney Annette L. Hayes. DEVONTEA ROSEMON pleaded guilty to four felony charges in November 2016: Conspiracy to distribute cocaine, possession of a firearm in furtherance of a drug trafficking crime and two counts of unlawful possession of a firearm. Between January and June 2016, ROSEMON repeatedly sold guns and drugs to a person working with law enforcement. At the sentencing hearing U.S. District Judge Robert S. Lasnik said, “Truly dangerous weapons were being trafficked in a community where a rise in shootings is simply shocking…. There must be consequences for funneling weapons into the hands of people who commit violent crimes.”

 

          “This defendant was a one stop shop for multiple firearms, including high powered assault style weapons,” said U.S. Attorney Annette L. Hayes. “I commend ATF for their ongoing work to identify and stop sources of firearms that end up being used to harm our communities.”

 

          According to records filed in the case, ROSEMON repeatedly sold cocaine from a marijuana dispensary he operated in Seattle and from his car. After a few of the sales, ROSEMON offered to sell a firearm. ROSEMON first sold the person working with law enforcement a .38 caliber pistol. Between March and June 2016, ROSEMON sold the informant several more firearms including a Ruger with an extended clip, a Century Arms rifle, a Smith and Wesson .40 caliber pistol, a Walther PPK .380 caliber pistol, a Canik55 pistol, a Sig Sauer .38 caliber pistol, a Zastava .762 caliber pistol and a Springfield Armory .45 caliber pistol. ROSEMON also sold body armor. When law enforcement searched ROSEMON’s apartment after his arrest, they found a Norinco MAK 90 Sporter 7.62X39mm assault rifle, equipped with a 100-round drum. The weapon was simply stored on the floor of a bedroom closet where ROSEMON’s two nieces (both under the age of 5) could have accessed it.

 

          ROSEMON is prohibited from possessing firearms due to three prior robbery convictions. ROSEMON was arrested in June 2016 following the last of the gun sales.

 

          The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Seattle Police Department. The case was prosecuted by Assistant United States Attorney Todd Greenberg.

          The manager of an Ocean Park, Washington oyster processing company who falsified important tests of the plant’s wastewater discharge and lied to state regulators about those readings was sentenced today in U.S. District Court in Tacoma for a felony violation of the Clean Water Act, announced U.S. Attorney Annette L. Hayes. LONNY HOWARD, 56, was employed as the plant manager of Wiegardt Brothers, Inc. (WBI). HOWARD admitted that, for 12 years, he falsified data to understate the amount of fecal coliform the plant was discharging into Willapa Bay. U.S. District Judge Ronald B. Leighton imposed a sentence of one year of probation.

          “Over a dozen years, this defendant consistently falsified readings intended to protect the health and safety of people using and enjoying Willapa Bay,” said U.S. Attorney Annette L. Hayes. “Fecal Coliform contamination can have particularly serious consequences for children, the elderly, and people with compromised immune systems. The felony conviction in this case is an appropriate sanction for this defendant whose callous disregard for his legal obligations harmed the environment we Northwesterners hold dear.”

          According to records filed in the case, HOWARD was the General Manager of Wiegardt Brothers between 2002 to 2014. During that period, the company was required to perform monthly tests of the wastewater by taking samples of the wastewater at the point it was discharged into Willapa Bay. HOWARD admitted that instead of doing so, he tested diluted water from source known as “bubbler,” causing the tests to understate the amount of fecal coliform in the wastewater. On some occasions, the level of fecal coliform in the bubbler was still higher than the permit allowed. In those instances, HOWARD falsified the data submitted to the state to make it appear the plant was in compliance. When asked by inspectors whether he was taking tests from the location specified in the permit, HOWARD falsely told the inspectors that he was doing so.

          On August 22, 2014, the company reported the violations to the Department of Ecology and has been working with environmental regulators on a remediation plan. Regulators were unable to assess whether the violations resulted in any environmental harm.

           The company and its President pleaded guilty to misdemeanor violations of the Clean Water Act in June 2015. Wiegardt Brothers, Inc. agreed to pay a $100,000 fine, make a $75,000 community service payment, implement an EPA approved environmental management system to insure future compliance, and publish a public apology in the Pacific Coast Shellfish Growers Association’s quarterly newsletter. Company President Frederic “Fritz” Weigardt was jointly responsible for payment of the $100,000 criminal fine was required to complete 75 hours of community service.

 

          HOWARD is no longer employed in the food industry or other industry with environmental compliance issues.

 

          The case was investigated by the Environmental Protection Agency Criminal Investigation Division (EPA-CID) and was prosecuted by Assistant United States Attorneys Seth Wilkinson and James Oesterle and Special Assistant United States Attorney Karla Perrin, with assistance from EPA Regional Enforcement Counsel Bradley Roberts.

          The U.S. Department of Justice today filed a lawsuit in U.S. District Court for the Western District of Washington alleging that the owners and manager of three Edmonds, Washington apartment buildings refused to rent their apartments to families with children, in violation of the Fair Housing Act.

 

          “Equal access to housing is essential for all Americans, including families with young children,” said U.S. Attorney Annette L. Hayes of the Western District of Washington. “Particularly in our tight housing market, landlords must follow the law and make units available without discrimination based on race, color, religion, sex, national origin, disability or familial status.”
 

          “The Fair Housing Act prohibits landlords from denying apartments to families just because they have children,” said Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division. “Many families already face challenges finding affordable housing, and they should not also have to deal with unlawful discrimination.”

 

          “Families should have the same opportunity as anyone else to obtain housing, and not have their options limited simply because they have children,” said Fair Housing Director Barbara Lehman of the Department of Housing and Urban Development’s Region X Office. “HUD will continue working to ensure that home seekers are aware of their housing rights and housing providers meet their responsibility to comply with this nation’s fair housing laws.”

 

          Today’s complaint concerns three apartment buildings – located at 201 5th Ave. N., 621 5th Ave. S., and 401 Pine Street in Edmonds – that are managed by defendant Debbie A. Appleby, of Stanwood, Washington. The properties are owned by three Limited Liability Corporations (LLCs) controlled by Appleby – Apple One, LLC, Apple Two, LLC, and Apple Three, LLC—which are also named as defendants in the suit. The complaint alleges that in March 2014, defendant Appleby told a woman seeking an apartment for herself, her husband, and their one-year-old child that the apartment buildings were “adult only” and therefore not available to her family. The complaint also alleges that at various other times from April 2014 to November 2015, defendants advertised their available apartments as being restricted to adults only. The family filed a complaint with the Department of Housing and Urban Development (“HUD”) which conducted an investigation, issued a charge of discrimination against the defendants, and referred the case to the Department of Justice.

 

          The complaint seeks a court order requiring defendants to cease their discriminatory housing practices, damages for the family that filed the HUD complaint and any other families against whom the defendants discriminated against because they had children, and civil penalties. Any individuals who have information relevant to this case are encouraged to contact the Civil Rights Division at 1-800-896-7743, Option 96.

 

          The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the U. S. Attorney’s Office and the Civil Rights Division and the civil rights laws it enforces is available at https://www.justice.gov/usao-wdwa/civil-rights and www.usdoj.gov/crt. Individuals who believe that they have been victims of housing discrimination may call the Justice Department at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777 or through its website at www.hud.gov.

 

          The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.

          The case is being jointly handled by Trial Attorney Kathryn Legomsky for the Civil Rights Division for the U.S. Department of Justice and Assistant United States Attorney J. Michael Diaz for the Western District of Washington.

appleby_complaint_1.pdf

The U.S. Department of Justice today filed a lawsuit in U.S. District Court for the Western District of Washington alleging that the owners and manager of three Edmonds, Washington apartment buildings refused to rent their apartments to families with children, in violation of the Fair Housing Act.

 

“The Fair Housing Act prohibits landlords from denying apartments to families just because they have children,” said Acting Assistant Attorney General Tom Wheeler of the Justice Department’s Civil Rights Division. “Many families already face challenges finding affordable housing, and they should not also have to deal with unlawful discrimination.”

 

“Equal access to housing is essential for all Americans, including families with young children,” said U.S. Attorney Annette L. Hayes of the Western District of Washington. “Particularly in our tight housing market, landlords must follow the law and make units available without discrimination based on race, color, religion, sex, national origin, disability or familial status.”

 

The complaint concerns three apartment buildings – located at 201 5th Ave. N., 621 5th Ave. S., and 401 Pine Street in Edmonds – that are managed by defendant Debbie A. Appleby, of Stanwood, Washington. The properties are owned by three Limited Liability Corporations (LLCs) controlled by Appleby – Apple One, LLC, Apple Two, LLC, and Apple Three, LLC—which are also named as defendants in the suit. The complaint alleges that in March 2014, defendant Appleby told a woman seeking an apartment for herself, her husband, and their one year old child that the apartment buildings were “adult only” and therefore not available to her family. The complaint also alleges that at various other times from April 2014 to November 2015, defendants advertised their available apartments as being restricted to adults only. The family filed a complaint with the Department of Housing and Urban Development (“HUD”) which conducted an investigation, issued a charge of discrimination against the defendants, and referred the case to the Department of Justice.

 

The complaint seeks a court order requiring defendants to cease their discriminatory housing practices, damages for the family that filed the HUD complaint and any other families against whom the defendants discriminated against because they had children, and civil penalties. Any individuals who have information relevant to this case are encouraged to contact the Civil Rights Division at 1-800-896-7743, Option 96.

 

The federal Fair Housing Act prohibits discrimination in housing on the basis of race, color, religion, sex, familial status, national origin and disability. More information about the Civil Rights Division and the civil rights laws it enforces is available at www.usdoj.gov/crt and https://www.justice.gov/usao-wdwa/civil-rights. Individuals who believe that they have been victims of housing discrimination may call the Justice Department at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov, or contact HUD at 1-800-669-9777 or through its website at www.hud.gov.

 

The case is being jointly handled by the Department’s Civil Rights Division and the U.S. Attorney’s Office for the Western District of Washington.

 

The complaint is an allegation of unlawful conduct. The allegations must still be proven in federal court.

         UPDATE

The defendant in this case, CHARLES ANDREW STOCKER, was acquitted of the charges described in the press release below following a jury trial in March 2018.

 

           A corrections officer at the Aberdeen, Washington City Jail will make his initial appearance in U.S. District Court in Tacoma this afternoon, following an FBI investigation into allegations that the corrections officer was tipping-off drug traffickers about law enforcement activities, announced U.S. Attorney Annette L. Hayes. CHARLES ANDREW STOCKER, 49, is charged in a criminal complaint with two counts of aiding and abetting drug trafficking and two counts of misprision of a felony. STOCKER had been on administrative leave since last summer when federal law enforcement served court authorized search warrants on his home and business.

 

          According to the criminal complaint unsealed today, members of the Grays Harbor Drug Task Force informed the FBI and the Drug Enforcement Administration (DEA) about indications STOCKER had been providing sensitive law enforcement information to known drug dealers in the Aberdeen area. During their drug trafficking investigations, Task Force members became aware of allegations that STOCKER had warned a drug dealer about an individual working with law enforcement as a confidential source attempting to purchase drugs. The FBI led investigation uncovered a recording of a jail call that implicated STOCKER in providing this information. In addition, the investigation revealed that STOCKER passed sensitive law enforcement information, including that the Task Force was listening to jail calls, to two other drug dealers who worked together to distribute drugs in the area. STOCKER also allegedly agreed to hold money for one of these drug targets. That target later worked with law enforcement and under law enforcement supervision delivered money to STOCKER for safe keeping. The money was recovered when the search warrants were executed. According to the Complaint, STOCKER made a variety of false statements at the time the search warrants were executed.

 

          Aiding and abetting a drug trafficking offense is punishable by a term of imprisonment of up to 20 years. Misprision of a felony is punishable by a term of imprisonment of up to 3 years.

 

          The charges contained in the complaint 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 is being investigated by the FBI. The case is being prosecuted by Assistant United States Attorneys Justin Arnold and Vince Lombardi.

stocker_complaint_0.pdf

 

          A pair of identity thieves who methodically stole and used victims’ personal information to steal more than $350,000 were sentenced today in U.S. District Court in Seattle, announced U.S. Attorney Annette L. Hayes. RYDER COLIN GUTHRIE, 32, and MICHELLE NICOLE HUDSON, 33, were arrested in August 2016, following an investigation that revealed they had used stolen identities to claim more than $50,000 in unemployment benefits and had defrauded multiple credit unions of more than $300,000. GUTHRIE was sentenced to 52 months in prison and HUDSON was sentenced to 48 months in prison. Both are responsible for $363,101 in restitution. At the sentencing hearing U.S. District Judge James L. Robart said, “For four years these defendants lived the high life by using other people’s money… (They) attacked (the victims’) character, their reputation and their assets by a non-violent but equally destructive means.”

          “By some estimates, 7% of all U.S. residents age 16 or older, experience at least one incident of identity theft a year,” said U.S. Attorney Annette L. Hayes. “Identity theft takes an emotional and financial toll, and all of us pay more because of these frauds. As today’s sentencing demonstrates, the thieves who engage in this crime face significant federal sentences.”

          According to records filed in the case, working out of motels in western Washington, Oregon and northern California, the pair stole identity information of friends and relatives, former employees of a defunct business, and credit union employees. Using advanced data-mining techniques, the pair built detailed credit profiles of the victims which they used to submit fraudulent unemployment benefit claims, and to create and access new and existing accounts under the victims’ names at credit unions. The pair wrote fraudulent checks to inflate the balances in the credit union accounts, and then withdrew cash at ATMs before the checks bounced. The pair also accessed and drained legitimate accounts belonging to the victims. When the pair fled from a motel in Fife, Washington they left behind a laptop containing credit profiles and other evidence of their many frauds.

          GUTHRIE and HUDSON each pleaded guilty to conspiracy to commit bank and wire fraud and aggravated identity theft in November 2016.

          The case was investigated by the U.S. Secret Service, Washington State Employment Security, the U.S. Department of Labor Office of Inspector General, and the Puyallup and Fife Police Departments.

          The case was prosecuted by Assistant United States Attorney Francis Franze-Nakamura.

          An enrolled member of the Suquamish Indian Tribe was sentenced this week to five months in prison and three years of supervised release, including three months of home detention and 100 hours of community service for assault, announced U.S. Attorney Annette L. Hayes. HA-KWA CHIQUITI, 38, assaulted his girlfriend on December 22 and 23, 2015. At the sentencing hearing U.S. District Judge Benjamin H. Settle noted CHIQUITI’s conduct constituted a serious, violent crime causing substantial injury and suffering.

          According to records filed in the case, Suquamish Police were called to a home on tribal land where they found the victim covered in blood and seriously injured. She was transported to Harrison Hospital in Bremerton. She reported that CHIQUITI had hit her, forcibly restrained her, slammed her face into the edge of the bath tub and stepped on her back while she was lying on the floor. She had multiple cuts and bruises, a damaged eye socket and vision problems because of the assault.

          As part of his sentence, CHIQUITI is required to participate in a domestic violence/anger management program. CHIQUITI is also prohibited from having any contact with the victim.

          The case was investigated by the Suquamish Police Department and the FBI. The case was prosecuted by Assistant United States Attorneys J. Tate London and Ye-Ting Woo.

          A former resident of Clinton, Washington was sentenced today in U.S. District Court in Seattle to eight years in prison and 15 years of supervised release for receipt and possession of child pornography, announced U.S. Attorney Annette L. Hayes. ERIC EUGENE LOBDELL, 48, was arrested in November 2015, following an investigation by U.S. Immigration and Customs Enforcement’s Homeland Security Investigation. LOBDELL’s computer was identified in the investigation of peer-to-peer file sharing involving images of child rape. LOBDELL’s electronic devices were found to contain more than 100,000 images of child pornography including some images LOBDELL made with a hidden camera of young girls changing clothes and using the bathroom. At the sentencing hearing U.S. District Judge Thomas S. Zilly called the conduct “really outrageous behavior by this defendant.”

 

          According to records filed in the case, LOBDELL came to the attention of law enforcement in early 2015 when investigators uncovered child pornography on a peer to peer file sharing network. In June 2015, the investigation resulted in court authorized search warrants being executed at the home where LOBDELL was staying on Whidbey Island, Washington. Investigators seized multiple electronic devices and discovered thousands of images of child pornography. Some of the images were known series of child victims. Others were images LOBDELL made using cameras hidden in bathrooms of homes or hotels where he had lived or traveled. In one instance reviewed by law enforcement LOBDELL adjusts a small child’s clothing to photograph the child for his sexual gratification.

 

          One of the victims speaking in court today said she was “devastated and heartbroken” when she learned someone she trusted had violated that trust. “The person I was meant to be was taken from me… I feel broken, violated and ashamed.”

 

          Investigators believe LOBDELL did not share the photos he made of local victims over the internet, but Judge Zilly made note of the other victims whose images LOBDELL obtained via file sharing saying, “Those victims will be victims forever, because it is on the internet and will be forever.”

 

          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 investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the Internet Crimes Against Children Task Force including detectives from the Bellingham Police Department.

 

          The case was prosecuted by Assistant United States Attorney Matthew Hampton.

          The long-time manager of a Hoquiam wood shavings business was sentenced today in U.S. District Court in Tacoma to three years in prison and three years of supervised release for thirteen federal felonies related to his theft of $1.3 million from a family business, announced U.S. Attorney Annette L. Hayes. WILLIS D. “BILL” LONN, JR., 68, of Aberdeen was convicted in October 2016 of nine counts of mail fraud, two counts of income tax evasion, one count of money laundering conspiracy and one count of interstate transportation of stolen property following a six-day trial. At the sentencing hearing U.S. District Judge Benjamin H. Settle said LONN “profoundly abused the trust of his employer [and] callously betrayed family members and took what belonged to the company.”

          “This defendant did not commit just a single act of embezzlement, rather, over the course of years, he stole from the company almost every day,” said U.S. Attorney Annette L. Hayes. “He betrayed the trust of his family members to satisfy his greed and then used the stolen money to start his competing business harming his victims even further.”

          According to records filed in the case and testimony at trial, LONN was a long time manager for Long Beach Shavings Company (LBS). The company was owned by LONN’s uncle and cousins and was based in California. The company had one plant in Hoquiam, Washington where it processed wood shavings for use on farms, at horse shows or in pet stores. LONN had worked at the Hoquiam plant for about a decade when he launched a scheme in the 2000s to steal and sell the wood shavings products for his own enrichment. LONN did this by selling the shavings directly to customers in Washington and Oregon without turning the proceeds over to the company. Later in the scheme, LONN arranged to get wood chips for free from a Montesano lumber mill, but he informed the parent company that an entity named M & R Lumber needed to be paid for the wood shavings. LONN posed as M & R Lumber and created phony invoices that he mailed to LBS to bill them for the shavings. LONN then kept the money. Between the two schemes LONN obtained more than $1.3 million from LBS. He was terminated by the company in 2011 when the full scope of the scheme came to light.

          Testimony at trial revealed that LONN never paid income taxes on the ill-gotten gain in tax years 2009 and 2010. Had LONN reported the income his tax bill for those years would have increased by more than $80,000.

          “At this time of year most Americans are busy fulfilling their obligations as citizens of our country by preparing and filing honest and accurate tax returns. However, a small percentage of the population selfishly shuns their civic duty by dodging the tax laws that the majority of us observe,” stated Special Agent in Charge Darrell Waldon of IRS Criminal Investigation. “When this happens, IRS Special Agents stand ready to defend our nation’s tax system by bringing scofflaws to justice and ensuring a level playing field for all of us.”

 

          Anthony Galetti, Inspector in Charge of Seattle Division of the U.S. Postal Inspection Service, stated, “Today’s sentencing confirms that anyone who uses the U.S. Mail to operate a fraud scheme will be held accountable. I’m pleased to see justice in a case which had such an impact on the community of Hoquiam.”

 

          The case was investigated by the U.S. Postal Inspection Service (USPIS) and the Internal Revenue Service Criminal Investigation (IRS-CI).

          The case was prosecuted by Assistant United States Attorneys Brian D. Werner and Nicholas Manheim.

          A U.S. District Court jury found a former Des Moines, Washington man guilty of producing and possessing images of child pornography, announced U.S. Attorney Annette L. Hayes. ROBERT D. THORSON, 58, was arrested May 30, 2016, after his girlfriend called Des Moines police after finding sexually explicit images of minors on THORSON’s phone. Over the three-day trial jurors heard testimony about images on THORSON’s phone, computer, thumb drives and DVDs. Chief U.S. District Judge Ricardo S. Martinez scheduled sentencing in the case for March 12, 2017.

 

          According to records in the case and testimony at trial, THORSON’s girlfriend examined his phone looking for evidence he was seeing other women. Instead she found images of THORSON molesting young girls who resided in her home. The woman called Des Moines Police and THORSON was arrested. When investigators examined THORSON’s electronic devices they found images showing THORSON disturbing the clothing and bedding of sleeping children so he could make sexually explicit photos. THORSON’s clothing, tatoos and body parts appear in some of the images. THORSON’s electronic devices also contained images from a hidden camera installed in a bathroom at the home that captured minor children using the bathroom and the shower. While THORSON was in custody he sent letters to his former girlfriend threatening her and demanding she change her statements to police.

 

          Production of child pornography carries a mandatory minimum sentence of fifteen years in prison.

 

          The case was investigated by the Des Moines Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.

 

         The case was prosecuted by Assistant United States Attorney Stephen Hobbs and Special Assistant United States Attorney Cecelia Gregson. Ms. Gregson is Senior Deputy Prosecuting Attorney specially designated to prosecute child exploitation cases in federal court.

 

           A 22-year-old member of the Suquamish Tribe was sentenced today in U.S. District Court in Tacoma to six years in prison and lifetime supervised release for receipt of child pornography, announced U.S. Attorney Annette L. Hayes. NICHOLAS M. ALEXANDER repeatedly pressured and threatened as many as seven young teens in the Poulsbo and Suquamish area to provide him sexually explicit photos and pressured them for sex. ALEXANDER communicated with the girls via Facebook Messenger and via text messages. At the sentencing hearing U.S. District Judge Robert J. Bryan said, “The things that Mr. Alexander has done cannot continue and that is quite clear. These are serious matters.”

 

          “The teens that this defendant preyed on are the glimmer of good in this sad case,” said U.S. Attorney Annette L. Hayes. “The fact that these young people alerted law enforcement ensured that the damage this offender could do was limited. I commend the FBI and their tribal law enforcement partners for their work to ensure justice was done.”

 

           According to records filed in the case, in April 2015, ALEXANDER messaged various teens attempting to strike up a relationship and making it clear he was interested in sexual contact even though the teens were between 13 and 16-years-old. Various teens ignored his texts, some sent nude photos, at least one sent a sexually explicit image to ALEXANDER. ALEXADER also approached the teens in public settings, following one around a community gathering and pressuring her to come with him to a secluded location. The teen refused and reported the incident to law enforcement. ALXANDERR was arrested on May 12, 2015, and law enforcement recovered a cell phone revealing ALEXANDER communicated with as many as seven young teens pressuring them for sexually explicit images.

 

          The case was investigated by the FBI, the Suquamish Tribal Police and the Port Gamble S’Klallam Tribal Police. The case is being prosecuted by Assistant United States Attorney Amy Jaquette.

          A 47-year-old Chicago man pleaded guilty today in U.S. District Court in Seattle to distributing controlled substances, announced U.S. Attorney Annette L. Hayes. KEVIN C. CAMPBELL sold heroin and prescription drugs such as Xanax and valium using the dark web. In August 2013, CAMPBELL sold heroin and prescription medications to a 27-year-old Bellevue, Washington man who died after taking the prescription drugs and shooting up with heroin.

 

          “This case is an outrage and a tragedy at the same time,” said U.S. Attorney Annette L. Hayes. “What allowed this defendant to work at a drug treatment center with people in the grips of addiction, and at the same time peddle dangerous drugs across the country via the dark web? The heroin this defendant sold killed one of his customers. At sentencing we will ask the Court for a sentence that reflects that fact.”

 

          According to records filed in the case, emergency crews were called to a home in Bellevue in August 2013, when a house guest found 27-year-old Jordan Mettee unconscious in his bedroom. On the computer in front of him was the ‘Silk Road’ website, an online black market where illegal goods and services were anonymously marketed and sold. On the screen were messages from a vendor, later determined to be CAMPBELL’s online identity. The investigation revealed that CAMPBELL was a drug dealer on the dark web site, sending prescription drugs, heroin and other illegal substances to customers across the country who ordered online and paid via bitcoin. CAMPBELL concealed and delivered the drugs in altered DVD cases. One DVD case recovered near Mettee’s body was found to have CAMPBELL’s fingerprint on it. Even after the Silk Road website was shut down, CAMPBELL continued to sell drugs to customers, in one instance sending Xanax pills to a customer in Colorado who was working with law enforcement. In May 2014, law enforcement obtained a search warrant to search CAMPBELL’s Chicago home and found evidence of his drug trafficking including a small amount of drugs, digital scales, notes, empty DVD cases and shipping materials.

 

          Under the terms of the plea agreement, prosecutors can ask for up to ten years in prison when CAMPBELL is sentenced on May 9, 2017, by U.S. District Judge John C. Coughenour.

 

          The case was investigated by the U.S. Postal Inspection Service, the Bellevue Police Department and the Eastside Narcotics Task Force. The case is being prosecuted by Assistant United States Attorney Steven Masada.

 

          SEATTLE – A follow-up assessment of the Seattle Police Department’s (SPD) investigations and chain of command review of intermediate-level, Type II uses of force has found SPD are in initial compliance with the requirements of the Court-ordered agreement with the Department of Justice, announced U. S. Attorney Annette L. Hayes. On Friday, January 27, 2017, Federal Monitor Merrick Bobb filed the re-assessment with the U.S. District Court and, in finding SPD in initial compliance, noted “significant improvement” and “solid progress” since his initial assessment of supervisors’ investigations and review of Type II uses of force.

 

          The previous assessment, filed with the Court in September 2015, examined the documentation, investigation and analysis of uses of force by officers and found SPD to be in initial compliance with requirements relating to lower-level Type I force reporting and investigations, Type II and III reporting, and Force Investigation Team investigations for Type III uses of force, including officer-involved shootings. However, the initial 2015 assessment found that investigations of Type II force conducted by sergeants and reviewed by the chain of command “are not where they need to be” and that “[l]ieutenants and captains are likewise not yet identifying and addressing deficiencies in sergeant investigations of Type II force.”

 

          “We know that effective oversight by direct supervisors, particularly in the investigation and review of uses of force, is critical to maintaining a high-functioning, accountable, and self-correcting police department,” said Annette L. Hayes, U.S. Attorney for the Western District of Washington. “The progress made by SPD’s sergeants, lieutenants and captains is commendable and demonstrates a real commitment to full, fair and rigorous investigations and reviews of force incidents consistent with SPD policies developed as part of the court-ordered reform process.”

 

          The re-assessment focuses on the immediate supervisor’s response to the scene of Type II incidents and the proper initial classification of the type of force used (from low-level Type I, intermediate Type II, or the most serious Type III uses of force). It also addresses the subsequent investigations of the incidents by sergeants, the “chain of command” review by lieutenants and captains, and final reviews by the Force Review Board to identify any policy issues, as well as any issues with the actual force and tactics, that were not caught earlier in the process. The conclusion that SPD is in initial compliance with its obligations under the Consent Decree and SPD policy is based on a review of all Type II incidents from January through March 2016, of which there were only 27, which, as the Monitor notes, reflects the relative infrequency with which force is being used overall. According to statistics compiled and soon to be published by SPD, Type 3s and Officer Involved Shootings (OIS) are statistically uncommon events (e.g., only four OIS in 2016; only 13 Type 3s). This fact highlights the importance of having robust oversight over more common (though still relatively rare) lower level uses of force.

 

          Previous assessments found SPD to be in initial compliance with requirements relating to crisis intervention, the Office of Professional Accountability, use of force reporting and investigations, and the Force Review Board. The Monitor also has examined and found positive developments and trends in public confidence and community trust regarding SPD. Upcoming assessments in 2017 will examine SPD’s use of force and Terry stops, and the Early Intervention System.

 

          In addition to the filing of the re-assessment of the investigation and review of Type II uses of force, the Monitor also filed with the Court SPD’s new crowd management policy and body worn camera plan. Those can be found: here.

          A former police officer who was the leader of an online pharmacy that illegally distributed hundreds of thousands of narcotic pills and other prescription drugs was sentenced to eight years in prison today, announced U.S. Attorney Annette L. Hayes. JUAN GALLINAL, 49, of Pembroke Pines, Florida is a former police officer from Virginia. GALLINAL was the organizer of the online pharmacy operation, turning a small brick and mortar drugstore into a massive online pill mill that spread addiction across the country. Highlighting the devastation of opioid abuse, U.S. District Judge Richard A. Jones noted that during his time as a police officer GALLINAL had “the opportunity to see the ravages and consequences of addiction to drugs.”

          “This defendant is one of the ‘founding fathers’ of this internet pharmacy business that exploited the drug addiction of people across the country for his own gain,” said U.S. Attorney Annette L. Hayes. “Using a sham owner, shell corporations and databases hidden on a server in Switzerland, Mr. Gallinal tried to hide his business and his role from the law. I commend the Drug Enforcement Administration for their diligent work on this case that led to the shuttering of this criminal operation.”

           Under the name ‘Discount Pharmacy’ and later ‘A-1 Pharmacy’, the internet operation distributed drugs to some 200 customers in Washington State between 2009 and 2012. The pharmacy shipped hundreds of thousands of pills of hydrocodone, phentermine, alprazolam (Xanax) and codeine (Tylenol 4) to thousands of people across the country who did not have valid prescriptions for the narcotics. The conspiracy brought in more than $9 million in revenue from the sale of pills during the three-year scheme. The pharmacy operated four internet sites through which the defendant and his co-conspirators solicited customers including those in Washington State. According to records in the case, the conspiracy filled prescriptions even if no valid prescription existed. At times the conspirators simply looked for a physician in the same geographic area as the customer, with a similar sounding name, and filled the prescription using the physician’s DEA number without the physician’s knowledge. The pharmacy charged as much as ten times the usual price for the medications.

          In June 2012, the DEA seized the websites, computers, and drug inventory associated with the illegal pharmacy. In April 2015, GALLINAL pleaded guilty to conspiracy to distribute controlled substances, conspiracy to distribute controlled substances by means of the internet, conspiracy to introduce misbranded prescription drugs, conspiracy to commit money laundering, and destruction, alteration and concealment of records. He agreed to a forfeiture money judgment of more than $1.9 million.

          GALLINAL is the final defendant to be sentenced. Judge Jones noted GALLINAL was the leader who drew his co-conspirators into his “web of deceit and greed…. You were the orchestrator, conductor, composer and chief engineer making this engine run.”

          The other defendants include:

• Craig Greer, 43, of Hollywood, Florida, was sentenced to 60 months in prison;

• Kevin Kogan, 48, of Cedar Park, Texas, was sentenced to 30 months in prison;

• Jordan Truxell, 26, of Davie, Florida served as the registered agent for Discount Pharmacy dba frontierpharmacies.com. He was sentenced to a year in prison in June 2016;

• Thomas Brooke, 54, of Cooper City, Florida, the bookkeeper for Discount Pharmacy, was sentenced in March 2016 to 60 months in prison;

• Ali Lovins, 44, of Cooper City, Florida is a registered nurse and was the office manager for Discount Pharmacy. Lovins was sentenced in March 2016 to 36 months in prison.

          This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. The case was investigated by the Portland Tactical Diversion Squad which is comprised of the Drug Enforcement Administration (DEA) and the Portland Police Bureau. Substantial investigative assistance was provided by the Food and Drug and Administration (FDA), Office of Criminal Investigations, Miami Field Office, and DEA Miami Field Division.

          The case was prosecuted by Assistant United States Attorneys Mike Lang, Francis Franze-Nakamura and Brian Werner.

          A 40-year-old resident of Ferndale, Washington was sentenced today in U.S. District Court in Seattle to six and a half years in prison after he tried to secretly cross the Canadian border to have sex with someone he thought was a 12-year-old girl, announced U.S. Attorney Annette L. Hayes. CHRISTOPHER DAVID JOHNSTON, was arrested in May 2016 when he tried to illegally cross the border into Canada near Sumas following a two-week period during which he communicated with an undercover agent posing as a 12-year-old child. At the sentencing hearing U.S. District Judge Richard A. Jones imposed a ten-year term of supervised release and recommended both sex offender treatment and drug treatment. “What concerns me is that your drug addiction puts you in a position to think this (criminal conduct) is o.k.,” Judge Jones said. “Had this child been a real person… the damage would have been life-long and serious.”

 

          According to records filed in the case, JOHNSTON posted an ad in the “casual encounters” section of the Craigslist personal ad site. The ad used phrases leading law enforcement to believe JOHNSTON was seeking sex with minors. An undercover agent with U.S. Immigration and Custom Enforcement’s Homeland Security Investigation (HSI) responded to the ad posing as a 12-year-old girl. Over the next two weeks JOHNSTON sent increasingly sexualized communications and asked for explicit pictures of the “girl.” On May 20, 2016, JOHNSTON left his home and headed toward the Canadian border, intending to illegally cross the border and meet the “girl” for sex. He was under surveillance the entire time and was arrested before crossing into Canada.

 

          At the time of his arrest JOHNSTON was facing various state charges in Whatcom County which would have prevented him from legally crossing the border. In asking for the prison sentence and 20-year term of supervised release, prosecutors noted that JOHNSTON was willing to go to great lengths to try to reach the fictional 12-year-old. “Even the fact that he had no means of legally crossing into Canada and his pending felony charges were not sufficient to deter him,” prosecutors wrote in their sentencing memo. JOHNSTON is required to register as a sex offender following his release from prison.

 

          The case was investigated by U.S. Immigration and Custom Enforcement’s Homeland Security Investigation (HSI). The case was prosecuted by Assistant United States Attorney Matthew Hampton.

          A 37-year-old citizen of Belarus was sentenced today in U.S. District Court in Seattle to four years in prison for conspiracy to commit wire fraud, announced U.S. Attorney Annette L. Hayes. ALEXANDER MIHAILOVSKI was indicted in August 2012 for his role as a payment processor in a $71 million cybercrime scheme. He was arrested in Vienna, Austria in late 2015. MIHAILOVSKI was extradited to the U.S. to face charges a year ago. He pleaded guilty in August 2016. At the sentencing hearing U.S. District Judge Thomas S. Zilly said, “You provided an important part of the total scheme… by making it appear legitimate…. People who commit these crimes will be apprehended and will be punished.”

          “Just like a bank robber needs a get-away driver, cyber fraudsters need people to turn their electronic scams into cash,” said U.S. Attorney Annette L. Hayes. “This defendant ran a credit card processing company that was essentially ripping off nearly $71 million dollars from unsuspecting computer users. Like so many others, he thought he would get away with his crimes. Instead, close cooperation with our worldwide law enforcement partners allowed us to track him down and get him back to the United States to face justice.”
 

          According to records in the case, MIHAILOVSKI operated a credit card payment processing company called Mystique Enterprises, LTD, doing business as PSBILL, Smart Systems, and Failsafe Payments. MIHAILOVSKI and his company were part of an international cybercrime ring that netted $71 million by infecting victims’ computers with “scareware” and selling fraudulent antivirus software that was supposed to secure victims’ computers but was, in fact, useless.

          The prosecution of MIHAILOVSKI is part of Operation Trident Tribunal, a coordinated enforcement action targeting international cybercrime rings that caused more than $71 million in total losses to more than one million computer users through the sale of fraudulent computer security software known as “scareware.” The scareware used in this scheme was malicious software that posed as legitimate computer security software. The scareware caused popup notices to appear on the victims’ computers with false warnings that the computers had been infected and prompted the victims to purchase fake anti-virus software with a credit card at a cost of up to $129. The scareware would often disable legitimate anti-virus software and lock-down other features of the computers, effectively preventing the victims from using their computers until they purchased the fake anti-virus software or reformatted their computers. An estimated 960,000 users were victimized by this scareware scheme, leading to $71 million in actual losses.

          MIHAILOVSKI is the second foreign national prosecuted in this particular scareware scheme. In December 2012, Mikael Patrick Sallnert, 40, a citizen of Sweden, was also sentenced to four years in prison and was ordered to pay $650,000 in forfeiture. Sallnert also served as a credit card payment processor for the crime ring.

          This case is being investigated by the FBI Seattle Division Cyber Task Force and other FBI entities. The case is being prosecuted by Assistant U.S. Attorneys Norman Barbosa and Francis Franze-Nakamura. Substantial assistance was provided by the Criminal Division’s Office of International Affairs and the Computer Crime and Intellectual Property Section.

          Critical assistance in the investigation was provided by the Security Service of Ukraine, German Federal Criminal Police, Netherlands National High-Tech Crime Unit, London Metropolitan Police, Latvian State Police, Lithuanian Criminal Police Bureau, Swedish National Police Cyber Unit, French Police Judiciare, Royal Canadian Mounted Police, Romania’s Directorate for Combating Organized Crime, Cyprus National Police in cooperation with the Unit for Combating Money Laundering, the Danish National Police, and the Austrian Federal Ministry of Justice.

          The U.S. Department of Justice and Overlake Medical Center have entered into a settlement agreement to remedy alleged violations of the Americans with Disabilities Act (“ADA”), announced United States Attorney Annette L. Hayes. The U.S. Attorney’s Office for the Western District of Washington began the investigation after a complainant, who is deaf, alleged that she requested an ASL interpreter in advance of a scheduled, induced delivery at the hospital in June 2014. Despite assurances that one would be provided, no interpreter was present as the labor escalated, eventually resulting in a cesarean section. In addition, the complainant’s partner, who is also deaf, was also not provided an interpreter. He also was excluded from the delivery room during the birth because complainant’s mother (who was attempting to provide basic ASL interpretation to her daughter) was counted as complainant’s choice of “companion” during the birth.

 

          “The ability to communicate effectively with health care providers is essential – especially during a critical event like the birth of a child,” said U.S. Attorney Annette L. Hayes. “This resolution demonstrates our unwavering commitment to protect the civil rights of all Americans, including those who are deaf or hard of hearing. This settlement will not only resolve this particular case, but ensures that future patients who are treated at Overlake Medical Center will receive assistance so that they can communicate with their doctors and other caregivers.”

 

          Under the settlement signed today, the hospital admits no law violation, wrongdoing or misconduct but agreed to: (1) adopt policies and procedures that ensure that individuals who are deaf or hard of hearing receive auxiliary aids and/or services (including sign language interpreters when necessary) that ensure effective communication; (2) train its staff on the ADA’s effective communication requirements; and (3) pay $200,000 in settlement. Under the terms of the agreement, $75,000 of the settlement will be paid to the complainant; $25,000 will be paid to her partner; $25,000 will be paid to her mother (for associational discrimination), and $75,000 will be paid in lieu of a civil penalty to the United States.

 

          Complainant scheduled an induced labor at Overlake Medical Center, in part, so that she could be assured that an ASL interpreter would be available during her labor and delivery process. Complainant requested an ASL interpreter 10 days in advance of her induction, but when she arrived for the procedure was told an interpreter was not immediately available to assist. Although the hospital subsequently provided an interpreter for part of complainant’s labor, when that interpreter’s shift ended, the hospital (having failed to plan for any replacement) was unable to find another interpreter to assist. As a result, complainant and her partner were only able to communicate with hospital staff through handwritten notes while her labor increased and complications ensued. Eventually, complainant’s mother, who taught herself some ASL when complainant was young, arrived and attempted to provide basic interpretation for complex medical concepts and procedures, including interpreting during complainant’s cesarean surgery. Complainant subsequently notified the United States Attorney’s Office of the alleged ADA violation. The U.S. Attorney’s Office investigated and found that the hospital discriminated against complainant and her companions by failing to ensure effective communication and by engaging in associational discrimination. Overlake Medical Center fully cooperated with the investigation and settlement of this matter.

 

          In a related matter, complainant also alleged that Overlake Obstetricians and Gynecologists, P.C., which provided her pre-natal care, similarly violated her rights under the ADA when it failed to provide an ASL interpreter for four of her nineteen office visits. The U.S. Attorney’s Office investigated this matter as well and confirmed the violation. That matter was resolved by a Letter of Resolution, under which the clinic agreed to make changes to its policies, procedures, and training and agreed to pay the complainant $3,500 in settlement.

 

          These cases are part of the Department of Justice’s Barrier-Free Health Care Initiative, which seeks to enforce the ADA’s prohibition of discrimination against disabled individuals by health care providers, including hospitals. Through the Barrier-Free Health Care Initiative, U.S. Attorneys’ offices across the nation and the Department’s Civil Rights Division target their enforcement efforts on this critical area for individuals with disabilities—access to medical services and facilities. The Barrier-Free Health Care Initiative is a multi-phase initiative that includes effective communication for people who are deaf or have hearing loss, physical access to medical care for people with mobility disabilities, and equal access to treatment for people who have HIV/AIDS.

 

          The Department of Justice has a number of publications available to assist entities in complying with the ADA, including a Business Brief on Communicating with People Who Are Deaf or Hard of Hearing in Hospital Settings, at www.ada.gov/hospcombr.htm. For more information on the ADA and to access these publications, visit http://www.ada.gov or call the Justice Department’s toll-free ADA information Line at 800-514-0301 or 800-514-0383 (TTY). ADA complaints may be filed by email to ada.complaint@usdoj.gov.

 

          Both matters were handled by Assistant United States Attorney Christina Fogg in collaboration with Disability Rights Section of the Civil Rights Division of the United States Department of Justice.

          A Montesano, Washington man, who illegally possessed firearms and expressed a desire to attack the police or U.S. Military personnel out of allegiance to the Islamic State of Iraq and the Levant (ISIL), was sentenced today in U.S. District Court in Tacoma to six years in prison announced U.S. Attorney Annette L. Hayes. DANIEL SETH FRANEY, 34, a/k/a Abu Dawuud was arrested in February 2016, following an undercover investigation during which he repeatedly violated a permanent protection order prohibiting him from possessing firearms. At the sentencing hearing U.S. District Judge Ronald B. Leighton said, he was concerned about “the persistent nature of the threats” to the military and law enforcement, and FRANEY’s history of domestic violence.

          “This defendant espoused his jihadist ideology and talked about his desire to kill police and military officers with nearly everyone he met,” said U.S. Attorney Annette L. Hayes. “His talk turned to action when he tried repeatedly to obtain high powered weapons and ammunition, and identified a target for his attack. This sentence will protect the public from this defendant who remains dangerous.”

          According to the plea agreement and other records filed in the case, on multiple occasions between September and November 2015, FRANEY handled several firearms, to include firing fully automatic machineguns on one occasion. He did so while acknowledging he knew he was legally prohibited from possessing firearms.

          FRANEY became the target of a federal investigation following reports from members of the public that they had heard FRANEY espouse violent rhetoric, particularly in support of the Islamic State of Iraq and the Levant (ISIL), a designated foreign terrorist organization. The citizen reports indicated FRANEY had made statements advocating the killing of non-Muslim Americans, particularly members of the U.S. military and law enforcement. One citizen reported that FRANEY repeatedly asked to purchase a firearm from the citizen, despite FRANEY’s admissions that he was not legally allowed to possess firearms.

          During the investigation, FRANEY traveled with a person who he thought would assist him in acquiring weapons. In fact, the person was an undercover law enforcement officer who was investigating FRANEY in light of the above referenced reports. During the undercover investigation, FRANEY was captured on audio attempting to acquire firearms, particularly AK-47s. FRANEY also discussed what he deemed were good targets for an attack, all the while repeatedly referring to his support for ISIL.

          The case is being prosecuted by Assistant United States Attorney Todd Greenberg for the Western District of Washington, with assistance from the Counterterrorism Section of the Justice Department’s National Security Division. The investigation was conducted by the FBI’s Joint Terrorism Task Force, which combines investigators from federal, state, and local law enforcement. Task force members include the Seattle Police Department, the Pierce County Sheriff’s Department, the Federal Protective Service, U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), and elements of the U.S. Army’s 902nd Military Intelligence Group. In addition, the Grays Harbor County Sheriff’s Department contributed significantly to this investigation.

          After more than six years on the run from law enforcement, a 37-year-old dual citizen of Canada and France was sentenced today in U.S. District Court in Seattle to ten years in prison for conspiracy to distribute cocaine, announced U.S. Attorney Annette L. Hayes. MARTIN BRIAND was identified by border agents in U.S. and Canada in 2009 as a person extensively involved with smuggling cocaine into Canada. Following the seizure of more than 59 kilos of cocaine in December of 2009, a warrant was issued for BRIAND’s arrest. He was ultimately arrested in December 2015, when he arrived at the Vancouver International Airport from France. At the sentencing hearing, U.S. District Judge Richard A. Jones noted that the large amount of cocaine trafficked by BRIAND impacted countless people, feeding their addiction and even leading to death.

 

          “In just six months in 2009, this defendant made 29 flights in chartered aircraft between Point Roberts, Washington and points south without ever legally entering the U.S.,” said U.S. Attorney Annette L. Hayes. “These frequent illegal border crossings are a hallmark of drug smugglers. In his final trip, a Washington State Trooper caught him with nearly 60 kilos of cocaine. Anyone responsible for transporting these kinds of quantities of illegal drugs also is responsible for feeding countless drug addictions and the misery that comes with them, and thus deserves the lengthy sentence imposed in this case.”

 

          “Homeland Security Investigations special agents disrupted a narcotics trafficking organization by identifying and targeting a lead conspirator circumventing our border security and customs protocols,” said Brad Bench, special agent in charge of HSI Seattle. “Our partners, both foreign and domestic, combined efforts to take down one of ICE’s Top 10 Most Wanted fugitives and present the solid evidence needed to obtain a successful prosecution.”

 

          According to records filed in the case, BRIAND’s activity came to the attention of border agents in October 2009, when two men tried to cross the border in a taxi. The men and their bags were screened and the bags showed a positive reading for cocaine residue. The men reported that they had entered the U.S. illegally by walking across the border into the U.S. at Point Roberts – a small peninsula of the U.S. that extends below the border with Canada. From Point Roberts the men flew to Seattle on a private charter and then to California where they met up with BRIAND. The men flew with BRIAND on a private plane back to Washington State, and BRIAND paid for all their travel expenses.

 

          U.S. Immigration and Customs Enforcement began an investigation into BRIAND and learned he had made 30 trips by private plane from Point Roberts to points south between April 9, 2009, and November 2, 2009. Over that same period of time, BRIAND had only one legal entrance into the U.S. On December 8, 2009, law enforcement learned BRIAND was making another charter trip from Point Roberts and began surveillance. On December 12, 2009, BRIAND and a co-defendant flew into the Skagit County Airport on a private plane and were observed struggling with heavy bags they loaded into a pick-up truck. The truck was stopped by law enforcement and a drug detection dog alerted to the presence of narcotics. The Washington State Trooper seized the bags for later search and BRIAND and his associate were allowed to leave. The men abandoned the truck and BRIAND fled to Canada. Despite contact from law enforcement he refused to return to the U.S. to face the charges. Following his arrest at the Vancouver International Airport, the Canadian Courts found he should be detained pending extradition. In March 2016, BRIAND agreed to be transferred to the U.S. to deal with the indictment.

 

          The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Canada Border Services Agency, and the U.S. Border Patrol with assistance from the Washington State Patrol (WSP), HSI Vancouver, HSI Los Angeles and the Los Angeles Sheriff’s Department Narcotics Bureau Violators Team.

 

WASHINGTON – Costco Wholesale will pay $11.75 million to settle allegations that its pharmacies violated the Controlled Substances Act when they improperly filled prescriptions for controlled substances. The settlement resolves allegations that Costco pharmacies filled prescriptions that were incomplete, lacked valid DEA numbers or were for substances beyond various doctors’ scope of practice. Additionally, the settlement resolves allegations that Costco failed to keep and maintain accurate records for controlled substances at its pharmacies and centralized fill locations.

 

          The settlement was announced today by U.S. Attorneys Annette L. Hayes for the Western District of Washington, Michael C. Ormsby for the Eastern District of Washington, Eileen M. Decker for the Central District of California, Barbara L. McQuade for the Eastern District of Michigan and Phillip A. Talbert for the Eastern District of California.

 

          “Pharmacies across this country are on the leading edge of the battle against our prescription drug abuse crisis,” said U.S. Attorney Annette L. Hayes. “A company such as Costco that distributes a significant volume of controlled substances has a responsibility to ensure it complies with regulations that help prevent opioids and other dangerous drugs from being misused or otherwise added to the illegal marketplace. I commend the Drug Enforcement Administration investigators for uncovering the violations at issue in this case, and working with Costco to ensure that systems are put in place to prevent controlled substances from ending up in the wrong hands.”

 

          “Last year, over 50,000 Americans died as a result of drug overdoses, many of which were related to the misuse of prescription drugs. This settlement demonstrates the accountability and responsibility that go along with handling controlled prescription drugs,” said DEA Assistant Administrator Louis Milione. “DEA works every day to reinforce good corporate practices through outreach and education efforts and, when appropriate, with administrative and criminal action.”

 

          Under the settlement reached January 18, 2017, Costco acknowledges that between January 1, 2012 and December 31, 2015, certain Costco Pharmacies dispensed controlled substances inconsistent with their compliance obligations under the Controlled Substances Act (CSA) and its implementing regulations. The violations include: filling prescriptions from practitioners who did not have a valid DEA number; incorrectly recording the practitioner’s DEA number; filling prescriptions outside the scope of a practitioner’s DEA registration; filling prescriptions that did not contain all the required information; failing to maintain accurate dispensing records; and failing to maintain records for their central fill locations in Sacramento, California and Everett, Washington.

 

          United States Attorney Barbara L. McQuade stated, “In light of the prescription pill and opioid overdose epidemic we are seeing across the country, compliance with regulations governing pharmacies is more important than ever. We applaud Costco for working with DEA and taking steps to tighten up its compliance to ensure that prescription pills do not end up on the street market.”

 

          “These are not just administrative or paperwork violations – Costco’s failure to have proper controls in place in its pharmacies played a role in prescription drugs reaching the black market,” said United States Attorney Eileen M. Decker. “Costco pharmacies in Southern California filled numerous prescriptions for drugs that should not have been sold to consumers because of its flawed system for validating DEA registration numbers.”

 

           Michael C. Ormsby, United States Attorney for the Eastern District of Washington, said “Opioid misuse has reached epidemic levels in the United States. This important matter is yet another example of the tenacious dedication of Drug Enforcement Administration investigators in uncovering and addressing corporate regulatory noncompliance. The DEA must be commended for its superb efforts in combating the opioid problem at so many different levels, including regulatory compliance.”

 

             “Pharmacies are the gatekeepers responsible for ensuring the lawful use of powerful drugs that have a legitimate medical purpose but are easily abused. The CSA provides the statutory oversight to ensure that pharmacies keep meticulous records,” U.S. Attorney Phillip A. Talbert for the Eastern District of California stated. “The successful resolution of this matter demonstrates the Department of Justice’s commitment to enforcing the CSA.”

          To address issues uncovered in this investigation, Costco made improvements in its pharmacies. The company purchased a new pharmacy management system at a total budgeted five year cost of approximately $127 million. Additionally, Costco implemented a three tier audit program of its pharmacy locations: Tier 1 done by pharmacy managers and regional pharmacy supervisors; Tier 2 completed by an Internal Audit group consisting of three auditors and an audit supervisor; and Tier 3 an External Audit of 40 annual audits.

 

          Under the terms of the settlement, over the next three years, DEA is allowed to conduct unannounced and unrestricted inspections of all DEA registered Costco Pharmacy locations without Administrative Inspection Warrants. The Drug Enforcement Administration monitors pharmacy prescribing practices to ensure compliance with federal law. Pharmacies found in violation face escalating penalties up to the revocation of their DEA Registration number – the authorization that allows them to write prescriptions for controlled substances.

 

          This case was investigated by DEA Diversion Groups in Seattle, Los Angeles, Sacramento and Detroit. While this settlement is national in scope, the settlement was negotiated by the United States Attorney’s Offices in the Western and Eastern Districts of Washington, Central and Eastern Districts of California and Eastern District of Michigan.

costco_executed_settlement_agreement.pdf

          A former youth baseball umpire was sentenced today in U.S. District Court in Seattle to 15 years in prison for production of child pornography, announced U.S. Attorney Annette L. Hayes. JEREMY GREGORY, 36, of Shoreline, Washington was previously sentenced to five years in prison in King County Superior Court for molesting two young boys who he met through youth baseball. The sentences will run concurrently. At the sentencing hearing Chief U.S. District Judge Ricardo S. Martinez ordered GREGORY to register as a sex offender as part of his twenty-year term of federal supervision following his prison sentence.

 

          According to records filed in the case, GREGORY befriended the victims’ father and started taking the two boys, then 13 and 11-years-old, to baseball games and amusement parks. GREGORY began providing the boys with items the family could not afford such as cell phones and gift cards. GREGORY groomed the boys, and knowing their limited financial resources, offered the boys money for sexually explicit conduct. Many of the assaults occurred in public restrooms near the fields where GREGORY worked as an umpire. Ultimately, the older victim reported the abuse to his father who immediately contacted police.

 

          A search of GREGORY’s residence and electronic devices revealed more than 2,000 images of child rape and molestation. Law enforcement did not identify any additional victims molested by GREGORY. GREGORY has been in custody since his arrest in July 2015.

 

          GREGORY has a physical ailment that requires the use of a wheelchair. His physical disability played a part in allaying any suspicions of the victims’ father. In asking for the lengthy sentence prosecutors wrote to the court, “The deep emotional pain his actions have caused both victims and their father is immeasurable. The victim’s father is racked with guilt for not appreciating that he was being groomed by Mr. Gregory in order to gain access to the victims for sexual gratification.”

 

          The case was investigated by the King County Sheriff’s Office and U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).

 

          The case is being prosecuted by Special Assistant United States Attorney Cecelia Gregson. Ms. Gregson is a Senior Deputy King County Prosecuting Attorney specially designated to prosecute child exploitation cases in federal court.

          A 52-year-old registered sex offender was sentenced today in U.S. District Court in Seattle to 15 years in prison for receipt of child pornography, announced U.S. Attorney Annette L. Hayes. SCOTT MITCHELL COHEN of Seattle was arrested on January 16, 2016, following an investigation by the Seattle Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation. The investigation revealed that COHEN had more than 600 images and videos of child pornography and had twice been convicted of crimes involving the sexual abuse of children. At sentencing Chief U.S. District Judge Ricardo S. Martinez imposed a lifetime period of supervised release.

 

          According to records filed in the case, the investigation began when Google alerted the National Center for Missing and Exploited Children (NCMEC) the images of child sexual abuse had been uploaded via a google email account. The IP address used was a Seattle Public Library address and later a University District Café wifi site. Through diligent police work tracing false identities used for on line and cell phone accounts detectives were ultimately able to identify COHEN as the user of the email account. When a search warrant was executed on his University District apartment, law enforcement discovered more than 600 images of child pornography on various computers, phones and other electronic devices. COHEN was convicted in 2005 of molesting a female under the age of 12. COHEN was ordered into extensive sexual deviancy treatment. Following treatment, he was convicted in 2010 of a second sex offense, possession of child pornography. COHEN was on state probation for that offense when arrested in this case. The investigation also uncovered that COHEN had been texting with a Texas teenager, attempting to get her to send him sexually explicit images.

 

          In asking for lifetime supervised release, prosecutors wrote to the court: “The defendant has demonstrated that he poses a threat to the safety and well-being of minors in our communities. Despite negative contact with law enforcement and convictions for sex offenses, the defendant has demonstrated that he is either unwilling or unable to abide by society’s rules concerning sexual contact and interactions with minors. The defendant has demonstrated nearly two decades of unacceptable criminal sexual behaviors towards minors. Anything less than lifetime supervision inadequately protects the community.”

 

          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 investigated by the Seattle Police Department and U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) as part of the Internet Crimes against Children Task Force (ICAC).

 

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

 

          Federal investigators from the Social Security Office of Inspector General (SSA-OIG) and prosecutors from the United States Attorney’s office are wrapping up a productive year of combatting fraud and abuse of critical Social Security programs, announced U.S. Attorney Annette L. Hayes. Using a variety of government databases and computer tools, investigators successfully identified individuals who defrauded government programs meant to support those truly in need. The United States Attorney’s office prosecuted cases based on those investigations resulting in more than $1.6 million in court-ordered restitution in 2016, with more cases in the pipeline.

 

          “Investigators from the Social Security Office of Inspector General are using available tools to identify those who scam federal benefit programs,” said U.S. Attorney Annette L. Hayes. “The misconduct uncovered includes accepting benefits for family members who have left the country, collecting under multiple identities, and lying about financial circumstances in order to appear eligible for benefits. These frauds harm not only the taxpayers, but those who are in fact needy and thus qualify for aid. The strong partnership between my office and SSA-OIG ensures more dollars are available for those who truly need them.”

 

          In 2016, prosecutors prosecuted fifteen cases that are now complete or awaiting sentencing. In the largest total fraud case, Travis Edward Fischer was ordered to pay back more than $466,000 for collecting benefits under a fictitious identity. Two other cases where defendants stole people’s real identities added up to $250,000 in fraud. Each of these three cases resulted in significant prison time for the defendants and orders to pay back the fraudulent gains.

 

          A second series of cases involves Supplemental Security Income (SSI) benefit recipients whose adult children illegally continued to accept and spend benefit dollars after the recipient left the country. The adult children of the recipients lied and said the parent continued to live in the U.S. so that they could continue to access the payments. If an SSI recipient leaves the U.S. for a month or more, payments are to cease. In some cases, the adult child failed to disclose that the parent had died and continued to collect benefits. The fraud in those six cases exceeds $350,000.

 

          The third set of cases involves defendants who lied about their household income to collect need-based benefits. In four such cases, recipients falsely claimed to be divorced or separated from their spouse in order to collect benefits. In a fifth case, the defendants submitted a forged letter and forged paystubs from an employer claiming substantially less income that was actually paid. Defendants in those five cases were ordered to pay back fraudulently secured benefits of more than $350,000.

 

          Other cases include: defendants collecting disability benefits while working (and hiding their work from the Social Security Administration); defendants claiming to collect benefits on behalf of a minor child but using the benefits themselves; and, defendants using others’ Social Security numbers to falsify identification documents.

 

          “Special Agents of the Office of the Inspector General for the Social Security Administration remain steadfast in their commitment to investigate allegations of fraud, waste, and abuse in Social Security programs,” said SSA-OIG Special Agent in Charge Steuart Markley. “We are grateful for our partnerships with the United States Attorney’s Office for the Western District of Washington and the Social Security Administration’s Seattle Region fraud prosecutor, and for their collaborative efforts in bringing to justice those who would otherwise violate the public trust by defrauding Social Security and the American taxpayer.”

 

          The cases were all investigated by the SSA-OIG with the assistance of other local, state and federal law enforcement agencies. Prosecution of these cases is the top priority of Special Assistant United States Attorney Benjamin Diggs. Mr. Diggs is an attorney with the Social Security Administration specially designated to prosecute fraud cases in federal court.

          A 28-year-old Seattle man was sentenced to two months in prison and three years of supervised release including six months of home confinement and 240 hours of community service for threatening former Congressman Jim McDermott, announced U.S. Attorney Annette L. Hayes. JASPER KILMER HILLMAN BELL made multiple phone calls to the staff of Congressman Jim McDermott in mid-April 2016, and in one call threatened to cut out the congressman’s tongue. Later he went to the Congressman’s Seattle office demanding to be let in. BELL expressed outrage over how delegates were being allocated between the two Democratic candidates for President and the role of Congressman McDermott as a ‘Super Delegate.’ U.S. District Judge Robert S. Lasnik said BELL’s actions were “Just so wrong on so many levels… This was somebody who knew better… The reaction (of law enforcement) was proportionate to the threat.”

          According to records in the case, in mid-April 2016, protestors went to Congressman McDermott’s office unhappy about his support for a particular Democratic presidential candidate as a ‘Super Delegate.’ BELL had written to the Congressman three times about the Super Delegate controversy, and had called the office on multiple occasions. On April 22, 2016, BELL called the Congressman’s office in Seattle seventeen times, and his Washington DC office an additional six times in one fifty-minute period. In the calls BELL expressed his outrage that protestors had been arrested at the Congressman’s office. Speaking with staffers BELL demanded to know the Congressman’s home address and said he would “track him down and cut his (expletive) tongue out.” BELL told one staffer he would find Congressman McDermott’s home address and “…he would not be safe.” Following the angry phone calls BELL went to the Congressman’s office and pounded on the locked exterior doors demanding to be admitted to the offices. Seattle Police arrested BELL later that evening.

          Telling BELL that Congressman McDermott deserved BELL’s “admiration and respect,” Judge Lasnik ordered BELL to do 240 hours of community service working with AIDS patients and the poor – two groups Congressman McDermott worked to assist during his career. Judge Lasnik then ordered BELL to research and produce two reports for the court – one on McDermott’s long career and another on Jack Hammann’s book ‘On American Soil.’ The book investigates how African-American soldiers were wrongly convicted of manslaughter at what was then Fort Lawton in Seattle. Congressman McDermott was instrumental in getting the Army to reopen the investigation, reverse the wrongful convictions and restore the honorable service record of the soldiers. Judge Lasnik said he plans to schedule a hearing after receiving the reports to ensure BELL has used his time on supervision as a learning experience.

          The case was investigated by the Seattle Police Department, U.S. Capitol Police and the FBI. The case is being prosecuted by Assistant United States Attorney Todd Greenberg.

          A Bellevue developer who raised more than $150 million from immigrant investors pleaded guilty today to fraud charges in U.S. District Court in Seattle, announced U.S. Attorney Annette L. Hayes.  LOBSANG DARGEY, 43, entered guilty pleas to two federal felonies alleging that DARGEY defrauded immigrant investors, federal regulators, and institutional investors.  The charges allege that DARGEY promised to use the immigrant investors’ investment funds to construct two Puget Sound-area developments in compliance with a federal immigration program designed to stimulate growth and create jobs.  DARGEY admitted at the court hearing that, contrary to his promises to investors, regulators and others, he secretly diverted tens of millions of dollars of investor funds to unauthorized uses and attempted to make up the resulting funding shortfall by raising additional capital using falsified financial records. 

                “Mr. Dargey exploited the dreams of his investors to line his own pockets,” said U. S. Attorney Annette L. Hayes.  “He promised to use the money he received in a way that would allow investors to apply to become permanent U.S. residents.  Instead, Mr. Dargey secretly sent millions of dollars overseas and used millions more for his own pet projects.  In doing so, he harmed his investors financially and risked their dreams of legal status in the United States.”

            According to records filed in the case, between 2012 and 2015, DARGEY recruited overseas investors, primarily in China, to fund two development projects – one in Everett, Washington known as the “Path American Farmer’s Market” and one in Seattle’s Belltown neighborhood known as the “Potala Tower.”  DARGEY promoted the projects under a federal program known as the “EB-5” program, which allows immigrant investors to qualify for permanent residency if they create American jobs by investing $500,000 in a qualifying American business project.  DARGEY represented to the immigrant investors and to the U.S. Department of Homeland Security that he was investing all of investors’ funds in the Everett and Seattle projects in compliance with program requirements. 

          DARGEY admitted at the court hearing that, contrary to his promises, he used tens of millions of investor dollars for uses not allowed under the federal program and not disclosed to investors.  This included approximately $11.5 million of investor funds that DARGEY secretly used to pay unauthorized sales expenses, including sales commissions to Asian brokers, as well as $16.8 million that DARGEY used for unrelated real estate projects.  In addition, DARGEY told investors and the United States government that DARGEY would contribute $32.5 million of his own money toward the projects.  DARGEY admitted at the hearing that, in fact, he made no contribution to the projects.  DARGEY’s fraud resulted in tens of millions of dollars in funding shortfalls for the projects.  DARGEY admitted that he attempted to fill these shortfalls by using a falsified bank statement to obtain a $25 million construction loan, and by using altered financial statements to obtain $60 million in additional funding from a private institutional investor. 

            DARGEY’s fraudulent conduct came to an end in August 2015 when the Securities and Exchange Commission filed a civil suit and won a court order freezing his assets.  The FBI simultaneously executed search warrants at DARGEY’s offices in Bellevue and Everett. 

            Each of the two criminal counts carries a prison term of up to five years, for a total maximum term of ten years.  DARGEY has agreed to provide restitution of more than $24 million to the investors.  Sentencing is currently scheduled in front of U.S. District Judge Thomas S. Zilly on April 6, 2017.

          The case is being investigated by the FBI and is being prosecuted by Assistant United States Attorneys Justin Arnold and Seth Wilkinson.  The Department of Justice appreciates the assistance of the Securities and Exchange Commission and United States Citizenship and Immigration Services in connection with this matter.

SEATTLE – A formal assessment of the Seattle Police Department’s (SPD) implementation of supervision-related provisions of the consent decree has found SPD to be in initial compliance with requirements of the Court-ordered agreement with the Department of Justice (DOJ), announced U. S. Attorney Annette L. Hayes.  Federal Monitor Merrick Bobb on December 31st filed the assessment with the U.S. District Court and concluded that the progress to date and “current quality and extent of supervision” within SPD in four main areas supports a finding of initial compliance.

          “Effective internal supervision is critical to the successful implementation of reform and to the successful management of the day-to-day operations of SPD,” said U. S. Attorney Annette L. Hayes.  “The results of this assessment demonstrate that the Department is making progress in supervising, investigating, and counselling officers to help them do their jobs effectively and increase accountability.”  

          This was the tenth assessment conducted to date by the Monitor and DOJ.  Previous assessments found SPD to be in initial compliance with requirements relating to crisis intervention, the Office of Professional Accountability, use of force reporting and investigation (finding initial compliance in three of the four areas assessed), and the Force Review Board.  The Monitor also examined and found many positive developments and trends in public confidence and community trust regarding SPD. 

          The supervisor assessment filed today and attached below focused on four areas:

1. The adequacy of supervision by the chain of command for a period from June 2014 through September 2016;
2. Whether SPD personnel are assigned to a single, consistent, clearly identified first-line supervisor, also known as “unity of command”;
3. The quality of sergeant training and ensuring that any personnel assigned as long-term “acting sergeants” receive specific training within 60 days of their appointment; and
4. Whether SPD is deploying an adequate number of qualified supervisors to assure that the provisions of the Consent Decree are implemented, also known as “adequate span of control.”

          The assessment found that in all four areas, SPD was in initial compliance.  For example, the assessment found that the chain of command receives timely notice of and reviews and tracks uses of force.  It also shows supervisors are taking appropriate action with their officers when the use of force is found to be problematic, including counseling officers, initiating referrals up the chain of command, noting performance issues in appropriate systems, and referring incidents that may implicate policy violations to the Office of Professional Accountability.  Viewed from the officer’s perspective, the Monitor found that over 90% of officers surveyed reported receiving feedback from their sergeants, finding their sergeants to be “very available” to them, and feeling comfortable asking questions about day-to-day issues and seeking advice. 

          With respect to unity of command, the assessment found that 97% of the time officers are assigned to a single, clearly-identified supervisor, with each squad assigned to the same daily work schedule.  This kind of consistent management structure is understood to lead to better policing and better morale in police organizations.  In contrast, during DOJ’s investigation in 2011, the average officer saw his or her sergeant twice per week.

          The Monitor also found that sergeant training materials prepare their sergeants for effective supervision and leadership and that supervisors reported finding these trainings valuable. 

          Finally, as to span of control, sergeant to officer ratios, which are now at 1:6 on average across the SPD precincts, were found to be more than adequate and, indeed, continue to trend downwards. 

          Although the Monitor made a finding of initial compliance regarding supervision, the assessment also identified a number of areas that either need improvement – including the Field Training Officer selection for which SPD will be setting forth new criteria – or require further examination.  Notably, the previous use of force reporting and investigation assessment found deficiencies in supervisory review of Type II force cases based on a 2014 sample.  A follow-up assessment is currently underway to determine if the quality and rigor of Type II investigations and reviews by supervisors have improved over the past two years.  Moreover, the Monitor, as part of the evaluation of SPD’s search and seizure activity, will explore whether supervisors are sufficiently reviewing documentation of stops and appropriately flagging those stops that have incomplete documentation or for which officers articulated inadequate reasonable suspicion to make the stop. 

          Additional upcoming assessments in 2017, in addition to the above-referenced follow-up assessment regarding Type II investigations, will examine SPD’s use of force, Early Intervention System, and the use of Terry stops.

Filed assessment

          Seattle -- Cardinal Health has agreed to pay $34 million in civil penalties to resolve allegations that the Lakeland, Florida-based distributor failed to report to the DEA suspicious orders of Class II controlled substances by pharmacies located in central Florida and Maryland.  The settlement also resolves a civil investigation in the Western District of Washington into Cardinal Health’s failure to maintain adequate records concerning Class II controlled substances in that district.

          Separately, the United States Attorney for the Southern District of New York announced that Cardinal Health has agreed to pay an additional $10 million to resolve allegations that its subsidiary, Kinray, Inc., failed to report suspicious orders by pharmacies operating in the Kinray service area.  In the settlement resolving the Florida and Maryland investigations, Cardinal Health acknowledged that, from January 1, 2009, to May 14, 2012, it failed to comply with regulations requiring reports of pharmacies’ suspicious orders of certain narcotic medications.  Cardinal did not admit to the recordkeeping allegations in the Western District of Washington, but chose to resolve the case along with the other investigations.

          “I am pleased to join with the U.S. Attorneys from Maryland, New York and the Middle District of Florida to hold Cardinal Health accountable for improperly securing the drug distribution chain,” said U.S. Attorney Annette L. Hayes.  “Our investigation, which uncovered recordkeeping violations, is resolved along with more wide-ranging violations identified in the other districts.”

          The Controlled Substances Act imposes civil penalties when DEA registrants fail to report suspicious pharmacy orders for Class II narcotic medications.  The settlement announced today imposes a civil monetary sanction for the conduct addressed in Cardinal Health’s administrative settlement executed with the DEA in 2012, which suspended Cardinal’s registration to distribute Class II narcotic medications for a period of two years.  The DEA returned Cardinal’s registration in May 2014 while the civil penalty negotiations that led to today’s announcement were pending. 

          The Western District of Washington investigation was conducted by the Drug Enforcement Administration’s Diversion Group, with negotiations handled by Assistant U.S. Attorney David East.

 

          The former owner of Cynthia’s Polynesian Market in Burien, Washington was sentenced today in U.S. District Court in Seattle to 14 months in prison and three years of supervised release for food stamp benefit fraud, announced U.S. Attorney Annette L. Hayes.  ROHIT REDDY, 43, pleaded guilty to Supplemental Nutrition Assistance Program (SNAP) fraud on July 1, 2016.  In his plea agreement, REDDY admitted that he allowed SNAP recipients to exchange their benefits for cash, while his store kept about 50 percent of the amount fraudulently redeemed on the benefit card.  In imposing the sentence, U.S. District Judge James L. Robart encouraged REDDY, a native of Fiji, to “Please go back and preach the message to your community that the law applies to everyone.”

            According to records filed in the case and evidence presented to the court, between March 2014 and June 2015 Cynthia’s Polynesian Market conducted more than 7600 transactions using food stamp debit cards.  Of those transactions more than 2000 were for a dollar amount above $120.  Investigators believe that is an unusually high number given the size and product selection at the market.  Additionally, on 11 different occasions undercover agents were able to redeem benefits for cash while providing the store with the 50 percent premium.  Finally, using a surveillance camera, investigators were able to link the processing of large dollar amounts from food stamp cards with the customers leaving the store.  Investigators determined that the customers ‘spent’ as much as $600 but left the store with no or very few grocery bags – an indicator that the card benefits had been illegally exchanged for cash.  On many of the higher transactions, the debit card was first checked to determine the balance, and the next transaction was to reduce the balance to almost zero – another sign of fraud.

            At the sentencing hearing, prosecutors asked that the court determine the fraud was more than $250,000, while the defense argued it could be less than $10,000.  Noting that REDDY had little ability to pay back the loss, Judge Robart set the loss and the restitution to be paid to the government of just more than $95,000.

            The case was investigated by the U.S. Department of Agriculture Office of Inspector General (USDA-OIG) and the FBI.  The case was prosecuted by Assistant United States Attorneys Rebecca Cohen and Thomas Woods.

 

          A resident of New Zealand who traveled to Seattle in April 2016 to take possession of export-restricted parts designed for missile and space applications was convicted late yesterday in U.S. District Court in Seattle of two federal felonies related to the scheme, announced U.S. Attorney Annette L. Hayes.  The jury deliberated about three hours before finding WILLIAM ALI, 38, guilty of conspiracy to violate the Arms Export Control Act and attempting to violate the Act.  U.S. District Judge Thomas S. Zilly scheduled ALI’s sentencing hearing for March 16, 2017.  ALI remains in federal custody pending sentencing.

            According to records in the case and testimony presented at the two-day trial, ALI emailed several companies and distributors in April 2015 about purchasing certain accelerometers that are designed for use in spacecraft and missile navigation.  These accelerometers cannot be exported from the United States without a license from the U.S. State Department, which Ali did not have.  The Department of Homeland Security learned of Ali’s inquiries and began an investigation. 

            Over the next year, ALI communicated by phone and email with a Homeland Security undercover agent and with a person in China known in his emails as “Michael.”  Michael was the person seeking the accelerometers, as well as certain gyroscopes that are designed for military use.  ALI was working to find a way to purchase the devices and transport them secretly to Michael in China.  In multiple emails, ALI made clear that he was aware that export of the accelerometers and gyroscopes was illegal.  ALI sent the undercover agent nearly $25,000 for the devices – money he got from Michael.  ALI traveled to Seattle and met with the undercover agent on April 16, 2016, at a downtown hotel.  Shortly after ALI took possession of the devices he was arrested.  ALI had with him an airline ticket to Hong Kong and a visa to travel to China.

            The conspiracy count is punishable by up to five years in prison and a $250,000 fine.  Attempt to violate the Export Control Act is punishable by up to 20 years in prison and a $1 million fine.  These are the maximum sentences allowed by law.  Judge Zilly will determine the appropriate sentence based on a number of factors including the background and circumstances of the defendant.

            The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and was prosecuted by Assistant United States Attorneys Thomas Woods and Rebecca Cohen.

          An investigation begun by the Drug Enforcement Administration and the West Sound Narcotics Enforcement Team in February 2014 resulted today in the arrest of 19 people with ties to a methamphetamine distribution ring, announced U.S. Attorney Annette L. Hayes.  Law enforcement served 24 search warrants on locations in Washington and Arizona in connection with the case.  More than 20 vehicles were searched in connection with the investigation.  Today alone law enforcement seized more than 44 pounds of methamphetamine, more than 50 firearms, and more than $50,000 in cash.

           Previous seizures associated with this drug ring include more than 5 pounds of meth and more than $28,000.

            Those arrested today in the Western District of Washington will make their initial appearances today and tomorrow in U.S. District Court in Tacoma at 2:30 p.m.  Those charged in the indictment include:

JOSE ERNESTO MOZEQUEDA VASQUEZ, 34. of Chehalis, Washington

JESUS BELTRAN, 34, of Phoenix, Arizona

ANTONIO DE LA MORA, 41, of Centralia, Washington

JUAN SALUD GARCIA ALMANZA, 30 of Centralia, Washington

VIOLETTA ROSALIA GUADARRAMA, 32 of Centralia, Washington

ERNESTO LUNA VASQUEZ, 44 of Kelso, Washington

MARIA CENTENO GALLEGOS, 37 of Chehalis, Washington

COLLIN MESINAS, 28 of Olympia, Washington

AUNDREA LYNN NATINS, 41 of Port Orchard, Washington

WILLIAM HAGMANN, 54 of Shelton, Washington

JON DANIEL BROWNFIELD, 58 of Shelton, Washington

KIMBERLY BROOKE GRAY, 36 of Port Orchard, Washington

REBECCA SUE GODSALVE, 52 of Bremerton, Washington

MARK AGNEW, 51 of Gig Harbor, Washington

ISAELA PACHECO CENTENO, 22 of Poulsbo, Washington

TERESA GOOS, 55 of Hoodsport, Washington

DEREK JOHNSON, 29 of Gig Harbor, Washington

KAREN KENMIR, 55 of Shelton, Washington

          A nineteenth defendant, GERARDO ENRIQUE FLORES, 26, of Chula Vista, California, was arrested in California and will make his initial appearance on a criminal complaint in the Southern District of California.

            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.

            This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved.

            Today’s searches and arrests were led by the Drug Enforcement Administration (DEA) in Washington, Arizona, and California, and involved officers from the West Sound Narcotics Enforcement Team (WESTNET), Tahoma Narcotics Enforcement Team (TNET), Lewis County Sheriff’s Office Joint Narcotics Enforcement Team (JNET), Vancouver Police Department, Grays Harbor County Drug Task Force, Cowlitz County Sheriff’s Office, Thurston Narcotics Team (TNT), Lakewood Police Department, Washington State Patrol, Shelton Police Department, Mason County Sheriff’s Office, Kitsap County Sheriff’s Office, Olympic Peninsula Narcotics Enforcement Team (OPNET), Pierce County Sheriff’s Office,  Bremerton Police Department, King County Sheriff’s Office, Valley Narcotics Enforcement Team (VNET), and the Lakewood Police Department.

            The case is being prosecuted by Assistant United States Attorneys Marci L. Ellsworth and C. Andrew Colasurdo.

 

          Seattle - U.S. Attorney Annette L. Hayes announced today that the Western District of Washington collected $14.4 million in the fiscal year ending September 30, 2016.  Of this amount, $8.9 was collected in criminal actions and $5.4 million was collected in civil actions. 

          Additionally, the Western District of Washington worked with other U.S. Attorney’s Offices and components of the Department of Justice to collect an additional $12.4 million in cases pursued jointly with these offices.  Virtually all of these funds were collected in civil actions.

          “The U.S. Attorney’s Office is working for taxpayers every day ensuring that monies belonging to them are returned to government coffers,” said U. S. Attorney Annette L. Hayes.  “The collections this year include funds obtained in cases involving healthcare, aviation and government contracting fraud, and pursuant to criminal authorities focused on taking the profit out of crime.  Along with all the other work done by the office, these collections are testament to the hard work of lawyers and support staff dedicated to their public service mission.”             

          Attorney General Loretta E. Lynch announced today that the Justice Department collected nearly $15.4 billion in civil and criminal actions in the fiscal year ending September 30, 2016.  The $15,380,130,434 in collections in FY 2016 represents more than five times the appropriated $2.93 billion budget for the 94 U.S. Attorneys’ offices and the main litigating divisions of the Justice Department combined in that same period.

          “Every day, the men and women of the Department of Justice work tirelessly to enforce our laws, ensuring that taxpayer dollars are used properly and that the American people are protected from exploitation and abuse,” said Attorney General Lynch.  “Today’s announcement is a testament to that work, and it makes clear that our actions deliver a significant return on public investment.  I want to thank the prosecutors and trial attorneys who made this year's collections possible, and I want to emphasize that the department remains committed to the well-being of our people and our nation.”

          Among the cases with significant collections are: a $3 million payment by Spiracur, Inc. to settle allegations the Sunnyvale, California medical device maker improperly compensated podiatrists at Veterans Affairs facilities to promote use if its products; a $2.8 million payment from Southwest Airlines to resolve allegations the airline violated FAA safety regulations in its maintenance of Boeing 737 aircraft; and a $1.4 million payment in U.S. v Gottfriedson – a counterfeit cigarette trafficking case.

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

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

            Additionally, the U.S. Attorney’s office in the Western District of Washington, working with partner agencies and divisions, collected $8.5 million in asset forfeiture actions in FY 2016.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.

            The prosecution of a sophisticated drug ring, and the investigation of food stamp trafficking led to the largest forfeiture matters in fiscal 2016.  In U.S. v. Gilberto Salazar Rojas, et al., Case No. CR13-050, the government forfeited $343,329 in cash and property as proceeds of a drug ring distributing large quantities of heroin, cocaine and methamphetamine.  In U.S. v. 11403 23rd Ave. W. Everett, WA, et al., Case No. C14-1132 the government recovered $412,694 from a store owner related to Supplemental Nutrition Assistance Program (SNAP) Benefit Fraud and Money Laundering.

          A 66-year-old Whatcom County, Washington woman was sentenced to three months home detention and two years of supervised release today in U.S. District Court in Seattle for aiding and abetting the possession of firearms by her son, a convicted felon who was prohibited from possessing firearms, announced U.S. Attorney Annette L. Hayes.  JEANNE TINKER-SMITH repeatedly went with her son and purchased firearms and allowed him to have access to the firearms despite knowing that her son had a felony conviction.  Tragically, TINKER-SMITH’s son was fatally shot by police after he fired on them in November 2014.  A jury in U.S. District Court in Seattle found TINKER-SMITH guilty following a three-day trial in September 2016.  At the sentencing hearing U.S. District Judge Robert S. Lasnik told her, “The decisions you made are part of the reason your son is not here right now.”           

            “It is critical that we enforce our gun laws and keep firearms out of the hands of convicted felons in order to protect public safety, said U. S. Attorney Annette L. Hayes.  This tragic case is a reminder that it is against the law for any of us to help a prohibited person get a firearm – even if that person is someone we are close to.”

            According to records filed in the case and testimony at trial, TINKER-SMITH purchased five firearms between August and November 2014.  TINKER-SMITH was accompanied by her son Cecil on multiple occasions.  Cecil was prohibited from possessing firearms because he had a felony conviction.  On November 16, 2014, TINKER-SMITH and her son went to a firearms store seeking to purchase a handgun.  She was unable to complete the purchase because she did not have a concealed weapons permit.  Shortly after the trip to the gun store, one of TINKER-SMITH’s neighbors reported Cecil was firing a gun in an unsafe manner.  When law enforcement arrived, Cecil ignored commands to drop the weapon and began a stand-off with law enforcement officers.

            During the stand-off, TINKER-SMITH made various statements to the officers – in one she denied her son was in the house.  When the SWAT team ultimately entered the house, Cecil fired at officers and was killed when officers fired back.  One police officer was grazed but not seriously injured.  Multiple firearms were found in the house, in locations where Cecil had access to them.

            The case was investigated by the Bellingham Police Department and the Washington State Patrol.  The case was prosecuted by Assistant United States Attorneys Thomas Woods and Senngjae Lee.

          A 49-year old El Paso, Texas man was indicted on December 7, 2016 with six counts of wire fraud and two counts of impersonating a federal officer or employee, announced U.S. Attorney Annette L. Hayes.  ALEJANDRO GURANY, allegedly collected thousands of dollars from immigrants after telling them he worked for a government immigration office and could provide the immigrants with legal status for a fee.  GURANY was never employed by a federal immigration agency.  At least nineteen victims in Washington and Ohio have been interviewed by law enforcement.  Authorities are seeking to contact others who may have been victimized.

            “While law enforcement has identified more than a dozen victims in this case, there may be more out there,” said U.S. Attorney Annette L. Hayes.  “I encourage anyone who has information about this case, and anyone who may have been victimized by this scam to contact Investigators.”  Tips related to such crimes can be made by email (https://www.ice.gov/we form/HSI-tip-form) or by calling 1-866-DHS-2-ICE.

             GURANY has been summoned to appear in U.S. District Court in Seattle on January 5, 2017. 

            According to the indictment, between at least December 2011 and March 2015, GURANY pretended to be an employee of the United States and told immigrants he could get them legal status in the U.S. in exchange for money.  GURANY would travel to SeaTac, Washington, and meet with immigrants at an airport hotel.  The indictment alleges that GURANY would take personal identifying information, including photographs and fingerprints from the immigrants seeking green cards or citizenship.  Some of the immigrants paid GURANY thousands of dollars believing he would provide legal status. 

            “This defendant preyed on vulnerable victims who were fearful of being deported by falsely representing himself to be in a position to assist them. His actions misrepresented the agency's purpose and processes while creating a false sense of fear in those wishing to seek help from law enforcement,” said Shawn Fallah, resident agent in charge of the U.S. Immigration and Customs Enforcement (ICE), Office of Professional Responsibility (OPR) in Seattle. “We remain committed to safeguarding the public from these imposters. ICE encourages community members to report this type of fraud to help us protect and prevent future victims.”

            Wire fraud is punishable by up to 20 years of imprisonment and a $250,000 fine.  Impersonating an officer or employee of the United States is punishable by up to three years of imprisonment and a $250,000 fine.

            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 is being investigated by U.S. Immigration and Custom Enforcement’s Homeland Security Investigations (HSI).  The case is being prosecuted by Assistant United States Attorney Nicholas Manheim.

          The operator of a number of ‘clean and sober’ residential facilities in Snohomish County, Washington was sentenced today in U.S. District Court in Seattle to six years in prison and five years of supervised release for drug trafficking crimes, announced U.S. Attorney Annette L. Hayes.  TIMOTHY REHBERG, 50, of Everett was arrested on February 9, 2016, following an investigation that revealed he was dealing illegal drugs.  In a search of the office at the primary I.C. Clean People Recovery Housing, Incorporated facility in Everett, authorities located approximately one pound of crystal methamphetamine, a quarter pound of heroin, small quantities of marijuana, oxycodone and methadone, and a loaded .38 caliber revolver.  REHBERG pleaded guilty in September 2016 to possession of heroin and methamphetamine with intent to distribute and possession of a firearm in furtherance of a drug trafficking crime.  At the sentencing hearing U.S. District Judge Robert S. Lasnik said, “there is no excuse for having that loaded firearm in the safe.”

            “As the operator of a clean and sober house, this defendant knew better than most the devastation caused by drug addiction, said U. S. Attorney Annette L. Hayes.  “It is outrageous that he chose to run his drug operation out of such a facility.  His conduct certainly is deserving of a significant penalty.”

          According to various records in state and federal court, REHBERG came to the attention of law enforcement in December 2015, when a witness identified him as someone selling methamphetamine, heroin, and marijuana.  Further investigation confirmed REHBERG’s identity and his occupation as the owner and operator of a chain of clean and sober housing facilities under the name ‘I.C. Clean People Recovery Housing.’  The person working with law enforcement made four purchases of illegal drugs, including methamphetamine, heroin, and marijuana, from REHBERG.  REHBERG is prohibited from possessing firearms due to prior felony convictions as well as an active protection order from a domestic partner.  REHBERG admitted he was the only person with access to the safe where the gun was stored and that he had it in connection with his drug trafficking activities.

          The investigation was led by the DEA and SPD with assistance from Health and Human Services, Office of the Inspector General (HHS-OIG), the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), and the Washington State Attorney General’s Office.

            The case was prosecuted by Assistant United States Attorney Siddharth Velamoor.

          A computer support technician formerly employed at Expedia offices in San Francisco pleaded guilty today in U.S. District Court in Seattle to securities fraud, announced U.S. Attorney Annette L. Hayes.  JONATHAN LY, 28, of San Francisco, admitted he used his position in tech support at Expedia to access emails of Expedia executives so that he could trade in Expedia stock and illegally profit from non-public information.  LY faces a separate Securities and Exchange Commission action requiring him to pay back the more than $331,000 in profits he made in the scheme.  Sentencing in the criminal case is scheduled for February 28, 2017, in front of U.S. District Judge John C. Coughenour.

            “The irony of our increasingly digital world is that the greatest threat to our networks is a human one,” said U.S. Attorney Annette L. Hayes.  “In this case, an IT professional used his employer’s networks to facilitate a get-rich-quick scheme.  I commend Expedia for quickly contacting law enforcement when they identified the computer intrusion.  Their willingness to do the right thing made it possible to effectively investigate and prosecute the matter – protecting our financial markets from unfair manipulation.”

            According to records filed in the case, between 2013 and 2015, LY was employed by Bellevue based Expedia as a Senior IT Technician in the San Francisco office of subsidiary Hotwire.com.  In order to provide IT support, LY had network privileges that allowed him to remotely access the electronic devices of Expedia executives.  Using those privileges LY accessed documents and emails containing non- public information on the devices of both the Chief Financial Officer and the Head of Investor Relations.  Using the non-public information LY executed a series of well-timed trades in Expedia stock options.           

          Even after he left the company in 2015, LY kept an Expedia laptop, and without the knowledge of the company, continued to access the electronic devices and email accounts of Expedia executives.  LY used his know-how to make it appear that other Expedia employees were actually the ones accessing the devices.  Shortly after discovering the computer intrusion, Expedia reported it to the FBI and undertook its own forensic investigation.  Because of the quick reporting, the FBI was able to trace the computer intrusion to LY.  As part of his plea agreement LY will repay Expedia the $81,592 it spent investigating the computer intrusion.

          “Insider trading erodes the public’s trust in the financial markets. Reassuringly, most employees never exploit their unique knowledge for unfair investment advantages,” said FBI Special Agent in Charge Jay S. Tabb, Jr. of the FBI Seattle field division. “However, our FBI office is particularly attentive to uncovering when and where this type of fraud occurs, given this state’s high density of publicly traded companies. This case was particularly egregious because Mr. Ly abused his special access privileges as an IT administrator. On top of violating the trust of the public and his company, he violated the privacy of fellow employees by surreptitiously accessing their files.”

          Securities fraud is punishable by up to 25 years in prison and a $250,000 fine.  This is the maximum penalty allowed by law.  The actual sentence imposed in any case will reflect the specific facts of the crime, including the impact on any victims and the defendant.

          The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Kathryn Kim Frierson.

          An Everett, Washington man who worked for a Canadian company that sells point of sale computer software, pleaded guilty today to wire fraud and conspiracy to defraud the government for his role in a scheme to sell ‘Tax Zapper’ software, announced U.S. Attorney Annette L. Hayes.  JOHN YIN, 66, pleaded guilty in U.S. District Court in Seattle, admitting that he promoted and sold a revenue suppression software that allowed restaurants to underreport their sales and illegally lower their tax bills.  The software – sometimes called a “Zapper” program - resulted in a loss amount of more than $3.4 million.

            “This defendant sold businesses a high tech tool that had only one purpose – to give businesses a leg up by cheating the taxman,” said U. S. Attorney Annette L. Hayes.  “In addition, by not paying their fair share of taxes, they cheated state and federal programs, and victimized workers whose employment and social security taxes went unpaid as well.  Partnering with the Washington State Attorney General’s Office, we will ensure that those who are responsible for this conduct will be held to account.”

            “Using illegal software to avoid tax obligations harms both taxpayers and businesses that compete fairly and play by the rules,” said Attorney General Bob Ferguson. “I’m proud to work with U.S. Attorney Hayes to stamp out this fraud.”  Ferguson’s office is pursuing a separate criminal case against a Bellevue restauranteur accused of using zapper software to pocket nearly $400,000 in state sales taxes.

          According to the charging information and the plea agreement, YIN was a salesman for Profitek, a British Columbia, Canada company selling point of sale (POS) systems for hospitality and retail industries.  In addition to its Canadian headquarters, the Company has offices in China and a growing dealership network across North America.  The Company designed, or had designed, and marketed, sold and supported revenue suppression software (RSS) as an add-on to its Profitek point of sale software.  This RSS functioned only with the Profitek POS software.

            Point of Sale software creates a database of transactions that is used to calculate a business’s tax obligations.  Revenue suppression software (RSS) is used to modify a business’ POS database for the purpose of tax evasion.  When executed, the RSS program deletes all or some of the business’s cash transactions, and then reconciles the books of the business.  The result is business records that appear to be complete and accurate but, in fact, are false and fraudulent in that they show less than total income earned.

            JOHN YIN successfully sold the POS software, and assisted in the widespread distribution of the Zapper software, to dozens of customers over the course of several years.  

          Between 2010 and 2013, eight different restaurants in the Seattle area used the software and underpaid their state and federal taxes by amounts ranging from a low of just over $145,000 to more than $910,000.  When the restaurant owner who underpaid taxes by more than $900,000 was confronted about using the tax zapper software she admitted she used the unreported cash to pay some employees in cash.  In addition, she did not withhold mandatory social security or Medicare taxes for these employees.

            “Revenue Suppression Software represents the modern iteration of old-fashioned skimming,” said Special Agent in Charge Darrell Waldon of IRS Criminal Investigation.  “The IRS has always pursued those who attempt to circumvent their tax obligations, and this case is no exception.  These so-called Zapper programs have caught the eye of diligent IRS Special Agents and our law enforcement partners, and together we will continue to prosecute those who threaten the integrity and equity of our nation’s tax system.”

          “The publicity around “zapper” software cases sends the clear message that state and federal agencies are serious about this type of fraud,” said Vikki Smith, director of the Washington State Department of Revenue. “We will continue our work with the IRS and the state Attorney General’s office to make sure retail sales tax dollars stolen in this type of scheme are recovered and used as intended – to fund public services.”

            Wire fraud is punishable by up to 20 years in prison and a $250,000 fine.  Conspiracy to defraud the government is punishable by up to five years in prison and a $250,000 fine.  YIN has agreed to pay $3,445,589 in restitution to the United States and Washington State and also agreed to pay for the costs of prosecution.  Sentencing is scheduled in front of U. S. District Judge Richard A. Jones on February 24, 2017.

            The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), the Washington State Department of Revenue with special assistance from the Washington State Attorney General’s Office.

            The case is being prosecuted by Assistant United States Attorney Susan Roe.

 

          The United States Department of Justice and Emeritus Corporation, dba Emeritus Senior Living, today settled claims that Emeritus had failed to refund to the U.S. overpayments for Medicaid services, announced U.S. Attorney Annette L. Hayes.  Under the terms of the settlement, Emeritus admits no wrongdoing, but makes payments to the U.S. and various states totaling $979,000.  Emeritus was headquartered in Seattle and had senior living facilities throughout the United States.  In 2014 Emeritus was purchased by Brookdale Senior Living, Inc., of Brentwood, Tennessee.

            According to the settlement agreement, Emeritus will pay the federal government $587,400 for payments it should have refunded to the federal Medicaid program.  An additional $391,600 will be divided between eighteen states where Emeritus had facilities.  The dollar amounts are estimates of overpayments Emeritus failed to refund to state and federal programs between 2008 and 2014.  The investigation began with an online hotline report from a former employee of Emeritus alleging that Emeritus systematically “wrote-off” credit balances as a result of limitations in the company’s accounting software.

           The accounting software has been replaced with one that can better track overpayment.

          The U.S. Health and Human Services Office of Inspector General (HHS-OIG) led the investigation.  The settlement was negotiated by Assistant United States Attorney Kayla Stahman with the U.S. Attorney’s Office for the Western District of Washington.  A National Association of Medicaid Fraud Control Units (NAMFCU) Team participated in the investigation and conducted the settlement negotiations with Emeritus on behalf of the states and included representatives from the Offices of the Attorneys General for the states of Washington, Oregon, Colorado, Texas and Florida.

          A Drug Enforcement Administration led task force conducted raids at 14 locations across King and Pierce Counties, as well as locations in Oregon, following a two-year investigation of drug trafficking, announced U.S. Attorney Annette L. Hayes.  Law enforcement searched residential and business locations in Maple Valley, Enumclaw, Ravensdale, Auburn, Kent, Federal Way, Graham, Tacoma, Puyallup, and Bellevue.  Additional searches and arrests occurred in Springfield, Oregon.  The defendants will appear in U.S. District Court in Tacoma today and tomorrow during the 2:30 PM initial appearance calendar.

            In addition to searches at various properties, thirteen vehicles associated with the drug trafficking organization are also being searched.  Members of the group allegedly transported drugs and money in hidden compartments of various vehicles.  The businesses searched include a landscaping business, an auto wrecking yard, a motorsports/boat business and a pawn shop. 

            Over the course of the investigation, and with today’s searches, law enforcement has seized more than $350,000 in cash, more than thirty pounds of methamphetamine, cocaine and firearms.

            Those arrested on the indictment today include: BERNABE NAVA AMBRIZ, 37, of Maple Valley; VINCENT PHILLIP CORSALETTI, 51, of Springfield, Oregon; SERAFIN MENDOZA CABRERA, 37, of Federal Way; SAUL MENDOZA CABRERA, 35, of Kent; ADAN GUTIERREZ RASO, 22, of Kent; JESSICA CARVER, 46, of Puyallup; and THOMAS RADFORD, 34, of Graham.  Three additional defendants were arrested on criminal complaints: CLINTON BJORNSON, 34, of Bellevue; QUINN HINKLE, 45, of Tacoma; and JOEL CHAVEZ, 21, of Maple Valley.

            The charges contained in the indictment and criminal complaints 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.

            This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved. 

          The case was investigated by the Drug Enforcement Administration in Tacoma and Eugene, Oregon, with assistance from the West Sound Narcotics Enforcement Task Force (WESTNET), Pierce County Sheriff’s Office, Portland (Oregon) Police Bureau, and Springfield (Oregon) Police Department.  The case is being prosecuted by Assistant United States Attorneys Marci Ellsworth and Amy Jaquette.

          A 33-year-old Federal Way man was sentenced today in U.S. District Court in Seattle to 24 years in prison for production and distribution of child pornography, announced U.S. Attorney Annette L. Hayes.  VICTOR LARRY LEE WRIGHT pleaded guilty in August 2016, admitting that he made videos of himself molesting a 7-year-old child.  He then shared those images with others via a peer to peer file sharing program.  In addition to the lengthy federal sentence, WRIGHT faces 26 and a half years in prison in King County Superior Court for rape of a child.  U.S. District Judge John C. Coughenour ordered WRIGHT to be under a lifetime term of federal supervision following his prison term.

            “This defendant violated his young victim twice.  First, via sexual assault, and second by distributing images of that depraved and horrific crime across the internet,” said U.S. Attorney Annette L. Hayes.  “I commend the work of law enforcement to identify and arrest this defendant, and the partnership between my office and the King County Prosecutor to ensure this defendant receives long federal and state prison sentences, and a lifetime of supervision for his crimes.  Our kids deserve nothing less.”

            According to records in the case, in April 2015 an agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) was working in an undercover capacity when he noted an individual sharing files on a peer to peer network.  The individual provided the undercover agent with the password to access the files.  The agent determined the files contained an extensive child pornography collection showing images of the rape and molestation of multiple children.  Further investigation revealed the person sharing the files was WRIGHT.  In May 2015, WRIGHT was arrested following a court authorized search of electronic devices at his Federal Way residence.  Forensic examination by HSI revealed the devices contained images of WRIGHT sexually assaulting a 7-year-old child.  The examination also uncovered chat messages with others where WRIGHT discusses sexually molesting the child.

          “The thorough investigative approach by our special agents not only helped secure an appropriate sentence today, but more importantly identified a victim subject to Wright's abuse,” said Steve Cagen, special agent in charge of Homeland Security Investigations Seattle.  “Partnering with local law enforcement, we will continue steadfast in our efforts to rid all communities of likeminded child predators.”

            WRIGHT has been in custody since his arrest in May 2015.  Under the terms of the plea agreement he will plead guilty to rape of a child in King County Superior Court following his sentencing on federal charges.

          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 investigating by Homeland Security Investigations and the Federal Way Police Department.  The case is being prosecuted by Assistant United States Attorney Kate Vaughan.