Western District of Washington

            U.S. Attorney Jenny A. Durkan announced today that significant federal funding has been awarded to the Seattle Police Department and the Skokomish Indian Tribe aimed at keeping youth safe from sex predators.  The Seattle Police Department received nearly $430,000 to fund its internet Crimes Against Children (ICAC) Task Force.  The Skokomish Tribe received more than $274,000 to fund sex offender registration and monitoring on tribal lands.

            “There is no higher priority than the safety of our children both online and in our communities,” said U.S. Attorney Jenny A. Durkan.  “These federal funds make a critical difference in both our urban and rural settings to the challenges faced by law enforcement.  I congratulate the Skokomish Tribe and the Seattle Police Department for securing these grants through a competitive process.”

            The grant award to the Seattle Police Department is from the Bureau of Justice Assistance (BJA) and will fund a commander, detective, training and equipment for the Internet Crimes Against Children Task Force.  The funding is part of the PROTECT Act of 2008 that targets the use of the internet to prey on children.  Some of the funding will be used for outreach to schools and parents about emerging technologies that could be misused and pose a risk to children.

            The grant to the Skokomish Tribe is part of the Adam Walsh Child Protection and Safety Act of 2006.  The funding will allow the tribe to hire a compliance officer to ensure sex offender registration and community notification.  The grant will allow for greater community outreach and education and will allow the tribe to set up a kiosk at the Tribal Center where residents can get information about registered sex offenders in their community.

Today, the U.S. Department of Justice announced an update to its federal marijuana enforcement policy in light of recent state ballot initiatives that legalize, under state law, the possession of small amounts of marijuana by adults and provide for the state regulation of marijuana production, processing and sale.  The Department also issued a memorandum to all U.S. Attorneys that makes clear that the Department will continue to enforce the Controlled Substances Act and details the federal interests that guide federal enforcement relating to marijuana.  Based on assurances that Washington and Colorado will impose an appropriately strict regulatory system, the Department has informed the governors of both states that it is deferring its right to challenge their legalization laws at this time.

The following is a statement from Jenny A. Durkan, U.S. Attorney for the Western District of Washington:

We have consistently focused on federal enforcement priorities in Western Washington, and have worked with our state and local partners to ensure the safety of our communities.  That will not change.  We will continue to enforce the Controlled Substances Act.  We will continue an aggressive focus on the promotion and sale of drugs to minors, violence and the use of firearms, and the trafficking of marijuana across state or international lines.  We will continue our work against organized criminal organizations and their underground economy, and against those who would use drug proceeds to fund other criminal activity.

The Department guidance is premised on the expectation that the state will implement strong and effective regulatory and enforcement systems.  This also is what Washington voters were promised and we expect no less today.  I look forward to meeting with state leaders to hear how the promises of enhanced public safety will be met.

The continued operation and proliferation of unregulated, for-profit entities outside of the state's regulatory and licensing scheme is not tenable and violates both state and federal law.  While our resources are limited, we will continue to enforce federal law in this arena by focusing on the critical public and federal interests outlined in the Department memo today.

This is an important moment for Washington, and I remain committed to working with law enforcement partners to focus on our priorities and address threats to public safety.   

The Department’s announcement and a link to the guidance memorandum can be found here: http://www.justice.gov/opa/pr/2013/August/13-opa-974.html.

Members of the public are also advised that it remains against federal law to bring any amount of marijuana onto federal property, including all federal buildings, federal lands including national parks and forests, military installations, and courthouses.  Individuals that do so will be subject to federal penalties.

Press contact for the U.S. Attorney’s Office is Executive Assistant United States Attorney Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

Three motels on Tukwila International Boulevard, in Tukwila, Washington were seized and boarded-up by federal agents today following a year-long investigation of criminal activity in and around the motels, announced U.S. Attorney Jenny A. Durkan.  More than 400 law enforcement officers and agents participated in the serving of search and seizure warrants today on the Great Bear Motor Inn, Boulevard Motel and Travelers Choice Motel.  In addition to the civil seizure of the motels, four people were arrested in connection with ongoing criminal activity at the motels, including three owner-operators.  In 2011 and 2012, police responded to the motels for reports of rape, robbery, assault, drug transactions, gun crimes, prostitution, and possession of stolen property.  During that time, the three motels accounted for approximately 17 percent of the Tukwila Police Department’s calls for service.

“Today we seek to hold the hotel owners accountable for their crimes, strip them of their criminal dens and make this area of the community safer,” said U.S. Attorney Jenny A. Durkan.  “I commend the Tukwila Police Department and ATF for their work – which allows us to not just prosecute the defendants, but to solve a problem.  Reducing crime on International Boulevard is a top priority for the residents of Tukwila and their representatives in government, and this operation is directly responsive to the community’s most pressing needs.”

According to records filed to seize the motels, (see Complaint here) the Tukwila Police Department and Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) jointly-led investigation used undercover officers and people working with law enforcement to document criminal activity at the motels and the role the owners and managers played in that activity.  According to the affidavit filed in the case, owners and managers would collect a $10 entry fee for those coming on the property seeking drugs or sexual services.  The owners and/or managers would take the money and direct the customer to rooms to purchase drugs or sex.  In some instances the person taking the “fee” would call the motel room to inform the dealer or sex worker that a customer was on the way.  According to witnesses, the owner or manager would collect additional rental fees from the dealer or sex worker based on how many customers were sent to the room over the course of the day.

“These businesses have been a haven for violence and gang activity for several years.  Today’s operation should have a lasting positive impact on crime in Tukwila,” said ATF Acting Special Agent in Charge Jim Modzelewski.  “ATF remains committed to partnering with other agencies to fulfill our mission of targeting violent crime.”

“The Mayor and Tukwila City Council have made public safety a priority for the citizens of Tukwila, and we are thankful for their support that has helped the police department create a safer place to live and conduct business,” said Tukwila Chief of Police Mike Villa. “Additionally, I would like to thank all of our officers, staff and partnering agencies that have made this operation a success.  We are excited that jointly we have been able to make such a significant impact on crime in Tukwila.”    

Since at least 2006, the three motels have consistently been among the top five motels in Tukwila with the highest calls for police service per room, with significantly higher ratios than other hotels in Tukwila.  The Great Bear Motor Inn was identified and cited in August 2012, as a nuisance property by the City of Tukwila.  The Boulevard Motel and Travelers Choice Motel had been sent warning letters in 2011 about being cited as nuisance properties.

            Displaced residents from the seized motels will be offered transportation to a nearby church.  At the church they will be fed and offered medical and mental health services, and assistance with housing and other needs from several City of Tukwila departments and other local, state and federal agencies.  The City will be providing qualified low income residents with vouchers for groceries and transportation.

            “The City of Tukwila expresses our deepest appreciation to the many federal, state, and local agencies who collaborated so well with our police department on this public safety action. This shows how we are all committed to improving public safety and creating great neighborhoods,” said Tukwila Mayor Jim Haggerton.

            The investigation, search and seizure operation today was led by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and the Tukwila Police Department.  Many additional agencies assisted the investigation and today’s operation, including the U.S. Marshals Service;  Department of Homeland Security; Drug Enforcement Administration; Federal Bureau of Investigation; Internal Revenue Service Criminal Investigation; U.S. Department of Agriculture Office of Inspector General; Washington State Patrol; Seattle, Auburn, Kent, Renton, Federal Way, and Port of Seattle Police Departments; Valley SWAT Team; King County Sheriff’s Office; Washington State Department of Corrections; and Washington State Department of Social and Health Services (DSHS).

            The case is being handled by Assistant United States Attorneys Justin Arnold, Jill Otake and Richard Cohen.

            Press contact for the U.S. Attorney’s Office from August 27 to 30 is Executive Assistant United States Attorney Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

            Press contact for the City of Tukwila is Commander Eric Drever of the Tukwila Police Department at (206) 858-3883 or e.drever@tukwilawa.gov.

A drug trafficker who came to the attention of law enforcement after his roommate was shot and killed in November 2012, was sentenced today in U.S. District Court in Tacoma to 15 years in prison and five years of supervised release, announced U.S. Attorney Jenny A. Durkan. JUAN HIDALGO-MENDOZA, 33, of Lakewood, Washington was convicted following a jury trial in May 2013 of Conspiracy to Distribute Controlled Substances, Possession with Intent to Distribute Controlled Substances, Possession of a Firearm in Furtherance of a Drug Trafficking Offense and being a Felon in Possession of a Firearm/Ammunition.  At sentencing U.S. District Judge Ronald B. Leighton referred to HIDALGO-MENDOZA’s apartment as “ground zero” for local trafficking activity and “a magnet for crime and violence” that drew the attention of armed intruders and led to the death of his roommate.

According to records filed in the case, emergency crews responded to the Greenwood Apartments on San Francisco Ave. SW, in Lakewood, just before 10:00 p.m. on November 12, 2012.  They found Jaime Diaz-Solis with a fatal gunshot wound on the sidewalk outside the ground floor apartment he shared with HIDALGO-MENDOZA.  According to witnesses, they heard a gunshot and later HIDALGO-MENDOZA dragged Dias-Solis from the apartment yelling for neighbors to call an ambulance.  HIDALGO-MENDOZA said he was in his bedroom when the victim was shot by an intruder.  On the night of the shooting a search of the apartment revealed two bricks of heroin weighing over three kilos, wrapped in duct tape, as well as an AK-47 style assault weapon and ammunition.  Investigators also found a revolver in HIDALGO-MENDOZA’s bedroom closet.  Hidden under the seat of HIDALGO-MENDOZA’s truck, investigators found $37,800 in cash.  HIDALGO-MENDOZA was arrested in November for the drug conspiracy as well as being a felon in possession of a firearm.  He has a prior conviction in California for distributing heroin and is prohibited from possessing firearms.

Two months after HIDALGO-MENDOZA’s arrest, and after the apartment had been rented to a new tenant, law enforcement learned there were additional drugs hidden in the unit.  In the walls they found eight bricks of heroin wrapped in duct tape, and two bricks of methamphetamine wrapped in green cellophane.  The hidden heroin totaled more than 13 kilos and the methamphetamine was nearly two kilos.  The wrapping of the heroin was identical to the two bricks seized in November.

In asking for a significant sentence prosecutors wrote to the court, “Hidalgo-Mendoza is a repeat offender.  He was caught, convicted, and imprisoned for selling heroin three years before this offense, in California.  He was subject to court supervision for that offense at the time he came to Washington, ostensibly to obtain a driver’s license but almost certainly with designs related to the drug trade.  That being the case, unlike first-time offenders, he cannot claim ignorance to the potential criminal consequences of drug trafficking activity, and was intimately aware of the hazards of the business (evidenced by his weapons) as well as the tragic impact drugs have on users.”

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 Lakewood Police Department, the Drug Enforcement Administration (DEA) and the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF).  The Auburn Police Department assisted with the case.

The case was prosecuted by Assistant United States Attorneys Sarah Vogel and Steven Masada.

Press contact for the U.S. Attorney’s Office on August 27 is Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

            Two federal grants from the U.S. Department of Justice are aimed at intervening in the lives of those struggling with drug abuse or sexual or domestic violence, announced U.S. Attorney Jenny A. Durkan.  The largest grant, more than $975,000, goes to the King County Sexual Assault Resource Center (KSARC) to provide services to youth and young adults who have been impacted by domestic violence, sexual assault, dating violence or stalking. The second grant, to the Washington State Department of Social and Health Services (DSHS) is aimed at supporting drug treatment for offenders in Washington’s jails and prisons.  The $150,000 grant is from DOJ’s Bureau of Justice Assistance.

            “These grants recognize the quality work being done in Washington to build a better future.  Preventing domestic violence and stalking, and helping victims is critical to building safe communities and strong adults.  KSARC has long been a national leader on these issues,” said U.S. Attorney Jenny A. Durkan.  “As Attorney General Eric Holder noted last week, we also must provide services such as drug treatment to allow those reentering society from prison the best chance at success.”

            The grant from DOJ’s Office of Violence Against Women (OVW) is designed to support comprehensive child- and youth-centered prevention, intervention, treatment, and response strategies to more fully address sexual assault, domestic violence, dating violence, and/or stalking.  The grant supports training for professionals, school based strategies, services for non-abusive parents and coordinating community responses.  This project also supports innovative projects that engage men and boys to act as allies with women and girls to address sexual assault, domestic violence, dating violence, and/or stalking.  The King County Sexual Assault Resource Center will implement this comprehensive project which focuses on sexual assault. The primary targeted age groups include youth and young adults, ages 13-24 years old, with a special focus on the homeless and runaway youth population, LGBTQ and the Latino population.

            The grant to DSHS will support the Residential Substance Abuse Treatment (RSAT) program in the state’s jails and prisons.  The goal of the RSAT program is to break the cycle of drugs and violence by reducing the demand for, use, and trafficking of illegal drugs.  RSAT enhances the capability of states and units of local government to provide residential substance abuse treatment for incarcerated inmates; prepares offenders for their reintegration into the communities from which they came by incorporating reentry planning activities into treatment programs; and assists offenders and their communities through the reentry process through the delivery of community-based treatment and other broad-based aftercare services.

The U.S. Justice Department today awarded nearly $5 million in grants to improve criminal justice in Washington State, announced U.S. Attorney Jenny A. Durkan.  The largest grant, $3.6 million, will be funneled through the Washington State Department of Commerce.  An advisory council made up of law enforcement, corrections, treatment and prevention professionals at the local, state and federal level selects the grant recipients throughout the state.  Individual police departments also received $1.3 million in direct grants, and the University of Washington received more than $247,000 for its Wrongful Conviction Review Program.

            “These Byrne grants, named for a young police officer who lost his life in the line of duty, are critical to the mission of our local police departments,” said U.S. Attorney Jenny A. Durkan.  “These grant awards are key to helping police forces with scarce resources so they can better protect public safety.”

The City of Seattle and surrounding jurisdictions (Auburn, Bellevue, Burien, Federal Way, Kent, King County, Renton, Seatac, Seattle and Tukwila) applied together for the largest grant:  $635,618.  The money will go to a variety of law enforcement programs aimed at preventing and reducing crime and providing services to victims.  Tacoma and surrounding jurisdictions (Tacoma Human Services, Pierce County Sheriff, Pierce County Prosecutor, Pierce County Superior Court and the Pierce County Department of Assigned Counsel) also did a combined application.  The Tacoma group was awarded $286,619 for various community-based policing and prosecution programs.  Priorities include youth violence, crime prevention and community policing.

These are the other direct Byrne grants awarded today:

• Skagit County $10,050 for their Victim Offender Meeting Program.
• Bellingham $35,159  for their Active Shooter training for law enforcement agencies in the area to increase officer safety, improve integrated public safety response, and to save lives.
• Everett $54,339 to purchase a variety of equipment including trauma kits, SWAT training, ballistic shields, license plate readers and life vests.
• Clark County $92,769 and surrounding jurisdictions will use the grant for equipment and technology including a crime reporting and analysis system, ammunition, protective gear and a criminal and jail records system
• Thurston County $31,922 for computer equipment; case management transition and implementations; visual aid equipment; and training.
• University Place $10,323 to support community-based programs.  Funds will be used for overtime and to augment crime prevention programs concerning personal and property safety.
• Snohomish County $41,155.  The Sheriff's Office will use grant funds to support overtime costs incurred for training.
• Bremerton $25,688 to preserve the community resource specialist who oversees the landlord notification, neighborhood watch, and crime prevention programs in the community.
• Lakewood $59,756 to target the increasing crime of copper theft and identify and eradicate illegal scrap metal shops operating in the area.
• Kitsap County $53,590 to obtain new equipment and technology to improve service and provide a safe environment for officers and the community.

Significant funding, $247, 593, was awarded today to the University of Washington Wrongful Conviction Review Program, known as the Innocence Project Northwest.  The Program provides high quality and efficient representation for potentially wrongfully convicted defendants in post-conviction claims of innocence.  The goals of this initiative are to: provide quality representation to those who may have been wrongfully convicted; alleviate burdens placed on the criminal justice system through costly and prolonged post-conviction litigation; and identify, whenever possible, the actual perpetrator of the crime.

The Byrne Grants are named in honor of New York City Police Officer Edward R. Byrne, who was killed in the line of duty on February 26, 1988.  Officer Byrne was just 22-years-old.  The Department of Justice's Bureau of Justice Assistance (BJA) administers this program, which allows state and local governments to support a broad range of activities to prevent and control crime and to improve the justice system.

            A Vancouver, Washington musician and record producer pleaded guilty today in U.S. District Court in Tacoma to wire fraud in connection with schemes to lure investors in non-existent music projects, announced U.S. Attorney Jenny A. Durkan.  KASEY ANDERSON, 33, admits in his plea agreement that he defrauded investors who believed they were investing in legitimate albums and concerts, including projects featuring major recording artists and celebrities.  ANDERSON is scheduled to be sentenced by U.S. District Judge Ronald B. Leighton on November 22, 2013.
           
            According to the facts set forth in the plea agreement, ANDERSON admitted that between 2009 and 2011, he induced more than $500,000 in investments for a number of projects, including a compilation album and concert series featuring well-known artists such as Bruce Springsteen, Pearl Jam, and R.E.M.  ANDERSON also sought investors for his own album and tours, and the record of another musician.  As part of the solicitation for the compilation album, ANDERSON represented that a portion of the proceeds from the record would support the legal defense fund for the “West Memphis Three,” three men convicted of murder in Arkansas in 1994, who had garnered significant attention and support from people who believed in their innocence.  ANDERSON claimed to have agreements signed by various music stars and a family member of one of the West Memphis Three.  No such agreements existed.  ANDERSON created fake email accounts for prominent music industry members and sent emails from those accounts to further convince investors his project was legitimate.  ANDERSON also forged statements from a music-distribution company purporting to show that the project had earned $1.7 million from advance sales.

            In addition to the “West Memphis Three” project, ANDERSON solicited investors for three other music-related projects using forged documents and false representations. ANDERSON solicited investors to fund an album of his music, and provided false paperwork indicating that thousands of copies of the album had been sold, earning more than $1.4 million in royalties.  In fact the album had earned less than $10,000 in royalties.  ANDERSON provided other forged documents indicating he had earned royalties in connection with an album by an unrelated artist, when in fact the album had been released by another record label years earlier, and that a 2011 concert tour had earned more than $200,000.  ANDERSON also sent investors forged bank account statements showing balances of hundreds of thousands of dollars more than existed in the accounts. 

            In all, ANDERSON took in nearly $526,000 from more than 30 investors.  ANDERSON has repaid $160,258, leaving more than $365,580 in loss for investors.  Wire fraud is punishable by up to 20 years in prison and a $250,000 fine.

            The case was investigated by the FBI and is being prosecuted by Assistant United States Attorneys Thomas Bates and Andrew Friedman.

            A Kent, Washington man who sold more than $500,000 in counterfeit luxury vehicle parts and accessories pleaded guilty today in U.S. District Court in Seattle to trafficking in counterfeit goods, announced U.S. Attorney Jenny A. Durkan.  GUOXIONG XIAN, 34, faces up to ten years in prison and a $2 million fine when sentenced by U.S. District Judge John C. Coughenour on November 22, 2013.

            According to the plea agreement signed today, XIAN owns 3 Ways LLC, a company selling auto parts over the internet.  XIAN primarily sold automobile accessories such as license plate frames, marque license plates, automobile logos and other decorative items for high-end automobiles.  The automobile accessories XIAN sold did not impact the operational characteristics of any automobiles.  In his plea agreement XIAN admits he imported the parts from China and that they were counterfeit parts bearing trademarks that belong to companies such as BMW, Mercedes, Toyota, Nissan and others.  From November 2008, through April 2013, XIAN sold approximately $538,000 worth of counterfeit automobile accessories.  In January 2013, XIAN sold various counterfeit car accessories to an undercover agent with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI).  XIAN sold them knowing they were marked with counterfeit trademarks.

            Prosecutors have agreed to recommend a sentence of no more than 18 months in prison.  XIAN has agreed to make restitution to the following companies: BMW/Mini - $256,066; Mercedes-Benz - $109,620;  Nissan/Infiniti - $13,361; Toyota/Lexus/Scion - $35,304;  Suzuki - $26,054;  Volkswagen/Audi - $20,434; Honda - $8,433 Yamaha - $6,218.03; Dodge/Chrysler/ Jeep - $13,326; General Motors Corporation- $20,075.  Ten other car companies are owed amounts less than $6,000.

            The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and was prosecuted by Assistant United States Attorney Norman Barbosa.

            The former Chairman and CEO of Summit Bank, a Skagit County community bank, pleaded guilty today in U.S. District Court in Seattle to Making a False Entry in a Report of an Insured Bank, announced U.S. Attorney Jenny A. Durkan.  JAMES E. BISHOP, 70, of Mount Vernon, Washington pleaded guilty to a criminal charge filed last week.  In his plea agreement BISHOP admits that between 2009 and 2011, BISHOP and his son, who was the bank president, concealed from regulators the mounting number of loans that were in default.  Summit bank was ultimately closed by state regulators and sold in May 2011.  Under the terms of the plea agreement, BISHOP must be sentenced to a term of imprisonment between 12 and 41 months or both sides can withdraw from the plea agreement.  Sentencing is scheduled before Chief U.S. District Judge Marsha J. Pechman on November 15, 2013.

            “Our economy depends on every bank following the rules.  Banking rules protect individual depositors as well as our financial system,” said U.S. Attorney Jenny A. Durkan.  “These defendants – both experienced bankers – took a myriad of steps to hide the true financial condition of Summit Bank from federal and state regulators.”

According to the records filed in the case, in 2005 JAMES E. BISHOP became CEO of Summit Bank and Chairman of Summit Bank’s Board of Directors.  His son, James E. Bishop II, served as President of the bank, and both were significant shareholders in the bank.  James E. Bishop II has also been charged in the case.  The younger BISHOP served as president of Summit Bank from 2005-2011.  According to the statement of facts in the plea agreement, the bank was required to file various reports with the Federal Deposit Insurance Corporation (FDIC) disclosing the loans the bank had made and the status of the loans.  In his plea agreement BISHOP admits that between 2009 and 2011, he caused the bank to undertake financial transactions related to past due loans, which concealed the overdue loans in the quarterly reports that went to the FDIC, essentially hiding millions of dollars in loans that were past due, and causing the bank to appear financially healthier than it actually was.  For example in one report on June 30, 2010, the Bank reported past due loans of approximately $6 million in outstanding loans, payments on which were past due for 30 or more days.  In truth, the bank had at least $13 million in outstanding loans, payments on which were past due for 30 or more days.

            “When we put our money in a bank, we also place our trust in those who operate it,” said Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle office.  “The FBI is committed to working with our partners to bring to justice those who would violate that trust.”

            “We are pleased to join our law enforcement colleagues and the U.S. Attorney’s Office in announcing this guilty plea,” said Wade Walters, Special Agent in Charge of the Western Region FDIC Office of Inspector General. “We are committed to ensuring the integrity of the banking industry and are especially concerned when bank insiders abuse their positions of trust and attempt to deceive the regulators.  It is fitting punishment that Mr. Bishop will be imprisoned, fined, and prohibited from participation in the affairs of any federally insured financial institution going forward.”

As part of a civil enforcement agreement entered with the FDIC, which is incorporated into the plea agreement, BISHOP will pay $300,000 to the FDIC and agree to a lifetime prohibition from participating in the conduct of the affairs of any federally insured financial institution.

            James E. Bishop II is scheduled for a plea hearing on September 5, 2013.

            The case was investigated by the FDIC Office of Inspector General (FDIC-OIG) and the FBI.

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

            A member of a scheme to scam prospective purchasers of cars, boats, and RVs by using false internet postings and fake payment processing programs was arrested in New York on July 22, 2013, when he tried to enter the U.S. from Romania, announced U.S. Attorney Jenny A. Durkan.  JUAN CARLOS DE LA CRUZ PIOTE, 47, a native of Spain, and his co-schemers opened multiple bank accounts in the Western District of Washington, which were used to accept funds from victims who thought they were using a secure payment method to purchase vehicles advertised on the internet.  In fact, the advertised vehicles – luxury cars, boats, or RVs – were never delivered, and the money was quickly wired out of the country or withdrawn from the accounts as cash.  DE LA CRUZ PIOTE will be transported to the Western District of Washington for arraignment on the indictment returned on August 14, 2013.

            According to records filed in the case, DE LA CRUZ PIOTE and other co-schemers opened multiple bank accounts using various foreign passports and identities.  The conspirators set up the accounts with business names such as GMC AUTOS, LLC, CARS CONSULTANTS, LLC, AUTO FINANCIAL, LLC and MGA ENGINES, LLC.  The conspirators would advertise various luxury cars, boats, and recreational vehicles on the internet on legitimate websites such as Craig’s List or Autotrader.com.  The conspirators would correspond with potential purchasers using false names.  When the purchaser was interested in buying one of the luxury vehicles, the schemers would have them wire funds to one of the business bank accounts claiming it was an “escrow account,” that would hold the funds until the purchaser received the vehicle.  The conspirators would create counterfeit PayPal paperwork and web pages, or would have the victims make the payment through a service they created and called “Amazon Payments” – but the service was in no way associated with Amazon.com.  The use of these names was a way to lull the purchasers into thinking they were dealing with a legitimate online seller.

            The indictment alleges that between February and August of 2011, the conspirators took in more than $940,000, and from one bank account alone quickly made multiple withdrawals totaling more than $100,000.

            One member of the ring has already pleaded guilty to wire fraud.  In September 2012, Emilian Madalin Nita was sentenced to 42 months in prison.

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

The cases were investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) and the FBI.  The case is being prosecuted by Assistant United States Attorney David Reese Jennings.

            A U.S. Customs and Border Protection officer living in Victoria, B.C. Canada, and his wife were arrested and charged today with conspiracy to defraud the U.S. with respect to claims for filing false claims for educational expenses, announced U.S. Attorney Jenny A. Durkan.
JOHN ERIC WEAVER and his wife JOY WEAVER appeared in U.S. District Court in Tacoma today.  WEAVER had been assigned to desk duty since the investigation began, and has now been placed on paid administrative leave.

According to the complaint, U.S. Customs and Border Protection (CBP) officers, like other federal employees stationed overseas, are eligible for an education allowance for their minor children.  Those expenses include basic tuition for required courses and necessary elective courses, books and supplies required by the school, and local transportation on school days between the school and the employee’s home.  The complaint alleges that in 2009 and 2010, JOY WEAVER created fictitious invoices from the school their children attended, claiming tuition that was twice the actual amount of tuition.  JOHN ERIC WEAVER submitted the false documents and claims to the CBP Office of Administration.  The fraud was discovered in June 2010 when a financial program specialist checked with the school to see if there were costs for books and supplies that should be reimbursed.   When the school indicated the invoices did not reflect the accurate cost of tuition and had not been produced by the school, U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility (OPR) began its investigation.  The invoices submitted by the WEAVERS were determined to be false.  The complaint alleges that the couple filed false claims for education reimbursement of more than $8,000.

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.

Conspiracy to file a false claim is punishable by up to ten years in prison and a $250,000 fine.

The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Office of Professional Responsibility (OPR) with the assistance of ICE’s Homeland Security Investigations, U.S. Customs and Border Protection’s Office of Internal Affairs, and the Department of Homeland Security’s Office of the Inspector General.

The case is being prosecuted by Assistant United States Attorney Marci Ellsworth.

            A former Bellevue based developer and lender who spent millions on gambling, thoroughbred horse racing, private aircraft, country club fees and a Bellevue penthouse, has been indicted for tax evasion and social security number fraud.  THOMAS R. HAZELRIGG, III, 67, of Rancho Mirage, California, will appear in U.S. District Court in Seattle today at 1:30 following his indictment for two counts of evading and defeating payment of tax, and two counts of Social Security number misuse.

            The detailed indictment, returned by the grand jury last week, describes how HAZELRIGG first agreed to pay $533,454 in taxes owed for tax years 1989, 1990 and 1991 and then failed to pay the tax debt while living a lavish lifestyle that included private jets, multi-million dollar remodels, expensive artwork and high roller casino junkets.  The Indictment also alleges that HAZELRIGG evaded payment of his taxes owed for 1994, for which he had filed a return showing tax owed, but for which he made no payments.  The indictment alleges that between 1997 and 2007, HAZELRIGG illegally funneled income from his businesses into accounts that he controlled but that which he kept secret from the IRS and other creditors. HAZELRIGG used these accounts to pay for the multimillion dollar purchase and remodel of a Bellevue penthouse, two Chihuly glass chandeliers worth more than $460,000, more than one million dollars in chips at various casinos, country club memberships for himself and associates, the leasing of private jets, the use of a butler, and more than $160,000 on race horses.

            The two counts of Social Security number misuse relate to HAZLERIGG opening bank accounts in 2009, using the Social Security number of his deceased father.  HAZELRIGG allegedly used the number to hide the resources from the IRS.

            The tax evasion counts are punishable by up to five years in prison.  The misuse of Social Security number counts are also punishable by up to five years in prison.

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

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).

            The case is being prosecuted by Assistant United States Attorneys Susan Loitz and Robert Westinghouse.

A 34-year-old nurse from Anacortes, Washington was sentenced today in U.S. District Court in Seattle to one year in prison and three years of supervised release for tampering with consumer products and acquiring a controlled substance by fraud or misrepresentation, announced U.S. Attorney Jenny A. Durkan.  ERIN LINVOG, a former nurse at Fidalgo Care Center & Rosario Assisted Living, pleaded guilty in April 2013.  At sentencing U.S. District Judge Richard A. Jones said LINVOG “showed reckless disregard of others’ pain and risk of overdose... The only reason you stopped was you were caught... you violated every single notion of what we expect from a nurse.”

According to the facts admitted in the plea agreement, in June 2010, LINVOG began working at the Rosario Assisted Living Center, an elder care facility in Anacortes, Washington, that offers skilled nursing and hospice care to terminally ill patients.  LINVOG became credentialed as a registered nurse in November 2011.  Sometime in late 2011, LINVOG began stealing narcotics from the facility for her own use.  Using her position and authority as a nurse, she requested and received orders for morphine from pharmacies on behalf of Rosario patients, but then diverted entire bottles of narcotics rather than properly logging them into the assigned medicine carts.  Moreover, in multiple instances admitted in the plea agreement, LINVOG removed liquid morphine from medicine bottles for her own use, and replaced the missing morphine with tap water, before returning the tampered bottles back to the facility’s medicine carts, where they could have been, and at times were, administered to patients.

The morphine was intended to alleviate the pain of various elderly patients in end-of-life care.  LINVOG’s conduct meant that patients near the end of their life were receiving inadequate amounts of medicine to treat their pain and discomfort, and that medical staff did not have a clear picture of the appropriate dosage – since the morphine on hand was diluted.  The conduct created the risk that patients could be overdosed if treated with non-diluted medicine, as well as the risk they would suffer needlessly in their final days.  LINVOG’s conduct was discovered by the facility in February 2012, which led to her termination shortly thereafter.

At sentencing, Deborah Kelly, the daughter of one of LINVOG’s patients said, “My mom in her last month of life was suffering tremendously… The last year and a half I have been kicking myself that I trusted (LINVOG) to be a better person than she was.”

In asking for a 30 month sentence prosecutors wrote to the court: “Erin Linvog’s offense conduct is egregious, as she knowingly placed highly vulnerable patients at substantial risk of harm and, in some cases, knowingly allowed patients to needlessly suffer….  For the most part, the patients who received diluted pain medication are now deceased and cannot speak for themselves.  Thus, families are left largely to speculate as to the consequences of Ms. Linvog’s actions and to question their role in placing their loved ones in such a vulnerable position or in failing to notice foul play.  That is a terrible and an unfair position in which to leave these innocent individuals — sons and daughters who entrusted their ailing parent to trained professionals.  The final chapter in their memory of the now-deceased loved ones has been forever tainted by the selfish acts of this defendant.”

The case was investigated by the United States Food and Drug Administration, Office of Criminal Investigations, and the Anacortes Police Department.  The case is being prosecuted by Assistant United States Attorneys Steven Masada and Jerrod Patterson.

WASHINGTON – Helen ‘Micki’ Brunner, the Chief of the Appellate Unit in the Western District of Washington, was one of 154 members of the Department of Justice recognized by Attorney General Eric Holder and Executive Office for U.S. Attorneys (EOUSA) Director H. Marshall Jarrett with a 2013 Director’s Award.

In a personalized letter, Attorney General Holder noted that Ms. Brunner’s leadership “has made your office one of the most highly regarded United States Attorneys’ offices litigating in the Ninth Circuit. You have handled virtually every complex legal issue encountered by your office and served as a role model for many less experienced Assistant United States Attorneys.”

“Each day the members of the US Attorneys’ community go to work for the citizens of this country with one goal in mind – to do everything they can to protect the rights of all Americans,” said EOUSA Director Jarrett.  “I am continually humbled by their resiliency, dedication, and unparalleled work ethic to accomplish this noble mission. Today’s awardees exemplify what it truly means to be a patriot and it is an honor to recognize them for their extraordinary service.”

U.S. Attorney Jenny A. Durkan presented the award to AUSA Brunner today at a gathering at the U.S. Attorney’s Office.  Due to sequestration, the Awards presentation at the Justice Department in Washington DC was cancelled this year, and no financial awards were presented.

“Micki Brunner epitomizes the dedication, ethics and superior judgment we all strive for as attorneys.  I am honored to count her as a colleague and friend,” said U.S. Attorney Jenny A. Durkan.  “This award not only recognizes the superior work she has done this year on cases ranging from terrorism to fraud to environmental crime, it is a testament to years of dedicated public service.”

Ms. Brunner has been an attorney with the U.S. Attorney’s Office for the Western District of Washington since 1989.  Prior to joining the office she served in the Justice Department Environmental Crimes Section in Washington D.C. and was in the Office of Enforcement at the Environmental Protection Agency.

            A former western Washington real estate developer and his long-time girlfriend were convicted today in U.S. District Court in Seattle of 25 counts of tax evasion and false statements related to their scheme to avoid paying taxes on more than $23 million in income, announced U.S. Attorney Jenny A. Durkan.  WINSTON BONTRAGER, 64, and PAULINE ANDERSON, 65, were indicted in March 2012, and have been in federal custody since June 2012.  The jury deliberated about 3 days following a four week long jury trial.  Jurors convicted the two on all counts presented by prosecutors.  U.S. District Judge Richard A. Jones scheduled sentencing for November 22, 2013.

            For WINSTON BONTRAGER, it is a second conviction for tax crimes and third federal criminal conviction.  BONTRAGER was previously convicted in 1983 for bank fraud and in 1994 for defrauding the Oregon Public Employees Retirement System and the IRS of over $687,000.  In 1994 he was sentenced to 40 months in prison.  Some of the convictions returned today are for BONTRAGER’s false statements surrounding his failure to pay more than $687,000 in restitution from his prior conviction.  During the trial prosecutors detailed how BONTRAGER and ANDERSON filed false tax returns from 2004-2009, failing to report more than $23 million in income and failing to pay more than $2.7 million in taxes.  Over $10 million was moved into foreign bank accounts in PAULINE ANDERSON’s name, and virtually all of the couples’ assets were put in ANDERSON’s name in order to hide it from the IRS and those seeking to enforce BONTRAGER’s restitution obligation and collect delinquent taxes.  At the same time that the couple paid little in income taxes, they purchased a luxury condominium in Bellevue and spent approximately $500,000 on an extensive remodel.  They owned a $325,000 wine collection, a $1.2 million home in Southern California, a 6.7 carat diamond ring, a Bentley worth $186,000, and they spent over $3.4 million in credit card purchases, including travel, cosmetic surgery, cosmetic dentistry, restaurants, and clothing and shoes.

            Prosecutors told the jury the case was about “fraud, deceit, and evasion,” and they urged jurors to “follow the money” to see how BONTRAGER and ANDERSON made millions of dollars but refused to pay a single dime for BONTRAGER’s restitution obligation, delinquent taxes, or in income tax.  Prosecutors described various development deals in Vancouver, Washington where BONTRAGER made millions of dollars, in some instances defrauding business partners as well as the IRS.

            The tax crimes of conviction are each punishable by between three to five years in prison, and the false statement convictions are also punishable by up to five years in prison.  BONTRAGER was convicted of nine tax counts and eight counts of making false statements.  ANDERSON was convicted of 11 tax counts.

            The case was investigated by the Internal Revenue Service Criminal Investigation.  The case was prosecuted by Assistant United States Attorneys Carl Blackstone and Aravind Swaminathan.

to Taiwan

A Woodinville, Washington based company and its owner pleaded guilty today in U.S. District Court in Seattle to violating the Arms Export Control Act and wire fraud, announced U.S. Attorney Jenny A. Durkan.  The company, PRECISION IMAGE CORPORATION, is operated by owner, CHIH-KWANG HWA, out of his Woodinville home.  HWA obtained contracts to supply circuit boards to the U.S. Navy, by falsely claiming the boards would be manufactured in the United States.  Instead HWA illegally sent restricted information to a company in Taiwan for the boards to be manufactured there.  The company faces a fine of up to $1,000,000 and HWA faces up to 20 years in prison when sentenced by U. S. District Judge James. L. Robart on October 28, 2013.

“Our national security depends upon protecting our military systems and their specifications.  Going ‘on the cheap,’ gave this defendant an unfair advantage over other suppliers and risked our security,” said U.S. Attorney Jenny A. Durkan.  “Protecting our military technical data and enforcing our export restrictions are critical priorities of the U.S. Attorney’s Office.”

According to the charging information and the plea agreements in the case, between 2009 and 2011, HWA obtained contracts worth $180,034 to supply circuit boards to the U.S. Navy.  The Navy supplied technical data to PRECISION IMAGE that contained the technical specifications for the circuit boards.  This technical data was designated on the United States Munitions List, International Traffic in Arms Regulations.  As a result, this technical data could not legally be transmitted outside the United States without a license from the U.S. State Department.  CHIH-KWANG HWA knew about this restriction at the time he received the technical data from the Navy.  HWA did not get the appropriate licenses, and sent the restricted data to the Taiwan manufacturer.  One of the transmissions occurred in September 2011, and the Taiwanese manufactured circuit boards were later provided to the Navy.  In addition, many of the contracts awarded to HWA were set aside for companies that promised to manufacture the boards in the United States.  HWA falsely represented to the Navy in connection with these contracts that the boards were being manufactured in the United States, when instead they were being manufactured in Taiwan.

“U.S. export controls are in place to keep sensitive technology from falling into the hands of our nation's enemies,” said Brad Bench, special agent in charge of HSI Seattle.  “One of HSI's highest priorities is to prevent illicit procurement networks, terrorist groups, and hostile nations from illegally obtaining military items and controlled dual-use technology.”

Under the terms of the plea agreement, prosecutors will recommend the company pay a $300,000 fine and HWA serve a sentence within the anticipated guidelines range of 15-21 months in prison.  Judge Robart is free to accept or reject these recommendations at the time of sentencing.

The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations and the Naval Criminal Investigative Service.  The case is being prosecuted by Assistant United States Attorneys Todd Greenberg and Thomas Woods.

Press contact for the U.S. Attorney’s Office is Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.

A long-time University Place, Washington tax accountant and tax preparer was sentenced today in U.S. District Court in Tacoma to two years of probation and $146,226 in restitution for tax evasion.  JOSEPH J. DORIA, 70, pleaded guilty to falsifying his tax returns in 2007, 2008, and 2009.  DORIA submitted fraudulent tax returns that understated his income and overstated his expenses.  DORIA blamed a gambling addiction for his decision to cheat on his taxes.  At sentencing U.S. District Judge Benjamin H. Settle made treatment with Gamblers Anonymous part of DORIA’s probationary sentence.

According to records filed in the case, the fraud came to light during an IRS audit of DORIA’s returns in 2011.  The total tax loss over the three year period was $146,226.

Prosecutors noted that as a respected tax accountant and tax preparer for more than 35 years, DORIA knew the wrongful nature of his conduct.  “Notably, he also knew that there were alternatives to falsifying these tax returns.  Based on his background in tax preparation and accounting, Mr. Doria no doubt was fully aware that if he did not have the ability to pay his taxes, he could have approached the Internal Revenue Service and sought relief.  Mr. Doria could have sought an offer and compromise to provide him with more time to pay his taxes and/or a reduction in his total tax liability.  Despite this and other options, Mr. Doria chose the most dishonest solution to his problem: he falsified his tax returns.”

The case was investigated by the Internal Revenue Service Criminal Investigations (IRS-CI) and was prosecuted by Assistant United States Attorney Lawrence Lincoln.

Press contact for the U.S. Attorney’s Office is Emily Langlie at (206) 553-4110 or Emily.Langlie@usdoj.gov.

            Two former employees of Seattle’s Veterans Affairs Hospital were sentenced to prison terms today in U.S. District Court in Seattle in connection with their scheme to take kickbacks on fraudulently inflated travel vouchers, announced U.S. Attorney Jenny A. Durkan.  The men, veterans themselves, recruited other military veterans to participate in the fraud.  Some of those recruited were vulnerable due to service related mental health disorders.  NICK HALL, 47, of Seattle was sentenced to 42 months in prison and three years of supervised release. KEISHJUAN DANIELS, 33, of Kent, Washington was sentenced to 37 months in prison and three years of supervised release. At sentencing U.S. District Judge James L. Robart ordered both to share in restitution in the amount of $181,114.  Judge Robart said, “There’s nothing like the bright sunshine of public disclosure to reduce fraud.  I’m delighted to see there has been a decrease in fraudulent claims following this prosecution.”

            “Not only did these defendants recruit vulnerable veterans into criminal activity, they stole resources critically needed to help our men and women returning from Iraq and Afghanistan,” said U.S. Attorney Jenny A. Durkan.  “Following the arrests in this case the average monthly cost of larger travel vouchers was cut almost in half here, and sent a deterrent message everywhere: Don’t cheat our wounded warriors.”

            Medical benefits are a critical aid for veterans.  Not all communities have a VA medical facility.  Thus to ensure more veterans get the services they need, the VA will reimburse certain travel costs.

            According to records filed in the case, beginning in the second half of 2010, HALL and DANIELS recruited other veterans to lie about where they lived so that they could fraudulently inflate their travel costs for coming to the VA for medical appointments.  They provided their co-schemers with phony addresses in towns such as Pullman, Port Townsend, Richland or Port Angeles, Washington so that the amount of mileage each vet claimed was far in excess of what they actually traveled.  The two men, who worked in the travel voucher office, provided the falsified vouchers and sometimes provided vouchers for appointments that never occurred.  HALL and DANIELS would take a kickback of half the cash the veteran obtained through fraud.  Over the course of the 18 month scheme the fraud totaled $180,000.

            After the arrest of HALL and DANIELS, the Veterans Affairs Office of Inspector General (VAOIG) analyzed all larger vouchers submitted for payment (more than $500 per veteran).  Before the arrest, such vouchers totaled more than $103,000 a month in payments.  After the arrests and publicity about the prosecutions, the average total of such vouchers dropped to about $54,000 per month – a drop of 48%.

            Michael E. Seitler, Special Agent in Charge of the U.S. Department of Veterans Affairs, Office of Inspector General, Northwest Field Office, stated that “the actions of the defendants in this case served to undermine the public trust and divert precious financial resources from the VA’s critical mission.  In this case two corrupt government employees, and eight veterans who conspired with them, exploited a system designed to help facilitate veterans’ access to medical care.  This system provides financial travel reimbursements to veterans so that they can more easily come to VA medical centers and get the medical attention they deserve.  The defendants abused this system in order to enrich themselves, ultimately at the expense of others.  The VA Office of Inspector General will continue to aggressively pursue investigations of this type and hold those responsible accountable for their actions.”

            Nationwide over the last 18 months the Veterans Affairs Office of Inspector General has conducted 225 investigations and arrested 125 people for fraud in the travel benefits program.  Currently the VA-OIG has more than 125 open investigations of fraud in the travel benefits program.

The VA, Office of Inspector General, has established a hotline for anyone to anonymously report fraud, waste, and abuse at 1-800-488-8244 or vaoighotline@va.gov

            The case was investigated by the Veterans Affairs Office of Inspector General with assistance from the Veterans Affairs Police and VA Medical Center Management.  The cases were prosecuted by Assistant United States Attorneys Kate Vaughan and Thomas Woods.

A former employee of the Social Security Office of Disability Adjudication and Review was sentenced today in U.S. District Court in Seattle to five years in prison for receipt of child pornography, announced U.S. Attorney Jenny A. Durkan.  THOMAS JOSEPH BARRETT, 50, of Lynnwood, Washington pleaded guilty earlier this year following his arrest at work in January 2013.  The investigation revealed that BARRETT had accessed child pornography on both his work computer and at his home.  U.S. District Judge John C. Coughenour imposed a ten year term of supervised release to follow his prison term.

According to records filed in the case, SSA obtained evidence of inappropriate internet use by BARRETT during work hours in November 2012 and immediately initiated an investigation.  The Social Security Administration Office of Inspector General (SSA-OIG) investigated BARRETT’s computer use, reviewing his internet history and examining his computer’s hard drive.  The analysis produced evidence that BARRETT had viewed child pornography using the computer.  In addition, some of the website analysis revealed that BARRETT had accessed news stories about the penalties for possessing and distributing child pornography.  According to SSA, SSA’s network and data were never compromised.

Search warrants served at BARRETT’s home and work revealed he had accessed more than 3,500 images of child pornography.

The case was investigated by the Social Security Administration Office of Inspector General, Homeland Security Investigation and the Washington State Patrol.

The case was prosecuted by Special Assistant United States Attorney Seth Wilkinson and Assistant United States Attorney Marci Ellsworth.  Mr. Wilkinson is an attorney with the Social Security Administration specially designated to prosecute criminal cases in federal court.

            A repeat felon who had been out of prison less than six months when he returned to drug dealing, was sentenced today to 14 years in prison, announced U.S. Attorney Jenny A. Durkan.  CEDRIC JACKSON, 35, was prosecuted as part of a federal “hotspot” initiative designed to target drug and gun crime in the Kent Valley region of Western Washington.  Between August and October 2012, JACKSON supplied cocaine that was purchased by undercover officers on six different occasions.  When search warrants were executed on JACKSON’s home, officers found cocaine, cash, and four firearms.  At sentencing, U.S. District Judge Thomas S. Zilly said, “You have a long history of convictions.  You have been a career criminal in the true sense of the word.  But you have so much talent – you could do so many things if you stayed away from drugs and guns.”

            CEDRIC JACKSON was released from federal prison in March 2012, and within months returned to manufacturing and distributing crack cocaine.  When officers searched his home, they found a loaded Taurus .357 Magnum revolver under his bed, and three guns in a cooler in the garage: a Glock 9mm handgun loaded with a 30 round magazine, a loaded Intratec 9mm handgun, and a revolver.  CEDRIC JACKSON has more than a dozen prior convictions including assault, robbery, burglary, drug possession, and bank fraud.

            In asking for the 14 year prison sentence, prosecutors wrote to the court, “A significant term of imprisonment is warranted in this case to protect the public from further crimes of defendant Cedric Jackson.  As the criminal history outlined above makes clear, from the time he was 18 to the present, the defendant has engaged in a repeated pattern of criminal activity, including violent crimes and unlawful firearm possession.  Of most concern, the timeline above demonstrates clearly that the defendant engages in new criminal conduct as soon as he is released from custody.”

            In all, 33 people were prosecuted as part of “Operation Down in the Valley,” the hotspot initiative targeting gang violence, drugs, and gun sales in the Kent, Renton, and Tukwila areas. The initiative took nearly 14 pounds of methamphetamine off the street as well as cocaine, heroin, and prescription narcotics.  This three month initiative is the second hotspot initiative in the Seattle area.  It followed the successful focus on White Center in 2011.

            The hotspot initiative was led by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and ICE’s Homeland Security Investigation.  The police departments and agencies involved include the Valley Gang Unit (including officers from Kent, Renton, the Port of Seattle, Tukwila, King County Metro, and the Department of Corrections), the Seattle Police Department, the FBI, and the Washington State Liquor Control Board.

            The case was prosecuted by Assistant United States Attorney Justin Arnold.

A retired Lieutenant Colonel in the U.S. Army who served in Iraq as a contracting officer pleaded guilty in U.S. District Court in Tacoma today to criminal conflict of interest for using his position of authority to benefit himself to the detriment of the United States.  HAROLD L. BROEK, 49, who served as Chief of Contracting at the Tikrit Regional Contracting Center in Tikrit, Iraq, established a company, Global Motion, that received contracts from an Iraqi company to which he had awarded contracts.

BROEK is scheduled to be sentenced by U.S. District Judge Benjamin H. Settle on October 15, 2013.  Criminal conflict of interest is punishable by up to five years in prison.

According to the records filed in the case, BROEK used his position of authority in the U.S. Army, his knowledge of government contracting, and his relationship with Rohit Goel and “Avalon International Limited” to contract with Goel and Avalon on government contracts.  Before BROEK left Iraq in 2007, he directed his family in Washington State to form a company, Global Motion, for the purpose of receiving contracts from Goel and Avalon.  While in Iraq, BROEK had entered into an illegal agreement with Goel whereby Goel would send certain government contracts, awarded by the United States to Goel and Avalon, to the new company formed by BROEK and his family.  Pursuant to this arrangement, Goel agreed to award government contracts to BROEK’s new company, to pay BROEK’s new company 30% of the profit on such contracts, and to front necessary funds or finance any contract expenditures BROEK’s company would incur in purchasing goods to perform under the contracts.

            Before leaving Iraq and returning to the United States, BROEK participated in awarding contracts to Avalon.  Specifically, in July 2007, shortly before he left Iraq to return to Lacey, Washington, BROEK signed a waiver shortening the deadline on a contract for the purchase and delivery of line-of-sight radios.  By shortening the deadline, BROEK decreased the chances that Avalon’s competitors might win the contract.  Later in July 2007, one of BROEK’s subordinates in Iraq awarded a contract for line-of-sight radios, valued at $162,151.00, to Goel and Avalon.  Goel, in turn, awarded the contract for line-of-sight radios to BROEK’s company, Global Motion.

            In September 2007, Avalon fronted $99,978.00 to Global Motion to finance the purchase of the line-of-sight radios.  To fill the line-of-sight radio contract, Global Motion spent $58,733 to purchase the radios and have them shipped to Iraq.  Global Motion retained the balance of the funds from Avalon, making a profit of $29,871.90 on this deal.

According to tax returns, Global Motion made a profit in 2007 and 2008 of $52,400.16. Pursuant to the plea agreement, BROEK will make restitution payments to the United States in the amount of $52,400.16.

The case was investigated by the Special Inspector General for Iraq Reconstruction, Federal Bureau of Investigation, and Defense Criminal Investigative Service.  The case is being prosecuted by Assistant United States Attorney David Reese Jennings.

A Romanian citizen who traveled to Seattle in April 2013 in an attempt to scam participants in internet auctions pleaded guilty today in U.S. District Court in Seattle to bank fraud, announced U.S. Attorney Jenny A. Durkan.  DANIEL MUNTEANU, 29, was arrested May 1, 2013 at Seattle-Tacoma International Airport as he attempted to board a flight to Amsterdam.  While in Seattle MUNTEANU used phony passports to establish bank accounts and mail box rentals.  Using the accounts and mail drops, he and co-conspirators scammed various participants in eBay auctions.  MUNTEANU is scheduled for sentencing by U.S. District Judge Martinez on October 24, 2013.

 According to records filed in the case, MUNTEANU’s co-conspirators picked victims by contacting those who had been unsuccessful in bidding for boats, cars, farm equipment or other vehicles on eBay.  Posing as sellers, the co-conspirators would seek to negotiate the sale of the item the victim had bid on in the auction.  After striking a deal, victims would receive emails appearing to be from eBay and their “Purchase Protection Plan.”  The emails even had a link to an eBay “live help” function.  But the emails and links were fraudulent.  Purchasers thought their payments were going into a secure escrow account until they could inspect the vehicles.  Instead, the purchasers’ money went directly to accounts opened in false names by MUNTEANU using phony passports.  MUNTEANU controlled the accounts and quickly moved the money off shore to co-conspirators in Romania.  In all, five victims suffered losses of more than $120,000.

“This type of fraud erodes trust and undermines legitimate online commerce, and we will track down and prosecute scam artists,” said U. S. Attorney Jenny A. Durkan.  “I appreciate the efforts of the Homeland Security Investigations agents who pursued this case and protected the victims.”

 “The vast majority of online auctions are legitimate, which leaves consumers who’ve had positive online buying experiences with a false sense of security,” said Brad Bench, special agent in charge of HSI Seattle.  “The defendant and his co-conspirators in this case exploited this vulnerability to swindle their victims.  While HSI works closely with its enforcement partners here and overseas to aggressively target this type of crime, consumers must take steps to protect themselves.”

 Bank Fraud is punishable by up to 30 years in prison and a $1,000,000 fine.

 The case was investigated by U.S. Immigration and Customs Enforcement’s Homeland Security Investigations.  The case was prosecuted by Assistant United States Attorney Kate Vaughan.

 Press contact for the U.S. Attorney’s Office is Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

“With the passing of Kip Tokuda, the Western District of Washington has lost a beloved community leader, an undaunted advocate for children, and a devoted husband, father and friend.   His legacy lives in the causes he advanced, the lives he bettered, and the multitude he mentored.  Kip never stopped serving.  Most recently, he was a valued member of the Community Police Commission, the public’s voice in police reform efforts in Seattle.  He brought to that work, as he did to everything he touched, a true moral compass and genuine hope for the future.  His voice was strong and respected and, as always, he spoke for the disadvantaged.  We miss him.”

A public memorial service will be held at 2 p.m. on Sunday, July 21st, at Kane Hall on the campus of the University of Washington.   

A Seattle man who marketed real estate investment opportunities in Peru pleaded guilty in U.S. District Court in Seattle today to wire fraud and money laundering for his creation and operation of a classic Ponzi scheme, announced U.S. Attorney Jenny Durkan.  JOSE L. NINO DE GUZMAN, Jr., 30, ran NDG Investment Group, LLC from 2006 until 2009, when the Washington State Department of Financial Institutions issued a cease and desist order concerning his fraudulent sales of investment opportunities.  According to the plea agreement filed in the case, DE GUZMAN raised more than $30 million from over 200 investors for real estate investments in Peru.  However, the investments as described to investors did not occur.

DE GUZMAN is scheduled to be sentenced by U.S. District Judge Robert S. Lasnik on November 1, 2013.  Pursuant to the terms of the plea agreement, the government will recommend a sentence of 151 months imprisonment.

According to records filed in the case, DE GUZMAN left school at the University of Washington without graduating and at the age of 23 founded NDG Investment Group LLC.  Prior to starting the company in September 2006, DE GUZMAN had been employed by U.S. Bank as a teller and then as a personal banker.  However, despite his true background, DE GUZMAN solicited investors by telling them he had worked at U.S. Bank for three years as a business and commercial lending officer and specialized in fixed income with a focus on real estate.

            “This defendant brazenly and persistently defrauded investors by lying about his background and success and misused millions of their dollars for his personal benefit,” said Jenny A. Durkan, U.S. Attorney for the Western District of Washington.  “His victims included family members, friends and co-workers who did not know he paid for his glitz with their money.  When the scheme crumbled, they sadly learned that Mr. De Guzman had perpetuated a massive fraud.”

            DE GUZMAN made numerous misrepresentations about his success and the most basic fundamentals of the investments.  For example, DE GUZMAN falsely represented to investors that he had a proven track record of successfully developing real estate through an established company in Peru; that the investors’ funds would be used for specific real estate projects and that the investments were secured by real property in Peru; that investors would get a high rate of return on their investments when the development projects were complete; and that NDG would only receive a portion of the profits upon successful completion of the projects and after all the investors had received their original investment and projected rates of return.  These representations were false.  Neither DE GUZMAN nor NDG had ever successfully completed any real estate projects in Peru and, despite raising funds for approximately twenty projects, had only purchased a limited number of real properties.  No projects ever generated a profit.  Nevertheless, NINO DE GUZMAN told the investors their projects were completed or were progressing, and he sent periodic, fraudulent “updates” to investors, including showing “construction” sites for projects in which the land had not even been purchased.  Investors’ funds instead were used to fund DE GUZMAN’s lavish lifestyle, including the purchase of a $365,000 diamond ring, a $600,000 yacht, a $250,000 suite at Qwest Field for Seahawks games and a $200,000 Bentley automobile.  Moreover, as in a classic Ponzi scheme, DE GUZMAN used millions of dollars of investors’ funds to pay off previous investors to continue the illusion that DE GUZMAN was a successful developer, and to induce additional investors.

“The FBI is pleased that Mr. De Guzman is finally taking responsibility for his actions,” said Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle office.  “He exploited friends, loved ones, and coworkers indiscriminately to fund a lavish lifestyle for himself.  The FBI stands with the prosecutors and victims in refusing to tolerate such heartless criminal activity.”

            DE GUZMAN pitched his investment opportunity at expensive downtown clubs and hotels, and emphasized NDG’s established alliances and relationships with well-known businesses and individuals.  Some of the investors were the parents or friends of people employed by NDG, and it was some of these employees who first reported DE GUZMAN to regulators when they became aware of the fraud.

            The case was investigated by the Washington State Department of Financial Institutions (DFI), the Internal Revenue Service Criminal Investigations and the Federal Bureau of Investigation.  The case is being prosecuted by Assistant United States Attorneys Tessa Gorman, Justin Arnold and Aravind Swaminathan, as well as Special Assistant United States Attorney Robert Kondrat, who is a DFI attorney cross-designated to the United States Attorney’s Office to prosecute securities fraud cases.

            For additional information please contact Thomas Bates for the United States Attorney’s Office at (206) 553-7970 or Thomas.Bates@usdoj.gov.

A family law attorney who previously practiced in Kent, Washington, pleaded guilty today in U.S. District Court in Seattle to production of child pornography, receipt of child pornography and possession of child pornography, announced U.S. Attorney Jenny A. Durkan.  DAVID SCOTT ENGLE, 49, of Maple Valley, Washington was arrested in November 2012.  ENGLE, who both volunteered in and ran a business involving youth baseball, has been incarcerated since his arrest.  ENGLE faces a mandatory minimum term of imprisonment of fifteen years when he is sentenced by U.S. District Judge James L. Robart on October 21, 2013.

According to records filed in the case, ENGLE came to the attention of law enforcement following the investigation of an international movie production company that operated a website offering DVDs and streaming videos for sale.  The materials depicted young boys in sexually explicit activity.  Between 2005 and 2011, ENGLE purchased 184 different items from the website.  The international movie production company was put out of business when agents seized its inventory and records.  The company and the owners of the company are being prosecuted for child exploitation offenses, including the production and distribution of child pornography.

After law enforcement executed a search warrant on ENGLE’s home and storage locker in November 2012, they discovered more than 500 videos of ENGLE sexually molesting a young boy under the age of 16.  Law enforcement later discovered additional evidence of ENGLE sexually molesting another young boy, also under the age of 16.  ENGLE is being separately prosecuted for those offenses by the King County Prosecutor’s Office.  Following forensic examination of a number of computers, DVDs, thumb drives, and floppy disks, investigators determined that ENGLE was in possession of tens of thousands of images of child pornography, and thousands of videos of child pornography.

The case is being investigated by the U.S. Postal Inspection Service and is being prosecuted by Assistant United States Attorney Marci Ellsworth.

Press contact for the U.S. Attorney’s Office is Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

            Four members of a gun trafficking conspiracy based in Snohomish County, Washington are under arrest after being indicted by the grand jury for illegally selling more than 50 firearms to an undercover investigator, announced U.S. Attorney Jenny A. Durkan.  HEATHER CHANCEY, a/k/a HEATHER LEE SLATER, 34, of Marysville, Washington, is charged in 14 counts of a 20 count indictment for gun and drug crimes.  MARK JENKINS, 53, of Marysville, Washington, is charged in four counts of being a felon in possession of a firearm, and JAMES MICHAELS, 37, of Marysville, Washington, and CURTIS VAN PUTTEN, 43, of Marysville, Washington, are each charged in one count of being a felon in possession of a firearm.  The four were arrested this morning and will make their initial appearances in U.S. District Court in Seattle at 1:30 today.

            “These defendants, convicted felons, were selling dozens of high powered firearms with no sales record and no concern about where these guns would end up,” said U.S. Attorney Jenny A. Durkan.  “Our region has seen too much heartache come out of the end of guns.  Law enforcement will continue to work together to stop the illegal flow of guns into our communities.”

            According to the indictment, on multiple occasions between October 2012 and January 2013, HEATHER CHANCEY and her coconspirators sold guns to an undercover law enforcement agent.  Most of the sales occurred in the parking lot of the Tulalip Resort Casino in Marysville, Washington.  Some of the sales occurred in other parking lots of businesses in Marysville or Arlington, Washington or at a Marysville residence.  CHANCEY was prohibited from possessing firearms because of a 2001 conviction for methamphetamine possession.  Some of the guns she possessed and sold in this case include: two sawed off shotguns and 13 regular shotguns – some with no visible serial numbers; 21 rifles – some with obliterated serial numbers; and four handguns.  CHANCEY is also charged with distribution of methamphetamine and possession of a firearm in furtherance of a drug trafficking crime.  JENKINS, who has a prior felony conviction in Oregon, is charged with illegally possessing five rifles and two handguns.  MICHAELS has a 2000 drug possession conviction, and is accused of illegally possessing a rifle. CURTIS VAN PUTTEN has prior convictions for drug possession and possession of stolen property and is alleged to have illegally possessed three rifles.

            “Ms. Chancey blatantly disregarded the safety of her community by distributing dangerous items indiscriminately,” said Special Agent-in-Charge Laura M. Laughlin of the FBI Seattle office.  “Further, she often did so in broad daylight, in areas where we all live and play with our families.  The FBI welcomed the opportunity to work with our law enforcement partners to disrupt this brazen activity.”

            “Our communities are safer when you take illegal weapons and drugs off the street.  A potentially dangerous and harmful element has been removed from Snohomish County as a result of this collaborative investigation between federal, state and local agencies,” said Snohomish Regional Gang and Drug Task Force Commander Pat Slack.

“Working together, law enforcement cracked a crime ring that was trafficking handguns, rifles and weapons that could be altered for fully automatic firing,” said Seattle Police Chief Jim Pugel.  “I can say with confidence that Seattle is safer with these weapons and their dealers off the streets.”

            Conspiracy to unlawfully deal in firearms and illegal distribution of firearms are punishable by a term of imprisonment of up to five years and a $250,000 fine.  Being a felon in possession of a firearm is punishable by up to ten years in prison and a $250,000 fine.  Distribution of fifty grams or more of methamphetamine is punishable by a mandatory sentence of five years in prison, and up to forty years in prison.  Possession of a firearm in furtherance of a drug trafficking crime is punishable by a mandatory additional consecutive sentence of five years in prison.

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

            This investigation was conducted by the Snohomish Regional Gang and Drug Task Force, the Seattle Police Department, and the FBI.  During the investigation, those agencies were assisted by the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the Snohomish County Violent Offender Task Force and the United States Marshal’s Violent Offender Task Force.  The case is being prosecuted by Assistant United States Attorney Kate Crisham.

            A repeat offender who repeatedly distributed meth while armed with a firearm was sentenced yesterday to seven and a half years in prison, announced U.S. Attorney Jenny A. Durkan.  In December 2011, LANDON KUSH, 34, was arrested at a Vancouver, Washington motel with methamphetamine packaged for distribution and a loaded Browning, .25 caliber, semi-automatic pistol stored in the trunk of his car.  Kush was charged in Clark County Superior Court and released on Abail.  Even as those charges were pending KUSH returned to drug dealing.  On January 5, 2012, officers found meth in a car that Kush abandoned after an accident.  When he was arrested on federal charges in February 2012, a search of his hotel room revealed a loaded Glock .45 caliber pistol.  At sentencing U.S. District Judge Ronald B. Leighton said KUSH had the longest criminal record he had seen, calling him a “dangerous, dangerous man” and a “persistent criminal.”

            According to records filed in the case, KUSH already had convictions for robbery, eluding police and dealing drugs when he was taken into custody in December 2011.

KUSH pleaded guilty at his sentencing hearing to Possession of a firearm during and in relation to a drug trafficking crime, and Possession of methamphetamine with intent to distribute.

            The case was investigated by the SWIGET (Southwest Integrated Gang Enforcement Team), which is made up of officers and agents of the FBI, Vancouver Police Department (VPD), Clark County Sheriff’s Department and the Washington State Department of Corrections.  SWIGET was formed to combat violent gang crime in the Vancouver, Washington area.

            The case was prosecuted by Assistant United States Attorneys Michael Dion and Thomas Woods.

            A 22-year-old man who was arrested last week by University of Washington Police in a stolen truck with stolen firearms, body armor and gasoline incendiary devices, was charged federally by the grand jury this morning, announced U.S. Attorney Jenny A. Durkan.  JUSTIN MILES JASPER, will make his initial appearance in U.S. District Court in Seattle at 1:30 on Thursday July 11, 2013.  JASPER is charged with five counts: transportation of a stolen vehicle; possession of a stolen vehicle; possession of stolen firearms; possession of destructive devices; and possession of explosives during the commission of a felony.

            JASPER was arrested on July 3, 2013 near the UW campus in Seattle.  He was driving a 1998 Dodge Ram 2500 pick-up truck with Montana plates.  The truck had been reported stolen by the owner in Butte, Montana.  Inside the truck police found a Stevens Model 311A double-barrel 12-gauge shotgun, with no serial number, and a Mauser Model 1895 bolt-action rifle.  Both guns had been stolen from the same owner as the truck.  The truck also contained destructive devices commonly referred to as “Molotov cocktails.”

            Four of the counts in the indictment have a maximum penalty of ten years in prison.  Possession of explosives during the commission of a felony carries a mandatory minimum ten year sentence in addition to any other sentence imposed in the case.

            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 the FBI, the UW Police Department, and the Seattle Police Department.  The case is being prosecuted by Assistant United States Attorney Todd Greenberg.

            A Whatcom County man who ran a drug distribution network was sentenced today to 20 years in federal prison, announced U.S. Attorney Jenny A. Durkan.  TODD HAMILTON, 36, of Bellingham ran the area’s most widespread and prolific drug trafficking organization using violence and threats of violence to impose his will.  At sentencing U.S. District Judge John C. Coughenour said the community should be grateful HAMILTON is off the street.  “Bellingham is one of the most pleasant and beautiful communities on the West Coast… Society cannot tolerate (Hamilton’s) cavalier attitude toward the rule of law.”

            “This defendant has been a source of crime and violence in Whatcom County for far too long,” said U.S. Attorney Jenny A. Durkan.  “I commend the good partnership between the Whatcom County Sheriff’s Office, the Bellingham Police Department, the Skagit County Sheriff’s Office and state and federal law enforcement to remove this scourge from the community and shut down his criminal organization.”

            According to the plea agreement and other records filed in the case, upon his January 2011 release from Washington State prison, HAMILTON began running a heroin and methamphetamine distribution ring operating in Whatcom County.  During a court authorized wiretap investigation, law enforcement learned HAMILTON purchased significant quantities of methamphetamine and heroin from his Olympia, Washington based supplier and had it transported to the Bellingham area for further distribution.  When HAMILTON’s home was searched in December 2011, investigators found meth and heroin, drug ledgers and packaging materials.  They also found a loaded Cobra Enterprise, Inc.45 caliber pistol.

During the investigation, DEA agents learned that HAMILTON purchased several pounds of methamphetamine and heroin each week, spending tens of thousands of dollars to redistribute the drugs in his community for profit.  The investigation also revealed that HAMILTON had recruited an employee of the Department of Corrections (DOC) to assist him with his drug trafficking.  The employee, also charged and convicted in this conspiracy, used his access to a Department of Corrections computer to determine whether law enforcement was investigating HAMILTON.  He no longer works for the DOC.

            HAMILTON pleaded guilty to conspiracy to distribute controlled substances and possession of a firearm in furtherance of a drug trafficking crime on April 1, 2013.

            In asking for a 21-year sentence, prosecutors noted that the full extent of HAMILTON’s violence reign may never be known.  “Defendant made tens, if not hundreds, of thousands of dollars off the backs of drug addicts in the Bellingham community.  His brazen and prolific drug dealing was only matched by his reputation for violence.  The wiretap revealed that Defendant was willing to assault the vulnerable people who were addicted to his poisons.  Defendant armed himself with a firearm to ensure that he was invincible.  What is unknown is how many people…. suffered from Defendant’s violence without reporting it to authorities precisely because they were both afraid of Defendant and feared police attention,” prosecutors wrote in their sentencing memo.

This was an Organized Crime and Drug Enforcement Task Force (OCDETF) investigation, providing supplemental federal funding to the federal and state agencies involved, and was investigated and prosecuted pursuant to the United States Attorney’s Northwest Washington Hot Spot Initiative.  The case was investigated by the Drug Enforcement Administration, the Washington State Patrol, the Washington State Department of Corrections, the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Skagit County Interlocal Drug Enforcement Unit (SCIDEU) and the Northwest Regional Drug Task Force.

The case was prosecuted by Assistant United States Attorneys Jill Otake and Roger Rogoff.

            A Florida resident who had threatened family members over a $20,000 debt was arrested yesterday in connection with a destructive device left in June 2013 at the Seattle home of his relatives, announced U.S. Attorney Jenny A. Durkan.  SANG NGOC UNG, 53, of Margate, Florida is charged by criminal complaint with possession of a destructive device.  UNG remains a suspect in the June 10, 2013 arson of a home at 3939 S. Cloverdale Street in Seattle.  The fire, set in the early morning hours, extensively damaged the home and forced the homeowner, her adult children and a friend to flee through a window and the garage.  Shortly after that fire, investigators went to a second home associated with the family and discovered a destructive device that had not ignited.  UNG is charged with possession of that device.  He will make his appearance in U.S. District Court in Seattle at 1:30 today.

            According to the criminal complaint, UNG had allegedly been pressuring family members in Seattle about $20,000 he believes is owed to him.  Family members had attempted to pay some of the money, but UNG reportedly continued to threaten them if the debt was not paid.  In mid-May 2013, UNG arrived in the Seattle area and again began pressuring the family to repay the debt.  On June 9, 2013, UNG was observed attempting to contact people at both homes.  The fire and the destructive device that failed to ignite were discovered the next day.  Cell phone records place UNG in the Seattle area during the time the fire and destructive device were set.  Evidence on the destructive device ties him to the scene.  UNG returned to the Seattle area yesterday and was arrested by Seattle Police and ATF agents.

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

            A California rap artist who performed under the name “Guerilla Black” pleaded guilty in U.S. District Court in Seattle today to a scheme where credit card numbers were stolen in Seattle and fraudulently used in other states, announced U.S. Attorney Jenny A. Durkan.  CHARLES TONY WILLIAMSON, 33, of Torrance, California, conducted his criminal conduct under various names including: GUERILLA BLACK; MRBUSINESSMAN62; and BLACKDOLLA.  WILLIAMSON was on the user end of the fraud involving hacks of point of sale credit card processing at businesses in Seattle and across the U.S.  WILLIAMSON purchased credit card numbers in bulk via various ‘carding’ websites so that he and his associates could use them for fraud.  WILLIAMSON will be sentenced by U.S. District Judge Ricardo S. Martinez on October 10, 2013.

            WILLIAMSON was indicted in July 2012, following the investigation into point of sale hacking at a restaurant in the Magnolia neighborhood of Seattle and a retail store in Shoreline, Washington.  Two men have already been sentenced for their roles in the hacking scheme.  David Benjamin Schrooten, 21, a Dutch citizen arrested in Romania, where he operated a carding website making the credit card numbers available for fraud was sentenced in February 2012 to 12 years in prison.  Christopher A. Schroebel, 21, of Keedysville, Maryland, who hacked into point of sale systems to steal credit card information was sentenced to seven years in prison in August 2012.

            Between January 11, 2011 and February 26, 2012, WILLIAMSON received and possessed at least 27,257 stolen credit card numbers, including cards issued by American Express, Visa, MasterCard and Discover.  Loss figures are as yet incomplete, but close to $150,000 in fraud loss has been attributed to just 134 of the over 27,000 card numbers stolen.  The indictment alleges that WILLIAMSON communicated by email with co-conspirators, telling them that he wanted to purchase “dumps” of stolen credit card numbers “in bulk,” that is lots of 100, 500 or more.  WILLIAMSON indicated that he wanted “freshly” stolen numbers so they would be easier to use, since the customers would not yet know their information had been stolen.  While on release pending trial, WILLIAMSON continued his criminal conduct by producing counterfeit credit cards and using stolen credit card numbers and was rearrested following a lengthy investigation by Manhattan Beach Police Department and the U.S. Secret Service (USSS) Electronic Crimes Task Force in Seattle and USSS Los Angeles Fraud Task Force.  In his plea agreement WILLIAMSON admits the credit card fraud both before and after his arrest on the indictment in the Western District of Washington.  WILLIAMSON has remained in custody since his arrest in January 2013.

            WILLIAMSON pleaded guilty to conspiracy and unauthorized access to a protected computer to facilitate fraud.  Both are punishable by up to five years in prison and a $250,000 fine.  WILLIAMSON also pleaded guilty to access device fraud which is punishable by up to 15 years in prison and a $250,000 fine.  He pleaded guilty to bank fraud which is punishable by up to 30 years in prison and a $1,000,000 fine and he pleaded guilty to aggravated identity theft which is punishable by a mandatory minimum two years in prison consecutive to any other sentence imposed in the case.

The case is being investigated by the Seattle U.S. Secret Service Electronic Crimes Task Force and Seattle Police Department as part of the Task Force, with assistance provided by the Manhattan Beach (California) Police Department and the Los Angeles Field Office, U.S. Secret Service.  The case is being prosecuted by Assistant United States Attorney Kathryn Warma.

            A brother and sister team has been sentenced to prison for their scheme to ship narcotics from the Los Angeles area for distribution in Seattle, announced U.S. Attorney Jenny A. Durkan.  ROBIN BROWN, 52, of Los Angeles, California was sentenced today in U.S. District Court in Seattle to 62 months in prison and four years of supervised release for conspiracy to distribute oxycodone.  BROWN’s brother, Terrell Brown, was sentenced last month to 37 months in prison and three years of supervised release for his role in the drug distribution scheme.  At sentencing today U.S. District Judge James L. Robart noted the inherent danger of oxycodone abuse.

            According to records filed in the case, BROWN and her brother came to the attention of Postal Inspection Service Investigators when an alert postal employee reported numerous express mail packages being delivered to Terrell Brown’s Seattle apartment.  A records review showed more than 90 express mail packages sent from Los Angeles to the Seattle apartment in a one year period.  Apartment managers confirmed that Terrell Brown received multiple express mail packages each week and had just purchased a new Cadillac Escalade despite reporting little income.  In July 2012, investigators served a search warrant on a package destined for Brown and found 210 pills of 30 mg oxycodone.  Even as they were executing a search warrant on Terrell Brown’s apartment another package arrived with another 240 pills of oxycodone.

            ROBIN BROWN pleaded guilty on March 14, 2013.  Terrell Brown pleaded guilty on March 28, 2013.

            ROBIN BROWN has multiple prior criminal convictions in Washington and California.  In asking for a lengthy prison term for BROWN prosecutors noted that oxycodone abuse is a significant problem in the community. “Overdoses of oxycodone and other prescription opiates are a leading cause of death in King County…. In 2000, there were 13 deaths in King County from oxycodone overdoses.  That number increased steadily over the next nine years, with 60 deaths directly attributable to oxycodone in 2009.  Oxycodone was present (but not necessarily the sole cause) in 104 deaths in 2009, as opposed to just 26 in 2000,” prosecutors wrote in their sentencing memo.

            The case was investigated by the U.S. Postal Inspection Service and was prosecuted by Assistant United States Attorney Justin Arnold.

WASHINGTON - Sound Inpatient Physicians Inc. will pay $14.5 million to settle allegations that it overbilled Medicare and other federal health care programs, the Justice Department announced today.  Sound Physicians is a Tacoma, Wash.-based provider of hospitalists and other physicians to hospitals and other medical facilities.  It employs more than 700 hospitalists and post-acute physicians, who provide services at 70 hospitals and a growing network of post-acute facilities in 22 states.

“Physicians who participate in Medicare and other federal health care programs must document and bill for their services accurately and honestly,” said Stuart F. Delery, Acting Assistant Attorney General for the Civil Division.  “The Department of Justice is committed to ensuring that Medicare and other federal funds are expended appropriately.”

Today’s settlement addresses allegations that, between 2004 and 2012, Sound Physicians knowingly submitted to federal health benefits programs inflated claims on behalf of its hospitalist employees for higher and more expensive levels of service than were documented by hospitalists in patient medical records.  Hospitalists are physicians, typically trained in internal medicine, who provide care exclusively to hospital inpatients and have no office or outpatient practice.

“Fraudulently inflated billing of government health care programs puts those programs at risk, and impacts the system’s ability to care for the neediest in our communities,” said Jenny A. Durkan, U.S. Attorney for the Western District of Washington.  “During this time of tight government budgets, we will do all we can to make sure everyone plays by the rules and does not run up the taxpayers’ tab.”

Allegations that Sound Physicians had improperly billed a variety of federal health care programs were brought to the government’s attention through a lawsuit filed by a former Sound Physicians employee, Craig Thomas, under the qui tam, or whistleblower, provisions of the False Claims Act.  The act allows private citizens to bring civil actions on behalf of the government and share in any recovery.  Thomas will receive $2.7 million of the $14.5 million settlement for exposing Sound Physicians’ inflated claims.

This civil settlement illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by Attorney General Eric Holder and Health and Human Services Secretary Kathleen Sebelius.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $14.7 billion through False Claims Act cases, with more than $10.7 billion of that amount recovered in cases involving fraud against federal health care programs.

The Sound Physicians settlement was the result of a coordinated effort by the Department of Justice, Civil Division, Commercial Litigation Branch; the U.S. Attorney’s Office for the Western District of Washington; the Department of Health and Human Services Office of Inspector General; the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service; the Office of Personnel Management Office of Inspector General; the Department of Veterans’ Affairs Office of Inspector General; and the TRICARE Management Activity Office of General Counsel.

  The lawsuit is United States of America ex rel. Craig Thomas v. Sound Inpatient Physicians, Inc. and Robert A. Bessler, Civil Action No. C09-5301RBL (W.D. Wash.).  The claims resolved by the settlement are allegations only, and there has been no determination of liability.

WASHINGTON – The Justice Department today filed a lawsuit against the owners and managers of rental homes in and near Kelso and Longview, Wash., for violating the Fair Housing Act by discriminating against persons with disabilities.

The lawsuit, filed in the U.S. District Court for the Western District of Washington, alleges that Linda Barber, Bert Barber and Lori Thompson engaged in a pattern or practice of violating the Fair Housing Act or denied rights protected by the Act.  Specifically, the lawsuit asserts that the defendants established and implemented a discriminatory policy that allowed waiver of the defendants’ mandatory $1,000 “pet deposit” for service animals with specialized training, but not for other assistance animals, including emotional support animals.  The suit also alleges that, by refusing a tenant’s requests for a reasonable accommodation to waive the $1,000 pet deposit for her assistance animal, the defendants violated the Fair Housing Act.

“The Fair Housing Act ensures that individuals with disabilities who live with and benefit from assistance animals have equal access to housing,” said Eric Halperin, Senior Counsel and Special Counsel for Fair Lending in the Civil Rights Division.  “The Justice Department will continue its vigorous enforcement of fair housing laws that protect the rights of persons with disabilities.”

“The rights of our disabled citizens need to be protected and landlords should not engage in conduct that makes their lives more difficult,” said U.S. Attorney Jenny A. Durkan for the Western District of Washington.  “A tenant should not have to repeatedly prove they need a service animal or other accommodation, and should not face retaliation when they make a complaint to those tasked with protecting their civil rights.”

This lawsuit arose as a result of a complaint filed with the Department of Housing and Urban Development (HUD).  A low-income tenant with a mental disability repeatedly asked the defendants to waive the $1,000 pet deposit for her assistance animal and provided numerous notes from medical professionals to support her request.  As a result of the defendants’ policy and their failure to grant her request, she waited for over two and a half years to obtain an assistance animal and then began to pay the deposit in monthly installments at great financial hardship.  After filing her HUD complaint, she was subjected to retaliation and harassment by the defendants, and she eventually moved out of the defendants’ unit.  After HUD investigated the complaint, it issued a charge of discrimination and the matter was referred to the Justice Department.

“Housing providers must grant reasonable accommodations needed by residents with disabilities,” said Bryan Greene, Acting Assistant Secretary for Fair Housing and Equal Opportunity.  “HUD and the Department of Justice are committed to ensuring that everyone has equal housing opportunities and is able to exercise their fair housing rights without fear of retaliation.”

The lawsuit seeks a court order prohibiting future discrimination by the defendants, monetary damages for those harmed by the defendants’ actions, and a civil penalty.  Any individuals who have information relevant to this case are to contact the Housing and Civil Enforcement Section of the Civil Rights Division at 1-800-896-7743, ext. 7.

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 laws it enforces is available at www.usdoj.gov/crt.  Individuals who believe that they have been victims of housing discrimination can call the Housing Discrimination Tip Line at 1-800-896-7743, email the Justice Department at fairhousing@usdoj.gov or contact HUD at 1-800-669-9777.

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

WASHINGTON – The Department of Justice today announced Jamie Larson, 49, pleaded guilty in U.S. District Court in Seattle to a federal hate crime relating to a racially-motivated assault of a 50-year-old Sikh man who works as a taxi cab driver.

Jamie Larson pleaded guilty to one count of violating the Matthew Shepard and James Byrd Jr. Hate Crimes Prevention Act that was enacted in October 2009. The indictment alleges that on Oct. 17, 2012, Larson assaulted the victim, who is from India, based upon the victim’s actual and perceived race, color and national origin, which included Middle Eastern and Arab descent. The defendant was arrested at the scene of the attack after a witness called 911.

According to the documents filed in court, the victim was called to drive Larson to an address in Federal Way, Wash.  When the taxi arrived at the destination, the driver got out of the taxi and Larson got out and attacked the driver, grabbing his beard, pulling him to the ground, punching and stomping on his head and body.  Larson uttered racial slurs and insults about the vicitm’s perceived ancestry during the attack. The victim suffered damage to his back, shoulder and kidney.  He was hospitalized for more than a week and has undergone lengthy physical therapy.

“This case is a testament to the Justice Department’s dedication to vigorously investigate and prosecute all racially-motivated attacks,” said Roy L. Austin Jr., Deputy Assistant Attorney General for the Civil Rights Division.  “It is unacceptable that violent acts of hate committed because of someone’s race and ethnicity continue to occur, and the department will continue to use every available tool to identify and prosecute hate crimes whenever and wherever they occur.”

“Acts of hate, such as this one, hurt not only the victim, but tear at our social fabric.  They cannot be tolerated in our community,” said U.S. Attorney for the Western Distrcict of Washington Jenny A. Durkan.  “The Shepard-Byrd Act is an important tool for holding defendants accountable.”

The charge carries a statutory maximum of 10 years in prison.  Sentencing is scheduled in front of U.S. District Judge John C. Coughenour on Nov. 5, 2013.

The Shepard-Byrd law criminalizes acts of physical violence causing bodily injury motivated by any person’s actual or perceived race, color, national origin, religion, sexual orientation, gender, gender identity or disability.

The matter was investigated by the Seattle Division of the FBI.  The Federal Way Police Department provided significant support in this prosecution. The case is being prosecuted by Assistant U.S. Attorney Bruce F. Miyake of the U.S. Attorney’s Office for the Western District of Washington and Trial Attorney Nicholas Durham of the U.S. Department of Justice’s Civil Rights Division.

IF YOU HAVE QUESTIONS, PLEASE USE THE CONTACTS IN THE MESSAGE OR CALL THE OFFICE OF PUBLIC AFFAIRS AT 202-514-2007.

A former Bellevue travel agent who used her access to clients’ credit card numbers and mileage plan awards to steal cash, travel and tickets worth more than $300,000 was sentenced today by U. S. District Judge James L. Robart to 24 months in prison and three years of supervised release, announced U.S. Attorney Jenny A. Durkan.  KAREN YEAKEL, 64, was ordered to pay $339,242 to those she defrauded and to her employer who incurred thousands of dollars investigating the embezzlement. 

According to records filed in the case, between 2005 and 2011, YEAKEL used her close relationship with some of her clients to steal their money and their miles.  In some instances, YEAKEL would use their credit card accounts to charge airplane tickets to Hawaii or Mexico and then would resell the tickets as “travel vouchers” at a discount to other clients, pocketing the cash.  She put more than $180,000 in fraudulent charges on the clients’ credit cards.  The other prong of the scheme involved using clients’ miles to book her own travel or travel for her family members.  YEAKEL booked more than 152 flights for family members using other people’s frequent flyer miles.  When clients wanted to use their miles, YEAKEL claimed no mileage seats were available, when in fact she had simply drained the miles from the accounts.  The value of the miles is estimated at more than $132,000.

YEAKEL pleaded guilty January 28, 2013.

Writing to the court prosecutors described how YEAKEL betrayed clients, many of whom were close friends, with her scheme.  “Year after year, month after month, day after day, defendant Yeakel misused credit card and airline mile accounts her clients had entrusted to her.  During this lengthy period, defendant Yeakel led her clients to believe that she was acting in their best interests, when in fact, she was embezzling hundreds of thousands of dollars from them to support her own lifestyle….. here is simply no excuse for an educated defendant, entrusted with private financial information by her clients, to engage in a multi-year fraud which caused significant emotional pain and significant losses,” prosecutors wrote in their sentencing memo.

The case was investigated by the Bellevue Police Department and was prosecuted by Assistant United States Attorney Justin Arnold. 

Press contact for the U.S. Attorney’s Office is Thomas Bates at (206) 553-7970 or Thomas.Bates@usdoj.gov.

A 69-year-old Redmond, Washington man who falsely claimed he was owed a tax refund of more than $800,000 was sentenced today in the U.S. District Court in Seattle to one year in prison, and three years of supervised release, announced U.S. Attorney Jenny A. Durkan.  FRED F. FRINK was charged in September 2012, and pleaded guilty on March 13, 2013 to filing a false, fictitious, and fraudulent claim.  At sentencing, U.S. District Judge Robert S. Lasnik said FRINK “had many opportunities to pull the plug” on his fraud.  The judge ordered FRINK to report to prison on September 24, 2013, giving him some time to be treated for a variety of health issues.

According to records in the case, in 2009, FRINK hired a tax preparer to prepare his 2008 return.  The tax preparer calculated the taxes and determined that FRINK was owed a refund of $7,413.  However, FRINK failed to file that tax return and instead went to an H & R Block outlet and provided bogus forms indicating that more than $1 million had been withheld on his behalf. H & R Block calculated his return using these bogus documents, determining that he was owed $827,117.  The IRS did not catch the fraud immediately, and FRINK used the money for various transactions, including the purchase of a $48,000 car.  Even after FRINK was contacted by a Federal Revenue Agent, he continued to spend his ill-gotten gains instead of returning it to the U.S. Treasury.

The scheme FRINK used has been seen multiple times in the Western District of Washington and has resulted in significant prison terms.  “The IRS included 1099-OID fraud on its “Dirty Dozen Tax Scams” for 2012.  Although some scam participants are undeterrable, there are a number of people who will be deterred if they understand that their conduct could lead to serious penalties, including imprisonment,” prosecutors wrote in their sentencing memo.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI).  The case is being prosecuted by Assistant United States Attorney Thomas Woods.

            A 35-year-old Oregon man was sentenced yesterday in the U.S. District Court in Tacoma to 54 months in prison and five years of supervised release for bank fraud, announced U.S. Attorney Jenny A. Durkan.  ALEXANDER VENIAMIN SVIRIDIUK of Happy Valley, Oregon, was the leader of a scheme to profit by submitting fraudulent applications for student loans.  In August 2013, U.S. District Judge Benjamin H. Settle will hold a second hearing to determine the amount of restitution SVIRIDIUK will be required to pay.  The loss amount from the scheme exceeds $900,000.

            According to records filed in the case, SVIRIDIUK advertised in the Russian immigrant community that he could assist people facing financial difficulties.  SVIRIDIUK advised the immigrants they could get cash by applying for student loans, without any need to actually go to college.  Using the immigrant’s personal information, SVIRIDIUK and his cousin would apply for student loans stating that the immigrant planned to attend either Washington State University or University of California at Irvine.  SVIRIDIUK would set up an email account in the immigrant’s name, and register them for college classes at WSU or UC Irvine.  The email registration would be used to convince the bank funding the loan that the person was enrolling in school.  After the loan was approved, and the money delivered, the student would quickly withdraw from the university.  SVIRIDIUK took a percentage of the loan funds, and sometimes additional fees as well.  Between March and August of 2008, SVIRIDIUK submitted 55 student loan applications and 29 were funded for a total of $932,630.  To date, the bank has only been able to recover about $30,000.

            SVIRIDIUK and his cousin, Natalya Sviridiuk were indicted in December 2011.  The cousin pleaded guilty in February 2012 and will be sentenced next month.  SVIRIDIUK was convicted in October 2012 following a five day jury trial.

            In asking for a significant prison term, prosecutors noted that SVIRIDIUK recruited clients from as far away as California and Colorado.  “Sviridiuk involved numerous other individuals in his scheme and forever changed many of their lives.  While some of his clients undoubtedly knew, or at least suspected, that what they were doing was wrong, it is equally clear that many did not.  These individuals, many with a limited ability to read and speak English, put their trust in him.  As a member of their community, they relied upon him and his expertise to help them.  Instead, he took advantage of them,” prosecutors wrote in their sentencing memo.

            The case was investigated by the U.S. Secret Service and was prosecuted by Assistant United States Attorney C. Andrew Colasurdo and Special Assistant United States Attorney Stephen Hobbs.  Mr. Hobbs is a Senior Deputy King County Prosecutor specially designated to prosecute cases in federal court.

            A 51-year old Auburn, Washington woman was arrested this afternoon following her indictment for a wire fraud scheme in which she claimed to be a cancer patient, announced U.S. Attorney Jenny A. Durkan.  Between May 2009 and September 2012, JULIE ANN DAHLQUIST convinced an elderly Auburn resident to support her financially by claiming the money was for cancer treatment.  In fact, DAHLQUIST had no cancer diagnosis.  DAHLQUIST is scheduled to appear in U.S. District Court in Seattle at 1:30 tomorrow (Tuesday June 25, 2013.)

            According to the indictment, DAHLQUIST told the elderly victim that she had been diagnosed with cancer and had no medical insurance or any money for treatment.  The victim, concerned for DAHLQUIST’s welfare, wrote her checks to pay for the non-existent treatment.  The victim wrote checks for as much as $9,000 about three times a month.  In all, the victim wrote 190 checks to DAHLQUIST for more than $400,000.  The indictment alleges that DAHLQUIST used the money for gambling and other expenses.  In addition to wire fraud, DAHLQUIST is indicted for Social Security fraud.  The indictment charges that DAHLQIST concealed the $400,000 in proceeds from her fraud scheme so that she could collect $8,000 in Supplemental Security Income (SSI) benefits from the Social Security Administration.  DAHLQUIST also failed to disclose $100,000 in gambling proceeds.  The income that was allegedly concealed would have disqualified DAHLQUIST from receiving SSI benefits.

            Wire fraud is punishable by up to 20 years in prison.  Social Security Fraud is punishable by up to five years in prison.

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

            The case was investigated by the Social Security Administration Office of Inspector General (SSA-OIG) and was prosecuted by Special Assistant United States Attorney Seth Wilkinson as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office.

Two men with a quarter century history of robbing banks, were sentenced today to 70 years in prison for a string of bank robberies in the Seattle area, announced U.S. Attorney Jenny A. Durkan.  The two men, 66-year-old JACK P. SEXTON and 65-year-old RONALD C. KETTELLS were convicted in March 2013 of conspiracy to commit bank robbery, three armed bank robberies and using a firearm during a crime of violence.  At sentencing U.S. District Judge Robert S. Lasnik said these were some of the longest sentences he has handed down, noting  the men’s criminal history is “remarkable in its length and depth.”

According to testimony at trial and records filed in the case, the two men were linked to three bank robberies in the Seattle area between August and October 2011.  On August 8, 2011 the two men robbed a Key Bank branch on Holman Road in north Seattle.  In that case the men used a bandana and a t-shirt to disguise their faces.  They pointed a handgun at the tellers and threatened to kill them if they did not lie down on the floor.

They next robbed the Wells Fargo bank branch on Greenwood Avenue in Shoreline on September 12, 2011.  The men wore masks: one of an elderly man, the other of President Richard Nixon.  The men were armed with a pistol grip shotgun and a handgun.

Finally, on October 20, 2011, the men robbed a Washington Federal Bank branch in West Seattle.  One wore a Hillary Clinton mask, the other the same “elderly man” mask as in the previous robbery.  Again they pointed the pistol grip shotgun and handgun at the tellers and demanded money.  An elderly woman who was a customer at the bank was injured when she was forced to the ground by one of the men.

Key information in the case came from an alert neighbor at one of the robberies who noted the license plate number of the get-away car.  The car was ultimately linked to SEXTON and the person who had sold him the vehicle knew where SEXTON and KETTELLS were living.  Both had recently been released from prison.  A search of their vehicles and residence turned up bags used in the robberies as well as four firearms – including the ones used in the robberies.  Investigators also found the masks used in the robbery, and DNA on the inside of the masks linked them to both men.

Both men have numerous prior convictions. KETTELLS has convictions dating back to 1963 for assault, burglary and bank robbery.  Similarly, SEXTON has convictions dating back to the 1960s for burglary, forgery, and armed bank robbery.

Writing to the court prosecutors noted these “crimes were recklessly violent and directly endangered the lives of numerous victims and responding officers.  In each of the robberies (the men)…  aggressively brandished a loaded firearm, shouted threats and profanities at the victims, and made various threatening actions such as banging a gun on a desk, racking a shot gun, and waving a gun in close proximity to a teller’s face with (a) finger on the trigger.”

The men were ordered to pay $29,628 in restitution.

The case was investigated by the FBI’s Seattle Safe Streets Task Force, which includes investigators from the Seattle Police Department, as well as the King County Sheriff’s Office

The case was prosecuted by Assistant United States Attorneys Andrew Friedman and Francis Franze-Nakamura.

            A Seattle woman who illegally collected her dead father’s Social Security benefits for more than 19 years after his death, was sentenced today in U.S. District Court in Seattle to 18 months in prison and three years of supervised release for theft of government funds, announced U.S. Attorney Jenny A. Durkan.  PATTY BUCHANAN, 57, was prosecuted as part of an initiative with the Social Security Administration Office of Inspector General to combat benefit fraud.  BUCHANAN forged a power of attorney, submitted false documentation to the Social Security Administration and even had someone impersonate her father on the telephone to continue collecting his benefits after his death in 1993.  At sentencing Chief U.S. District Judge Marsha J. Pechman ordered her to pay $239,083 in restitution.

            “Fraud against Social Security harms the poor, the disabled, and those most in need, including the elderly,” said U.S. Attorney Jenny A. Durkan.  “These prosecutions are aimed at preserving the integrity of the Social Security safety net so that it remains available for vulnerable people who need these benefits to survive.”

            BUCHANAN is one of the largest Social Security benefit fraud cases prosecuted as part of the initiative in the Western District of Washington.  BUCHANAN’s father died in May 1993, but she continued to receive and cash his benefit checks using a check cashing business.  She told the outlet her father was infirm and homebound and that she had power of attorney.  Every month for 19 years she cashed the checks – in all, 235 checks for a total of $239,083.  When one of the tellers at the check cashing business became suspicious, BUCHANAN forged a fraudulent power of attorney document.  When staffers at the outlet called to try to speak with BUCHANAN’s father, BUCHANAN had a male friend pretend to be her father.  Ultimately, an anonymous tip to Social Security ended the fraud in December 2012.  In addition, between March 2003 and November 2012, BUCHANAN also applied for and fraudulently collected $11,271 in Washington State Department of Social and Health Services benefits to which she was not entitled.  BUCHANAN has one prior conviction for fraud against the state welfare system.

            Five other defendants have been charged this year with theft of government funds for fraudulently collecting Social Security benefits for years after their parents’ death.  All five have entered guilty pleas and await sentencing. The following are the longest running of these frauds.

            CLAUDIA RUTH GREENAMYER, 72, of University Place, fraudulently collected $219,960 following the death of her mother in 1996 and her father in 2000.  The payments were made to bank accounts GREENAMYER held jointly with her parents. GREENAMYER continued to use the money without telling Social Security her parents were deceased.  She forged signatures to continue the theft, and when confronted by agents in February 2013, she claimed to have seen her parents one month earlier.  GREENAMYER pleaded guilty to theft of government funds on May 15, 2013.

            DENNIS JAY GORIN, 76, of Eatonville, fraudulently collected about $100,000 in Social Security benefits belonging to his mother following her death in around 2003.  GORIN did not notify federal or state authorities of his mother’s death and personally disposed of his mother’s body on property in a rural area.  Between 2003 and 2013, GORIN forged his mother’s signature to embezzle an estimated $100,000 worth of Social Security benefits.  GORIN pleaded guilty on May 21, 2013.

            DAVID MICHAEL COSTA, 77, of Sammamish, fraudulently collected $297,948 of his mother’s Social Security benefits following her death in 1989.  While COSTA originally thought the payments coming to the joint bank account were from an annuity, in 1992 he learned they were Social Security payments.  Rather than alert authorities and pay back the $40,000 that had wrongly been paid, COSTA continued to collect the benefits for more than 15 more years.  COSTA forged his mother’s name on documents and substituted his address for hers on all records, updating it three different times over the years.  COSTA pleaded guilty on June 3, 2013.

            These cases were investigated by the Social Security Administration Office of Inspector General (SSA-OIG) and are being prosecuted by Special Assistant United States Attorney Seth Wilkinson as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office.

Dr. Alfred H. Chan, an oncologist in Lakewood, Washington, and his family, have agreed to pay the United States $3.1 million to settle allegations that he and his wife defrauded federal health care programs by significantly and repeatedly overbilling for cancer treatment medications.  From at least April 2006 through April 2009, the government contends that Dr. Chan and his wife Judy Chan intentionally inflated claims to Medicare, TRICARE, and other federal health care programs, resulting in a loss to the government estimated at over $1 million.  Today’s settlement represents a recovery of almost three times the estimated loss to federal health care programs.

             “Dr. Chan and Judy Chan blatantly and persistently defrauded the government of more than a million dollars and traded the safety of cancer patients for their own personal gain,” said U.S. Attorney Jenny A. Durkan. “They continue to try to avoid criminal sanctions by remaining outside the U.S.  This civil settlement recoups the financial damage they inflicted on taxpayer funded programs.”

            The government was alerted to the Chans’ fraud through a “qui tam” or “whistleblower” lawsuit brought under the False Claims Act by one of Dr. Chan’s former employees, Ruth Ruckman.  Ms. Ruckman observed that Dr. Chan – with the assistance of his wife, Judy – routinely billed federal healthcare programs for twice (or more) the amount of cancer treatment drugs actually administered to his patients.  The couple then destroyed records and falsified patients’ medical records in order to conceal the fraud.  Ms. Ruckman provided the government with Dr. Chan’s treatment orders, which showed the actual dosages of drugs administered to certain patients, and the invoices, which showed how much Dr. Chan overbilled for the treatments.  

            Upon learning of the government’s investigation, the Chans attempted to sell, transfer, and conceal millions of dollars in assets in an ultimately unsuccessful attempt to prevent the government from recovering its overpayments.  In February 2011, the Chans fled to Taiwan.  A grand jury sitting in the Western District of Washington has returned a criminal indictment against Alfred and Judy Chan relating to their fraudulent conduct.    

            Pursuant to the False Claims Act, Ms. Ruckman is entitled to share in the government’s recovery and will receive $620,000 of the $3.1 million settlement for exposing the Chans’ fraudulent conduct.       

            Government agencies supporting and/or participating in the successful resolution of this matter include: the Office of Inspector General of the Department of Health and Human Services; the Department of Defense Office of Inspector General, Defense Criminal Investigative Service; the Office of Inspector General of the Office of Personnel Management; the TRICARE Management Activity Office of General Counsel; the Washington State Health Care Authority; and the Washington State Attorney General’s Office.

            A 35-year-old Renton, Washington man pleaded guilty today in U.S. District Court in Seattle to wire fraud in connection with his scheme to advertise and sell fake Chihuly artwork, announced U.S. Attorney Jenny A. Durkan.  MICHAEL LITTLE admits he bought various pieces of generic glasswork and artwork over the internet and falsely claimed to buyers that it was authentic Dale Chihuly work.  LITTLE made at least $40,000 selling the fakes.  LITTLE will be sentenced by U.S. District Judge Robert S. Lasnik on October 4, 2013.

According to records in the case, between 2011 and April 2013, LITTLE offered for sale or sold various pieces of glass art and paintings that he represented were the original work of Dale Chihuly.  LITTLE marketed the works via eBay.  The artworks bore a signature that appeared to be Chihuly’s and LITTLE provided paperwork that he said authenticated the pieces as the work of Dale Chihuly.  However, an expert in Chihuly’s work examined the pieces at the request of a number of the purchasers and determined they were fakes.  The papers that were supposed to authenticate the works were forged.  LITTLE told various stories to potential buyers about how he had acquired the Chihuly work, including that his family had purchased the pieces after winning the Lotto.

Wire fraud is punishable by up to 20 years in prison and a $250,000 fine.

The case was investigated by Seattle-Tacoma Border Enforcement Security Task Force (BEST Seattle), led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).  BEST Seattle is comprised of members from HSI; U.S. Customs and Border Protection’s Office of Field Operations; the U.S. Secret Service; the U.S. Coast Guard Investigative Service; the FBI; the U.S. Postal Inspection Service; and the Port of Seattle Police Department.  BEST Seattle investigates smuggling and related crimes and combats criminal organizations seeking to exploit vulnerabilities at the Seattle and Tacoma seaports and adjacent waterways.

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

Two men who allegedly stole thousands of feet of copper wire from runway light towers at Seattle-Tacoma International Airport are in custody facing federal charges, announced U.S. Attorney Jenny A. Durkan.  JERAMIE HARMS, 28, will make his initial appearance in U.S. District Court in Seattle today at 1:30 p.m.  TIMOTHY LYNCH, 50, is in custody in King County, Washington, on an unrelated charge and will be scheduled for his appearance in the coming weeks.  The theft was discovered on February 12, 2013, when a Port of Seattle employee noticed damage to the fence surrounding the runway light structures near South 188th Street and Des Moines Memorial Drive.  In total, approximately 7,200 feet of copper cable was stolen from the FAA light towers, rendering them inoperable and potentially posing a threat to airline safety.

According to the criminal complaint unsealed today, HARMS and LYNCH entered a secured area of Sea-Tac airport and removed copper cable from the light towers.  HARMS first came to the attention of law enforcement in connection with a King County burglary.  While being questioned by law enforcement, information was developed linking HARMS and LYNCH to the wire theft.  The copper wire cost more than $77,000 when it was installed in 2008.  HARMS was arrested yesterday afternoon. 

The men are charged with theft of public property which is punishable by up to ten years in prison and a $250,000 fine.

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 Safe Streets Task Force which includes officers from the Port of Seattle Police Department, the Seattle Police Department and the King County Sheriff’s Department.  The case is being prosecuted by Executive Assistant United States Attorney Thomas Bates.

            French authorities have informed the United States that under French law, there are no grounds to appeal the June 5, 2013 ruling by the French Court of Appeal of Chambery, near Lyon, France, denying the extradition of MICHAEL R. MASTRO, 88, and LINDA A. MASTRO, 63. This concludes the French extradition proceedings in this case.

            On October 24, 2012, MICHAEL and LINDA MASTRO, were arrested in France based on a criminal warrant from the Western District of Washington. On November 4, 2012, a federal grand jury in Seattle returned a Superseding indictment charging the MASTROS with a variety of bankruptcy fraud crimes and multiple counts of money laundering.  At the request of the United States, French authorities began extradition proceedings in late-December 2012.  The MASTROS subsequently contested extradition. 

During the extradition proceedings, the French Court requested assurances that if extradited to the United States, the MASTROS would serve no time in jail.  The French Court’s request was based on concerns about the health and age of the MASTROS.  To address the French Court’s concerns, the United States agreed that if convicted, prosecutors would recommend no more than two years in custody for either of the MASTROS.  Prosecutors further assured the French Court that if convicted, the MASTROS would have access to medically appropriate care through the U.S. Bureau of Prisons.  In its June 5, 2013 ruling, the French Court decided that these assurances were insufficient and denied extradition.

            The United States requested that French authorities appeal the order denying extradition. However, French authorities advised that there are limited grounds for appeal in extradition matters in France.  Because the French prosecutor in consultation with the French Justice Ministry determined that there were no grounds for a successful appeal, the French authorities made the decision not to appeal the French Court’s ruling. 

MICHAEL R. MASTRO and LINDA A. MASTRO have a continuing obligation to return to the United States to resolve all civil and criminal matters.

The millions of dollars in assets seized from the MASTROS in France, and currently in the custody of the FBI in the United States, are unaffected by the French Court’s ruling.

            An aircraft maintenance company in Everett, Washington, has agreed to settle two federal civil penalty claims brought by the U.S. Attorney’s Office on behalf of the Federal Aviation Administration (FAA).  Based on its investigation, the FAA contends that from 2006-2009 Aviation Technical Services (ATS) violated FAA regulations – and thus created potential safety issues – by not following proper procedures for replacing fuselage skins and not using proper cradles to support the aircraft during maintenance work on over 40 Southwest Airline Boeing 737s.

            Pursuant to the terms of the settlement, ATS has agreed to pay the government $275,000 and implement policies specifically designed to promote compliance with FAA regulations through improved quality control, engineering oversight of maintenance, safety management, and voluntary reporting of safety issues.

            “The FAA’s mission is to promote safe air travel and protect our country’s passengers, and their safety regulations must be honored,” said U.S. Attorney Jenny A. Durkan.  “Monitoring and enforcing compliance with FAA regulations is critical to this mission.  I applaud the FAA’s efforts.”

                ATS is one of the largest third-party aircraft maintenance companies in North America.  As part of today’s settlement, ATS does not admit liability or agree to the government’s characterization of its conduct.

            Government agencies supporting and/or participating in the successful resolution of this matter include: FAA Office of Chief Counsel; FAA Northwest Mountain Region Office of Regional Counsel; and the Office of Inspector General of the Department of Transportation.

A Yelm, Washington man who advised and assisted others in a common tax fraud scheme was sentenced today in U.S. District Court in Tacoma to 97 months in prison and three years of supervised release, announced U.S. Attorney Jenny A. Durkan.  RAYMOND LEO JARLIK BELL was convicted in March 2013 of five counts of filing false, fictitious and fraudulent claims, 15 counts of assisting in filing false tax returns, three counts of mail fraud, and one count of criminal contempt.  JARLIK BELL and his wife, Ute Christine Jarlik Bell, are of members of the so-called ‘Sovereign Citizen’ movement.  Members of the Sovereign Citizen movement profess a belief that both state and federal government entities are illegitimate.  U.S. District Judge Ronald B. Leighton imposed $705,276 in restitution saying, “Your scheme… is fraud at its core.  You are hurting people intentionally, regardless of your adherence to [your beliefs].”

“This defendant held himself out as a tax expert with contacts at the IRS – when both the IRS and a federal judge told him repeatedly that his conduct was criminal,” said U.S. Attorney Jenny A. Durkan.  “Mr. Jarlik Bell believed he was above the law, and aggressively promoted and spread his scheme to others looking to duck their fair share and steal tax dollars through fraudulent refunds.”

The JARLIK BELL investigation centered on the filing of false tax returns using a scheme known as OID fraud; RAYMOND LEO JARLIK BELL advised and assisted others in using the scheme.  In 2006, BELL obtained a tax refund in excess of $30,000 using the scheme. Numerous others who were advised by JARLIK BELL also filed for and received fraudulent refunds they did not deserve.  One woman received a tax refund of more than $590,000.  In 2005, JARLIK BELL was ordered by U.S. District Judge Robert J. Bryan to stop promoting fraudulent tax schemes.  Less than three years later, he was back promoting another massive tax fraud among friends, family and strangers.

“No matter what the promoter calls it, a scheme to file bogus tax returns claiming outrageous tax ‘refunds’ that don’t belong to you, is just fraud,” said Kenneth J. Hines, Special Agent in Charge of IRS Criminal Investigation in Seattle.  “All frauds have a victim, and the victim of Mr. Bell’s scheme was every hard working taxpayer in America, as well as government operations and programs, including our military, that depend on tax dollars.  Mr. Bell’s prison sentence reflects the severity of his crime and demonstrates the commitment of IRS Criminal Investigation to defending the integrity of our system.”

In asking for a lengthy prison sentence prosecutors wrote to the court that JARLIK BELL “aggressively promoted this scheme, both locally in the Western District of Washington, at seminars in California, and among tax filers in Arizona and Hawaii.  The defendant recruited other people – blinded by their own greed and shortsightedness – to break the law.  In that sense his crime is more detrimental to society and to the enforcement of the tax laws than that of a defendant who confines his criminal activity to him or her self.”

Ute Christine Jarlik Bell was convicted of four counts of filing false, fictitious and fraudulent claims.  She will be sentenced June 18, 2013.

The case was investigated by the Internal Revenue Service Criminal Investigation (IRS-CI), the FBI, ATF, the Federal Protective Service and the U.S. Marshal Service.

The cases were prosecuted by Assistant United States Attorneys Jill Otake and Matthew Diggs.

            A Seattle man who operated a successful landscaping and hauling company was sentenced to prison today for defrauding benefit programs of more than $60,000, announced U.S. Attorney Jenny A. Durkan.  Over five years, VERNAL LEMUEL MORRIS, 59, defrauded Social Security, the Seattle Housing Authority and the federal food stamp program.  MORRIS repeatedly told welfare agencies he was so disabled he could not bathe or dress himself.  In fact, MORRIS owned and operated B&V Lawn and Hauling, with as many as six employees, a website and trucks.  MORRIS was responsible for the company’s advertising, sales, customer relations, and for the supervision of the employees.  U.S. District Judge John C. Coughenour sentenced MORRIS to five months in prison, three years of supervised release and $60,726 in restitution.

            According to records filed in the case, MORRIS first applied for Social Security Disability payments in August 2004 claiming he has a psychological disability.  The claim was rejected, and MORRIS appealed to an Administrative Law Judge.  MORRIS claimed he was unable to bathe, that he could not stand for more than 20 minutes, and that he was afraid to leave his home.  Based on these claims the judge found MORRIS eligible for benefits and he collected $31,313 in disability benefits from October 2007 to August 2012.  Over those years MORRIS repeatedly represented to the Social Security Administration that he had difficulty dressing and bathing himself and could not drive.

            In addition to the Social Security Fraud, MORRIS defrauded the Seattle Housing Authority (SHA) by fraudulently obtaining rent subsidy funds provided by the U.S. Department of Housing and Urban Development (HUD).  MORRIS applied for housing in January 2009, and collected $21,284 in benefits by claiming he was not employed and had no income other than the Social Security benefits.  There is a 6,000 person waiting list for the SHA subsidies, and MORRIS’ fraud kept other truly needy people from obtaining subsidized housing.  Finally, MORRIS fraudulently obtained $8,192 in benefits from the Washington State Department of Social and Health Services (DSHS) for food and medical care.  Between May 2007 and October 2011 he falsely claimed he had no income or assets in order to obtain food stamps and medical coupons.

            In asking for a prison sentence prosecutors wrote to the court that MORRIS “stole resources intended for the neediest members of society….  By fraudulently collecting benefits he was not entitled to receive, VERNAL MORRIS literally deprived a needy family of a decent place to live.  Furthermore, persons who feign disabilities, as VERNAL MORRIS did, require social agencies to spend their resources investigating disabilities instead of delivering benefits.  Fake disability claims also require genuinely disabled persons to undergo the indignity of examinations geared to determine whether they are faking their claim as well.”

            The case was investigated by the Social Security Administration Office of Inspector General (SSA-OIG) and was prosecuted by Special Assistant United States Attorney Seth Wilkinson as part of a partnership venture between the Social Security Administration Office of General Counsel and the United States Attorney’s Office.

            The owner of a Kenmore, Washington nail and beauty salon who illegally imported and sold cigarettes was sentenced today in U.S. District Court in Seattle to 18 months in prison, three years of supervised release and will pay approximately $250,000 in tax penalties and assessments, announced U.S. Attorney Jenny A. Durkan.  HAN BUI, 45, owner of Lovely Nails and Beauty Salon on NE 181st Street, pleaded guilty February 12, 2013 to trafficking in counterfeit cigarettes.  At sentencing U.S. District Judge John C. Coughenour ordered that the tax assessments and penalties will go to the State of Washington for the taxes lost on the sale of the counterfeit cigarettes.

            According to records filed in the case, HAN BUI came to the attention of law enforcement as part of a coordinated investigation of illegal cigarette imports from Vietnam.  The investigation identified BUI and her husband as the highest volume illegal importers of cigarettes from Vietnam.  The contraband cigarettes are sold under familiar U.S. brand names and packaging, but are manufactured in Vietnam.  BUI did not pay federal excise taxes or state cigarette taxes on the cigarettes.  Investigators estimate the tax loss from BUI’s illegal trafficking at more than $450,000.  When a search warrant was served on her home in July 2011, she possessed more than 400,000 contraband cigarettes, along with $115,500 cash, and a Lexus SUV that she admitted was purchased with the proceeds of her cigarette trafficking.  The cash and the SUV are being forfeited to the government.

            In asking for a two year prison sentence prosecutors wrote to the court that “between November of 2009 and July of 2011, BUI purchased from Vietnam and arranged the importation of hundreds of thousands of contraband cigarettes in hundreds of mailed parcels….On the day her house and business were searched, Ms. Bui was in possession of more than 2,000 cartons of cigarettes…. investigators have reason to believe that because the contraband cigarettes were being sold outside of legal, regulated channels, they were ending up in the hands of minors at disproportionately high rates.”

            The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), U.S. Immigration and Customs Enforcement’s Homeland Security Investigations, the U.S. Postal Inspection Service, and the Washington State Liquor Control Board.  The case is being prosecuted by Assistant United States Attorney Darwin Roberts.

            A hard money lender who resides in University Place, Washington was arrested today after being indicted by the grand jury for conspiracy, making false statements on loan applications and mail fraud.  EMIEL A. KANDI, 36,was taken into custody by the FBI this morning and will make his initial appearance on the indictment in U.S. District court in Tacoma at 2:30 today.

            “The business practices of this defendant harmed individuals who lost their homes.  Then the lies told in mortgage documents harmed taxpayer funded institutions such as the Federal Housing Administration,” said U.S. Attorney Jenny A. Durkan.  “These mortgage fraud cases result from thorough and intensive investigations.  I’m grateful for the hard work of the dedicated agents and investigators working to hold Mr. Kandi accountable.”

            According to the indictment, between 2008 and 2009, KANDI submitted false information to obtain home mortgage loans.  Some of these loans were designed to let KANDI cash out of properties that KANDI owned through his hard money lending.  KANDI’s lending activities were typically secured by a borrower’s home and charged a high rate of interest.  The hard money loans were structured, in some instances, to allow KANDI to seize control of a home if the borrower missed a single payment.  Other loans included an inflated and often disguised commission payment to KANDI.  In at least 19 loans, KANDI and his co-schemers submitted false information regarding the borrowers’ employment, salary, and intention to live in the home.  Some of the loan paperwork included inflated appraisals so that KANDI could maximize the money he obtained in the scheme.  The false statements were designed to make the loans appear legitimate and ensure that they would meet federal lending standards.  Many of the loans were processed by Pierce Commercial Bank and were insured by the Federal Housing Administration (FHA), a unit within the federal Department of Housing and Urban Development (HUD).

            The indictment details the false statements that were made in loan applications on properties in Kent, Puyallup, Roy, Gig Harbor and Vancouver, Washington.  In one instance detailed in the indictment, the falsified forms were sent to a lender in Texas via U.S. Mail resulting in the charge of mail fraud.

            Mail fraud is punishable by up to 20 years in prison and a $250,000 fine.  Conspiracy is punishable by up to five years in prison and a $250,000 fine.  Making false statements in a loan application is punishable by up to 30 years in prison and a $1 million 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.

Today’s announcement is part of efforts underway by President Obama’s Financial Fraud Enforcement Task Force (FFETF) which was created in November 2009 to wage an aggressive, coordinated and proactive effort to investigate and prosecute financial crimes. With more than 20 federal agencies, 94 U.S. attorneys’ offices and state and local partners, it’s the broadest coalition of law enforcement, investigatory and regulatory agencies ever assembled to combat fraud. Since its formation, the task force has made great strides in facilitating increased investigation and prosecution of financial crimes; enhancing coordination and cooperation among federal, state and local authorities; addressing discrimination in the lending and financial markets and conducting outreach to the public, victims, financial institutions and other organizations. Over the past three fiscal years, the Justice Department has filed more than 10,000 financial fraud cases against nearly 15,000 defendants including more than 2,700 mortgage fraud defendants. For more information on the task force, visit www.stopfraud.gov.

The case is being investigated by the FBI and the Department of Housing and Urban Development, Office of Inspector General.  The case is being prosecuted by Assistant United States Attorney Brian Werner and Special Assistant United States Attorney Hugo Torres.  Mr. Torres is a King County Deputy Prosecutor specially funded by the Washington Department of Financial Institutions (DFI) to handle mortgage fraud cases in state and federal court.