LOS ANGELES – A urologist was sentenced today to 71 months in federal prison for submitting fraudulent billings totaling more than $700,000 to Medicare for medically unnecessary and nonexistent treatments, sometimes billing for purported patient visits miles apart and occurring at the exact same time.

          Mark Wilfred Tamarin, 65, of Manhattan Beach, was sentenced by United States District Judge Dale S. Fischer, who also ordered him to pay nearly $345,000 in restitution.

          After a seven-day trial in July 2019, a jury found Tamarin guilty of six counts of wire fraud and one count of attempted health care fraud. He has been in federal custody since the trial’s conclusion.

          According to the evidence presented at trial, from 1987 until 2014, Tamarin was a partner Advanced Urology Medical Offices (AUMO), which had offices in Torrance and West Los Angeles.

          From January 2009 until January 2013, at AUMO, where the majority of the patients were covered by Medicare, Tamarin billed Medicare for services he did not and could not have performed and also ordered medically unnecessary tests. Tamarin covered Kindred Hospital, a sub-acute medical center in Ladera Heights, for AUMO. Kindred is a facility designed for patients with serious medical problems and in need of long-term care, but for whom a traditional hospital setting is unnecessary. There, he billed for numerous patient visits that never happened and for services he never provided. The evidence presented at trial showed that on multiple occasions between 2009 and 2013, Tamarin purportedly was in two places miles apart at the same time he was treating patients in both locations.

          At his office at AUMO, Tamarin ordered medically unnecessary tests for his patients. In particular, he ordered two to three times the number of post-void residual (PVR) tests and renal ultrasounds for urology patients in comparison to his three medical partners. Tamarin ordered so many PVRs that the office’s medical assistants suggested that the office purchase a second PVR machine. Tamarin ordered these tests before speaking with or seeing a patient despite the fact that the tests themselves only were appropriate in limited medical circumstances.

          In total, Tamarin caused more than $700,000 in fraudulent claims to be billed to Medicare, of which Medicare paid approximately $219,934 in fraudulent Kindred claims and $124,802 in medically unnecessary PVR and renal ultrasound claims.

          This matter was investigated by the FBI and U.S. Department of Health and Human Services Office of Inspector General.

          This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.

          LOS ANGELES – An Orange County man who fled after authorities searched his residence on Wednesday is in federal custody today after he was arrested at the U.S.-Mexico border and charged with fraudulently obtaining more than $5 million in COVID-relief loans for three sham companies.

          Reddy Raghav Budamala, 35, of Irvine, was arrested at the border early Thursday morning by federal law enforcement and made his initial court appearance Thursday afternoon in the United States District Court in Los Angeles. At that hearing, a United States Magistrate Judge ordered Budamala held without bond because he posed a flight risk.

          A criminal complaint filed Thursday charges Budamala with one count of wire fraud.

          According to an affidavit filed with the complaint, Budamala in 2019 formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the economic fallout from the pandemic, Budamala allegedly submitted to the Small Business Administration (SBA) seven applications for pandemic-relief loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL).

          As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses, the affidavit alleges.

          The listed addresses for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses. During a February 2021 interview with a State Department official in an unsuccessful attempt to obtain a United States passport, Budamala said he wanted the passport so he could get a job, according to the affidavit.

          The SBA and the banks funded six of the loans and disbursed $5,151,497, the affidavit states. Budamala allegedly applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.

          Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Los Angeles, the purchase of a $597,585 property in Malibu, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account, according to the affidavit.

          A complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          If convicted of the charge, Budamala would face a statutory maximum sentence of 20 years in federal prison.

          IRS Criminal Investigation, the FBI, and the Small Business Administration’s Office of Inspector General investigated this matter.

          Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.

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

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

          RIVERSIDE, California – The former CEO of Axium International, Inc., a leading Hollywood payroll services company until it collapsed in 2008, has been sentenced to two years in federal prison for defrauding the Internal Revenue Service by failing to report as income millions of dollars he skimmed from company coffers.

          John Visconti, 74, of Beverly Hills, was sentenced on Monday by United States District Judge Jesus G. Bernal, who also ordered the defendant to pay $1.75 million in restitution to the Internal Revenue Service.

          Visconti was convicted by a federal jury in October of tax evasion, conspiracy to defraud the IRS, and filing a false tax return.

          Axium was one of the largest payroll services companies serving the entertainment industry, and its client list included studios, Fortune 500 companies and broadcasters. At its height, Axium’s gross revenues were well over $1 billion per year. As the payroll services provider and employer of record for its client entities, Axium regularly submitted payroll tax returns to the IRS and to the taxing authorities of several states. In some cases, those tax returns generated substantial refunds, which were supposed to be held in trust by Axium.

          As the result of gross mismanagement, Axium collapsed in 2008 after revelations that its tax delinquencies exceeded $100 million. These tax delinquencies resulted in the IRS assessing a $15 million recovery penalty against Visconti.

          According to the evidence presented at trial last fall, Visconti and Axium’s former chief operating officer – Ronald Garber, 62, of Santa Monica – used a variety of elaborate mechanisms to divert approximately $5.1 million from Axium. Additionally, Visconti took $1.9 million in corporate loans that he did not repay.

          As part of the scheme, Visconti diverted tax refund checks payable to Axium and its subsidiaries into secret bank accounts the he and Garber controlled. These diverted funds were not shown on corporate books and records, and they were not disclosed to the Axium accounting department. Garber and Visconti also diverted approximately $570,000 from Axium by paying invoices submitted by a sham construction company that they controlled. The two men also conspired to have thousands of dollars in cash from Axium delivered to them on a weekly basis.

          “While they were entrusted with overseeing the business activities of a company that was taking in hundreds of millions of dollars every year, these defendants were stealing millions from Axium,” said United States Attorney Eileen M. Decker. “In addition to harming their employer and its clients, the defendants defrauded the government by failing to pay taxes on their ill-gotten gains.”

          Visconti and Garber caused millions of dollars to be diverted from Axium, and Visconti reported none of the funds pocketed by him on his federal income tax returns.

          “Using sham entities and secret bank accounts, Mr. Visconti drained Axium of millions of dollars in cash and assets to finance his lavish lifestyle,” stated Acting Special Agent in Charge Anthony J. Orlando of IRS Criminal Investigation. “Taxpayers and businesses can be assured that IRS Criminal Investigation will continue to vigorously pursue any payroll business that collects taxes and fails to pay them over to the IRS.”

          When he imposed the two-year sentence on Monday, Judge Bernal said he was balancing the seriousness of the crimes against Visconti’s recent diagnosis with a serious medical condition.

          Ronald Garber previously pleaded guilty to two counts of subscribing to a false tax return and is scheduled to be sentenced later this year. Another former Axium associate – Christina Futak, 60, of Orange – pleaded guilty to tax evasion and was sentenced to three years of probation. Futak, a former tax professional, also stipulated to the entry of a civil order enjoining her from engaging in the business of tax preparation.

          The Chapter 11 bankruptcy case for Axium, initially filed in January 2008, remains an active case proceeding in which thousands of documents have been filed.

          The investigation into Axium was conducted by IRS Criminal Investigation. The case is being prosecuted by Assistant United States Attorney Angela J. Davis of the Major Frauds Section.

LOS ANGELES – An Oklahoma man who grew up in Los Angeles pleaded guilty today to a federal criminal charge for telephoning bomb threats to five Los Angeles schools, including two elementary schools, and threatened to shoot the children as they exited one of the elementary schools.

Marcus Jamal Sanchez, 45, a.k.a. “Marcus James Buchanan,” of Blackwell, Oklahoma, pleaded guilty to one count of making a threat through interstate commerce to damage and destroy buildings by fire and explosives.

Sanchez, who was arrested in June 2022, has been free on bond since July 2022.

“Sanchez put children, teachers, and staff at risk through his reckless and irresponsible actions,” said United States Attorney Martin Estrada. “Schools should be safe havens for our kids, and my office will use the force of federal law – when necessary – to prosecute individuals who threaten the educational safety of our young people.”

“The depraved act of making death threats to vulnerable schoolchildren is incomprehensible to most and will not be tolerated by the FBI, nor the American people,” said Amir Ehsaei, the Acting Assistant Director in Charge of the FBI's Los Angeles Field Office. “When threats such as these are reported, they must always be treated as credible and so they continue to drain valuable resources from law enforcement at the expense of the taxpayers who fund them.”

“The Los Angeles School Police Department’s commitment to the safety of our school communities is our top priority,” said Lieutenant Nina Buranasombati, LASPD spokesperson. “We are pleased with the significant step toward justice for the affected school communities. We sincerely appreciate the dedication and collaboration of all parties involved in the judicial process.”

According to his plea agreement, during a period of less than two hours on the morning of February 28, 2022, Sanchez called in bomb threats to two elementary schools, two middle schools, and a high school in Los Angeles. In a call to one of the elementary schools, Sanchez threatened to shoot the children as they exited the building.

On April 27 and 28, Sanchez made additional bomb threats to two of the Los Angeles schools he previously threatened, threatening to shoot and kill children at other schools. On the afternoon of April 27, Sanchez called an elementary school and said to a school employee, “There is a bomb at your school, and we will shoot the kids when they get out of the school. That is what you get for not accepting me in ’86,” according to his plea agreement.

After receiving the threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.

On April 28, Sanchez called the same school again and said there was a pipe bomb placed at the school’s address. After receiving the bomb threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.

That same day, Sanchez called a different elementary school and said, “Stop playing games; you know who this is. I am going to shoot the school. I know the kids are there.” Afterwards, the school was placed on lockdown, but – as with all the incidents – no explosives or unusual items were found.

United States District Judge Josephine L. Staton scheduled a June 7 sentencing hearing in this case, at which time Sanchez will face a statutory maximum sentence of 10 years in federal prison.

The FBI and the Los Angeles School Police Department investigated this matter.

Assistant United State Attorney Jena A. MacCabe of the Violent and Organized Crime Section is prosecuting this case.

            LOS ANGELES – A South Los Angeles man was arrested this afternoon on federal charges of illegally transporting tons of explosives he purchased in Nevada – including dangerous homemade devices that were detonated by police, leading to a massive explosion that destroyed a specially designed containment vehicle and injured 17 people.

            Arturo Ceja III, was arrested by ATF special agents pursuant to a criminal complaint filed late Friday that charges him with transporting explosives without a license. Ceja will remain in custody until an initial appearance expected on July 6 in United States District Court in Los Angeles.

            The complaint alleges that Ceja made several trips to Nevada in late June to purchase various types of explosives – including aerial displays and large homemade fireworks containing explosive materials – that he transported to his residence in rental vans. Most of the explosives were purchased at Area 51, a fireworks dealer in Pahrump, Nevada. The complaint notes that fireworks in California can be sold for as much as four times what purchasers pay for the fireworks in Nevada.

            Ceja told investigators that he purchased the homemade explosives – constructed of cardboard paper, hobby fuse and packed with explosive flash powder – from an individual selling the devices out of the trunk of a Honda in the Area 51 parking lot, according to the complaint.

            “Ceja did not possess an ATF explosives license or permit of any kind that would authorize him to transport either aerial display fireworks or homemade fireworks made with explosive materials, including but not limited to flash powder,” according to the complaint affidavit written by a special agent with the Bureau of Alcohol, Tobacco, Firearms and Explosives.

            On Wednesday, after receiving a tip that fireworks were being stored in Ceja’s backyard, Los Angeles Police officers responded to his residence on East 27th Street. At the house, officers found over 500 boxes of commercial grade fireworks in large cardboard boxes. The initial investigation by local authorities estimated that approximately 5,000 pounds of fireworks were found; however, today the ATF determined that Ceja was storing approximately 32,000 pounds of fireworks in his backyard.

            “[T]he fireworks were stored outside and in an unsafe manner, namely under unsecured tents and next to cooking grills,” the complaint alleges. “None of the commercial fireworks or homemade fireworks, which contained explosive materials, were stored in an approved magazine.”

            In addition to the commercial fireworks, the initial search of Ceja’s residence led to the discovery of over 140 other homemade fireworks (typically referred to M devices of varying sizes), as well as explosives-making components, including hobby fuse that matched the fuse on a homemade mortar shell wrapped in tin foil that was discovered inside the residence, according to the affidavit.

            While the fireworks were being removed from Ceja’s residence, the LAPD Bomb Squad determined that some of the homemade fireworks containing explosive materials were not safe to transport due to risk of detonation in a densely populated area and therefore would be destroyed on scene using a total containment vessel (TCV), according to the affidavit. During the destruction of the devices, the entire TCV exploded, causing a massive blast radius, damaging homes in the neighborhood and injuring a total of 17 law enforcement personnel and civilians.

            A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

            The charge of transporting explosives without a license carries a statutory maximum sentence of 10 years in federal prison.

            The Bureau of Alcohol, Tobacco, Firearms and Explosives; the United States Department of Transportation, Office of Inspector General; and the Los Angeles Police Department are investigating this matter.

            Assistant United States Attorneys Amanda M. Bettinelli and Erik M. Silber of the Environmental and Community Safety Crimes Section are prosecuting this case.

LOS ANGELES – A woman from the Mid-City area of Los Angeles pleaded guilty today to fraudulently obtaining more than $2 million in COVID-19 government loans and to submitting false claims in an unsuccessful effort to secure from the IRS nearly $1.3 million in pandemic-related tax credits.

Casie Hynes, 37, pleaded guilty to one count of wire fraud and one count of false claims.

According to her plea agreement, from June 2020 to December 2021, Hynes submitted more than 80 fraudulent applications for Paycheck Protection Program (PPP) loans and Economic Injury Disaster Loans (EIDL) from banks and the United States Small Business Administration (SBA) in the names of approximately 20 companies. Congress designed these programs to provide government relief to businesses during the COVID-19 pandemic.

Hynes submitted the bogus applications in the names of both existing and newly created companies, including Nasty Womxn Project and She Suite Collective and others purportedly owned by Hynes or her friends and family members. On those applications, Hynes often used the personal information and signatures of other people without their authorization and even though those people were not involved with the companies. Hynes also provided false information on the applications, including as to the number of purported employees at the companies, the companies’ average monthly payroll, and who purportedly owned and controlled these sham businesses. Hynes also submitted fabricated tax documents and bank statements in support of the fraudulent PPP and EIDL applications.

In reliance on Hynes’ fraudulent loan applications, banks and the SBA approved PPP and EIDL loans for the various companies she created and then disbursed the COVID-relief funds into bank accounts she controlled and used to pay her own personal expenses.

Hynes admitted in her plea agreement that she intended to cause approximately $3,174,323 in losses and she received approximately $2,255,244 in fraudulent proceeds from this scheme.

In a related scheme, Hynes used some of the same companies named in her PPP and EIDL fraud to submit bogus tax forms to the IRS, requesting refunds. Following COVID-19’s outbreak, Congress enacted laws authorizing the IRS to reduce the employment tax burdens of small businesses and reimburse those businesses for wages paid to employees who were on sick or family leave and could not work because of the pandemic. During the tax years 2020 and 2021, the IRS offered the Employee Retention Credit and paid sick and family leave credit to businesses that were significantly impacted by COVID-19.

From May 2021 to April 2022, Hynes caused to be submitted 12 tax forms that sought refunds based on false statements on behalf of Nasty Womxn Project LLC, She Suite Ventures, and Casie Hynes Consulting. Hynes knew these companies had little to no business operations, did not have the number of employees she claimed, and did not pay the quarterly wages she claimed in the tax forms.

Hynes fraudulently sought approximately $1,255,703 in COVID-19 tax credits and tax refunds through these false claims, none of which the IRS paid.

United States District Judge Hernán D. Vera scheduled a January 30, 2025, sentencing hearing, at which time Hynes will face a statutory maximum sentence of 20 years in federal prison for the wire fraud count and up to five years in federal prison for the false claims count.

IRS Criminal Investigation investigated this matter.

Assistant United States Attorney Kristen A. Williams of the Major Frauds Section is prosecuting this case.

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

          LOS ANGELES – A High Desert physician remains in federal custody today after his arrest Wednesday on charges of illegally dispensing prescriptions for often-abused controlled substances – including opioid-based medications – during telemedicine sessions with “patients” from across the United States.

          Dr. Raphael Tomas Malikian, 36, who resides in Llano and Palmdale and called his medical practice Happy Family Medicine, was arrested Wednesday afternoon by special agents with the Drug Enforcement Administration.

          An indictment naming Malikian was unsealed at his arraignment Thursday evening, when Malikian entered not guilty pleas and a United States Magistrate Judge ordered him detained pending trial, which is currently scheduled for October 5.

          Malikian is charged in an 11-count indictment with illegally distributing narcotics “while acting and intending to act outside the usual course of professional practice and without a legitimate medical purpose.” The controlled substances that Malikian allegedly distributed are oxycodone, hydrocodone, alprazolam, promethazine and codeine.

          The DEA investigation was prompted by multiple reports in February 2020 of suspicious prescriptions issued by Malikian. The indictment alleges specific incidents in which Malikian prescribed controlled substances without a medical purpose after seven telemedicine consultations – including one conducted entirely via text message – starting in April 2020 and continuing through July 2020. None of the consultations involved any physical exam or diagnostic tests, and the appointments lasted as little as 2 minutes and 20 seconds.

          A federal judge on Thursday unsealed search warrants executed at Malikian’s residences in conjunction with his arrest. The affidavit in support of the search warrants outlines the DEA’s investigation, which included various undercover operations in which agents from the DEA and California DOJ posed as patients and received the prescriptions that form the basis of the indictment. The DEA agent who authored the affidavit concluded that Malikian “effectively sells prescriptions for controlled substances to patients upon request, and does so without obtaining a patient’s medical history or conducting a physical examination.”

          According to the affidavit, an independent medical expert reviewed the interactions between Malikian and the undercover agents and “concluded that Malikian ‘did not thoroughly evaluate his patients’ before prescribing ‘potent and potentially deadly medications,’ and had done so ‘without any regard to what is required of conscientious physicians in the United States before proceeding with controlled medications.’”

            A DEA investigator also reviewed patient records maintained by Malikian, which showed that Malikian saw patients across the United States and that about 43 percent of them shared common addresses, email addresses, “caregivers” or phone numbers with other patients. According to the affidavit, one of those patients was a convicted narcotics trafficker and another was stopped at Los Angeles International Airport while carrying over $19,000 in cash and approximately 1,764 Hydrocodone and Alprazolam pills.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          The charges alleged in the indictment carry different statutory maximum sentences. Seven of the counts allege the illegal distribution of opioids, such as oxycodone, and those charges carry a maximum possible penalty of 20 years in federal prison.

          The DEA is conducting an ongoing investigation in this case. The California Department of Justice, Bureau of Medi-Cal Fraud and Elder Abuse provided substantial assistance.

          Assistant United States Attorney Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.

          LOS ANGELES – A Corona man was sentenced today to 102 months in federal prison for fraudulently obtaining more than $6.6 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds intended for business owners impacted by the economic shock of the COVID-19 pandemic and then laundering his illegal proceeds into financial instruments and real property in Pakistan.

          Muhammad Noor Ul Ain Atta,39, was sentenced by United States District Judge Percy Anderson, who also ordered him to pay $6,643,540 in restitution.

          “It’s important that the sentence imposed today sends the message that there are serious consequences for defrauding federal relief programs,” Judge Anderson said.

          Atta pleaded guilty on August 2 to one count of wire fraud and one count of money laundering.

          From March through July 2020, Atta submitted 11 fraudulent loan applications for seven of his shell companies. The fraudulent applications misrepresented the number of employees and the average monthly payroll expenses of Atta’s companies, and falsely certified he would use the loan proceeds for permissible business purposes. Atta also submitted false tax and payroll documentation in support of his loan applications.

          For one PPP loan, Atta sought $1,267,714 for a company called Envisioning Future Inc. The loan application falsely represented that Envisioning Future had 73 employees and falsely certified Envisioning Future would use the loan proceeds for permissible business purposes, including the payment of payroll and other business-related expenses. The fraudulent application filed on April 10, 2020 was supported by falsified federal tax returns and false payroll data.

          About one month later, Envisioning Future received $1,267,140 in loan proceeds, and the following day Atta wired most of the money to his mother’s bank account. Then in June 2020, Atta wired $1.3 million – the majority of which came from the Envisioning Future PPP loan – to a financial institution in Islamabad, Pakistan. The wire transfer details included a note that the wire was “family support.”

          In total, Atta received $6,643,540 in loan proceeds even though none of his companies were legitimate recipients of relief funds at that time. Atta then laundered loan proceeds to bank accounts in the United States and Pakistan.

          Atta fled the United States in May 2020 and invested some $2.1 million of his ill-gotten gains into Pakistani financial instruments and another $3.5 million into the purchase of land in Pakistan. Almost two years months later, he was apprehended as he traveled through Los Angeles International Airport.

          “The PPP and EIDL programs did not create a limitless pot of money,” prosecutors argued in a sentencing memorandum. “By taking money that he was not entitled to, [Atta] reduced the funds available to other legitimate applicants and defrauded the taxpayers supporting the programs.”

          The Office of the Inspector General for the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection, IRS Criminal Investigation, the Small Business Administration – Office of Inspector General, and the Treasury Inspector General for Tax Administration investigated this matter.

         Assistant U.S. Attorney Adam P. Schleifer of the Major Frauds Section and Trial Attorneys Jennifer L. Bilinkas and Matthew F. Sullivan of the Justice Department’s Fraud Section prosecuted this case.

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

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

LOS ANGELES – An El Monte man and two Chinese nationals living elsewhere in Los Angeles County were sentenced today to terms in federal prison for laundering gift cards purchased by telephone-scam fraud victims at Target stores across the United States.

Blade Bai, 35, of El Monte; Bowen Hu, 28, of Hacienda Heights; and Tairan Shi, 29, of Diamond Bar; were sentenced to terms of 15 years, 10 years, and eight years in federal prison, respectively.

United States District Judge André Birotte Jr. also ordered the defendants to pay restitution in the amounts of $97,815 for Bai, $57,156 for Hu, and $39,416 for Shi.

Bai has been in federal custody since February 2022. Hu and Shi were remanded into custody after the guilty verdicts against them were read in September 2023.



“These defendants were part of a sophisticated, transnational fraud operation that targeted mostly older adults to cheat them out of their savings,” said United States Attorney Martin Estrada of the Central District of California. “Protecting our most vulnerable community members is critically important, and we will hold accountable those who reach into our country to engage in these sorts of egregious fraud schemes.”



The defendants were part of a network of individuals who laundered proceeds of fraud stored on Target gift cards. Telephone scammers fraudulently induced victims across the country to buy gift cards, often $500 each, and to provide the card numbers and access codes to the scammers. The scammers included government imposters falsely claiming to be police and other government personnel and retail and tech support impersonators falsely offering to fix nonexistent issues with the victims’ online account or computer.

The defendants acquired more than 5,000 gift card numbers and access codes from a group in the People’s Republic of China calling itself the “Magic Lamp,” and funneled the gift cards to “runners” to liquidate at Target stores in Southern California.  Those runners, at the defendants’ direction, would quickly use the cards to purchase high-value consumer electronics and conduct other transactions. The rapid transactions prevented victims from recouping the value on the cards when they contacted Target to report the scam.

At the conclusion of a 10-day trial in September 2023, a jury found the defendants guilty of a money laundering conspiracy that spanned from approximately June 2019 to November 2020. The jury also found Bai guilty of a second money laundering conspiracy, in which he enlisted an associate to help sell a batch of gift cards with fraudulent proceeds after his initial arrest in the case. One of the defendants’ main “runners,” Yan Fu, 61, of Chino Hills, pled guilty and was previously sentenced to 20 months in federal prison.

“Transnational fraud schemes typically rely on complicated networks designed to launder victim proceeds,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “This case is a testament to the commitment of the department and our partners to ensuring that all those who knowingly facilitate fraud face justice.”

“The FBI and its partners are committed to going after networks that perpetuate fraud even when they are targeting the American people from thousands of miles away and over the phone,” said Executive Assistant Director Timothy Langan of the FBI’s Criminal, Cyber, Response and Services Branch. “Today’s sentencing should make it known to individuals that participate in this sort of illegal activity that they can expect to face the consequences of their actions.”

“HSI Los Angeles’ El Camino Real Financial Crimes Task Force will continue to aggressively target greedy criminals and organizations that seek to line their pockets by defrauding unsuspecting victims,” said Special Agent in Charge Eddy Wang for HSI Los Angeles. “The defendants’ desire for easy money will lead to them doing hard time.”

The Los Angeles Field Offices of Homeland Security Investigations and the FBI investigated the case, with assistance from the Social Security Administration’s Office of the Inspector General and numerous local police departments across the United States, including the Brea Police Department, the La Palma Police Department, and the Menifee Police Department.

Assistant United States Attorney Monica E. Tait of the Major Frauds Section and Trial Attorneys Wei Xiang and Meredith B. Healy of the Justice Department’s Consumer Protection Branch prosecuted the case.

If you or someone you know is age 60 or older and has experienced financial fraud, experienced professionals are standing by at the National Elder Fraud Hotline: 1-833-FRAUD-11 (1-833-372-8311). This U.S. Department of Justice hotline, managed by the Office for Victims of Crime, can provide personalized support to callers by assessing the needs of the victim and identifying relevant next steps. Case managers will identify appropriate reporting agencies, provide information to callers to assist them in reporting, connect callers directly with appropriate agencies, and provide resources and referrals, on a case-by-case basis. Reporting is the first step. Reporting can help authorities identify those who commit fraud and reporting certain financial losses due to fraud as soon as possible can increase the likelihood of recovering losses. The hotline is open Monday through Friday from 7 a.m. to 3 p.m. PT. English, Spanish and other languages are available.

More information about the Department’s efforts to help American seniors is available at its Elder Justice Initiative webpage. For more information about the Consumer Protection Branch and its enforcement efforts, visit its website at https://www.justice.gov/civil/consumer-protection-branch. Elder fraud complaints may be filed with the FTC at https://reportfraud.ftc.gov/ or at 877-FTC-HELP. The Department of Justice provides a variety of resources relating to elder fraud victimization through its Office for Victims of Crime, which can be reached at https://www.ovc.gov.

LOS ANGELES – Three Los Angeles County residents were found guilty by a jury today of scheming to launder the proceeds of scams targeting older adults and other victims who were conned into buying Target gift cards, supposedly to resolve various financial problems.

At the conclusion of a 10-day trial, a jury convicted the three defendants – Blade Bai, 35, of El Monte; Bowen Hu, 28, of Hacienda Heights; and Tairan Shi, 29, of Diamond Bar – of one count of conspiracy to commit money laundering. The jury also found Bai guilty of an additional charge of conspiring to commit money laundering, an offense he committed after being freed on bond in the initial case.

Hu and Shi were remanded into custody immediately after today’s verdict, and Bai has been in custody since February 2022

According to evidence presented at trial, telephone scammers based overseas lied to victims to persuade them to buy one or more Target gift cards to fix nonexistent problems. Some victims received calls from fraudsters posing as law enforcement officers or government employees, who claimed the victims’ identities had been stolen or warrants had been issued for the victims’ arrest, and that money in the form of Target gift cards was necessary to remedy the problems.

Other victims were tricked into responding to tech support emails that purported to be from well-known companies and claimed there were serious problems relating to the victims’ financial accounts that could only be resolved by paying money in the form of Target gift cards.

As a result of the scammers’ lies and misrepresentations, the victims were convinced to buy Target gift cards – often more than one – typically in increments of $500 and to read the card numbers and access codes over the phone to the scam artists.

Bai, Hu and Shi obtained more than 5,000 gift cards from a group of unknown persons in China that called itself the “Magic Lamp” and sold gift card information via the online messenging application WeChat.

The defendants used WeChat to coordinate the distribution of gift cards to “runners,” who used the gift cards at Target stores primarily in Los Angeles and Orange counties to purchase consumer electronics, other gift cards and other items, according to court documents. Through the purchases and other transactions at multiple Target stores, the defendants and their co-conspirators sought to conceal the fact that the gift cards had been originally funded with fraudulent proceeds.

Prosecutors estimate that the defendants laundered more than $2.5 million in gift cards between approximately June 2019 and November 2020.

Bai was arrested on a criminal complaint in this matter in November 2020 and was released on bond. Within days of his release from federal custody, Bai engaged in another money laundering conspiracy involving Target gift cards. Bai offered to introduce an associate to someone who bought merchandise from him, and thereafter asked the associate to help him liquidate approximately $36,000 of Target gift cards. With Bai unwilling to be paid directly for the sale, two accomplices together arranged a deal in which they sold, to the customer, Bai’s gift cards for approximately 90 cents on the dollar.

Law enforcement arrested Bai again in February 2022 on a superseding indictment and he has remained in federal custody since that time.

United States District Judge André Birotte Jr. scheduled a January 26, 2024, sentencing hearing, at which time Bai, Hu and Shi will face a statutory maximum sentence of 20 years in federal prison for each money laundering conspiracy count.

Yan Fu, 60, of Chino Hills, pleaded guilty in September 2022 to one count of conspiracy to commit money laundering. Fu, who was one of the “runners” in this conspiracy, is serving a 20 month-sentence in federal prison. Judge Birotte also ordered Fu to pay $48,073 in restitution.

This case is the product of an investigation by Homeland Security Investigations (HSI) and the FBI. The investigation was conducted under the auspice of HSI Los Angeles’ El Camino Real Financial Crimes Task Force, a multi-agency task force comprised of federal and state investigators focused on financial crimes in Southern California.

The Social Security Administration’s Office of the Inspector General provided substantial assistance during the investigation, as did the following law enforcement agencies: the Brea Police Department; the La Palma Police Department; the Menifee Police Department; the Glynn County (Georgia) Police Department; the Fontana Police Department; the Charlotte-Mecklenburg (North Carolina) Police Department; the Streamwood (Illinois) Police Department; the Cleveland Police Department; the Madera County Sheriff's Office; the New York Police Department; the Norwood (New Jersey) Police Department; the Loudon County (Virginia) Sheriff's Office; the Waukesha County (Wisconsin) Sheriff's Department; the Fremont Police Department; the Marin County Sheriff's Office; the County of Hawaii Police Department; the Henderson (Nevada) Police Department; the Wilmington (Massachusetts) Police Department; the Las Vegas Metropolitan Police Department; the Lewisville (Texas) Police Department; the Gardena Police Department; the Des Moines Police Department; the Cobb County (Georgia) Sheriff`s Department; the Millburn (New Jersey) Police; the Wauwatosa (Wisconsin) Police Department; the San Angelo (Texas) Police Department; the Fairfax City (Virginia) Police Department; and the Virginia Beach Police Department.

Assistant United States Attorney Monica E. Tait of the Major Frauds Section and Justice Department Trial Attorneys Wei Xiang and Meredith Healy of the Civil Division’s Consumer Protection Branch are prosecuting the case.

The United States Attorney’s Office and the Consumer Protection Branch are part of the Transnational Elder Fraud Strike Force, which investigates and prosecutes scams targeting older adults and are run by transnational criminal organizations. These scams include mass mailing, telemarketing, and tech support scams.

If you fall victim to a gift card scam, immediately call the gift card issuer and ask them to freeze the gift card numbers involved – and save your receipt and the gift card.  Then, report the crime to the FBI’s Internet Crime Complaint Center at www.ic3.gov,  the Federal Trade Commission at https://reportfraud.ftc.gov/#/ or (877) 382-4357, and your local police department.

          LOS ANGELES – The former musical director of “The Arsenio Hall Show” was sentenced today to 27 months in federal prison for embezzling nearly $1 million from a charity concert intended to raise money for children made homeless by wars.

          Robin DiMaggio, 49, of Woodland Hills, was sentenced by United States District Judge Dolly M. Gee, who described his actions as “a despicable crime of sheer greed.” Judge Gee also ordered DiMaggio to service one year of home confinement once he has finished serving his prison sentence. A restitution hearing in this case will be scheduled in the coming months.

          During the summer of 2016, DiMaggio promised to help the Bulgaria-based non-profit organization Peace for You Peace for Me Foundation organize a concert in the Bulgarian capital of Sofia. The concert was intended to raise money to help children who lost their homes because of global conflicts.

          DiMaggio, a professional drummer who also had served as a musical director for the United Nations, offered to get world-famous musicians and celebrities to perform at the concert, and he claimed to need money to book these artists. Relying on these promises, the foundation’s financial sponsor wired nearly $1 million to DiMaggio.

          Rather than use the money for the charity concert, DiMaggio instead used it to fund his personal lifestyle and pay his debts. Within weeks of the last wire transfer of $750,000, he used $251,370 of the funds to purchase a Calabasas home for his ex-wife. DiMaggio also bought his mother a $35,000 car and bought his son a $24,000 car. He also wired $150,000 of the funds to a bank account in the name of his company, DiMagic Entertainment Inc. None of the transfers was sent to artists or their management in connection with the charity concert in Bulgaria.

          “The concert never happened and this much-needed money was never raised for this charitable cause,” prosecutors wrote in their sentencing memorandum. “[DiMaggio] lined his own pockets at the expense of [the foundation’s financial sponsor] and the children that would have benefited from the concert’s proceeds.”

          The sponsor later sued DiMaggio in Los Angeles Superior Court, where DiMaggio continued to lie in court proceedings that someone else had stolen the money. DiMaggio also forged bank documents and deleted correspondence while this civil litigation was spending, and he ultimately filed for Chapter 7 bankruptcy protection. In his September 2017 bankruptcy filing, DiMaggio made false statements that he had not made alimony payments or given any gifts worth more than $600 to any person in the prior two years.

          The FBI investigated this matter.

          This case was prosecuted by Assistant United States Attorney Poonam G. Kumar of the Major Frauds Section.

          LOS ANGELES – The former president of a Colton-based labor union was sentenced today to 144 months in federal prison for stealing nearly $800,000 from the union’s health plan trust fund, which he used to pay for personal expenses including legal bills and a car loan for his son’s sports car.

          John S. Romero, 74, of Loma Linda, was sentenced by United States District Judge Virginia A. Phillips, who scheduled an April 5 hearing to determine the amount of restitution Romero owes to his victims.

          At the conclusion of a five-day trial in February, a jury found Romero guilty of one count of conspiracy, 12 counts of theft in connection with health care, and one count of making a false statement to a government agency.

          Romero appointed himself president of United Industrial Services Workers of America (UISWA) and trustee of the UISWA health plan trust fund. Money paid into the fund was supposed to be used exclusively for health care benefits of its participants. Instead, Romero stole the union’s health funds for the benefit of himself and his immediate family.

          In furtherance of his scheme, Romero appointed a sham trustee who had no prior experience with unions. He also actively misled the third-party administrators of the health plan into making improper payments from the trust fund.

          From 2008 to 2014, Romero embezzled health plan funds to pay a $110,000 personal civil judgment against himself and his son, John J. Romero, 55, also of Loma Linda. He also embezzled $40,000 to pay criminal defense lawyers who represented Romero in a separate case. Romero funneled more than $310,000 to himself by disguising the funds as rent payments on two properties he owned and held under a shell company.

          In addition, he stole more than $300,000 in union health plan money to make “salary” payments to his family, even though none of his family members ever worked for the plan. He also used plan funds to pay off a $25,000 loan on his son’s Ford Mustang Shelby GT500 sports car.

          Romero also filed a false financial report with the U.S. Department of Labor in which he concealed the existence of more than $100,000 in union receipts and disbursements that Romero held in a secret bank account and from which he made regular payments to his mistress.

          Romero advanced his scheme by appointing his son as the secretary and treasurer of the union. He later appointed his ex-wife, Evelyn Romero, 71, as the UISWA president and trustee in 2010, shortly before Romero began serving a two-year federal prison sentence for making false statements to federal officials while he was president of a different labor union. Romero’s son, ex-wife, and daughter, Danae Romero, 42, of Loma Linda, pleaded guilty to criminal charges in this case. Evelyn and Danae Romero each were sentenced to two years’ probation in this case. John J. Romero was sentenced to time served in prison, plus three years of supervised release.

          At a September 9 hearing, Judge Phillips ordered this case’s other defendants to pay restitution in the following amounts: Evelyn Romero – $316,502; John J. Romero – $273,350; and Danae Romero – $200,552.

          “To execute this scheme, (John S. Romero) manipulated others, including his own family members,” prosecutors wrote in their sentencing memorandum. “He employed sophisticated means in furtherance of the scheme, including by diverting trust money through a Nevada shell company to hide his theft. He lied to brokers and administrators. And he bullied and pressured those around him to get his way, thereby intimidating and abusing those who trusted him most.”

          This case was investigated by the U.S. Department of Labor, Office of Inspector General; the U.S. Department of Labor, Employee Benefits Security Administration; and the U.S. Department of Labor, Office of Labor Management Standards.

          This matter was prosecuted by Assistant United States Attorneys Susan S. Har and Aaron B. Frumkin of the General Crimes Section.

RIVERSIDE, California – A former detective with the Murrieta Police Department pleaded guilty today to a federal criminal charge for soliciting bribes from a Colombian art dealer who was seeking immigration benefits in the United States.

Paul John Gollogly, 74, of Temecula, pleaded guilty to one count of bribery.

According to his plea agreement, Gollogly began working for the Murrieta Police Department (MPD) in March 2013 to lead its purported anti-money laundering program. In this role, he handled and directed confidential informants (CI) registered with the department, including non-U.S. citizens who needed authorization from the U.S. government to enter and work in the United States.

In April 2013, Gollogly registered an individual – identified in court documents as “Person A” – as a CI with MPD. Person A was a Colombian national and a wealthy art dealer who had significant business interests in Colombia, the United States, Mexico, Panama, and Spain. Person A owned art galleries in New York and Spain, as well as a hotel in Mexico.

While previously employed at a police department in Florida, Gollogly had registered Person A as a CI with that police department. Person A was neither a U.S. citizen nor had legal permanent resident status, commonly known as holding a “green card.”

From April 2013 to February 2020, Gollogly helped Person A obtain various immigration benefits, including authorization from the U.S. Department of Homeland Security (DHS) to allow Person A to enter and work in the United States for one year at a time and facilitation of Person A’s physical entry into the United States. Gollogly also attempted to assist with Person A’s permanent residency application.

Gollogly wrote letters of support to DHS for Person A’s approvals to enter the United States, falsely stating that Person A’s work as a CI resulted in arrests, seizures of large amounts of money and drugs, and additional investigations. In fact, the information Person A provided MPD resulted in none of these things.

Also, on at least 25 occasions, Person A texted Gollogly to inform him of Person A’s arrival in the United States, including Person A’s arrival date and location, and flight information in case Person A got held up at a port of entry by immigration authorities. On at least five occasions, after receiving notice of Person A’s arrival at the San Ysidro Port of Entry at the U.S.-Mexico border, Gollogly personally drove to San Ysidro to meet Person A and facilitate Person A’s incident-free reentry into the United States.

In exchange for this help with immigration authorities, Gollogly solicited and received benefits from Person A, including:



receiving tickets to art shows in New York and Miami;

the hiring of a Gollogly family friend to work at one of Person A’s businesses and making efforts to help a Gollogly relative secure a job with a major philanthropist, whom Person A knew personally;

arranging for hotel stays for two close Gollogly relatives and another Gollogly friend at Person A’s hotel in Mexico, including one July 2014 stay in which – at Gollogly’s request – Person A had wine and flowers inside the hotel room of one of the close relatives;

paying four months’ rent in 2018 and 2019 for a Gollogly relative who was living in New York City; and

paying for dinner at an upscale New York restaurant for Gollogly and four of his relatives in December 2019.



United States District Judge Sunshine S. Sykes scheduled a January 19, 2024 sentencing hearing, at which time Gollogly will face a statutory maximum sentence of 10 years in federal prison. Prosecutors have agreed to seek no more than 18 months’ imprisonment for Gollogly.

The FBI investigated this matter, with assistance from the U.S. Immigration and Customs Enforcement, Office of Professional Responsibility.

Assistant United States Attorneys Julius J. Nam of the Public Corruption and Civil Rights Section and Courtney N. Williams of the Riverside Branch Office are prosecuting this case.

          WASHINGTON - With the annual tax return filing deadline almost upon us, the vast majority of taxpayers are complying with their legal obligation to file accurate returns and pay the taxes that they owe. However, there are taxpayers who attempt to evade paying their fair share of taxes, file false returns, fail to file returns or seek to obstruct the Internal Revenue Service (IRS)’s efforts to assess or collect monies that are due. The Justice Department’s Tax Division warns taxpayers who attempt to violate the federal tax laws that they face prosecution, jail, restitution and significant monetary penalties.

          “Most Americans follow the tax law and rightfully expect that each of their fellow citizens will do the same,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Yet every year some taxpayers try to take a different path – they hide money offshore, declare only a small portion of their income, make up bogus deductions and lie to the IRS if they are caught. With this year’s filing deadline approaching, these taxpayers should stop, reverse course and simply pay what they owe. As the Justice Department’s recent criminal prosecutions make clear, the consequences for willful violations are severe: jail time and substantial monetary penalties.”

          “The majority of Americans file their taxes without issue and they would tell you that they want strong enforcement of the tax laws to ensure that we are all paying our fair share,” said Chief Richard Weber of IRS Criminal Investigation. “For those thinking about intentionally evading the tax laws – IRS-CI has the finest financial investigators and are trained to follow the money trail wherever it may lead.”

          Over the past year, the Tax Division and the U.S. Attorney’s Offices have worked closely with the IRS and other law enforcement partners to enforce the nation’s tax laws fully, fairly and consistently through criminal investigations and prosecutions across the country, as evidenced by the sampling of recent convictions listed below. These enforcement efforts continue year-round.

Recent Tax Evasion and Filing False Tax Returns Prosecutions:



In March, Denver Nichols, a Labadie, Missouri roofing contractor, pleaded guilty to filing false 2007 and 2008 income tax returns. Nichols operated his roofing business under the name Eagle Roofing Co. He late filed false 2007 and 2008 returns that underreported his business’s gross receipts by approximately $959,500 and $794,680.





In March, Stephen Leib, a Philadelphia, Pennsylvania tech business owner, pleaded guilty to tax evasion. Leib owned New Wave Logistics Inc. He evaded more than $800,000 in taxes by cashing a significant amount of his business’s gross receipts at a check cashing facility, lying to his accountant about the total amount of income he earned and filing false tax returns.





In March, Jeffrey Nowak, a Las Vegas, Nevada liquor storeowner, was sentenced to serve 41 months in prison for tax evasion and conspiring to defraud the United States. Nowak conspired with Ramzi Suliman, with whom he jointly owned and operated liquor stores in Las Vegas. Nowak and Suliman skimmed cash receipts and provided their accountant with a phony set of books that omitted nearly $4 million in cash receipts.





In February, Jose Echeverria, a Chelan Falls, Washington businessman, pleaded guilty to filing a false individual income tax return. Echeverria owned and operated a produce sales business. He underreported his income by approximately $564,292.





In December 2016, James and Mardeen Perin, former owners of Sully’s Pub in West Des Moines, Iowa, pleaded guilty to aiding and assisting in filing a false tax return. The Perins filed a false 2013 tax return that did not report cash that they earned through their business.



Recent Failure to File Tax Returns Prosecutions:



In March, James Burton and Lucretia Pecantte-Burton, two Louisiana attorneys, pleaded guilty to failing to file individual income tax returns. Burton and Pecantte-Burton were partners of the law firm Pecantte-Burton & Burton (PB&B) and regularly received cash payments. They also had a partnership interest in a tax return preparation business. Burton and Pecantte-Burton did not file 2007 through 2009 income tax returns.





In February, Samuel Frazier, a Gulfport, Mississippi businessman, was sentenced to serve 12 months in prison for failing to file an individual income tax return. Frazier owned two companies in Gulfport: Frazier Fire Systems LLC and EZ Haul Demolition and Construction LLC. Frazier failed to file a 2009 tax return despite earning more than $618,253 in income.





In December 2016, John Raschella, a former Parma, Ohio resident, was convicted at trial for failing to pay more than $1 million in income taxes, interest and penalties for 1995, 1996 and 1998 through 2012 on income earned as an insurance salesman. He also failed to timely file income tax returns between 1989 and 2012.





In June 2016, Carlos Cortes, a San Antonio, Texas artist, was sentenced to serve 12 months in prison for failing to file an individual income tax return. Cortes did not file tax returns for 2006 through 2009, despite earning more than $1.3 million in income during this time.



Recent Prosecutions Involving the Use of Nominee Entities and Offshore Bank Accounts to Hide Assets and Income:



In March, Casey Padula, a Port Charlotte, Florida owner of Demandblox, a marketing and information technology business, pleaded guilty to conspiracy to commit tax and bank fraud. Padula conspired to move more than $2.5 million to offshore accounts in Belize and disguised them as business expenses in the corporate records. Padula used the funds to pay for personal expenses and purchase significant personal assets.





March, Masud Sarshar, a Los Angeles, California businessman, was sentenced to serve 24 months in prison for hiding more than $23.5 million in offshore bank accounts. Sarshar maintained several undeclared bank accounts at Israeli banks, both in his name and in the names of entities that he created. Between 2006 and 2009, Sarshar diverted more than $21 million in untaxed gross business income to those undeclared accounts and earned more than $2.5 million in interest income. Sarshar reported none of this income on his individual and corporate tax returns.





In January, three Orange County, California residents pleaded guilty to hiding millions of dollars in secret foreign bank accounts. Dan Farhad Kalili, David Ramin Kalili and David Shahrokh Azarian, willfully failed to file legally required reports, commonly known as FBARs, disclosing their bank accounts in Switzerland and Israel.





In January, Peggy and John DeYoung, a Missoula, Montana couple, pleaded guilty to conspiring to defraud the United States. The DeYoungs had not filed an income tax return since 1998. Peggy DeYoung earned income through her ownership interest in two companies that owned Southern California mobile home parks. The DeYoungs also established a number of purported trusts. They owned bank accounts in the names of these trusts using fabricated taxpayer identification numbers and paid personal expenses from the accounts, causing a tax loss of $376,350.



Recent Prosecutions of Attempts to Obstruct IRS Efforts to Assess and Collect Taxes:



November 2016, Richard Thomas Grant, a Point Richmond, California man, was sentenced to serve 33 months in prison. Grant stopped filing income tax returns and paying income taxes despite earning significant income as a partner with an engineering company. Grant attempted to frustrate IRS collection and audit efforts by filing lawsuits against the IRS. To conceal his income, Grant used prepaid debit cards and money orders to pay personal expenses.





In November 2016, Steven Headden Young of St. Petersburg, Florida, was sentenced to serve 21 months in prison. Young evaded a substantial portion of his individual income taxes for 2007 through 2011 and interfered with an IRS audit. He fabricated a letter from the IRS to a bank directing the bank to send subpoenaed records to a bogus address.





In October 2016, Henti Lucian Baird, a Greensboro, North Carolina resident and former IRS revenue officer, pleaded guilty. Baird filed tax returns each year but has not paid since at least 1998. Baird created nominee bank accounts to hide hundreds of thousands of dollars from the IRS, submitted false information to the investigating IRS officer regarding these accounts and transferred funds from nominee accounts to avoid impending IRS levies.





June 2016, Paul Tharp, a North Carolina man, was sentenced to serve 21 months in prison. Tharp failed to file tax returns for 2003 through 2006, and the IRS assessed income tax against him for those years. Tharp attempted to evade payment of his tax debt by filing false disclosures with the IRS, omitting businesses that he owned as well as bank accounts and rental income.



          More information about the Tax Division’s criminal and civil enforcement efforts in these and other areas is on the division’s website. The IRS website also has information about how to report tax fraud.

          LOS ANGELES – A Santa Barbara man who allegedly stole approximately $12 million from victims who thought their investments would be used to purchase annuities today faces new charges of failing to pay over $3 million in federal income tax and concealing bank accounts in Monaco used to hide ill-gotten gains.

          A superseding indictment filed today in United States District Court charges Darrell Arnold Aviss, 64, with three counts of tax evasion, six counts of failing to report foreign bank and financial accounts, and one count of aggravated identity theft.

          Aviss was arrested last June and initially charged with five counts of wire fraud and six counts of money laundering for allegedly operating a Ponzi scheme that promised to invest victims’ money in annuities from Swiss insurance companies. The original 11 charges are included in today’s superseding indictment that alleges Aviss used none of the victim funds to purchase annuities.

          Aviss, who was jailed for about three months before a judge ordered him released in September on a $200,000 bond, is currently scheduled to go on trial July 26. He will be directed to appear for an arraignment on the superseding indictment in the coming weeks.

          Aviss allegedly operated the fraud scheme from at least 2012 through mid-2020, soliciting money from people who wanted to purchase annuities from insurance companies based in Switzerland. Even though he arranged for the victims to receive statements showing the value of the annuities were increasing, the indictment alleges Aviss did not use the victims’ money to purchase annuities. Victims, most of whom were over the age of 60, gave Aviss more than $12 million, with most of that money coming from just one victim, according to court documents. Some money was paid back to victims to keep the scheme running.

          Instead of purchasing annuities, Aviss allegedly used the victims’ money for his own purposes and to support his lavish lifestyle, which included luxury cars, expensive watches and trips to Monaco.

          The superseding indictment alleges that Aviss also defrauded the United States by failing to file tax returns for 2014, 2015 and 2016 and failing to pay any income taxes for those years. Aviss allegedly evaded paying more than $3 million in income taxes.

          Aviss also failed to file with the Department of the Treasury Reports of Foreign Bank and Financial Accounts for the years 2015 through 2020 relating to accounts he controlled in Monaco. The superseding indictment alleges that he transferred victims’ money to these offshore accounts, one of which was established with information from an identity theft victim.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          If convicted of the charges in the superseding indictment, Aviss would face decades in federal prison. For example, each of the five counts of wire fraud carries a statutory maximum sentence of 20 years in federal prison.

          The FBI and IRS Criminal Investigation are conducting the investigation in this matter.

          Assistant United States Attorney Monica E. Tait of the Major Frauds Section is prosecuting this case.

          LOS ANGELES – A Santa Clarita resident who invested in real estate and sold “coupon bonds” that promised regular interest payments on top of principal repayment was sentenced today to 77 months in federal prison for defrauding investors out of more than $1.7 million.

          Matthew Skinner, 45, was sentenced by United States District Judge Percy Anderson, who also ordered him to pay $1,744,946 in restitution.

          Skinner pleaded guilty on June 1 to one count of securities fraud.

          In 2014, Skinner founded a company called Empire West Equity Inc. and later established another business named Simple Growth LLC. Skinner used social media platforms such as Facebook and YouTube to promote himself, falsely claiming to be an experienced and successful real estate investor with more than $200 million in deals under his belt.

          After Empire West experienced financial troubles – Skinner was unable to pay his staff and investors – he established Simple Growth in 2018 and falsely told investors who purchased Simple Growth coupon bonds “that their money would be used to purchase real estate that [Skinner] and Empire West would develop and resell at a profit,” according to court documents.

          Skinner did not intend to purchase, develop or resell real estate, and that he instead used investor funds to pay older investors, his employees and himself. Instead, Skinner used investor funds from those entities and accounts to pay for personal trips, his mortgage, his utility bills, cosmetic surgery, and alimony payments to his ex-wife.

          Simple Growth raised approximately $1,744,946 from more than 20 investors – none of whom received any of their money back.

          “Several of the victims were elderly and were seeking safe investment opportunities,” prosecutors argued in a sentencing memorandum. “Several of the victims described how [Skinner} repeatedly lied to them and made-up excuses of why he was unable to make the quarterly interest payments.”

          The FBI investigated this case.

          Assistant United States Attorney Jeff Mitchell of the Major Frauds Section prosecuted this case.

          LOS ANGELES – A Santa Clarita resident who invested in real estate and sold “coupon bonds” that promised regular interest payments on top of principal repayment has agreed to plead guilty to a federal criminal charge for defrauding investors out of more than $1.7 million, the Justice Department announced today.

          Matthew Skinner, 45, who in 2014 founded a company called Empire West Equity, Inc. and later established Simple Growth, LLC, was charged today with securities fraud in a one-count information filed in United States District Court.

          Federal prosecutors today also filed a plea agreement in which Skinner agreed to plead guilty to the offense and admitted he fraudulently sold securities.

          Skinner used social media platforms such as Facebook and YouTube to promote himself, falsely claiming to be an experienced and successful real estate investor with more than $200 million in deals under his belt, according to court documents.

          After Empire West experienced financial troubles – Skinner was unable to pay his staff and investors – he established Simple Growth in 2018 and falsely told investors who purchased Simple Growth coupon bonds “that their money would be used to purchase real estate that [Skinner] and Empire West would develop and resell at a profit,” according to the plea agreement.

          Skinner admitted that he did not intend to purchase, develop or resell real estate, and that he instead used investor funds to pay older investors, his employees and himself.

          Skinner “used investor funds from those entities and accounts to pay for personal trips, his mortgage, his utility bills, cosmetic surgery, and alimony payments to his ex-wife,” he acknowledged in the plea agreement.

          Simple Growth raised approximately $1,744,946 from more than 20 investors – none of whom received any of their money back.

          The securities fraud charge against Skinner carries a statutory maximum penalty of 20 years in federal prison.

          Skinner has agreed to surrender to federal authorities and make his initial court appearance on May 25.

          The FBI conducted the investigation into Skinner.

          Assistant United States Attorney Jeff Mitchell of the Major Frauds Section is prosecuting this case.

          LOS ANGELES – A Corona man pleaded guilty today to federal criminal charges in connection with a scheme to submit false loan applications that brought him more than $6.6 million in Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) funds.

          Muhammad Noor Ul Ain Atta, 39, pleaded guilty to a two-count information charging him with wire fraud and laundering of monetary instruments.

          According to his plea agreement, Atta submitted 11 fraudulent PPP loan applications for seven of his shell companies. The fraudulent PPP loan applications misrepresented the number of employees and the average monthly payroll expenses of Atta’s companies, and falsely certified he would use the loan proceeds for permissible business purposes. Atta also submitted false tax and payroll documentation in support of his loan applications. In total, Atta received $6,643,540 in loan proceeds even though none of his companies were legitimate recipients of relief funds at that time. Atta then laundered loan proceeds to bank accounts in the United States and Pakistan.

          The plea agreement details one PPP loan in which Atta sought $1,267,714 for a company called Envisioning Future Inc. The loan application falsely represented that

          Envisioning Future had 73 employees and falsely certified Envisioning Future would use the loan proceeds for permissible business purposes, including the payment of payroll and other business-related expenses. The fraudulent application filed on April 10, 2020 was supported by falsified federal tax returns and false payroll data.

          About one month later, Envisioning Future received $1,267,140 in loan proceeds, and the following day Atta wired most of the money to his mother’s bank account. Then in June 2020, Atta wired $1.3 million – the majority of which came from the Envisioning Future PPP loan – to a financial institution in Islamabad, Pakistan. According to the plea agreement, the wire transfer details included a note that the wire was “family support.”

          United States District Judge Percy Anderson scheduled an October 17 sentencing hearing, at which time Atta will face a statutory maximum penalty of 20 years in prison for each count.

          Acting United States Attorney Stephanie S. Christensen, Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division, Acting Special Agent in Charge Cory Nootnagel of the Office of the Inspector General for the Board of Governors of the Federal Reserve System and Bureau of Consumer Financial Protection, Special Agent in Charge Ryan Korner of IRS Criminal Investigation, Special Agent in Charge Weston King of the Small Business Administration – Office of Inspector General, and Special Agent in Charge Rod Ammari of the Treasury Inspector General for Tax Administration made the announcement.

          Assistant U.S. Attorney Adam P. Schleifer of the Major Frauds Section and Trial Attorneys Jennifer L. Bilinkas and Matthew F. Sullivan of the Justice Department’s Fraud Section are prosecuting the case.

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

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

LOS ANGELES – An Orange County man was sentenced today to 54 months in federal prison for fraudulently obtaining $5 million in COVID-relief loans for his sham businesses, then used the money on himself, including purchasing Ferrari, Bentley and Lamborghini cars.

Mustafa Qadiri, 42, of Irvine, was sentenced by United States District Judge Josephine L. Staton, who also fined him $20,000 and ordered him to pay $2,861,050 in restitution.

Qadiri pleaded guilty in July 2021 to one count of bank fraud, one count of aggravated identity theft, and one count of money laundering.

According to court documents, Qadiri claimed to have operated four Newport Beach-based companies, none of which were in operation: All American Lending Inc., All American Capital Holdings Inc., RadMediaLab Inc., and Ad Blot Inc.

In May and June of 2020, Qadiri submitted false and fraudulent Paycheck Protection Program (PPP) loan applications to three banks on behalf of those companies. The false information Qadiri submitted included the number of employees to whom the companies paid wages, altered bank account records with inflated balances, and fictitious quarterly federal tax return forms. Qadiri also used someone else’s name, Social Security number and signature to fraudulently apply for one of the loans.

PPP loans were intended by Congress to provided financial support to businesses suffering under the weight of the COVID-19 pandemic’s economic fallout.

Relying on this false information, the banks funded the PPP loan applications and transferred approximately $5 million to accounts Qadiri controlled. Qadiri used the fraudulently obtained PPP loan proceeds for his own personal benefit, including for expenses prohibited under the requirements of the PPP program, such as the purchase of luxury vehicles, lavish vacations, and the payment of his personal expenses.

Federal agents seized the Ferrari, Bentley and Lamborghini cars that Qadiri purchased with the fraudulently obtained PPP loans, along with $2 million in ill-gotten gains from his bank account.

Homeland Security Investigations, the Small Business Administration Office of Inspector General, the FBI and IRS Criminal Investigation investigated this matter as part of the El Camino Real Financial Crimes Task Force.

Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office prosecuted this case.

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

          LOS ANGELES – A Santa Clarita Valley man pleaded guilty today to a federal criminal charge that he fraudulently obtained more than $1 million in Paycheck Protection Program (PPP) loans for his sham companies by submitting fake tax documents and fraudulent employee information.

          Raymond Magana, 40, of Santa Clarita, pleaded guilty to one count of fraud in connection with major disaster or emergency benefits.

          According to his plea agreement, in May and June 2020, Magana submitted to banks applications for PPP loans that contained false statements about the number of employees and the amount of payroll expenses. Specifically, on June 3, 2020, Magana submitted a PPP loan application to Customer’s Bank for $940,416 for The Building Circle LLC, a company registered in his name. In that application, Magana falsely listed that the company’s average monthly payroll was $376,167, and it employed 40 workers. Magana admitted to submitting fraudulent tax documents that reported $4,402,000 in annual wages paid to 40 employees in 2019 and $852,000 paid in employee wages during the first quarter of 2020.

          Both IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to an affidavit filed with a criminal complaint in this case.

          Investigators later determined that the Pico Rivera address given as The Building Circle’s headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, the loan application was approved and $940,416 was funded to Magana’s shell company on June 4, 2020, the affidavit states.

          Magana also admitted that he applied for and received a PPP loan of $360,415 for Forward Builders LLC, another shell company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.

          When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he told the bank “We have all the documents, we got approved,” and he refused to agree to return the improperly obtained PPP funds, the affidavit states. The bank nonetheless kept the $940,416 in defendant’s bank account frozen and defendant could not access it, the plea agreement states.

          The actual loss from the two loans that were approved and disbursed was $360,415, according to the plea agreement.

          United States District Judge Stanley Blumenfeld Jr. has scheduled a May 11 sentencing hearing, at which time Magana will face a statutory maximum sentence of 30 years in federal prison.

          The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April 2020, Congress authorized more than $300 billion in additional PPP funding. In December 2020, Congress authorized $250 billion in additional PPP funding.

          The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set period and use at least a certain percentage of the loan towards payroll expenses.

          In December 2020, Steven R. Goldstein, 36, of Northridge, Magana’s business partner, pleaded guilty to a single-count information charging him with fraud in connection with major disaster or emergency benefits. Goldstein admitted that he fraudulently obtained $655,000 in PPP loans for his companies by submitting false tax documents and fake employee information. Goldstein’s sentencing hearing is scheduled for March 30.

          IRS Criminal Investigation and the Small Business Administration Office of Inspector General investigated this case.

          Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office is prosecuting this case.

          LOS ANGELES – A South Bay man was charged today in a federal grand jury indictment alleging he used the “Desilu” name – the same name used by Lucille Ball and Desi Arnaz’s television production company famous for shows such as “I Love Lucy” and “Star Trek” – to dupe investors into giving him money for sham investments, money that was actually used for personal expenses that included trips to Las Vegas.

          Charles Hensley, 68, of Redondo Beach, is charged with 11 counts of wire fraud and one count of aggravated identity theft. He will be summonsed into United States District Court for an arraignment in the coming weeks.

          According to the indictment returned today, from August 2017 to May 2018, Hensley successfully pitched investments in companies he owned, including Desilu Studios Inc. and Migranade Inc., which he operated out of offices in Manhattan Beach and other locations in Southern California. While Hensley claimed his businesses were real and successful, in fact, the indictment alleges, they were little more than shell corporations used as part of an investment scam.

          In 2016, Hensley began using the name Desilu, which was similar to the name Desilu Productions Inc., the company that produced classic television shows during the 1950s and 1960s. He then claimed he was making new content for his company, Desilu Studios.

          Hensley allegedly told investors he was extremely wealthy and was backing Desilu Studios with his personal funds. In fact, according to the indictment, Hensley had few assets, and he repeatedly bounced checks and overdrew bank accounts to get cash and pay expenses.

          Hensley also allegedly provided victim-investors false and misleading valuation letters that purported to show that Desilu Studios was valued at more than $11 billion and Migranade at more than $50 million. In fact, the indictment alleges, the companies had little to no assets and were worth nowhere near the represented value.

          In addition to these false statements, Hensley allegedly misrepresented that his companies had acquired valuable intellectual property, distribution agreements, subsidiaries and development rights, and that they were actively developing projects and bringing products to market, including new film and television projects using the Desilu name. In reality, Hensley did not own the intellectual property and other assets he said he did, and he used misleading representations regarding new film and television productions he was supposedly producing to dupe victim-investors into giving him money.

          The indictment further alleges Hensley falsely represented that Desilu Studios was about to go public and that the company’s stock was worth more than its face value and more than investors were paying and would increase in value following its imminent initial public offering. In fact, according to the indictment, none of this was accurate and Hensley stole someone’s identity to list as Desilu Studio’s chief financial officer in offering materials.

          The overall scheme allegedly impacted multiple victim-investors, including some who wired the approximately $331,000 identified in the wire fraud counts. In addition to these victims, Hensley allegedly also targeted multiple companies in the entertainment industry. In this part of the scheme, Hensley allegedly used some of the same misrepresentations to convince owners and executives to sell their companies to him in exchange for Desilu Studio’s stock that, unbeknownst to them, was worthless. The indictment further alleges that Hensley touted these purchases to the individual investors, further misleading them about his purported acquisitions of valuable assets.

          If convicted, Hensley would face a statutory maximum sentence of 20 years in federal prison for each wire fraud count plus a mandatory two-year prison sentence for the aggravated identity theft count.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          The FBI and IRS Criminal Investigation investigated this matter.

          Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section is prosecuting this case.

          LOS ANGELES – A former California lawyer has agreed to plead guilty to a fraud charge, admitting he lied to clients about winning cases and deceiving them with bogus documents, some with the forged signatures of judges.

          Matthew Charles Elstein, 51, of Redondo Beach, agreed to plead guilty to one count of wire fraud in a plea agreement filed this afternoon in United States District Court. An arraignment in this case is scheduled for October 28.

          Elstein was a licensed California attorney from December 1994 until the State Bar of California ordered him inactive in March 2019. According to his plea agreement, from June 2015 to July 2018, Elstein engaged in a scheme to defraud his clients by claiming he obtained favorable legal resolutions for them, when in fact the favorable resolutions had never been obtained. In many cases, Elstein never initiated any legal action. Elstein also admitted to misappropriating funds by informing victims their fees were going into his client trust account, when in fact he directed them to deposit money into his personal bank account.

          For example, in June 2016, Elstein falsely informed a corporate client that it had won a $52 million default judgment. He emailed the victim-client a fake court order that contained a judge’s forged signature. Having never actually filed a lawsuit on his client’s behalf, Elstein further misrepresented that the case was improperly under seal due to a United States Department of Justice investigation. To further his fraudulent scheme, Elstein presented his clients with a fake settlement agreement between the client and the United States Attorney’s Office for the Eastern District of California. It was not until the company reached out to that United States Attorney’s Office to authenticate the settlement agreement that it discovered that the agreement was a forgery.

          Elstein also admitted to fabricating depositions in a federal case in Washington state in September 2015. Because these depositions were fake, no one appeared for them. Nonetheless, Elstein had a court stenographer present and made a formal record of the nonappearances. Elstein also billed the client for attending the fake depositions and his travel expenses to Seattle.

          Elstein also falsely told the victim that he had obtained a $4.25 million judgment in the victim’s favor and provided the victim with a fake court order containing the forged signature of a judge. When the victim traveled to Seattle to collect the judgment, he was informed by the court that no such case existed.

          In total, Elstein’s conduct resulted in losses of at least $358,855 to his victims.

          Upon entering his guilty plea in this case, Elstein will face a statutory maximum sentence of 20 years in federal prison.

          The FBI investigated this matter.

          Assistant United States Attorney Agustín D. Orozco of the Public Corruption and Civil Rights Section is prosecuting this case.

          LOS ANGELES – An Orange County man has agreed to plead guilty to federal criminal charges that he fraudulently obtained more than $5 million in COVID-relief loans for three sham companies.

          Raghavender Reddy Budamala, 35, of Irvine, agreed to plead guilty to one count of bank fraud and one count of money laundering in a plea agreement filed today in United States District Court. Budamala, who has agreed to forfeit his ill-gotten gains to the government, is scheduled to enter his guilty plea on June 21 before United States District Judge Otis D. Wright II.

          According to his plea agreement, in 2019 Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic, and the enactment of federal programs designed to address the economic fallout from the pandemic, Budamala submitted to the Small Business Administration seven applications for pandemic-relief loans under the Paycheck Protection Program and Economic Injury Disaster Loan.

          As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.

          The listed addresses for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses.

          The SBA and the banks funded six of the loans and disbursed $5,151,497. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.

          Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Eagle Rock, the purchase of a $597,585 property in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account.

          Upon entering his guilty plea, Budamala will face a statutory maximum sentence of 40 years in federal prison.

          Budamala has been in federal custody since his arrest on February 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing. A criminal complaint was filed against him on February 24.

          IRS Criminal Investigation, the FBI, and the Small Business Administration’s Office of Inspector General investigated this matter.

          Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section is prosecuting this case.

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

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

          LOS ANGELES – Law enforcement today arrested eight individuals named in a federal grand jury indictment charging them with creating nonexistent businesses and then claiming more than $1.1 million in unemployment benefits for purported employees of those fake businesses.

          The nine-count indictment unsealed today alleges a three-year conspiracy to cheat the state’s unemployment insurance program through the creation of bogus cleaning services and boutique stores, sometimes using the names of prison inmates as phony employees with which to collect the benefits.

          The indictment charges each of the eight defendants with one count of conspiracy to commit wire fraud and one count of aggravated identity theft. Those named in the indictment are:

Donna Givens, 58, of the Gramercy Park area of the City of Los Angeles;

Catrina Gipson, 44, of Moreno Valley, who is Givens’ niece;

Evelyn Taylor, 36, of Gramercy Park, a daughter of Givens;

Laron Taylor, 34, of Buena Park, a son of Givens;

Latrice Taylor, 37, of Buena Park, a daughter of Givens;

Raschell Taylor, 30, of San Bernardino, a daughter of Givens;

Bianka Logie, 45, of Moreno Valley; and

Vernisha Jolivet, 27, of Indianapolis.

          Seven of the defendants are expected to be arraigned this afternoon in United States District Court. Jolivet was arrested in Indianapolis and will be making a court appearance in Indiana on Wednesday.

          From February 2013 until July 2016, the defendants allegedly registered fake businesses with the California Employment Development Department, the administrator of the federal unemployment insurance benefit program for the state. The names of the bogus companies included Latasha’s Devining Cleaning Service, Charm Boutique, and Infinite Cleaning Service, according to the indictment. Givens, Laron Taylor, and Raschell Taylor allegedly opened and maintained post office boxes responsible for receiving the fake businesses’ mail.

          Logie, Jolivet, and Evelyn Taylor filed claims for unemployment insurance in their own names, claiming unemployment from the fake businesses created by the co-conspirators, the indictment alleges. Other times, the conspirators allegedly filed unemployment insurance claims using the names of other people, including prison inmates.

          After being supplied California EDD-funded debit cards, the defendants allegedly withdrew funds from the cards that were in the name of other claimants. In total, the defendants fraudulently obtained approximately $1,106,282 in unemployment insurance benefits, according to the indictment.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          If convicted of all charges, each defendant would face a statutory maximum sentence of 22 years in federal prison.

          This matter was investigated by the United States Department of Labor, Office of Inspector General and California EDD Investigation Division, with assistance from the United States Postal Inspection Service and U.S. Marshals Service.

          This case is being prosecuted by Assistant United States Attorney Puneet V. Kakkar of the International Narcotics, Money Laundering, and Racketeering Section.

LOS ANGELES – An entertainment industry accountant pleaded guilty today to a felony charge for lying to federal law enforcement officials about his role in laundering illicit proceeds from an illegal gambling operation run by a former minor-league baseball player and which involved professional athletes.

William Eric Fulton, 59, of Agoura Hills, pleaded guilty to one count of making false statements.

According to his plea agreement, Fulton and his company provided bookkeeping, accounting, and tax preparation services for Wayne Joseph Nix, 46, of Newport Coast, a former minor-league baseball player who for nearly 20 years ran an illegal bookmaking business.

Beginning no later than 2011, Fulton was aware that Nix ran an illegal gambling business. Nonetheless, Fulton knowingly laundered Nix’s illegal gambling proceeds by continuing to provide financial services to Nix and providing access to the financial system. Specifically, Fulton continued to transfer money between accounts, issue checks and wires to Nix’s gambling clients who won large bets, and helped Nix obtain bank loans to facilitate the gambling business. Between 2010 and 2020, Fulton charged Nix approximately $336,645 in professional fees for his financial services.  

Fulton also admitted in his plea agreement that on three separate occasions from March 2011 to October 2019 he provided personal loans to Nix totaling $1.25 million, which allowed Nix to pay his gambling clients when Nix needed rapid access to funds, which Fulton agreed to provide at no cost to Nix.

In addition, Fulton placed personal bets with Nix via the Sand Island Sports website. On one day, Fulton placed 14 bets, including three bets he made on a professional match of one of his company’s clients. Fulton also referred at least one of his company’s clients to Nix for the purposes of illegal gambling.

During an October 2021 interview with federal law enforcement about the Nix gambling business, Fulton falsely denied all knowledge of Nix’s involvement in sports gambling, falsely claimed to have had no knowledge that Nix was a bookmaker until learning law enforcement had searched Nix’s home in February 2020, and repeatedly made the false assertion that he had never placed a bet with Nix.

United States District Judge Dolly M. Gee scheduled a November 29 sentencing hearing, at which time Fulton will face a statutory maximum sentence of five years in federal prison. Fulton has agreed to pay a fine of no less than $673,290.

Nix pleaded guilty in April 2022 to one count of conspiracy to operate an illegal gambling business and one count of subscribing to a false tax return. His sentencing hearing is scheduled for March 6, 2024.

Nix’s longtime partner in the gambling operation – Edon Yoshida Kagasoff, 45, of Lake Forest – pleaded guilty in April 2022 to one count of conspiracy to operate an illegal gambling business. Kagasoff was sentenced on July 5 to six months of probation, was fined $1,000, and was ordered to forfeit $3,164,563 in ill-gotten gains.

Former Major League Baseball player Yasiel Puig Valdés, 32, who allegedly lied to federal law enforcement investigating Nix’s illegal gambling operation, is charged with obstruction of justice and making false statements. His trial is scheduled for January 16, 2024.

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

Homeland Security Investigations and IRS Criminal Investigation are conducting the ongoing investigation in this matter. The HSI agents are part of the El Camino Real Financial Crimes Task Force.

Assistant United States Attorneys Jeff Mitchell of the Major Frauds Section and Dan Boyle of the Environmental Crimes and Consumer Protection Section are prosecuting this case.

          SANTA ANA, California – A San Gabriel Valley man was sentenced today to 34 months in federal prison for fraudulently submitting more than $62 million in claims to the military’s TRICARE health care benefit program for bogus compounded medications prescriptions largely generated by the payment of large referral fees to marketers.

          James Chen, 51, of Monterey Park, was sentenced by United States District Judge David O. Carter, who also ordered Chen to pay $28,283,844 in restitution. Chen pleaded guilty in June 2017 to one count of health care fraud.

          Chen owned Clevis Management, Inc., a Commerce-based company that did business under the name Haeoyou Pharmacy (HY). HY hired marketers to obtain prescriptions for medications that were billed to TRICARE, a health care benefit program for military members and their families. HY also operated “Healtharchy.com,” a “telemedicine” website through which individuals could seek prescriptions for medications without being examined by a physician.

          Under Chen’s supervision, HY paid referral fees to outside businesses, including Mission Viejo-based Trestles RX LLC and Trestles Pain Management Specialists LLC, and to his own in-house marketers to obtain compounded medications prescriptions. The referral fees constituted more than 50 percent of the net reimbursements that HY received from TRICARE.

          Compounding medication is a practice where a physician or pharmacists alters the ingredients of a drug or multiple drugs to create a medication tailored to an individual patient, such as if a patient is allergic to a specific ingredient in a medication approved by the Food and Drug Administration.

          Chen knew that none of the prescriptions arose from a bona-fide physician-patient relationship, as required by TRICARE rules. Chen also knew that a substantial number of the prescriptions were sent to HY from marketers, not physicians, though the claim forms falsely indicated otherwise. HY never attempted to collect copayments from patients, who were selected at random and denied ever seeking the compounded medications, which were of questionable medical value. All the medications were for generic pain, scarring, stretch marks, erectile dysfunction, or “metabolic general wellness” (vitamins), according to court documents.

          During 2013, Chen submitted zero claims to TRICARE for reimbursement for filling compounded medication prescriptions. In Decembr 2014, his company submitted 31 such claims to TRICARE for $81,401. During the first five months of 2015, HY submitted 2,798 such claims to TRICARE seeking a total of $62,654,938.

          The claims HY submitted to TRICARE for each compounded medication prescription were astronomical compared to previous claims that HY typically submitted for reimbursement. A claim to TRICARE for a single compounded medication prescription caused TRICARE to pay HY $194,707.

          Chen and his co-schemers targeted TRICARE because few, if any, insurance carriers at the time would honor reimbursement claims for similar prescriptions.

          This matter was investigated by the Defense Criminal Investigative Service; the FBI; Amtrak’s Office of Inspector General; IRS Criminal Investigation, the Office of Personnel Management’s Office of Inspector General; the U.S. Department of Health and Human Services – Office of Inspector General; the U.S. Department of Labor, Employee Benefits Security Administration; and the California Department of Insurance.

          This case was prosecuted by Assistant United States Attorney Mark Aveis of the Major Frauds Section.

LOS ANGELES – A San Fernando Valley man was sentenced today to 144 months in federal prison for illegally selling firearms – including dozens of so-called “ghost guns” – and also selling pound quantities of methamphetamine.

Julio Ernesto Lopez-Menendez, 27, of Reseda, was sentenced by United States District Judge André Birotte Jr.

Lopez-Menendez pleaded guilty on February 3 to one count of distribution of methamphetamine and one count of engaging in the business of dealing in firearms without a license. He has been in federal custody since April 2022.

From January 2022 to April 2022, Lopez-Menendez sold at least 89 firearms and 20 rounds of ammunition over nine transactions to a buyer. The firearms sold included at least 62 firearms that lacked serial numbers and are commonly referred to as “ghost guns.” Of those ghost guns, four were short-barreled rifles whose barrel lengths Lopez-Menendez knew were each substantially less than the legally required 16 inches.

During a February 2022 telephone call with a buyer, Lopez-Menendez said the possession of shotguns or rifles with short barrels was “super illegal.” None of these short-barreled rifles were federally registered by Lopez-Menendez. He does not have a federal firearms license and does not have any firearms registered to him in the National Firearms Registration and Transfer Record, the central registry for all items regulated under the National Firearms Act, according to court documents.

Lopez-Menendez also sold to a buyer a total of 17 pounds of methamphetamine on four occasions, including one sale in which he sold 4.2 kilograms (9.2 pounds) of the drug to the buyer.

The Drug Enforcement Administration’s High Intensity Drug Trafficking Area Southern California Drug Task Force; the FBI; the Bureau of Alcohol, Tobacco, and Firearms; and the Los Angeles Police Department investigated this matter.

Assistant United States Attorney Jennifer Chou of the Violent and Organized Crimes Section prosecuted this case.

INFORMATION (Chavez)   PLEA AGREEMENT (Chavez)   PLEA AGREEMENT (Pacheco)            

         LOS ANGELES – A former San Bernardino County planning commissioner has agreed to plead guilty to a federal criminal charge for funneling bribes through his company to a corrupt Baldwin Park politician in exchange for the politician’s votes and influence over the city’s cannabis permitting process, the Justice Department announced today.

          Gabriel Chavez, 65, of Upland, agreed to plead guilty to a one-count criminal information charging him with bribery. Both the information and Chavez’s plea agreement were filed today in United States District Court, and Chavez is expected to enter a guilty plea in the coming weeks.

          The politician who solicited the bribes – former Baldwin Park City Councilmember Ricardo Pacheco – pleaded guilty in June 2021 to a federal bribery charge. Federal prosecutors today also unsealed additional portions of Pacheco’s plea agreement in which he admits to bribery schemes involving Chavez and other individuals.

          Pacheco was first elected to the Baldwin Park City Council in 1997 and served as mayor pro-tem in 2018. He resigned from the city council in June 2021 and is awaiting sentencing.

          Both Chavez and Pacheco have signed plea agreements in which they have agreed to cooperate in the government’s ongoing investigation.

          According to Chavez’s plea agreement, in June 2017, Baldwin Park began permitting the cultivation, sale and manufacturing of marijuana within its city limits. Soon afterward, Pacheco decided to solicit bribe payments from businesses seeking marijuana development agreements and related permits in the city. In exchange for the illicit payments, Pacheco agreed to use his position in city government to assist the companies with obtaining marijuana permits.

          Chavez agreed to act as an intermediary to funnel those bribes to Pacheco by using his Claremont-based internet marketing company, Market Share Media Agency. In exchange for the bribes, Pacheco agreed to vote and use his influence over the city’s permitting process to secure marijuana permits for two companies, identified in court documents as “Marijuana Company 3” and “Marijuana Company 4.”

          Pacheco and Chavez agreed that Pacheco would get 60% of the companies’ bribe money while Chavez would retain the remainder as payment primarily for facilitating the bribes.

          Chavez obtained bribe payments to pass to Pacheco from an individual identified in court papers as “Person 14,” another public official, who was helping Marijuana Company 4 obtain its marijuana permit. To conceal the true nature of the payments, the bribes Chavez accepted were disguised as consulting payments from Person 14’s consulting company to Market Share Media Agency.

          From August 2017 to March 2018, Chavez received at least $125,000 from Marijuana Company 3 and at least $45,000 on behalf of Marijuana Company 4, none of which he reported to the IRS as personal income or as his company’s revenue. Chavez paid Pacheco between $80,000 and $93,000 in cash, out of at least $170,000 collected from both companies.

          On multiple occasions, Chavez used coded language in text messages to tell Pacheco that he had cash bribes to pass to him. For example, in January 2018, Chavez sent Pacheco a text message stating, “I’m planning to bring all the documents…,” by which Chavez meant he planned to bring Pacheco cash bribes.

          Per Chavez’s agreement with Pacheco, the cash payments were in exchange for Pacheo’s votes on the two companies’ marijuana permits and Pacheco’s help securing the necessary votes from other members of the Baldwin Park City Council.

          Pacheco performed his end of the bargain, voting in favor of Marijuana Company 3 and Marijuana Company 4’s cannabis permits, first in December 2017 and later in May 2018.

          Chavez further admitted in his plea agreement that Market Share Media Agency won a no-bid, $14,500 contract from the City of Huntington Park signed by Person 14. The no-bid contract represented, in part, further compensation for Chavez in his efforts facilitating the bribe to Pacheco to secure the marijuana permit for Marijuana Company 4 in Baldwin Park. To further secure this permit, Person 14 gave Chavez a $5,000 check made payable to the church associated with the school where Pacheco’s child attended.

          Chavez was appointed to the San Bernardino County Planning Commission in June 2018 but resigned in November 2018 after the FBI executed a search warrant at his home.

          The FBI and IRS Criminal Investigation are investigating this matter.

          Any member of the public who has information related to this or any other public corruption matter in Los Angeles County is encouraged to send information to the FBI’s email tip line at pctips-losangeles@fbi.gov or to contact the FBI’s Los Angeles Field Office at (310) 477-6565.

          Assistant United States Attorneys Thomas F. Rybarczyk and Lindsey Greer Dotson of the Public Corruption and Civil Rights Section are prosecuting this case.

          WASHINGTON – A Los Angeles businessman was sentenced to 24 months in prison today for hiding more than $23.5 million in offshore bank accounts, announced Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division.

          According to court documents, Masud Sarshar, a U.S. citizen, maintained several undeclared bank accounts at Bank Leumi and two other Israeli banks, both in his name and in the names of entities that he created. Sarshar owned and operated Apparel Limited Inc., a business that designed, manufactured and sold clothing and other apparel. For decades, with the assistance of at least two relationship managers from Bank Leumi and a second Israeli bank (Israeli Bank A), Sarshar hid tens of millions of dollars in assets in these accounts in an effort to conceal income and obstruct the Internal Revenue Service (IRS). Between 2006 and 2009, Sarshar diverted more than $21 million in untaxed gross business income to those undeclared accounts and earned more than $2.5 million in interest income from the funds. Sarshar reported none of this income on his 2006 through 2012 individual and corporate tax returns. He also filed false Reports of Foreign Bank and Financial Accounts, commonly known as FBARs, with the U.S. Department of Treasury on which he omitted his ownership and control of these offshore accounts.

          “Masud Sarshar used every trick to avoid paying his taxes: he moved his money from foreign bank to foreign bank; switched passports and had his statements smuggled to the United States on a thumb drive secreted in the necklace of a bank manager,” said Acting Deputy Assistant Attorney General Goldberg. “He even tapped the funds in his offshore accounts through financial maneuvers that he thought would not leave a paper trail. However, Sarshar found out today -- with the imposition of a two-year prison sentence -- that secret foreign bank accounts can no longer be safely hidden from the Department of Justice and the IRS.”

          “Mr. Sarshar’s conduct was both egregious and staggering,” said Chief Richard Weber of IRS Criminal Investigation. “He knew the laws and purposefully hid his income to avoid paying taxes, cheating not only the U.S. government, but other law abiding tax payers who uphold their tax obligations. Hiding income in offshore banks is not tax planning, it’s fraud.”

          Sarshar’s relationship managers at Israeli Bank A (RM1) and Bank Leumi (RM2) visited him frequently in Los Angeles. At Sarshar’s request, neither bank sent him his account statements by mail. Instead, RM1 and RM2 provided Sarshar with his account information in person. RM2 concealed Sarshar’s account statements on a USB drive hidden in a necklace that she wore when she visited Sarshar in the United States. Sarshar’s meetings with RM1 sometimes occurred in Sarshar’s car. RM1 and RM2 used their visits to offer Sarshar other bank products, including “back-to-back” loans. Through back-to-back loans, which Bank Leumi made to Sarshar through its branch in the United States and which Sarshar collateralized with funds from his account at Israeli Bank A, Sarshar was able to bring back to the United States approximately $19 million of his assets without creating a paper trail or otherwise disclosing the existence of the offshore accounts to U.S. authorities. At the direction of RM1 and RM2, Sarshar also obtained Israeli and Iranian passports in an effort to avoid being flagged as a U.S. citizen by the banks’ compliance departments. The banks still flagged Sarshar as a U.S. citizen after Sarshar received these two passports, so RM1 and RM2 advised him to transfer his remaining funds from Israeli Bank A to Israeli Bank B, which Sarshar did in late 2011. In addition, with the help of someone identified as Individual 1, Sarshar transferred approximately $5.8 million from his Bank Leumi accounts to an account at Hong Kong Bank A, which Individual 1 then helped transfer to Sarshar in the United States, disguising it as a loan to Apparel Limited.

          In addition to the term of prison imposed, Sarshar was ordered to serve three years of supervised release and to pay more than $8.3 million in restitution to the IRS, plus interest and penalties. Sarshar also agreed to pay an FBAR penalty of more than $18.2 million for failing to report his Israeli bank accounts.

          Acting Deputy Assistant Attorney General Goldberg commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant Chief Tino M. Lisella and Trial Attorney Timothy M. Russo of the Tax Division, who prosecuted the case. Acting Deputy Assistant Attorney General Goldberg also thanked the U.S. Attorney’s Office for the Central District of California for their substantial assistance in the case.

          Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

LOS ANGELES – A federal grand jury today indicted a Burbank man who allegedly evaded the payment of nearly $5.8 million in federal taxes over several years by using a shill to illegally collect Medicare reimbursement payments made to his blood-testing company.

Armen Muradyan, 58, is charged via indictment with one count of tax evasion. He has been in federal custody since his April 9 arrest at Los Angeles International Airport on a criminal complaint in this matter. Muradyan, a dual citizen of the United States and Armenia, was arrested prior to boarding a one-way flight whose ultimate destination was Armenia.

Muradyan’s arraignment is scheduled for April 29 in United States District Court in downtown Los Angeles.

According to court documents, Muradyan owned and operated a Burbank-based blood testing laboratory called Genex Laboratories Inc. Medicare and bank records show that Medicare paid millions of dollars in reimbursements to Genex for blood testing. The reimbursements were wired to bank accounts in the name of an individual identified in court documents as “L.S.” – Muradyan’s long-time friend to whom Muradyan had offered to pay $2,000 per month to pretend to be Genex’s owner.

Muradyan allegedly told L.S. that he needed him to submit Medicare enrollment papers to Medicare on Genex’s behalf because Medicare had banned Muradyan from submitting claims.

L.S. and Muradyan allegedly opened bank accounts for Genex in L.S.’s name, but which Muradyan controlled. L.S. neither owned nor operated Genex and visited the company’s Burbank office to collect his $2,000 monthly payment and to sometimes sign documents at Muradyan’s direction.

For the tax years of 2015 through 2020, Muradyan allegedly instructed L.S. to report Genex’s financial activity on L.S.’s personal income tax returns using documents that L.S. provided to his own tax preparer. The documents purportedly showed that Genex had minimal net profit or was operating at a loss, meaning the company had little or no income tax liability.

For the same period, Muradyan allegedly submitted income tax returns that reported none of Genex’s financial activity as his own and that he averaged an income of $40,000 per year. In fact, Muradyan allegedly personally received and used millions of dollars in Medicare reimbursements to support his own expensive lifestyle.

For these tax years, Muradyan’s unreported income was approximately $16,231,046, resulting in a total federal income tax due and owing by him of approximately $5,771,567, according to court documents.

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

IRS Criminal Investigation, the FBI, and the United States Department of Health and Human Services – Office of Inspector General are investigating this matter.

Assistant United States Attorney Mark Aveis of the Major Frauds Section and Trial Attorney Mahana K. Weidler of the Department of Justice’s Tax Division are prosecuting this case.

          SANTA ANA, California – An Orange County man was arrested today on federal charges alleging he fraudulently obtained approximately $5 million in Payment Protection Program (PPP) loans for his sham businesses, then used the money on himself, including purchasing Ferrari, Bentley and Lamborghini sports cars.

          Mustafa Qadiri, 38, of Irvine, was named in a federal grand jury indictment returned Wednesday charging him with four counts of bank fraud, four counts of wire fraud, one count of aggravated identity theft, and six counts of money laundering.

          Qadiri surrendered to law enforcement this morning and is expected to make his initial appearance this afternoon in United States District Court in Santa Ana.

          According to the indictment, Qadiri claimed to have operated four Newport Beach-based companies, none of which are currently in operation: All American Lending, Inc., All American Capital Holdings, Inc., RadMediaLab, Inc., and Ad Blot, Inc.

          In May and June of 2020, Qadiri allegedly submitted false and fraudulent PPP loan applications to three banks on behalf of those companies. The false information allegedly included the number of employees to whom the companies paid wages, altered bank account records with inflated balances, and fictitious quarterly federal tax return forms. Qadiri allegedly also used someone else’s name, Social Security number and signature to fraudulently apply for one of the loans.

          Relying on this false information, the banks funded the PPP loan applications and transferred approximately $5 million to accounts Qadiri controlled, according to the indictment. Qadiri allegedly used the fraudulently obtained PPP loan proceeds for his own personal benefit, including for expenses prohibited under the requirements of the PPP program, such as the purchase of luxury vehicles, lavish vacations, and the payment of his personal expenses.

          Federal agents have seized the Ferrari, Bentley and Lamborghini cars that Qadiri allegedly purchased with the fraudulently obtained PPP loans, along with $2 million in alleged ill-gotten gains from his bank account.

          The Coronavirus Aid, Relief, and Economic Security (CARES) Act was designed to provide emergency financial assistance to millions of Americans who are suffering the economic effects resulting from the COVID-19 pandemic. One source of relief provided by the CARES Act is the authorization of up to $349 billion in forgivable loans to small businesses for job retention and certain other expenses through the PPP. In April, Congress authorized more than $300 billion in additional PPP funding.

          The PPP allows qualifying small businesses and other organizations to receive loans with a maturity of two years and an interest rate of 1 percent. Businesses must use PPP loan proceeds for payroll costs, interest on mortgages, rent, and utilities. The PPP allows the interest and principal to be forgiven if businesses spend the proceeds on these expenses within a set time period and use at least a certain percentage of the loan towards payroll expenses.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          Homeland Security Investigations, the Small Business Administration Office of Inspector General, the FBI and IRS Criminal Investigation investigated this matter as part of the El Camino Real Financial Crimes Task Force.

          Assistant United States Attorney Jennifer L. Waier of the Santa Ana Branch Office is prosecuting this case.

          LOS ANGELES – A Santa Clarita man was sentenced today to 41 months in federal prison for attempting to steal millions of dollars in Paycheck Protection Program (PPP) COVID-relief loans for his companies by submitting fraudulent applications that included fake tax documents and information for non-existent employees.

          Raymond Magana, 41, was sentenced by United States District Judge Stanley Blumenfeld Jr., who ordered him to pay $360,415 in restitution. At today’s hearing, Judge Blumenfeld called Magana’s crime “a despicable offense” and noted that Magana exploited a “national emergency” in order to “line his own pockets.”

          Magana pleaded guilty in January 2021 to one count of fraud in connection with major disaster or emergency benefits.

          In May and June 2020, Magana submitted to banks PPP loan applications that contained false statements about the number of employees and the amount of payroll expenses. Specifically, on June 3, 2020, Magana submitted a PPP loan application to Customer’s Bank for $940,416 for The Building Circle LLC, a company registered in his name.

          In that application, Magana falsely claimed the company’s average monthly payroll was $376,167 for 40 workers. Magana admitted to submitting fraudulent tax documents that reported $4,402,000 in annual wages paid to 40 employees in 2019 and $852,000 paid in employee wages during the first quarter of 2020.

          IRS and California Employment Development Department records showed that the company never reported paying any employees, and the underwriting packet also did not include a list of employees or associates for the company, according to an affidavit filed with a criminal complaint in this case.

          Investigators later determined that the Pico Rivera address given as The Building Circle’s headquarters was a 980-square-foot, single-family home that appeared to be a residence, not a business. Ultimately, the loan application was approved and $940,416 was funded to Magana’s company on June 4, 2020, the affidavit states.

          Magana also applied for and received a PPP loan of $360,415 for Forward Builders LLC, another company, using fake tax documents and false employee information, and falsely claiming $1.73 million in employee wages.

          When a bank manager contacted Magana after one of the business accounts receiving PPP funds had been frozen because of suspicious activity, he told the bank “We have all the documents, we got approved,” and he refused to agree to return the improperly obtained PPP funds, the affidavit states. The bank nonetheless kept the $940,416 in Magana's bank account frozen, and he could not access it.

          The actual loss from the two loans that were approved and disbursed was $360,415. Prior to today’s sentencing hearing, Magana deposited with the court $360,415 as his restitution payment.

          Magana’s business partner, Steven R. Goldstein, 37, of Northridge, is serving a one-year federal prison sentence for committing fraud in connection with major disaster or emergency benefits. Goldstein pleaded guilty in December 2020 to a federal fraud charge and admitted in his plea agreement that he fraudulently obtained $655,000 in PPP loans for his companies by submitting false tax documents and fake employee information.

          IRS Criminal Investigation and the Small Business Administration’s Office of Inspector General investigated this case.

          Assistant United States Attorney Charles E. Pell of the Santa Ana Branch Office prosecuted this case.

LOS ANGELES – A federal grand jury this afternoon returned a five-count indictment that accuses a Beverly Hills man – who was completing a sentence in a prior federal fraud case – of soliciting more than $9 million from investors with false claims they were investing in a hemp farm that did not exist.

Mark Roy Anderson, 68, who was living in Beverly Hills while on supervised release after serving a 135-month prison sentence, faces five counts of wire fraud in a case that alleges he tricked investors into providing funding for his company, called Harvest Farm Group, to harvest and process hemp, grown on his farm, into medical grade CBD isolate to be sold for a substantial profit.

Special agents with the FBI arrested Anderson in this case on May 9 after prosecutors filed a criminal complaint outlining a series of actions and false statements that allegedly induced victims to send money to Anderson during the scheme that ran from at least June 2020 to April 2021.

“To induce the victim-investors to invest in Harvest Farm Group, defendant Anderson falsely represented that, through Harvest Farm Group: (i) he owned and operated a hemp farm in Kern County, California; (ii) he had already completed successful and profitable harvests of hemp from the farm; and (iii) he was using his own machinery and equipment to convert the hemp into CBD isolate and/or Delta 8, a psychoactive substance that, like CBD isolate, could be used in consumer products ranging from olive oil to body cream,” according to the indictment, which goes on to allege that none of those claims was true.

Anderson allegedly attempted to maintain a veneer of trustworthiness by taking steps to assure investors Harvest Farms Group was legitimate and he “was not the ‘Mark Roy Anderson’ with multiple prior fraud convictions.” The indictment alleges Anderson “concealed that he had been convicted of multiple federal and state felony crimes, including mail fraud, wire fraud, grand theft, forgery, preparing false evidence, and money laundering, and concealed that he was still serving a criminal sentence and still on supervised release at the time he was soliciting investments.”

Anderson allegedly used investor money for personal expenses, including more than $650,000 worth of luxury and vintage vehicles, over $400,000 in cash withdrawals, more than $142,000 in retail purchases, and other personal expenses, including more than $1.3 million spent to purchase a residence and surrounding citrus groves in Ojai.

An indictment contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

Anderson, who has been ordered held without bond in this case, is scheduled to be arraigned on the indictment in United States District Court on May 30.

Each count of wire fraud alleged in the indictment carries a statutory maximum sentence of 20 years in federal prison.

The FBI is investigating this case.

Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section is prosecuting the case.

          LOS ANGELES – A former California lawyer has been sentenced to 37 months in federal prison for lying to his clients about winning cases for them and then deceiving them with bogus documents – some with the forged signatures of judges, the Justice Department announced today.

          Matthew Charles Elstein, 52, of Redondo Beach, was sentenced late Monday afternoon by United States District Judge Mark C. Scarsi, who also ordered him to pay $254,354 in restitution.

          Elstein pleaded guilty in November 2021 to one count of wire fraud.

          Elstein was a licensed California attorney from December 1994 until the State Bar of California ordered him inactive in March 2019. From June 2015 to July 2018, Elstein engaged in a scheme to defraud his clients by falsely claiming he obtained favorable legal resolutions for them, when in fact the favorable resolutions had never been obtained.

          In some cases, Elstein never initiated any legal action. Elstein also admitted to misappropriating funds by falsely informing victims their fees were going into his client trust account, when in fact he directed them to deposit money into his personal bank account.

          “[Elstein] caused irreparable financial, reputational, and emotional damage to his victims that exceeds the mere monetary damage caused by a typical fraud,” prosecutors argued in a sentencing memorandum. “[Elstein’s] motive appears fueled not only by greed but also malice.”

          For example, in June 2016, Elstein falsely informed a corporate client that it had won a $52 million default judgment. He emailed the victim-client a fake court order that contained a judge’s forged signature. In order to conceal the fact that he never actually filed a lawsuit on his client’s behalf, Elstein further misrepresented that the case was improperly under seal due to a United States Department of Justice investigation.

          To further his fraudulent scheme, Elstein presented his clients with a fake settlement agreement between the client and the United States Attorney’s Office for the Eastern District of California. It was not until the company reached out to that United States Attorney’s Office to authenticate the settlement agreement that it discovered that the agreement was a forgery.

          Elstein also fabricated depositions in a federal case in Washington state in September 2015. Because these depositions were fake, no one appeared for them. Nonetheless, Elstein had a court stenographer present and made a formal record of the nonappearances. Elstein also billed the client for attending the sham depositions and his travel expenses to Seattle.

          Elstein also falsely told the victim that he had obtained a $4.25 million judgment in the victim’s favor and provided the victim with a fake court order containing the forged signature of a judge. When the victim traveled to Seattle to collect the judgment, he was informed by the court that no such case existed.

          In total, Elstein’s fraudulent schemes resulted in losses of at least $358,855 to his victims.

          The FBI’s Public Corruption Squad investigated this matter.

          Assistant United States Attorney Daniel J. O’Brien of the Public Corruption and Civil Rights Section prosecuted this case.

LOS ANGELES – A Westside man has been arrested on a federal grand jury indictment alleging he fraudulently obtained nearly $3.2 million in COVID-19 loans for his businesses that, in fact, were shell companies, the Justice Department announced today.

Mark Farag Shehata, 70, a.k.a. “Samy Farag,” “Mark Farag,” and “Mark Fshehata,” of Marina del Rey, was arrested Monday morning by federal agents and was arraigned late Monday in United States District Court in downtown Los Angeles.

Shehata pleaded not guilty to seven counts of wire fraud. A July 24 trial date was scheduled, and a $500,000 bond was set in this case.

According to a federal grand jury indictment returned on June 8 and unsealed Monday, Shehata organized and registered four limited liability companies that purportedly operated in Marina del Rey: Shirmak Group LLC; Cynergy Group Internatioal (sic) LLC; Global Network Investments LLC; and Alpha and Omega Group LLC.

From May 2020 to May 2021, Shehata allegedly submitted at least seven false and fraudulent loan applications under the Paycheck Protection Program (PPP), a financial aid plan Congress enacted to support businesses harmed by the COVID-19 pandemic’s economic impact. The PPP loans were to be used by recipients to pay only certain authorized business expenses, such as payroll, mortgage interest, lease, and utilities.

Shehata’s four businesses were nothing more than shell companies, the indictment alleges. None of the PPP loan proceeds Shehata allegedly fraudulently obtained were used to make payments to employees for payroll or any business expenses.

In furtherance of the scheme, Shehata submitted to the Small Business Administration and several lenders false applications requesting a total of $5,423,989 in PPP loans, and fraudulently obtained approximately $3,154,265 in PPP proceeds, the indictment alleges.

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

If convicted, Shehata would face a statutory maximum sentence of 20 years in federal prison for each count.

The United States Department of Justice Office of Inspector General investigated this matter.

This case was investigated by the Pandemic Response Accountability Committee (PRAC) Fraud Task Force. The PRAC was established to serve the American public by promoting transparency and facilitating coordinated oversight of the federal government’s COVID-19 pandemic response. The PRAC’s 21 member Inspectors General identify major risks that cross program and agency boundaries to detect fraud, waste, abuse, and mismanagement in the more than $5 trillion in COVID-19 spending. The PRAC Fraud Task Force brings together agents from 15 Inspectors General to investigate fraud involving a variety of programs, including the Paycheck Protection Program. Task force agents who are detailed to the PRAC receive expanded authority to investigate pandemic fraud as well as tools and training to support their investigations.

Assistant United States Attorney Valerie L. Makarewicz of the Major Frauds Section is prosecuting this case.

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

          LOS ANGELES – The former owner of a Studio City medical clinic was sentenced today to 37 months in federal prison for causing more than $11.5 million in bills to be submitted to health care benefit programs for unnecessary – and sometimes nonexistent – sleep studies, primarily for employees of United Parcel Service, Inc., and Costco Wholesale Corp.

          Anna Vishnevsky, 52, of Valley Village, was sentenced by United States District Judge George H. Wu, who also ordered her to pay $2,747,071 in restitution.

          Vishnevsky, who owned Atlas Diagnostic Services, Inc., pleaded guilty in November 2018 to one count of health care fraud.

          From March 2014 until June 2016, Vishnevsky participated in a scheme to defraud health care benefit plans. Vishnevsky and others working at her direction recruited patients to participate in sleep study testing at Atlas by offering them cash. She also offered them additional cash if they brought in other sleep study participants, including their co-workers and relatives.

          Vishnevsky recruited patients, knowing that no doctor had prescribed sleep study testing for them and regardless of whether the testing was medically necessary or appropriate. Vishnevsky did not score or interpret the data from the testing or send it to anyone who could score or interpret it, which is necessary for diagnosis and treatment.

          She submitted insurance claims for sleep study testing performed on the recruited patients, listing physicians that had never treated the patients. She also billed not only for the one night of sleep study testing that the patients had purportedly undergone – regardless of medical necessity – but also for an additional, consecutive night of sleep study testing that was never performed.

          In total, Vishnevsky submitted more than $11.5 million in fraudulent insurance claims to health care benefit plans. She received approximately $3 million on those claims, of which $2,747,071 is still outstanding.

          “(Vishnevsky’s) criminal activity victimized not only the plans, but also plan participants recruited into the scheme, as many of them have been required to pay back fraudulent insurance claims submitted using their names (on penalty of losing their health insurance),” prosecutors wrote in their sentencing memorandum.

          A co-defendant, Eddie Hernandez, 46, of Torrance, pleaded guilty in November 2018 to one count of health care fraud and is serving a 30-month federal prison sentence in this case. Hernandez was a UPS driver who helped Vishnevsky recruit people to participate in the fraudulent sleep studies.

          The United States Department of Labor - Employee Benefits Security Administration, the Department of Labor - Office of Inspector General, the FBI, and the Office of Personnel Management - Office of Inspector General investigated this matter.

          This case was prosecuted by Assistant United States Attorney Kerry L. Quinn of the Major Frauds Section.

LOS ANGELES – A Hollywood man has been arrested and is scheduled to be arraigned this afternoon on federal charges alleging he sought more than $65 million from the IRS by falsely claiming on tax returns that his nonexistent farming business was entitled to COVID-19-related tax credits.

Kevin J. Gregory, 55, who is charged in a federal grand jury indictment with 17 counts of making false claims to the IRS, was arrested Thursday morning by special agents with IRS Criminal Investigation.

In response to the COVID-19 pandemic and its economic impact, Congress authorized an employee retention tax credit that a small business could use to reduce the employment tax it owed to the IRS, also known as the “employee retention credit.”

To qualify, the business had to have been in operation in 2020 and to have experienced at least a partial suspension of its operations because of a government order related to COVID-19 (for example, an order limiting commerce, group meetings or travel) or a significant decline in profits. The credit was an amount equal to a set percentage of the wages that the business paid to its employees during the relevant time period, subject to a maximum amount.

Congress also authorized the IRS to give a credit against employment taxes to reimburse businesses for the wages paid to employees who were on sick or family leave and could not work because of COVID-19. This “paid sick and family leave credit” was equal to the wages the business paid the employees during the sick or family leave, also subject to a maximum amount.

According to the indictment that was returned on May 11 and unsealed today, from November 2020 to April 2022, Gregory made false claims to the IRS for the payment of nearly $65.4 million in tax refunds for a purported Beverly Hills-based farming-and-transportation company named Elijah USA Farm Holdings.

The IRS issued a portion of the refunds Gregory claimed, and Gregory allegedly used that portion – more than $2.7 million – for personal expenses.

An indictment contains allegations that a defendant committed a crime. All defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

If convicted, Gregory would face a statutory maximum sentence of five years in federal prison for each false claims charge.

IRS Criminal Investigation is investigating this matter.

Assistant United States Attorneys Valerie L. Makarewicz and Gregory D. Bernstein of the Major Frauds Section are prosecuting this case.

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

          LOS ANGELES – An Orange County man was sentenced today to 48 months in federal prison for fraudulently obtaining more than $5 million in COVID-relief loans for three shell companies.

          Raghavender Reddy Budamala, 36, of Irvine, was sentenced by United States District Judge Otis D. Wright II, who also ordered Budamala to pay $5,151,497 in restitution.

          Budamala pleaded guilty on June 21 to one count of bank fraud and one count of money laundering. As part of his plea agreement, Budamala agreed to forfeit real estate in Orange County, Malibu and Los Angeles, as well as approximately $4,119,662 in funds from bank and investment accounts and cryptocurrency.

          From January 2019 to August 2019, Budamala formed or acquired three shell companies with no operations – Hayventure LLC, Pioneer LLC, and XC International LLC. Following the outbreak of the COVID-19 pandemic and the enactment of federal programs designed to address the resulting economic fallout, Budamala submitted to the Small Business Administration seven applications for pandemic-relief loans under the Paycheck Protection Program (PPP) and Economic Injury Disaster Loan (EIDL) program.

          As part of the applications filed from April 2020 through March 2021, Budamala falsely represented to the banks administering the COVID-relief business loan programs that his companies employed dozens of individuals and earned millions of dollars in revenue, and that he needed the money for payroll and business expenses.

          The addresses listed for the companies were bogus, nonexistent or residential. The states where Budamala’s companies purportedly operated have no records of those companies paying wages to any employees, and bank records for the companies reflect no significant business income or operating expenses.

          The SBA and the banks funded six of the loans and disbursed a total of $5,151,497. Budamala applied to have several of the loans forgiven and falsely represented that he had used the SBA money entirely for payroll.

          Once the loans were funded, Budamala used the money to pay for personal expenses, including the purchase of a $1.2 million investment property in Eagle Rock, the purchase of a $597,585 property in Malibu, the purchase of a personal residence in Irvine, a $970,000 investment in an EB-5 Immigrant Investor Visa Program and a nearly $3 million deposit into Budamala’s personal TD Ameritrade account.

          Budamala has been in federal custody since his arrest on February 23, when he attempted to abscond from the United States to Mexico via the San Ysidro border crossing. A criminal complaint was filed against him on February 24.

          IRS Criminal Investigation, the FBI, and the Small Business Administration’s Office of Inspector General investigated this matter.

          Assistant United States Attorney Gregory D. Bernstein of the Major Frauds Section and Assistant United States Attorney Maxwell K. Coll of the Asset Forfeiture and Recovery Section prosecuted this case.

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

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

          LOS ANGELES – An Oklahoma man who grew up in Los Angeles was arrested today on a federal criminal complaint alleging that he telephoned bomb threats to five Los Angeles schools, including two elementary schools, and also threatened to shoot the children as they exited one of the elementary schools.

          Marcus James Buchanan, 44, of Blackwell, Oklahoma, is expected to make his initial appearance this afternoon in United States District Court in Wichita, Kansas.

          Buchanan is charged with one count of making a threat through interstate commerce to damage or destroy buildings by fire or explosives.

          According to an affidavit filed with the complaint, during a period of less than two hours on the morning of February 28, Buchanan called in bomb threats to two elementary schools, two middle schools, and a high school in Los Angeles. In a call to one of the elementary schools, Buchanan allegedly threatened to shoot the children as they exited the building.

          On April 27 and 28, Buchanan allegedly called in additional bomb threats to two of the Los Angeles schools he previously threatened, and threatened to shoot and kill children at other schools. On the afternoon of April 27, Buchanan called an elementary school and said to a school employee, “There is a bomb at your school and we will shoot the kids when they get out of the school. That is what you get for not accepting me in ’86,” according to the affidavit. When the employee asked who was calling, Buchanan allegedly responded, “If you try to find out, I will shoot you.” After receiving the threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.

          On April 28, Buchanan allegedly called the same school again and said there was a pipe bomb placed at the school’s address. After receiving the bomb threat, the school staff notified police and placed the school on lockdown. Police searched the campus for explosives or unusual items but found none.

          That same day, Buchanan allegedly called a different elementary school and said, “Stop playing games you know who this is. I am going to shoot the school. I know the kids are there.” Afterwards, the school was placed on lockdown, but – as with all the incidents – no explosives or unusual items were found.

          Phone records indicated that the threatening calls came from a number identified with Buchanan, the affidavit states.

          A criminal complaint contains allegations that a defendant has committed a crime. Every defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

          If convicted, Buchanan would face a statutory maximum sentence of 10 years in federal prison.

          The FBI and the Los Angeles School Police Department investigated this matter.

          Assistant United States Attorney Morgan J. Cohen of the General Crimes Section is prosecuting this case.

LOS ANGELES – A Costa Mesa man pleaded guilty today to federal criminal charges for running fraudulent investment schemes that raised more than $17 million by promising investors – several of them elderly – returns of up to 10% that would be generated through real estate deals that turned out to be bogus, and for disobeying a court order to go to jail for violating the terms of his pretrial release.

Brett Barber, 44, a former co-owner of the Newport Beach-based BNZ Capital One LLC and National American Capital, pleaded guilty to two counts of wire fraud and one count of criminal contempt.

According to his plea agreement, from May 2019 to October 2021, Barber participated in two schemes to defraud victim investors out of their money and property.

In the first scheme, BNZ Capital, its principals and several marketers raised money by falsely representing that the firm bought and sold real estate projects and “flipped” real estate. Barber, co-conspirator Louis Zimmerle, 64, of Sacramento, and the marketers falsely promised investors a “guaranteed” return of between 8% and 10%, as well as potential bonuses based on successful deals. According to court documents, Barber told investors that their funds were “safe” and “FDIC insured.”

In fact, while BNZ Capital did purchase some real estate, it did not take any substantial steps to develop parcels, nor did BNZ flip real estate for a profit. Rather, BNZ primarily used investor funds to pay Barber, Zimmerle and others associated with the scheme, including purchasing residences where Barber and Zimmerle lived. Some of the investors’ money was used to repay earlier investors.

During this scheme, Barber, Zimmerle, and the marketers solicited or caused to be transferred to BNZ Capital approximately $13.8 million from victim investors. Investigators estimate that actual losses resulting from this scheme are at least $7 million.

Barber admitted in his plea agreement that he received and kept approximately $2,933,970 of investor money for his personal gain. At least five BNZ Capital investors were elderly, vulnerable victims who suffered substantial hardship because of the fraud committed against them.

After Barber learned that federal officials were investigating BNZ Capital, he began a second fraudulent scheme, this time involving a company he formed in January 2021 called National American Capital (NAC). The NAC scheme operated, in substance, the same way as the BNZ Capital fraud. That is, Barber and marketers working at his direction lied to investors by saying their money would be used to fund real estate development projects. In fact, there were no such projects, and the only way NAC could repay earlier investors was by soliciting money from new investors.

Specifically, in October 2021, Barber met with a person he believed was a prospective investor, but who in fact was an undercover law enforcement official. During this meeting, Barber told several lies: that NAC had been in business for 20 years, that it owned 10 parcels of land in Laguna Beach, and that it had purchased property in Newport Beach and turned in into a four-plex. None of these statements was true.

Barber admitted in his plea agreement that this scheme caused a loss of at least $3.5 million. He further admitted to receiving and keeping at least $388,669 of investor money for his personal gain.

During the BNZ Capital and NAC schemes, Barber failed to disclose to investors that he previously was barred from acting as or associating with a broker-dealer by the Financial Industry Regulatory Authority (FINRA).

Finally, after a federal grand jury indicted Barber in October 2021, he was released on bond. In January 2023, a court found that Barber violated the terms of his pretrial release and ordered him to surrender to the United States Marshals Service by January 13. Barber willfully disobeyed the court’s order and failed to surrender. In March 2023, Barber was arrested in Santa Cruz County, California. He eventually was transferred to federal custody in Los Angeles, where he remains.

United States District Judge Otis D. Wright II scheduled a March 4, 2024 sentencing hearing, at which time Barber will face a statutory maximum sentence of 20 years in federal prison for each wire fraud count, and a statutory maximum sentence of life imprisonment for the criminal contempt count.

Zimmerle pleaded guilty in January 2022 to one count of wire fraud. In his plea agreement, Zimmerle admitted to participating in the BNZ Capital scam and that he received and kept approximately $582,815 of victim investor money. His sentencing hearing is scheduled for January 22, 2024.

In October 2021, the United States Securities and Exchange Commission (SEC) filed a civil lawsuit against Barber, Zimmerle and BNZ Capital for fraudulently raising more than $13 million from over 100 retail investors.

The FBI is investigating this matter. The SEC provided substantial assistance.

Assistant United States Attorney Bradley E. Marrett of the Santa Ana Branch Office is prosecuting this case.

          SANTA ANA, California – The Justice Department today announced that California Auto Finance, a subprime auto lending company based in the City of Orange, has agreed to enter into a court-enforceable consent order to resolve allegations that it illegally repossessed two servicemembers’ cars without court orders while they were on active duty.

          The Justice Department filed a lawsuit against California Auto Finance and a related entity called 3rd Generation Inc. on March 28, 2018 alleging that their repossession practices violated the Servicemembers Civil Relief Act (SCRA). Under the proposed consent order, which is still subject to approval by a federal judge, California Auto Finance must adopt new repossession policies, pay one servicemember $30,000 – which is the highest amount ever recovered by the Department for a single servicemember in an automobile repossession case – and pay a $50,000 civil penalty to the United States.

          “Individuals who take up the call to protect our nation by serving in the armed forces make an enormous sacrifice for us all,” said United States Attorney Nick Hanna. “We have a legal and moral duty to safeguard the rights of our men and women in uniform. California Auto Finance failed to uphold this duty through its repossession practices. Today’s consent order demonstrates that we will tolerate no abuses of servicemembers’ rights in our district.”

          “This case sends a message to financial institutions, large and small, that they must live up to their obligations to our servicemembers,” said Assistant Attorney General Eric Dreiband for the Department of Justice’s Civil Rights Division. “We will continue to vigorously pursue lenders who fail to take the simple steps necessary to determine, before repossessing a car, whether it belongs to a servicemember. Servicemembers who are going through basic training or another kind of military service should not have to worry that their cars will be repossessed with no court supervision during their time of service to our country.”

          The Justice Department initiated its investigation of California Auto Finance after receiving a complaint in November 2016 from United States Army Private Andrea Starks. The United States alleges that in April 2016, Private Starks notified California Auto Finance that she would be entering the military the following month. Despite this advance notice, California Auto Finance repossessed Private Starks’ vehicle without a court order on May 9, 2016, her first day of military training duty at Fort Leonard Wood, Missouri. At the time of repossession, the vehicle was parked at the home of Private Starks’ grandmother in Cedar Rapids, Iowa.

          The Justice Department’s investigation corroborated Private Starks’ complaint, found that California Auto Finance had no policies related to SCRA compliance, and revealed that California Auto Finance had also violated the SCRA rights of U.S. Army Specialist Omar Martinez. The United States alleges that Specialist Martinez informed California Auto Finance that he would be entering the military, and that he would have limited means of communication during basic training. Nonetheless, California Auto Finance repossessed Specialist Martinez’s vehicle during his first month of military service. The repossession severely damaged Specialist Martinez’s credit, and, as a result, he was unable to purchase a new car. For over a year while living on base at Fort Benning, Georgia, Specialist Martinez had to rely on rideshares and taxis to buy groceries and take care of other personal needs. In March 2018, Specialist Martinez deployed to Afghanistan, where he served until November 2018.

          The proposed consent order requires California Auto Finance to pay $30,000 in compensation to Specialist Martinez, and to take steps to repair his credit. In addition, the proposed consent order requires California Auto Finance to take steps to ensure it does not repossess servicemembers’ cars without court orders in the future. Private Starks reached a private settlement with California Auto Finance before the proposed consent order was filed.

          The SCRA protects servicemembers against certain civil proceedings that could affect their legal rights while they are in military service. It requires a court to review and approve any repossession if the servicemember took out the loan and made a payment before entering military service. The court may delay the repossession or require the lender to refund prior payments before repossessing. The court may also appoint an attorney to represent the servicemember, require the lender to post a bond with the court and issue any other orders it deems necessary to protect the servicemember. By failing to obtain court orders before repossessing motor vehicles owned by protected servicemembers, California Auto Finance prevented servicemembers from obtaining a court’s review of whether their repossessions should have been delayed or adjusted to account for their military service.

          The Justice Department’s enforcement of the SCRA is conducted by the Civil Rights Division’s Housing and Civil Enforcement Section, often in partnership with United States Attorney’s Offices. Housing and Civil Enforcement Section attorneys worked jointly with the Civil Rights Section within the Civil Division of the United States Attorney’s Office in this action.

          Since 2011, the Justice Department has obtained over $469 million in monetary relief for over 119,000 servicemembers through its enforcement of the SCRA. The SCRA provides protections for servicemembers in areas such as evictions, rental agreements, security deposits, prepaid rent, civil judicial proceedings, installment contracts, credit card interest rates, mortgage interest rates, mortgage foreclosures, automobile leases, life insurance, health insurance, and income tax payments. For more information about the Justice Department’s SCRA enforcement, please visit www.servicemembers.gov.

          Servicemembers and their dependents who believe that their rights under the SCRA have been violated should contact the nearest Armed Forces Legal Assistance Program Office. Office locations may be found at http://legalassistance.law.af.mil/.

          LOS ANGELES – A Ventura County man has been sentenced to 168 months in federal prison for participating in a massive fraud scheme that used dozens of nonexistent companies to collect nearly $5 million in unemployment benefits for phony employees who never performed any work at the fake entities.

          Jack Benjamin Hessiani, a.k.a. “Jack Herrera,” 40, of Camarillo, was sentenced today by United States District Judge John A. Kronstadt. Hessiani pleaded guilty in August 2018 to one count of mail fraud.

          According to court documents, Hessiani created numerous fictitious businesses for the sole purpose of defrauding the Employment Development Department (EDD), the state agency that administers the federal unemployment insurance program in California. After he and his co-schemers filed documents with EDD that showed made-up earnings for the fictitious workers, Hessiani and the co-schemers submitted claims for unemployment insurance benefits for laid-off “employees.” In fact, many of the “employees” were people who had agreed to provide their personal identifying information in exchange for a portion of the unemployment insurance benefits. Some of the benefit portions would go to drug users who likely used the funds to enable future drug purchases, while others were poor students who later faced criminal exposure as a result of the actions of Hessiani and his co-schemers, court papers state.

          The unemployment benefits were sent in the form of checks and debit cards to “mail drops” that Hessiani and the co-schemers established in the names of other individuals, according to court documents. After EDD began issuing unemployment benefits, Hessiani ensured that documents were filed that falsely stated that the laid-off “workers” were still unemployed, and he later sought “extended benefits” to obtain unemployment insurance benefits for the sham workers beyond the normal six-month period. These extended benefits were ultimately funded by the United States Treasury.

          According to court documents, Hessiani and his co-schemers submitted approximately 725 unemployment insurance claims – including 521 original claims and 204 claims for extended benefits – in the names of 384 “employees.” The investigation identified 43 fictitious companies based in Ventura County that were used to further the scheme, which caused EDD to suffer actual losses of $3.96 million and the United States Treasury to suffer actual losses of approximately $900,000. Hessiani enlarged his scheme by inducing the people whose names were already being used to obtain fraudulent benefits to “recruit” others who would be identified as additional false employees at the fictitious companies, and he paid referral fees for each new fake worker brought into the scheme.

          Three other defendants in the case have pleaded guilty to criminal charges and are pending sentencing. They are Hessiani’s brother, James Manuel Herrera, 30, of Camarillo; Eduardo Josue Garcia, 27, of Camarillo; and Daniel Ayala-Mora, 29, formerly of Camarillo.

          The investigation in this case was conducted by the United States Department of Labor, Office of Inspector General; the United States Secret Service; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the California Employment Development Department.

          Assistant United States Attorneys Ranee Katzenstein and Julian André of the Major Frauds Section are prosecuting this case.

          LOS ANGELES – A Gardena man was sentenced today to 162 months in federal prison for running a multi-year scam in which he fraudulently obtained nearly $1 million in business loans by setting up shell corporations – complete with people paid to pose as fake corporate “officers” – that deceived small business lenders into believing they were legitimate companies.

          Troy Rustill Stroud, 54, of Gardena, was sentenced by United States District Judge Stephen V. Wilson, who also ordered him to pay $968,169 in restitution.

          Stroud pleaded guilty in August 2020 to one count of conspiracy to commit wire fraud. He has been in federal custody since his arrest in this matter in May 2020.

          Stroud created several corporations that purported to be in business, but in fact did none. The sham businesses included kitchen remodeling companies Glorious Oak Company and Glossy Grape Investments Inc., and Polished Pine Group, an audio-visual company, according to court documents. Stroud applied for business loans from at least 22 financial institutions and used the names of 14 companies in doing so, court documents state.

          Stroud conducted a series of transfers from bank accounts in some of his corporations’ names to those held in other names to make it appear that the sham corporations were engaging in business.

          Stroud paid other people to pretend to be officers of his corporations, and then he used the names of those “officers” to apply online for business loans for his sham companies. Stroud falsely reported that the shell companies had substantial revenues when in fact they had none.

          When Stroud received the loan proceeds, he used them to pay for his personal expenses, and defaulted on the loans immediately or after a payment or two. Stroud admitted that his scheme to defraud lenders caused $968,169 in actual losses.

          The FBI investigated this matter.

          Assistant United States Attorney Andrew Brown of the Major Frauds Section prosecuted this case.

          LOS ANGELES – A former music teacher who contracted with a number of school districts in Southern California was arrested today pursuant to a federal grand jury indictment that alleges multiple crimes against children, including the production of child pornography.

          John Edward Zeretzke, 60, of Ventura, was arrested late this morning without incident by the United States Postal Inspection Service and the Los Angeles County Sheriff’s Department. Zeretzke is expected to be arraigned on the indictment this afternoon in United States District Court in downtown Los Angeles.

          The five-count indictment alleges that Zeretzke coerced a female minor to produce child pornography, that he attempted to entice another victim to send him sexually explicit images, that he traveled to the Philippines with the intent to engage in illicit sexual conduct with other minor victims, and that he twice received child pornography over the internet.

          None of the victims in this case are located in Southern California.

          An indictment contains allegations that a defendant has committed a crime. Every defendant is presumed to be innocent until proven guilty in court.

          If convicted of the charges in the indictment, Zeretzke would face a statutory maximum penalty of life in federal prison. He also would face mandatory minimum sentences for several of the offenses, including a mandatory 15-year prison for the offense of producing child pornography.

          This case is being investigated by the United States Postal Inspection Service and the Los Angeles Sheriff’s Department, Special Victims Bureau.

          This matter is being prosecuted by Assistant United States Attorney Justin Rhoades, Chief of the Violent and Organized Crime Section.

LOS ANGELES – A Japanese-language translator was charged today via federal criminal complaint with unlawfully transferring more than $16 million from a Major League Baseball (MLB) player’s bank account – without the player’s knowledge or permission – to pay off his own substantial gambling debts incurred with an illegal bookmaking operation.

Ippei Mizuhara, 39, of Newport Beach, is charged with bank fraud, a felony offense that carries a statutory maximum sentence of 30 years in federal prison.

Mizuhara is expected to appear in United States District Court in downtown Los Angeles for his initial appearance in the near future.

According to an affidavit filed with the complaint, from November 2021 to January 2024, Mizuhara wired more than $16 million in unauthorized transfers from a checking account belong to an MLB player identified in the affidavit as “Victim A,” who in fact is MLB star Shohei Ohtani. The transfers from this bank account allegedly were made from devices and IP addresses associated with Mizuhara, who served as Ohtani’s translator and de facto manager.

In 2018, Mizuhara accompanied Ohtani, who didn’t speak English, to a bank branch in Arizona to assist Ohtani in opening the account and translated for Ohtani when setting up the account details. Ohtani’s salary from playing professional baseball was deposited into this account and he never gave Mizuhara control of this or any of his other financial accounts, according to the affidavit. Mizuhara allegedly told Ohtani’s U.S.-based financial professionals, none of whom spoke Japanese, that Ohtani denied them access to the account.

In September 2021, Mizuhara began gambling with an illegal sports book and, several months later, started losing substantial sums of money, the affidavit states. During this time, the contact information on Ohtani’s bank account allegedly was changed to link the account to Mizuhara’s phone number and to an anonymous email address connected to Mizuhara.

Mizuhara allegedly also telephoned the bank and falsely identified himself as Ohtani to trick bank employees into authorizing wire transfers from Ohtani’s bank account to associates of the illegal gambling operation.

From January 2024 to March 2024, he also allegedly used this same account to purchase via eBay and Whatnot approximately 1,000 baseball cards – at a cost of approximately $325,000 – and had them mailed to Mizuhara under an alias, “Jay Min,” and mailed to the clubhouse for Ohtani’s current MLB team.

In an interview last week with law enforcement, Ohtani denied authorizing Mizuhara’s wire transfers. Ohtani provided his cellphone to law enforcement, who determined that there was no evidence to suggest that Ohtani was aware of, or involved in, Mizuhara’s illegal gambling activity or payment of those debts.

A criminal complaint is merely an allegation, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

IRS Criminal Investigation and Homeland Security Investigations are investigating this matter.

Assistant United States Attorneys Jeff Mitchell of the Major Frauds Section, Dan Boyle of the Environmental Crimes and Consumer Protection Section, and Rachel N. Agress of the International Narcotics, Money Laundering, and Racketeering Section are prosecuting this case.