HOUSTON - A suburban Houston-area man has been ordered to prison following his convictions of 15 counts of fraud and tax violations, announced U.S. Attorney Ryan K. Patrick.

A Houston federal jury convicted Winfred Fields Feb. 13 following a two-week trial.

Today, U.S. District Judge Ewing Werlein Jr. handed Fields a 109-month sentence to be immediately followed by three years of supervised release.

Fields operated tax and bookkeeping businesses from an office on Richmond Avenue in Houston for many years under the business names Fields Enterprises, Your Tax Professionals and The Tax Boss.

At trial, the jury heard Fields participated in a scheme involving the submission of U.S. Individual Tax Returns on behalf of foreign people working on vessels on the Outer Continental Shelf of the United States. These crewmembers were engaged in oil and gas exploitation activities in the Gulf of Mexico. 

“In order to enrich himself and line his own pockets, the defendant mislead his clients by falsely claiming an international tax treaty was justification for amending their tax returns,” said Special Agent in Charge D. Richard Goss of  IRS-Criminal Investigation’s (CI) Houston Field Office. “As shown by today’s sentencing, this type of deceit will not go unpunished. IRS-CI will continue to protect the public by pursuing unscrupulous tax return preparers.”

“Tax fraud schemes have been around for many years,” said Inspector in Charge Adrian Gonzalez of the Houston Division of the U.S. Postal Inspection Service (USPIS). “USPIS is committed to working with our law enforcement partners to ensure the U.S. Mails are not used as a tool to facilitate these fraudulent schemes. The arrest and sentencing of Winfred Fields was a direct result of the collaborative efforts between the USPIS and IRS-CI.”

At trial, the evidence showed Fields falsely claimed workers were exempt from U.S. tax under a tax treaty between the United States and the United Kingdom, Spain or New Zealand. The employing companies had previously provided to the IRS withholdings from the worker’s wages and reported the income to the IRS. However, Fields submitted amended tax returns as well as original nonresident tax forms 1040NR claiming a refund of the entirety of the amounts paid in as U.S. taxes for various tax years including 2007 through 2012. 

Fields charged a fee of $2,500 for each crew member’s first return and required a $1,000 fee for each return thereafter. He required direct receipt of the refunds so he could negotiate the checks and take his fee off the top. Fields had some refund checks deposited directly into one of several bank accounts he maintained. Alternatively, he cashed the checks at a Houston check cashing business or had the checks deposited into one of several attorney trust accounts three different Houston lawyers had maintained. Fields gathered the check proceeds or deposited them into the attorney trust accounts after paying a fee to the check cashing business and the attorneys for the service of cashing the U.S. Treasury checks. Fields deposited the proceeds in one of several bank accounts he utilized during the scheme.

Fields agreed to provide the remainder of the refund proceeds to the foreign clients. He did that for a while, but ultimately stopped forwarding any money to the workers. As those individuals began contacting him to ask for updates on their refund claims, he repeatedly sent misleading and materially false responses to their questions. 

The jury heard that Fields fraudulently obtained $3,097,974.19 in tax refunds from the IRS and kept approximately $1,302,271.75 for himself.

The defense attempted to convince the jury he acted in good faith and believed the wages were exempt. He also claimed he was trying to pay the crewmembers their refunds but just got behind. The jury rejected Fields’ contentions in their verdict and found him guilty as charged on all 15 counts.

Fields was permitted to remain on bond and voluntarily surrender to a U.S. Bureau of Prisons facility to be determined in the future.

IRS - CI and USPIS conducted the investigation. Assistant U.S. Attorneys Melissa Annis and Charles Escher prosecuted this case.

HOUSTON - A suburban Houston-area man has been convicted of 15 counts of fraud and tax violations following a two-week jury trial, announced U.S. Attorney Ryan K. Patrick.

Winfred Fields operated tax and bookkeeping businesses from an office on Richmond Avenue in Houston for many years under the business names Fields Enterprises, Your Tax Professionals and The Tax Boss.

At trial, the jury heard Fields participated in a scheme involving the submission of U.S. Individual Tax Returns on behalf of foreign people working on vessels on the Outer Continental Shelf of the United States. These crewmembers were engaged in oil and gas exploitation activities in the Gulf of Mexico. 

Evidence showed Fields falsely claimed workers were exempt from U.S. tax under a tax treaty between the U.S. and the United Kingdom, Spain or New Zealand. The employing companies had previously provided to the IRS withholdings from the worker’s wages and reported the income to the IRS. However, Fields submitted amended tax returns as well as original nonresident tax forms 1040NR claiming a refund of the entirety of the amounts paid in as U.S. taxes for various tax years including 2007 through 2012. 

Fields charged a fee of $2,500 for each crew member’s first return and required a $1,000 fee for each return thereafter. He required direct receipt of the refunds so that he could negotiate the checks and take his fee off the top. Fields had some refund checks deposited directly into one of several bank accounts he maintained. Alternatively, he cashed the checks at a Houston check cashing business or had the checks deposited into one of several attorney trust accounts three different Houston lawyers had maintained. Fields gathered the check proceeds or deposited them into the attorney trust accounts after paying a fee to the check cashing business and the attorneys for the service of cashing the U.S. Treasury checks. Fields deposited the proceeds in one of several bank accounts he utilized during the scheme.

Fields agreed to provide the remainder of the refund proceeds to the foreign clients. He did that for a while, but ultimately stopped forwarding any money to the workers. As those individuals began contacting him to ask for updates on their refund claims, he repeatedly sent misleading and materially false responses to their questions. 

The jury heard that Fields fraudulently obtained $3,097,974.19 in tax refunds from the IRS and kept approximately $1,302,271.75 for himself.

The defense attempted to convince the jury he acted in good faith and believed the wages were exempt. He also claimed he was trying to pay the crewmembers their refunds but just got behind. The jury rejected Fields’ contentions in their verdict and found him guilty as charged on all 15 counts.

U.S. District Ewing Werlein Jr. presided over trial and has set sentencing for May 2020. At that time, Fields faces up to 20 years for conspiracy to commit mail and wire fraud and count of mail fraud. For the other 13 tax fraud convictions, he also faces up to three years in federal prison. He may also be ordered to pay restitution to his victims and up to $250,000 in fines.

IRS - Criminal Investigation and U.S. Postal Inspection Service conducted the investigation. Assistant U.S. Attorneys Melissa Annis and Charles Escher prosecuted this case.

In San Antonio yesterday, 27-year-old William Richard Welsh and 23-year-old Ashleigh Nicole Browning Welsh were sentenced to 327 months in federal prison for production of child pornography announced United States Attorney Richard L. Durbin, Jr., and Homeland Security Investigations (HSI) Special Agent in Charge Shane Folden, San Antonio Division.

 

In addition to the prison term, United States District Judge Xavier Rodriguez ordered the Welshes be placed under supervised release for a period of 20 years after completing their prison term.

 

According to court records, HSI received information that a New Zealand individual was receiving images and videos depicting children engaged in sexually explicit conduct from a Kik Messenger account with subscriber information indicating the account holder resided in San Antonio. Authorities were able to identify the adults in the videos as the Welshes living in the San Antonio, TX area.

 

Agents from HSI interviewed the Welshes who admitted to producing the child pornography in their home at that time in Stockdale, TX.

 

The Welshes have remained in custody since being arrested in December 2015. On October 6, 2016, Ashleigh Welsh pleaded guilty to three counts of production of child pornography and on October 13, 2016, William Welsh pleaded guilty to three counts of production of child pornography.

 

“The heavy sentence imposed on Mr. and Mrs. Welsh sends a clear message that there are serious consequences for those who exploit children in any way,” said Special Agent in Charge, Shane Folden, HSI San Antonio. “Targeting crimes of this nature is a high priority for HSI. We will continue to dedicate HSI resources worldwide to identify and bring to justice these individuals."

 

This investigation was conducted under HSI’s Operation Predator, an international initiative to protect children from sexual predators. Since the launch of Operation Predator in 2003, HSI has arrested more than 14,000 individuals for crimes against children, including the production and distribution of online child pornography, traveling overseas for sex with minors, and sex trafficking of children. In fiscal year 2015, nearly 2,400 individuals were arrested by HSI special agents under this initiative and more than 1,000 victims identified or rescued.

HSI encourages the public to report suspected child predators and any suspicious activity through its toll-free Tip Line at 1-866-DHS-2-ICE or by completing its online tip form. Both are staffed around the clock by investigators. From outside the U.S. and Canada, callers should dial 802-872-6199. Hearing impaired users can call TTY 802-872-6196.

Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.

For additional information about wanted suspected child predators, download HSI’s Operation Predator smartphone app or visit the online suspect alerts page.

 

This investigation was conducted by the U. S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) with assistance from the Guadalupe County Sheriff’s Office. Assistant United States Attorney Tracy Thompson prosecuted this case on behalf of the government.

For more information contact:

Assistant U. S. Attorney Matthew J. Sutton (619) 546-8941, Special Assistant U.S. Attorney Nicole Bredariol (619) 546-8419, and Assistant U. S. Attorney Amy B. Wang (619) 546-6968

Click HERE for the indictment

Click HERE for the search warrant

SAN DIEGO – An indictment was unsealed today in federal court charging 60 members of a San Diego-based international methamphetamine distribution network tied to the Sinaloa Cartel with drug trafficking, money laundering and firearms offenses.

During the last month, hundreds of federal, state, and local law enforcement agents and officers have arrested dozens of defendants and searched multiple locations throughout San Diego County and in five states. As of today, 44 of the 60 defendants are either in federal or state custody, and the search continues for 16 defendants. In addition to these arrests, law enforcement has seized more than 220 pounds of methamphetamine and other illegal drugs; 90 firearms; and more than $250,000 in cash. Law enforcement officials are also seeking the forfeit of residences, high-end vehicles, and bulk cash belonging to these defendants.

According to the indictment and other publicly filed documents, over the last several years, this complex San Diego-based network obtained thousands of kilograms of methamphetamine from the Sinaloa Cartel to smuggle across the international border concealed in hidden compartments in passenger cars and motorcycles. The defendants then used these cars and motorcycles, along with trains, commercial airlines, the U.S. Mail, and commercial delivery services like FedEx and UPS to distribute that methamphetamine to dozens of sub-distributors located throughout San Diego County, the United States, and the world, including Hawaii, Arizona, Texas, Kansas, Iowa, Indiana, Michigan, Minnesota, Missouri, Connecticut, New York, New Jersey, Massachusetts, Kentucky, as well as Australia and New Zealand.

In return, tens of thousands of dollars in narcotics proceeds were returned to the network’s leaders via shipments of bulk cash, structured cash deposits into bank accounts, and money transfer systems like MoneyGram, Western Union, PayPal, Zelle, Venmo, and Cash App. And to protect their illegal operations, the defendants allegedly possessed dozens of firearms and used encrypted communication providers to communicate with each other. This drug trafficking and money laundering continued unabated throughout the COVID-19 global pandemic.

Despite their sophisticated efforts, law enforcement successfully penetrated this network with a variety of investigative techniques, including physical surveillance, obtaining phone records and financial documents, undercover agents, search warrants, as well as a six-month federal wiretap to intercept the communications and track the locations of the defendants.

Today we have dealt a serious blow to this San Diego-based international drug trafficking network with ties to the Sinaloa Cartel,” said Acting U.S. Attorney Randy Grossman. “The intersection of drug dealing and gun possession inevitably leads to violence in our communities. By dismantling this network, the Department of Justice reaffirms its unwavering commitment to reducing violent crime and building a San Diego where all our citizens are safe.”

“DEA is enhancing its efforts to disrupt, dismantle and destroy the most violent drug trafficking organizations across the country under Operation Crystal Shield,” said DEA Special Agent in Charge John W. Callery. “By dismantling this sophisticated drug trafficking network, DEA and our law enforcement partners have prevented significant quantities of methamphetamine and numerous firearms from making their way to the streets of San Diego and other neighborhoods throughout the United States.  Drug trafficking is a violent crime, that impacts the safety and security of our communities – and the drug and firearm seizures made in this investigation are testament to that.”

“The primary motivation of drug traffickers is greed,” said Ryan L. Korner, Special Agent in Charge for IRS-Criminal Investigation’s Los Angeles Field Office.  “IRS-CI will continue to work tirelessly alongside our partner agencies to stop the flow of narcotics and narcotics proceeds that are killing innocent Americans, and to ensure that crime doesn’t pay—that those individuals, like the 60 defendants indicted and arrested in this case, are brought to justice.”

“The U.S. Postal Inspection Service is committed to preserving the integrity of the mail by ridding the mail of involvement in drug trafficking,” said US Postal Inspection Service Acting Inspector in Charge Eric Shen of the Los Angeles Division. “This operation clearly shows that by combining our strengths and resources with all the involved agencies which include, federal, state and local law enforcement agencies we can disrupt their drug trafficking organizations to protect our communities.”

Acting U.S. Attorney Grossman also praised federal, state, and local law enforcement for the coordinated team effort in the culmination of this investigation. This case was led by the Drug Enforcement Administration’s Narcotics Task Force (NTF), the Internal Revenue Service - Criminal Investigation, and the United States Postal Inspection Service. The NTF is a DEA-led task force comprised of federal and local law enforcement from the DEA, San Diego County Sheriff’s Department, the San Diego Police Department, the Escondido Police Department, the United States Border Patrol, and the San Diego County Probation Office. Agents and officers from the United States Marshals Service, Homeland Security Investigations, Customs and Border Protection, the Bureau of Alcohol, Tobacco, Firearms & Explosives, and the Federal Bureau of Prisons, also provided vital assistance for the investigation. Attorneys from the Department of Justice, Office of Enforcement Operations, Electronic Surveillance Unit, likewise provided critical work as part of the investigative team.

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

Assistant U.S. Attorneys Matthew J. Sutton, Nicole Bredariol, and Amy B. Wang of the U.S. Attorney’s Office for the Southern District of California are prosecuting the case, with assistance from Paralegal Specialists Kathleen Jordano and Leticia Adams.

 

An indictment is not evidence of guilt. The defendants are presumed innocent and entitled to a fair trial at which the government has the burden of proving guilt beyond a reasonable doubt.

 

DEFENDANTS                                            Case Number 21cr1559-H                           

(D1) Reyes Espinoza                                      Age: 35                                   San Ysidro, CA

(D2) David Villegas                                        Age: 49                                   San Diego, CA

(D3) John Bomenka                                        Age: 54                                   San Diego, CA

(D4) Dennis Jones                                          Age: 49                                   San Diego, CA

(D5) Darren Mosier                                        Age: 59                                   San Diego, CA

(D6) Frank Tucker                                          Age: 63                                   San Diego, CA

(D7) Charles Miller                                         Age: 52                                   San Diego, CA

*(D8) Carlos Espinoza                                    Age: 28                                   Tijuana, MX

(D9) Mario Espinoza                                      Age: 20                                   Tijuana, MX

(D10) Jaron Hillyer                                         Age: 30                                   San Diego, CA

(D11) Kristina Brown                                     Age: 32                                   San Diego, CA

(D12) Danny Miller                                        Age: 52                                   San Diego, CA

(D13) Shawn Morrill                                       Age: 49                                   San Diego, CA

*(D14) Hilleal Grant                                      Age: 51                                   San Diego, CA

*(D15) Lewis Rich                                         Age: 59                                   San Diego, CA

(D16) Cameron Graff                                     Age: 29                                   San Diego, CA

*(D17) Terry Haith                                         Age: 60                                   San Diego, CA

(D18) Tansy Steinhauer                                  Age: 51                                   San Diego, CA

*(D19) Jessica Pomeroy                                 Age: 30                                   San Diego, CA

*(D20) Shadow Segura                                   Age: 23                                   Houston, TX

(D21) Jasmine Lucas                                      Age: 50                                   San Diego, CA

(D22) Philip Abbas                                         Age: 42                                   San Diego, CA

*(D23) Peter Fuller                                         Age: 63                                   San Diego, CA

(D24) Eduardo Osuna                                     Age: 41                                   San Diego, CA

(D25) Frank Carrillo                                       Age: 45                                   San Diego, CA

(D26) Stephen Myrick                                    Age: 45                                   San Diego, CA

(D27) Gloria Sandoval                                   Age: 40                                   San Diego, CA

*(D28) Ashley Hilton                                     Age: 42                                   Houston, TX

(D29) Joseph Occhiogrosso                            Age: 44                                   Brooklyn, NY

(D30) Gary Beasley                                        Age: 39                                   San Diego, CA

*(D31) Arnulfo Rodriguez                             Age: 38                                   San Diego, CA

(D32) Alexandro Larios-Flores                       Age: 24                                   San Diego, CA

*(D33) Jose Vargas                                        Age: 31                                   San Diego, CA

(D34) Michael Nagle                                      Age: 50                                   San Diego, CA

*(D35) Raymond Sterling                               Age: 51                                   San Diego, CA

(D36) Terry Tyler                                           Age: 49                                   San Diego, CA

(D37) Victor Yamasaki                                   Age: 59                                   San Diego, CA

(D38) Chris Paschke                                       Age: 57                                   San Diego, CA

(D39) Charles Gerardi                                                Age: 57                                   Houston, TX

(D40) Christian Lopez-Villegas                      Age: 34                                   San Ysidro, CA

(D41) David Santa Maria                                Age: 49                                   San Diego, CA

(D42) Melvin Johnson                                    Age: 44                                   San Diego, CA

(D43) Daniel Babuata                                     Age: 34                                   San Diego, CA

*(D44) Garrett Steele                                     Age: 40                                   San Diego, CA

(D45) Vien Trinh                                            Age: 62                                   San Diego, CA

*(D46) Troy Prater                                         Age: 46                                   San Diego, CA

*(D47) Sharon Landhan                                 Age: 44                                   San Diego, CA

(D48) Gabriel Askay                                      Age: 44                                   San Diego, CA

(D49) Patrick Lane                                         Age: 57                                   San Diego, CA

(D50) Kevin Tobin                                          Age: 65                                   San Diego, CA

(D51) James Ellerbe                                        Age: 68                                   San Diego, CA

(D52) Hope Stoneking                                    Age: 35                                   San Diego, CA

(D53) Tasha Almanza                                     Age: 42                                   San Diego, CA

*(D54) Jason Ferguson                                   Age: 48                                   San Diego, CA

(D55) Kelle Ferguson                                     Age: 52                                   San Diego, CA

*(D56) Roger Desroche                                  Age: 74                                   San Diego, CA

(D57) Steven Brandt                                      Age: 57                                   San Diego, CA

(D58) Esteban Gastelum-Sanchez                  Age: 42                                   San Diego, CA

(D59) Tara Scroggins                                     Age: 45                                   San Diego, CA

(D60) Debbie Hill                                           Age: 59                                   San Diego, CA

 

*Fugitives

 

SUMMARY OF CHARGES

 

Conspiracy to Distribute Methamphetamine (21 U.S.C. §§ 841(a)(1) and 846)

Conspiracy to Launder Monetary Instruments (18 U.S.C. §§ 1956(a)(1) and (h))

Possession with Intent to Distribute Methamphetamine (21 U.S.C., § 841(a)(1))

Importation of Methamphetamine (21 U.S.C. §§ 952 and 960)

Felon in Possession of a Firearm (18 U.S.C. § 922(g)(1)

 

Maximum Penalties: For the drug charges, term of custody including a mandatory minimum 10 years and up to life imprisonment, $10 million fine and a lifetime of supervised release. For money laundering charges, term of custody up to 20 years’ imprisonment, a fine of $500,000 or twice the value of the monetary instrument or funds involved, and three years of supervised release. For the firearms charges, term of custody up to 10 years imprisonment, and a $250,000 fine.

 

AGENCIES

 

Drug Enforcement Administration, Narcotics Task Force

Internal Revenue Service - Criminal Investigation

United States Postal Inspection Service

San Diego County Sheriff’s Department

San Diego Police Department

Escondido Police Department

United States Border Patrol

San Diego County Probation Office

United States Marshals Service

Homeland Security Investigations

Bureau of Alcohol, Tobacco, Firearms & Explosives

Federal Bureau of Prisons

San Diego County District Attorney’s Office

Department of Justice, Organized Crime Drug Enforcement Task Forces

Department of Justice, Office of Enforcement Operations, Electronic Surveillance Unit

U.S. Attorney’s Office for the District of Massachusetts

U.S. Attorney’s Office for the Southern District of New York

U.S. Attorney’s Office for the Eastern District of Kentucky

U.S. Attorney’s Office for the Western District of Texas

U.S. Attorney’s Office for the Central District of California

U.S. Attorney’s Office for the District of Minnesota

U.S. Attorney’s Office for the Northern District of Iowa

U.S. Attorney’s Office for the Western District of Michigan

U.S. Attorney’s Office for the Eastern District of Michigan

For Further Information, Contact:

Assistant U. S. Attorneys Peter Ko (619) 546-7359 and Shane Harrigan (619) 546-6981

 

John T. Earnest of Rancho Penasquitos pleaded guilty in federal court today to a 113-count hate crimes indictment, admitting that he set fire to an Escondido mosque and opened fire in a Poway synagogue because he wanted to kill Muslims and Jews. The religiously- and racially-motivated attacks resulted in the murder of one person and the attempted murders of 53 others.

Earnest was indicted by a federal grand jury in May of 2019 on civil rights, hate crime, and firearm charges in connection with the murder of Lori Gilbert Kaye and the attempted murder of 53 others at the Chabad of Poway on April 27, and the March 24 arson of the Dar-ul-Arqam Mosque in Escondido.

“This nation stands with Lori Gilbert Kaye’s family and the survivors of these unspeakable acts of terror,” said Acting U.S. Attorney Randy S. Grossman. “We emphatically reject the defendant’s hate, racism and prejudice, and we hope the conclusion of this case brings some measure of comfort to all those affected by his heinous crimes.”

“The defendant entered a synagogue with the intent to kill all those inside because of his hatred for Jewish people, and days earlier used fire in an attempt to destroy another sacred house of worship because of his hatred for Muslims,” said Deputy Attorney General Lisa Monaco. “There is no place in American society for this type of hate-fueled violence. The Department of Justice will enforce hate crimes and anti-discrimination laws to the fullest extent of the law and will hold perpetrators accountable for these crimes, which inflict harm not only on individual victims, but on entire communities.”

“This guilty plea will hopefully bring closure and start the healing process to all those impacted by the defendant’s cowardly acts nearly two-and-a-half years ago,” said FBI Special Agent in Charge Suzanne Turner. “The FBI stands steadfast with all of our law enforcement partners throughout the county to root out and defeat hate; It has no place in a civilized society.” 

“The tragic shooting at the Chabad of Poway was shocking for our community,” said ATF Los Angeles Field Division Special Agent in Charge Monique Villegas. “Our condolences go out to the victims and their families who were affected by this horrific act. ATF remains committed to bringing individuals responsible for such acts to justice to ensure everyone can worship safely.”

According to the plea agreement and other court documents, after several weeks of planning, on the morning of April 27, 2019, Earnest drove to the Chabad of Poway synagogue, where members of the congregation were gathered for religious worship. Earnest entered the building armed with a Smith and Wesson M&P 15 assault rifle that was fully loaded with a 10-round magazine. He wore a chest rig which contained five additional magazines, each loaded with ten rounds of ammunition. Earnest opened fire, killing one person and injuring three other members of the congregation, including a then 8-year-old child. After Earnest emptied his initial magazine, several congregants rushed at Earnest. Earnest fled in his car and, shortly after, called 911 and confessed that he had “just shot up a synagogue.” Earnest was apprehended by local law enforcement who found the rifle and additional ammunition in his car.

Investigators found a manifesto written by Earnest and posted on the Internet shortly before the attack. In the manifesto, Earnest made many anti-Semitic and anti-Muslim statements, including “I can only kill so many Jews” and “I only wish I killed more.” Earnest wrote that he was inspired by the Tree of Life synagogue shooting in Pittsburgh, Pennsylvania, and the shootings at two mosques in New Zealand.

Earnest also admitted that on March 24, 2019, he attempted to set fire to the Dar-ul-Arqam mosque in Escondido, California because of his hatred of Muslims and the religious character of the building. Seven missionaries were asleep in the mosque, but no one was injured.

According to the terms of the plea agreement, the United States and Earnest will jointly recommend a sentence of life in prison plus 30 years.

The case is being prosecuted by Assistant U.S. Attorneys Shane Harrigan and Peter Ko, along with Deputy Chief Rose Gibson of the Civil Rights Division. The FBI, ATF and San Diego Sheriff’s Office conducted the investigation. Grossman thanked the prosecutors and law enforcement agencies for working hard to achieve justice in this case.

 

DEFENDANT                                               Case Number 19cr1850                                           

John T. Earnest                                               Age: 22           San Diego

SUMMARY OF CHARGES

Counts 1 - 54

Obstruction of Free Exercise of Religious Beliefs Resulting in Death and Bodily Injury; and Involving Attempt to Kill, Use of a Dangerous Weapon - 18 U.S.C. §§ 247(a)(2), 247(d)(1) and 247(d)(3)

Maximum penalty: Life in prison or death and $250,000 fine

 

Counts 55-108

Hate Crime Acts – 18 U.S.C. § 249(a)(1)(B)(i)(ii)

Maximum penalty: Life in prison and $250,000 fine

 

Count 109

Damage to Religious Real Property Involving Use of a Dangerous Weapon or Fire – 18 U.S.C. §§ 247(a)(1), 247 (d)(3) 

Maximum penalty: Twenty years in prison and $250,000 fine

 

Count 110

Using and Carrying a Firearm During and In Relation to a Crime of Violence, Resulting in Death – Title 18, U.S.C., Sec. and 924(c) and 924(j)

Maximum penalty: Life in prison or death and $250,000 fine

 

Counts 111-113

Using, Carrying, and Discharging a Firearm During and In Relation to a Crime of Violence – Title 18, U.S.C., Sec. and 924(c)

Maximum penalty: Life in prison and $250,000 fine, mandatory minimum 10 years in prison

 

AGENCIES

Federal Bureau of Investigation

San Diego County Sheriff’s Department

San Diego Police Department

Bureau of Alcohol, Tobacco, Firearms and Explosives

San Diego County District Attorney’s Office

Escondido Police Department

For Further Information, Contact:

Media Relations Director Kelly Thornton (619) 546-9726

SAN DIEGO – A wave of hundreds of arrests that began in Australia and stretched across Europe culminated today with the unsealing of a federal grand jury indictment in San Diego charging 17 foreign nationals with distributing thousands of encrypted communication devices to criminal syndicates.

The 500-plus arrests that took place during a worldwide two-day takedown were possible because of a San Diego-based investigation like no other. For the first time, the FBI operated its own encrypted device company, called “ANOM,” which was promoted by criminal groups worldwide. These criminals sold more than 12,000 ANOM encrypted devices and services to more than 300 criminal syndicates operating in more than 100 countries, including Italian organized crime, Outlaw Motorcycle Gangs, and various international drug trafficking organizations, according to court records.

SEARCH WARRANT - Operation Trojan Shield

INDICTMENT - Operation Trojan Shield











During the course of the investigation, while ANOM’s criminal users unknowingly promoted and communicated on a system operated lawfully by the FBI, agents catalogued more than 27 million messages between users around the world who had their criminal discussions reviewed, recorded, and translated by the FBI, until the platform was taken down yesterday.

The users, believing their ANOM devices were protected from law enforcement by the shield of impenetrable encryption, openly discussed narcotics concealment methods, shipments of narcotics, money laundering, and in some groups—violent threats, the indictment said. Some users negotiated drug deals via these encrypted messages and sent pictures of drugs, in one instance hundreds of kilograms of cocaine concealed in shipments of pineapples and bananas, and in another instance, in cans of tuna, in order to evade law enforcement.

The indictment charges 17 alleged distributors of the FBI’s devices and platform. They are charged with conspiring to violate the Racketeer Influenced and Corrupt Organizations Act (RICO), pertaining to their alleged involvement in marketing and distributing thousands of encrypted communication devices to transnational criminal organizations worldwide.

During the last 24 to 48 hours, in addition to the more than 500 arrests around the world, authorities searched more than 700 locations deploying more than 9,000 law enforcement officers worldwide and seized multi-ton quantities of illicit drugs.

CLICK HERE - Video Messages from International Partners

Grand totals for the entire investigation include 800 arrests; and seizures of more than 8 tons of cocaine; 22 tons of marijuana; 2 tons of methamphetamine/amphetamine; six tons of precursor chemicals; 250 firearms; and more than $48 million in various worldwide currencies. Dozens of public corruption cases have been initiated over the course of the investigation. And, during the course of the investigation, more than 50 clandestine drug labs have been dismantled. One of the labs hit yesterday was one of the largest clandestine labs in German history.

“This was an unprecedented operation in terms of its massive scale, innovative strategy and technological and investigative achievement,” said Acting U.S. Attorney Randy Grossman. “Hardened encrypted devices usually provide an impenetrable shield against law enforcement surveillance and detection. The supreme irony here is that the very devices that these criminals were using to hide from law enforcement were actually beacons for law enforcement. We aim to shatter any confidence in the hardened encrypted device industry with our indictment and announcement that this platform was run by the FBI.”



















 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

“Today marks the culmination of more than five years of innovative and complex investigative work strategically aimed to disrupt the encrypted communications space that caters to the criminal element,” said Suzanne Turner, Special Agent in Charge of the Federal Bureau of Investigation (FBI) - San Diego Field Office.  “The FBI has brought together a network of dedicated international law enforcement partners who are steadfast in combating the global threat of organized crime. The immense and unprecedented success of Operation Trojan Shield should be a warning to international criminal organizations  – your criminal communications may not be secure; and you can count on law enforcement worldwide working together to combat dangerous crime that crosses international borders.”

“Operation Trojan Shield is a perfect example of an OCDETF case - an investigation driven by intelligence and maximizing the strengths of partner law enforcement agencies in coordinated efforts to dismantle command and control elements of criminal networks,” said OCDETF Director Adam W. Cohen.  “Coordination is the cornerstone of the OCDETF program, and the impressiveness of the combined efforts of the U.S. Attorney’s Office, FBI, and our foreign partners cannot be overstated.  This effort has created lasting disruptive impacts to these transnational criminal organizations.”

“The AFP and FBI have been working together on a world-first operation to bring to justice the organised crime gangs flooding our communities with drugs, guns and violence,” said AFP Commissioner Reece Kershaw APM. “The FBI provided an encrypted communications platform while the AFP deployed the technical capability which helped unmask some of the biggest criminals in the world. This week the AFP and our state police partners will execute hundreds of warrants and we expect to arrest hundreds of offenders linked to the platform. This is the culmination of hard work, perseverance and an invaluable, trusted relationship with the FBI.

We thank the FBI for their long and integral partnership with the AFP.”

Europol’s Deputy Executive Director Jean-Philippe Lecouffe: “This operation is an exceptional success by the authorities in the United States, Sweden, the Netherlands, Australia, New Zealand and the other European members of the Operational Task Force. Europol coordinated the international law enforcement community, enriched the information picture and brought criminal intelligence into ongoing operations to target organised crime and drug trafficking organisations, wherever they are and however they choose to communicate. I am very satisfied to see Europol supporting this operation and strengthen law enforcement partnerships by emphasizing the multi-agency aspect of the case.”



















 

 

 

 

 

 

 

 

 

 

 

 

 

“I am exceptionally proud of our New Zealand Police staff who supported Operation Trojan Shield,” said New Zealand Police Commissioner Andrew Coster. “This operation will have an unprecedented impact on organised crime syndicates across the globe. We value our strong relationship with the FBI, AFP and Europol and it is through these partnerships and the unrelenting efforts by law enforcement agencies from multiple countries that this operation has seen such incredible success This is a fantastic result and reiterates the importance of our transnational partnerships with law enforcement agencies across the globe in our common ongoing efforts to dismantle organised crime groups and the enormous harm they cause to our communities.”

“This remarkably successful operation demonstrates what can be accomplished when law enforcement agencies throughout the world work together,” said DEA Los Angeles Division Special Agent in Charge Bill Bodner. “Through strong relationships with our partners in more than 67 countries, professionals throughout the DEA, including experts in the Los Angeles Division, supported this unprecedented collaboration and our own mission to disrupt and dismantle the criminal organizations that profit from the distribution of illegal drugs.”

According to the San Diego indictment, ANOM’s administrators, distributors, and agents described the platform to potential users as “designed by criminals for criminals” and targeted the sale of ANOM to individuals that they knew participated in illegal activities. 

All defendants are foreign nationals located outside of the U.S. In total, eight of the indicted defendants were taken into custody last night.  Authorities are continuing to search for the remaining nine defendants.

The indictment alleges the defendants knew the devices they distributed were being used exclusively by criminals to coordinate drug trafficking and money laundering, including in the U.S. The defendants personally fielded “wipe requests” from users when devices fell into the hands of law enforcement.

The FBI’s review of ANOM users’ communications worked like a blind carbon copy function in an email. A copy of every message being sent from each device was sent to a server in a third-party country where the messages were collected and stored. The data was then provided to the FBI on a regular basis pursuant to an international cooperation agreement. Communications such as text messages, photos, audio messages, and other digital information were reviewed by the FBI for criminal activity and disseminated to partner law enforcement agencies in other countries. Each user was using ANOM for a criminal purpose. Those countries have built their own cases against ANOM users, many of whom were arrested in takedowns in Europe, Australia and New Zealand over the last several days.

Intelligence derived from the FBI’s communications platform presented opportunities to disrupt major drug trafficking, money laundering, and other criminal activity while the platform was active. For example, over 150 unique threats to human life were mitigated.

This operation was led by the FBI and coordinated with the U.S. Drug Enforcement Administration, the U.S. Marshals Service, Australian Federal Police, Swedish Police Authority, National Police of the Netherlands, Lithuanian Criminal Police Bureau, Europol, and numerous other law enforcement partners from over a dozen other countries.

This investigation began after Canada-based encrypted device company Phantom Secure was dismantled by the FBI in 2018 through a San Diego-based federal RICO indictment and court-authorized seizure of the Phantom Secure platform, forcing many criminals to seek other secret communication methods to avoid law enforcement detection. The FBI—along with substantial contributions by the Australian Federal Police—filled that void with ANOM.

When the FBI and the San Diego U.S. Attorney’s Office dismantled Sky Global in March 2021, the demand for ANOM devices grew exponentially as criminal users sought a new brand of hardened encryption device to plot their drug trafficking and money laundering transactions and to evade law enforcement.  Demand for ANOM from criminal groups also increased after European investigators announced the dismantlement of the EncroChat platform in July 2020. The ANOM platform - unlike Phantom Secure, EncroChat, and Sky Global - was exploited by the FBI from the very beginning of ANOM’s existence and was not an infiltration of an existing popular encrypted communications company.

In October 2018, Phantom Secure’s CEO pleaded guilty to a RICO conspiracy in the Southern District of California.  He was sentenced to nine years in prison and ordered to forfeit $80 million in proceeds from the sale of Phantom devices.

For further information, please see https://www.justice.gov/usao-sdca/pr/chief-executive-communications-company-sentenced-prison-providing-encryption-services and https://www.justice.gov/usao-sdca/pr/sky-global-executive-and-associate-indicted-providing-encrypted-communication-devices.

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

Assistant U.S. Attorneys Meghan E. Heesch, Joshua C. Mellor, Shauna Prewitt, and Mikaela Weber of the U.S. Attorney’s Office for the Southern District of California are prosecuting the case, with assistance from Paralegal Specialist Tracie Jarvis.  Former Assistant U.S. Attorney Andrew P. Young made invaluable contributions during his tenure on the case team. 

Acting U.S. Attorney Grossman praised federal prosecutors and FBI agents and international law enforcement partners for their relentless pursuit of justice in this extraordinary case. Additionally, Acting U.S. Attorney Grossman thanked the coordinated efforts of the Department of Justice’s Office of International Affairs which facilitated many international components of this complex investigation.

The charges and allegations contained in an indictment are merely accusations, and the defendants are considered innocent unless and until proven guilty.

DEFENDANTS  21-CR-1623-JLS

COUNTRY

*Joseph Hakan Ayik (1)

 

Domenico Catanzariti (2)

Australia

*Maximilian Rivkin (3)

 

Abdelhakim Aharchaou (4)

The Netherlands

*Seyyed Hossein Hosseini (5)

 

Alexander Dmitrienko (6) 

Spain

*Baris Tukel (7)     

 

*Erkan Yusef Dogan (8)    

 

*Shane Geoffrey May (9)    

 

Aurangzeb Ayub (10) 

The Netherlands

James Thomas Flood (11)  

Spain

*Srdjan Todorovic aka Dr. Djek (12)    

 

*Shane Ngakuru (13)    

 

Edwin Harmendra Kumar (14)  

Australia

Omar Malik (15)  

The Netherlands

Miwand Zakhimi (16)   

The Netherlands

*Osemah Elhassen (17)

 

*Fugitive

 

                                     

SUMMARY OF CHARGES

Conspiracy to Conduct Enterprise Affairs Through Pattern of Racketeering Activity (RICO Conspiracy), in violation of 18 U.S.C. § 1962(d)

Maximum Penalty: Twenty years in prion

AGENCIES

Federal Bureau of Investigation

Drug Enforcement Administration

United States Marshals Service

Department of Justice, Office of International Affairs

Australian Federal Police

Swedish Police Authority

Lithuanian Criminal Police Bureau

National Police of the Netherlands

EUROPOL

 

For further information, please see

https://www.europol.europa.eu/newsroom/news/800-criminals-arrested-in-biggest-ever-law-enforcement-operation-against-encrypted-communication

https://www.afp.gov.au/news-media/media-releases/afp-led-operation-ironside-smashes-organised-crime

NEWS RELEASE SUMMARY – March 19, 2024

SAN DIEGO – Matthew Isaac Wolfe was sentenced in federal court today to 14 years in prison for his role in a conspiracy with Michael Pratt, owner of the website GirlsDoPorn, and others, to deceive and coerce young women into appearing in pornographic videos. A restitution hearing is scheduled for May 7, 2024 at 10 a.m.

The conspiracy included recruiting the victims from throughout the United States and Canada using internet advertisements for clothed modeling jobs. Even after the victims learned the gig involved an adult video-shoot, Wolfe admitted to persuading women to appear in the videos by telling them that the videos would never be posted online, that the videos would never be released in the United States, and that no one who knew the women would ever find out about the videos, representations he knew to be false. In truth, the videos were exclusively marketed and distributed on the internet. Not only did Wolfe lie to the women, he also instructed others to do so. Wolfe told co-defendant Theodore Gyi, the cameraman on hundreds of GirlsDoPorn video shoots, that if asked, he should lie to the women and tell them the videos would not be posted on the internet.

Most of the video shoots took place in San Diego – at local hotels and short-term rental units.  Although the women were promised that the video shoots would be brief, they often took hours. Once the video productions began, some women were not permitted to leave the shooting locations until the videos were completed; some were threatened with lawsuits or cancelled flights home if they did not complete the videos; and others were allegedly forced to perform certain sex acts, which they had earlier declined to do.

After the victims returned home, still believing that they would remain anonymous, clips of the videos were posted on heavily trafficked adult film sites, like Pornhub, meant to funnel viewers to the full-length versions of the videos on Pratt’s website, GirlsDoPorn. Pratt charged visitors to GirlsDoPorn a subscription fee and generated more than $17 million in revenue. 

Wolfe pleaded guilty to the conspiracy on July 26, 2022, admitting he moved to the United States from New Zealand in 2011 to work for Pratt and had a wide range of responsibilities. He filmed approximately 100 videos; uploaded finished videos onto the internet; oversaw the company’s financial books; and operated various business entities that were used to promote the business. Wolfe worked at GirlsDoPorn from 2011 until his arrest in October 2019.

During hearings today and on January 22, 2024, approximately 30 survivors asked a federal judge to impose a significant sentence, describing how the actions of Wolfe and his co-defendants destroyed their lives. Survivors, many of them college students at the time, described answering what they thought were legitimate modeling ads and flying to San Diego for paid modeling gigs, only to be forced to perform sexual acts on camera.

The women spoke of struggling with substance and alcohol abuse, anxiety and depression, suicidal thoughts and attempts, and post-traumatic stress syndrome in the aftermath of their videos going viral. Some spoke of lost relationships with friends and family; others dropped out of school; and others went into hiding.

One of the women said: “I was robbed of my privacy, my dignity, and my peace of mind… But worst of all, I was robbed of my identity. I was once viewed as a beautiful, fun-loving and strong woman who was known for her athleticism and ability to make just about anyone laugh. I was a caring friend and a daughter my parents were proud of. Mr. Wolfe shattered who I was…Today I'm taking my identity back. I am not a victim. I'm a survivor.”

One woman recalled the day she learned that her pornographic video received more than 300 million views on Pornhub, one of the most-visited websites in the world.

“That ad seemed harmless, but it wrecked my entire life. In an instant, the life I had was gone: My hopes gone, my relationships gone, everything was gone…The fall-out from the videos spread to every part of my life like cancer, and that cancer remains to this day, making it virtually impossible for me to start a new life. I lost my modeling career, my college years, my whole twenties, my name, my career path, my friends, and my family. Everything I had built was gone, and so too was my future. Doors that were once opened were slammed in my face…Matthew Wolfe stole my life, and it wasn't just my life. He stole hundreds of lives. What kind of price do you put on a life? Mr. Wolfe deserves a jail sentence that accounts for each and every life he has stolen.”

Another woman told the court: “It's been nearly 3,650 days of living in a tortuous purgatory, but today marks a major milestone in my recovery. Today there's a shift in the winds. Today is the day all the survivors get their voices back. Today is the day we get to be heard.”

Wolfe also admitted he was aware that personal identifying information and social media accounts for some women were being posted on pornwikileaks.com, a site controlled by Pratt and dedicated to “exposing” the true identities of individuals appearing in pornographic videos, causing the victims to be subjected to severe harassment. Even after Wolfe became aware of this, he and others continued to assure prospective models that no one would ever find out about their video shoot or learn their identity.



“We applaud all survivors who courageously speak out in pursuit of justice,” said U.S. Attorney Tara McGrath. “Their voices rang out in the courtroom today, and we stand beside them in holding Mr. Wolfe accountable for the incredible pain and suffering he caused.”



“Matthew Wolfe’s willingness to use deception, coercion and intimidation to exploit young women paints a sordid picture of the lengths some people will go just to make money,” said FBI San Diego Special Agent in Charge Stacey Moy. “Wolfe’s sentencing today, and any past or future sentencings related to this case, are small slivers of justice for the victims, but ultimately don’t fully heal the deep pain spawned by Mr. Wolfe and the other defendants.”

Co-defendant Michael Pratt made his first appearance today after being extradited from Spain following more than three years as an international fugitive. In 2022, Pratt was named to the FBI’s Top Ten Most Wanted list.

Ruben Andre Garcia, the recruiter and male model, was sentenced to 20 years in prison on June 14, 2021. Theodore Gyi was sentenced to four years in prison on November 9, 2022. Valorie Moser, the office manager, is set for sentencing on August 9, 2024.

DEFENDANTS                                             Case Number 19cr4488                       

Michael James Pratt                                        Age:       36                 Unknown

Matthew Isaac Wolfe                                      Age        37                     San Diego, CA

Ruben Andre Garcia                                       Age:       31                      San Diego, CA

Theodore Gyi                                                  Age,       46                        Solana Beach, CA  

Valorie Moser                                                 Age:       37                       San Diego, CA

CHARGES

Count 1

Conspiracy to Commit Sex Trafficking by Force, Fraud and Coercion, 18 U.S.C. § 1594

Maximum Penalty:  Life in prison, $250,000 fine.

INVESTIGATING AGENCIES

FBI – Southern District of California

U.S. Marshals Service

*The charges and allegations contained in an indictment or complaint are merely accusations, and the defendants are considered innocent unless and until proven guilty.

SAN DIEGO – Alexander Dmitrienko of Finland became the last of eight defendants extradited so far to admit participating in the worldwide conspiracy to distribute ANOM hardened encrypted communication devices to criminal syndicates. The ANOM enterprise facilitated drug trafficking, money laundering, and obstruction of justice crimes.The eight defendants were among 17 indicted in San Diego in 2021 in connection with Operation Trojan Shield, a first-of-its-kind, international law enforcement effort in which the FBI secretly operated an encrypted messaging network. The ANOM criminal enterprise was responsible for the distribution of more than 12,000 devices in 100 countries. While ANOM’s criminal users unknowingly communicated on the system operated by law enforcement, agents catalogued more than 27 million messages between users around the world whose criminal discussions were covertly obtained and reviewed by the FBI.ANOM devices were sold to and used by over 300 criminal syndicates, including outlaw motorcycle gangs, Italian and Balkan organized crime groups, and international drug trafficking organizations. The investigation culminated in a worldwide takedown on June 7, 2021. During the takedown, more than 10,000 law enforcement officers made over 500 arrests and searched over 700 locations around the world.Of the 17 indicted in San Diego, eight have been extradited to date. Dmitrienko pleaded guilty in federal court yesterday; defendants Seyyed Hossein Hosseini and Aurangzeb Ayub of the Netherlands and Shane Ngakuru of New Zealand entered their guilty pleas on January 23, 2025; Dragan Nikitovic, Edwin Harmendra Kumar, Miwand Zakhimi, and Osemah Elhassen pleaded guilty between May and September 2024. All pleaded guilty to Count 1 of a superseding indictment charging them with a racketeering conspiracy in connection with the ANOM enterprise.Prior to their guilty pleas, the defendants filed motions to dismiss the indictment and a motion to suppress the ANOM evidence. The District Court denied those motions, concluding the Fourth Amendment did not apply to the defendants and the ANOM data collection did not violate the U.S. Constitution.In total, the investigation resulted in approximately 1,200 arrests; the seizure of more than 12 tons of cocaine, three tons of methamphetamine or amphetamines; 17 tons of precursor chemicals, 300 firearms, and $58 million in various currencies. Dozens of public corruption investigations, too, have been pursued, and more than 50 drug labs have been dismantled. Further, over 150 threats to life were prevented.According to their plea agreements, the defendants promoted the ANOM platform as “Built by criminals for criminals,” and touted security features such as the ability to wipe devices remotely when seized by law enforcement. The defendants admitted that the conspiracy’s purposes included money laundering and laundering with cryptocurrency. As to drugs, specifically, the four defendants who pleaded guilty in January and February 2025—Hosseini, Dmitrienko, Ayub, and Ngakuru—all admitted that they sold ANOM devices knowing that they would be used to traffic at last 50 kilograms of cocaine; Ngakuru also admitted the importation, exportation, and distribution of at least five kilograms of methamphetamine. Based on their plea agreements and other court filings, what these defendants also did as part of the conspiracy included:Hosseini was a part of a team of ANOM distributors, “Team Wijzijn,” based in the Netherlands. He and Dmitrienko discussed the distribution of “90% pure, Peruvian” cocaine, for example, and he and Kumar messaged each other about bringing “kilos” from Belgium and getting drugs to Australia by “Fisher boats.” Hosseini promoted ANOM’s security features and told other distributors about vulnerabilities of competitors SkyECC and No. 1 BC. Hosseini also admitted to obstructing justice through wiping ANOM devices when they were seized by law enforcement.Dmitrienko distributed ANOM devices from Spain. He frequently used ANOM for cocaine and other drug distribution: “5 blocks of colombian coke” and “32 blocks,” he offered in two instances, in addition to conversations about “cook[ing] cocaine.” Dmitrienko wrote about “gateways” and “interesting opportunities” for the enterprise in Russia and Ukraine, including through Latvia and Lithuania. He also promoted money laundering through a company he had in Delaware, telling Hosseini that it involved “0% tax and no book[k]eeping…Yes this is pure moneylaund[e]ring 😂.”Ayub was an ANOM distributor in Europe, who also sold encrypted communications devices in the U.A.E.—and he had been imprisoned in Dubai for distributing these types of platforms. Ayub was involved in cocaine distribution as he talked about “top” (cocaine) from Colombia, and delivery to London, and sending “100k at a time” to pay for the drugs. He promoted ANOM through his own experience and contrasts with Encrochat and SkyECC, both of which were taken down by law enforcement in 2020 and 2021. Ayub, too, admitted to the obstruction of justice through wiping ANOM devices.Ngakuru was based in Thailand, distributing ANOM devices there and in New Zealand and Australia. He used the platform for extensive cocaine and methamphetamine distribution and money laundering. He was tied to two seizures of methamphetamine; discussed quality, repressing, and prices for “rack” and “bird” (cocaine); and detailed in messages how seven kilograms of methamphetamine was concealed in boxes of “full scan proof” “commercial lights.” Among other times he laundered proceeds, Ngakuru coordinated cash pickup in Sydney, Australia and directed deposits into “Thai accounts.”“The statistics of this case are staggering,” said U.S. Attorney Tara McGrath. “The FBI led this unprecedented collaboration for years, harnessing the evidence to bring down cocaine, meth, and cash traffickers across the globe. These guilty pleas underscore the impact of international partnerships in dismantling organized crime.”“Operation Trojan Shield was a massive, innovative, and unprecedented case having immeasurable implications to criminal organizations across the globe,” said FBI San Diego Special Agent in Charge Stacey Moy. “This extraordinary impact came from an investigative strategy that relied on ingenuity, partnerships, and perseverance, designing a blueprint for disrupting organized crime within the United States and abroad. The guilty pleas of all extradited defendants highlight the effectiveness of this strategy and reinforces the FBI’s collaborative approach aimed at dismantling Transnational Criminal Organizations worldwide.”Matthew Allen, Special Agent in Charge of the DEA Los Angeles Field Division, said, “The triumph of this vast-scale operation demonstrates the immense value of partnerships, both domestic and international. Expert investigators in the DEA Los Angeles Division, working alongside innovative and exceptionally experienced federal and foreign-based partners, took an intricate investigation to the next level. Our multi-agency alliance managed to infiltrate these transnational criminal organizations, ultimately exposing and pummeling their schemes. DEA will continue to foster this type of unprecedented collaboration and offer a core presence.”Elhassen and Zakhimi were previously sentenced to 63 and 60 months in prison, respectively. The other six defendants who have pleaded guilty are scheduled to be sentenced in February, April, and May, 2025. They were extradited to the Southern District of California from Australia (Kumar), Colombia (Elhassen), The Netherlands (Hosseini, Ayub, and Zakhimi), Spain (Dmitrienko and Nikitovic), and Thailand (Ngakuru). Eight other defendants in the case have been arrested in locations outside the United States and are yet to be extradited, and one remains a fugitive.This case is being prosecuted by Assistant U.S. Attorneys Joshua C. Mellor, Mikaela L. Weber, and Peter S. Horn.For further information on investigations and prosecutions of encrypted communication providers, see https://www.justice.gov/usao-sdca/pr/fbi-s-encrypted-phone-platform-infiltrated-hundreds-criminal-syndicates-result-massive (ANOM), https://www.justice.gov/usao-sdca/pr/sky-global-executive-and-associate-indicted-providing-encrypted-communication-devices (Sky Global), and https://www.justice.gov/usao-sdca/pr/chief-executive-communications-company-sentenced-prison-providing-encryption-services (Phantom Secure).Operation Trojan Shield is part of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation. OCDETF identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.The Justice Department’s Office of International Affairs provided significant assistance in securing the arrests and extraditions of the defendants to the United States.DEFENDANTS                                 Case Number 21cr1623-JLS                                   Seyyed Hossein Hosseini                   Age: 41                       The NetherlandsAlexander Dmitrienko                        Age: 49                       FinlandAurangzeb Ayub                                 Age: 48                       The NetherlandsDragan Nikitovic                                Age: 50                       Croatia and Switzerland aka Dr. DjekShane Ngakuru                                   Age: 45                       New ZealandEdwin Harmendra Kumar,                  Age: 37                       Australia aka Edwin Harmendra ValentineMiwand Zakhimi,                               Age: 30                       The Netherlands aka Maiwand ZakhimiOsemah Elhassen                                Age: 52                       AustraliaSUMMARY OF CHARGESCount 1: Racketeering Conspiracy – Title 18, United States Code, Section 1962(d)Maximum penalty: Twenty years in prison, and fine of up to $250,000 or twice the gain or lossINVESTIGATING AGENCIESFederal Bureau of InvestigationDrug Enforcement AdministrationUnited States Marshals ServiceDepartment of Justice, Office of International AffairsAustralian Federal PoliceSwedish Police AuthorityLithuanian Criminal Police BureauNational Police of the NetherlandsOffice of the Attorney General of ThailandRoyal Thai PoliceEUROPOL

Tampa, Florida – U.S. District Judge Kathryn K. Mizelle today sentenced Tracy Lee Jedlicki (56, Delray Beach) to 30 months in federal prison for conspiracy to commit wire fraud.  As part of her sentence, the Court also ordered Jedlicki to forfeit $750,000, a 4.01 carat diamond ring, a 11-carat diamond necklace, and a South Florida residence worth more than $2 million.  The Court also ordered Jedlicki to pay $3,244,592 in restitution to the victims.  Jedlicki had pleaded guilty on February 24, 2022. 

According to court documents, Jedlicki and her coconspirators operated international boiler rooms in Panama and elsewhere.  The boiler rooms used high-pressure sales techniques to defraud individuals who believed they were investing substantial amounts of money in regulated financial products or markets, such as options in commodities and stocks. The majority of the victims targeted by the boiler rooms operated by Jedlicki and her coconspirators were located in Canada, the United Kingdom, Australia and New Zealand.

Jedlicki and her coconspirators then laundered fraud proceeds generated by the boiler rooms through several money laundering rings, to overseas accounts, with the launderers receiving a percentage of the funds they had moved. Jedlicki's duties included, among other tasks, arranging travel for boiler room workers to the boiler room locations, calling victims while posing as an employee of a fake investment firm to set up loading calls for coconspirators operating the boiler rooms, serving as a liaison between the boiler rooms and a money laundering organization, maintaining records of coconspirator wire transfer payments to foreign and domestic bank accounts, and reconciling payments between the boiler rooms and the money laundering organization.

Jedlicki herself received a 2% referral fee for referring victims’ funds to a money laundering ring and used the funds to perpetuate the conspiracy and for her own personal enrichment.  Jedlicki and her coconspirators wired or caused to be wired victims’ funds in the approximate amount of $3,244,592 to money laundering accounts in furtherance of the wire fraud conspiracy.

“We are committed to stopping transnational criminal organizations that target the elderly with fraudulent investment schemes that use high-pressure tactics,” said HSI Tampa Assistant Special Agent in Charge John Dumas. “This conviction should send a message that HSI and the Internal Revenue Service – Criminal Investigation (IRS-CI), working with together with our international partners, are a formidable investigative force that is unwavering in our pursuit of fraudsters.” 

“These boiler rooms used high-pressure sales to peddle millions of dollars in bogus investments to unsuspecting victims across the globe,” said Brian Payne, Special Agent in Charge of the IRS Criminal Investigation Tampa Field Office. “Thanks to the investigative work of IRS-CI and HSI special agents, another transnational criminal organization has bit the dust.”

This case was investigated by Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation.  It was prosecuted by Assistant United States Attorney David W.A. Chee and Assistant United States Attorney Craig Gestring.

Tampa, Florida – U.S. District Judge James Moody has sentenced Mary Kathryn Marr (42, Miami) to 14 years in federal prison for conspiracy to commit money laundering. The Court also ordered Marr to forfeit various assets, which are traceable to proceeds of the offense and, as part of her sentence, entered a money judgment in the amount of $1.5 million, representing proceeds Marr received as a result of the charged criminal conduct. In addition, the Court ordered Marr to pay restitution to victims in the amount of $14,511,754.05. Marr pleaded guilty in June 2021.

According to court documents, Marr was the leader of a large, international fraud and money laundering ring that operated out of the United States and abroad. Marr contracted with various international “boiler rooms” to launder fraud proceeds that she and other conspirators had obtained from foreign victims, primarily by selling worthless investments. Marr and her conspirators employed a mass-marketing scam in which high-pressure sales techniques originating out of the boiler rooms were used to defraud individuals who believed that they were investing substantial amounts of money in regulated financial products or markets, particularly shares of stocks. In reality, the investments were a sham and the victims received nothing. The majority of the victims that Marr and her conspirators targeted were located in Australia, New Zealand, the United Kingdom, and countries in Asia.

Marr and her co-conspirator, Michel Marc Chateau, who was charged in the same case, operated a network of funnel bank accounts in the United States in the names of shell companies into which the boiler room agents instructed victims to send their money. In some instances, Marr, using fake personas, spoke with the victims herself to convince the victims to send additional funds based on fraudulent representations and high-pressure tactics. The victims’ funds were then laundered through more bank accounts and sent overseas. Marr and Chateau recruited various individuals to open and operate funnel bank accounts in Florida and other states.

Electronic communications obtained during the investigation revealed that Marr had received a set percentage of each victim’s wire transfer that had been sent to the bank accounts in the United States. Once the victims’ funds had been laundered through Marr’s network of bank accounts in the United States, Marr would arrange for most of the funds to be sent back to the boiler rooms and their employees overseas.

In total, Marr and her co-conspirators unlawfully obtained approximately $14.5 million from victims through various boiler room fraud schemes between 2015 and 2018. Including funds that had originated from other funnel accounts, the accounts engaged in money laundering transactions totaling more than $20 million.

On November 1, 2018, Serbian authorities arrested Marr in Belgrade, Serbia pursuant to an INTERPOL Red Notice that had been issued by the U.S. Department of Justice. Marr was extradited to Tampa in April 2019.

“Thanks to a collaborative investigative effort between HSI and the IRS-Criminal Investigation, this sophisticated transnational money laundering organization was dismantled,” said HSI Tampa acting Assistant Special Agent in Charge Timothy Westlove.

“This sentence should stand as a warning to those who engage in nefarious activities,” said IRS Criminal Investigation Special Agent in Charge Brian Payne. “As proven by this partnership with HSI, we will continue to work together to bring criminals to justice. Marr's sentencing is the final chapter in this complex international scam, which will hopefully pave the way to the healing process for all of those impacted by these heinous crimes.”      

This case was investigated by Homeland Security Investigations and Internal Revenue Service - Criminal Investigation. It was prosecuted by Assistant United States Attorney Patrick Scruggs. Assistant United States Attorneys James Muench and Suzanne Nebesky handled the forfeiture. The Justice Department’s Office of International Affairs worked with law enforcement partners in Serbia to secure the arrest of Marr in Serbia and her extradition to the United States.

Tampa, Florida – U.S. District Judge Thomas P. Barber today sentenced Jeffrey Jedlicki (51, Panama City, Panama) to eight years in federal prison for wire fraud conspiracy. As part of his sentence, the court also ordered Jedlicki to forfeit $700,000 and a South Florida residence worth in excess of $2 million. The court also ordered Jedlicki to pay $3,244,592.00 in restitution to the victims. Jedlicki had pleaded guilty on September 16, 2021.

According to court documents, Jedlicki and his coconspirators operated international boiler rooms in Panama and elsewhere that used high-pressure sales techniques to defraud individuals who invested substantial amounts of money in what they believed were regulated financial products or markets, such as options in commodities and stocks. The majority of the victims that the boiler rooms targeted were located in Canada, the United Kingdom, Australia and New Zealand.

Jedlicki and his co-conspirators then transferred fraud proceeds generated by the boiler rooms through several money laundering rings, and then on to overseas accounts, with the launderers receiving a percentage of the funds they had moved. Jedlicki himself received a 2% referral fee for referring victims’ funds to a money laundering ring. Jedlicki used the funds to perpetuate the conspiracy, and for his own personal enrichment. In total, Jedlicki and his co-conspirators wired or caused to be wired approximately $3,244,592 in victims’ funds to money laundering accounts in furtherance of the wire fraud conspiracy.  

“This sentence reflects the serious nature of the offense,” said HSI Tampa Assistant Special Agent in Charge John Dumas. “HSI, working closely with Internal Revenue Service – Criminal Investigation and our international partners, is committed to stopping transnational criminal organizations that target the elderly with investment fraud schemes.”  

“Boiler rooms use high-pressure sales techniques to rope unsuspecting individuals into bogus investment schemes,” said Brian Payne, Special Agent in Charge of the IRS Criminal Investigation Tampa Field Office. “Today, justice was served. Jedlicki will spend nearly a decade in prison, and he has been ordered to repay the victims of his scheme the $3.2 million he stole from them.”

This case was investigated by Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation. It was prosecuted by Assistant United States Attorney David W.A. Chee. The forfeiture is being handled by Assistant United States Attorney Suzanne Nebesky.

Tampa, Florida – United States Attorney Roger B. Handberg announces that Tracy Lee Jedlicki (55, Delray Beach) has pleaded guilty to wire fraud conspiracy for her role in the operation of international boiler rooms which defrauded victims via the sale of worthless investments. Jedlicki faces a maximum penalty of five years in federal prison. A sentencing date has not been set.

According to the plea agreement, Jedlicki and her co-conspirators operated international boiler rooms in Panama and elsewhere which used high-pressure sales techniques to defraud individuals who believed they were investing substantial amounts of money in regulated financial products or markets, such as options in commodities and stocks. The majority of the victims targeted by these boiler rooms were located in Canada, the United Kingdom, Australia, and New Zealand.

Jedlicki and her co-conspirators laundered the fraud proceeds generated by the boiler rooms through several money laundering rings to overseas accounts; the launderers received a percentage of the funds they had moved. Jedlicki's duties included, among other tasks, arranging travel for boiler room workers to the boiler room locations, calling victims while posing as an employee of a fake investment firm to set up loading calls for co-conspirators operating the boiler rooms, serving as a liaison between the boiler rooms and a money laundering organization, and reconciling payments between the boiler rooms and the money laundering organization. Jedlicki received a 2% referral fee for referring victims’ funds to a money laundering ring and used the funds to perpetuate the conspiracy and for her own personal enrichment. Jedlicki and her co-conspirators wired or caused to be wired victims’ funds in the approximate amount of $3,244,500 to money laundering accounts in furtherance of the wire fraud conspiracy.

This case was investigated by Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation.  It was prosecuted by Assistant United States Attorneys David W.A. Chee and Craig Gestring.

Tampa, Florida – Jeffrey Jedlicki (51, Panama City, Panama) has pleaded guilty to conspiracy to commit wire fraud for his role in the operation of international boiler rooms which defrauded victims via the sale of worthless investments. Jedlicki faces a maximum penalty of 20 years in federal prison. A sentencing date has not been set.

According to the plea agreement, Jedlicki and his co-conspirators operated international boiler rooms in Panama and elsewhere that used high-pressure sales techniques to defraud individuals who invested substantial amounts of money in what they believed were regulated financial products or markets, such as options in commodities and stocks. The majority of the victims that the boiler rooms targeted were located in Canada, the United Kingdom, Australia, and New Zealand.

Jedlicki and his co-conspirators then transferred fraud proceeds generated by the boiler rooms through several money laundering rings, and then on to overseas accounts, with the launderers receiving a percentage of the funds they had moved. Jedlicki himself received a 2% referral fee for referring victims’ funds to a money laundering ring.  Jedlicki used the funds to perpetuate the conspiracy, and for his own personal enrichment. In total, Jedlicki and his co-conspirators wired or caused to be wired approximately $3,244,592 (U.S. Dollars) in victims’ funds to money laundering accounts in furtherance of the wire fraud conspiracy.

This case was investigated by the Homeland Security Investigations, and the Internal Revenue Service – Criminal Investigation.  It is being prosecuted by Assistant United States Attorney David W.A. Chee.

Tampa, Florida – U.S. District Judge Virginia Hernandez Covington has sentenced Brooks Thomas Nesbitt (37, Ontario, Canada) to 10 years and 1 month in federal prison for conspiracy to commit wire fraud. The court also ordered Nesbitt to forfeit various assets, and entered a money judgment of $500,000, representing the proceeds of the charged criminal conduct. In addition, Nesbitt was ordered to pay $14,511,754.05 in restitution to the victims.

Nesbitt had pleaded guilty in February 2020.  

According to court documents, Nesbitt was a member of a large, international fraud and money-laundering ring, led by Mary Kathryn Marr. Between at least 2014 and 2019, Nesbitt operated boiler rooms located outside of the United States. He set up the boiler rooms, recruited their sales agents and other employees, and oversaw their operations. Nesbitt contracted with Marr so that, for a set percentage, she and her network could launder the fraud proceeds that his boiler rooms had obtained from victims. Marr also worked with Nesbitt to directly contact and defraud certain victims. Once the victims’ funds had been laundered through Marr’s network of bank accounts in the United States, Marr would arrange for most of the funds to be sent back to Nesbitt and his boiler room employees overseas.

Mary Kathryn Marr was charged separately, along with her co-conspirator, Michel Marc Chateau. Both Marr and Chateau contracted with various international boiler rooms to launder fraud proceeds that they had obtained from foreign victims, primarily by selling worthless investments. Marr and her co-conspirators employed a mass marketing scam in which high-pressure sales techniques originating out of so-called “boiler rooms” were used to defraud individuals who believed that they were investing substantial amounts of money in regulated financial products or markets, particularly shares of stocks. In reality, however, the investments were a sham and the victims received nothing. The majority of the victims that Marr and her co-conspirators targeted were located in Australia, New Zealand, the United Kingdom, and countries in Asia.

Marr and Chateau operated a network of funnel bank accounts in the United States in the names of shell companies, into which the boiler room agents instructed victims to send their money. The victims’ funds were then laundered through more bank accounts and sent overseas, with the launderers receiving a percentage of funds that they moved. Marr and Chateau recruited various individuals to open and operate funnel bank accounts in Florida and other states.

In total, Nesbitt, Marr, and their co-conspirators unlawfully obtained approximately $14.5 million from victims through various boiler room fraud schemes. On January 30, 2019, Thai authorities provisionally arrested Nesbitt at his residence in Hua Hin, Thailand. Nesbitt was subsequently extradited to the United States for prosecution.

“This international fugitive thought he could hide from justice,” said HSI Tampa Assistant Special Agent in Charge Michael Cochran. “Because of the unique international investigative authorities of HSI, along with our partners at the U.S. Internal Revenue Service, he will now be held accountable for his crimes.”

​"With Homeland Security and IRS Special Agents working together, this unique investigation showcases the power of combined federal agencies to topple a global financial fraud. Foreign victims and the American public can rest a little easier tonight,” stated Special Agent in Charge Brian Payne of IRS Criminal Investigation. “When crooks endeavor to rip off just one victim, they also damage the consumer confidence of us all. We take our role as the world’s finest financial investigators very seriously because we realize prosecuting financial crime is vital to maintaining trust in our economy.”

This case was investigated by Homeland Security Investigations and the Internal Revenue Service – Criminal Investigation, with assistance provided by the Royal Thai Police. The Justice Department’s Office of International Affairs provided significant assistance in securing the defendant’s extradition from Thailand. It is being prosecuted by Assistant United States Attorney Patrick Scruggs.

Seattle – A 34-year-old Bothell, Washington, man was sentenced today to five years in prison, announced U.S. Attorney Nick Brown. Ryan Kane pled guilty to Possession of Methamphetamine with Intent to Distribute on March 22, 2022. At the sentencing hearing U.S. District Judge James L. Robart said, addressing Kane, “This isn’t about you…. This is about what you did to the community …sending drugs not just into our community, but the world.  What you did is decidedly wrong.”

“Mr. Kane was distributing nearly pure and addictive methamphetamine across the world, concealed in computer hard drives,” said U.S. Attorney Brown.  “He used the Dark Web to conceal his identity and make dangerous drugs available as far away as Australia and New Zealand.”

Kane first came to the attention of law enforcement because he was mailing packages with methamphetamine hidden inside. Kane used a Dark Web vendor account to take orders for the methamphetamine shipments; he then packaged the drugs and mailed them through the U.S. Postal Service to various locations in the United States, Australia, and New Zealand. In April of 2021, he attempted to mail two packages to Australia. However, these packages were intercepted by law enforcement and found to contain over three kilos of methamphetamine hydrochloride concealed in computer hard drives.





Meth in hard drive







In asking for a six-year sentence, Assistant United States Attorney Casey Conzatti said, “This recommendation takes into account Mr. Kane’s struggle with addiction, but it also takes into account the large volume of drugs involved.”

When Kane’s residence was searched on June 7, 2021, law enforcement seized a glass jar and 16 additional hollowed out computer hard drives containing over three kilos of methamphetamine hydrochloride. Agents found packing materials, a notebook containing shipping labels to Australia and artwork related to Kane’s Dark Web vendor account. Additionally, agents discovered a loaded 9mm handgun on the couch in the apartment.

“Mr. Kane’s conviction and today’s sentence demonstrates how smugglers cannot hide behind the perceived veil of secrecy associated with Dark Web marketplaces,” said Special Agent in Charge (SAC) Robert Hammer, who oversees Homeland Security Investigations (HSI) operations in the Pacific Northwest. “HSI through its transnational law enforcement footprint will doggedly pursue these cases with our law enforcement partners within the U.S. and abroad.”

“With Mr. Kane’s sentencing today, we show a clear and united front, not only here in the United States but abroad, in the effort to combat the distribution of these dangerous and potentially lethal narcotics,” said Inspector in Charge Anthony Galetti with the U.S. Postal Inspection Service (U.S.P.I.S.). “We remain steadfast in our mission to remove illegal narcotics from the U.S. Mail and will continue to do so to ensure our communities remain safe. We thank our law enforcement partners for their assistance in bringing Kane to justice.”   

The case was investigated by Homeland Security Investigations (HSI) with assistance from the U.S. Postal Inspection Service (U.S.P.I.S.) and the Australian Border Force (ABF).

This case was prosecuted by Assistant United States Attorney Casey S. Conzatti.

          A resident of New Zealand, who traveled to Seattle in April 2016 to take possession of export-restricted parts designed for missile and space applications, was sentenced today in U.S. District Court in Seattle to two years in prison for conspiring to violate the Arms Export Control Act, announced U.S. Attorney Annette L. Hayes. WILLIAM ALI, 38, has been in federal custody since his arrest on April 11, 2016. At sentencing U.S. District Judge Thomas S. Zilly said, “You knew that if you did it you could go to jail and you proceeded to do it. . . you laughed and you were undeterred in your decision to come here.”

          “Protecting national security is job one for United States Attorneys,” said U.S. Attorney Annette L. Hayes. “This defendant tried to evade our export control laws to transfer highly sensitive products to China. We will continue to work closely with U.S. Immigration and Customs Enforcement and our other law enforcement partners to ensure our national assets do not end up in the wrong hands.”

 

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

          Over the next year, ALI communicated by phone and email with a Homeland Security Investigations undercover agent, and with a person in China known in his emails as “Michael.” Michael was the person seeking the accelerometers, as well as certain gyroscopes that are designed for military use. ALI was working to find a way to purchase the devices and transport them secretly to Michael in China. In multiple emails, ALI made clear that he was aware that export of the accelerometers and gyroscopes was illegal. ALI sent the undercover agent nearly $25,000 for the devices – money he got from Michael. ALI traveled to Seattle and met with the undercover agent on April 11, 2016, at a downtown hotel. Shortly after ALI took possession of the devices he was arrested. ALI had with him an airline ticket to Hong Kong and a visa to travel to China.

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

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

          LOS ANGELES – A San Fernando Valley man who planned the bombing of a political rally in Long Beach in 2019 was sentenced today to 25 years in federal prison.

          Mark Steven Domingo, 28, of Reseda, was sentenced by United States District Judge Stephen V. Wilson.

          At the conclusion of a five-day trial, a federal jury on August 11 found Domingo guilty of one count of providing material support to terrorists and one count of attempted use of a weapon of mass destruction.

          Judge Wilson sentenced Domingo to 15 years’ imprisonment on the providing material support count and 25 years in federal prison for attempted use of a weapon of mass destruction – both sentences to be served concurrently. The court also ordered Domingo to be placed on supervised release for a term of 20 years once Domingo completes his prison sentence.

          Domingo has been in federal custody since his arrest in April 2019.

          “This defendant planned a mass-casualty terrorist attack and repeatedly admitted at trial that he had a desire to kill as many people as possible,” said Acting United States Attorney Tracy L. Wilkison. “Had this bombing been successful, many innocent people would have been murdered, yet this defendant has shown no remorse for his conduct, nor has he renounced the extremist ideology that motivated his horrific plot.”

          “Mr. Domingo represents the very real threat posed by homegrown violent extremists in the United States,” said Kristi K. Johnson, the Assistant Director in Charge of the FBI’s Los Angeles Field Office. “Domingo’s plans and a potentially catastrophic attack were thwarted when the Joint Terrorism Task Force learned of his intentions in advance and carried out this successful undercover operation with our partners. This case was the result of a collaborative effort with the Naval Criminal Investigative Service, the Los Angeles Police Department, the Los Angeles County Sheriff's Department, and the Long Beach Police Department.”

          The investigation into Domingo was prompted by his online posts and conversations in an online forum in which he expressed support for violence, specifically a desire to seek violent retribution for attacks against Muslims, as well as a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.

          As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.

          Leading up to the attack, Domingo called for an event similar to the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.

          Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas to place the bombs so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but actually were inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.

          “At trial, [Domingo] testified and repeatedly affirmed that he intended to commit mass murder in March and April 2019,” prosecutors wrote in a sentencing memorandum that recommended a sentence of life in prison. “He admitted that the [confidential informant] stopped him from committing at least one murder in April 2019 by encouraging him to be patient. Finally, he admitted that he was excited when he learned that the [confidential informant] had access to an individual who could construct a bomb, and that he was the one who chose to attack the rally, chose to use the bombs, and chose to go through with the plot to commit mass murder, right up until the moment of his arrest.”

          The FBI’s Joint Terrorism Task Force (JTTF) investigated this matter. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department and the Long Beach Police Department.

          Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section, along with Trial Attorneys Lauren Goddard and Joshua Champagne of the National Security Section’s Counterterrorism Section at the Department of Justice, prosecuted this case.

LOS ANGELES – Two Orange County men have been arrested on a three-count federal grand jury indictment alleging they ran a transnational drug trafficking organization that exported wholesale amounts of cocaine and methamphetamine – concealed within commercial products such as instant noodle packets, car parts, emergency kits, and subwoofers – to Australia, Papua New Guinea, and New Zealand, the Justice Department announced today.

Hoang Xuan Le, 42, a.k.a. “Big Bro,” “Blue,” and “Knockout,” of Tustin, and Tri Cao Buinguyen, 38, a.k.a. “Bro” and “Mango,” of Garden Grove, were arrested Thursday. They are scheduled for arraignment this afternoon at United States District Court in Los Angeles.

In total, four defendants – including Trung Buinguyen, 40, of Lakewood, and Narongsak Champy, 28, of Long Beach – have been charged with one count of conspiracy to export controlled substances and one count of conspiracy to distribute controlled substances. Le and Tri Buinguyen are charged with one additional count of distribution of methamphetamine.

Trung Buinguyen and Champy are being sought by law enforcement.

As part of this case, law enforcement seized a total of 755 kilograms (1,664 pounds) of methamphetamine and more than 100 kilograms of cocaine. Law enforcement estimates that the value of the drugs seized exceeds $65 million and ranges up to $160 million.

According to the indictment, from at least February 2017 to September 2022, Le and Tri Buinguyen communicated with members of the drug trafficking organization in Australia, New Zealand, and Papua New Guinea. They then arranged for the export of bulk quantities of drugs from the United States to these nations via air cargo, ocean freight, and the U.S. mail, concealing the drugs in a variety of commercial products and falsifying their true nature on the manifests and customs documents.

The defendants allegedly used phones equipped with military-grade encryption software and encrypted messaging applications, particularly “Signal,” to coordinate the export of drugs from the United States. They also allegedly used fictitious names, businesses, and email accounts to communicate with intermediaries, including vendors, freight forwarders, shipping companies, customs brokers, and customs officials in the United States and foreign countries, to fraudulently disguise the drugs as legitimate commercial products.

For example, Le and Tri Buinguyen allegedly directed the summer 2018 shipment to Australia of 390 kilograms (860 pounds) of methamphetamine concealed in packets of instant noodles and mushroom seasoning, as well as the September 2018 export of 113 kilograms (249 pounds) of methamphetamine and 100 kilograms (over 220 pounds) of cocaine disguised as garlic seasoning. Additional shipments of drugs in October 2018, November 2019, February 2020, and August 2020 were allegedly concealed in emergency kits, car parts, subwoofers, and customized metal boxes.

In June 2021, Le and Tri Buinguyen orchestrated a bulk shipment of 150 kilograms (over 330 pounds) of methamphetamine concealed in food storage buckets for export to Papua New Guinea, according to the indictment. Finally, in August and September of 2022, Tri Buinguyen allegedly arranged for the export to New Zealand of 32 kilograms (more than 70 pounds) of methamphetamine concealed in meals ready-to-eat packets.

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 of all charges, each defendant would face a statutory maximum sentence of life in federal prison.

Homeland Security Investigations is investigating this matter. The following agencies have provided substantial assistance to this investigation: United States Postal Inspection Service, the Drug Enforcement Administration, United States Customs and Border Protection, the Australian Federal Police, the Australian Border Force, the Australian Department of Homeland Affairs – Intelligence Division, the Royal Papua New Guinea Constabulary, the Papua New Guinea Customs Service, and the New Zealand Customs Service.

This case is the result of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation led by the United States Attorney’s Office for the Central District of California and HSI. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking, weapons trafficking, and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. OCDETF uses a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

Assistant United States Attorney Gregg E. Marmaro of the International Narcotics, Money Laundering, and Racketeering Section is prosecuting this case.

          LOS ANGELES – A federal jury this afternoon convicted a San Fernando Valley man for attempting to bomb a rally in Long Beach for the purpose of causing mass casualties.

          Mark Steven Domingo, 28, of Reseda, was found guilty of providing material support to terrorism and attempting to use of a weapon of mass destruction.

          As a result of today’s guilty verdicts, Domingo faces a statutory maximum sentence of life in federal prison. Domingo, who has been in federal custody since his arrest in April 2019, is scheduled to be sentenced by United States District Judge Stephen V. Wilson on November 1.

          The investigation into Domingo was prompted by his online posts and conversations in an online forum in which he expressed support for violent jihad, a desire to seek retribution for attacks against Muslims, and a willingness to become a martyr. After considering various attacks – including targeting Jewish people, churches, and police officers – Domingo decided to bomb a rally scheduled to take place in Long Beach in April 2019.

          As part of the plot, Domingo asked a confederate – who actually was working with the FBI as part of the investigation – to invite a bomb-maker into the scheme. Domingo then purchased and provided to the confederate and the bomb-maker – who in fact was an undercover law enforcement officer – several hundred 3½-inch nails to be used as shrapnel for the bombs. Domingo specifically chose those nails because they were long enough to penetrate organs in the human body.

          Leading up to the attack, Domingo called for another event similar to the October 2017 mass shooting in Las Vegas. Following an attack on Muslims in New Zealand in March 2019, Domingo called for retribution in an online post.

          Domingo selected the Long Beach rally as his target and, in April 2019, drove his confederate and the undercover officer to Long Beach to scout the location he planned to attack. While there, Domingo discussed finding the most crowded areas so he could kill the most people. On April 26, 2019, Domingo received what he thought were two live bombs, but were actually inert explosive devices delivered by an undercover law enforcement officer. He was arrested that same day with one of the bombs in his hands.

          This matter is the product of an investigation by the FBI’s Joint Terrorism Task Force. JTTF members who participated in the investigation include the FBI, the Los Angeles Police Department, the Naval Criminal Investigative Service, the Los Angeles County Sheriff's Department, and the Long Beach Police Department.

          This case is being prosecuted by Assistant United States Attorneys Reema M. El-Amamy and David T. Ryan of the Terrorism and Export Crimes Section, and Trial Attorneys Lauren Goddard and Joshua Champagne of the Department of Justice’s Counterterrorism Section.

LOS ANGELES – A Yemeni national was charged today in a three-count federal grand jury indictment alleging he deployed the so-called “Black Kingdom” ransomware against computer servers owned organizations worldwide, including businesses, schools, and hospitals in the United States, including a medical billing services company in the San Fernando Valley.Rami Khaled Ahmed, 36, a.k.a. “Black Kingdom,” of Sana’a, Yemen, is charged with one count of conspiracy, one count of intentional damage to a protected computer, and one count of threatening damage to a protected computer. He is believed to be residing in Yemen.According to the indictment, from March 2021 to June 2023, Ahmed and others infected computer networks of several U.S.-based victims, including a medical billing services company in Encino, a ski resort in Oregon, a school district in Pennsylvania, and a health clinic in Wisconsin. Ahmed developed and deployed Black Kingdom ransomware to exploit a vulnerability in Microsoft Exchange.The ransomware either encrypted data from victims’ computer networks or claimed to take that data from the networks. When the malware was successful, the ransomware then created a ransom note on the victim’s system that directed the victim to send $10,000 worth of Bitcoin to a cryptocurrency address controlled by a co-conspirator and to send proof of this payment to a Black Kingdom email address.During the conspiracy, the Black Kingdom conspirators caused the transmission of the Black Kingdom malware to approximately 1,500 computer systems in the United States and elsewhere.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, Ahmed would face a statutory maximum sentence of five years in federal prison for each count.The FBI is investigating this matter with assistance from the New Zealand Police.Assistant United States Attorneys Angela C. Makabali and Alexander Gorin of the Cyber and Intellectual Property Crimes Section are prosecuting this case.

SANTA ANA, California – An Orange County man who firebombed a Planned Parenthood clinic in Costa Mesa and plotted other attacks – including an attack on the Orange County power grid in furtherance of a race war, an attack at Dodger Stadium during an LGBTQ+ pride night celebration, and the home invasions of Jewish homes in Los Angeles – was sentenced today to 108 months in federal prison.

Chance Brannon, 24, of San Juan Capistrano, who was an active-duty member of the United States Marine Corps stationed at Camp Pendleton at the time of the firebombing, was sentenced by United States District Judge Cormac J. Carney, who also ordered Brannon to pay $1,000 in restitution. Brannon has been in federal custody since his arrest in June 2023.

Judge Carney said Brannon “engaged in cruel and indefensible domestic terrorism.”

Brannon pleaded guilty in November 2023 to one count of conspiracy, one count of malicious destruction of property by fire and explosives, one count of possession of an unregistered destructive device, and one count of intentionally damaging a reproductive health services facility in violation of the Freedom of Access to Clinic Entrances Act.



“This defendant’s deep-seated hatred led him to commit a firebombing and plan many other acts of violence, including starting a race war,” said United States Attorney Martin Estrada. “This prosecution sends a message that we will act decisively to protect all members of our community from acts of violence, and that we will remain united against hate.”



“The Justice Department does not tolerate the use of violence to intimidate and endanger,” said Deputy Attorney General Lisa Monaco. “This prosecution and today’s sentence hold the defendant accountable for placing lives at risk by launching a brazen attack with an explosive device against a health care facility.”

“The defendant violently attacked a reproductive healthcare facility and plotted multiple, potentially deadly assaults to advance his hate-fueled agenda,” said Assistant Attorney General Kristen Clarke of the Justice Department’s Civil Rights Division. “The defendant’s assault on the Costa Mesa Clinic was designed to terrorize patients seeking reproductive healthcare and the people who provide it. Such violence has no place in the national discourse on reproductive health. The Justice Department will continue to investigate and prosecute those who seek to use threats of violence, force, and destruction of property to target vulnerable communities.”

“Mr. Brannon’s deep-rooted hatred and extremist views inspired him to target individuals or groups who did not conform to his neo-Nazi worldview and, in one case, led him to carry out a violent attack which could have killed innocent people,” said Mehtab Syed, the Acting Assistant Director in Charge of the FBI’s Los Angeles Field Office. “I’m proud of the hard work and collaboration by the JTTF whose members built this case and apprehended Brannon before additional acts of domestic terrorism could be carried out, as well as the hard work by prosecutors and agents leading to today’s sentencing.”

“This case represents the successful interagency coordination between NCIS, Costa Mesa first responders, and the FBI’s Joint Terrorism Task Force,” said Assistant Special Agent in Charge Michael Payne of the NCIS Marine West Field Office. “Such acts of terror in an attempt to preventing access to reproductive health services is intolerable.”

In February and March of 2022, Brannon and his co-defendants – Tibet Ergul, 22, of Irvine, and Xavier Batten, 21, of Brooksville, Florida – conspired to use a Molotov cocktail to destroy a commercial property. Brannon considered various targets, including the Anti-Defamation League office in San Diego, but ultimately chose to target a Planned Parenthood clinic in Costa Mesa to scare pregnant women, deter doctors and staff from providing abortion services, and encourage similar violent acts. 

During the early morning hours of March 13, 2022, Brannon and Ergul ignited and threw the Molotov cocktail at the clinic, striking the clinic entrance and starting a fire before fleeing. Brannon and Ergul returned hours later to surveil their work. In its sentencing memorandum, the government argued that “rather than allow the judicial and legislative systems to unfold, [Brannon] took matters into his own hands, weaponizing fear and intimidation to achieve his political ends.”

In May 2022, Brannon counseled Batten on how to “get away with” committing a similar attack to the Costa Mesa one. In June 2022, following the U.S. Supreme Court’s decision overturning Roe v. Wade, its 1973 ruling that recognized a constitutional right to abortion, Brannon and Ergul planned to use a second Molotov cocktail to damage or destroy a second Planned Parenthood clinic. Ultimately, Brannon and Ergul abandoned their plan because they saw law enforcement near the clinic they planned to target.

Beginning sometime in 2022 and continuing through the time of their arrests, Ergul and Brannon discussed starting a race war by attacking an electrical substation with the goal of disrupting the functioning of the power grid in Orange County. On a thumb drive disguised as a military-style necklace bearing the motto for the Marine Corps, Brannon kept a file containing an operation plan and a gear list for targeting a Southern California Edison substation. Brannon possessed several items on the gear list, including a rifle with “Total [N-word] Death” written in Cyrillic and a recording of the 2019 mosque shooting in Christchurch, New Zealand, where a white supremacist murdered 51 people and injured 40 others.

According to the government’s sentencing memorandum, Brannon used racial slurs for various minority groups, “made hateful comments towards all non-white individuals,” and discussed “cleans[ing]” the United States of particular ethnic groups. In the weeks leading up to his arrest, Brannon texted a friend, “Can we just be done with elections and have the race war already” and complained that “[p]eople will never do anything if everyone keeps waiting for [a race war] to start on its own.”

Throughout the early summer of 2023, Brannon and Ergul also discussed and researched how to attack Dodger Stadium on a night celebrating LGBTQ pride, including by using a remote-detonated device. As part of those conversations, Brannon shared a “WW2 sabotage manual” with Ergul, discussed doing “dry runs” to “case” the stadium, and conducted research on Ted Kaczynski, also known as the Unabomber.  Brannon and Ergul were arrested two days before the event, according to court documents.

Brannon was motivated by an extremist neo-nazi ideology, prosecutors wrote in their sentencing memorandum. Brannon frequently greeted his friends using “88,” which is coded language for “Heil Hitler,” and he called Adolf Hitler “a great man who loved his people and tried to save us all from the jews,” According to the sentencing memorandum. Brannon possessed antisemitic writings, drawings and literature in his bedroom at the time of his arrest and made comments to his fellow Marines including “All jews deserve to die.”

Just days before his arrest, Brannon began planning with a friend to rob Jewish residents of the Hollywood Hills. As prosecutors argued in court documents, Brannon’s “use of racial and homophobic slurs, casual expressions of misogyny, and persistent expressions of violent intent went far beyond empty words; rather, defendant intended – and in many instances planned – to take overt action that would at the very least scare and intimidate women, racial minorities, and the Jewish and LGBTQ+ communities, and would at worst harm or even kill real victims.”

At the time of his arrest, Brannon possessed a short-barreled rifle and two silencers, which he had not registered with the National Firearms Registration and Transfer Record. According to the government’s sentencing memorandum, in 2022, Brannon placed calls to two foreign adversaries, hoping to offer himself up as a “mole” by providing U.S. intelligence.

Batten and Ergul pleaded guilty earlier this year to criminal charges in this case and have sentencing hearings scheduled, respectively, for May 13 and May 30.

The FBI and the Naval Criminal Investigative Service investigated this matter, with substantial assistance from the Costa Mesa Police Department and the Costa Mesa Fire Department.

Assistant United States Attorney Kathrynne N. Seiden of the Terrorism and Export Crimes Section is prosecuting this case.

SANTA ANA, California – An Orange County man pleaded guilty today to federal criminal charges for firebombing a Planned Parenthood clinic in March 2022 and admitted to plotting other attacks. 

Chance Brannon, 24, of San Juan Capistrano, who was an active-duty Marine stationed at Camp Pendleton at the time of the offense, also admitted to making plans for additional attacks on a second Planned Parenthood clinic, a Southern California Edison substation, and an LGBTQ pride night celebration at Dodger Stadium.

Brannon pleaded guilty to all counts of the four-count indictment: conspiracy, malicious destruction of property by fire and explosives, possession of an unregistered destructive device, and intentional damage to a reproductive health services facility – a violation of the Freedom of Access to Clinic Entrances Act. 

Brannon has been in custody since his arrest in June 2023.

“This defendant exemplifies the insidious danger posed by domestic extremism,” said United States Attorney Martin Estrada. “The defendant, who was a member of the U.S. military, admitted not only to attacking a Planned Parenthood facility but also to planning for attacks on the power grid and a pride celebration at Dodger Stadium. We must never waver in our commitment to protect the American people from violent extremist ideology.”

“Extremist violence fueled by an insular hatred intended to intimidate law abiding Americans will not be tolerated,” said FBI Los Angeles Assistant Director in Charge Don Alway. “It is crucial that individuals who seek reproductive health services be able to obtain them in an environment that is free from interference, intimidation, and fear. Together with our federal, state, and local law enforcement partners, the FBI is committed to defending the American people against such acts of cruelty.” 

“NCIS is a proud member of the FBI Joint Terrorism Task Force and we are committed to swiftly and thoroughly investigating those who perpetrate acts of terror against our fellow Americans,” said Special Agent in Charge Todd Battaglia of the NCIS Marine West Field Office. “This case represents the impact of close interagency coordination and should serve as a warning that we will seek out and defeat extremist intimidation and hate that threatens access to reproductive health services.”

According to his plea agreement, in February and March of 2022, Brannon and his co-defendants – Tibet Ergul, 22, of Irvine, and Xavier Batten, 21, of Brooksville, Florida – conspired to use a Molotov cocktail to destroy a commercial property.  Brannon considered various targets, including the Anti-Defamation League in San Diego, but ultimately chose to target a Planned Parenthood clinic in Costa Mesa to scare pregnant women, deter doctors and staff from providing abortion services, and encourage similar violent acts. During the early morning hours of March 13, 2022, Brannon and Ergul ignited and threw the Molotov cocktail at the clinic, striking the clinic entrance.

Brannon admitted in his plea agreement that, in May 2022, he counseled Batten on how to “get away with” committing a similar attack to the Costa Mesa one. In June 2022, following the Supreme Court’s decision overturning Roe v. Wade, its 1973 ruling that recognized a constitutional right to abortion, Brannon and Ergul planned to use a second Molotov cocktail to damage or destroy a second Planned Parenthood clinic. 

Brannon further admitted that beginning sometime in 2022 and continuing through the time of their arrests, Ergul and he discussed starting a race war by attacking an electrical substation with the goal of disrupting the functioning of the power grid in Orange County. On a thumb drive disguised as a military-style necklace bearing the motto for the Marine Corps, Brannon kept a file containing an operation plan and a gear list for targeting a Southern California Edison substation. Brannon possessed several items on the gear list, including a specific rifle with “Total [N-word] Death” written in Cyrillic and a recording of the 2019 Christchurch, New Zealand, mosque shooting, in which a white supremacist murdered 51 people and injured 40 others.

Throughout the early summer of 2023, Brannon and Ergul also discussed and researched how to attack Dodger Stadium on a night celebrating LGBTQ pride, including by using a remote-detonated device. As part of those conversations, Brannon shared a “WW2 sabotage manual” with Ergul, discussed doing “dry runs” to “case” the stadium, and conducted research on Ted Kaczynski, also known as the Unabomber. Brannon and Ergul were arrested two days before the event.

At the time of his arrest, Brannon possessed a short-barreled rifle and two silencers, which he had not registered with the National Firearms Registration and Transfer Record.

United States District Judge Cormac J. Carney scheduled an April 15, 2024 sentencing hearing, at which time Brannon will face a mandatory minimum sentence of five years in federal prison for each of the conspiracy and malicious destruction counts as well as a statutory maximum sentence of 20 years in federal prison for each of those counts. The count of possession of an unregistered destructive device is punishable by up to 10 years in federal prison. The intentional damage to a reproductive health facility charge carries a statutory maximum sentence of one year in federal prison.

Ergul and Batten have pleaded not guilty to the charges against them. They are scheduled to go to trial on March 19, 2024.

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

The FBI and the Naval Criminal Investigative Service investigated this matter, with substantial assistance from the Costa Mesa Police Department and the Costa Mesa Fire Department.

Assistant United States Attorney Kathrynne N. Seiden of the Terrorism and Export Crimes Section is prosecuting this case.

LOS ANGELES – Two men were arrested today on federal charges of participating in a neo-Nazi child exploitation enterprise that groomed and then coerced minors to produce child sexual abuse material (CSAM) and images of self-harm. The group allegedly victimized at least 16 minors around the world, including two in Southern California.Collin John Thomas Walker, 23, of Bridgeton, New Jersey, and Clint Jordan Lopaka Nahooikaika Borge, 41, of Pahoa, Hawaii, were arrested this morning pursuant to a grand jury indictment that charges them with one count of engaging in a child exploitation enterprise. They are expected to make initial court appearances later today in New Jersey and Hawaii.The indictment charges two other defendants who are already in custody: Rohan Sandeep Rane, 28, of Antibes, France, and Kaleb Christopher Merritt, 24, of Spring, Texas. The indictment, which was returned by a grand jury on January 17 and unsealed today, also charges Rane and Walker with one count of engaging in a child exploitation enterprise.“The defendants here are alleged to have committed horrific acts against children,” said Acting United States Attorney Joseph T. McNally. “There is nothing more important than protecting our youth. Our office will continue its effort to aggressively prosecute and incarcerate dangerous predators.”“Sextortion and other forms of online child sexual abuse have tragically altered the trajectory of too many young lives and this group preyed upon the vulnerable to fulfill their sick and twisted desires,” said Homeland Security Investigations (HSI) Los Angeles Special Agent in Charge Eddy Wang. “HSI and our partners will work tirelessly to protect children from victimization in communities across the United States and around the globe.”According to the indictment, from at least 2019 to 2022, Rane, Walker, Merritt and Borge were members of CVLT (pronounced “cult”), an online group that espoused neo-Nazism, nihilism and pedophilia as its core principles. Members of the international enterprise engaged in online child sexual exploitation offenses and trafficked CSAM. Rane, Walker, and Merritt acted as leaders and administrators in the CVLT enterprise, hosting and running CVLT online servers and controlling membership for the group. CVLT members worked collectively to entice and coerce children to self-produce CSAM on a platform run by CVLT members where they groomed children for the eventual production of CSAM through various means of degradation, including exposing the victims to extremist and violent content. CVLT specifically targeted vulnerable victims, including ones suffering from mental health challenges or a history of sexual abuse.Victims were encouraged to engage in increasingly dehumanizing acts, including cutting and eating their own hair, drinking their urine, punching themselves, calling themselves racial slurs, and using razor blades to carve CVLT members’ names into their skin. CVLT members’ coercion escalated to pressuring victims to kill themselves on a video livestream.When victims hesitated, resisted or threatened to tell parents or authorities, CVLT members would threaten to distribute already-obtained compromising photos and videos of the victims to their family and friends. For victims who stopped participating in the CSAM, CVLT would sometimes carry through on their threats.Rane previously was charged with several child exploitation and related offenses in France and has been in French custody since 2022. Merritt is currently in Virginia state custody, serving a 50-year sentence for child sex abuse crimes committed in 2020 and 2021.If convicted, the defendants would face a 20-year mandatory minimum sentence and a statutory maximum sentence of life in prison.This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorney’s Offices and the Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.Homeland Security Investigations (HSI), the Los Angeles Police Department, San Bernardino County Sheriff’s Office, Henry County Sheriff’s Office (Virginia), Iowa State University Police, Police Nationale (France), the National Crime Agency (United Kingdom), the New Zealand Department of Internal Affairs, and EUROPOL are investigating this matter.Assistant United States Attorney Catharine A. Richmond of the Violent and Organized Crime Section, and Trial Attorneys Justin Sher and James Donnelly of the National Security Division’s Counterterrorism Section are prosecuting this case.

LOS ANGELES – Five alleged members of an international drug trafficking ring based in the San Gabriel Valley were arrested today on a 27-count federal grand jury indictment charging them with conspiring to distribute and possess with intent to distribute methamphetamine.

Two of the defendants also have been charged with maintaining a drug premises where the methamphetamine was stored and packaged. Specifically, the defendants are engaged in the mailing and shipping of methamphetamine from Los Angeles County to New Zealand and Australia.

The following defendants were arrested this morning are scheduled to be arraigned tomorrow in United States District Court in Santa Ana:



Yangqiang Chen, 45, of Monterey Park;

Jie Chen, 40, of Rosemead;

MeiMei Chen, 41, of Rosemead;

Guorong He, 50 of Rosemead; and

Yien He, 32, of Rosemead.



Zuxing Lin, 44, of Rosemead is currently a fugitive. Xingyun Chen, 54, is currently in Louisiana in immigration custody.

As part of this investigation, law enforcement has seized 91 packages of methamphetamine destined for foreign countries. In those packages, law enforcement seized almost 200 kilograms of methamphetamine. The value of the drugs seized, if sold in Australia and New Zealand, exceeds $20 million, according to law enforcement estimates.

During search warrants executed today at three locations in Rosemead and Monterey Park, law enforcement seized approximately 40 pounds of methamphetamine, more than $100,000 in cash, and more than 1,000 gift cards from various retailers.

According to the indictment returned on Tuesday, defendants Yangqiang Chen and Jie Chen ordered and received items from online retailers, such as spools of 3D printing filament, utility cases, wine opener sets, and drive shafts, for use in concealing methamphetamine in international shipments to foreign drug customers. 

Zuxing Lin, Meimei Chen, Xingyun Chen, Guorong He, and Yien He packaged the methamphetamine, at a residence in Monterey Park and elsewhere, for delivery to foreign drug customers. Yangqiang Chen, Zuxing Lin, Meimei Chen, Xingyun Chen, and Yien He delivered the packages containing methamphetamine to UPS stores and international shipping companies so they could be shipped to foreign drug customers.

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

If convicted of all charges, each defendant would face a statutory maximum sentence of life in federal prison and a mandatory minimum sentence of 10 years in federal prison.

The FBI; the Drug Enforcement Administration; Homeland Security Investigations; IRS Criminal Investigation; the Los Angeles Police Department; the Los Angeles County Sheriff’s Department; and the United States Postal Inspection Service are investigating this matter.

This case is the result of an Organized Crime Drug Enforcement Task Forces (OCDETF) investigation led by the United States Attorney’s Office for the Central District of California, FBI, DEA, and IRS. The principal mission of the OCDETF program is to identify, disrupt, and dismantle the most serious drug trafficking, firearms trafficking, and money laundering organizations, and those primarily responsible for the nation’s illegal drug supply. OCDETF uses an intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.

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

          LOS ANGELES – A federal grand jury today returned an indictment that alleges the former head of Santa Monica-based ServiceMesh, Inc. paid bribes to former IT executives at Commonwealth Bank of Australia to approve millions of dollars in contracts that inflated ServiceMesh revenues and fraudulently caused Computer Sciences Corporation (CSC) to pay a nearly $100 million incentive bonus as part of CSC’s purchase of the cloud software company.

          The 15-count indictment details a bribery and kickback scheme that developed over several years and involved two shell corporations.

          The indictment charges Eric Pulier – the founder, CEO and largest shareholder of ServiceMesh – with orchestrating the international fraud scheme involving his payment of approximately $2.5 million in bribes to two senior technology executives at Commonwealth Bank of Australia (CBA). In exchange for the bribes, the indictment alleges, the IT executives facilitated $10.4 million in contracts for the sale of software from ServiceMesh to CBA in late 2013 and January 2014. The CBA contracts triggered an “Earnout” payment as part of a sale agreement with CSC that caused CSC to pay an additional $98 million to ServiceMesh shareholders, about $30 million of which went directly to Pulier.

          The indictment also charges Jon Waldron, a former IT manager at CBA, with participating in the scheme by facilitating the approval of contracts with ServiceMesh in exchange for approximately $1.9 million in bribes, most of which was paid to him through a shell company in New Zealand.

          Warrants for the arrest of Pulier, 50, of Los Angeles, and Waldron, 47, of Sydney, Australia, have been issued. Pulier is expected to surrender to authorities in the coming days. Waldron remains in Australia facing related charges brought by Australian authorities.

          The 42-page indictment details an elaborate scheme in which Pulier agreed to pay bribes to Waldron and another CBA IT executive, Keith Hunter, in exchange for their assistance in facilitating contracts to help boost ServiceMesh revenue. The contracts were needed to push ServiceMesh revenues over $20 million – the threshold that triggered CSC paying the incentive bonus. As a result, CSC paid ServiceMesh shareholders, of which Pulier was the largest, an Earnout payment of $98 million in March 2014.

          A portion of Pulier’s ServiceMesh shares were held by a company called TechAdvisors. The indictment alleges that after TechAdvisors received its Earnout payment, Pulier caused TechAdvisors to transfer $4.8 million to a purported nonprofit company named Ace, Inc., which was later renamed The Ace Foundation. Ace was headed by a childhood friend of Pulier, who transferred $2.5 million to accounts held by Waldron and Hunter in Australia, New Zealand and the United States.

          The indictment filed today charges Pulier and Waldron with conspiracy to commit securities fraud and wire fraud, one count of securities fraud and four counts of wire fraud.

          Pulier alone is further charged with six counts of interstate travel and use of interstate facility in aid of commercial bribery, obstruction of justice, and two counts of filing a false tax return. The obstruction of justice charge relates to Pulier’s alleged effort to influence a former ServiceMesh executive to provide false information to the FBI and Grand Jury about payments made by Pulier through TechAdvisors. The tax fraud charges relate to charitable deductions taken by Pulier for payments by Ace made to Waldron, Hunter, and others.

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

          The statutory maximum penalties for the charges in the indictment are: 25 years in federal prison for the conspiracy and securities fraud counts, 20 years for each count of wire fraud, five years for each count of interstate travel in aid of commercial bribery, 10 years for the obstruction of justice count, and three years for each of the filing false tax return charges.

          Hunter was previously charged in a two-count information with conspiracy to commit securities fraud and wire fraud.

          The United States Securities and Exchange Commission today filed a civil action against Pulier and Waldron that charges them with securities fraud.

          The criminal case stemming from the ServiceMesh fraud scheme is being investigated by the Federal Bureau of Investigation and IRS Criminal Investigation.

          The United States Attorney’s Office expressed appreciation to the New South Wales Police Force, Fraud and Cybercrime Squad, for their assistance in this investigation.

          This case is being prosecuted by Stephen A. Cazares and Scott Paetty of the Major Frauds Section.

A federal jury in Beaumont, Texas, convicted a Romanian national today for plotting to traffic hundreds of kilograms of cocaine from the United States in a scheme that also included money laundering, arms trafficking, and an attempt to assassinate rival gang members.

According to court documents and evidence presented at trial, Marius Lazar, 50, of Bucharest, Romania, was a “founding member” of his local chapter of the Hells Angels Motorcycle Club, a transnational outlaw motorcycle gang that was founded in the United States and is now active on six continents. Through his relationship with a fellow Hells Angels member from New Zealand, Lazar joined a conspiracy to purchase more than 400 kilograms of cocaine from a person in the United States, who the conspirators believed was a powerful drug trafficker but who was actually an undercover agent of the Drug Enforcement Administration (DEA). As part of his negotiations for the cocaine purchase, Lazar also solicited the undercover agent to kill two members of a rival motorcycle club in Romania, and offered to supply the undercover with rifles, grenades, armored vehicles, and other military-grade equipment that Lazar understood would be used against police officers in the United States. Members of the conspiracy sent nearly $1 million to the United States, via bank wires and Bitcoin transfers, as payment for the drugs and murders.

The jury convicted Lazar of conspiracy to commit racketeering, conspiracy to import cocaine into the United States, and conspiracy to commit money laundering. He faces a maximum penalty of life years in prison. A sentencing hearing will be scheduled after the completion of a presentence investigation by the U.S. Probation Office. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Co-defendants Murray Michael Matthews and Marc Patrick Johnson remain fugitives.

Acting Assistant Attorney General Nicole M. Argentieri of the Justice Department’s Criminal Division, U.S. Attorney Damien Diggs for the Eastern District of Texas, DEA Administrator Anne Milgram, Special Agent in Charge Mark B. Dawson of Homeland Security Investigations (HSI) Houston, U.S. Marshal John Garrison of the U.S. Marshals Service (USMS), and Special Agent in Charge Christopher J. Altemus Jr. of the IRS Criminal Investigation (IRS-CI) Dallas Field Office made the announcement.

The DEA, HSI, USMS, and IRS-CI investigated the case, with significant assistance from the Bureau of Alcohol, Tobacco, Firearms and Explosives.

Trial Attorney Conor Mulroe of the Criminal Division’s Violent Crime and Racketeering Section and Assistant U.S. Attorney Christopher Rapp for the Eastern District of Texas are prosecuting the case.

The Justice Department’s Office of International Affairs worked with law enforcement partners in Romania to secure the arrest and extradition of Lazar.

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

Joon H. Kim, the Acting United States Attorney for the Southern District of New York, announced that RICHARD MOSELEY SR. was found guilty today in Manhattan federal court of wire fraud, aggravated identity theft, and violating the Racketeer Influenced Corrupt Organizations Act (“RICO”) and the Truth in Lending Act (“TILA”) for operating a payday lending enterprise that systematically evaded state usury laws in order to charge illegally high interest rates, and for issuing payday loans to consumers who never even sought them.  MOSELEY was convicted following a two-and-a-half week trial before U.S. District Judge Edgardo Ramos. 

Acting U.S. Attorney Joon H. Kim said: “Richard Moseley Sr.’s predatory loan company exploited more than 600,000 of the most financially vulnerable people in the United States.  Charging exorbitant interest, fees, and even signing up some individuals for loans they didn’t authorize, Moseley made it nearly impossible for those already struggling to make ends meet.  With today’s conviction, however, Moseley can no longer take advantage of those already on the brink, and he now faces significant time in prison for his predatory ways.”

According to the Indictment, other filings in Manhattan federal court, and the evidence presented at trial:   

Between 2004 and September 2014, MOSELEY owned and operated a group of payday lending businesses (the “Hydra Lenders”) that issued and serviced small, short-term, unsecured loans, known as “payday loans,” through the Internet to customers across the United States.   

 

For nearly a decade, MOSELEY systematically exploited more than 620,000 financially struggling working people throughout the United States, many of whom were having trouble paying for basic living expenses.  MOSELEY, through the Hydra Lenders, targeted and extended loans to these individuals at illegally high interest rates of more than 700 percent, using deceptive and misleading communications and contracts and in violation of the usury laws of numerous states that were designed to protect residents from such abusive conduct.  

 

In furtherance of the scheme, the Hydra Lenders’ loan agreements materially understated the amount the payday loan would cost and the total of payments that would be taken from borrowers’ bank accounts.  The loan agreements suggested, for example, that the borrower would pay $30 in interest for $100 borrowed.  In truth and in fact, however, MOSELEY structured the repayment schedule of the loans such that, on the borrower’s payday, the Hydra Lenders automatically withdrew the entire interest payment due on the loan, but left the principal balance untouched.  As a result, on the borrower’s next payday, the Hydra Lenders could again automatically withdraw an amount equaling the entire interest payment due (and already paid) on the loan.  Under MOSELEY’s control and oversight, the Hydra Lenders proceeded automatically to withdraw such “finance charges” payday after payday, applying none of the money toward repayment of principal.  Indeed, under the terms of the loan agreement, the Hydra Lenders withdrew finance charges from their customers’ accounts unless and until consumers took affirmative action to stop the automatic renewal of the loan. 

 

Through the Hydra Lenders, MOSELEY also extended numerous payday “loans” to victims across the country who did not even want the loans or authorize the issuance of the loans, but instead had merely submitted their personal and bank account information in order to inquire about the possibility of obtaining a payday loan.  MOSELEY then automatically withdrew the Hydra Lenders’ usurious “financing fees” directly from the financially struggling victims’ bank accounts on a bi-weekly basis.  Although hundreds of victims, over a period of years, lodged complaints that they had never approved or even been aware of the issuance of the loans, the Hydra Lenders, at MOSELEY’s direction, continued to issue loans to consumers without confirming that the consumers in fact wanted the loans that they received or had reviewed and approved the loan terms.    

 

Throughout their existence, the Hydra Lenders were the subject of complaints from customers across the country, numerous state regulators, and consumer protection groups, about the Hydra Lenders’ deceptive and misleading practices in issuing usurious and fraudulent loans.  Beginning in approximately 2006, in an attempt to avoid civil and criminal liability for his conduct, and to enable the Hydra Lenders to extend usurious loans contrary to state laws, MOSELEY created the sham appearance that the Hydra Lenders were located overseas.  MOSELEY nominally incorporated the Hydra Lenders first in Nevis, and later in New Zealand, and claimed that the Hydra Lenders could not be sued or subject to state enforcement actions because they were beyond the jurisdiction of every state in the United States.  In truth and in fact, the entirety of MOSELEY’s lending business, including all bank accounts from which loans were originated, all communications with consumers, and all employees, were located at MOSELEY’s corporate office in Kansas City, Missouri.  The Hydra Lenders’ purported “offshore” operation consisted of little more than a service that forwarded mail from addresses in Nevis or New Zealand to the Kansas City, Missouri, office. 

 

In furtherance of the scheme, MOSELEY falsely told his attorneys that the Hydra Lenders maintained physical offices and employees in Nevis and New Zealand and that the decision whether to extend loans to particular consumers was made by employees of the Hydra Lenders in Nevis and New Zealand.  As MOSELEY knew, at no time did the Hydra Lenders have any employees involved in the lending business in Nevis or New Zealand, and at all times the decision whether to underwrite loans was made by employees under MOSELEY’s direction in Kansas City, Missouri.  To defeat state complaints and inquiries, MOSELEY directed his attorneys at outside law firms to submit correspondence to state Attorneys General that stated – falsely, unbeknownst to MOSELEY’s attorneys – that the Hydra Lenders originated loans “exclusively” from their offices overseas and had no physical presence anywhere in the United States.  In reliance on this materially false and misleading correspondence, many state Attorneys General and regulators closed their investigations on the apparent basis that they lacked jurisdiction over the Hydra Lenders and that the Hydra Lenders had no presence or operations in the United States. 

 

From approximately November 2006 through approximately August 2014, the Hydra Lenders generated more than $200 million in revenues.  MOSELEY himself made millions of dollars from the scheme, which he spent on, among other things, a vacation home in Mexico, luxury automobiles, and country club membership dues. 

 

*          *          *

MOSELEY, 73, of Kansas City, Missouri, was convicted of one count of conspiracy to collect unlawful debts in violation of RICO; one count of collecting unlawful debts in violation of RICO; one count of conspiracy to commit wire fraud; and one count of wire fraud, each of which carries a maximum sentence of 20 years in prison.  In addition, he was convicted of one count of aggravated identity theft, which carries a maximum sentence of two years in prison, and one count of violating TILA, which carries a maximum sentence of one year in prison.  MOSELEY is scheduled to be sentenced by Judge Ramos on April 27, 2018, at 11:00 a.m.

The maximum potential sentences in this case are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Kim praised the outstanding investigative work of the Federal Bureau of Investigation and the Office of the Inspector General for the Board of Governors of the Federal Reserve System.  Mr. Kim also thanked the Consumer Financial Protection Bureau, which brought a separate civil action against MOSELEY, for referring the matter and for its assistance.

The case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Edward A. Imperatore and David Abramowicz are in charge of the prosecution.  

Preet Bharara, the United States Attorney for the Southern District of New York, Mary B. McCord, Acting Assistant Attorney General for National Security, and William F. Sweeney Jr., Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced that Kun Shan Chun, a/k/a “Joey Chun,” was sentenced to serve 24 months in prison and pay a $10,000 fine based on his conviction for acting in the United States as an agent of the People’s Republic of China (“China”), without providing prior notice to the Attorney General. CHUN pled guilty on August 1, 2016. U.S. District Judge Victor Marrero imposed today’s sentence.

Manhattan U.S. Attorney Preet Bharara said: “Kun Shan Chun, an FBI employee, was supposed to work to protect and serve the American people. But instead, he acted as a secret agent of China. For that betrayal, Chun has now been sentenced to federal prison.”

 

FBI Assistant Director-in-Charge William F. Sweeney Jr. said: “The FBI continues to be vigilant in an effort to warn American industries, businesses and institutions of the dangers posed by the insider threat. This investigation validates that we at the FBI are not immune to the threat of an insider. The FBI will continue to diligently protect its equities, and those of both our U.S. intelligence community partners and those in the private sector, from insiders looking to steal our information and use it against us.”

 

According to the Information filed against CHUN, other documents publicly filed in this case, and statements made during court proceedings, including today’s sentencing:

CHUN, a native of China and a naturalized citizen of the United States, began working at the FBI’s New York Field Office in approximately 1997 as an electronics technician assigned to the Computerized Central Monitoring Facility of the FBI’s Technical Branch. In approximately 1998, and in connection with his employment, the FBI granted CHUN a Top Secret security clearance, and his duties included accessing sensitive and, in some instances, classified information. As discussed in more detail below, in connection with a progressive recruitment process, CHUN received and responded to requests from Chinese nationals and at least one Chinese government official (“Chinese Official-1”), at least some of whom were aware that CHUN worked at the FBI.

On multiple occasions prior to his arrest in March 2016, while engaging in a prolonged and concerted effort to conceal from the FBI his illicit relationships with these individuals, CHUN disclosed to Chinese Official-1 – at minimum – information regarding the FBI’s personnel, structure, technological capabilities, general information regarding the FBI’s surveillance strategies, and certain categories of surveillance targets.

CHUN’s Purported Consulting for Zhuhai Kolion Technology Company Ltd.

Beginning in at least 2005, CHUN and certain of his relatives maintained relationships with Chinese nationals purporting to be affiliated with a company in China named Zhuhai Kolion Technology Company Ltd. (“Kolion”). CHUN maintained an indirect financial interest in Kolion, including through a previous investment by one of his relatives. In connection with these relationships, Chinese nationals asked CHUN to perform research and consulting tasks in the United States, purportedly for the benefit of Kolion, in exchange for financial benefits, including partial compensation for international trips as well as cash payments made to CHUN’s relative.

Between 2006 and 2010, CHUN’s communications and other evidence reflect inquiries to CHUN from purported employees of Kolion while CHUN was in the United States, as well as efforts by CHUN to collect, among other things, information regarding solid-state hard drives and printer cartridges.

CHUN’s Relationship with Chinese Official-1

CHUN was introduced to Chinese Official-1 in approximately 2007 and subsequently provided Chinese Official-1 with sensitive information from the FBI. During a trip to Italy and France in 2011, CHUN met with Chinese Official-1. Chinese Official-1 indicated that he worked for the Chinese government, and that he knew CHUN worked for the FBI. During subsequent private meetings conducted abroad between CHUN and Chinese Official-1, Chinese Official-1 asked questions about sensitive, nonpublic FBI information. During those meetings, CHUN disclosed, among other things, the identity and potential travel patterns of an FBI Special Agent.

In approximately 2012, the FBI conducted a routine investigation relating to CHUN’s Top Secret security clearance. In an effort to conceal his relationships with Chinese Official-1 and the other Chinese nationals purporting to be affiliated with Kolion, CHUN repeatedly lied on a standardized form related to the security clearance investigation. During the period between 2000 and CHUN’s termination, CHUN also reported to the FBI that he had traveled to the areas of Hong Kong and China approximately nine times, as well as additional trips to Canada, Thailand, Europe, Australia, and New Zealand. CHUN was required by FBI policy to disclose anticipated and actual contact with foreign nationals during his international travel, but he lied on numerous pre- and post-trip FBI debriefing forms by omitting his contacts with Chinese Official-1, other Chinese nationals, and Kolion.

Examples of CHUN’s Actions in the United States in Response to Requests from Chinese Official-1

 

Chinese Official-1 asked CHUN on multiple occasions for information regarding the internal structure of the FBI. In response to those requests, in approximately March 2013, CHUN downloaded an FBI organizational chart from his FBI computer in Manhattan. CHUN later admitted to the FBI that, after editing the chart to remove the names of FBI personnel, he saved the document on a piece of digital media and caused it to be transported to Chinese Official-1 in China.

Chinese Official-1 also asked CHUN for information regarding technology used by the FBI. In approximately January 2015, CHUN took photographs of documents displayed in a restricted area of the FBI’s New York Field Office, which summarized sensitive details regarding multiple surveillance technologies used by the FBI. CHUN sent the photographs to his personal cell phone, and later admitted to the FBI that he caused the photographs to be transported to Chinese Official-1 in China.

CHUN’s Admissions to an FBI Undercover Employee

In about February 2015, the FBI caused an undercover employee (the “UCE”) to be introduced to CHUN. The UCE purported to be employed by an independent contractor.

During a March 2015 recorded meeting, CHUN told the UCE about his relationship with Kolion and Chinese nationals. In a subsequent recorded meeting in March 2015, CHUN explained to the UCE that Kolion had “government backing,” and that approximately five years earlier a relative met a “section chief” who CHUN believed was associated with the Chinese government.

In June 2015, during a recorded meeting, CHUN told the UCE that he had informed his Chinese associates that the UCE may be in a position to assist them. CHUN said that he wished to act as a “sub-consultant” to the UCE and wanted the UCE to “pay” him “a little bit.” In July 2015, after coordinating travel in an effort to introduce the UCE to CHUN’s Chinese associates, CHUN met with the UCE twice. During one of the meetings, CHUN stated that he knew “firsthand” that the Chinese government was actively recruiting individuals who could provide assistance, and that the Chinese government was willing to provide immigration benefits and other compensation in exchange for such assistance. The UCE told CHUN that he had access to sensitive information from the United States government. CHUN responded that his Chinese associates would be interested in that type of information, but that CHUN expected a “cut” of any payment that the UCE received for providing information to the Chinese government.

CHUN’s Arrest by the FBI and Confession

CHUN was arrested by the FBI on March 16, 2016. He subsequently confessed to most of the foregoing activities, including having taken steps to collect sensitive FBI information in the United States in response to taskings from Chinese Official-1. CHUN explained that he was motivated in part by the financial benefits that he and others derived from these relationships, but also admitted that he understood that he had provided assistance to the Chinese government.

The Seizure of Additional Sensitive FBI Information from CHUN’s Residence

The FBI searched CHUN’s residence pursuant to a search warrant around the time of his arrest. Agents found a .40 caliber handgun and an AR-15 rifle in CHUN’s basement, neither of which was registered in New York. The FBI also seized from CHUN’s residence a thumb drive that contained three files with sensitive FBI information dating back to approximately 2006 and 2007. CHUN’s job at the FBI did not require him to work from home, and there is no legitimate reason for him to have possessed these files at his residence. One file – which had a “date modified” of January 19, 2007 – was marked with a security header that read “FBI sensitive information for official use only.” The document described technical details of FBI surveillance infrastructure, including specific information about networks used to store highly sensitive, classified data. The second file contained information relating to ways in which FBI employees could access raw intelligence information, and it included network details and unique usernames for ten FBI employees. The third file – which had a “date modified” of July 20, 2007 – contained a spreadsheet dated June 2, 2006, that included names and telephone numbers of FBI personnel with jobs similar to CHUN’s position, as well as telephone numbers for lines that Electronics Technicians such as CHUN would have used to configure or troubleshoot network issues with the FBI’s New York Office.

 

* * *

 

In addition to the prison sentence and fine, Judge Marrero also sentenced CHUN, 47, to one year of supervised release and to pay a $100 special assessment.

 

Mr. Bharara praised the outstanding investigative work of the FBI’s Counterintelligence Division. Mr. Bharara also thanked the Counterintelligence and Export Control Section of the Department of Justice’s National Security Division.

The prosecution is being handled by the Office’s Terrorism and International Narcotics Unit. Assistant U.S. Attorneys Emil J. Bove III and Andrea L. Surratt are in charge of the prosecution, with assistance from Trial Attorneys Thea D. R. Kendler and David C. Recker of the Counterintelligence and Export Control Section.

Damian Williams, the United States Attorney for the Southern District of New York, announced today that PATRICK EDWIN GORYCHKA was sentenced to 42 months in prison by United States District Judge Kenneth M. Karas for his possession of child pornography.  The sentencing today followed GORYCHKA’s guilty plea on May 23, 2022.

U.S. Attorney Damian Williams said: “The availability of child pornography spread through chatrooms and discreet websites is every modern parent’s worst nightmare.  This Office will continue to prioritize protecting our most vulnerable citizens, children, from this kind of exploitation.”

According to documents filed in this case and statements made in related court proceedings:

In October 2019, the Federal Bureau of Investigation (“FBI”) received information from an FBI Online Undercover Employee (“UC-1”) concerning UC-1’s communications with an individual using the Kik username “epg84,” who was later identified as GORYCHKA, in a Kik chat room known to be frequented by individuals with a sexual interest in children.  UC-1 identified himself as a 48-year-old uncle who had engaged in sex acts with his niece.  GORYCHKA, who identified himself as “Eric G.,” asked UC-1 for photos of UC-1’s niece.  UC-1 told GORYCHKA that UC-1 had met a “pedo mom” (“UC-2”) in New York.  UC-1 told GORYCHKA that “she keeps kids of illegals while they work for a couple weeks” and “makes some $ on the side.”  GORYCHKA stated, “Omg that’s hot” and asked UC-1 to connect him to UC-2.   

Thereafter, UC-2, going by the name “Jane,” and GORYCHKA engaged in numerous communications from in or about October 31, 2019, through in or about November 16, 2019.  During these communications, GORYCHKA said he was interested in “preteens” and told UC-2, “I heard that you could potentially facilitate certain things.”  GORYCHKA said that he was interested in a “similar setup” as UC-1 and told UC-2, “I have money.” 

On November 2, 2019, GORYCHKA transmitted two links to Mega, a New Zealand-based cloud storage platform that permits users to store and share electronically stored information, including images and videos.[1]  Both links contained numerous images and videos of children engaging in sexually explicit activity.

In imposing the sentence, Judge Karas underscored, “The possession of child pornography feeds a business that exploits the most vulnerable in our society.”

*                *                *

In addition to the prison term, Judge Karas sentenced GORYCHKA, 40, of Manitowoc, Wisconsin, to five years of supervised release.

Mr. Williams praised the efforts of the FBI, West Point’s Criminal Investigation Division, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Town of New Windsor Police Department in connection with this investigation. 

The prosecution is being handled by the Office’s White Plains Division.  Assistant U.S. Attorney Marcia S. Cohen is in charge of the prosecution.  

 



[1] With respect to Mega, a user can send a link to a Mega cloud account to another person.  Once the link to the Mega cloud account is transmitted, the person who clicks on the link to the cloud account can access, view, and download the files contained in that Mega cloud account.

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced the arrest of PATRICK EDWIN GORYCHKA for distributing child pornography.  GORYCHKA was arrested yesterday and presented before U.S. Magistrate Judge Judith McCarthy in White Plains federal court and released on bail.

 According to the Complaint[1] filed yesterday in White Plains federal court:           

In October 2019, the Federal Bureau of Investigation (“FBI”) received information from an FBI Online Undercover Employee (“UC-1”) concerning UC-1’s communications with an individual using the Kik user name “epg84” (“User-1”) in a Kik chat room known to be frequented by individuals with a sexual interest in children.  UC-1 identified himself as a 48-year-old uncle who had engaged in sex acts with his niece.  User-1, who identified himself as “Eric G.,” asked UC-1 for photos of UC-1’s niece.  UC-1 told User-1 that UC-1 had met a “pedo mom” (“UC-2”) in New York.  UC-1 told User-1 that “she keeps kids of illegals while they work for a couple weeks” and “makes some $ on the side.”  User-1 stated, “Omg that’s hot” and asked UC-1 to connect him to UC-2.   

Thereafter, UC-2, going by the name “Jane,” and User-1 engaged in numerous communications from in or about October 31, 2019, through in or about November 16, 2019.  During these communications, User-1 said he was interested in “preteens” and told UC-2, “I heard that you could potentially facilitate certain things.”  User-1 said that he was interested in a “similar setup” as UC-1 and told UC-2, “I have money.” 

On November 2, 2019, User-1 transmitted two links to Mega, a New Zealand-based cloud storage platform that permits users to store and share ESI, including images and videos. [2]  Both links contained numerous images and videos of children engaging in sexually explicit activity.

*                *                *

GORYCHKA, 37, of New Windsor, New York, is charged with one count of distribution and receipt of child pornography, which carries a minimum sentence of five years in prison and a maximum sentence of 20 years in prison.  The statutory minimum and maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentencing of the defendant will be determined by the judge.

Mr. Berman praised the efforts of the FBI, West Point’s Criminal Investigation Division, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Town of New Windsor Police Department, in connection with this investigation.  He added that the investigation is ongoing.                     

The prosecution is being handled by the Office’s White Plains Division.  Assistant United States Attorney Marcia S. Cohen is in charge of the prosecution.  

 



[1] As the introductory phrase signifies, the entirety of the text of the Complaint and the description of the Complaint set forth herein constitute only allegations, and every fact described should be treated as an allegation.





[2] With respect to Mega, a user can send a link to a Mega cloud account to another person.  Once the link to the Mega cloud account is transmitted, the person who clicks on the link to the cloud account can access, view, and download the files contained in that Mega cloud account.

 

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that RICHARD MOSELEY SR. was sentenced today to 120 months in prison, after having been found guilty in November 2017 of racketeering, fraud, and identity-theft offenses for operating an illegal payday lending enterprise in which MOSELEY charged illegally high interest rates and issued payday loans to victims who did not authorize them.  MOSELEY was convicted after a three-week jury trial before U.S. District Judge Edgardo Ramos, who imposed today’s sentence.   

Manhattan U.S. Attorney Geoffrey S. Berman said:  “Richard Moseley’s illegal payday lending operation exploited more than half a million of the most financially vulnerable people in the U.S.  Charging usurious interest and exorbitant fees, and even signing people up for loans they didn’t authorize, Moseley put financially struggling people even further in debt.  Today Moseley has been rightly sentenced to prison for his predatory ways.”

According to the Indictment, other filings in Manhattan federal court, and the evidence presented at trial:     

From approximately 2004 to 2014, MOSELEY owned and operated a group of payday lending businesses (the “Hydra Lenders”) that issued and serviced small, short-term, unsecured loans, known as “payday loans,” through the Internet to customers across the United States.   

For nearly a decade, MOSELEY systematically exploited more than 620,000 financially struggling working people throughout the United States, many of whom struggled to pay for basic living expenses.  MOSELEY, through the Hydra Lenders, targeted and extended loans to these individuals at illegally high interest rates of more than 700 percent, using deceptive and misleading communications and contracts and in violation of the usury laws of numerous states that were designed to protect residents from such abusive conduct.  

In furtherance of the scheme, the Hydra Lenders’ loan agreements materially understated the amount the payday loan would cost and the total amount of payments that would be taken from borrowers’ bank accounts.  MOSELEY structured the repayment schedule of the loans such that, on the borrower’s payday, the Hydra Lenders automatically withdrew the entire interest payment due on the loan, but left the principal balance untouched so that, on the borrower’s next payday, the Hydra Lenders could again automatically withdraw an amount equaling the entire interest payment due (and already paid) on the loan.  Under MOSELEY’s control and oversight, the Hydra Lenders proceeded automatically to withdraw such “finance charges” payday after payday, applying none of the money toward repayment of the loan principal.  Under the terms of the loan agreement, the Hydra Lenders withdrew finance charges from their customers’ accounts unless and until consumers took affirmative action to stop the automatic renewal of the loan. 

Through the Hydra Lenders, MOSELEY also extended numerous payday loans to victims across the country who did not even want the loans or authorize the issuance of the loans, but instead had merely submitted their personal and bank account information in order to inquire about the possibility of obtaining a payday loan.  MOSELEY then automatically withdrew the Hydra Lenders’ usurious “financing fees” directly from the financially struggling victims’ bank accounts on a bi-weekly basis.  Although hundreds of victims, over a period of years, lodged complaints that they had never approved or even been aware of the issuance of the loans, the Hydra Lenders, at MOSELEY’s direction, continued to issue loans to consumers without confirming that the consumers in fact wanted the loans that they received or had reviewed and approved the loan terms.    

Customers across the country, numerous state regulators, and consumer protection groups complained about the Hydra Lenders’ deceptive and misleading practices in issuing usurious and fraudulent loans.  Beginning in approximately 2006, in an attempt to avoid civil and criminal liability for his conduct, and to enable the Hydra Lenders to extend usurious loans contrary to state laws, MOSELEY made it appear that the Hydra Lenders were located overseas.  Specifically, MOSELEY nominally incorporated the Hydra Lenders first in Nevis in the Caribbean, and later in New Zealand, and claimed that the Hydra Lenders could not be sued or subject to state enforcement actions because they were beyond the jurisdiction of every state in the United States.  In truth, the entirety of MOSELEY’s lending business, including all bank accounts from which loans were originated, all communications with consumers, and all employees, were located at MOSELEY’s corporate office in Kansas City, Missouri.  The Hydra Lenders’ purported “offshore” operation consisted of little more than a service that forwarded mail from addresses in Nevis or New Zealand to the Kansas City, Missouri, office. 

In furtherance of the scheme, MOSELEY falsely told his attorneys that the Hydra Lenders maintained physical offices and employees in Nevis and New Zealand and that the decision whether to extend loans to particular consumers was made by employees of the Hydra Lenders in Nevis and New Zealand.  As MOSELEY well knew, at no time did the Hydra Lenders have any employees involved in the lending business in Nevis or New Zealand, and at all times the decision whether to underwrite loans was made by employees under MOSELEY’s direction in Kansas City, Missouri.  To defeat state complaints and inquiries, MOSELEY directed his attorneys at outside law firms to submit correspondence to state Attorneys General that stated – falsely, unbeknownst to MOSELEY’s attorneys – that the Hydra Lenders originated loans “exclusively” from their offices overseas and had no physical presence anywhere in the United States. 

From approximately November 2006 through approximately August 2014, the Hydra Lenders generated more than $220 million in revenue.  MOSELEY made millions of dollars from the scheme, which he spent on, among other things, a vacation home in Mexico, luxury automobiles, and country club membership dues. 

*                *                *

In addition to the 10-year prison term, MOSELEY, 73, of Kansas City, Missouri, was sentenced to three years of supervised release and ordered to forfeit $49 million. 

Mr. Berman praised the work of the Federal Bureau of Investigation and the Office Inspector General for the Board of Governors of the Federal Reserve System.  Mr. Berman also thanked the Consumer Financial Protection Bureau, which brought a separate civil action against MOSELEY, for referring the matter and for its assistance.

The case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Edward A. Imperatore and David Abramowicz are in charge of the prosecution.  

Geoffrey S. Berman, the United States Attorney for the Southern District of New York, announced that ONYEKACHI EMMANUEL OPARA was sentenced today in Manhattan federal court to 60 months in prison based upon OPARA’s participation in fraudulent business email compromise scams that targeted thousands of victims in the United States and around the world.  Through these scams, OPARA and his co-conspirators attempted to defraud victims of over $25 million.  On April 11, 2018, OPARA pled guilty to conspiracy to commit wire fraud and wire fraud before U.S. District Judge Paul A. Crotty, who imposed today’s sentence. 

U.S. Attorney Geoffrey S. Berman said:  “From halfway around the world, Onyekachi Emmanuel Opara ran a global email scam business that victimized thousands of people out of millions of dollars.  The global reach of our Office and the FBI ensured that Opara will serve time in the United States for his crimes.”       

According to the allegations in the Indictment to which OPARA pled guilty and statements made at the plea and sentencing proceedings:

Between 2014 and 2016, OPARA and his co-defendant, David Chukwuneke Adindu (“Adindu”), participated in multiple business email compromise (“BEC”) scams that targeted thousands of victims around the world, including in the United States, the United Kingdom, Australia, Switzerland, Sweden, New Zealand, and Singapore.  OPARA sent bogus emails to employees of the victim companies directing that funds be transferred to specified bank accounts.  The emails purported to be from supervisors at those companies or from third party vendors with whom the companies did business.  In reality, the emails were either sent from email accounts with domain names very similar to those of the companies and vendors, or the metadata for the emails was modified to make it appear as if the emails had been sent from legitimate email addresses.  After victims transferred the funds as directed in the bogus emails, the funds were quickly withdrawn or transferred to other bank accounts controlled by scheme participants.  In total, the BEC scam participants attempted to steal more than $25 million from victims around the world.

In furtherance of the BEC scams, OPARA created accounts on dating websites and entered into online romantic relationships with individuals in the United States by portraying himself as a young attractive woman named “Barbara.”  “Barbara” would then instruct these individuals in the United States to send their money overseas and/or to receive money from BEC scams and forward the proceeds to other scheme participants located overseas.  For example, one victim with whom OPARA struck up a romantic relationship sent over $600,000 of the victim’s own money to bank accounts controlled by scheme participants at OPARA’s direction.  OPARA also attempted to recruit at least 14 other individuals via dating websites to receive funds from BEC scams into their bank accounts and then transfer the proceeds to overseas bank accounts. 

OPARA was arrested on December 22, 2016, in Johannesburg, South Africa, and was extradited to the Southern District of New York on January 26, 2018. 

*                *                *

In addition to the prison term, OPARA, 30, of Lagos, Nigeria, was sentenced to two years of supervised release and was ordered to pay $2.5 million in restitution. 

On June 20, 2017, Adindu pled guilty to one count of conspiracy to commit wire fraud and one count of conspiracy to commit identity theft.  On December 14, 2017, Judge Crotty sentenced Adindu to 41 months in prison and ordered him to pay approximately $1.4 million in restitution.

Mr. Berman praised the investigative work of the Federal Bureau of Investigation.  Mr. Berman also thanked Oath’s E-Crime Investigations Team, the National Prosecuting Authority for South Africa, the South African Police Service, and the United States Marshals Service.  Mr. Berman noted that the investigation is ongoing.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Andrew K. Chan and Daniel Loss are in charge of the prosecution.

DAYTON – Adam J. Moffitt, 31, of Urbana, Ohio, was sentenced in U.S. District Court to 156 months in prison for creating and distributing pictures of the sexual abuse of a female infant. He was also sentenced to remain under court supervision for the rest of his life.  

Benjamin C. Glassman, United States Attorney for the Southern District of Ohio, and Steve Francis, Special Agent in Charge, Homeland Security Investigations (HSI), announced the sentence handed down yesterday by U.S. District Judge Walter H Rice.

According to court documents, between October and November 2016, Moffitt logged onto a website and posted in chatrooms dedicated to the discussion and dissemination of child pornography and abuse. On at least three occasions, Moffitt posted internet links that, when clicked, led to images of child pornography. Two of those links led to images Moffitt had created of the sexual abuse of a prepubescent female.

While executing a search warrant at Moffitt’s house in November 2016, investigators found more than 600 images of child pornography on his computer. Moffitt pleaded guilty in June 2018 to distributing child pornography.

“The fact that an undercover officer in New Zealand, who was patrolling the internet, found the images Moffitt posted underscores the global danger of child exploitation,” U.S. Attorney Glassman said. “Distributing such disturbing images all but ensures that the child will continue to be victimized long after this case is concluded.”

"HSI will continue to aggressively target predators who share child pornography online; sharing furthers the motivation of those who are producing this repulsive material,” said Francis. “As today's sentence clearly demonstrates, these are serious crimes with serious consequences."

U.S. Attorney Glassman commended the cooperative investigation by HSI, as well as Assistant United States Attorney Dominick S. Gerace, who is representing the United States in this case. 

###

SPRINGFIELD, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that a man who lived in his travel trailer was sentenced in federal court today for a counterfeiting scheme that victimized businesses across the United States.

Stuart E. Thurber, 56, was sentenced by U.S. District Judge Brian C. Wimes to two years and six months in federal prison without parole. Today’s sentence reflects an upward variance from the recommendation under the federal sentencing guidelines. The court also ordered Thurber to pay $9,000 in restitution to several Missouri businesses in Mountain View, Springfield and West Plains as well as businesses in Nevada and California.

On Sept. 6, 2016, Thurber pleaded guilty to possessing electronic images for the purpose of counterfeiting.

Thurber was arrested on April 5, 2016, by Mountain View, Mo., police officers for passing counterfeit $100 bills. When officers searched his truck and travel trailer in the Wal-Mart parking lot, they found three laptop computers, two hard drives and two printers. Thurber admitted that these items were used to print counterfeit $100 bills.

Thurber also acknowledged that the government could establish by a preponderance of the evidence that he engaged in counterfeiting from January 2014 to June 2016. Thurber, who lived in his Dodge Dakota pick-up and travel trailer, engaged in a counterfeiting operation whereby he “washed” the ink off of genuine bills and used his computer and color printer to create counterfeit $100 bills, which he then passed to unsuspecting businesses throughout the United States.

Thurber manufactured and passed at least 93 counterfeit $100 bills in the Western District of Missouri. Among the victims of Thurber’s criminal activity was Dollar General and Wal-Mart in Mountain View, Southern Supply in Springfield, Mo., and Dollar General in West Plains, Mo.

At the time of his arrest, Thurber attempted to avoid detection and punishment by claiming to be a citizen of New Zealand and presenting a counterfeit New Zealand identification card in the name David Turnbull.

This case was prosecuted by Assistant U.S. Attorney Steven M. Mohlhenrich. It was investigated by the U.S. Secret Service, the Mountain View, Mo., Police Department, the Ozark, Mo., Police Department and the West Plains, Mo., Police Department.

SAN JOSE – Cuong Chi Quan, also known as “Roger Quan,” was sentenced last week to 10 months in prison for crimes related to a scheme to underreport his income by nearly $4.5 million, announced United States Attorney Ismail J. Ramsey and Kareem Carter, Special Agent in Charge of IRS–Criminal Investigation (IRS-CI)’s Washington D.C. Field Office. The sentence was handed down by the Honorable Edward J. Davila, United States District Judge.

On March 27, 2023, Quan was charged by felony information with one count each of willfully aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. § 7206(2), and willfully violating foreign bank account reporting requirements, in violation of 31 U.S.C. §§ 5314 and 5322(a). On April 24, 2023, Quan pleaded guilty to both counts.

Quan, 56, of Milpitas, Calif., owned and managed QXQ, Inc. (“QXQ”), a manufacturer of circuit board test fixtures based in Fremont, Calif. QXQ shipped its products to customers in the United States and abroad. According to his plea agreement, Quan admitted that, since before 2014, QXQ maintained two sets of QuickBooks bookkeeping files. One set of books recorded sales to customers in the United States and all of QXQ’s expenses. The second set of books recorded sales to customers in Asia. Quan directed QXQ’s customers in Asia to wire their payments to QXQ’s bank accounts in New Zealand. The income and expenses of QXQ were reported on Quan’s individual Form 1040 tax returns. Quan admitted that he provided his income tax preparer only with the QuickBooks bookkeeping file that recorded QXQ’s sales to customers in the United States and all of its expenses. Further, Quan acknowledged he knowingly did not provide his income tax return preparer with, or disclose to the tax preparer the existence of, the bookkeeping file that recorded QXQ’s sales to customers in Asia or the statements from his and QXQ’s foreign bank accounts, which included significant interest. Quan agreed his actions omitted over $4 million in 2017 income, causing his 2017 federal income taxes to be underreported by $1,783,339.

The plea agreement contains further details of the scheme. For example, Quan admitted that he had signature authority over at least eleven foreign bank accounts in 2017. One of these accounts held a balance of at least $12,137,288.50 on April 15, 2018. Quan admitted that he knowingly did not report the existence of these accounts as required. Quan also did not report the interest earned in foreign bank accounts to his tax return preparer.

Judge Davila imposed restitution to the Internal Revenue Service of $8,167,733 for underreported federal income tax for the years 2014 through 2018. Judge Davila further imposed a fine of $35,000, and a 3-year term of supervised release.

Assistant U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the IRS-CI International Tax and Financial Crimes (ITFC) group, a team of Special Agents dedicated to investigating international tax crimes. 

SAN JOSE –Roger Chi Quan, pleaded guilty to crimes related to a scheme to underreport his 2017 business income by over $4 million, announced United States Attorney Ismail J. Ramsey and Kareem Carter, Acting Special Agent in Charge of the IRS - Criminal Investigation Washington D.C. Field Office. The guilty plea was accepted by the Honorable Edward J. Davila, United States District Court.

Quan, 55, of Milpitas, Calif., owned and operated QXQ, Inc. (“QXQ”), a manufacturer of circuit board test fixtures based in Fremont, Calif. QXQ shipped its products to customers in the United States and Asia. According to his plea agreement, Quan admitted that since before 2014, QXQ maintained two sets of QuickBooks bookkeeping files. One set of books recorded sales to customers in the United States and all QXQ’s expenses. The second set of books recorded sales to customers in Asia. Quan directed QXQ’s customers in Asia to wire transfer their payments to QXQ’s bank accounts in New Zealand. Quan admitted that he retained an income tax preparer but provided the preparer only with the QuickBooks bookkeeping file that recorded QXQ’s sales to customers in the United States and all of its expenses. Further, Quan acknowledged he knowingly did not provide his income tax return preparer with, or disclose to the tax preparer the existence of, the bookkeeping file that recorded QXQ’s sales to customers in Asia or the statements from his and QXQ’s foreign bank accounts. Quan agreed his actions caused his 2017 federal income taxes to be underreported by $1,783,339. 

The plea agreement contains further details of the scheme. For example, Quan admitted that he had signature authority over at least eleven foreign bank accounts in 2017. One of these accounts held a balance of at least $12,137,288.50 on April 15, 2018. Quan admitted that he knowingly did not report the existence of these accounts as required. For example, Quan was required to report the existence of the accounts on FinCEN Form 114, Report of Foreign Bank and Financial Accounts. Quan also did not report the interest earned in foreign bank accounts to his tax return preparer.

On March 27, 2023, Quan was charged by felony information with one count each of willfully aiding and assisting in the preparation of a false tax return, in violation of 26 U.S.C. § 7206(2), and willfully violating foreign bank account reporting requirements, in violation of 31 U.S.C. §§ 5314 and 5322(a). Quan pleaded guilty to both counts.

Judge Davila scheduled Quan’s sentencing for September 25, 2023. The maximum penalty for willfully violating foreign bank account reporting requirements, in violation of Title 31 U.S.C. §§ 5314 and 5322(a), is five years in prison and a fine of $250,000. The maximum penalty for filing a false tax return, in violation of Title 26 U.S.C. § 7206(2), is three years in prison and a fine of $250,000. Quan agreed to pay $8,167,733 of restitution to the Internal Revenue Service for the tax years 2014 through 2018.

Assistant U.S. Attorney Colin Sampson is prosecuting the case. The prosecution is the result of an investigation by the Internal Revenue Service – Criminal Investigation International Tax and Financial Crimes (ITFC), a group dedicated to investigating international tax crimes.

SAN FRANCISCO – A grand jury in the Northern District of California has indicted a Russian national and an organization he allegedly operated, BTC-e, for operating an unlicensed money service business, money laundering, and related crimes. The announcement was made by U.S. Attorney Brian J. Stretch for the Northern District of California; Acting Assistant Attorney General Kenneth A. Blanco of the Justice Department’s Criminal Division; Internal Revenue Service (IRS) Criminal Investigation Chief Don Fort; Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Acting Executive Associate Director Derek Benner; Federal Bureau of Investigation (FBI) Special Agent in Charge of the Louisville Division Amy Hess; United States Secret Service (USSS) Special Agent in Charge of the Criminal Investigative Division Michael D’Ambrosio; Federal Deposit Insurance Corporation (FDIC), Office of the Inspector General, Inspector General Jay N. Lerner; and Acting Director of the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN), Jamal El-Hindi.

“Cryptocurrencies such as Bitcoin provide people around the world new and innovative ways of engaging in legitimate commerce. As this case demonstrates, however, just as new computer technologies continue to change the way we engage each other and experience the world, so too will criminals subvert these new technologies to serve their own nefarious purposes,” said U.S. Attorney Stretch.  “This office will continue to devote the necessary resources to ensure that money launderers and cyber-criminals are detected, apprehended, and brought to justice wherever and however they use the internet to commit their crimes.”

"As this case demonstrates, the Criminal Division employs a multi-faceted approach to dismantling criminal enterprises, by prosecuting the criminal actors themselves, and by shutting down their ability to monetize their crimes through entities that facilitate money laundering," said Acting Assistant Attorney General Blanco.  "The Criminal Division will work tirelessly to identify those who use technology to conduct and obscure their criminal activity, as we ensure there are no safe havens from U.S. justice for those who seek to victimize Americans."

“Homeland Security Investigations is strongly committed to tracking down criminals who seek to strike at the foundations of global financial security through complex money laundering schemes,” said HSI Acting Executive Associate Director Derek Benner. “The resulting indictment is a clear representation of why our close law enforcement partnerships are vital to our shared missions. HSI will continue to aggressively target those who deliberately seek to exploit financial systems for personal gain."

“Mr. Vinnik is alleged to have committed and facilitated a wide range of crimes that go far beyond the lack of regulation of the bitcoin exchange he operated.  Through his actions, it is alleged that he stole identities, facilitated drug trafficking, and helped to launder criminal proceeds from syndicates around the world,” said Chief Don Fort, IRS Criminal Investigation.  “Exchanges like this are not only illegal, but they are a breeding ground for stolen identity refund fraud schemes and other types of tax fraud.  When there is no regulation and criminals are left unchecked, this scenario is all too common. The takedown of this large virtual currency exchange should send a strong message to cyber-criminals and other unregulated exchanges across the globe.”

“BTC-e was noted for its role in numerous ransomware and other cyber-criminal activity; its take-down is a significant accomplishment, and should serve as a reminder of our global reach in combating transnational cyber crime,” said Special Agent in Charge of the USSS Criminal Investigative Division Michael D’Ambrosio. “We are grateful for the efforts of our law enforcement partners in achieving this significant result.”

"The arrest of Alexander Vinnik is the result of a multi-national effort and clearly displays the benefits of global cooperation among US and international law enforcement,” said FBI Special Agent in Charge Hess.  “This investigation demonstrates the long-term commitment given to identifying and pursuing criminals world-wide with a whole of government approach. This was a highly complex investigation that has only reached this stage due to the persistent and dedicated efforts of all the parties involved.  We must continue to impose real costs on criminals, no matter who they are or where they attempt to hide."

“The Federal Deposit Insurance Corporation Office of Inspector General works to ensure the integrity of the financial service sector and is committed to holding accountable those involved in criminal activity that undermine its integrity,” said Inspector General Lerner.  “This investigation demonstrates what can be achieved among the cooperative partnerships in the domestic and international law enforcement community.”

The indictment describes Alexander Vinnik, 37, a Russian citizen, as the owner and operator of multiple BTC-e accounts, including administrator accounts, and also a primary beneficial owner of BTC-e’s managing shell company, Canton Business Corporation. According to the indictment, numerous withdrawals from BTC-e administrator accounts went directly to Vinnik’s personal bank accounts. The indictment further alleges that proceeds from well-known hacks and thefts from bitcoin exchanges were funded through a BTC-e administrator account associated with Vinnik.  Vinnik was arrested in Greece on July 25.  

According to the indictment unsealed today, BTC-e, founded in 2011, was one of the world’s largest and most widely used digital currency exchanges.  The indictment alleges that BTC-e allowed its users to trade in the digital currency “Bitcoin” with high levels of anonymity.  The indictment alleges that although Bitcoin has known legitimate uses, the virtual currency, like cash, can be used to facilitate illicit transactions and to launder criminal proceeds.  According to the indictment, since its inception, Vinnik and others developed a customer base for BTC-e that was heavily reliant on criminals, including by not requiring users to validate their identity, obscuring and anonymizing transactions and source of funds, and by lacking any anti-money laundering processes. The indictment alleges BTC-e was operated to facilitate transactions for cybercriminals worldwide and received the criminal proceeds of numerous computer intrusions and hacking incidents, ransomware scams, identity theft schemes, corrupt public officials, and narcotics distribution rings.  Thus, the indictment alleges, BTC-e was used to facilitate crimes ranging from computer hacking, to fraud, identity theft, tax refund fraud schemes, public corruption, and drug trafficking. The investigation has revealed that BTC-e received more than $4 billion worth of bitcoin over the course of its operation.

As to Vinnik, the indictment alleges that he received funds from the infamous computer intrusion or “hack” of Mt. Gox – an earlier digital currency exchange that eventually failed, in part due to losses attributable to hacking.  The indictment alleges that Vinnik obtained funds from the hack of Mt. Gox and laundered those funds through various online exchanges, including his own BTC-e and a now defunct digital currency exchange, Tradehill, based in San Francisco, California.  The indictment alleges that by moving funds through BTC-e, Vinnik sought to conceal and disguise his connection with the proceeds from the hacking of Mt. Gox and the resulting investigation.

As for defendant BTC-e, the indictment alleges that, despite doing substantial business in the United States, BTC-e was not registered as a money services business with the U.S. Department of the Treasury, had no anti-money laundering process, no system for appropriate “know your customer” or “KYC” verification, and no anti-money laundering program as required by federal law.  According to the company’s website, BTC-e is located in Bulgaria but organized or otherwise subject to the laws of Cyprus.  The exchange allegedly maintains a base of operations in the Seychelles Islands and its web domains are registered to shell companies in, among other places, Singapore, the British Virgin Islands, France, and New Zealand. 

The indictment charges BTC-e and Vinnik with one count of operation of an unlicensed money service business, in violation of 18 U.S.C. § 1960, and one count of conspiracy to commit money laundering, in violation of 18 U.S.C. § 1956(h).  In addition, the indictment charges Vinnik with seventeen counts of money laundering, in violation of 18 U.S.C. § 1956(a)(1), and two counts of engaging in unlawful monetary transactions, in violation of 18 U.S.C. § 1957. An indictment merely alleges that crimes have been committed, and the defendants are presumed innocent until proven guilty beyond a reasonable doubt.  

FinCEN today assessed a $110 million civil money penalty against BTC-e  for willfully violating U.S. anti-money laundering (AML) laws.  Alexander Vinnik was assessed $12 million for his role in the violations.

“We will hold accountable foreign-located money transmitters, including virtual currency exchangers, that do business in the United States when they willfully violate U.S. AML laws,” said Acting FinCEN Director Jamal El-Hindi.  “Today’s action should be a strong deterrent to anyone who thinks that they can facilitate ransomware, dark net drug sales, or conduct other illicit activity using encrypted virtual currency.  Treasury’s FinCEN team and our law enforcement partners will work with foreign counterparts across the globe to appropriately oversee virtual currency exchangers and administrators who attempt to subvert U.S. law and avoid complying with U.S. AML safeguards.”  

If convicted of these crimes, Vinnik faces the following maximum penalties:      

 



Violation





Statute





Maximum Penalty





operation of an unlicensed money service business





18 U.S.C. § 1960





5 years of imprisonment





conspiracy to commit money laundering





18 U.S.C. § 1956(h)





20 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction





money laundering





18 U.S.C. § 1956(a)(1)





20 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction (each count)





engaging in unlawful monetary transactions





18 U.S.C. § 1957





10 years of imprisonment and a $500,000 fine or twice the value of the property involved in the transaction (each count)



 

Additional fines, restitution, and supervised release also may be ordered.  However, any sentence will be imposed by the court only after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.

This case is being investigated by the Internal Revenue Service (the Oakland Calif., Field Office and Cyber Crime Unit in Washington, D.C.); Department of Homeland Security, Homeland Security Investigations; FBI; U.S. Secret Service Criminal Investigative Division; and Federal Deposit Insurance Corporation, Office of the Inspector General.  The case is being prosecuted by the U.S. Attorney’s Office for the Northern District of California and the Criminal Division’s Computer Crime and Intellectual Property Section.  The Criminal Division’s Office of International Affairs provided substantial assistance on the case.

OAKLAND – A Union City man and the corporation he owns were charged with conspiracy to defraud the United States, smuggling, and multiple violations of the Toxic Substances Control Act and the Hazardous Materials Transportation Act, announced U.S. Attorney Brian J. Stretch; Environmental Protection Agency Criminal Investigation Division Special Agent in Charge Jay Green; U.S. Department of Transportation Office of the Inspector General Regional Special Agent in Charge William Swallow; and U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) Special Agent in Charge Ryan Spradlin.  The indictment alleges that Peiwen Zhou and his company, AK Scientific, conspired to defraud the United States, smuggled materials into the United States, and illegally transported chemicals within the United States by mislabeling and improperly packaging hazardous chemicals.

According to the indictment, Zhou, 53, of Palo Alto, was the founder, owner, and chief executive officer of AK Scientific.  Zhou and AK Scientific were in the business of purchasing and then selling research and specialty chemicals to customers that included universities, research laboratories, and other entities.  AK Scientific purchased chemicals from chemical supply companies in, among other places, South Korea, Poland, India, and New Zealand. 

The indictment alleges the defendants defrauded the United States and smuggled hazardous chemicals into the United States by mislabeling the contents of containers.  Further, defendants allegedly transported chemicals in violation of the Toxic Substances Control Act (TSCA) by failing to complete required import certifications and by failing to properly label packages containing hazardous materials.  In addition, according to the indictment, the defendants also arranged to transport hazardous materials on several occasions without labeling the packages as required by the Hazardous Materials Transportation Act (HMTA). 

Defendants are charged with one count of conspiracy to defraud the United States, in violation of 18 U.S.C. § 371; one count of smuggling, in violation of 18 U.S.C. § 545; two counts of violating the TSCA, in violation of 15 U.S.C. § 2611(b) and 40 C.F.R. §§ 721.20 and 721.4880; and seven counts of violating 49 C.F.R. § 172.400 of the HMTA, in violation of 49 U.S.C. § 5124(a) and 18 U.S.C. § 2.  For defendant Zhou, if convicted, the maximum statutory penalties are as follows:



Conspiracy- 5 years in prison term and a $250,000 fine

Smuggling- 20 years in prison and a $250,000 fine

Each count of violating the TSCA- 1 year in prison term and a $50,000 fine

Each count of violating the HMTA- 5 years in prison term and a $250,000 fine



For defendant AK Scientific, if convicted, the corporation faces the following maximum statutory penalties:



Conspiracy- 5 years of probation and a $500,000 fine 

Smuggling- 5 years of probation and a $500,000 fine 

Each count of violating the TSCA- 5 years of probation and a $200,000 fine

Each count of violating the HMTA- 5 years of probation and a $500,000 fine



Further, additional special assessments may be imposed on either defendant and Zhou may be subject to additional terms of supervised release.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553. 

Zhou and a representative for AK Scientific are scheduled to appear on Tuesday, February 21, 2017, at 9:30 am before United States Magistrate Judge Donna Ryu for an initial appearance.

The case is being prosecuted by the Special Prosecutions and National Security Unit of the United States Attorney’s office in San Francisco.  The prosecution is the result of an investigation by the U.S. Environmental Protection Agency’s Criminal Investigation Division, the U.S. Department of Transportation’s Office of Inspector General, and the U.S. Department of Homeland Security’s Homeland Security Investigations.

CHICAGO — An investment advisor was sentenced today to more than five years in federal prison for stealing $6.5 million from several clients, including family members in the Chicago area.

HENRY MEYER, who owned HCM Asset Management LLC in Coral Gables, Fla., misappropriated the money from 2009 to 2016.  Most of Meyer’s clients were his family members and friends, some of whom were elderly and had invested their retirement savings.  Meyer used some of the stolen funds to pay personal expenses, including rent, utilities and car payments.  His credit card statements reflect expensive purchases at restaurants, including lavish tips in the hundreds of dollars.

U.S. District Judge Charles R. Norgle imposed the 69-month prison sentence and ordered Meyer to pay $6.5 million in restitution to the victims.  Meyer, 47, of Coral Gables, Fla., pleaded guilty last year to one count of mail fraud.

The sentence was announced by John R. Lausch, Jr., United States Attorney for the Northern District of Illinois; and Jeffrey S. Sallet, Special Agent-in-Charge of the Chicago office of the Federal Bureau of Investigation.

“This case is about a bold and brash con man who has little concern for anybody but himself,” Assistant U.S. Attorney Sunil R. Harjani argued in the government’s sentencing memorandum.  “The harm he has caused the victims is hard to overstate.” 

According to his plea agreement, Meyer told investors that their funds would be placed in a “European Derivative Investment Program,” whose performance was purportedly premised on the failures of several European economies.  In soliciting investors, Meyer claimed the program had partnerships with several European firms, and that he was part of a group of highly successful investment firms operating in the European derivatives markets.  Meyer represented that his firm produced investment returns as high as 600%.

In reality, the European Derivative Investment Program did not exist.  There was no support from other European companies, and Meyer’s firm never produced any successful returns.

In 2016, Meyer was arrested and a search warrant was executed at his apartment.  Among other things, the FBI found a document on Meyer’s desk entitled “Battle Plan.”  Part of the document discussed Meyer’s attempt to obtain more funding from new investors in order to make Ponzi-type payments to older investors.  Another part of the document discussed how to expedite Meyer’s passport application as part of a plan to evade law enforcement.  Meyer’s “Battle Plan” set forth a strategy to travel initially to a location in the southern United States, followed by an “international escape” to such locations as the Bahamas, Thailand, Singapore, Korea, Australia or New Zealand.

ASHEVILLE, N.C. – Chief U.S. District Judge Martin Reidinger sentenced today Jason Michael Miles, 37, of Forest City, N.C., to 132 months in prison for receipt of child pornography, announced William T. Stetzer, Acting U.S. Attorney for the Western District of North Carolina. In addition to the prison term imposed, Miles was ordered to serve a lifetime of supervised release and to register as sex offender after his incarceration.

Ronnie Martinez, Special Agent in Charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in North Carolina, joins Acting U.S. Attorney Stetzer in making today’s announcement.

According to admissions contained in plea documents and today’s sentencing hearing, on February 24, 2018, New Zealand investigators became aware that an individual later identified as Miles was utilizing the username “PURSEANON” to post pictures of children to a foreign image website. Court records show that Miles had posted approximately 15 photos albums containing images of young girls secretly taken in public places. One of the albums, titled “GIRL AT CVS,” contained information that helped investigators determine the images were taken a CVS store located in Morganton, N.C.

According to court documents, on February 25, 2018, New Zealand investigators began undercover communications with Miles, during which Miles expressed his interest in children and distributed files containing depictions of the sexual abuse of children to the undercover investigator. After law enforcement determined Miles’ identity, the investigation was transferred to the HSI office in Hendersonville, N.C. On May 31, 2018, HSI agents executed a search warrant at Miles’ residence in Rutherford County. During the execution of the search warrant, law enforcement seized multiple electronic devices. An analysis of the seized devices revealed that Miles had an extensive library of child pornography that contained more than 7,193 images and videos depicting the sexual abuse of children, including infants and toddlers.

Court records show that while Miles was serving in the U.S. Air Force, he was convicted of two counts of Indecent Liberties With a Child Under Age 16 and was sentenced to four years in prison. As a result of that conviction, Miles was also ordered to register as sex offender for a period of 30 years.

Miles pleaded guilty to receipt of child pornography on February 24, 2021. He is currently in federal custody and will be transferred to the custody of the federal Bureau of Prisons upon designation of a federal facility. 

In making today’s announcement, Acting U.S. Attorney Stetzer commended HSI for their investigation of the case.

Special Assistant U.S. Attorney (SAUSA) Alexis Solheim, with the U.S. Attorney’s Office in Asheville, prosecuted the case. Ms. Solheim is a state prosecutor with the office of the 43rd Prosecutorial District and was assigned by District Attorney Ashley Welch to serve as a SAUSA with the U.S. Attorney’s Office in Asheville. Ms. Solheim is duly sworn in both state and federal courts. The SAUSA position is a reflection of the partnership between the office of the 43rd Prosecutorial District and the United States Attorney’s Office. 

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in 2006 by the Department of Justice, aimed at combating the growing online sexual exploitation of children.  By combining resources, federal, state and local agencies are better able to locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue those victims.  For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.