TALLAHASSEE, FLORIDA– Michael Daniel Rubens, 31, formerly of Tallahassee, pled guilty yesterday to cyberstalking, unauthorized access to a protected computer, and aggravated identity theft.  The guilty plea was announced by Christopher P. Canova, Acting United States Attorney for the Northern District of Florida.

During his guilty plea, Rubens admitted that, between January 2012 and January 2015, he publicly humiliated dozens of young women by hacking into their online accounts, including e-mail and social media, stealing photographs and other personal information, using the photographs to create pornography, and posting the pornographic images on social media websites and on a revenge pornography website that was recently shut down by the FBI.  Rubens engaged in most of the conduct from his residence in Tallahassee.  He used software to conceal his IP address.

Rubens’ victims included an employee of a local restaurant he frequented, an out-of-town colleague, an acquaintance in his office building, clients of the defendant’s employer, a former girlfriend and her colleagues, high school classmates, and the victims’ relatives or friends.  For one particular woman, Rubens’ laptop contained 470 files with more than 5,000 references to the victim.  Rubens’ computer searches focused on finding the victims’ personal identifying information, such as past addresses, family information, and other personal data that could be used to answer security questions.  As a result of Rubens’ conduct, the victims became afraid to conduct any online activities and often deleted their social media presence entirely.  In some instances, the conduct also affected the victims’ personal relationships.

The sentencing hearing is scheduled for February 25, 2016, at 11:00 a.m. at the United States Courthouse in Tallahassee, Florida.  For each of the 12 counts of cyberstalking and unauthorized access to a protected computer, Rubens faces a maximum of five years in prison.  For the aggravated identity theft charge, he faces a mandatory two years in prison to be served consecutively to any other sentence.

This case resulted from investigations by the United States Immigration and Customs Enforcement Homeland Security Investigations, the Florida State University Police Department, and the Leon County Sheriff’s Office.  It is being prosecuted by Assistant United States Attorney Jason S. Beaton.

The United States Attorney's Office for the Northern District of Florida is one of 94 offices that serve as the nation’s principal litigators under the direction of the Attorney General.  The office strives to protect and serve the citizens of the Northern District of Florida through the ethical, vigorous, and impartial enforcement of the laws of the United States, to defend the national security, to improve the safety and quality of life in our communities through the protection of civil rights, and to protect the public funds and financial assets of the United States.  To access public court documents online, please visit the U.S. District Court for the Northern District of Florida website.  For more information about the United States Attorney’s Office, Northern District of Florida, visit http://www.justice.gov/usao/fln/index.html.

For more information, contact:
Amy Alexander, Public Information Officer
(850) 216-3854, amy.alexander@usdoj.gov

ALBUQUERQUE – Darryl J. Gutierrez, 60, of Santa Fe, N.M., was arraigned yesterday on an eleven-count indictment alleging federal tax charges, announced U.S. Attorney Damon P. Martinez and Ismael Nevarez Jr., Special Agent in Charge of the Phoenix Field Office of IRS Criminal Investigation. 

Gutierrez was arrested on Dec. 2, 2015, on the indictment which was filed on Nov. 5, 2015.  Gutierrez made his initial appearance in federal court in Albuquerque, N.M., yesterday.  During those proceedings, Gutierrez entered a not guilty plea and was released on conditions of release and under pretrial supervision pending trial.

Count 1 of the indictment charges Gutierrez with evading his federal tax obligations during tax years 2000 through 2009 by falsely claiming tax refunds totaling $173,526.00, when he was not entitled any tax refunds but instead owed approximately $125,624.00 in income taxes.  According to the indictment, Gutierrez’s alleged tax liability increased the amount of his false claims to approximately $299,150.00, exclusive of interest and penalties.  Counts 2 through 11 of the indictment allege that Gutierrez subscribed and filed individual tax returns for calendar years 2000 through 2009 that were materially false.  Each of the charges alleges that Gutierrez’s tax returns falsely reported wages earned and other income during those calendar years.

If convicted, Gutierrez faces a statutory maximum penalty of five years in federal prison on the tax evasion charge and a statutory maximum penalty of three years in federal prison on the subscribing false tax returns charges.  Charges in indictments are merely accusations, and defendants are presumed innocent unless found guilty in a court of law.

This case was investigated by the Albuquerque office of IRS Criminal Investigation and is being prosecuted by Assistant U.S. Attorney Reeve L. Swainston.

            Preet Bharara, the United States Attorney for the Southern District of New York, Diego Rodriguez, Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), James M. Gibbons, Acting Special Agent-in-Charge of Homeland Security Investigations Chicago (“HSI”), James J. Hunt, Special Agent in Charge of the New York Field Division of the Drug Enforcement Administration (“DEA”), and Shantelle P. Kitchen, the Special Agent-in-Charge of the New York Field Office of the Internal Revenue Service, Criminal Investigation (“IRS-CI”), announced today the unsealing of a complaint charging ROGER THOMAS CLARK, a senior adviser to Ross Ulbricht, a/k/a “Dread Pirate Roberts,” a/k/a “DPR,” the owner and operator of the “Silk Road” website, an online illicit black market that operated from January 2011 until October 2, 2013.  CLARK is alleged to have been a close confidante of Ulbricht’s who advised him on all aspects of Silk Road’s operations and helped him grow the site into an extensive criminal enterprise.  CLARK was arrested in Thailand on December 3, 2015, and is pending extradition to the United States.

            Manhattan U.S. Attorney Preet Bharara said: “Silk Road was a secret online marketplace for illegal drugs, hacking services, and a whole host of other criminal activity.  Like a consigliere, Roger Thomas Clark allegedly served as a trusted confidante to Silk Road founder and operator Ross Ulbricht, advising him on all aspects of this illegal business, including how to maximize profits and use threats of violence to thwart law enforcement.  Thanks to the investigative work of our fellow law enforcement agencies and our international partners, Clark is in custody and awaits American justice.”

            FBI Assistant Director Diego Rodriguez said: “The arrest of Roger Thomas Clark shows again that conducting criminal activities on the Dark Web does not keep a criminal out of law enforcement’s reach. As alleged, Clark was paid at least hundreds of thousands of dollars to act as a counselor to Ross Ulbricht’s black-market bazaar, Silk Road. Clark may have thought residing in Thailand would keep him out of reach of U.S authorities, but our international partnerships have proven him wrong.  We thank our law enforcement partners who have worked with the FBI on this case.”

            HSI Chicago Acting Special Agent-in-Charge James M. Gibbons said: “Roger Clark, a high-ranking Silk Road operator, served as Ross Ulbricht’s closest adviser and confidante as together they facilitated an anonymous global black market for all things illegal.  As this arrest proves, the ‘long arm of the law’ has a great reach – even in cyberspace.  Our HSI special agents continue to work closely with our federal and international law enforcement partners around the world to patrol the darknet and protect public safety.”

            DEA Special Agent in Charge James J. Hunt said: “Anonymity is what Roger Thomas Clark believed he attained posing as ‘Variety Jones’ while allegedly committing crimes; but handcuffed and pending extradition is not anonymity. I command and thank law enforcement's tenacious investigative skills and coordination throughout this investigation.”

            IRS-CI Special Agent in Charge Shantelle P. Kitchen said: “Although the conviction of Ross Ulbricht effectively brought an end to the operation of the Silk Road site, this complaint represents another step in bringing full closure to the investigation of this criminal enterprise.  IRS Criminal Investigation remains committed to bringing our expertise in conducting complex financial investigations to the investigation of narcotics organizations of all types, including those operating in the anonymity of cyberspace.”

            According to the allegations contained in the criminal complaint[1] unsealed today in Manhattan federal court, and evidence submitted at trial and in court filings during the prosecution of Ross Ulbricht:

            Ulbricht created Silk Road in approximately January 2011, and owned and operated the underground website until it was shut down by law enforcement authorities in October 2013.  During that time, Silk Road emerged as the most sophisticated and extensive criminal marketplace on the Internet, serving as a sprawling black-market bazaar where unlawful goods and services, including illegal drugs of virtually all kinds, were bought and sold regularly by the site’s users.  While in operation, Silk Road was used by thousands of drug dealers and other unlawful vendors to distribute hundreds of kilograms of illegal drugs and other unlawful goods and services to well over a hundred thousand buyers, and to launder hundreds of millions of dollars deriving from these unlawful transactions.      

            Silk Road enabled its users to buy and sell drugs and other illegal goods and services anonymously and outside the reach of law enforcement.  Silk Road was operated on what is known as “The Onion Router” or “Tor” network, a special network of computers on the Internet, distributed around the world, designed to conceal the true IP addresses of the computers on the network and thereby the identities of the networks’ users.  Silk Road also included a Bitcoin-based payment system that served to facilitate the illegal commerce conducted on the site, including by concealing the identities and locations of the users transmitting and receiving funds through the site.

            CLARK, who went by the online nicknames “Variety Jones,” “VJ,” “Cimon,” and “Plural of Mongoose,” was described by Ulbricht as a trusted “mentor,” who regularly advised him on the management of the Silk Road enterprise.  Among other things, CLARK counseled Ulbricht on the improvement and expansion of Silk Road’s technical infrastructure, including helping Ulbricht hire and manage a computer programmer to assist with these projects.  CLARK also helped Ulbricht develop and enforce the rules governing how Silk Road vendors and users could do business on the site, which were designed to maximize the commissions that Ulbricht received from Silk Road sales.  CLARK further advised Ulbricht on how to conceal his involvement in, and hide his profits from, the operation of Silk Road, including helping Ulbricht devise cover stories to tell others and make plans to obtain foreign citizenship and offshore bank accounts.  Finally, CLARK also advised Ulbricht on tactics to thwart efforts by law enforcement to investigate Silk Road.  In that vein, CLARK repeatedly advocated the use of intimidation and violence to keep members of the Silk Road support staff from cooperating with law enforcement.  In one such conversation, in which CLARK and Ulbricht discussed “track[ing] down” a certain Silk Road employee to ensure that he had not gone “[o]ff the rails,” CLARK commented, “[D]ude, we’re criminal drug dealers – what line shouldn’t we cross?”

            CLARK was paid at least hundreds of thousands of dollars for his assistance in operating Silk Road.

*                *                *

            CLARK, 54, a citizen of Canada, is charged with one count of narcotics conspiracy, which carries a maximum sentence of life in prison and a mandatory minimum sentence of 10 years, and one count of money laundering conspiracy, which carries a maximum sentence of 20 years in prison.  The statutory maximum sentences are prescribed by Congress and are provided here for informational purposes only, as any sentence imposed on the defendant will be determined by the Court.

            Mr. Bharara praised the outstanding joint efforts of the FBI and its New York Special Operations and Cyber Division, HSI Chicago-O’Hare, the DEA’s New York Field Division, and IRS-CI’s New York Field Office.  Mr. Bharara also thanked the HSI Attache Bangkok, Thailand, for its assistance and support.  Mr. Bharara also thanked the Royal Thai Police and the U.S. Department of Justice’s Office of International Affairs for their support and assistance.

            This case is being prosecuted by the Office’s Complex Frauds and Cybercrime Unit.  Assistant United States Attorneys Timothy Howard and Richard Cooper are in charge of the prosecution.

            The charges contained in the Complaint are merely accusations and the defendant is presumed innocent unless and until proven guilty.

MISSOULA – Blaine Garrett Reposa, 47, of Livingston, Montana, was sentenced today in Missoula federal court for distribution of child pornography.  Reposa pleaded guilty to the charge in August.  Chief U.S. District Court Judge Dana Christensen Sentenced Reposa to 60 months incarceration.  Following his release, Reposa will be subject to 20 years supervised release.

In an offer of proof filed by Assistant U.S. Attorney Cyndee Peterson, the government stated that if the case had proceeded to trial, the government would have introduced evidence that in January 2014, an Internet Crimes Against Children Task Force detective received a cyber-tip that images of child pornography had been uploaded to a Tumblr account.  The IP logs for the upload were associated with Reposa’s residence.  A search of the residence produced numerous digital devices, which, on examination, provided evidence that Reposa uploaded images of child pornography to the Tumblr account in question between October 2013 and January 2014.

This case was prosecuted by Assistant U.S. Attorney Cyndee Peterson and investigated by the Internet Crimes against Children Task Force.  Reposa will have to serve at least 85% of his sentence before he will be eligible for parole.

U.S. Attorney Kenneth A. Polite announced that CHEERY WAY, INC., and ELAINE CHIU, age 60, a resident of San Francisco, California, were charged today in a one-count Bill of Information with a felony violation of the Clean Air Act.

According to the Bill of Information, on or about April 2, 2011, in the Eastern District of Louisiana, CHEERY WAY, INC., and CHIU did knowingly fail to notify and report to the Louisiana Department of Environmental Quality the demolition of the Mississippi Queen Riverboat, a facility, which contained regulated asbestos containing material, to wit: wall and ceiling tiles, at least ten days prior to the start of the demolition as required by the Clean Air Act, in violation of Title 42, United States Code, Section 7413(c)(2)(B) and Title 40, Code of Federal Regulations, Section 61.145(b). 

If convicted, CHEERY WAY, INC., faces a maximum term of probation of five years and a fine of $500,000.  If convicted, CHIU, faces a maximum term of imprisonment of two years, a maximum fine of $250,000, a maximum term of supervised release of one year, and a mandatory $100 special assessment.

U.S. Attorney Polite praised the work of the Environmental Protection Agency-Criminal Investigation Division and the Louisiana Department of Environmental Quality-Criminal Investigation Division in investigating this matter.   Assistant United States Attorney Emily K. Greenfield is in charge of the prosecution.

The United States Attorney’s Office announced that those persons listed below were arraigned before the U.S. Magistrate and the indictments handed down by the Grand Jury unsealed.

Appearing before U.S. Magistrate Ostby in Billings, on December 3, 2015 and entering pleas of Not Guilty were:

• ROSS DUANE BRESHEARS, a 36-year-old resident of Billings, appeared on charges of felon in possession of a firearm and possession of a firearm by a person convicted of a misdemeanor crime of domestic violence.  If convicted of the most serious charge contained in the indictment, BRESHEARS faces 10 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.  PACER Case Reference.  15-140

• RICHARD EDGAR YOUNGBLOOD, a 28-year-old resident of Miles City, appeared on charges of felon in possession of a firearm and possession of a firearm with an obliterated serial number.  If convicted of the most serious charge contained in the indictment, YOUNGBLOOD faces 10 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives.  PACER Case Reference.  15-146

Appearing before U.S. Magistrate Lynch in Missoula, on December 2, 2015 and entering pleas of Not Guilty were:

• LUKE ALDON HAYES, a 33-year-old resident of Missoula, appeared on charges of conspiracy to distribute methamphetamine, possession with intent to distribute methamphetamine, possession of a firearm in furtherance of a drug trafficking crime, felon in possession of firearms, possession of unregistered silencers, and possession of silencers with no serial numbers.  If convicted of the most serious charges contained in the indictment, HAYES faces life in prison, $5,000,000 in fines and 4 years supervised release.  The case was investigated by the Montana Regional Violent Crime Task Force.  PACER Case Reference.  15-35

Appearing before U.S. Magistrate Johnston in Great Falls, on December 1, 2015 and entering pleas of Not Guilty were:

• JAMES DEBERRY, a 21-year-old resident of Box Elder, appeared on charges of sexual abuse of a minor and abusive sexual contact.  If convicted of the most serious charges contained in the indictment, DEBERRY faces 15 years in prison, $250,000 in fines and lifetime supervised release.  The case was investigated by the Federal Bureau of Investigation.  PACER Case Reference.  15-73

Appearing before U.S. Magistrate Johnston in Great Falls, on November 30, 2015 and entering pleas of Not Guilty were:

• ROBERT LEE KETCHUM, a 32-year-old resident of Big Sandy, appeared on charges of conspiracy to possess with intent to distribute and to distribute methamphetamine, possession with intent to distribute methamphetamine, and possession of a firearm in furtherance of a drug trafficking crime.  If convicted of the most serious charges contained in the indictment, KETCHUM faces life in prison, $10,000,000 in fines and 5 years supervised release.  The case was investigated by the Russell Country Drug Task Force.  PACER Case Reference.  15-49

Appearing before U.S. Magistrate Ostby in Billings, on November 24, 2015 and entering pleas of Not Guilty were:

• JEFFERY JOHN BROWN, a 29-year-old resident of Lame Deer, appeared on charges of assault resulting in serious bodily injury.  If convicted of the most serious charge contained in the indictment, BROWN faces 10 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Bureau of Indian Affairs.  PACER Case Reference.  15-126

• KIMBERLEE DUNN, a 64-year-old resident of Billings, appeared on charges of wire fraud and tax evasion.  If convicted of the most serious charges contained in the indictment, DUNN faces 20 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Federal Bureau of Investigation.  PACER Case Reference.  15-129

• THOMAS WILFRED MEURET, a 38-year-old resident of Billings, appeared on charges of conspiracy to distribute methamphetamine and to possess methamphetamine with intent to distribute, and possession with intent to distribute methamphetamine.  If convicted of the most serious charge contained in the indictment, MEURET faces life in prison, $10,000,000 in fines and 5 years supervised release.  The case was investigated by the Federal Bureau of Investigation and the Drug Enforcement Administration.  PACER Case Reference.  15-132

• JUSTIN DAVID RIDDLE, a 34-year-old resident of Billings, appeared on charges of conspiracy to distribute methamphetamine and possession with intent to distribute methamphetamine.  If convicted of the most serious charge contained in the indictment, RIDDLE faces 20 years in prison, $1,000,000 in fines and 3 years supervised release.  The case was investigated by the Bureau of Indian Affairs.  PACER Case Reference.  15-116

Appearing before U.S. Magistrate Johnston in Great Falls, on November 24, 2015 and entering pleas of Not Guilty were:

• MARCUS GERALD FAST HORSE, a 24-year-old resident of Poplar, appeared on charges of assault resulting in serious bodily injury, assault with a dangerous weapon, and kidnapping.  If convicted of the most serious charges contained in the indictment, FAST HORSE faces life in prison, $250,000 in fines and 5 years supervised release.  The case was investigated by the Federal Bureau of Investigation and the Fort Peck Tribes Department of Law and Justice.  PACER Case Reference.  15-80

Appearing before U.S. Magistrate Lynch in Missoula, on November 24, 2015 and entering pleas of Not Guilty were:

• ALAN J. COOK, a 38-year-old resident of Grand Junction, Colorado, appeared on charges of interstate communication of a threat.  If convicted of the most serious charges contained in the indictment, COOK faces 5 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Federal Bureau of Investigation.  PACER Case Reference.  15-34

Appearing before U.S. Magistrate Johnston in Great Falls, on November 23, 2015 and entering pleas of Not Guilty were:

• MONICA VERNETTE CAMPBELL, a 52-year-old resident of Wolf Point, appeared on charges of theft from an Indian tribal organization.  If convicted of the charge contained in the indictment, CAMPBELL faces 5 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Department of Interior Office of Inspector General and the Fort Peck Tribes Department of Law and Justice.  PACER Case Reference.  15-72

Appearing before U.S. Magistrate Ostby in Billings, on November 23, 2015 and entering pleas of Not Guilty were:

• CODY PEYTON BROWN, a 22-year-old resident of Wilson, North Carolina, appeared on charges of receipt of child pornography and transfer of obscene matter to a minor.  If convicted of the most serious charge contained in the indictment, BROWN faces 20 years in prison, $250,000 in fines and lifetime supervised release.  The case was investigated by the Federal Bureau of Investigation. PACER Case Reference.  15-125

• LUTHER GEROME DAVIS, a 43-year-old resident of Madera, California, appeared on charges of transportation of a person with intent to engage in criminal sexual activity.  If convicted of the charge contained in the indictment, DAVIS faces 10 years in prison, $250,000 in fines and 3 years supervised release.  The case was investigated by the Federal Bureau of Investigation.  PACER Case Reference.  15-114

• ELMER HOUSTIN ESTILL, a 54-year-old resident of Billings, appeared on charges of conspiracy to possess with intent to distribute and to distribute methamphetamine, and possession with intent to distribute methamphetamine.  If convicted of the most serious charge contained in the indictment, ESTILL faces 20 years in prison, $1,000,000 in fines and 3 years supervised release.  The case was investigated by the Homeland Security Investigations, the Drug Enforcement Administration and the Eastern Montana HIDTA.  PACER Case Reference.  15-142

• RAYMOND LEE TOULOUSE, JR., a 30-year-old resident of Billings, appeared on charges of conspiracy to possess with intent to distribute and to distribute methamphetamine, possession with intent to distribute methamphetamine, distribution of methamphetamine, and conspiracy to commit money laundering.  If convicted of the most serious charges contained in the indictment, TOULOUSE faces 40 years in prison, $5,000,000 in fines and 4 years supervised release.  The case was investigated by the Homeland Security Investigations, the Drug Enforcement Administration and the Eastern Montana HIDTA.  PACER Case Reference.  15-145

If any of the above cases are of interest to your media organization and the community it serves, we encourage you to monitor the progress of the case regularly through the U.S. District Court calendar and the PACER system so that you stay current and not miss any important developments in the case.

To establish a PACER account, which will allow you to review documents filed in the case, please go to, http://www.pacer.gov/register.html. To access the district court’s calendar, please go to https://ecf.mtd.uscourts.gov/cgi-bin/PublicCalendar.pl.

BOSTON – An Iowa man was sentenced today for threatening to shoot and kill Muslims by posting threats on the Facebook page of an Islamic organization in Boston.

Gerald Wayne Ledford, 57, of Clinton, Iowa, was sentenced in the Southern District of Iowa to four years of probation with the first six months to be served in home confinement.  In August 2015, Ledford pleaded guilty to one count of transmitting in interstate commerce a communication containing a threat to injure after being charged in the District of Massachusetts.  He was initially arrested in Iowa and his case was transferred to the Southern District of Iowa for his guilty plea and sentencing. 

“Now more than ever it is essential to protect Muslims in our communities from misguided notions of their faith and traditions,” said United States Attorney Carmen M. Ortiz.  “Islamophobia has no place in this Commonwealth or this county, and those who threaten Muslims must be held to account.” 

“The FBI takes our duty to protect the civil rights of all Americans seriously, regardless of one’s race, religion or sexual orientation,” said Harold H. Shaw, Special Agent in Charge of the Federal Bureau of Investigation, Boston Field Division.  “We ask that anyone who feels their civil rights have been violated to come forward and report it.”

On Oct. 19, 2014, Ledford threatened the Islamic Society of Boston Cultural Center (ISBCC), a cultural center that offers a mosque and a variety of educational, spiritual, and social services to Muslims in New England.  Ledford posted two threats on the ISBCC’s Facebook page.  One post threatened, “Mohamed was a child rapist .a murderer and molester.you all will go to hell with you’re father satan..we will destroy you here and in your’re s**t hole countrys.”  The second post consisted of a photograph of a man bearing a long gun with the caption, “This is for you.followers of the piece of s**t Mohamed …”  Ledford admitted that he knew that these messages would be viewed as threats.

U.S. Attorney Ortiz; United States Attorney for the Southern District of Iowa Nicholas A. Klinefeldt; FBI SAC Shaw, made the announcement today.  The case was prosecuted by Assistant U.S. Attorneys  S. Theodore Merritt and Scott L. Garland of Ortiz’s Civil Rights Enforcement Team and Richard D. Westphal of the U.S. Attorney’s Office for the Southern District of Iowa.

SACRAMENTO, Calif. -- After a 16-day trial, a federal jury today found Vera Kuzmenko, 45, of Loomis, and Rachel Siders, 40, of Roseville, guilty of multiple counts of mail and wire fraud associated with their involvement in a mortgage fraud scheme that cost financial institutions over $16 million, United States Attorney Benjamin B. Wagner announced.

Vera Kuzmenko was also found guilty of witness tampering and money laundering associated with the scheme.

According to evidence presented at trial, from late 2006 through early 2008, the defendants engaged in a mortgage fraud scheme involving over 30 properties in the Sacramento area. The defendants were responsible for securing more than $30 million in residential mortgage loans on more than 30 homes purchased through straw buyers. Records introduced at trial showed Vera Kuzmenko received millions of dollars and Rachel Siders received hundreds of thousands of dollars.

Vera Kuzmenko, who had been a licensed real estate agent for part of the scheme, created fraudulent loan applications on behalf of the straw buyers. The loan applications contained materially false information as to the straw buyers’ income, employment, assets, and intent to occupy the residences. The loan paperwork also hid from lenders millions of dollars of payments that went to the defendants. Vera Kuzmenko also served as a straw-buyer herself. With respect to the witness tampering count, the evidence showed that after Kuzmenko learned the FBI was investigating her, she told various witnesses to lie to the FBI and blame a dead woman for the fraud.

Rachel Siders ran the Rocklin office of the escrow company used on the majority of the transactions. She helped funnel millions of dollars to the defendants, which was not disclosed to the lenders.

“Vera Kuzmenko was a major figure in a network of fraudsters responsible for a wave of mortgage fraud that hit the Sacramento area,” said U.S. Attorney Benjamin B. Wagner. “As the guilty verdicts in this case demonstrate, mortgage fraudsters who believe they can escape accountability for their crime by blaming others and offering false alibis are mistaken.”

“Vera Kuzmenko and her associates intentionally victimized their community, abusing trust to significantly damage the financial wellbeing of victims and negatively impact regional economy. This greed-fueled, multimillion dollar fraud scheme had a lasting, negative effect on the regional real estate market,” said Assistant Special Agent in Charge Manuel Alvarez of the FBI’s Sacramento field office. “We hope today’s verdict serves as a warning to would-be fraudsters that the FBI will aggressively pursue perpetrators of large, complex financial fraud to protect regional economies and ensure justice for their victims.”

“Mortgage fraud is an incredibly destructive crime that leaves many victims in its wake,” said IRS-Criminal Investigation Acting Special Agent in Charge, Andrew Toth. “The impact on homeowners and communities is devastating. While this verdict cannot reverse the damage caused by these defendants, it highlights the ongoing commitment of IRS-CI to hold accountable those involved in these types of crimes.”

This case is the product of an investigation by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. Assistant U.S. Attorneys Lee S. Bickley and Michael D. Anderson and Special U.S. Attorney David J. Ward are prosecuting the case.

The defendants are scheduled to be sentenced by United States District Judge John A. Mendez on March 15, 2016. Each defendant faces a maximum statutory penalty of 20 years in prison on each of their counts of conviction for wire and mail fraud. Vera Kuzmenko faces an additional 20 years for each count of conviction for witness tampering and money laundering. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.

On October 20, 2015, Judge Mendez sentenced co-defendants Peter Kuzmenko, 37, of West Sacramento, to 19 years in prison; Aaron New, 41, of Sacramento, to 11 years and three months in prison; Nadia Kuzmenko, 36, formerly of Loomis, to eight years in prison; and Edward Shevtsov, 51, of North Highlands, to eight years in prison. They were found guilty on February 13, 2015, after a 21-day trial, of multiple counts of mail and wire fraud associated with the mortgage fraud scheme. In addition, Peter Kuzmenko, Edward Shevtsov, and Aaron New were found guilty of money laundering associated with the scheme, and Nadia Kuzmenko was found guilty of witness tampering.

St. Thomas, USVI- District Court Judge Curtis V. Gomez today sentenced Alain Rene Leichtnam, 71, a French national, to 24 months in prison for alien smuggling, United States Attorney Ronald W. Sharpe announced. Leichtnam also was ordered to serve two years of supervised release, 200 hours of community service and pay a $3,800 special assessment.

On August 12, 2015, Leichtnam pleaded guilty to encouraging and inducing aliens to enter the United States in violation of law. As part of his plea, Leichtnam admitted that on April 29, 2015, the sailing vessel Mazurka, operating with no lights, entered United States waters heading towards Coral Bay on the East End of St. John, Virgin Islands. The vessel was intercepted by Customs and Border Protection (CBP) agents who observed Leichtnam operating the vessel and identified 38 Cuban nationals and one St. Lucian national onboard. CBP agents observed that the vessel was grossly overloaded and did not have a sufficient number of life jackets and life rafts for the number of people onboard. Leichtnam admitted that he transports people to the United States for financial gain knowing that such conduct is unlawful.

“Those responsible for encouraging and inducing immigrants to enter the United States illegally are placing personal profit ahead of public safety and the lives of the immigrants,” U.S. Attorney Sharpe said. “This conviction should warn those involved in this dangerous and illegal activity that it comes with a high price.”

Angel M. Melendez, special agent in charge of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) in Puerto Rico and the U.S. Virgin Islands said: “ICE continues to be committed to putting an end to the practice of profiting from the illegal transportation of aliens across our borders and throughout our country. We will continue to vigorously enforce the federal laws which punish the many manifestations of the complex problem of smuggling, trafficking and harboring illegal aliens. Tragically, many have lost their lives while attempting this illegal and treacherous trip. Human smugglers have a callous disregard for the value of human life and are only concerned about making a profit. ICE will continue to aggressively work with our U.S. Department of Homeland Security (DHS) partners to identify and arrest those involved in this illicit and dangerous activity.”

The case was investigated by ICE with the assistance of CBP and the United States Coast Guard. It was prosecuted by Assistant United States Attorney Kim L. Chisholm.

St. Thomas, USVI – Edridge Clyne, 45, was arrested today after a federal grand jury returned a one-count indictment against him Thursday charging him with possession with intent to distribute marijuana, United States Attorney Ronald W. Sharpe announced. After his arrest, Clyne made his initial appearance before District Court Judge Curtis V. Gomez, who ordered that he be released on a $25,000 unsecured bond with GPS monitoring. Arraignment is scheduled for December 9, 2015.

If convicted of possession with intent to distribute marijuana, Clyne faces a maximum sentence of five years in prison and a $250,000 fine.

United States Attorney Sharpe reminds the public that an indictment is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless found guilty.

The indictment is the result of investigative work by the U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the FBI. The case is being prosecuted by Assistant U.S. Attorney Sigrid M. Tejo-Sprotte.

St. Thomas, USVI – Jennifer Bowen-Dodoo, 51, made her initial appearance in District Court today before District Court Judge Curtis V. Gomez after her arrest on St. Thomas Thursday for sex trafficking of a 13-year-old female minor, United States Attorney Ronald W. Sharpe announced. Judge Gomez remanded Bowen-Dodoo to the custody of the U.S. Marshals Service pending a detention hearing scheduled for December 7, 2015.

According to a criminal complaint filed in the District Court, Bowen-Dodoo directed a 13-year-old female to become involved in a sexual relationship with a 58-year-old adult male, and demanded that the male make monthly deposits into Bowen-Dodoo’s bank account. In addition to the monthly deposits, Bowen-Dodoo periodically demanded other cash payments in exchange for facilitating the male’s continued access to the minor. If convicted, Bowen-Dodoo faces a mandatory minimum sentence of 10 years in prison and a maximum sentence of life in prison. She would also face a fine of up to $250,000.

“Adults who target children for sexual exploitation, regardless of their age, should consider themselves targets by HSI and our law enforcement partners,” said Angel M. Melendez, special agent in charge of HSI in Puerto Rico and the Virgin Islands. “Child exploitation, in all its forms, is a very serious crime and its investigation is a priority for HSI.”

United States Attorney Sharpe reminds the public that a criminal complaint is merely a formal charging document and is not evidence of guilt. Every defendant is presumed innocent until and unless proven guilty.

Suspected child exploitation or missing children cases may be reported to the National Center for Missing and Exploited Children via its toll-free 24–hour hotline at 202-514-5678, or to U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) at (340) 693-2250.

This case is being investigated by HSI, with the assistance of the Virgin Islands Police Department and Human Services. It is being prosecuted by Assistant United States Attorney Everard E. Potter.

TULSA, Okla.–Roy James Hudson, 29, of Mayes County, Okla., was sentenced today by United States District Court Judge Claire V. Eagan to 15 years in prison for being a felon in possession of firearms and ammunition, announced United States Attorney Danny C. Williams Sr. of the Northern District of Oklahoma.

On October 10, 2014, Mayes County Sheriff’s deputies searched Hudson’s home pursuant to a search warrant.  The deputies found 12 firearms and over 1,000 rounds of ammunition.  Nine of the recovered firearms had been stolen in a residential burglary earlier in the week. Two of the firearms, a shotgun and a rifle, had been shortened below the legal limit.  Hudson had multiple prior felony convictions including three for burglary and one for escape.

This case was investigated by the Mayes County Sheriff’s Office, the Pryor Police Department, and the Bureau of Alcohol, Tobacco, Firearms and Explosives.  Assistant U.S. Attorney Eric O. Johnston prosecuted on behalf of the United States.      

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DENVER – U.S. Attorney John Walsh today announced that the District of Colorado, working on its own and with other U.S. Attorney’s Offices and components of the Department of Justice collected $539,446,849.97.  These collections come from key cases such as those against DaVita, Inc., MetLife, First RF Corporation and others.  Of this amount, $15,844.38 was collected in criminal actions and $539,431,005.59 was collected in civil actions.       

Of the total, the U.S. Attorney’s Office in Colorado itself collected $6,590,196.05 in Colorado-specific criminal and civil actions.  Of this amount, $5,257,087.32 was collected in criminal actions and $1,333,108.73 was collected in civil actions. 

Attorney General Loretta E. Lynch announced on December 3, 2015 that the Justice Department collected $23.1 billion in civil and criminal actions in the fiscal year ending September 30, 2015.  Collections in FY 2015 represent more than seven and a half times the approximately $2.93 billion of the Justice Department's combined appropriations for the 94 U.S. Attorney's Offices and the main litigating divisions in that same time period. 

"The Department of Justice is committed to upholding the rule of law, safeguarding taxpayer resources, and protecting the American people from exploitation and abuse,” said Attorney General Loretta Lynch.  “The collections we are announcing today demonstrate not only the strength of that commitment, but also the significant return on public investment that our actions deliver.  I want to thank the prosecutors and trial attorneys who made this achievement possible, and to reiterate our dedication to this ongoing work.”

“Each year the United States Attorney’s Office for the District of Colorado helps recover huge sums on behalf of the taxpayers.  This year that amount was over half a billion dollars,” said U.S. Attorney John Walsh.   “The extraordinary skill and dedication of our civil attorneys and staff, as well as our financial litigation unit staff, are to thank for the vast majority of these recoveries, and those amounts exceed the total budget of the U.S. Attorney’s Office each year not just by multiples, but by factors of ten and more.”

Included in this year’s collection are three high-level civil cases, some of which the Colorado U.S. Attorney’s Office worked with other U.S. Attorney’s Offices or with litigating divisions within the Department of Justice.  They include:

• A $350 million settlement with DaVita, Inc. to resolve allegations that DaVita, a dialysis company, used bogus economic manipulations to artificially reduce the apparent value of its dialysis centers.  The United States alleged that DaVita reduced these values to induce doctors to enter into joint ventures with DaVita, so that those doctors would then refer all their patients to DaVita clinics.  The United States alleged that these economic manipulations violated the Anti-Kickback Statute and the False Claims Act. 

• A $123.5 million settlement to resolve allegations that MetLife Bank N.A. violated the False Claims Act when it underwrote mortgage loans to be insured by the U.S. Department of Housing and Urban Development’s Federal Housing Administration (FHA).The United States alleged that MetLife knowingly failed to follow FHA’s rules and sought insurance for loans that did not meet the applicable requirements, leaving the government on the hook as the insurer when the loans defaulted.

• A $10 million settlement with First RF Corporation to settle allegations that First RF defrauded the United States when it supplied antennas for use in fighting improvised explosive devices in Iraq and Afghanistan.The United States alleged that First RF improperly overcharged the government for the equipment by making misrepresentations during contract negotiations.

• A $550,000 settlement with Esri, Inc. involving alleged overcharging of the Bureau of Land Management in contracts for time and materials.The Federal Acquisition Regulations for T&M contracts set rules for government contractors, and prevent them from submitting bills that include certain kinds of fees, such as travel and the cost of subcontractors.  The United States alleged that Esri added prohibited profit and fees to invoices for payment in T&M contracts without BLM’s knowledge or approval. 

The 2015 collections related to criminal cases include two tax fraud related cases, U.S. v. Gregory Laurence and U.S. v. Matthew Zuckerman.  Additional money was collected following a trial in U.S. v. Michael Griggs, an executive with Disaster Restoration, Inc. who conspired with subcontractors to inflate their bids for restoration costs.

The largest civil collections in 2015 were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud or other misconduct or collected fines imposed on individuals and/or corporations for violations of federal health, safety, civil rights or environmental laws.  In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration and Department of Education.

Additionally, the U.S. Attorney's Office in Colorado, working with partner agencies and divisions, collected $45,938,911.00 in asset forfeiture actions in FY 2015.  Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes. 

In addition to the substantial 2015 collections, the U.S. Attorney’s Office, working with other Department of Justice components, continues to recover large amounts of money for the taxpayers.  One example that will be applied to the FY 2016 collection, is the recent settlement with Franklin American Mortgage, who agreed to pay the United States $70 million to resolve allegations it violated the False Claims Act by knowingly originating and underwriting bad mortgage loans insured by the U.S. Department of Housing and Urban Development.

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

RIVERSIDE, California– The founder and co-owner of a Rancho Cucamonga business was sentenced today to 18 years in federal prison for orchestrating a scheme that offered bogus loan modification programs to thousands of financially distressed homeowners who lost more than $7 million when they paid for services that were never provided.

Andrea Ramirez, 47, of Rancho Cucamonga, was sentenced today by United States District Judge Virginia A. Phillips, who also ordered the defendant to pay $6,764,743 in restitution.

Ramirez was the organizer of a telemarketing operation known under a series of names – including 21^st Century Legal Services, Inc. – that bilked more than 4,000 homeowners across the nation, many of whom lost their homes to foreclosure. Ramirez was sentenced today after pleading guilty to one count of conspiracy to commit mail fraud and wire fraud.

“This fraudulent company purposely targeted homeowners who were extremely vulnerable because they were facing foreclosure,” said United States Attorney Eileen M. Decker. “Ramirez and her co-defendants made false promises to desperate homeowners, often took the last of their money and then abandoned them. Her contempt for her victims will put her in federal prison for nearly two decades.”

Previously in this case, the other co-owner of 21^st Century – Christopher Paul George, 45, of Rancho Cucamonga, was sentenced by Judge Phillips to 20 years in federal prison.

A total of 11 defendants linked to 21^st Century have been convicted of federal fraud charges as a result of an investigation conducted by the Federal Bureau of Investigation; IRS - Criminal Investigation; the United States Postal Inspection Service; the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP); and the Federal Housing Finance Agency, Office of Inspector General.

“As the ringleader in a scheme to dupe thousands of distressed homeowners out of their last dollar at the height of the financial crisis, Andrea Ramirez earned the next 18 years in federal prison, which she should use to reflect on her victims,” said Christy Goldsmith Romero, Special Inspector General for the Troubled Asset Relief Program (SIGTARP).

During a 15-month period that began in the middle of 2008, Ramirez operated 21^st Century, which defrauded financially distressed homeowners by making false promises and guarantees regarding 21^st Century’s ability to negotiate loan modifications for homeowners. Employees of 21^st Century made numerous misrepresentations to victims during the course of the scheme, including falsely telling victims that 21^st Century was operating a loan modification program sponsored by the United States government. Victims were generally instructed to stop communicating with their mortgage lenders and to cease making their mortgage payments.

21^st Century employees contacted distressed homeowners through cold calls, newspaper ads and mailings. The company also controlled websites that advertised loan modification services. Once they contacted the distressed homeowners, 21^st Century employees often falsely told clients that the company was operating through a federal government program, that they would be able to obtain new mortgages with specific interest rates and reduced payments, and that attorneys would negotiate loan modifications with their lenders. 21^st Century employees regularly instructed financially distressed homeowners to cease making mortgage payments to their lenders and to cut off all contact with their lenders because they were being represented by 21^st Century. On some occasions, 21^st Century employees told homeowners that 21^st Century was using the fees paid by the homeowner to make mortgage payments, when Ramirez, George and their co-defendants simply were pocketing the homeowners’ money.

After federal authorities executed a search warrant at 21^st Century, Ramirez relocated 21^st Century’s offices, renamed the company and made it appear it was operating out of Las Vegas, Nevada.

“Fraudulent mortgage fraud schemes affect consumers at the most basic level, jeopardizing their ability to retain ownership of their homes,” said Robert Wemyss, Inspector in Charge of the U.S. Postal Inspection Service – Los Angeles Division. “The U.S. Postal Inspection Service will continue to investigate these crimes to protect consumers and our nation's mail system from being used for illegal or dangerous purposes.”

Special Agent in Charge Erick Martinez of IRS-Criminal Investigation of the Los Angeles Field Office stated: “Ms. Ramirez took advantage of unsuspecting homeowners hoping to keep a roof over their heads.  Hopefully she will now understand that her irresponsible actions have real consequences.”

In addition to Ramirez and George, nine other defendants have been convicted for their roles in the 21^st Century scam. They are:

•           Crystal Taiwana Buck, 40, of Long Beach, who persuaded numerous victims to pay fees to 21^st Century, was sentenced to five years in prison;

•           Albert DiRoberto, 62, of Fullerton, who handled both sales and marketing – which included making a commercial for 21^st Century – was sentenced to five years in prison;

•           Yadira Garcia Padilla, 38, of Rancho Cucamonga – who, among other things, posted bogus positive reviews about 21^st Century on the Internet – was sentenced to four years in prison;     

•           Michael Bruce Bates, of Moreno Valley, was sentenced to one year and one day in prison;

•           Michael Lewis Parker, of Pomona, was sentenced to six years in prison;

•           Catalina Deleon, of Glendora, is scheduled to be sentenced on December 14;

•           Hamid Reza Shalviri, of Montebello, is scheduled to be sentenced on Thursday, December 10;

•           Mindy Sue Holt, of San Bernardino, was sentenced to 18 months in prison; and

•           Iris Melissa Pelayo, of Upland, was sentenced to four years in prison.

SAN FRANCISCO – A former Secret Service special agent who had been a member of the Baltimore Silk Road Task Force was sentenced to prison on charges of money laundering and obstruction of justice announced Acting U.S. Attorney Brian Stretch, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, Chief Richard Weber of the Internal Revenue Service-Criminal Investigation (IRS-CI), Special Agent in Charge David J. Johnson, Special Agent in Charge Michael P. Tompkins of the Department of Justice Office of the Inspector General’s Washington, D.C., Field Office, and Special Agent in Charge James E. Ward of the Department of Homeland Security-Office of the Inspector General’s Atlanta Field Office.

This afternoon, U.S. District Judge Richard Seeborg sentenced Shaun W. Bridges, 33, of Laurel, Maryland, to 71 months in prison following his guilty plea to one count of money laundering and one count of obstructing justice.  Bridges was also ordered to forfeit more than $650,000.  

Between 2012 and 2014, Bridges was assigned to the Baltimore Silk Road Task Force, a multi-agency group investigating illegal activity on the Silk Road.  The Silk Road is a covert online marketplace for illicit goods, primarily drugs. Bridges’ responsibilities included, among other things, conducting forensic computer investigations in an effort to locate, identify, and prosecute targets, including Ross Ulbricht, aka Dread Pirate Roberts, who ran the Silk Road from the Northern District of California. 

As part of his guilty plea, Bridges admitted to using account information that he obtained during the January 2013 search and arrest of Curtis Green, a customer support representative on Silk Road.  Bridges used the information to reset passwords and pins of various accounts on Silk Road and move approximately 20,000 bitcoin, at the time worth approximately $350,000, from those accounts into a bitcoin “wallet” that Bridges controlled.  When Ulbricht learned that Green’s access to Silk Road had been used to transfer bitcoin from Silk Road into a wallet, Ulbricht cancelled Green’s administrator access to Silk Road and attempted to have him killed in retaliation for the bitcoin thefts. 

Bridges admitted that he moved the stolen bitcoin into an account at Mt. Gox, an online digital currency exchange based in Japan, and that between March and May 2015, he liquidated the bitcoin into $820,000 in U.S. currency and had the funds transferred to a personal investment account in the United States.  In June 2014, Bridges transferred money from the investment account into a personal bank account that he shared with another person.  Moreover, days after Bridges removed the illegally-obtained proceeds from Mt. Gox, he then served as an affiant in a warrant to enable federal authorities to seize Mt. Gox’s assets. 

Bridges also admitted he used Green’s access to Silk Road to steal bitcoin from the site, thereby limiting Green’s access to further the Baltimore Grand Jury investigation of Ulbricht and Silk Road.  Additionally, Bridges admitted that he made multiple false and misleading statements to both prosecutors and investigators in connection with the San Francisco Grand Jury investigation into his own illegal acts.   

During the sentencing, Judge Seeborg stated, “nothing in [Bridges’] background mitigates the shocking and reprehensible abandonment of his public duty.”  The judge found that a sentence on the high end of the sentencing guidelines was appropriate in light of Bridges’ “inexcusable” conduct which, the judge pointed out, might have gotten a witness killed.

Bridges is the second of two federal agents to be sentenced in connection with the Baltimore Silk Road Task Force’s investigation into the Silk Road.  Carl M. Force, 46, of Baltimore, was a Special Agent with the Drug Enforcement Administration who pleaded guilty on July 1, 2015, to a three-count information charging him with money laundering with predicates of wire fraud and theft of government property, obstruction of justice, and extortion under color of official right, related to his theft and diversion of over $700,000 in digital currency to which he gained control as part of undercover role on the Baltimore Silk Road Task Force.  On Oct. 19, 2015, Judge Seeborg sentenced Force to 78 months in prison.                 

The case is being prosecuted by Assistant U.S. Attorneys Kathryn Haun and William Frentzen of the Northern District of California and Trial Attorney Richard B. Evans of the Criminal Division’s Public Integrity Section, with the assistance of San Francisco Legal Assistant Daniel Charlier-Smith, Christine Tian, and Lance Libatique.  Assistant U.S. Attorney Arvon Perteet assisted with Asset Forfeiture aspects of the case.  The case was investigated by the FBI’s San Francisco Division, the IRS-CI’s San Francisco Division, the Department of Justice Office of the Inspector General, and the Department of Homeland Security Office of the Inspector General in Washington D.C.  The prosecution team is also thankful for the assistance of the following components for their support throughout the investigation of this case: IRS Criminal Investigation – New York Field Office, HSI’s Chicago/O’Hare Division, the U.S. Attorney’s Office for the Southern District of New York, the Department of Justice’s Computer Crime and Intellectual Property Section, the Financial Crimes Enforcement Network, the U.S. Embassy in Slovenia, and the FBI Legal Attaché Office in Tokyo, Japan.

SANTA ANA, California– A Santa Barbara-area physician who wrote numerous prescriptions for powerful painkillers for “patients” – many of whom were drug addicts, and some of whom died from drug overdoses – was sentenced today to 327 months in federal prison.

Julio Gabriel Diaz, 67, a Goleta resident who operated the Family Medical Clinic in Santa Barbara and was known to some “patients” as the “Candyman,” was sentenced by United States District Judge Cormac J. Carney.

Diaz was sentenced today after being found guilty in August by a federal jury. During the 2½-week trial, prosecutors showed that Diaz was a prolific writer of prescriptions for highly addictive and dangerous drugs and that he distributed the drugs outside of the usual course of professional practice and without a legitimate medical purpose.

In 2011, for example, Diaz wrote prescriptions for more than 1.7 million doses of painkillers. His “patients” typically paid cash and received prescriptions for powerful drugs that included opioids, anti-anxiety medications and muscle relaxants. Several doctors and pharmacists who testified during the trial said that they had never seen any doctor prescribe the combination and quantity of drugs prescribed by Diaz.

“Driven by financial gain, this doctor wrote a staggering number of prescriptions for people, many of whom were clearly abusing the drugs,” said United States Attorney Eileen M. Decker. “Diaz ignored family members who begged him to stop prescribing prescription pain medications to loved ones, and he ignored warnings from doctors and pharmacists that his ‘patients’ were abusing the drugs and suffering overdoses – in some cases fatally overdosing. Doctors who abuse their position of trust and violate their oath pose a significant threat to public health, and we will continue to target them when they commit acts that are not driven by a medical necessity.”

Diaz was found guilty of 79 counts of distribution of a controlled substance. Twenty-six of the charges relate to oxycodone (a drug often sold under the brand name OxyContin), 10 of the charges relate to methadone, seven of the counts relate to hydromorphone (a drug commonly sold under the brand name Dilaudid), 10 of the charges relate to fentanyl, 11 of the charges relate to hydrocodone (a drug often sold under the brand names Vicodin and Norco), 10 of the charges relate to alprazolam (a drug often sold under brand name Xanax), and five of the charges related to the distribution of various controlled substances to a minor.

According to the evidence presented at trial, doctors, nurses and other personnel with Santa Barbara Cottage Hospital wrote to the Medical Board of California and gave statements to investigators to complain about Diaz. Cottage Hospital doctors believed that Diaz posed such a threat that they prepared a spreadsheet documenting emergency room visits by patients who had been prescribed narcotics by Diaz.

“A medical doctor trusted by society, defendant [Diaz] stopped treating patients and became a drug dealer,” prosecutors wrote in a sentencing memorandum. “He turned young people into addicts and/or fueled the addictions of drug abusers.”

Diaz was arrested in this case in January 2012. After being free on bond for a time, he was taken into custody and has remained in custody since January 2014. After his arrest, the state of California revoked his license after finding that he provided incompetent and grossly negligent care.

The investigation into Diaz was conducted by the Drug Enforcement Administration and the Santa Barbara Police Department, which received the assistance of the California Medical Board.

Assistant U.S. Attorney Alessandra Serano (619) 546-8104

NEWS RELEASE SUMMARY– December 7, 2015

SAN DIEGO, CA – Michael William Lutts, a 52-year-old foster parent and pediatric nurse, was sentenced in federal court today to the statutory maximum 80 years in prison for sexually exploiting a two-month-old premature boy and an 11-month-old girl who had been placed in his care in 2014.

During the sentencing hearing, U.S. District Judge John Houston called Lutts the “worst of the worst” and described his conduct as “horrific” and “worse than a mass murderer shooting 20 people” because the newborns he targeted “are the most fragile people to victimize.”

Before the sentence was handed down, Assistant U.S. Attorney Alessandra Serano urged Judge Houston to hand down a 65-year prison term –essentially life in prison considering the defendant’s age. “This defendant is a parent’s worst nightmare and a predator to society. He should never see the light of day. Rehabilitation would be futile.”

Judge Houston handed Lutts a sentence that was 15 years more than the prosecutor had asked for – saying he wanted to “send a message to others who conduct this activity under the cover of dark.” The judge said he would not recommend any psychological treatment for the defendant as the “taxpayers shouldn't waste their money on treatment.”

Lutts pleaded guilty in January, admitting to 15 instances in July and August of 2014 in which he photographed and videotaped the babies in sexually explicit situations at both his home and workplace. In one image, the defendant photographed his own exposed genitals beside the infant, who was still wearing his hospital bracelet. In some of the images and videos, the baby is crying as Lutts sexually abuses him. Lutts also admitted emailing sexually explicit images of children to others.

Lutts pleaded guilty to two counts of sexual exploitation of a minor and one count of distribution of child pornography. In addition to his custodial sentence, he was ordered to forfeit his College area home where most of the crimes occurred.

“This is one of most appalling, heart-wrenching cases I have seen in this district,” said U.S. Attorney Laura Duffy. “All child exploitation cases are heinous. But it’s a whole new level of depravity when the victims are babies in the care of a trusted nurse. One of these victims was a premature, two-month-old foster child who was alone in this world except for a foster parent who was supposed to provide a safe and loving environment. We will do everything in our power to protect our precious, defenseless children from sexual abuse and exploitation.”

“Lutts was trusted with the care of two infants who he sexually exploited and abused repeatedly. These infants suffered in silence, unable to speak for themselves, and unable tell others of the horror they were suffering,” said FBI Special Agent in Charge, Eric S. Birnbaum. “When this type of sexual exploitation takes place, the FBI and our law enforcement partners will aggressively pursue these sexual predators and bring them to justice. In doing so, we will give a voice to the most vulnerable members of our society.”

DEFENDANT                                              Criminal Case No. 14CR2542-JAH

Michael William Lutts                        Age: 52                       San Diego

SUMMARY OF CHARGES

Counts 1, 17:               Sexual Exploitation of a Minor, in violation of 18 U.S.C. §2251(a)

Maximum Penalties: Thirty years in prison, mandatory minimum 15 years per count

Counts 16:                   Distribution of Child Pornography, in violation of 18 U.S.C. §2252(a)(2)

                                    Maximum Penalties: Twenty years in prison, mandatory minimum 5 years              

INVESTIGATING AGENCIES

Federal Bureau of Investigation

LOS ANGELES– A Corona woman who was the chief executive officer of a high-end jean company that outfitted Hollywood celebrities was sentenced today to 79 months in federal prison for running what prosecutors called “two fraud schemes of epic proportions.”

Carolyn Marie Jones, 52, was sentenced this afternoon by United States District Judge Michael W. Fitzgerald, who also ordered the defendant to pay $15,124,100 in restitution to individual investors and Union Bank of California.

At today’s sentencing hearing, Judge Fitzgerald said the defendant was “truly a greedy, awful person.”

Jones pleaded guilty in February to one count of bank fraud and one count of concealing assets in a bankruptcy proceeding.

Jones “executed not one, but two, fraud schemes of epic proportions resulting in a loss to Union Bank and numerous investors of $15,124,100,” prosecutors wrote in a sentencing memorandum that outlined one scheme involving bank loans and bankruptcy fraud and a second one targeting individual investors that Jones perpetrated while free on bond after being indicted in the bank fraud case.

According to court documents, Jones defrauded Union Bank of California in a scheme related to her company, DDI (sometimes known as Diamond Decisions, Inc.), which sold jeans under the labels Privacywear and PRVCY Premium. Union Bank issued an $8.5 million line of credit – which was later increased to $15 million – to Jones in late 2008, but Jones had filed a fraudulent loan application that used another person’s social security number, bogus tax returns that had never been filed with the Internal Revenue Service and false financial statements for DDI that grossly overstated the company’s profits.

“For years, defendant [Jones] knowingly submitted false and fabricated tax returns, income statements, accounts receivable reports, and other financial documents to Union Bank,” according to the sentencing memo. “She lied to numerous bank employees about her company’s success and sales, among other things. She fabricated fake customers and retail stores purportedly buying her products.”

Jones also admitted in court that the accounting firm she claimed had audited her financial statements was a sham company. Jones confessed she lied to Union Bank employees, including the loan officer.

Jones soon defaulted on the $15 million loan, and Union Bank filed a civil lawsuit against DDI in state court. When the court issued an order authorizing Union Bank to seize the company’s assets, Jones filed a Chapter 11 bankruptcy petition in February 2010 that listed the bank as the sole creditor. In the following months, Jones lied to the bankruptcy trustee, concealed DDI assets, specifically about $120,000 that she had received from DDI customers, and spent some of the money on herself.

“Jones operated a sophisticated and devious scheme that spanned many years and caused significant financial and personal harm,” said United States Attorney Eileen M. Decker. “Jones actions were driven by greed, caused losses to both a financial institution and individuals, and has now resulted in a significant prison sentence.”

As part of a plea agreement in this case, Jones apologized to the identity theft victim in the bank fraud case, and she agreed to pay $15 million in restitution to Union Bank and $124,100 in restitution to victims whom she admitted defrauding in the second scheme.

Jones pleaded guilty in relation to two cases that were the result of an investigation conducted by the United States Secret Service and IRS - Criminal Investigation. The United States Trustee’s Office provided valuable assistance during the investigation.

Assistant U. S. Attorney Matthew Brehm (619) 546-8983    

NEWS RELEASE SUMMARY– December 7, 2015

SAN DIEGO – Tulio David Gasca was sentenced today by U.S. District Judge John Houston to 55 months in prison for robbing a North Island Credit Union branch and then leading sheriff’s deputies on a 40-minute foot chase.

In his plea agreement, Gasca, 24, admitted that on March 5, 2015, at approximately 12:41 p.m., he entered the branch in Imperial Beach wearing a mask and approached a teller and said, “Give me your money!” Gasca took $4,210 and ran from the credit union.

An off-duty correctional officer chased after Gasca, who ran into an apartment complex across the street from the credit union, through its courtyard, and then out a gate into an alley. The correctional officer continued to pursue Gasca but lost sight of him. A canine unit responded to the courtyard and began to track Gasca.

Before the canine unit found the defendant, a San Diego County Sheriff’s helicopter arrived and its crew spotted Gasca a few blocks away from the credit union and apartment complex. A responding sheriff’s deputy attempted to stop Gasca.  Gasca wrenched himself free from the deputy’s hold and ran from him. 

When the deputy caught up to Gasca and tried to stun him with a taser, Gasca physically resisted, injuring the deputy. Gasca then fled toward 13th Street. At approximately 1:25 p.m., deputies found Gasca hiding in the backyard of a 13th Street residence, where they arrested him. The stolen money was not recovered at that time.

On March 6, 2015, a resident on 13th Street notified law enforcement that she found a large amount of currency when cleaning shelves located in her backyard, where Gasca was found the day before. Deputies returned to her home and recovered $3,862 and an email addressed to Gasca from beneath a shelf in the backyard.

DEFENDANT                                  Case Number: 15CR0731-JAH

Tulio David Gasca                              Age: 24                      

SUMMARY OF CHARGE                                                                  

Bank Robbery, in violation of Title 18, United States Code, Section 2113(a)         

Maximum penalty: 20 years in prison

AGENCY

Federal Bureau of Investigation

San Diego County Sheriff’s Department

LOS ANGELES– A former deputy U.S. marshal was sentenced today to 15 months in federal prison after being convicted of obstruction of justice – a charge stemming from lies he told to police after he fatally shot a man.

Matthew Itkowitz, 47, who now lives in Suffern, New York, was sentenced by United States District Judge Philip S. Gutierrez.

Itkowitz was found guilty of obstruction of justice by a federal jury in July. The conviction was based on false statements Itkowitz made to Los Angeles Police Department homicide detectives following his fatal shooting of a man in West Hollywood in March of 2008. Itkowitz falsely characterized an altercation that led to the shooting, and his version of events was contradicted by a video made by a security camera in the alley where the shooting took place.

In addition to obstruction of justice, Itkowitz was charged with violating the victim's constitutional rights to be free from the use of unreasonable force by a law enforcement officer. During the trial, Judge Gutierrez granted a defense motion for judgment of acquittal on that charge and a related gun charge. The jury that convicted Itkowitz also acquitted him of an obstruction of justice charge related to statements he made to a supervisor at the U.S. Marshals Service.

“Law enforcement officers are not above the law,” said United States Attorney Eileen M. Decker. “The actions of this defendant tarnished the outstanding work of law enforcement throughout the district and the nation and have earned him a significant federal prison sentence.”

The investigation into Itkowitz was conducted by the Federal Bureau of Investigation