Bangor, Maine:  A Rochester, New York man was sentenced today in federal court in Bangor for distributing heroin and conspiring to distribute heroin and cocaine base, U.S. Attorney Halsey B. Frank announced.

U.S. District Judge John A. Woodcock, Jr. sentenced Sharoz Haywood, a/k/a “Baby Dreads,” a/k/a “Rah Rah,” 22,to two years in prison and three years of supervised release. Haywood pleaded guilty in March 2019.

According to court records, between November 2016 and September 2017, Haywood and others conspired to distribute cocaine base and heroin in central Maine. Haywood and other individuals sold the drugs, which were being transported from Rochester, New York. In July 2017, Haywood sold heroin to an informant for the Maine Drug Enforcement Agency (MDEA).

The Bureau of Alcohol, Tobacco, Firearms, and Explosives; the U.S. Drug Enforcement Administration; and the MDEA investigated the case. The case was prosecuted as part of the Department of Justice’s program to combat the opioid epidemic.

John H. Durham, United States Attorney for the District of Connecticut, announced that RAEKWON OVERSTREET, 24, of Waterbury, pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to one count of possession of a firearm and ammunition by a convicted felon.

According to court documents and statements made in court, on February 19, 2019, as part of a special parole compliance check, law enforcement officials searched Overstreet and found that he had in his possession a loaded Springfield 9mm firearm.

Overstreet’s criminal history includes a state felony conviction for conspiracy to commit robbery in the first degree.

It is a violation of federal law for a person previously convicted of a felony offense to possess a firearm or ammunition that has moved in interstate or foreign commerce.

Judge Meyer scheduled sentencing for January 13, 2020, at which time Overstreet faces a maximum term of imprisonment of 10 years.

Overstreet has been detained since his arrest on February 19, 2019.

This matter has been investigated by the Bureau of Alcohol, Tobacco Firearms and Explosives and the Waterbury Police Department.  The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.      

This prosecution has been brought though Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make neighborhoods safer for everyone.

John H. Durham, United States Attorney for the District of Connecticut, announced that MARIANO IRIZARRY, 35, of New Haven, pleaded guilty today before U.S. District Judge Jeffrey A. Meyer in New Haven to one count of possession of a firearm by a convicted felon and one count of distributing a controlled substance while on pretrial release.

According to court documents and statements made in court, in the early morning hours of January 1, 2019, New Haven Police officers assigned to a New Year’s Eve crime prevention detail responded to a disturbance and a report of an individual with a gun in front of a nightclub on Hamilton Street in New Haven.  At the scene, a bystander identified Irizarry as being in possession of a gun.  After ignoring various commands from officers, Irizarry opened the driver’s side door of his vehicle and made furtive movements in the area of the steering wheel.  He then closed the door and surrendered to officers.  A subsequent search of the area beneath the steering wheel revealed a loaded .40 caliber Glock 27 pistol.

The firearm had been reported stolen in a residential burglary in New Haven in March 2015.

Irizarry’s criminal history includes felony drug convictions in 2000 and 2010, and a felony conviction in August 2000 for illegal sexual contact with a minor.

Irizarry was arrested on a federal criminal complaint on February 6, 2019, and was released on a $50,000 bond.  On June 17, 2019, he sold four bags of heroin, some of which contained fentanyl, to an individual working with law enforcement.  He has been detained since his arrest on June 27, 2019.

Judge Meyer scheduled sentencing for January 14, 2020, at which time Irizarry faces a maximum term of imprisonment of 40 years.

This matter has been investigated by the Federal Bureau of Investigation, the Drug Enforcement Administration and the New Haven Police Department.  The case is being prosecuted by Assistant U.S. Attorney Michael J. Gustafson.         

This prosecution has been brought though Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make neighborhoods safer for everyone.

FRESNO, Calif. — Augustine Amon Reyes, 33, of Bakersfield, was sentenced today by U.S. District Judge Dale A. Drozd to 15 years in prison for receiving child pornography, U.S. Attorney McGregor W. Scott announced.

According to court documents, between Oct. 28, 2016, and Nov. 27, 2016, in Kern County, Reyes was found to have received or distributed through the internet between 10 and 150 images of minors engaged in sexually explicit conduct. The images also included depictions of prepubescent minors. Reyes also engaged in a pattern of activity involving the sexual abuse of minors.

This case was the product of an investigation by the Bakersfield office of Homeland Security Investigations as well as the California Department of Corrections and Rehabilitation. Assistant U.S. Attorney Brian W. Enos prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute those who sexually exploit children, and to identify and rescue victims. For more information about Project Safe Childhood, please visit www.usdoj.gov/psc. Click on the “resources” tab for information about internet safety education.

FRESNO, Calif. — Arnold Peterson, 57, of Big Pine, pleaded guilty today to operating a plane without an airman’s certificate, U.S. Attorney McGregor W. Scott announced.

According to court documents, on June 8, 2017, Peterson flew a private aircraft into Portales Municipal Airport located in Portales, New Mexico without having a valid airman certification issued by the Federal Aviation Administration.

On June 8, 2017, Peterson flew an aircraft through Class C Airspace at Lubbock Preston Smith International Airport in Lubbock, Texas without calling the airport’s Air Traffic Control (ATC). Two-way radio communication with ATC is required prior to entry into and while in Class C Airspace. His action caused a regional jet to deviate from its flight path in order to avoid the unknown, uncommunicative aircraft. ATC tracked the aircraft until in landed in Portales, New Mexico. A subsequent investigation established that the aircraft’s registration was expired and that Peterson’s previously issued airman certificate had been surrendered for revocation on June 17, 2014, and had never been reinstated.

“The guilty plea in this U.S. Department of Transportation, Office of Inspector General (DOT-OIG) investigation demonstrates our commitment to safeguarding the National Airspace System,” said Jeffrey Dubsick, DOT-OIG Regional Special Agent-in-Charge. “Working with the Federal Aviation Administration and our prosecutorial partners, we will continue our efforts to vigorously pursue unlicensed pilots who illegally operate aircraft.”

This case is the product of an investigation by the DOT-OIG and the Federal Aviation Administration. Assistant U.S. Attorneys Laura D. Withers and Vincente A. Tennerelli are prosecuting the case.

Peterson is scheduled to be sentenced on Dec. 16 by U.S. District Judge Lawrence J. O’Neill. Peterson faces a maximum statutory penalty of three years in prison and a $250,000 fine. 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.

POCATELLO – Vincent Miera, 53, of Chubbuck, Idaho, was sentenced today in U.S. District Court to 235 months in federal prison followed by a lifetime of supervised release for distributing sexually explicit images of minors, U.S. Attorney Bart M. Davis announced. Miera was also ordered to pay $25,000 in restitution to victims of the offense. Miera was sentenced by Chief U.S. District Judge David C. Nye. Miera pleaded guilty on May 2, 2019.

According to court records, law enforcement officers executed a search warrant at Miera’s Chubbuck home in June 2018. Officers previously received information that Miera had downloaded a large amount of child pornography from the internet. At Miera’s home, officers discovered two phones in Miera’s possession. During a forensic search of Miera’s phones, officers found 159 images and 588 videos of child pornography. Miera admitted in court that he distributed the child pornography through a texting application.

At sentencing, Judge Nye also ordered Miera to forfeit the phones used in the commission of the offense. As a result of his conviction, Miera will be required to register as a sex offender.

This case was investigated by Homeland Security Investigations in Idaho Falls and the Chubbuck Police Department.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by the United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who sexually exploit children, and to identify and rescue victims.

For more information about Project Safe Childhood, please visit www.usdoj.gov/psc.

For more information about internet safety education, please visit www.usdoj.gov/psc and click on the tab “resources.”

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LAREDO, Texas – A 27-year-old resident of Laredo has entered a guilty plea to federal charges stemming from her attempt to smuggle a Mexican national minor, announced U.S. Attorney Ryan K. Patrick.

On July 13, Rosa Elia Amaya applied for admission into the country from Mexico at the Lincoln Juarez Port of Entry accompanied by a minor male and her U.S. citizen daughter. She claimed to be the boy’s mother and presented authorities with a birth certificate as proof of citizenship.

Upon questioning, the minor boy remained silent as authorities asked for the location of his mother. The investigation subsequently confirmed the unaccompanied minor was not Amaya’s son.

Today, she admitted she had agreed to smuggle him into the U.S. in return for $1,500.

U.S. District Judge Marina Garcia Marmolejo will impose a sentencing at a later date. At that time, Amaya faces up to 10 years in federal prison and a possible $250,000 maximum fine. She was permitted to remain on bond pending that hearing.

Immigration and Customs Enforcement’s Homeland Security Investigations conducted the investigation with assistance from Customs and Border Protection. Assistant U.S. Attorney Aaron Petters is prosecuting the case.  

HUNTINGTON, W.Va. – A Huntington woman pled guilty today to a federal drug conspiracy charge, announced United States Attorney Mike Stuart. Krystal Ewing, 31, entered a guilty plea to an indictment charging her with conspiracy to distribute heroin and fentanyl.

“Operation Free Market disrupted a significant heroin and fentanyl trafficking organization operating between Detroit and Huntington,” said United States Attorney Mike Stuart.  “My office is setting historic records in the number of prosecutions of drug dealers and poison peddlers.  We are working hard every day to shutter drug networks responsible for bringing these deadly drugs into our state.”

Ewing admitted that between December 2018 and May 2019 she conspired with other individuals to distribute heroin and fentanyl in Huntington, West Virginia.  Ewing admitted that she would travel to Detroit, Michigan to obtain heroin for George Lockhart for him to sell in Huntington. 

Ewing faces up to twenty years in federal prison when she is sentenced on January 13, 2020.

Operation Free Market was a long-term drug investigation in the Huntington area.  The investigation was the result of a joint effort by the Drug Enforcement Administration and the Violent Crime and Drug Task Force West.  

The plea hearing was held before United States District Judge Robert C. Chambers.  Assistant United States Attorney Stephanie S. Taylor handled the prosecution.

Follow us on Twitter:SDWVNewsand USAttyStuart
 

 
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HOUSTON – A 49-year-old resident of Katy has been indicted for defrauding the Department of Veterans Affairs (VA) of more than $600,000, announced U.S. Attorney Ryan K. Patrick.

Tammy Wilson made her initial appearance today before U.S. Magistrate Judge Nancy Johnson.

A federal grand jury returned the three-count indictment Sept. 19, alleging she committed one count each of mail fraud, health care fraud and making a false statement relating to health care matters. She is set for trial before Chief U.S. District Judge Lee H. Rosenthal.

According to the charges, Wilson is a widow of military veteran. Her husband allegedly died of service related injuries, after which she was eligible to participate in the Civilian Health and Mental Program of the Department of Veterans Affairs (CHAMPVA) Program. CHAMPVA is headquartered in Denver, Colorado, and is a comprehensive health care program in which the VA reimburses for eligible out-of-pocket prescription expenses, according to the indictment.

From 2013 through 2017, Wilson allegedly submitted falsified prescription summaries to the CHAMPVA Program. In the scheme, according to the charges, Wilson claimed to have paid for hundreds of thousands of dollars worth of prescription medications. The VA then allegedly paid Wilson more than $640,000 for those claims. However, the indictment alleges the pharmacies never dispensed the prescriptions as she had claimed.

During the course of the scheme, Wilson was the biggest recipient of CHAMPVA funds in the world, according to the charges.

If convicted, Wilson faces up to 20 years in federal prison and a possible $250,000 maximum fine.

The VA - Office of Inspector General conducted the investigation. Assistant U.S. Attorney Heyward Carter is prosecuting the case.

An indictment is a formal accusation of criminal conduct.
A defendant is presumed unless and until convicted through due process of law.

HUNTINGTON, W.Va. – A Huntington man pled guilty today to a federal drug charge, announced United States Attorney Mike Stuart. Kenneth Alexander, 33, entered a guilty plea to an indictment charging him with aiding and abetting the distribution of heroin.

“We’re taking heroin dealers off the streets one by one and, on certain days, by the dozens,” said United States Attorney Mike Stuart.   “We are laser focused on prosecuting drug dealers and making our communities safer for West Virginia families.”

Alexander admitted that on August 1, 2018, he and another individual sold heroin to a confidential informant in the 1100 block of 9^th Avenue in Huntington, West Virginia.   

Alexander faces up to twenty years in federal prison when he is sentenced on January 13, 2020.

The Cabell County Sheriff’s Department conducted the investigation.   The plea hearing was held before United States District Judge Robert C. Chambers.  Assistant United States Attorney Stephanie S. Taylor handled the prosecution.

Follow us on Twitter:SDWVNewsand USAttyStuart
 

 
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BLUEFIELD, W.Va. – An inmate at the Federal Correctional Institution at McDowell pled guilty to a weapon offense, announced United States Attorney Mike Stuart.  Devin Dantzler, 24, pled guilty to being an inmate in possession of a weapon.

Dantzler admitted that on June 26, 2019, while he was an inmate at the prison, he possessed a handcrafted weapon commonly called a “shank.”   A staff member at the prison found the shank in Dantzler’s pocket during a search.

Dantzler faces up to five years in prison when sentenced on February 3, 2020.

The Federal Bureau of Prisons conducted the investigation.   Senior United States District Judge David A. Faber presided over the hearing.  Assistant United States Attorney John File is handling the prosecution.

HUNTINGTON, W.Va.—A Huntington woman pled guilty to embezzling money from 2015 until April 2019 from the Huntington branch of the West Virginia Federal Credit Union (WVFCU), announced United States Attorney Mike Stuart.  Frances McComas, 56, pled guilty to embezzling $165,500 from WVFCU.

“This was an egregious crime by a bank employee,” said United States Attorney Mike Stuart.  “McComas stole cash for approximately four years from the credit union that employed her.  We will continue to work with the FBI to prosecute cases like this.”

McComas, who worked as a teller at WVFCU, admitted she took $165,500 from the credit union’s vault and falsified the financial records to hide the embezzlement.   McComas faces up to 30 years in prison and 5 years supervised release when sentenced on January 6, 2020.  

The Federal Bureau of Investigation handled the investigation.   United States District Judge Robert C. Chambers presided over the hearing. Assistant United States Attorney Chris Arthur is handling the prosecution. 

Follow us on Twitter:SDWVNewsand USAttyStuart

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          LOS ANGELES– A long-time con artist was sentenced today to 240 months in federal prison for running a multimillion-dollar real estate scam that conned elderly people out of their homes, gouging them with fraudulent threats of litigation and extorting monthly payments for illegal foreclosure and eviction delay.

          Michael “Mickey” Henschel, 70, of Van Nuys, was sentenced by United States District Judge Virginia A. Phillips. A restitution hearing in this matter has been scheduled for December 2.

          Henschel pleaded guilty on May 13 to one count of mail fraud after spending years filing fraudulent documents on homeowners’ properties, and then using the fraudulent filings and fraudulent litigation to steal money from victims, sometimes stealing homes outright, and other times extorting settlement payments in actual or threatened civil litigation.

          Henschel – who used various aliases, including “Frank Winston,” “Steve Lopez” and “Ron Berman” – and his co-conspirators deceived vulnerable homeowners – typically elderly people in financial distress, some of whom spoke limited English. Henschel tricked the homeowners into signing fraudulent deeds on their properties with false promises that the deeds would help homeowners protect properties from creditors or enable them to get equity out of the properties. Unbeknownst to his victims, the deeds described fake loans that the homeowners were supposedly guaranteeing for third parties, and in signing the deeds, they were pledging their houses as collateral for these fake loans. Henschel used the fraudulent deeds to steal homes and money from the victims.

          In total, the scheme generated more than $17 million in profits. Henschel’s fraudulent conduct also caused losses to mortgage lenders in connection with lawful foreclosure actions and to purchasers of foreclosed properties in depriving them of lawful possession to those properties.

          Henschel’s criminal conduct devastated his victims, leaving some of them penniless. Many other victims had to face financial insecurity – even homelessness – in their old age as they struggled to pay for basic necessities such as food and clothing. Several victims lost homes that their families had owned for generations.

          One victim, who spent her entire career teaching developmentally disabled students, purchased a home and spent decades paying down most of her mortgage, only to have Henschel and his co-conspirators fraudulently steal it from her.

          The real estate fraud scheme had two parts: one involving property theft and litigation extortion, and the other involving illegal foreclosure and eviction delay.

          In the property theft and litigation extortion part of the scheme, Henschel filed fraudulent documents on titles to homeowners’ properties and used these fraudulent filings to steal properties from some victims outright and to extort settlement payments from other victims in civil litigation. Henschel weaponized the state court litigation system against homeowners, using his specialized training and knowledge of the law (he attended law school but never was admitted to practice) to extort settlements from homeowners by dragging them through stressful lawsuits.

          “Assault by legal paperwork, unscrupulous litigation tactics, and low-ball settlement demands were all part of the scheme, as victims often found it cheaper to pay defendant than to fight him, and defendant intentionally arbitraged the high cost of state court civil litigation to extort settlement payments,” the government wrote in its sentencing memorandum.

          In the foreclosure rescue part of the scheme, Henschel and his co-conspirators used fraudulent filings to charge homeowners fees to delay foreclosure and eviction actions. Henschel and the others had homeowners sign fraudulent deeds that transferred interests to debtors in bankruptcy cases – but the bankruptcies were fraudulent and used solely as part of the fraudulent scheme, not as part of any genuine effort to restructure or eliminate debts.

          Many of the fraudulent bankruptcies were filed in the names of fictional people and entities, and some involved stolen identities. Henschel and his co-conspirators sent fake deeds and fraudulent bankruptcy petitions to trustees to stop foreclosure sales. They delayed evictions in a similar way, mainly by filing fraudulent documents in state court unlawful detainer actions and then sending bogus documents to various county sheriff’s offices.

          Henschel charged homeowners monthly fees for the illegal foreclosure- and eviction-delay services, collecting more than $7 million through this part of the scheme. The property theft portion of the scheme netted Henschel $10 million in ill-gotten gains.

          A total of seven defendants linked to Henschel’s Van Nuys-based companies have been convinced of crimes related to the scheme. Those defendants are scheduled to be sentenced later this year.

          The case against Henschel and the others are the result of an investigation by the Federal Bureau of Investigation, and the Federal Housing Finance Agency - Office of Inspector General. The United States Trustee’s Office for the Central District of California initially referred the matter for investigation and has provided substantial assistance. Also providing assistance during the investigation were the Alameda County District Attorney’s Office, the Los Angeles County Recorder’s Office, the Alameda County Recorder’s Office, and the San Diego County Recorder’s Office.

          This case was prosecuted by Assistant United States Attorneys Kerry L. Quinn and Eddie A. Jauregui of the Major Frauds Section. The forfeiture part of the case is being handled by Assistant United States Attorney Jonathan S. Galatzan of the Asset Forfeiture Section.

GREAT FALLS— U.S. Attorney Kurt Alme today announced the settlement of a civil lawsuit and recovery of $137,500 in an oil and gas royalty dispute involving federal leases.

The settlement arises from allegations that Charles Janksy, and his two companies, Somont Oil Company and Ferdig Oil Company, violated the federal False Claims Act by failing to pay money owed to the Department of the Interior’s Office of Natural Resources Revenue (ONRR) for natural gas produced from federal leases located in Montana.

Jansky owns or is the controlling shareholder in both Somont and Ferdig.  Somont holds a number of federal gas leases.  The leases obligate Somont to pay the United States royalties on the value of the gas it produces. Each month, companies with federal leases are required to report to ONRR the amount of royalties due and then pay the amount owed.

The settlement resolves claims by the United States that Jansky and Somont failed to properly pay their full royalty obligation for gas produced from Somont’s federal leases in Montana from January 1, 2010 through December 31, 2016.  The United States alleged that Somont and Jansky improperly treated their dealings with Ferdig as arms-length transactions, when in fact, Somont and Ferdig share common ownership.  The United States alleged this caused Somont to knowingly underreport its royalty obligations.

“Companies that extract resources from federal lands must pay what they owe. We will hold accountable any company that tries to avoid its obligations,” said U.S. Attorney Alme.  

“The obligation to properly pay federal mineral royalties is essential to the responsible development of oil and gas from public lands, and we are committed to work with our partners at the Department of Justice, Office of Natural Resources Revenue, and the Office of the Solicitor, to ensure that companies operating federal leases meet their legal responsibilities,” said Ron Gonzales, Special Agent in Charge of the Department of the Interior-Office of Inspector General’s Energy Investigations Unit.

The U. S. Attorney’s Office acknowledges the cooperation and teamwork demonstrated by governmental entities involved in today’s recovery. Special thanks are extended to the Office of Natural Resources Revenue, the Department of the Interior’s Office of the Solicitor, and the Department of the Interior’s Office of Inspector General. 

Assistant U.S. Attorney Megan L. Dishong represented the United States.

XXX

CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051

BUFFALO, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that two Brazilian citizens living in Canada, Tiago Mello-Lima, 32, and Renan Portela Bandeira De Souza, 32, have been charged by a federal grand jury in a 13-count indictment which charges them with conspiracy to bring aliens to the United States, alien smuggling for commercial advantage and private financial gain, and bringing an alien to the United States at a place other than a designated port of entry. Mello-Lima faces a mandatory minimum sentence of five years in prison and a maximum of 15 years if convicted. De Souza faces a mandatory minimum sentence of three years in prison and a maximum of 10 years if convicted.

Assistant U.S. Attorney Charles Kruly, who is handling the case, stated that according to the indictment, between approximately August 2018 and April 28, 2019, the defendants conspired together and with others to bring aliens to the United States, knowing that these individuals were aliens, at places other than designated ports of entry. Mello-Lima allegedly smuggled six aliens to the United States for commercial advantage and private financial gain, while De Souza is accused of smuggling two aliens into the United States. 

Renan Portela Bandeira De Souza was arraigned before U.S. Magistrate Judge Jeremiah J. McCarthy and is being held pending a detention hearing on October 10, 2019. Tiago Mello-Lima will be scheduled for arraignment at a later date.

The indictment is the result of an investigation by U.S. Border Patrol, under the direction of Acting Port Director Sharon Swiatek, and Homeland Security Investigations, under the direction of Special Agent-in-Charge Kevin Kelly.

The fact that a defendant has been charged with a crime is merely an accusation and the defendant is presumed innocent until and unless proven guilty.

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CONTACT: Barbara Burns
PHONE: (716) 843-5817
FAX #: (716) 551-3051

ROCHESTER, N.Y. - U.S. Attorney James P. Kennedy, Jr. announced today that Ross Susco, 34, of East Meadow, NY, pleaded guilty before U.S. District Judge Charles J. Siragusa to possession of child pornography, including prepubescent images. The charge carries a maximum penalty of 20 years in prison and a $250,000 fine.

Assistant U.S. Attorney Melissa M. Marangola, who is handling the case, stated that between March 8 and March 27, 2018, the defendant possessed images of child pornography on a desktop computer. Susco received the images over the internet. Some of the images depicted prepubescent minors, including a one-year old child.

On March 8 and March 12, 2018, the defendant communicated on the internet with an undercover Homeland Security Special Agent. During those communications, Susco sent the agent two videos containing child pornography. Both videos depicted prepubescent girls engaging in sexually explicit conduct with an adult.   

The plea is the result of an investigation by Homeland Security Investigations, under the direction of Special Agent-in-Charge Kevin Kelly. 

Sentencing is scheduled for December 16, 2019, at 10:15 a.m. before Judge Siragusa.

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          LOS ANGELES– A Riverside man was sentenced today to 70 months in federal prison for defrauding hundreds of victims, mainly distressed homeowners who paid thousands of dollars after attending seminars that promoted a “Free and Clear” program pitched by the defendant and his salespeople.

          James Ignatius Diamond, 69, was sentenced by United States District Judge R. Gary Klausner.

          At the conclusion of a six-day trial in June, Diamond was found guilty by a jury of 15 counts of mail fraud affecting a financial institution and 15 counts of wire fraud affecting a financial institution.

          Between 2010 and 2013, Diamond sold fraudulent debt-elimination services to desperate victims whose finances had been ravaged by the Great Recession. Diamond owned and operated a number of businesses – including the Riverside-based Transmitting Assets Inc., Operation Safe Haven, Buyer Beware, and Unlimited Logistics Corp. – through which he fraudulently offered services that he claimed could wipe out the debts of homeowners behind on their mortgage payments and other debts.

          Diamond personally pitched the “Diamond Home Reclamation Method” to solicit victims with false promises that his methods would entirely eliminate their mortgages and allow people to own their homes “free and clear.”

          Relying on the false representations, victims paid substantial fees, including an upfront fee – typically $3,500, payable only in cash, money orders or cashier’s checks – periodic program fees, and inflated notary fees. After paying the upfront fee, victims were required to sign and notarize documents, which they were instructed to send to financial institutions and government agencies – documents prosecutors described in court documents as “fraudulent and nonsensical.”

          When victims of the scheme in 2011 began receiving mortgage default notices and lost their homes, Diamond launched another debt-elimination scam called the “EFT Program,” under which Diamond claimed to be able to eliminate victims’ debt with “EFT” checks. This scam required victims to pay Diamond 13 percent of the debt that was to be eliminated.

          Diamond knew that his methods did nothing to discharge debts. In fact, when FBI agents searched his business in 2013, they recovered hundreds of “rejection letters” from financial institutions indicating that documents submitted as part of the debt-elimination programs did nothing to help the victims. Diamond’s email accounts contained numerous complaints and refund requests from victims – all of which he ignored.

          Investigators have identified more than 500 victims who suffered losses of at least $1.6 million. Diamond spent victims’ money on luxury hotels, jewelry, alcoholic beverages, and living expenses.

          Previously in this case, a Diamond associate – Tricia Mae Gruber, 43, also of Riverside – pleaded guilty to conspiracy to commit mail fraud and admitted helping operate the scheme. Her sentencing hearing is scheduled for October 21.

          This case was investigated by the FBI.

          This matter was prosecuted by Assistant United States Attorneys Marina A. Torres of the International Narcotics, Money Laundering, and Racketeering Section and Kevin B. Reidy of the General Crimes Section.

FRESNO, Calif. — Gary John Koval, 76, formerly of Fresno, pleaded guilty today to one count of wire fraud in connection with an investment fraud scheme, U.S. Attorney McGregor W. Scott announced. 
According to court documents, from 2012 to approximately Nov. 2014, Koval executed an investment fraud scheme, where he falsely represented himself to potential investors as an experienced and successful businessperson and investor with significant relationships and contacts in the banking and investment community. He convinced several investors to give him money by falsely claiming that he was a facilitator for opportunities where one could purchase foreign bank notes or lines of credit and have them resold at a significant profit. Koval, in fact, used the money to fund his own business ventures unrelated to foreign investments or spent the money on his personal expenses. Koval also gave inconsistent, conflicting explanations and excuses concerning the lack of return on their investment and the inability to return the investment principal to investors that requested such a return. Some of the explanations and excuses provided by Koval induced investors to provide additional money. Koval’s conduct caused a loss to investors of over $550,000.
This case is the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorney Henry Z. Carbajal III is prosecuting the case.
Koval is scheduled to be sentenced by U.S. District Judge Dale A. Drozd on Jan. 13. Koval faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. 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.

SACRAMENTO, Calif. — Today, Senior U.S. District Judge William B. Shubb sentenced three defendants for conspiring to commit wire fraud in a mortgage fraud scheme, U.S. Attorney McGregor W. Scott announced.

Moctezuma “Mo” Tovar, 50, of Sacramento, was sentenced to four years and six months in prison; Jun Michael Dirain, 47, of Antelope, was sentenced to six months in prison, followed by six months of home detention; and Sandra Hermosillo, 57, of Woodland, was sentenced to nine months of home detention.

According to court documents, Tovar was the founder and president of Delta Homes and Lending Inc., a now-defunct Sacramento-based real estate and mortgage lending company. Delta Homes opened one office in 2003 and eventually had several offices in Sacramento and Woodland. As the president of Delta Homes, Tovar managed the day-to-day operations of the company and prepared and submitted residential home loan applications on behalf of Delta Homes’ clients. Dirain was a loan processor at Delta Homes, and Hermosillo was a loan officer at the Woodland office and was also responsible for submitting residential home loan applications on behalf of clients.

Between October 2004 and May 2007, Tovar, Dirain, and Hermosillo conspired along with others to obtain home loans from mortgage lenders based upon false and fraudulent loan applications and supporting documents that falsely represented the borrowers’ assets and income, liabilities and debts, and employment status. They provided money to the borrowers in order to inflate their bank account balances. Once the loans were secured, the borrowers returned the money to the defendants. The aggregate sale price of the homes involved in the overall conspiracy was in excess of $10 million. As a result of the conspiracy, mortgage lenders and others suffered losses of at least $4 million.

This case was the product of an investigation by the Federal Bureau of Investigation. Assistant U.S. Attorneys Brian A. Fogerty and Justin L. Lee prosecuted the case.

Co-defendant Christian Parada Renteria, 43, formerly of Sacramento, pleaded guilty to two counts of concealing felonies related to the wire fraud conspiracy, and was previously sentenced to serve one year in prison.

Co-defendant Manuel Herrera, 39, of Davis, pleaded guilty to conspiracy to commit wire fraud, and co-defendants Jaime Mayorga, 40, and Ruben Rodriguez, 42, both of Sacramento, were convicted of conspiracy to commit wire fraud at a jury trial. Herrera will be sentenced by Judge Shubb on a date to be determined. Mayorga and Rodriguez will be sentenced by U.S. District Judge John A. Mendez on Nov. 5. Each defendant faces a maximum statutory penalty of 20 years in prison and a $250,000 fine. 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.

SAN FRANCISCO – The United States Attorney’s Office for the Northern District of California unsealed charges today in a criminal complaint charging Xuehua Peng, a/k/a Edward Peng, for acting as an illegal foreign agent in delivering classified United States national security information to officials of the People’s Republic of China’s Ministry of State Security (MSS), announced United States Attorney David L. Anderson, Assistant Attorney General for the Department of Justice National Security Division, John C. Demers, and Federal Bureau of Investigation San Francisco Division Special Agent in Charge John F. Bennett. 

“The conduct charged in this case alleges a combination of age-old spycraft and modern technology,” said U.S. Attorney Anderson.  “Defendant Xuehua (Edward) Peng is charged with executing dead drops, delivering payments, and personally carrying to Beijing, China, secure digital cards containing classified information related to the national security of the United States.”  U.S. Attorney Anderson further stated, “The charges announced today provide a rare glimpse into the secret efforts of the People’s Republic of China to obtain classified national security information from the United States and the battle being waged by our intelligence and law-enforcement communities to protect our people, our ideas, and our national defense.”

“According to the allegations, Peng conducted numerous dead drops here in the United States on behalf of Chinese intelligence officers and delivered classified information to them in China.  His arrest exposes and disrupts an operation by those Chinese intelligence officers to collect such information without having to step foot in this country,” said AAG Demers.  “Coming on top of our many recent Chinese espionage cases—involving both national security and intellectual property information—this case illustrates the seriousness of Chinese espionage efforts and the determination of the United States to thwart them.”            

"The FBI, along with our partners, will aggressively pursue foreign agents operating illegally in the United States attempting to steal our country's most sensitive information." said FBI Assistant Director John Brown of the Counterintelligence Division. "This case should serve as a warning to the government of China as well as any other foreign adversary looking to replicate this activity. The FBI, and our intelligence and law enforcement partners, will not waiver.  We will bring all of our resources to bear to defeat hostile foreign intelligence services and protect our nation's security. I would like to thank FBI counterintelligence personnel throughout the country who tirelessly worked this investigation over the course of many years, particularly those personnel in our Counterintelligence and San Francisco Divisions." 

“Putting an end to Mr. Peng’s alleged actions are an important and significant step in dismantling the PRC’s overall efforts against our country,” said Special Agent in Charge Bennett.  "Our message is clear: the FBI, along with our intelligence community partners, will pursue foreign adversaries—at any level of an operation—and disrupt their malicious activity when it is detected."

According to the complaint filed September 24, 2019, and unsealed this morning, Peng, 56, a U.S. citizen living in Hayward, Calif., acted at the direction and under the control of MSS officials in China in retrieving classified information passed to him by a confidential human source (“the source”), leaving money behind for the source, or both.  His activities included one dry run and at least five successful “dead drops” between October 2015 and July 2018.  The dead drops occurred in the Bay Area and in Columbus, Georgia.  

The table below summarizes the allegations in the complaint about each successful dead drop, including the date of the dead drop, the location of the dead drop, what Peng left in the hotel room, and what Peng retrieved from the hotel: 

In the June 23, 2015 “dry run,” no information or money was exchanged.  Instead, an empty package was left by the source for Peng at the front desk of a hotel, and Peng later retrieved it.  In the first successful dead drop, Peng retrieved a package containing an SD card from the front desk of a hotel.  In each of the other four successful dead drops, Peng booked hotel rooms and left a room key to be picked up by the source.  Peng then left envelopes of cash in the room, retrieved a secure digital card left there by the source, or both.

In each instance in which he retrieved an SD card from the hotel room, Peng then traveled to Beijing, China, shortly thereafter.  The complaint further alleges that Peng was told by an MSS handler, in coded language, where and when to conduct the dead drops, how much money to leave in exchange for the SD cards, and when to return to China to deliver them.  As alleged in the Complaint, the FBI secretly filmed Peng conducting some of the dead drops, and intercepted Peng’s telephone conversations with his MSS handlers in China.  

On Friday, September 27, 2019, Peng was arrested at his residence in Hayward and made his initial appearance in federal court in San Francisco before U.S. Magistrate Judge Joseph C. Spero.  Magistrate Judge Spero ordered Peng held without bond pending further proceedings. Peng’s next hearing has been scheduled for October 2, 2019, at 10:30 am before the Honorable Jacqueline Corley, 450 Golden Gate Ave., 15th Floor, for a detention hearing and identification of counsel.

A complaint merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt. If convicted, Peng faces a maximum sentence of 10 years and a fine of $250,000 for acting as an agent of a foreign government without notifying the United States Attorney General, in violation of 18 U.S.C. § 951.  However, any sentence following conviction would be imposed by the court after consideration of the U.S. Sentencing Guidelines, as applicable, and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553.  

This case is being prosecuted by the Special Prosecutions Section of the United States Attorney’s Office for the Northern District of California and the Counterintelligence and Export Control Section of the Department of Justice, National Security Division.  The prosecution is the result of an investigation by the Federal Bureau of Investigation.

A video filed in this case can be found at the following websites:

• https://youtu.be/Op5nROF7IAo
• https://youtu.be/HKweGYTguB0