Man Pleads Guilty to Identity Theft and Tax Evasion

A New Jersey man pleaded guilty Wednesday, January 30, 2013, in connection with his role in a large-scale identity-theft scheme. If convicted, he faces up to 52 years in prison. This case is being investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), FBI, Internal Revenue Service's (IRS) Criminal Investigation and the Bergen County Prosecutor's Office.

Sang-Kyu Seo, 63, of Palisades Park, N.J., pleaded guilty to charges of conspiracy to unlawfully produce identification documents and false identification documents, aggravated identity theft, conspiracy to commit wire fraud, conspiracy to commit bank fraud and tax evasion.

According to court documents, Seo was the owner and operator of Hang Jin Yi Inc., doing business as Hwangini, a salon located in North Bergen, N.J., and Pier 7 Corporation, a purported small business located in Palisades Park.

Seo conspired with Sang-Hyun Park, aka Jimmy, and others, to obtain a Social Security number beginning with the prefix '586' for another individual. These 586 Social Security numbers were issued by the U.S. to individuals, usually from China, who were employed in American territories, such as Guam. Park is alleged to have been the leader of a criminal organization headquartered in Bergen County that obtained, brokered and sold identity documents to customers to commit credit card fraud, bank fraud, tax fraud and other crimes.

Park pleaded guilty Jan. 9 to his role in the enterprise, and is awaiting sentencing.

This criminal enterprise engaged in the fraudulent 'build-up' of credit scores associated with the Chinese identities. They did so by adding the Chinese identity as an authorized user to the credit card accounts of various co-conspirators - members of the enterprise's credit build-up teams who received a fee for this service. By attaching the Chinese identities to these existing credit card accounts, the teams increased the credit scores associated with the Chinese identities to between 700 and 800. The members of the build-up teams did not know the real person to whom the identity belonged or virtually any of the customers who had purchased the identities.

After building up the credit associated with these identities, Park and his co-conspirators directed, coached and assisted the customers in opening bank accounts and obtaining credit cards. Park and his co-conspirators then used these accounts and credit cards to commit fraud. Park relied on several collusive merchants who possessed credit card processing machines. For a fee, known as a 'kkang fee,' these collusive merchants charged the fraudulently obtained credit cards, although no transaction took place. After receiving the money into their merchant accounts from these fraudulent transactions, the collusive merchants gave the money to Park and his co-conspirators, minus their kkang fee.

Seo admitted that he obtained a 586 Social Security card and counterfeit driver's licenses through Park for a family member, who then used this identity to 'bust out' credit cards. Seo also admitted that he gave his corporate and personal credit cards to Park for the purpose of 'busting out' these maxed-out credit cards. In furtherance of this conspiracy, Park and his co-conspirators issued worthless checks, drawn on bank accounts that had been established using the 586 identities, as payment toward the balances on Seo's credit cards.

Before the banks and credit card companies realized that these checks were bogus, Park and his co-conspirators charged Seo's credit cards through collusive merchants or used them to purchase merchandise.

Seo also admitted that in 2007, with the assistance of a loan broker, he fraudulently obtained a $100,000 commercial loan on behalf of Pier 7. Seo admitted that he and the loan broker made false statements to obtain the loan including falsely representing that his businesses annual revenue was about $620,000.

Finally, Seo admitted that he committed tax evasion by issuing checks to himself and others, representing income derived through the operation of Hwangini, and then failing to report this income on his personal tax returns.

Seo admitted that in April 2008, he filed an individual income tax return for tax year 2007. This return declared that his taxable income for calendar year 2007 was about $197, and the amount of tax due and owing was about $19. Seo admitted that this return failed to include $304,848 in additional taxable income that he had received in 2007, thus having an additional tax of $81,643 due to the United States government.

Seo's sentencing is scheduled for May 14.

California Men Charged with Wire Fraud and Bribery

Federal prosecutors filed criminal charges Monday, January 28, 2013, against the CEO of an Orange County electronic components company who paid kickbacks for years to ensure contracts for his firm, and against an official with Panasonic's American subsidiary who accepted the bribes.

The two men charged Monday, January 28, 2013, with "honest services" wire fraud are William McMahon, 47, of Norco, the CEO and co-owner of Trustin Technology, and Sean Volin, 38, of Oakland, New Jersey, a manager with Panasonic Corporation of North America in Secaucus, New Jersey.

In addition to criminal informations filed in U.S. District Court, prosecutors filed plea agreements in which both men admitted their criminal conduct and agreed to cooperate in the ongoing probe conducted by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the FBI.

According to court documents, for the past decade, Trustin sold RAM modules and hard drives to Panasonic – Trustin's largest and most important customer – for use in at least one line of laptop computers.

Approximately 10 years ago, Volin approached the then-CEO of Trustin to discuss a price reduction for hard drives Trustin was supplying to Panasonic. In response, the then-CEO proposed a kickback scheme in which Panasonic would continue to pay the same price for hard drives, but Trustin would give Volin half of the proposed price reduction for each unit sold. 

Volin "agreed with the former CEO's proposal, did not obtain a price reduction for Panasonic, and a stream of illicit payments between Trustin and Volin began," according to Volin's plea agreement.

McMahon became CEO of Trustin in 2005, and he learned of the kickback arrangement that had already paid more than $100,000 to Volin. The payments stopped under McMahon's watch for a period of time, but resumed as McMahon's relationship with Volin developed. Instead of paying a kickback for each hard drive sold to Panasonic, McMahon made regular payments in exchange for Volin "looking out for Trustin's interests and as a reward for his prior assistance to Trustin," according to Volin's plea agreement.

From November 2005 through the end of 2011, McMahon oversaw payments of more than $555,000 that went to a company Volin had established to accept the illicit payments from Trustin. In total, Volin was paid more than $664,900 by Trustin. Volin and McMahon also admitted in the court documents that Volin received other benefits, including trips to the Kentucky Derby and Napa Valley.

"In exchange for this stream of payments, and acting with the intent to defraud Panasonic of Volin's duty of honest services, Volin continued to assist Trustin in obtaining additional business from Panasonic, resulting in Panasonic's designating Trustin a 'master vendor,' according to court documents, which say that as a result of the scheme "Trustin was able to obtain tens of millions of dollars of business from Panasonic."

McMahon and Volin will be summoned to appear in federal court in Orange County in February. The wire fraud charge alleged in the two cases filed Monday, January 28, 2013, carries a statutory maximum penalty of 20 years in federal prison.

Panasonic Corporation of North America fully cooperated with the government's investigation.

Seattle Company Indicted for Conspiracy to Traffic Counterfeit Goods

A Lynnwood electronics company, a China-based manufacturer and four individuals were indicted by a federal grand jury Thursday, January 17, 2013, for conspiracy to traffic in counterfeit goods, following a probe by the Seattle-Tacoma Border Enforcement Security Task Force (BEST), including U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

ConnectZone.com, LLC, its owner Daniel Oberholtzer, 50, of Lynwood, sales manager Warren Lance Wilder, 46, of Auburn, and production manager Edward Vales, 31, of Seattle, are alleged to have sold counterfeit network products bearing the trademark of Cisco Systems through their online store. They falsely advertised the knockoffs as genuine and offered them for sale at a much lower price than genuine Cisco products. Through the investigation, authorities learned the U.S.-based conspirators were responsible for arranging the manufacture of the counterfeit goods through Mao Mang, aka "Bob Mao," a representative for Shenzhen Xiewei Electronic, LTD of Shanghai, China. Both Mang and the company are also named in the indictment.

In addition to HSI, the other members of BEST that played a prominent role in the case included the Seattle Police Department, the Port of Seattle Police Department, with additional assistance provided by U.S. Customs and Border Protection Office of Field Operations (CBP OFO).

"Counterfeiting high dollar goods can be very lucrative for enterprising criminals," said Brad Bench, special agent in charge of HSI Seattle. "Their illicit activities ultimately come at the expense of trademark owners and consumers. They don't contribute to research and development, and the knockoffs they sell generally don't match the quality and safety of genuine items."

The indictment alleges that Oberholtzer, Wilder and Vales would advise Mao and Xiewei Electronic, and other Chinese firms on how to manufacture products to look like genuine Cisco trademarked goods. In an attempt to evade U.S. customs officials, merchandise would be labeled "samples" when shipped to the United States. The indictment describes the various emails sent between the conspirators as they ran their scheme, including discussions on how to reverse-engineer products. In addition to the conspiracy count, the indictment also charges two counts of mail fraud and four counts of trafficking in counterfeit goods. Prosecutors believe Oberholtzer has been distributing counterfeit equipment from China since at least 1997.

"Protecting the intellectual property of American companies is critical to job growth and economic recovery – especially in our high tech industries," said U.S. Attorney Durkan. "I commend the dedicated investigators who uncovered this scheme."

Conspiracy to traffic in counterfeit goods is punishable by up to 10 years in prison and a $2 million fine. Mail fraud is punishable by up to 20 years in prison and trafficking in counterfeit goods is punishable by up to 10 years in prison. The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.

BEST Seattle is comprised of full time members from HSI; CBP OFO; the U.S. Secret Service; the Port of Seattle Police Department; the U.S. Coast Guard Investigative Service; and the FBI. BEST Seattle investigates smuggling and related crimes and combats criminal organizations seeking to exploit vulnerabilities at the Seattle and Tacoma seaports and adjacent waterways. 

The case is being prosecuted by the U.S. Attorney's Office for the Western District of Washington.

4 Texas Policemen Charged with Drug Conspiracy

Two complaints were filed Thursday, December 13, 2012, charging two Hidalgo County Sheriff's Office (HCSO) deputies and two Mission Police Department (MPD) officers with a drug trafficking conspiracy, announced U.S. Attorney Kenneth Magidson, Southern District of Texas.

MPD officer Alexis Espinoza, 29, of Alamo, was arrested Wednesday, December 12, 2012, and made his initial appearance before U.S. Magistrate Judge Dorina Ramos Thursday, December 13, 2012. A decision on his bond has not yet been determined by the court.

A second complaint was filed Thursday, December 13, 2012, charging MPD officer Jonathan Trevino, 28, of McAllen; Fabian Rodriguez, 28, of Edinburg, and Gerardo Duran, 30, of Pharr, both with HCSO. They were arrested Thursday, December 13, 2012, and appeared before Judge Ramos Friday, December 14, 2012.

According to court records, in early 2012 agents learned that members of HCSO's Panama Unit were involved in distributing narcotics. The Panama Unit is a task force designed to target narcotics trafficking in Hidalgo County, and is comprised of law enforcement officers from HCSO and MPD.

This investigation revealed that members of the Panama Unit, including Trevino, Espinoza, Rodriguez and Duran, allegedly used their law enforcement positions to escort and protect loads of smuggled narcotics; and they were paid for their services.

The case is being investigated by the following agencies: the Drug Enforcement Administration; U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), and ICE's Office of Professional Responsibility, the FBI, the Texas Rangers, and the Department of Justice's Office of the Inspector General.

Assistant U.S. Attorneys Anibal Alanis and James Sturgis, Southern District of Texas, are prosecuting the case.

HSI Arrests Texas Man Who Threatened Murder of Local Law Enforcement

A local man who threatened to kill area law enforcement officers and members of their families remains in federal custody after special agents with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) arrested him Tuesday, November 27, 2012.

Jacob Ramos Esparza, 30, of Pecos, was arrested about 1:30 a.m. on Tuesday, November 27, 2012, outside a Pecos truck stop.

He was scheduled to have his detention hearing at 10 a.m. Thursday, November 29, 2012, in Alpine, Texas, before U.S. Magistrate Judge Dwight Goains.

A federal complaint filed Tuesday, November 27, 2012, charges Esparza with unlawfully, knowingly and intentionally using interstate communications to threaten to injure a person. If convicted, he faces a maximum sentence of 20 years in federal prison.

According to the criminal complaint, Esparza was responsible for posting several death threats to Internet chat forums that targeted the Fort Stockton (Texas) Police Department officers and their families, as well as Texas police departments in Pecos, Big Spring and Midland, and the Midland County Sheriff's Office. Additional threats were made through emails, and several contained videos depicting graphic violence to taunt law enforcement. Some of the threats included the intent to use chemical weapons, car bombs and high-caliber munitions.

HSI special agents believe that among the threats Esparza allegedly made, were some posted by username "El Diablo," offering a reward for the head of a local police officer. El Diablo further threatened to "unleash 15 pipe bombs" around the Texas cities of Pecos, Midland and Odessa. He also threatened to place pipe bombs in public places Dec. 25 to "create carnage unimaginable," and kill Fort Stockton police officers and their families using large-caliber weapons, chemical weapons and car bombs.

Dennis A. Ulrich, special agent in charge of HSI El Paso, said: "HSI takes seriously all threats against law enforcement officers. Our special agents in west Texas worked cooperatively and vigorously with our local, state and federal law enforcement partners. This arrest exemplifies the efficiency and force-multiplying effect of law enforcement agencies working together."

The following law enforcement agencies assisted with this investigation: the FBI; Fort Stockton, Pecos and Midland police departments; and Ector and Midland county sheriff's offices.

A criminal complaint is merely a charge and should not be considered as evidence of guilt. The defendant is innocent until proven guilty in a court of law.

Woman Pleads Guilty to Bribery and Document Fraud Scheme

A Tennessee woman pleaded guilty Wednesday, November 14, 2012, to paying approximately $30,000 in bribes to a former Tennessee Department of Public Safety supervisory license examiner in exchange for fraudulent licenses and permits. The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) with assistance from the FBI and Tennessee Department of Safety.

Anny Castillo, 29, of Antioch, Tenn., a citizen of the Dominican Republic and lawful U.S. resident, pleaded guilty to bribery, conspiracy to unlawfully produce state identification documents, and to selling Social Security cards and citizenship documents.

"Fraudulent documents threaten the security of all citizens by making it easier for criminals to commit a range of offenses from identity theft to terrorism," said Raymond R. Parmer Jr., special agent in charge of HSI New Orleans, who oversees a five state area of responsibility including Tennessee. "This guilty plea should serve as a reminder that HSI and its law enforcement partners continually work together to identify and prosecute criminals who violate the public trust."

According to court documents, Castillo illegally obtained and sold genuine identification and citizenship documents to illegal aliens between August 2011 and April 2012. Undercover federal agents posing as illegal aliens subsequently learned from Castillo that she could also obtain fraudulent state licenses and permits for an additional fee.

Undercover federal agents accompanied Castillo to a driver testing center in Nashville where Larry Murphy, 54, of Antioch, Tenn., worked as a supervisory driver's license examiner. There Castillo paid Murphy more than $15,000 to issue fraudulent licenses to the undercover agents. Castillo admitted in court she and Murphy engaged in approximately 50 total transactions involving at least $30,000 in illegal payments.

Castillo and Murphy were both indicted by a federal grand jury in May 2012. Murphy pleaded guilty Nov. 6 and both are scheduled to be sentenced in February. Castillo and Murphy each face a maximum penalty of 10 years in prison and a $250,000 fine.

Cartel Organizer and 5 Associate Members Sentenced for Bribing Public Official

A Gulf Cartel organizer and five of his associates were sentenced Wednesday, October 10, 2012, after they were convicted for bribing a public official, announced U.S. Attorney Kenneth Magidson, Southern District of Texas.

This investigation was led by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), with the assistance of the FBI and Brownsville Police Department.

U.S. District Judge Andrew Hanen imposed the following sentences Oct. 10:

·                             Juan Carlos De La Cruz Reyna, 37, was sentenced to 135 months in federal prison, and ordered to pay a $100,000 fine;

·                             Julio Adolfo Torres, 40, was sentenced to 120 months;

·                             Carlos Melo, 38, was sentenced to 84 months;

·                             Gaspar Montes-Montes-Martinez, 42, was sentenced to 46 months, and ordered to pay a $5,000 fine;

·                             Trejo Juan Trejo Venegas, 34, was sentenced to 46 months; and

·                             Jose Cruz Venegas Esquivel, 37, was sentenced to 24 months.

Adalberto Nunez Venegas, 40, who was also convicted in the case, will be sentenced in January.

All six defendants previously pleaded guilty between April 23 and May 10.

According to court documents, the convictions resulted from an investigation launched as De La Cruz Reyna was set to be released from federal prison after serving 30 months for assaulting federal agents in Matamoros, Mexico, in November 1999. Those assaults were conducted at the direction of Osiel Cardenas Guillen, who was then leader of the Gulf Cartel.

After completing his first prison sentence, De La Cruz Reyna would normally have been returned to Mexican authorities since he had no legal status to remain in the U.S. He would have been returned at either a port of entry along the U.S.-Mexican border or flown to the interior of Mexico. However, fearing possible prosecution by Mexican authorities or being taken into custody by a rival drug cartel, De La Cruz Reyna attempted to bribe a federal official to ensure safe passage to Mexico. Through the co-conspirators, De La Cruz Reyna made a total of $797,000 in bribe payments over the course of the scheme.

At his direction, De La Cruz Reyna's co-conspirators met an undercover officer, who they thought was a corrupt HSI special agent, on numerous occasions from May 2011 to March 2012, and made several bribe payments. During this period, De La Cruz Reyna admitted he spoke with the special agent from prison on numerous occasions about bribery payments and to negotiate his release and with another special agent in Atlanta, Ga., and on two occasions to discuss his covert removal to Mexico.

The overall bribery scheme primarily involved obtaining De La Cruz Reyna's unannounced removal to Mexico, his release to elements of the Gulf Cartel, and avoiding official notification and transfer to the appropriate Mexican federal law enforcement authorities. The bribery scheme also involved allowing individuals to visit him in the Atlanta prison while he was there.

After De La Cruz Reyna was transferred to the Rio Grande Valley in preparation for his supposed release to elements of the Gulf Cartel, several of the conspirators, including De La Cruz Reyna and Nunez Venegas, met with the special agent and discussed the final bribe payment. At that time, the officer was wearing his official credentials clearly indicating he was a federal law enforcement officer. On -March 13, Nunez Venegas, Trejo Venegas and Montes-Martinez met with the undercover officer and made the final payment.

On the night of March 14, the six men met with the special agent to discuss the final arrangements and each person's role in the operation, at which time they were all arrested. De La Cruz Reyna was also arrested on that date.

De La Cruz Reyna and the others will remain in federal custody pending transfer to a U.S. Bureau of Prisons facility to be determined in the near future.

Assistant U.S. Attorneys Jody Young and Angel Castro, Southern District of Texas, prosecuted this case.

ICE and HSI Gang Specialists Train Royal Bahamas Anti-Gang Unit

Over the past couple years, law enforcement agencies across the globe have seen a steady rise in transnational organized gangs. To tackle this growing problem in the Bahamas, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations' (HSI) National Gang Unit recently led a workshop to train officers with the Royal Bahamas Police Force's newest anti-gang unit.

Modeled after U.S.-based gang task forces, the Royal Bahamas Police Force is in the process of standing up its first anti-gang unit. Early in this process the Bahamian police force looked to HSI's National Gang Unit for guidance, knowledge and techniques. After multiple discussions and an on-site visit to determine the Bahamian police force's specific needs, the HSI gang unit created a customized 24-hour curriculum to share best practices and strategies, as well as to build upon the Bahamian force's existing knowledge.

"While we have trained anti-gang units in Mexico, this is the first time we've developed an anti-gang course for the Royal Bahamas Police Force," said Alvin DeLaRosa, program manager for HSI's National Gang Unit. "It took about five months to come to fruition, but we're glad to have another partner to take on these international criminals."

The four-day training, held the last week of September, brought together gang experts from HSI, the FBI, the Organized Crime and Gang Unit of the U.S. Attorney's Office in Washington, D.C., and the Bahamian equivalent of the U.S. Drug Enforcement Administration. Vetted Royal Bahamas Police Force officers learned about recognizing gangs, gathering intelligence and evidence, analyzing intelligence, types of smuggling, interview techniques, and prosecution strategies.
During the training's opening remarks, Bahamian National Security Minister Bernard Nottage noted that the "serious threat" these "well organized and sophisticated" gangs are posing to his country.

"We have come to pool our ideas on ways to eliminate or control the proliferation of gang violence or gang-type violence in our communities," Nottage said.

DeLaRosa noted that in the Bahamas, these gangs resort to whatever tactics, including homicide, they need to in order to survive, to traffic drugs and to smuggle guns.

"Organized gangs are not confined to our borders," added DeLaRosa. "It's a worldwide epidemic, and a growing problem in the Bahamas. Working together we can dismantle transnational gangs to ensure public safety in the region."

Next week, HSI's National Gang Unit is scheduled to conduct similar training in Anguilla, British West Indies.

New Jersey Defense Contractor Convicted for Sharing U.S. Military Technology with China

On Thursday, September 20, 2012, a federal jury convicted a former employee of a New Jersey-based defense contractor of exporting sensitive U.S. military technology to China, stealing trade secrets and lying to federal agents. The joint case was investigated by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the FBI and U.S. Customs and Border Protection (CBP).

Sixing Liu, aka "Steve Liu," 49, a Chinese national, who had recently lived in Flanders, N.J., and Deerfield, Ill., was taken into custody following the verdict, based on risk of flight considerations. He is scheduled to be sentenced Jan. 7, 2013 before U.S. District Judge Stanley R. Chesler.

"Exporting military weapons and technical data, and the theft of sensitive technology in violation of the Arms Export Control Act, are serious crimes with global consequences," Andrew McLees, special agent in charge of HSI Newark, said. "Illegal foreign procurement networks continue to threaten our safety and this conviction reinforces that HSI has no tolerance for those who try to undermine our nation's safety and security."

"The jury found that in order to promote himself, Liu took highly sensitive defense information and trade secrets to China, violating the rules of his company and the laws of this country, and then lied about it upon his return to the United States," District of New Jersey U.S. Attorney Paul J. Fishman said. "We will not tolerate the exploitation of this country's opportunities through the theft of our secrets."

"This specific investigation is troubling on many levels," FBI Special Agent in Charge Michael B. Ward said. "Mr. Liu helped develop technology critical to our military, then took a computer with that information on an unauthorized trip to China to present at a conference sponsored by the Chinese government. The United States spends billions of dollars each year on research and development, and this ‘intellectual capital' is very attractive to others. If they are able to acquire this research, they can save billions and quickly develop their own products to compete against the United States, be it in the world economic market or on the battlefield."

Robert E. Perez, director of field operations for CBP New York, said, "This arrest demonstrates the determination of Customs and Border Protection's frontline officers, who work closely with our law enforcement partners to safeguard the American public from potential threats."

The jury convicted Liu of nine of the 11 counts in the second superseding indictment with which he was charged, including six counts of violating the Arms Export Control Act and the International Traffic in Arms Regulations, one count of possessing stolen trade secrets in violation of the Economic Espionage Act of 1996, one count of transporting stolen property in interstate commerce and one count of lying to federal agents. The jury acquitted Liu on two counts of lying to federal agents.

According to court documents, in 2010, Liu stole thousands of electronic files from his employer, L-3 Communications, Space and Navigation Division, located in Budd Lake, N.J. The stolen files detailed the performance and design of guidance systems for missiles, rockets, target locators and unmanned aerial vehicles. Liu stole the files to position and prepare himself for future employment in China. As part of that plan, Liu delivered presentations about the technology at several Chinese universities, the Chinese Academy of Sciences and conferences organized by Chinese government entities. However, Liu was not charged with any crimes related to those presentations.

On Nov. 12, 2010, Liu boarded a flight from Newark Liberty International Airport to China. Upon his return to the United States Nov. 29, 2010, agents found Liu in possession of a non-work-issued computer found to contain the stolen material. The following day, Liu lied to agents of the Department of Homeland Security about the extent of his work on U.S. defense technology, which the jury found to be a criminal false statement.

The U.S. Department of State's Directorate of Defense Trade Controls later verified that several of the stolen files on Liu's computer contained export-controlled technical data that relates to defense items listed on the United States Munitions List (USML). Under federal regulations, items and data covered by the USML may not be exported without a license, which Liu did not obtain. The regulations also provide that it is the policy of the United States to deny licenses to export items and data covered by the USML to countries with which the United States maintains an arms embargo, including China.

The jury heard testimony that Liu's company trained him about the United States' export control laws and told him that most of the company's products were covered by those laws.
After the verdict, Judge Chesler ordered Liu taken into custody, citing the penalties Liu faces, his ties to China and the lack of an extradition treaty with China, among other reasons.

Liu faces the following maximum penalties, per count:

·                             Export violations – 20 years in prison; $1 million fine,

·                             Stolen trade secrets violation – 10 years in prison; $250,000 fine,

·                             Interstate transportation of stolen property – 10 years in prison; $250,000 fine, and

·                             False statement – five years in prison; $250,000 fine.

Business Owner Sentenced for Illegal Alien Employment Ring

An Arkansas business owner was sentenced to 30 months in federal prison Monday, September 24, 2012, for providing counterfeit immigration documents and Social Security cards to illegal aliens and then employing them at various locations across three states. The sentence follows an investigation led by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

Valentin Gutierrez, 53, owner of Action Staffing and Action Labor Contractors in Arkansas, Mississippi and Alabama, was sentenced as a result of his May 10 guilty plea to one count of harboring and shielding illegal aliens for financial gain. In addition to the sentence Gutierrez was ordered to pay $10,000 in fines and to serve two years supervised release upon his release from prison.

HSI special agents received information in November 2008 that Gutierrez was employing illegal aliens and providing them with counterfeit work authorization documents. HSI subsequently arrested 13 foreign nationals associated with the scheme. Investigators also determined from financial records that Gutierrez made at least $6.4 million from May to December 2008 as a result of selling illegal alien labor to various companies. HSI seized Gutierrez's bank accounts and recovered approximately $117,000 in forfeited funds traced to harboring and shielding illegal aliens.

The FBI along with task force officers from the Rogers Police Department, the Washington County Sheriff's Office and the Springdale Police Department assisted with the case.

Scott Crawford, resident agent in charge of the HSI Fayetteville field office said this successful prosecution resulted from a coordinated effort of federal, state and local law enforcement agencies and this case illustrates the serious consequences of harboring and shielding illegal aliens.

"This case shows that individuals who violate immigration laws face significant penalties along with the forfeiture of proceeds gained as a result of their criminal activity," said Crawford. "This sentence serves as a stark reminder that employing illegal aliens or assisting others in doing so is a serious crime that carries serious penalties. Federal, state and local law enforcement partners work vigilantly each day and will continue to identify these criminals and ensure they face justice."

$22 Million of Cocaine Seized; 3 Dominican Republic Nationals Arrested for Drug Trafficking

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), working jointly with other members of the Caribbean Corridor Strike Force (CCSF), arrested three Dominican Republic nationals for drug trafficking and seized 918 kilograms of cocaine with an estimated street value of more than $22 million Monday, September 17, 2012, off the southern coast of Puerto Rico.

"In less than one month HSI and its partners in the Caribbean Corridor Strike Force have seized more than 2,000 kilograms of cocaine," said Angel Melendez, acting special agent in charge of HSI San Juan. "These seizures and related arrests are clear proof that HSI, along with our state and federal partners, are vigilant and will not tolerate the importation of illegal drugs into the United States through Puerto Rico."

On Sept. 17, Puerto Rico Police Department's (PRPD) United Forces for Rapid Action (FURA), working jointly with CCSF partners, detected a suspicious vessel with two outboard engines reaching the shores of Tuna Beach in the town of Maunabo, Puerto Rico. Immediately after detection FURA, with the assistance of the U.S. Border Patrol, proceeded to intercept the vessel which had made it to the beach with 811 bricks of cocaine inside.

Three Dominican Republic nationals, Cecilio Mercedes-De la Cruz, Jose Miguel Guzman-De los Santos and Victor Manuel Carela, were arrested in conjunction with the seizure. They had their initial hearing before U.S. Magistrate Judge Camille Velez-Rive Tuesday and were transferred to the Guaynabo, Puerto Rico Metropolitan Detention Center awaiting the outcome of their case.

CCSF is an initiative of the U.S. Attorney's Office created to disrupt and dismantle major drug trafficking organizations operating in the Caribbean. CCSF is part of the High Intensity Drug Trafficking Area and Organized Crime Drug Enforcement Task Force that investigate South American-based drug trafficking organizations responsible for the movement of multi-kilogram quantities of narcotics using the Caribbean as a transshipment point for further distribution to the United States. The initiative is composed of HSI, the U.S. Attorney for the District of Puerto Rico, the Drug Enforcement Administration, the FBI, the Coast Guard, CBP and PRPD's FURA.

Hawaiian Men Sentenced for $1.6 Million Ponzi-Style Fraud Scheme

Three men who led a Ponzi-style scheme that defrauded investors of more than $1.6 million were sentenced in federal court Thursday, September 13, 2012, following a joint investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) and the Federal Bureau of Investigation.

Syed Qadri, 39, Ruben Carrillo Gonzalez, 50, and Jeffrey Greenhut, 40, were sentenced by U.S. District Judge Leslie E. Kobayashi to 51 months, 41 months and 24 months in federal prison, respectively. The trio, who pleaded guilty to wire fraud charges in September 2010, were also ordered to pay restitution to the victims of the scheme.

In addition to the defendants, Qadri's wife, Patricia Roszkowski, 48, was also sentenced to one month in prison for filing a fraudulent credit application with a local bank as part of the scheme.

According to court documents, the three men schemed to defraud investors through two Honolulu companies, Amasse Capital, LLC, and Solomon & Co., LLC. The trio operated a Ponzi-style scheme in which the companies purportedly invested in high yield bonds that exposed investors' principal to minimal risk, when, in reality, the investments were used to pay back earlier investors, with the remainder of funds converted to Qadri's personal use. The net loss to victims as a result of the scheme was more than $1.6 million.

Qadri, who led the fraud scheme, served as Amasse Capital's president and chief executive officer. He and Roszkowski lived in a luxurious Kahala residence, purchased several expensive cars and leased an entire floor in a downtown office building. Gonzalez served as Amasse Capital's senior vice president of marketing and was responsible for soliciting investors. Greenhut, Amasse Capital's chief operating officer, managed investor funds.

Amasse Capital was marketed as an investment firm registered with the Securities and Exchange Commission. The company's prospectus listed the defendants as management and members of the board of directors and made false claims about the experience of the defendants in order to induce investment. Additionally, the prospectus contained false statements about the business activity, capability and financial stability of the company. Qadri and Gonzalez claimed that the companies could return 100 to 400 percent monthly interest on investments.

The case was prosecuted by Assistant U.S. Attorneys Chris Thomas and Ronald Johnson of the U.S. Attorney's Office, District of Hawaii.

Three Men Sentenced for Food-Stamp Fraud and Selling Counterfeit Goods

Three local men were sentenced in federal court Thursday, August 2, 2012, for selling counterfeit clothes, shoes and merchandise in the Rockford area. These sentences resulted from a joint investigation into food-stamp fraud and counterfeit merchandise sales conducted by the following agencies: U.S. Department of Agriculture's Office of Inspector General, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), the FBI, the Internal Revenue Service's Criminal Investigation Division, and the Rockford Police Department.

Two brothers, Abdul Hariz, 23, and Mohammad Hariz, 21, of Rockford, each pleaded guilty Feb. 8 to conspiring to sell counterfeit shoes and apparel. According to their plea agreements, they sold counterfeit merchandise at the Fashion Show store in Rockford between Aug. 19 and Dec. 14, 2010.

Mohammad Hamad, 44, was charged in a separate indictment and pleaded guilty March 8 to selling counterfeit goods at the Westside Groceries store in Rockford Oct. 21, 2010. In his plea agreement, Hamad admitted that he was part owner of Westside Groceries. He also admitted that his store employees improperly allowed an individual cooperating with law enforcement officers to use a LINK card (food stamp benefits) to purchase counterfeit shoes.

All three defendants were sentenced Aug. 2 by U.S. District Judge Frederick J. Kapala to five months in federal prison followed by three years of supervised release. During the first five months of their supervised release, each defendant will be placed on home confinement with electronic monitoring. After they complete their home confinement, each defendant must then serve the remaining 31 months of supervised release. All three defendants were ordered to pay full restitution to the victims of their crimes, and to repay the government for the costs incurred in the undercover investigation. Hamad was also sentenced to pay a $5,000 fine.

As a result of the investigation, five other Rockford men were charged in federal court with offenses relating to food stamp fraud (LINK cards). Those five men have pleaded guilty and have already been sentenced.

Assistant U.S. Attorney John G. McKenzie, Northern District of Illinois, prosecuted the case.

Extensive ICE Operation Arrests 90, Millions of Synthetic Narcotics Seized

More than 90 individuals were arrested and approximately five million packets of finished designer synthetic drugs were seized in the first-ever nationwide law enforcement action against the synthetic designer drug industry responsible for the production and sale of synthetic drugs that are often marketed as bath salts, Spice, incense, or plant food. More than $36 million in cash was also seized.

As of July 26, 2012, more than 4.8 million packets of synthetic cannabinoids (K2, Spice) and the products to produce nearly 13.6 million more, as well as 167,000 packets of synthetic cathinones (bath salts), and the products to produce an additional 392,000 were seized.

Operation Log Jam was conducted jointly by the U.S. Drug Enforcement Administration and U.S. Immigration and Customs Enforcement (ICE), with assistance from the IRS Criminal Investigation, U.S. Postal Inspection Service, U.S. Customs and Border Protection, FBI, Food and Drug Administration's Office of Criminal Investigations, as well as state and local law enforcement members in more than 109 U.S. cities and targeted every level of the synthetic designer drug industry, including retailers, wholesalers and manufacturers.

"Today, we struck a huge blow to the synthetic drug industry. The criminal organizations behind the importation, distribution and selling of these synthetic drugs have scant regard for human life in their reckless pursuit of illicit profits," said Acting Director of ICE's Office of Homeland Security Investigations James Chaparro. "ICE is committed to working with our law enforcement partners to bring this industry to its knees."

"Although tremendous progress has been made in legislating and scheduling these dangerous substances, this enforcement action has disrupted the entire illegal industry, from manufacturers to retailers," said DEA Administrator Michele M. Leonhart. "Together with our federal, state and local law enforcement partners, we are committed to targeting these new and emerging drugs with every scientific, legislative and investigative tool at our disposal."


"The synthetic drug industry is an emerging area where we can leverage our financial investigative expertise to trace the path of illicit drug proceeds by identifying the financial linkages among the various co-conspirators," said Richard Weber, chief, IRS Criminal Investigation. "We will continue working with our law enforcement partners to disrupt and ultimately dismantle the highest level drug trafficking and drug money laundering organizations that pose the greatest threat to Americans and American interests."

"The U.S. Postal Inspection Service aggressively investigates the use of the U.S. Mail system for the distribution of illegal controlled substances and its proceeds. Our agency uses a multi-tiered approach to these crimes: protection against the use of the mail for illegal purposes and enforcement of laws against drug trafficking and money laundering. This includes collaboration with other agencies," said Chief Postal Inspector Guy J. Cottrell.

"The mission of U.S. Customs and Border Protection is to guard our country's borders from people and goods that could harm our way of life," said Acting Commissioner David V. Aguilar. "We are proud to be part of an operation that disrupts the flow of synthetic drugs into the country and out of the hands of the American people."

Over the past several years, there has been a growing use of, and interest in, synthetic cathinones (stimulants/hallucinogens) sold under the guise of "bath salts" or "plant food." Marketed under names such as "Ivory Wave," "Purple Wave," "Vanilla Sky," or "Bliss," these products are comprised of a class of dangerous substances perceived to mimic cocaine, LSD, MDMA and/or methamphetamine. Users have reported impaired perception, reduced motor control, disorientation, extreme paranoia, and violent episodes. The long-term physical and psychological effects of use are unknown but potentially severe.

These products have become increasingly popular, particularly among teens and young adults and those who mistakenly believe they can bypass the drug testing protocols that have been set up by employers and government agencies to protect public safety. They are sold at a variety of retail outlets, in head shops and over the Internet. However, they have not been approved by the Food and Drug Administration for human consumption or for medical use, and there is no oversight of the manufacturing process.

Smokable herbal blends marketed as being "legal" and providing a marijuana-like high have also become increasingly popular, particularly among teens and young adults, because they are easily available and, in many cases, they are more potent and dangerous than marijuana.

These products consist of plant material that has been coated with dangerous psychoactive compounds that mimic THC, the active ingredient in marijuana. Just as with the synthetic cathinones, synthetic cannabinoids are sold at a variety of retail outlets, in head shops and over the Internet. Brands such as "Spice," "K2," "Blaze," and "Red X Dawn" are labeled as incense to mask their intended purpose.

While many of the designer drugs being marketed today that were seized as part of Operation Log Jam are not specifically prohibited in the Controlled Substances Act (CSA), the Controlled Substance Analogue Enforcement Act of 1986 (AEA) allows these drugs to be treated as controlled substances if they are proven to be chemically and/or pharmacologically similar to a Schedule I or Schedule II controlled substance. A number of cases that are part of Operation Log Jam will be prosecuted federally under this analogue provision, which specifically exists to combat these new and emerging designer drugs.

DEA has used its emergency scheduling authority to combat both synthetic cathinones (the so-called bath salts like Ivory Wave, etc.) and synthetic cannabinoids (the so-called incense products like K2, Spice, etc.), temporarily placing several of these dangerous chemicals into Schedule I of the CSA. Congress has also acted, permanently placing 26 substances into Schedule I of the CSA.

In 2010, poison centers nationwide responded to about 3,200 calls related to synthetic "Spice" and "bath salts." In 2011, that number jumped to more than 13,000 calls. Sixty percent of the cases involved patients 25 and younger.

ICE El Paso Unit a Center for Border Control

A U.S. Immigration and Customs Enforcement's Homeland Security Investigations (HSI) special agent contacted the El Paso Intelligence Center to place a nationwide alert on a vehicle of interest. The next day, the special agent received notice on his BlackBerry that a camera at a southwest border port of entry had captured an image of the vehicle's license plate. Border authorities stopped the vehicle, which was en route to Mexico, because of the nationwide alert. They discovered and seized an array of weapons in the vehicle's trunk.

The El Paso Intelligence Center is an information focal point, collecting and analyzing interdiction reports and multi-source intelligence to identify and track trafficking activities and organizations, identify and fill intelligence gaps, and provide tactical intelligence to law enforcement officers in the field.

The multi-agency center is hosted by the Drug Enforcement Agency and has grown to include more than 26 federal, state, local, tribal and foreign enforcement agencies. Foreign partners include Mexico and Colombia.

Located within a stone's throw of the Mexican border – in El Paso, Texas – its mission is not limited to only border activity. In fact, its scope is vast, covering activity within the United States, on both sides of the U.S./Mexican border, across the Caribbean and from other points of origin within the Western Hemisphere.

"The center's mission evolved after Sept. 11 when then center's multi-agency environment was called upon to support terrorism investigations," said Louie Garcia, the center's deputy director and the first ICE employee to hold this position in the center's 38-year history. "The mission evolved from its experience in supporting interdiction efforts and investigating drug trafficking, alien, weapon and bulk currency smuggling by adding anti-terrorism to its efforts."
Garcia calls it an "all-threat center."

Its expansive network of systems and databases make it the go-to hub for investigators and officers alike.

At the core of the center's activities is the Watch Operations Section, where officers work around the clock, seven days a week to support officers and special agents who are actively engaged in enforcement activities and in need of immediate tactical information. Utilizing more than 70 federal, state and local databases, the staff has a wealth of critical information at its fingertips to assist at a moment's notice.

A Tuscaloosa County deputy sheriff recently relied on the center when he had a hunch that something wasn't right about a Texas-registered tractor trailer. He made a call to the center's Watch Operations Section, requesting a full search on two subjects, the trucking company and the trailer's license plate. Within minutes, the center's search revealed there was an active investigation by HSI on one of the subjects. Additionally during the search of the trailer, the deputy found $130,000 in U.S. currency tucked away in a false wall.

Having this type of background information at hand enables officers to make better decisions and enhance their safety measures.

Additionally, the center's Research and Analysis Section also offers valuable information. It provides statistical and trend information to case-specific research and analysis, both proactively and on a by-request basis.

"The center's mission, and the work conducted at the center, is vital to our national security," said Garcia.

20 Arrested for Drug Trafficking After 18 Month Investigation

Twenty people were arrested Wednesday, May 30, 2012, following the two separate federal grand jury indictments charging 22 defendants with crimes related to trafficking methamphetamine and international money laundering. The charges were announced by the U.S. Attorney's Office of the District of Colorado, and the Organized Crime Drug Enforcement Task Force's (OCDETF) Strike Force.

All 20 people were arrested May 30 without incident in Metro Denver, California, Utah, and Iowa. The two others not arrested are considered fugitives from justice. The first indictment involves 11 defendants and 135 counts. The second indictment involves 11 additional defendants and 22 counts. Most of those arrested appeared in U.S. District Court in Denver Wednesday where they were advised of the charges pending against them.

During the course of the investigation, including fruits from search warrants executed May 30, agents and officers seized more than six pounds of methamphetamine, $715,340 in currency, one firearm and property. Five vehicles were seized, including two 2004 Freightliner tractor trailers, and a 2010 Chevrolet Camaro.

The arrests are a culmination of a year-and-a-half long OCDETF investigation known as Dark Angel, which targeted the Armando Mendoza-Haro drug trafficking organization (DTO), which has ties to Mexico. The DTO utilized corrupt drivers from a trucking company, using their semi-tractor trailers to move methamphetamine from California to Colorado. The tractor trailers were also used to move money back from Colorado to California. In one instance, the money was hidden in a truck load of milk. The DTO also used other means to send money back to California, including one instance where a minor had cash strapped to his body as he was being driven to California.

One unique aspect of this investigation was the money laundering the defendants allegedly engaged in. The defendants attempted to conceal and disguise the origin of the methamphetamine proceeds. They did this by depositing the methamphetamine proceeds into various bank accounts at financial institutions (called funnel accounts). In an attempt to avoid bank-reporting requirements, the defendants structured the deposits into the accounts by making deposits less than $10,000. Financial institutions are required to file a currency transaction report (CTR) for currency transactions more than $10,000. To further conceal the ownership and source of the methamphetamine proceeds in the funnel accounts, the defendants moved the funds that were deposited into the funnel accounts to other accounts via wire transfers. These wire transfers included transferring funds domestically and internationally. In some instances there were subsequent wire transfers back to the original funnel accounts with cash withdrawals made in California, avoiding the $10,000 reporting requirement.

Commissioned in July 2011, the mission of the Denver OCDETF Strike Force is to disrupt, dismantle and prosecute the command and control structure of major international and interstate drug transportation and smuggling organizations operating in and through the Mountain West region of the United States through collaborative criminal and financial investigations. The Denver OCDETF Strike Force is one of only 11 across the country. The Strike Forces are mostly housed in large cities.

The Denver OCDETF Strike Force is comprised of the Drug Enforcement Administration (DEA), FBI, U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI), Internal Revenue Service's Criminal Investigations, U.S. Marshals Service, Aurora Police Department, Colorado State Patrol, Denver Police Department, Fort Collins Police Services, Jefferson County Sheriff's Office, and Lakewood Police Department.

Those arrested May 30 include the following:

·                             Armando Mendoza-Haro (Northglenn, Colo.)

·                             Jesus Segovia (Denver, Colo.)

·                             Miguel Angel Sanchez (San Bernardino, Calif.)

·                             Daniela Munguia de Ortiz (Pomona, Calif.)

·                             Yuly Hernandez-Orozco (Edgewater, Colo.)

·                             Alejandro Morales-Garcia (Marshalltown, Iowa)

·                             Carlos Martin Segura Chang (Downey, Calif.)

·                             Sonia Perez (Denver, Colo.)

·                             Reyna Mendoza-Haro (Corcoran, Calif.)

·                             Jaime Moreno-Lopez (currently in BOP custody)

·                             Ricky Henry Cisneros (Denver, Colo.)

·                             Ivan Gomez-Avila (Denver, Colo.)

·                             Shana Louise Claybourn (Denver, Colo.)

·                             Cris Anthony Sandoval (Lakewood, Colo.)

·                             Todd Joseph Trujillo (Westminster, Colo.)

·                             Kennie Ray Snyder (currently in state custody)

·                             Christina Rose Malmgren (Highlands Ranch, Colo.)

·                             Desiree Rose Ceballes (Glendale, Colo.)

·                             Ricardo Paniagua-Rodriguez (San Ysidro, Calif.)

·                             Sergio Mendoza-Valdovinos (Utah)

"Thanks to the outstanding efforts of the OCDETF Strike Force, twenty-two drug dealers have been charged with trafficking methamphetamine, most of which was delivered to Metro Denver," said U.S. Attorney John Walsh. "This week's arrests will have an impact on the availability of methamphetamine on the streets of Denver."

"The indictments we are announcing today reflect the hard work of Denver OCDETF Strike Force, who targeted a Mexican drug trafficking organization responsible for the transportation of significant quantities of methamphetamine from California to Colorado," said DEA Special Agent in Charge Barbra Roach. "In addition to the drug trafficking aspects of this investigation, it is important to note the success investigators had in detecting and charging the money laundering scheme."

"Methamphetamine-trafficking organizations are deeply rooted in money and greed," said Michael Holt, Special Agent in Charge of Homeland Security Investigations Denver. "HSI routinely uses our unique law enforcement authorities in such operations to specifically target the finances that drive these crimes."

"IRS – Criminal Investigation (IRS-CI) is committed to fighting the war on drugs in conjunction with our law enforcement partners," said Sean Sowards, Special Agent in Charge of IRS – Criminal Investigation, Denver Field Office. "IRS-CI has the financial investigators and expertise to disrupt these organizations and deprive them of their illicit gains."

"Long term collaborative investigations like 'Dark Angel' are invaluable, especially when they achieve this kind of success," said Denver Police Chief Robert White. "Getting 22 drug dealers and their narcotics off the street will make Denver a much safer city."

"This multi-agency and multi-jurisdictional investigation will curtail the illegal drug market in the Western United States," said FBI Denver Special Agent in Charge James Yacone. "We will continue the efforts with our federal, state and local partners to aggressively investigate and prosecute these drug smuggling organizations that impact our communities."

If convicted, the defendants face penalties ranging from not less than 10 years and up to life in federal prison, to not less than five years and up to 20 years, depending on the quantity of drugs they are accused of trafficking. Some face not more than 20 years in federal prison for money laundering and/or other drug trafficking charges. Others face not more than four years for using a communication facility (i.e., a phone) while committing the felony drug offense.

The indictments also include asset forfeiture allegations. If convicted, the defendants shall forfeit their right, title and interest in all property constituting and derived from any proceeds obtained directly and indirectly as a result of their crimes.

This case is being prosecuted by Assistant U.S. Attorneys Zachary Phillips and Kasandra Carleton. Assistant U.S. Attorney Tonya Andrews assisted with the asset forfeiture aspect of this case.

The charges contained in the indictments are allegations, and the defendants are presumed innocent unless and until proven guilty.