Foreign Nationals Charged with Extensive Drug Trafficking and Identity Fraud Scheme

Eleven foreign nationals were charged Thursday, July 19, 2012, in a 90-count superseding federal indictment alleging they conspired to distribute cocaine and engaged in tax fraud, money laundering, identity theft and other financial crimes.

The indictment comes following a multi-agency Organized Crime and Drug Enforcement Task Force (OCDEF) investigation, stemming from an initial Drug Enforcement Administration (DEA) and Anchorage police drug probe. The magnitude of the financial crimes, money laundering and identity theft, resulted in the Internal Revenue Service (IRS) Criminal Investigations and U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) taking a lead role.

According to the indictment, the Dominican and Mexican-national defendants engaged in a conspiracy to defraud the United States by filing false tax returns and illegally claiming millions of dollars in tax refunds. Investigators believe that between January and March the defendants conducted their scheme using names and Social Security numbers of individuals from the Commonwealth of Puerto Rico.

"Today's indictment is a clear warning that anyone who steals the identities of innocent taxpayers and uses the information for personal profit will be aggressively pursued, investigated and prosecuted, in Alaska or throughout the United States," U.S. Attorney Karen Loeffler said. "This case is an example of how interagency cooperation and teamwork can successfully bring down an entire organized criminal conspiracy."

Three laptop computers seized by investigators contained information for approximately $19 million in fraudulent refund claims, 2,600 stolen identities including individual names, Social Security numbers and other identity information. It is also alleged that one or more of the defendants obtained the physical addresses used on the tax returns by stealing mail from mailboxes in and around the Anchorage area.

The defendants obtained Alaska identification cards using the stolen identities, which were necessary to open the numerous bank accounts needed to cash their tax refund checks. They also falsely claimed to be U.S. citizens to obtain the identity documents and open the accounts.

"These criminals illegally posed as U.S. citizens and exploited our financial system for personal gain," said Brad Bench, special agent in charge of HSI Seattle, who oversees HSI investigations in Alaska. "By pooling our unique resources, legal authorities and expertise, HSI and the IRS were able to dismantle a significant scheme to defraud the people of the United States."

"The charges brought forth today against these 11 individuals serve as another reminder that IRS Criminal Investigation is aggressively pursuing those who choose to defraud the government and disrupt the lives of innocent taxpayers," stated Richard Weber, IRS Criminal Investigations chief.

"Drug traffickers' greed clearly has no limits, as evidenced by this investigation," said Douglas James DEA acting special agent in charge. "The DEA is proud of its partnership with the Anchorage Police Department, which brought this case to their federal counterparts, exposing this multi-faceted criminal organization."

The indictment also charges various defendants with submitting false claims for refund, possessing stolen mail, making false claims of U.S. citizenship, committing passport fraud, making false statements to banks and credit unions, and passing forged U.S. Treasury checks, as well as aggravated identity theft.

The fraud charges each carry maximum penalties of between two and 30 years imprisonment, in addition to the five-year mandatory minimum prison term required upon conviction on the drug charges.

The U.S. Postal Inspection Service and U.S. State Department's Diplomatic Security Service also investigated. The case is being prosecuted by the U.S. Attorney's Office for the District of Alaska and the U.S. Department of Justice Tax Division.

An indictment is merely a formal accusation. Defendants are presumed innocent until proven guilty in a court of law.

Mexican National Sentenced to 15 Months for Illegal Reentry

A twice-deported Mexican national was sentenced Wednesday, July 18, 2012, to 15 months in prison for illegally re-entering the United States after having been previously deported.

The sentence resulted from an investigation conducted by U.S. Immigration and Customs Enforcement's (ICE) Enforcement and Removal Operations (ERO).

Reynaldo Coronado-Piedra, 33, was sentenced July 18 by U.S. District Judge Barbara B. Crabb, Western District of Wisconsin, for illegally re-entering the United States after having been deported. He pleaded guilty to the charge April 26. Re-entering the United States after being formally deported is a felony punishable by up to 20 years in prison.

Coronado-Piedra was first removed from the United States Nov. 19, 2004 following a probation revocation stemming from a 2000 Texas conviction for cocaine possession. He returned to the United States without permission and was convicted in Texas in 2006 of marijuana possession. He was again removed from the United States Jan. 10, 2008 after he completed his prison sentence. He returned to the United States without permission a second time. On Sept. 8, 2009, he was convicted in Portage County, Wis., for possessing marijuana with intent to deliver.

Coronado-Piedra will again be removed to Mexico after he completes his prison sentence handed down July 18.

Special Assistant U.S. Attorney Leah Fillbach Lenzendorf, Western District of Wisconsin, prosecuted the case.

California Company the Newest to Join ICE's IMAGE Program

An Escondido-based commercial framing company has become the latest employer headquartered in the San Diego area to partner with U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) in a program designed to strengthen hiring practices and combat the unlawful employment of illegal aliens.

S&H Contracting Inc., which has been in business more than 20 years, was certified as a member of the IMAGE program (ICE Mutual Agreement between Government and Employers) earlier this month. The contract company is licensed in California, Arizona and Nevada.
IMAGE is a voluntary partnership that helps employers maintain a lawful workforce and reduce the use of fraudulent identity documents.

"It is my pleasure to welcome S&H Contracting Inc. to our IMAGE family," said Derek Benner, special agent in charge for HSI San Diego. "The newly formed partnership with ICE underscores the company's commitment to protect the integrity of its workforce and to foster best hiring practices. When employers strive to maintain a lawful workforce, it's good for their business and it's good for the economy."

S&H Contracting Inc. was founded by two contractors with decades of experience in building high-end commercial and residential projects, including hotels, restaurants and churches in Southern California and Arizona. The company coordinates weekly apprenticeship classes at its onsite training facility and supports several high school athletic programs in San Diego's North County.

Undocumented workers create vulnerabilities in today's marketplace by presenting false documents to gain employment, completing applications for fraudulent benefits, and stealing identities of legally authorized workers. To combat this, ICE initiated the IMAGE program in 2006.

To qualify for IMAGE certification, partners agree to conduct a self-assessment of their hiring practices to uncover vulnerabilities that could be exploited by unauthorized workers; enroll in E-verify, an employment eligibility verification program; train staff on IMAGE Best Employment Practices and the use of new screening tools; and undergo a Form I-9 audit by HSI.

All IMAGE members must participate in the Department of Homeland Security (DHS) E-Verify employment eligibility verification program. Through this program, employers can verify that newly hired employees are eligible to work in the United States. This Internet-based system is available throughout the nation and is free to employers. It provides an automated link to the Social Security Administration database and DHS immigration records.

Upon enrollment in and commitment to the IMAGE Best Employment Practices, program participants are deemed "IMAGE certified," a distinction DHS and ICE believe will become an industry standard. IMAGE also provides free training to all employers on the provisions surrounding the Form I-9, fraudulent document detection, and building a solid immigration compliance model.

Drug Smuggler Tied to Raft Sentenced to Six Years

A Mexican national who arrived in Southern California on board a marijuana-laden panga-style boat that came ashore north of Malibu in mid-January has received a nearly six-year prison term.

Pedro Lopez-Rocha, 29, was sentenced Monday, July 16, 2012, in federal court to 70 months in prison. In March, Lopez pleaded guilty to possession with intent to distribute more than 1,000 pounds of marijuana. Lopez and two other Mexican national males were taken into custody by U.S. Customs and Border Protection (CBP) Border Patrol agents January 15 after their panga landed in the Deer Creek area. According to court documents, when the agents arrived on the scene, the defendants were in the process of unloading more than 45 bales of marijuana from the vessel.

The ensuing investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) revealed that, shortly before landing, Lopez sent a text message to an individual in the Los Angeles area advising that the boat was coming ashore. HSI's investigation further determined that the smuggling load originated in the Ensenada area of Mexico.

"This sentence should send a strong signal about the consequences facing those involved in this dangerous mode of smuggling," said Claude Arnold, special agent in charge for HSI Los Angeles. "The surge in maritime smuggling activity here in Southern California represents both a security and a public safety threat and we are working closely with our federal, state and local partners to disrupt these schemes and bring those responsible to justice."

The other two defendants charged in the case, Rafael Castillo-Juarez, 47, and Javier Lizarraga-Calderon, 48, also pleaded guilty to possession with intent to distribute marijuana. Castillo and Lizaragga were sentenced previously with each receiving one year and one day in prison. All three defendants are Mexican nationals and will face deportation upon completion of their prison sentences.

In response to the escalating volume of maritime smuggling in the Los Angeles area, authorities have intensified efforts to target the illegal activity, expanding the use of marine patrols, land-based surveillance and collaboration with the Government of Mexico.

Those efforts are being overseen by the Department of Homeland Security's Central California Maritime Agency Coordination Group. The group is comprised of HSI; CBP's Office of Air and Marine, Office of Field Operations and U.S. Border Patrol; the U.S. Coast Guard; and several state and local law enforcement agencies. The state and local partners include the California Highway Patrol; the California Department of Parks and Recreation; the sheriff's departments of Orange, Los Angeles, Ventura, Santa Barbara and San Luis Obispo counties; and the Los Angeles and Long Beach police departments. The group is also receiving substantial assistance from members of the California National Guard's Counterdrug Program.

So far in fiscal year 2012 (Oct. 1, 2011 through June 26, 2012), authorities advise there have been 116 recorded maritime smuggling incidents in Southern California, stretching from the San Diego area north to San Luis Obispo County. In addition, there have been 29 maritime smuggling attempts intercepted offshore. Collectively, those 145 encounters have resulted in the seizure of more than 80,000 pounds of marijuana, including the bales seized in the incident near Deer Creek.

Oregon Man Sentenced for Attempt to Export Military Equipment Overseas

A Corvallis, Ore., man was sentenced Friday, July 13, 2012, to 10 months in federal prison for attempting to sell export restricted military-grade equipment to overseas buyers in violation of the Arms Export Control Act.

Geoffrey B. Roose pleaded guilty in March following his February federal indictment, which stemmed from an investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

According to court documents, investigators sent a message via eBay advising Roose that the scopes he was auctioning were restricted for export to which Roose responded with "Thanks." Despite the warning, he didn't end his auction. Undercover HSI special agents then purchased one of the military-grade rifle scopes and had it shipped to a European address. Roose shipped the order, which was seized before it left the country. On the customs declaration, Roose identified the $1,700 scope as "telescope w/Mount" valued at $150.

In a search of Roose's email, HSI special agents found he had previously concealed the export of rifle scopes because of export controls. In one email Roose told a critic of his eBay sales: "…try worrying about your life, not stupid federal ITAR rules or stolen property." ITAR refers to International Traffic in Arms Regulations.

"It's always disturbing when an American illegally exports equipment that could be used on the battlefield against U.S. military servicemen," said Brad Bench, special agent in charge of HSI Seattle. "HSI will continue to work aggressively to stem the flow of restricted items from the U.S."

"The laws on exporting military equipment are designed to protect our country and our servicemen," said U.S. Attorney Jenny A. Durkan. "This prison sentence should be a warning to anyone considering sales that will damage our security for their personal profit."

In seeking a significant sentence for Roose, prosecutors highlighted his willful disregard of multiple warnings that it was illegal to send the high tech devices overseas. "There is simply no excuse for Roose's conduct. He was given every opportunity to change course and do the right thing. He was explicitly warned by the undercover ICE agent. He received a warning from the United States Postal Service. He received a warning from a stranger. Every product that he shipped was stamped with a warning about export. Nonetheless, he continued selling restricted items overseas, and was stopped only by his arrest," prosecutors wrote in their sentencing memo.

At sentencing, U.S. District Judge John C. Coughenour said he could not overlook Roose's attitude in response to warnings that selling the scopes overseas was illegal. "These are not hunting scopes," he said. "These are killing scopes."

The Defense Criminal Investigative Service assisted with the investigation. The U.S. Attorney's Office for the Western District of Washington prosecuted the case.

Two Face Potential 20 Years for Supplying Iran with U.S. Nuclear Materials

Two men accused of creating a global network of shell companies to deceive U.S. companies into supplying nuclear-related materials to Iran were indicted by a federal grand jury in the District of Columbia following an international investigation by U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI).

According to a superseding indictment made public Friday, July 13, 2012, Iranian national Parviz Khaki, 43, and Chinese national Zongcheng Yi allegedly attempted to obtain and illegally export U.S.-origin materials to Iran that can be used to construct, operate and maintain gas centrifuges to enrich uranium. This includes materials such as maraging steel, aluminum alloys, mass spectrometers, vacuum pumps and other items. Khaki is also accused of conspiring to procure radioactive source materials from the U. S. for customers in Iran.

HSI special agents uncovered the conspiracy in 2008. Special agents found that Khaki directed Yi and others to contact U.S. companies about purchasing U.S.-origin goods. Yi and other conspirators then placed orders and purchased goods from various U.S. companies and had the goods exported from the United States through China and Hong Kong to Khaki and others in Iran. Yi and others allegedly made a variety of false statements to U.S. companies on behalf of Khaki to conceal that Iran was the final destination and end-user of the goods and to convince U.S. companies to export these items to a third country.

"By dismantling this complex conspiracy to deliver nuclear-related materials from the United States to Iran, we have disrupted a significant threat to national security," said ICE Director John Morton. "Homeland Security Investigations will continue to pursue those who exploit U.S. businesses to illegally supply foreign governments with sensitive materials and technology that pose a serious risk to America and its allies."

"Today's indictment sheds light on the reach of Iran's illegal procurement networks and the importance of keeping U.S. nuclear-related materials from being exploited by Iran," said Assistant Attorney General for National Security Lisa Monaco on July 13, 2012. "Iranian procurement networks continue to target U.S. and Western companies for technology acquisition by using fraud, front companies and middlemen in nations around the globe. I applaud the authorities in the Philippines and the many U.S. agents, analysts and prosecutors who worked on this important case."

"This new indictment shows that we have no tolerance for those who try to traffic in commodities that can be used to support Iran's nuclear program," said U.S. Attorney Ronald C. Machen Jr. "It also underscores our commitment to aggressively enforcing export laws."

Both defendants are charged with conspiracy to violate the International Emergency Economic Powers Act (IEEPA) by conspiring with others to cause the export of U.S. goods to Iran without the required U.S. Treasury Department license; conspiracy to defraud the U. S.; two counts of smuggling; two counts of illegally exporting U.S. goods to Iran in violation of IEEPA; and conspiracy to commit money laundering.

Khaki, also known as "Martin," was arrested May 24 by Philippine authorities based on a U.S. provisional arrest request stemming from a March 2012 U.S. federal indictment. Khaki remains in Philippine custody and the United States intends to seek his extradition to stand trial in the District of Columbia. Yi, who also goes by "Yi Cheng," "Kohler," and "Kohler Yi," is purported to be the managing director of Monalila Co. LTD, a company in Guangzhou City, China, and remains at large.

The defendants face a maximum potential sentence of 20 years in prison for conspiring to violate IEEPA, five years in prison for conspiring to defraud the United States, 10 years in prison for each smuggling count, 20 years in prison for each IEEPA count and 20 years in prison for conspiracy to commit money laundering.

The investigation was led by HSI Seattle with assistance provided by HSI Attaché Manila; authorities in the Philippines; and the U.S. Department of Justice's Criminal Division Office of International Affairs. The prosecution is being handled by the U.S. Attorney's Office for the District of Columbia and the Counterespionage Section of the Justice Department's National Security Division.

An indictment only contains allegations of a crime, defendants are presumed innocent unless and until proven guilty in a court of law.

Through its counter proliferation investigations, HSI aims to prevent terrorist groups and hostile nations from illegally obtaining U.S. military products and sensitive technology, including weapons of mass destruction. HSI oversees a broad range of investigations related to export law violations. It enforces U.S. export laws involving military items and controlled dual-use goods, as well as products going to sanctioned or embargoed countries.

ICE and HSI Crackdown on Cyber Intelligence Theft

U.S. Immigration and Customs Enforcement's (ICE) Homeland Security Investigations (HSI) -led National Intellectual Property Rights Coordination Center (IPR Center) seized 70 websites that were illegally selling counterfeit merchandise.

The 70 websites seized are part of Project Copy Cat, an iteration of Operation In Our Sites (IOS), and closely mimicked legitimate websites selling authentic merchandise and duped consumers into unknowingly buying counterfeit goods. Many of the websites so closely resembled the legitimate websites that it would be difficult for even the most discerning consumer to tell the difference.

The websites are now shut down and their domain names are in the custody of the federal government. Visitors to these websites will find a seizure banner that notifies them that the domain name has been seized by federal authorities and educates them about the federal crime of willful copyright infringement.

"This operation targeted criminals making a buck by trying to trick consumers into believing they were buying name brand products from legitimate websites when in fact they were buying counterfeits from illegal but sophisticated imposter sites located overseas," said ICE Director John Morton. "The imposter sites were simply a fraud from start to finish and served no purpose other than to defraud and dupe unwary shoppers."

A new twist in the websites seized in Project Copy Cat involved the appearance of Secure Sockets Layer (SSL) certificates. SSL certificates provide authentication for financial information, meaning consumers should be able to trust that they are sending information to the intended server and not to a criminal's server. Trusted SSL providers should only issue SSL certificates to verified companies that have gone through several identity checks. In addition to providing authentication, SSL certificates also provide encryption, enhancing the security of credit card numbers, usernames, passwords and other sensitive information. These websites, however, displayed SSL certificates, further duping the consumer into thinking they were shopping on a legitimate website, potentially putting customers' financial information at risk.

During this operation, federal law enforcement officers made undercover purchases of a host of products, including baby carriers, professional sports jerseys, language and fitness DVD sets, and a variety of clothing, jewelry and luxury goods from online retailers who were suspected of selling counterfeit products. In most cases, the goods were shipped directly into the United States from suppliers in other countries. If the copyright holders confirmed that the purchased products were counterfeit or otherwise illegal, seizure orders for the domain names of the websites that sold the goods were obtained from federal magistrate judges.

"Every day the U.S. economy and American jobs are negatively impacted by criminal organizations engaged in the sale of counterfeit merchandise through rogue websites. Even more importantly, consumer's health and safety can be threatened when they unknowingly purchase counterfeit products," said IPR Center Director Lev Kubiak. "Our goal at the IPR Center is to protect the public's safety and economic welfare through robust intellectual property enforcement and we hope that today's enforcement actions raise the public's awareness to this pervasive crime."

This operation was the next phase of IOS, a sustained law enforcement initiative that began two years ago to protect consumers by targeting the sale of counterfeit merchandise on the Internet. These 70 domain name seizures bring the total number of IOS domain names seized in the last two years to 839. This enforcement action coincides with the two-year anniversary of the 2010 launch of IOS. Since then, the seizure banner has received more than 103 million individual views.

Of the 769 previous domain names seized, 229 have now been forfeited to the U.S. government. The federal forfeiture process affords individuals who have an interest in seized domain names a period of time after a "Notice of Seizure" to file a petition with a federal court and additional time after a "Notice of Forfeiture" to contest the forfeiture. If no petitions or claims are filed, the domain names become the property of the U.S. government. Additionally, a public service announcement, launched in April 2011, is linked from the seizure banner on each of the 229 forfeited websites. This video educates the public about the economic impact of counterfeiting.

The operation was spearheaded by the IPR Center in coordination with HSI field offices in Denver, El Paso, Houston, Newark and Salt Lake City. U.S. Attorney's Offices in the Western District of Texas, Southern District of Texas, District of New Jersey, District of Colorado and the District of Utah issued the warrants for the seizures. The IPR Center is one of the U.S. government's key weapons in the fight against counterfeiting and piracy. The IPR Center uses the expertise of its 21 member agencies to share information, develop initiatives, coordinate enforcement actions and conduct investigations related to IP theft. Through this strategic interagency partnership, the IPR Center protects the public's health and safety, the U.S. economy and the war fighters.

During the first phase of IOS in 2010, the IPR Center received information from the Motion Picture Association of America that a website, www.ninjavideo.net (Ninja Video), was illegally distributing pirated copies of motion pictures and other audiovisual works. Ninja Video provided its millions of visitors the ability to illegally download high quality copies of copyrighted movies including movies that were currently in theaters or not yet released.

Following the seizure of the website, search warrants were executed at the residences of the primary suspects in the United States and funds were seized from 15 separate financial accounts. To date, the Ninja Video investigation has resulted in the arrest and conviction of five of the six co-conspirators with sentences ranging from 22 months in federal prison to three years of probation with a combined restitution exceeding $470,000 to the victims. A sixth co-conspirator remains a fugitive. In addition to Ninja Video, IOS phase one also targeted eight other websites selling counterfeit merchandise in New York.

Previous website seizures include:

·                             First phase: 9 domain names

·                             Second phase: 83 domain names

·                             Third phase: 10 domain names

·                             Fourth phase: 18 domain names

·                             Fifth phase: 5 domain names

·                             Sixth phase: 17 domain names

·                             Seventh phase: 58 domain names

·                             Eight phase: 156 domain names

·                             Ninth phase: 10 domain names

·                             Tenth phase: 385 domain names

·                             Salt Lake City: 7 domain names

·                             Sustained Effort: 11 domain names

These cases are part of efforts being undertaken by the Department of Justice Task Force on Intellectual Property (IP Task Force) to stop the theft of intellectual property. Attorney General Eric Holder created the IP Task Force to combat the growing number of domestic and international intellectual property crimes, protect the health and safety of American consumers, and safeguard the nation's economic security against those who seek to profit illegally from American creativity, innovation and hard work. The IP Task Force seeks to strengthen intellectual property rights protection through heightened criminal and civil enforcement, greater coordination among federal, state and local law enforcement partners, and increased focus on international enforcement efforts, including reinforcing relationships with key foreign partners and U.S. industry leaders.