Making Immigration Happen
Chicago Woman Arrested for Selling Fraudulent Identity Documents to Illegal Aliens
A woman was arrested Wednesday, February 13, 2013, on charges she allegedly sold fraudulent identity documents to illegal aliens. These charges resulted from an investigation conducted by U.S. Immigra

Tag Archives: IRS

20 Indicted for Marijuana Trafficking Ring

A federal indictment, returned by a grand jury December 2012, was unsealed Friday, January 18, 2013, charging 20 Dallas-Fort Worth area residents with conspiracy to possess with the intent to distribute 100 kilograms or more of marijuana.

More than half of the defendants are in custody, following an operation this week conducted by the following law enforcement agencies: U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI); Internal Revenue Service’s Criminal Investigations (IRS-CI); the Dallas High Intensity Drug Trafficking Areas (HIDTA); the Desoto, Dallas, Balch Springs, Arlington and Midlothian police departments; Dallas County Sheriff’s Office; the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF); and the Dallas County District Attorney’s Office.

This announcement was made by U.S. Attorney Sarah R. Saldaña of the Northern District of Texas.

During the course of the Organized Crime Drug Enforcement Task Force (OCDETF) operation, law enforcement executed federal and state search warrants that resulted in the seizure of about 25 pounds of hydroponic marijuana, more than 600 marijuana plants, 10 vehicles and five firearms.

The indictment charges the below-named defendants in the drug conspiracy:

  • Sylvespa Eugene Adams, aka “Sylvesta Adams,” “Pa,” and “Paw,” 25,
  • Alma Diane Smith, aka “Diane Williams,” 30,
  • Michael Wayne-Cortez Ayers, aka “Big Mike,” 33,
  • Isaac Demon Mathis, aka “Ike” “Issac Damone Mathis,” 30,
  • David Laploise Jones, aka “Nino,” 31,
  • Kory Lamonte Crayton, aka “Mokmu Tave” and “Coon,” 39,
  • Taurus Kion Silmom, aka “T.K.,” 30,
  • Nathan Dewayne Brown, 21,
  • Connell Heads, 50,
  • Marvin Jamel Fantroy, aka “Seven,” 32,
  • Lamondrius Denard Kidd, 28,
  • Modrick Jamal Spencer, 28,
  • Waymon Madison, 39,
  • Edward Lee Witherspoon, 50,
  • Robin James Criss, aka “June Bug,” 30,
  • Andre Demacus Reid, aka “Black,” 27,
  • Rachael O’Neal, 20,
  • Natasha Brown, 34,
  • Jovanna Renee Bonner, 19, and
  • Precious Starr Lecreas Gowans, 30.

Defendants Sylvespa Eugene Adams and Alma Diane Smith are also charged with one count of conspiracy to commit money laundering. The indictment alleges that since January 2010, Adams and Smith conspired together, and with others, to conduct financial transactions involving the proceeds of their crime that were designed to conceal and disguise the nature, location, source or ownership of the proceeds. The indictment alleges the following:

  • they stored and concealed drug proceeds,
  • caused cash to be transported as payment for drugs,
  • disposed of proceeds derived from the distribution and sale of narcotics by purchasing assets to conceal and disguise the nature and source of the proceeds,
  • structured deposits of U.S. currency, and
  • used a business front to create the appearance of a legitimate of source of funds to hide the true nature and source of the funds.

A federal indictment is an accusation by a grand jury; a defendant is entitled to the presumption of innocence unless proven guilty. If convicted, however, the conspiracy to possess with the intent to distribute marijuana count carries a statutory sentence of at least five years and up to 40 years in federal prison and a $5 million fine. The conspiracy to commit money laundering count, upon conviction, carries a maximum penalty of 20 years in federal prison and a $500,000 fine.

In addition, the indictment includes a forfeiture allegation, which would require convicted defendants to forfeit the proceeds of their criminal activity. It would also require some of the defendants, upon conviction, to forfeit numerous vehicles, including a Mercedes, a Porsche and a Bentley, as well as numerous pieces of real estate.

Assistant U.S. Attorney Phelesa Guy, Northern District of Texas, is in charge of the prosecution.

Restaurant Owners Indicted for Illegal Alien Harboring and Mail Fraud

Husband and wife restaurant owners were charged with harboring illegal aliens and mail fraud in an indictment that was unsealed Thursday, November 29, 2012, in the Northern District of Indiana. The charges resulted from an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), IRS’s-Criminal Investigation Division, U.S. Department of Labor-Office of the Inspector General, Social Security Administration-Office of the Inspector General, and the Indiana Department of Workforce Development.

Michael McClellan, 38, and Tina McClellan, 36, of Richton Park, Ill., own and operate the Paragon Restaurant in Schererville, Ind., and T & M Daycare located in Calumet City, Ill., were charged in an indictment that was returned Oct. 17 and unsealed Nov. 29.

Michael McClellan was charged with one count of harboring illegal aliens and three counts of mail fraud. McClellan and his wife Tina McClellan were also charged with one count of making money transactions in criminally derived property.

The indictment alleges that in February 2009, and continuing until on or about March 2010, Michael McClellan harbored illegal aliens at the Paragon Restaurant and at a home he owned located behind the restaurant. He also submitted false quarterly reports which failed to account for restaurant employees he had paid in cash in a scheme to defraud the Indiana Department of Workforce Development out of unemployment insurance tax contributions.

Additionally, the indictment alleges that from 2006 through 2010 the McClellans, as owners of the T & M Daycare center, provided false information to the State of Illinois claiming that certain children had attended the daycare, when, in fact, they had not, causing reimbursements of at least $200,000 from the State of Illinois and Healthy Start program. The McClellans used the criminally derived funds to purchase the home located behind the Paragon Restaurant.

“Homeland Security Investigations holds employers accountable when they knowingly hire an illegal alien workforce to gain an unfair advantage over their law-abiding competitors. Our goal is to level the playing field for those businesses that play by the rules”, said Gary Hartwig, special agent in charge of HSI Chicago.

Assistant United States Attorney Gary Bell, Northern District of Indiana, is prosecuting the case.

The United States Attorney’s Office emphasized that an indictment is merely an allegation and that all persons charged are presumed innocent until and unless proven guilty in court.

ICE and PRPD Target Operation Arrests 13 for Identity Theft and Document Fraud in Puerto Rico

Thirteen individuals indicted for document fraud and identity theft related charges were arrested Friday, November 16, 2012, in the municipalities of Bayamon, San Juan, and Carolina, Puerto Rico. U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) special agents, worked jointly with the Internal Revenue Service, Puerto Rico Police Department (PRPD) and San Juan Police Department (SJPD) officers in an operation dubbed Game Over.

“Document and identity fraud pose a severe threat to national security and public safety because they create a vulnerability that may enable terrorists, criminals and illegal aliens to gain entry to and remain in theUnited States,” said Angel Melendez, acting special agent in charge of HSI San Juan. “HSI has partnered with federal, state and local counterparts to create the Document and Benefit Fraud Task Force, a series of multi-agency teams developed to target criminal organizations and beneficiaries behind these fraudulent schemes.”

The case involves a scheme to defraud the United States by fraudulently obtaining and converting to cash U.S. Treasury checks issued in connection with fraudulent tax returns filed with the agency. As part of the scheme, tax returns were filed using the personal identifying information of individuals, when in reality, said individuals never filed such tax returns with the IRS. The investigation has revealed that the fraudulent tax returns were filed without the consent of the taxpayers who appear in the returns.

The investigation also uncovered a scheme used by some of the defendants to obtain legitimate, counterfeit or altered Puerto Rico birth certificates, Social Security cards and driver’s licenses to facilitate the movement of illegal aliens already in Puerto Rico to the continental United States.

Those arrested are:

  • Alexander Compres-Rubio
  • Raquel Custodio
  • Jose M. Vega-Rivera
  • Fernando Rosa
  • Nidia Muñoz
  • Eduvigis Rodriguez
  • Salustiano Olivo
  • Damaris Hernandez
  • Jose Javier Serrano
  • Wander Carrasco
  • Mercedes de la Cruz
  • Norwin Santana
  • Julio Peralta

ICE encourages the public to report document and benefit fraud and related information by calling 1-866-DHS-2ICE.

Construction Business, Owner Plead Guilty to Harboring and Employing Illegal Aliens, Money Laundering

A Louisiana construction business and its owner pleaded guilty in federal court Thursday, November 8, 2012, to charges of conspiring to hide more than $280,000 gained by harboring and employing illegal aliens at multiple company work sites. The guilty plea follows an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI).

Ramon Santos, 43, of Kenner, La., owner of Rendon Construction LLC, and the company itself each pleaded guilty to one count of conspiracy to commit money laundering. Santos faces up to 20 years in federal prison and a $250,000 fine. Rendon Construction LLC faces five years probation and a $500,000 fine.

According to court documents, Rendon Construction and Santos knowingly employed illegal alien workers and encouraged existing workers to recruit other illegal aliens by word of mouth. The company then paid workers in cash by funneling money through a shell company to conceal the nature of these cash payments between April and July 2011.

“Companies that violate federal law by paying workers illegally ‘under the table’ seek to gain an unfair advantage over legitimate businesses that play by the rules,” said Raymond R. Parmer, special agent in charge of HSI New Orleans. “This practice denies job opportunities to law-abiding citizens and deprives federal, state and local governments the tax revenue needed to provide the essential services we all rely upon.”

Financial records show Santos authorized twelve checks from a Rendon Construction account made payable to Diablo Construction, which was a shell corporation without any assets or employees. Santos then cashed the checks through a check-cashing service and used the proceeds to pay his illegal alien workers at company job sites.

Sentencing is scheduled for February 15 in U.S. District Court. The Internal Revenue Service (IRS), Louisiana State Police and the Jefferson Parish Sheriff’s Office assisted with the investigation.

Mexican National Pleads Guilty to Drug Trafficking

A Mexican national pleaded guilty Nov. 6 to charges of conspiring to import narcotics into the United States. This plea is the result of an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) and the Drug Enforcement Administration (DEA), with the assistance of the Internal Revenue Service.

Esteban Rodriguez-Olivera, 48, a Mexican national who was extradited to the Eastern District of New York March 11, 2011, is one of two brothers who were the leaders of “Los Gueros,” an international drug organization responsible for shipping more than 100 tons of cocaine to the United States. Rodriguez-Olivera also pleaded guilty to federal criminal charges that were originally pending in the District of Columbia.

In 2007, the U.S. Organized Crime and Drug Enforcement Task Force designated the defendant and his brother, Luis Rodriguez-Olivera, drug kingpins, adding them to the list of the world’s most significant narcotics traffickers and money launderers. Los Gueros’ supply route originated in Mexico, stretched into Texas, and branched off to various points within the United States, including the New York City metropolitan area. The organization received multi-ton shipments of cocaine from Colombia along the Gulf Coast of Mexico, and transported drug shipments into the United States through Laredo and McAllen, Texas.

For the period of 1996 to 2008, Los Gueros imported over 100,000 kilograms of cocaine into the U.S., and the DEA estimates that between 2004 and 2006, the organization was responsible for shipping truckloads containing over 2,000 kilograms (two tons) of cocaine to New York City alone. As part of the investigation, in October 2004, HSI special agents seized approximately 156 kilograms of cocaine hidden in one of the organization’s tractor-trailers; in 2005, HSI special agents seized approximately $2.1 million in drug proceeds bound for the organization in Mexico; and in January 2006, Mexican authorities seized approximately 5.2 tons of the organization’s cocaine destined for the United States.

Rodriguez-Olivera faces life in prison and forfeiture of $50 million.

Man Pleads Guilty to Transporting Prostitutes to Massage Parlor

An Annandale, Va., man pleaded guilty Wednesday, October 31, 2012, to operating an unlicensed taxi business that brought women from other states to perform sexual services for patrons at an Annandale-based massage parlor.

The case was investigated by the Washington, D.C. offices of U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), Internal Revenue Service’s Criminal Investigation, and the Naval Criminal Investigative Service, with assistance by the Fairfax County Police Department.

Jin Seob Oh, 41, originally from South Korea, pleaded guilty to conspiracy to transport women to engage in prostitution, which carries a penalty of up to five years in prison, and conspiracy to commit money laundering, which carries a penalty of up to 20 years. His sentencing is scheduled for Feb. 15, 2013.

In a statement of facts filed with his plea agreement, Oh admitted that from 2010 to June 2012, he owned and operated an unlicensed taxi business known as “Royal Taxi.” From February 2011 to April 2012, Oh served as the primary taxi driver for women who worked at “Peach Therapy,” a massage parlor located in Annandale that provided sexual services to customers.

The former owner of Peach Therapy, Susan Lee Gross, also known as “Ju Mee Lee Gross,” 46, originally from South Korea but now of Trinidad, Colo., encouraged or instructed the women to only obtain transportation from Oh to minimize the number of people who knew the details about the women working at Peach Therapy, the sexual nature of the business, and how they were transported to the massage parlor. The women paid him $40 per trip.

At the direction of Lee Gross, Oh also deposited thousands of dollars of proceeds from commercial sexual activity into Bank of America accounts that belonged to Lee Gross and those opened in the name of a family member. He admitted that he understood that these bank accounts were used to conceal the unlawful source of the money and to ensure that activity could continue.

This case was investigated by HSI, which participates in the Northern Virginia Human Trafficking Task Force, as does IRS-CI and NCIS.

The Northern Virginia Human Trafficking Task Force is a collaboration of federal, state and local law enforcement agencies – along with nongovernmental organizations – dedicated to combating human trafficking and related crimes. From 2011 to the present, 44 defendants have been prosecuted in 25 cases in the Eastern District of Virginia for human trafficking and trafficking-related conduct involving at least 32 victims.

Assistant U.S. Attorney Michael J. Frank is prosecuting the case on behalf of the United States.

Charges for Individuals and Corporation Involved in Million Dollar Afghani Military Fraud Scheme

Three individuals and a corporation are charged with fraud and bribery in connection with their alleged role in a multi-million dollar fraud scheme involving the procurement of a military contract for services in Afghanistan, according to an indictment returned by a federal grand jury in Salt Lake City Wednesday, August 22, 2012.

Named in the 72-count indictment are David Young, 49, of Hernando Beach, Fla.; Christopher Harris, 48, of Lake Havasu, Ariz.; and Michael Taylor, 51, of Boston, the president of American International Security Corporation (AISC), which is also charged in the indictment.

The indictment alleges conspiracy; procurement and wire fraud; bribery of a public official; acceptance of a bribe by a public official; and money laundering and structuring violations. The charges follow an investigation by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), the Defense Criminal Investigative Service (DCIS), Internal Revenue Service-Criminal Investigation and the U.S. Army Criminal Investigation Command, Major Procurement Fraud Unit.

“As we are all aware, families in Utah and all across America continue to send loved ones to serve our nation in Afghanistan, and taxpayers continue to pay for the cost of the effort,” said Utah U.S. Attorney David B. Barlow. “Our office will fully and aggressively pursue alleged public corruption and fraud against taxpayers and the government such as that identified in today’s indictment.”

According to the indictment, in the spring of 2007, bids for a contract to manage Afghan supplies and train Afghan troops to do supply management were solicited by the U.S. Army. Because the need was deemed urgent, the Army requested a limited number of bids for the contract from private entities selected by the Army. The contract required the work to be performed in Afghanistan by a U.S. company. The indictment alleges the defendants conspired to use protected contract information to obtain an unfair competitive advantage for AISC over other bidders.

“The scope, complexity and brazenness of this alleged fraud scheme are astounding,” said ICE Director John Morton. “If the allegations prove true, millions of dollars in U.S. government funds earmarked to help train and equip Afghan soldiers were used instead to indulge the defendants’ appetites for wealth and opulent lifestyles, including investments in private planes, precious metals and real estate. As this long-term probe and the resulting indictment make clear, HSI and its investigative partners are committed to ensuring that those who misuse taxpayers’ dollars and violate the public’s trust are held accountable for their actions.”

The indictment alleges that Young, an activated reservist in the Army with the rank of Lieutenant Colonel, served as a current or former public official in his action for and on behalf of the U.S. Army. By virtue of his position, Young had access to bid, proposal and source selection information about the contract, including information establishing the government’s price estimate. Young also suggested AISC as one of a limited number of bidders. As a current or former official with responsibilities involving the contract, Young was barred from personally benefiting from the contract.

The indictment alleges that before the contract was awarded, Young disclosed information about the government’s price estimate, selection criteria, competing bid information and other confidential procurement information to Harris, Taylor, and AISC. The indictment also alleges Harris,Taylor, and AISC promised and gave money to Young in return for him using his official position to influence the award of the contract.

“Fraud and corruption in military contracting not only take away precious dollars necessary for the dedicated American warfighter, but they undermine the confidence of the American public who demand a military procurement system that spends their tax dollars wisely and responsibly,” said Janice M. Flores, special agent in charge of the DCIS Southwest Field Office. “In this case, it is alleged that both a military officer and a government contractor betrayed the public’s trust. This investigation should serve as a warning for those intent on defrauding the U.S. military and American public that law enforcement will pursue these crimes relentlessly.”

Using the protected contract information, AISC submitted a bid to the U.S. Army of $899,782, an amount that allegedly closely matched the military’s price estimate for the contract which Young had helped establish. AISC was awarded the six-month contract in the amount of $899,781.96. The indictment also alleges that based on the initial fraud in the procurement of the pilot contract, Harris, Young and Taylor obtained extensions of the contract and four additional follow-on contracts. According to the indictment, AISC received approximately $54 million from the Army under the agreement. The co-conspirators distributed more than $20 million among themselves, the indictment alleges.

The indictment alleges 13 counts of bribery of a public official and 13 counts of acceptance of a bribe by a public official in connection with payments Harris, Taylor and AISC made to Young. The indictment claims Harris, Young, Taylor and AISC used nominee entities and individuals to conduct and conceal the transfer of proceeds of their scheme among themselves. The indictment charges 16 counts of wire fraud involving email correspondence between the defendants as a part of the execution of the alleged fraud scheme.

Several counts of the indictment relate to alleged steps the defendants took to conceal the alleged fraud, including engaging in money laundering and structuring transactions. Harris is charged in seven counts of the indictment with structuring currency transactions he made at America First Credit Union in St. George, Utah, to avoid the financial institution’s legal obligation to report transactions in excess of $10,000. The indictment alleges Harris made a series of $9,000 cash withdrawals from the credit union between May 2009 and February 2010.

“IRS Criminal Investigation is proud to lend its financial investigative expertise to complex, multi-agency investigations,” Paul Camacho, special agent in charge of the IRS Las Vegas Field Office, said. “By working closely with our fellow law enforcement partners, we can ensure that crime doesn’t pay. We hit the bad guys where it hurts – in their wallets. By taking away their assets and profits, we deprive them of the proceeds of their criminal activity.”

The indictment also contains a notice of intent to seek forfeiture of substantial real and personal property, including more than $6 million in funds; approximately 20 houses and other property in Utah, Florida, Arizona and New Hampshire; motor vehicles, including a Hummer and a Jaguar; a boat; an airplane; and hundreds of gold coins.

Harris was arrested in Utah on a complaint filed in July. He had an initial appearance and was released. Summonses will be issued to AISC, Young and Taylor to appear in U.S. District Court inSalt Lake City.

The conspiracy count carries a maximum penalty of up to five years in prison. The two government procurement fraud counts also have potential five-year sentences. The potential penalty for the bribery charges is up to 15 years for each count. Each of the 16 wire fraud counts is punishable by up to 30 years in prison. The money laundering counts carry potential maximum penalties of 10 to 20 years, depending on the violation. The charges involving the structuring of transactions carry potential penalties of up to five years per count.

Indictments are not findings of guilt. Individuals charged in indictments are presumed innocent unless or until proven guilty in court.

Two Plead Guilty for Identity Fraud Scheme

Two individuals pleaded guilty and four others were sentenced in Newark federal court in connection with their roles in a large-scale identity theft scheme.

The case was investigated by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI) special agents along with agents of the FBI, Internal Revenue Service (IRS) Criminal Investigation, and the Bergen County Prosecutor’s Office.

According to court documents, Sang-Hyun Park, aka “Jimmy,” was the leader of a criminal enterprise that operated in Bergen County, N.J., and elsewhere, that engaged in identity theft and financial fraud. Park pleaded guilty Jan. 9, 2012, and is awaiting sentencing. Park and his co-conspirators obtained Social Security cards beginning with “586.” These Social Security cards were issued by the United States to individuals, usually from China, who were employed in American territories. The enterprise sold these Social Security cards, together with genuinely issued or counterfeit driver’s licenses, to its customers for a fee. Members of the 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 who received a fee for this service – members of the enterprise’s credit build-up teams. 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. After building the credit associated with these identities, Park and his co-conspirators directed, coached and assisted his customers to open bank accounts and obtain credit cards. Park and his co-conspirators then used these accounts and credit cards to commit fraud. In particular, Park relied on several collusive merchants who possessed credit card processing, or swipe, 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 the credit cards related to these fraudulent transactions, the collusive merchants gave the money to Park and his co-conspirators, minus their “kkang fee.”

Hyo-II Song, aka “Daniel”, 49, of Fort Lee, N.J., was sentenced Friday, July 27, 2012, to 65 months in prison, ordered to pay $1.08 million in restitution and sentenced to three years supervised release. Song pleaded guilty before U.S. District Judge Katharine Hayden Feb. 10, 2012, to a three-count Information that charged him with unlawfully producing identification documents, aggravated identity theft and conspiracy to commit wire fraud.

Hyun-Yop Sung, aka “James”, 43, of Carlstadt, N.J., was sentenced by Judge Hayden to 45 months in prison, ordered to pay $145,576.27 in restitution and sentenced to three years supervised release.

Sung pleaded guilty Jan. 25, 2012, to a two-count Information that charged him with conspiracy to unlawfully produce an identification document and commit credit card fraud and aggravated identity theft.

Young-Hee Ju, aka “Stephanie,” 43, of Closter, N.J., pleaded guilty before Judge Hayden to an Information charging her with conspiracy to unlawfully produce identification documents and counterfeit identification documents, credit card fraud and aggravated identity theft. Ju faces a maximum potential penalty of five years in prison on count one and a two-year mandatory minimum term of imprisonment on count two. Sentencing is scheduled for Nov. 8, 2012.

Alex S. Lee, 44, of Palisades Park, N.J., was sentenced by Judge Hayden to six months home confinement, three years probation and ordered to pay $118,891 in restitution. Lee pleaded guilty Feb. 6, 2012, to an Information charging him with conspiracy to unlawfully produce an identification document and false identification document, credit card fraud and aggravated identity theft.

Yong Kim Lee, 57, of Linden, N.J., pleaded guilty to an Information that charged her with conspiracy to unlawfully produce identification documents and counterfeit identification documents, credit card fraud and aggravated identity theft. Lee faces a maximum potential penalty of 20 years in prison. Sentencing is scheduled for Nov. 8, 2012.

Kang-Hyok Choi, of Valley Stream, N.Y., was sentenced by Judge Hayden to 15 months in prison after pleading guilty to an Indictment charging him with credit card fraud. Choi is currently serving a 75-year sentence in New Jersey related to a triple homicide, and his federal time was ordered to run concurrent with his state time.

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

Multi-Million Customs Fraud Ring Busted

The president of the San Diego Customs Brokers Association, along with three international trade companies and seven other individual co-conspirators, are facing federal charges following a probe targeting a multi-million dollar customs fraud scheme inSouthern California. The charges are a culmination of a year-long investigation led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI). HSI received substantial assistance from U.S. Customs and Border Protection (CBP) and the Internal Revenue Service (IRS).

To date, this investigation has identified more than 90 commercial shipments from several countries. The estimated value of these shipments is valued at more than $100 million.

Three of the defendants, including Gerard Chavez, 42, the president of the San Diego Customs Brokers Association, were taken into custody by HSI special agents early Wednesday, July 25, 2012.

A 56-count criminal complaint accuses the 11 defendants in Southern California and Tijuana, Mexico, of orchestrating a lucrative customs fraud scheme that resulted in more than $10 million in lost customs duties, taxes and other revenue. The criminal charges include conspiracy to defraud the United States, falsely bringing in foods and obstruction of justice. These charges carry a maximum sentence of up to 20 years in federal prison.

“This investigation pulled back the curtain on a potentially costly fraud scheme operating in one of the world’s busiest commercial centers,” said ICE Director John Morton. “Instead, HSI, aided by our law enforcement partners, exposed and dismantled this criminal ring and now those responsible will be held accountable.”

“Every day, U.S. Customs and Border Protection officials work to protect the United States and interdict fraudulent goods from entering the country,” said CBP Acting Commissioner David V. Aguilar. “I commend the work of our officers for their instinct and diligence, and recognize the seamless coordination across government agencies. Joint efforts such as this are crucial to maintaining our nation’s economic security and competitiveness.”

According to the court documents, the defendants operated a ring and devised an elaborate scheme to exploit the in-bond import process, a routine feature of international trade that provides for duty-free importations on goods that do not formally enter into U.S. commerce.

As part of their scheme, Chavez and others procured foreign goods such as apparel made in China and cigarettes made in India that were shipped via ocean to the Port of Long Beach, Calif. They are accused of falsely generating paperwork and electronic entries into a government database to make it appear the shipments would be transshipped to Mexico, therefore not enter into U.S. commerce. Instead of transshipping the goods to Mexico, the defendants allegedly hired drivers to deliver them to warehouses in Southern California where they were eventually sold in the U.S. market. Chavez and others allegedly forged U.S. customs certifications to make it appear the shipments went to Mexico.

It is alleged one of Chavez’s customers, Sunil Mirwani, a 36-year-old importer who was taken into custody Wednesday, July 25, 2012, by HSI special agents, received dozens of shipments of illegally imported Chinese-made apparel at Los Angeles-area warehouses.

Mirwani marketed and sold the apparel using his Los Angeles-based import company, M Trade Inc., which is also a defendant in the case. Similarly, other defendants distributed various shipments of illegally imported cigarettes to warehouses, self-storage units and residences throughout Southern California.

A third defendant, Carlos Medina, 34, of Chula Vista, Calif., was also taken into custody Wednesday, July 25, 2012. Medina allegedly hired truck drivers and coordinated the delivery of illegally imported goods.

The other defendants charged in the fraud scheme case are:

  • Rene Trahin, 32, of San Diego, who allegedly distributed illegally imported cigarettes to warehouses, self-storage units and residences throughout Southern California. She is being sought by law enforcement.
  • Joel Varela Gonzalez, 32, of Tijuana, who allegedly used Chavez’s broker’s license to facilitate fraudulent shipments. He also allegedly conspired with others to cover up the shipments linked to salmonella and prohibited dye. He also allegedly forged certifications on shipments. He is being sought by law enforcement.
  • Elizabeth Sandoval, 50, of San Diego, allegedly conspired with others to mislabel foods that contained prohibited dye. She is being sought by law enforcement.
  • Enrique Perez Soltero, 39, allegedly facilitated the laundering of illicit proceeds linked to the fraud. He is being sought by law enforcement.
  • Juan Porter, 58, of Tijuana, allegedly managed a local trucking company that assisted in the diversion of cigarettes. He is being sought by law enforcement.
  • Tecate Logistics LLC, one of Chavez’s companies allegedly used in the fraudulent trade activity. The company operates as a small contract trucking and hauling service.
  • International Trade Consultants LLC, one of Chavez’s companies allegedly linked to the criminal activity.

During the investigations, law enforcement uncovered shipments of produce linked to the defendants that were infected by salmonella, a potentially life-threatening bacterium. In at least one of those shipments, several defendants acted to evade future inspection by the U.S. Food and Drug Administration of prickly pear cactus they were importing. They also allegedly conspired to mislabel Mexican snack foods that contained a prohibited dye.

Investigators say in addition to depriving the United States of the customs duties owed on the diverted shipments, the defendants also harmed lawful domestic businesses. By exploiting the in-bond process, the defendants imported duty-free goods, which were sold at cheaper prices, undercutting American manufacturers and hindering the U.S. economy.

4 Arrested, Indicted in Oregon for Drug Trafficking

Officials released details Friday, May 18 of a federal grand jury indictment stemming
from a probe led by U.S. Immigration and Customs Enforcement’s (ICE) Homeland
Security Investigations (HSI) that charges four defendants for crimes surrounding the manufacture and distribution of synthetic drugs sold under the brand name “K2.”

Lead defendant Alexander Dimov, 33, of Molokai, Hawaii, and Ryan A. Scott, 31, of Vancouver, Wash., were arrested Tuesday, May 15, by Portland-based HSI special agents. Special agents seized hundreds of pounds of dried plant materials, packaging equipment
and chemicals from Scott’s residence.

Dimov and Scott, along with two other co-defendants, are charged with conspiring to
manufacture and distribute synthetic cannabinoid controlled substances, various synthetic cannabinoid analogues and the synthetic cathinones. These synthetic compounds are commonly known as synthetic marijuana, “spice,” and by the defendants’ brand name “K2.”

HSI and Internal Revenue Service (IRS) special agents, with financial analysts from the Organized Crime and Drug Enforcement Task Force, have been investigating the group since early 2011. According to the indictment, the four conspirators mixed chemical compounds together with herb extracts and marketed the “K2” products as incense. Additionally, it is alleged they used the Internet to market and distribute “K2” and purchased dozens of domain names, including “k2drugs.com” and “k2incense.org” to monopolize the K2 market.

“With these arrests, HSI has halted a multi-million dollar business that we believe was a threat to public health and safety,” said Brad Bench, acting special agent in charge of HSI Seattle. “The public should be aware that these synthetic drugs are just as dangerous, and now just as illegal, as similar controlled substances.”

The group is also charged with illegal importation, smuggling, distributing misbranded drugs and money laundering.

“Individuals who manufacture and distribute synthetic drugs in an attempt to get around the law are not fooling law enforcement,” said Kenneth J. Hines, the IRS special agent in charge of the Pacific Northwest. “Illegal drugs are illegal drugs, plain and simple. We will continue to work with our law enforcement partners to stop the flow of drugs that harm our communities.”

Dimov, a Bulgarian national currently in overstay status, appeared in federal court in
Honolulu and was detained for transport to Oregon. Scott was arraigned in Oregon
Wednesday where he pleaded not guilty and was released on conditions pending trial. Trial is set for July 10 at the Portland federal courthouse.

The conspiracy charge carries a maximum sentence of 20 years in prison and a $1
million fine. An indictment is only an accusation of a crime, and a defendant should be presumed innocent unless and until proven guilty.

In March 2011, the U.S. Drug Enforcement Administration (DEA) exercised its emergency scheduling authority to control five chemicals (JWH-018, JWH-073, JWH-200, CP-47,497, and cannabicyclohexanol). The DEA administrator exercised the emergency scheduling powers based on a finding that the placement of these synthetic cannabinoids into Schedule I of the Controlled Substances Act was necessary to avoid an imminent hazard to the public safety. Schedule I is the most restrictive category under the Controlled Substances Act and is reserved for those substances with a high potential for abuse, no accepted medical use for treatment in the United States and a lack of accepted safety for use of the drug under medical supervision.

The case is being prosecuted the U.S. Attorney’s Office for the District of Oregon.