MIL Security Engine-1

Source: United States Department of Justice Criminal Division

A California man who co-founded and served as board member of a company formerly known as Aspiration Partners, Inc. — a financial technology and sustainability services company — was charged today by criminal information and agreed to plead guilty to defrauding multiple investors and lenders.

“For years, Joseph Sanberg used his position at Aspiration to deceive investors and lenders for his own benefit, causing his victims over $248 million in losses,” said Acting Assistant Attorney General Matthew R. Galeotti of the Justice Department’s Criminal Division. “The Criminal Division is committed to pursuing, charging, and convicting fraudsters like Sanberg, who cause significant harm to their victims and undermine our financial institutions.”

“This so-called ‘anti-poverty’ activist has admitted to being nothing more than a self-serving fraudster, by seeking to enrich himself by defrauding lenders and investors out of hundreds of millions of dollars,” said Acting U.S. Attorney Bill Essayli for the Central District of California. “I commend our law enforcement partners for their efforts in this case, and I urge the investing public to use caution and beware of wolves in sheep’s clothing.”

“This is a case about greed and abuse of trust,” said Assistant Director Jose A. Perez of the FBI Criminal Investigative Division. “Today’s guilty plea is a direct result of the commitment by the FBI and our law enforcement partners to hold those accountable who set out to defraud victims and undermine our financial system. The FBI will continue to work with our partners to ensure this kind of malicious behavior is investigated and stopped.”

“The defendant didn’t just bend the truth, he built a business on a lie to boost the company’s value and line his own pockets,” said Inspector in Charge Eric Shen of the United States Postal Inspection Service (USPIS) Criminal Investigations Group. “The Postal Inspection Service will go after this kind of calculated deception. No matter who you are, you will be brought to justice.”

According to court documents, beginning in 2020 and continuing into 2025, Joseph Neal Sanberg, 46, of Orange, California, devised a scheme to use his role as a co-founder and board member of Aspiration as well as his shares of company stock to defraud various lenders and investors. Between 2020 and 2021, Sanberg and Ibrahim AlHusseini, both members of Aspiration’s board of directors, fraudulently obtained $145 million in loans from two lenders by pledging shares of Sanberg’s Aspiration stock. Sanberg and AlHusseini also falsified AlHusseini’s bank and brokerage statements to fraudulently inflate AlHusseini’s assets by tens of millions of dollars to secure the loans. Beginning in 2021, Sanberg also defrauded Aspiration’s investors by concealing that he was the source of certain revenue recognized by the company.

Court documents also state that Sanberg personally recruited companies and individuals to sign letters of intent with Aspiration in which they committed to pay tens of thousands of dollars per month for tree planting services. Sanberg used legal entities under his control to conceal that these payments came from Sanberg rather than from the customers. Sanberg instructed Aspiration employees not to contact the customers that he had recruited in order to conceal his scheme.

Aspiration booked revenue from these customers between March 2021 and November 2022, but Sanberg did not disclose that he was the source of the payments. As a result, Aspiration’s financial statements were inaccurate and reflected much higher revenue than the company in fact received. Sanberg continued to solicit investors to invest in Aspiration securities into 2025.

According to the documents, Sanberg also defrauded other lenders and investors with fraudulent materials describing Aspiration’s financial condition, including a fabricated letter from Aspiration’s audit committee that falsely stated that Aspiration had $250 million in available cash and equivalents at a time that Aspiration had less than $1 million in available cash. Sanberg used these fraudulent financial materials to obtain millions of dollars in additional loans and investments in Aspiration securities. Sanberg’s victims sustained more than $248 million in losses.

Sanberg has agreed to plead guilty to two counts of wire fraud and faces a maximum penalty of 20 years in prison per count. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

USPIS and the FBI are investigating the case.

Trial Attorneys Theodore Kneller and Adam L.D. Stempel of the Criminal Division’s Fraud Section and Assistant U.S. Attorneys Nisha Chandran and Jenna Williams for the Central District of California are prosecuting the case.

If you believe you are a victim in this case, please contact the Fraud Section’s Victim Witness Unit toll-free at (888) 549-3945 or by email at victimassistance.fraud@usdoj.gov. To learn more about victims’ rights, please visit www.justice.gov/criminal/criminal-vns/victim-rights-derechos-de-las-v-ctimas.
 

Source: United States Department of Justice Criminal Division

Thank you, Amanda, for that introduction, and thank you to the American Innovation Project for hosting this conference.

Let me start with a quick note about the critical work my Division is responsible for every day: enforcing criminal laws and vindicating victims’ rights in a wide variety of areas – from narcotics trafficking and violent crime to child exploitation to hacking to financial fraud and money laundering.

And, I know this is of particular interest to this audience: we are also focused on rooting out bad actors from the digital asset ecosystem. We’re doing that so responsible innovators can build and users can act with confidence to take advantage of the opportunities presented by these new technologies.

The digital asset industry plays an increasingly critical role in innovation and economic development in the United States. As digital assets become more commonplace, providing a safe environment for well-intentioned innovators and digital asset holders is central to our economic and national security.

That’s why our Deputy Attorney General, Todd Blanche, has asked me to come here to speak with you about the Justice Department’s focus on even-handed enforcement of the law that allows good actors in the digital asset industry to continue to flourish, while also ensuring bad actors who misuse this technology are held responsible. It is our job as law enforcement officers to provide fair notice and clarity around our enforcement policies. That is what I am here to do today.

In April, the Deputy Attorney General, more commonly known as “the DAG,” issued a Memorandum to the Department’s prosecutors around the country, including those in my Division, which makes plain that the Justice Department’s role is to enforce criminal laws. We are prosecutors, not regulators and not legislators. 

Our job, as prosecutors, is to follow the evidence, apply the appropriate legal framework, and seek justice.

As prosecutors, we are also governed by the Constitution, and, in particular, the right of due process. Criminal laws must give fair notice of what is illegal. As the Supreme Court has held, when the government prosecutes someone under a criminal law, “a defendant generally must know the facts that make his conduct fit the definition of the offense….”[1]

The Deputy Attorney General’s Memorandum re-commits the Department to these bedrock principles. The Department will not use federal criminal statutes to fashion a new regulatory regime over the digital assets industry. The Department will not use indictments as a lawmaking tool. The Department should not leave innovators guessing as to what could lead to criminal prosecution.

We know that the industry continues to seek clarity from the Department on its policies. We have received letters and presentations from defense counsel that raise concerns about holding developers of smart contracts criminally liable for operating unlicensed “money transmitting” businesses. We’ve heard arguments against imposing criminal liability on those who publish code and are not otherwise involved in peer-to-peer transactions.

These are complex questions of law and fact, and the Criminal Division will continue to rigorously evaluate each case to make sure that our actions are consistent with the letter and spirit of the Deputy Attorney General’s Guidance, which I’ve also incorporated into my own Guidance to Criminal Division prosecutors.

Our view is that merely writing code, without ill-intent, is not a crime. Innovating new ways for the economy to store and transmit value and create wealth, without ill-intent, is not a crime.

The Criminal Division will, however, continue to prosecute those who knowingly commit crimes — or who aid and abet the commission of crimes — including fraud, money laundering, and sanctions evasion. When bad actors exploit new technologies, it undermines public trust in those technologies and stifles innovation. 

And to be clear, to be guilty of aiding and abetting a crime, one has to intend to aid the commission of an underlying crime. It requires specific intent. So does conspiracy. Therefore, if a developer merely contributes code to an open-source project, without the specific intent to assist criminal conduct, aid or abet a crime, or join a criminal conspiracy, he or she is not criminally liable.

When it comes to criminal prosecution, involvement in the digital asset ecosystem should not and will not subject individuals to a different level of scrutiny. It also does not provide someone with any more or any less protection from money laundering, sanctions evasion, and other criminal offenses. Criminals will be prosecuted, whether their tools are old or new. However, these tools must not be misused to target the lawful activities of law-abiding citizens. The law is technology neutral.

So, under the Attorney General’s and the Deputy Attorney General’s leadership, as the DAG’s memo states, the Department is simplifying things to hold bad actors accountable while avoiding the prosecution of unwitting regulatory violations.

Let me get a bit more concrete — in particular with respect to the Department’s use of 18 U.S.C. § 1960, the statute that prohibits unlicensed money transmission. Here are the key points on that topic:

As the DAG’s memo makes clear, the Justice Department will not charge regulatory violations in cases involving digital assets — like unlicensed money transmitting under 1960(b)(1)(A) or (B) — in the absence of evidence that a defendant knew of the specific legal requirement and willfully violated it.

We may, under certain circumstances, bring cases under Section 1960(b)(1)(C), which prohibits the transmission of funds that the defendant knows are derived from a criminal offense, or are intended to be used to support unlawful activity. However, going forward, consistent with principles of notice and fairness, let me make the following clear:

Many developers have relied on regulatory guidance to suggest that non-custodial cryptocurrency software does not constitute an unlicensed money transmitting business. While that guidance may not be binding on the Department, its implications can of course factor into prosecutors’ charging decisions. Therefore, where the evidence shows that software is truly decentralized and solely automates peer-to-peer transactions, and where a third party does not have custody and control over user assets, new 1960(b)(1)(C) charges against the third-party will not be approved. Though, if criminal intent is present, other charges may be appropriate. All of a subject’s conduct and the services they provide end-to-end will be considered.

Generally, developers of neutral tools, with no criminal intent, should not be held responsible for someone else’s misuse of those tools. If a third-party’s misuse violates criminal law, that third-party should be prosecuted — not the well-intentioned developer.

These principles should provide solace to good actors and should be cold comfort for bad actors. Plenty of innovators want to responsibly and lawfully create value. But those with criminal intent may be liable for money laundering or potentially the underlying unlawful activity, sanctions violations, or other applicable laws.

Our job as prosecutors is to root out bad actors from markets — including the cryptocurrency markets. Embezzlement and misappropriation of customers’ funds on exchanges; digital asset investment fraud scams; hacking activity; and exploitation of vulnerabilities in smart contracts have no place in fair markets. They undermine efforts to innovate and they keep the digital assets industry from reaching its full potential.

That is our focus, and we continue to take that work seriously across the Criminal Division.

By way of example, we have recently announced:

The prosecution of multiple members of a China-based money laundering syndicate being run out of the Los Angeles area that laundered millions of dollars belonging to innocent victims who fell prey to cryptocurrency investment scams.

The filing of a civil forfeiture complaint against $225 million linked to cryptocurrency investment fraud and money laundering schemes.

The prosecution of a defendant for a Ponzi scheme that falsely promised investors sky-high profits from investments in cryptocurrency markets purportedly using trading robots powered by AI.

It is good to have this discussion with you at the American Innovation Project. The digital assets industry has a critical role to play in this fight to protect the digital assets ecosystem from bad actors who would exploit consumers, and enrich themselves through theft, scams, or other attacks.

The organizers of this conference have told me that no one is more committed to rooting out bad actors than the software developers, users, and others in the audience – but that well-intentioned innovators should not fear for their liberty. That’s common sense on both fronts.

Thank you for your time.

Source: United States Department of Justice Criminal Division

Yesterday, on Aug. 20, a federal jury convicted Jinchao Wei, also known as Patrick Wei, of espionage and export violations. Wei was an active-duty U.S. Navy sailor stationed at Naval Base San Diego when he agreed to sell Navy secrets to a Chinese intelligence officer for $12,000.

Following a five-day trial and one day of deliberation, the jury convicted Wei of six counts, including conspiracy to commit espionage, espionage, and unlawful export of, and conspiracy to export, technical data related to defense articles in violation of the Arms Export Control Act and the International Traffic in Arms Regulations. Wei is scheduled to be sentenced on Dec. 1.

“The defendant, who took an oath to protect our Nation and was entrusted with a security clearance as a petty officer in the United States Navy, sold out his country for $12,000,” said Assistant Attorney General for National Security John A. Eisenberg. “He violated his oath, betrayed his uniform and fellow sailors, and turned his back on his adopted nation for money. This verdict serves as a warning to those who do not take seriously the solemn obligations of their positions of trust or their duty to this Nation. Do not be tempted by easy money because you will be prosecuted and sent to prison.”

“The defendant’s actions represent an egregious betrayal of the trust placed in him as a member of the U.S. military,” said U.S. Attorney Adam Gordon for the Southern District of California. “By trading military secrets to the People’s Republic of China for cash, he jeopardized not only the lives of his fellow sailors but also the security of the entire nation and our allies. The jury’s verdict serves as a crucial reminder that the Department of Justice will vigorously prosecute traitors.”

“Jinchao Wei swore oaths to become a U.S. Navy sailor and a U.S. citizen. He then committed espionage by sending photographs and videos of U.S. Navy vessels, ship movement information, technical manuals, and weapons capabilities to a Chinese intelligence officer,” said Assistant Director Roman Rozhavsky of the FBI’s Counterintelligence Division. “China continues to aggressively target U.S. military members with and without clearances. This guilty verdict shows the FBI and our partners will aggressively investigate and hold accountable anyone who threatens U.S. national security. We encourage past and present U.S. government personnel to beware of anyone offering to pay for their information or opinions and to report any suspicious contacts to the FBI.”

According to evidence presented at trial, Wei was a machinist’s mate for the amphibious assault ship U.S.S. Essex. He also held a U.S. security clearance and had access to sensitive national defense information about the ship’s various systems.

The evidence introduced at trial showed that Wei was approached in February 2022 via social media by someone who claimed to be a naval enthusiast. The individual was in reality a Chinese intelligence officer. Between February 2022 and his arrest in August 2023, as their relationship developed, Wei, at the request of the officer, sent extensive information about the Essex, including photographs, videos, and about its weapons. He also sent detailed information about other U.S. Navy ships that he took from restricted U.S. Navy computer systems. In exchange for this information, the intelligence officer paid Wei more than $12,000 over 18 months.

During the trial, the government presented evidence including conversations and other messages that Wei exchanged with his Chinese handler. These communications showed the efforts they made to cover their tracks, the tasks issued by his handler, and how Wei was paid for his work.

In addition to the two espionage charges, Wei was convicted of four counts of conspiring to violate and violating the Arms Export Control Act. That law prohibits individuals from willfully exporting technical data related to a defense article without a license from the Department of State. The government presented evidence that Wei conspired with his Chinese handler to export certain technical information which required a license for export.

The FBI and NCIS investigated the case, with valuable assistance from the U.S. Department of State and Transportation Security Administration.

Assistant U.S. Attorney John Parmley for the Southern District of California and Trial Attorney Adam Barry of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the case.

Source: United States Department of Justice Criminal Division

An Illinois doctor was sentenced today to 34 months in prison for committing health care fraud and for hiding assets and lying to the IRS about his ability to pay approximately $1.6 million in taxes, penalties, and interest.

The following is according to court documents and statements made in court: from approximately 2011 to 2017, Krishnaswami Sriram, of Lake Forest, Illinois, evaded payment of approximately $1.6 million he owed to the IRS. Among other evasive steps, Sriram transferred ownership, in name only, of two rental properties to his children without their knowledge while he continued to receive income from the properties. He also transferred approximately $700,000 from bank accounts he controlled in the United States to accounts in India. To fraudulently reduce the money he owed, Sriram submitted documents to the IRS as part of an offer-in-compromise that omitted an investment account in the United States, bank and investment accounts in India, and ownership of the rental properties. In total, Sriram caused a tax loss to the IRS of approximately $1.6 million.

Between 2012 and 2022, Sriram also caused false Medicare billings to be submitted for episodes of in-home physician care that did not occur. Specifically, Sriram claimed to provide care for Medicare beneficiaries on dates when those individuals were either deceased or resided at inpatient facilities other than their homes. Sriram’s false statements in medical records relating to these episodes of care resulted in $136,980.36 in false billings to Medicare.

In addition to his prison sentence, the court ordered Sriram to serve three years of supervised release and to pay approximately $1.7 million in restitution to the United States.

IRS Criminal Investigation investigated the case.

Assistant U.S. Attorney Sara E. Henderson for the Northern District of California prosecuted the case with assistance from former Trial Attorney Victor Yanz of the Criminal Division’s Fraud Section. 

Source: United States Department of Justice Criminal Division

Troy Health, Inc. (Troy), a North Carolina-based provider of Medicare Advantage, Medicare Part D, and Dual Eligible Special Needs Plans, has entered into a non-prosecution agreement with the Department of Justice to resolve a criminal investigation into a health care fraud and identity theft scheme involving the use of artificial intelligence and automation software to illegally obtain Medicare beneficiary information and fraudulently enroll beneficiaries into its Medicare Advantage plans.

“Troy told low-income Medicare beneficiaries that it would use new technologies, including its proprietary artificial intelligence platform, to improve patient health outcomes,” said Acting Assistant Attorney General Matthew Galeotti of the Justice Department’s Criminal Division. “Instead, the company misused patient data to enroll beneficiaries in its Medicare Advantage plan without their consent. Today’s resolution reflects the Criminal Division’s emerging focus on corporate enforcement in the health care space and holding both individuals and companies accountable when they defraud our medical system to enrich themselves at the expense of the American taxpayer.”

“Health care providers that fraudulently enroll individuals in Medicare Advantage plans just to boost company profits undermine the integrity of the Medicare program and the well-being of Medicare enrollees,” said Special Agent in  Charge Kelly J. Blackmon with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG). “Alongside  our law enforcement partners, HHS OIG will continue to protect the American public and ensure that the personal health information of Medicare beneficiaries remains secured.”

As part of the non-prosecution agreement, Troy admitted that, from approximately October 2020 through the end of 2022, Troy defrauded the Medicare program by enrolling beneficiaries in Troy’s Medicare Advantage plans without their knowledge or consent. Under a Troy executive’s direction, some of Troy’s Territory Managers used proprietary software developed by one of Troy’s executives to unlawfully access pharmacy records and customer lists containing sensitive personal information, including beneficiaries’ names, addresses, dates of birth, Medicare ID numbers, and insurance information. Troy used that information to make unsolicited sales calls to potential beneficiaries. During those sales calls, Troy’s sales personnel provided false and misleading information to Medicare beneficiaries. For example, Troy’s sales personnel told prospective enrollees that they were calling on behalf of the beneficiaries’ pharmacies and representing to beneficiaries that Troy’s Medicare Advantage plan was being offered as a supplement to their existing health care plans rather than as a new plan.

Troy also used an artificial intelligence-based health care management platform it developed and made available to participating pharmacies, known as Troy.ai, as part of the scheme.  As described by the company, Troy marketed Troy.ai as a product that would leverage data and machine learning to lower the cost of care and improve health outcomes. As part of its effort to obtain new enrollments, however, Troy misused the platform by offering pharmacies kickbacks for enrollment referrals submitted through Troy.ai.

Troy also admitted that it used information obtained from the customer lists to enroll beneficiaries in Troy’s Medicare Advantage plan without their consent. At the height of the scheme, during the Medicare Advantage open enrollment period between Jan. 1, 2022 and March 31, 2022, Troy enrolled over 2,700 new Medicare Advantage members, many through automatic or batch enrollments. For example, on March 2, 2022, Troy enrolled over 300 beneficiaries on one day, with the enrollments occurring approximately one minute apart. In addition, some Troy employees manually entered fraudulent enrollments through the Centers for Medicare and Medicaid Services (CMS) website. This conduct followed a Troy executive’s announcement at a 2021 board meeting of an “aggressive but achievable” plan to triple Troy’s enrollment during the 2022 open enrollment period.

As part of the non-prosecution agreement, Troy admitted to and accepted responsibility for the acts of its officers, directors, employees, and agents in connection with the scheme. Troy has also agreed to continue cooperating with the Department in any ongoing or future criminal investigation relating to this conduct. As part of this agreement, Troy agreed to pay a criminal penalty of $1,430,008. This penalty has been adjusted based on Troy’s ability to pay.

The Department reached this resolution with Troy based on several factors, including Troy’s efforts to provide all relevant facts known to it, acceptance of responsibility for criminal conduct, extensive and timely remedial measures taken, commitment to continuing enhancement of compliance and internal control programs, absence of prior criminal history or regulatory actions, commitment to cooperation with federal agencies in any ongoing investigations, and the nature and seriousness of the offense. Troy did not receive voluntary self-disclosure credit, but did receive credit for its cooperation with the Department’s investigation and affirmative acceptance of responsibility, which included (i) self-reporting its 2022 batch member enrollment issue to CMS before it had come to the attention of the Department; (ii) providing timely updates on facts learned during its internal investigation; (iii) providing all relevant facts known to it, including information about individuals involved in the conduct. However, and particularly during the early phase of the Department’s investigation, Troy failed to preserve and produce certain documents and evidence in a timely manner and, at times, took actions that were inconsistent with full cooperation.

The FBI and HHS-OIG are investigating the case.

Trial Attorney Clayton P. Solomon of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Katherine Armstrong for the Western District of North Carolina are prosecuting the case.

The Criminal Division’s Fraud Section is responsible for investigating and prosecuting health care fraud (HCF) matters. Additional information about the Justice Department’s HCF enforcement efforts can be found at https://www.justice.gov/criminal/criminal-fraud/health-care-fraud-unit.