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CEO of CardReady LLC Sentenced to Seven Years in Prison for $19 Million Credit Card Laundering Scheme

Source: US FBI

Defendant Created Phony Merchant Accounts to Obtain Credit Card Processing for Fraudulent Telemarketing Scheme

Matthew Podolsky, the Acting United States Attorney for the Southern District of New York, announced that BRANDON BECKER, the former CEO of CardReady, LLC (“CardReady”), was sentenced today to seven years in prison for operating a credit card laundering scheme in which BECKER and his co-conspirators stole over $19 million based on false promises that they could reduce thousands of customers’ debt burdens. As part of this scheme, BECKER and his co-conspirators created dozens of sham merchant accounts and false merchant applications, defrauding a credit card processing company and federally insured bank into processing victim payments. BECKER previously pled guilty before U.S. District Judge Loretta A. Preska, who also imposed today’s sentence.

Acting U.S. Attorney Matthew Podolsky said: “Over a two-year period, Brandon Becker and his co-conspirators preyed on nearly 20,000 victims who were trying to reduce their debt burdens. Becker tasked co-conspirators at CardReady to recruit straw owners for shell companies, and deceived credit card payment processors into fraudulently processing more than $19 million in stolen funds. With today’s sentence, Becker faces the consequences of this massive fraud, sending the clear message that corporate executives who facilitate fraud will be held accountable for their crimes.”

According to the Superseding Indictment, court filings, and statements made in Court:

BECKER was the CEO of CardReady, a Los-Angeles based company acting as a sales agent in the credit card processing industry.  As part of its business as a sales agent, CardReady found merchants who wanted credit card processing services, and submitted merchant applications on behalf of those merchants to an Independent Sales Organization (“ISO”), referred to in the Indictment as the “New York ISO.”  The New York ISO then evaluated the merchant applications, and referred acceptable merchant accounts for processing up the chain to Payment Processor-1 and to Bank-1.  Bank-1 and Payment Processor-1, in turn, processed payments to merchants for purchases by customers who had used credit cards.

In or about 2012, BECKER negotiated a deal with co-defendant STEVEN SHORT, the former head of Florida-based E.M. Systems & Services LLC and affiliated companies (collectively, “E.M. Systems”).  Under this deal, CardReady would retain approximately one-third of E.M. Systems’ credit card sale transactions in exchange for providing E.M. Systems access to the credit card processing network.  For roughly the next two years, SHORT and telemarketers working in boiler rooms for E.M. Systems cold-called customers and offered services, including debt consolidation and interest-rate reduction, which were prohibited by the applicable guidelines from Bank-1 and other associated processing entities (the “Guidelines”), and which – as BECKER knew – would produce chargebacks from dissatisfied customers far in excess of the number and rate of chargebacks permitted under the Guidelines.

In securing payment card processing for E.M. Systems, BECKER concealed that E.M. Systems was the true underlying merchant.  Instead, BECKER and his subordinates and co-conspirators, created approximately 26 sham merchant companies, each headed by a “signer” (the “Sham Merchants” and the “Sham Merchant Accounts”).  The 26 signers for the 26 Sham Merchants typically had no business of their own, and lacked knowledge of E.M. Systems’ business.  In return for signing the paperwork provided to them, the signers were paid a nominal fee from CardReady. 

BECKER and his co-conspirators prepared and coordinated fraudulent merchant applications for each of the Sham Merchants, through merchant applications that falsely described the Sham Merchants to make them look like legitimate independent businesses and to make it more likely that the associated Sham Merchant Account would be approved for processing by the New York ISO, Payment Processor-1, and Bank-1.  The merchant application for each Sham Merchant also concealed the Sham Merchant’s true association with E.M. Systems.

By steering E.M. Systems’s payment processing through these Sham Merchant Accounts, BECKER accomplished a number of fraudulent purposes.  First, the use of these Sham Merchant Accounts made it possible for E.M. Systems and other high-risk merchants to conceal their identities from Payment Processor-1 and Bank-1 and to maintain payment card processing.  This was particularly relevant, as Payment Processor-1 repeatedly required CardReady to close individual Sham Merchant Accounts because of excessive chargebacks and reports of sales of prohibited services.  BECKER then caused CardReady to quickly replace the closed Sham Merchant Accounts with new Sham Merchant Accounts, precluding Payment Processor-1 from shutting down its processing of E.M. Systems and other high-risk merchants.  Second, the fraudulent processing scheme enabled E.M. Systems and other high-risk merchants to spread out their charges, refunds, and chargebacks across multiple Sham Merchant Accounts.  This enabled them to evade chargeback monitoring programs operated by Bank-1, Payment Processor-1, and the New York ISO.

BECKER’s use of signers to deceive payment processors was not limited to the E.M. Systems scheme. BECKER and his agents and employees at CardReady systematized the recruitment of over 270 signers and the creation of over 800 Sham Merchant Accounts to be used by more than 30 high risk clients other than E.M. Systems between approximately 2012 and 2016, both before and after the E.M. Systems scheme.

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BECKER, 53, of Los Angeles, California, pled guilty on August 30, 2024, to one count of conspiracy to commit wire fraud and bank fraud.  In addition to the prison sentence, BECKER was sentenced to three years of supervised release and ordered to pay restitution in the amount of $1,910,600.05, and forfeiture of $11,405,964.00.

STEVEN SHORT, 48, of Tampa, Florida, pled guilty on August 16, 2022, to one count of conspiracy to commit wire fraud and bank fraud.  On May 2, 2023, SHORT was sentenced to 78 months in prison and three years of supervised release and ordered to pay restitution in the amount of $1,910,600.05 and forfeiture of $8,833,889.69.

Mr. Podolsky praised the work of the Federal Bureau of Investigation and thanked the Federal Trade Commission for its assistance.

This case is being handled by the Office’s Complex Frauds and Cybercrime Unit.  Assistant U.S. Attorneys Vladislav Vainberg and Timothy Capozzi are in charge of the prosecution.

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Federal Prisoner Sentenced to 45 Years in Prison for Second-Degree Murder

Source: US FBI

TUCSON, Ariz. – Romeo Santino Giovanni, 46, was sentenced last week by Senior U.S. District Judge James A. Soto to 45 years in prison, followed by five years of supervised release. Giovanni pleaded guilty to Second Degree Murder on May 23, 2024.

On July 5, 2016, Giovanni, who was then a federal prisoner at a United States Penitentiary, used a cloth makeshift clothesline to strangle his cellmate to death. Giovanni left pieces of paper on his cellmate’s body, including one that read “lights out.”

The Federal Bureau of Investigation conducted the investigation in this case. Assistant U.S. Attorney Matthew C. Cassell, District of Arizona, Tucson, handled the prosecution.

CASE NUMBER:           CR-17-1428-TUC-JAS
RELEASE NUMBER:    2024-143_Giovanni

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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on X @USAO_AZ for the latest news.

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Four Leaders of Notorious Nuestra Familia Prison Gang Convicted of Racketeering and Related Crimes

Source: US FBI

Trial Evidence Established Defendants Furthered the Aims of the Gang from Prison By Directing Other Members and Associates to Perform Numerous Criminal Acts Including Drug Dealing and Murder

OAKLAND – A federal jury found David Cervantes (aka “DC”), James Perez (aka “Conejo”), Guillermo Solorio (aka “Capone” aka “Caps”), and George Franco (aka “Puppet”) guilty of racketeering, for their roles as senior members of the Nuestra Familia criminal enterprise, which engaged in murder conspiracies, attempted murder, drug distribution, and money laundering. The jury’s verdict follows a 12-week trial before the Hon. Yvonne Gonzalez Rogers, U.S. District Judge.    

“Prison gangs are a blight on the criminal justice system and on society,” said Martha Boersch, Chief of the Office of the U.S. Attorney’s Criminal Division. Prisons are supposed to protect the community from further crime and offer people the chance for rehabilitation, but prison gangs frustrate both goals. They perpetuate violence and criminality inside prisons, and through the use of contraband cell phones, gang leaders are able to oversee vast criminal networks on the streets. Successful prosecutions like this send an unmistakable message that this will not be tolerated simply because it’s happening behind prison walls.”  

“These convictions are the culmination of eight years of complex investigative work by the FBI-led Santa Clara County Safe Streets Task Force. Through tireless investigative efforts and collaboration with our law enforcement partners, we have dismantled a core part of this criminal enterprise, whose illicit drug distribution and violent crime have long plagued our community,” said FBI Special Agent in Charge Robert Tripp. “The FBI remains committed to ensuring that those who lead and engage in such violence, no matter where they operate, are brought to justice.”

The evidence at trial established that the four defendants—Cervantes, 76; Perez, 70; Solorio, 45; and Franco, 59 – all were senior members of the Nuestra Familia (NF) prison gang, all serving on the General Council, the primary decision-making body for the gang.  Through the testimony of more than 50 witnesses and dozens of wiretapped phone calls, the trial evidence revealed a lucrative and violent criminal enterprise with a presence in every Bay Area county and the roles that each defendant played in it.  

The trial evidence established that Cervantes was one of the NF’s three “Generals.” As outlined in the Nuestra Familia’s written Constitution, the three generals sat atop the NF organizational structure and made final decisions on serious matters involving governance of the enterprise.  As the sole member of the General Advocates Office, Cervantes oversaw member discipline—a role that at times included deciding when members should be attacked or killed for violating gang rules.  Further, the trial evidence established that Cervantes was responsible for (1) receiving “complaints” containing allegations of member wrongdoing within the NF, (2) appointing investigators to look into alleged wrongdoing of gang members, (3) accepting and modifying “findings and recommendations” of the investigators, and (4) forwarding final recommendations regarding member discipline to a seven-member General Council. Cervantes also was the “Regimental Commander” of the NF street gangs in Kings County.  As Regimental Commander, Cervantes was responsible for overseeing, managing, directing, and otherwise controlling criminal activity conducted by Norteño street gang members in Kings County.  In addition to convicting Cervantes of Racketeering Conspiracy, the jury found Cervantes responsible for the conspiracies to murder Lorenzo “Lencho” Guzman in 2015 and John “Shanks” Reyna in 2019, as well as the attempted murders of Antonio “Sombras” Villagrana in 2015, John “Knockers” Muzquiz in 2016, and Matt Rocha in 2019.  

The trial evidence demonstrated Perez was another General of the prison gang, specifically, the “General of Prisons.” In this role, Perez was responsible for maintaining authority over all NF regiments within the California prison system. His responsibilities included appointing NF members and associates to leadership positions within California Department of Corrections and Rehabilitation (CDCR) facilities, as well as overseeing and regulating criminal activity occurring in these facilities. In his role as General of Prisons, Perez collected a portion of profits from the prison regiments.  He also was the Regimental Commander of the San Mateo County Street Regiment.  In addition to convicting Perez of Racketeering Conspiracy, the jury found Perez responsible for the conspiracy to murder Lorenzo “Lencho” Guzman, as well as the attempted murders of Antonio “Sombras” Villagrana, John “Knockers” Muzquiz, and Matt Rocha.  

At trial, the evidence established that Franco was a member of the NF’s “Inner Council” and was Regimental Commander of San Joaquin County.  As a member of the Inner Council, Franco was an advisor to the three NF Generals (two of whom were Cervantes and Perez) and was part of the General Council that, in addition to member discipline, made other significant decisions in conducting the affairs of the NF.  In addition to convicting Franco of Racketeering Conspiracy, the jury found Franco responsible for the conspiracy to murder Lorenzo “Lencho” Guzman, as well as the attempted murder of Matt Rocha.  

Solorio also was part of the NF “Inner Council” and was an advisor to the NF Generals.  Solorio also was the Regimental Commander over the Monterey County Street Regiment.  The evidence at trial demonstrated Solorio oversaw a prolific drug trafficking operation in Fresno, Calif.  In addition to convicting Solorio of Racketeering Conspiracy, the jury found Solorio responsible for the attempted murder of Matt Rocha.  

In sum, all four defendants were found guilty of racketeering conspiracy, in violation of 18 U.S.C. § 1962, along with various special findings pertaining to the acts involving murder described above.  The maximum statutory sentence for each defendant is life in prison.  Judge Gonzalez Rogers scheduled the defendants’ sentencings for Mar. 6, 2025.

The trial of these four defendants marks the culmination of the prosecution of the NF leadership in the Northern District of California.  The prosecution stems from a five-year investigation by the FBI, which resulted in the indictment of 54 Nuestra Familia members and associates, including defendants both on the streets and in California state prisons.  With the jury’s verdict this week, the government has now obtained convictions of all 7 members of the NF’s General Council, its entire senior leadership team.  

This case is being prosecuted by Mari Overbeck, Leif Dautch, and Aseem Padukone of the Organized Crime Strike Force for the United States Attorney’s Office for the Northern District of California.  The prosecution is the result of an investigation by the FBI (San Francisco, Sacramento, and Phoenix Divisions), the DEA, the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the U.S. Marshal Service, with the assistance of the Santa Clara County Sheriff’s Office, the Santa Clara County District Attorney’s Office, and the San Jose Police Department, and with support from the Alameda County Sheriff’s Office, Antioch Police Department, Campbell Police Department, Fremont Police Department, King’s County Sheriff’s Office, Monterey County Sheriff’s Office, Mountain View Police Department, Sacramento Police Department, Salinas Police Department, Menlo Park Police Department, Santa Clara County Parole Department, Santa Clara County Probation Department, Santa Clara Police Department, Santa Cruz County District Attorney’s Office, Santa Cruz County Sheriff’s Office, Modesto Police Department, the California Department of Corrections and Rehabilitation, San Francisco Police Department, the Stanislaus County Sheriff’s Department, Sunnyvale Department of Public Safety, and the FBI’s Cryptanalysis and Racketeering Records Unit.  

This investigation and prosecution are part of the Organized Crime Drug Enforcement Task Force (OCDETF), which identifies, disrupts, and dismantles the highest-level drug traffickers, money launderers, gangs, and transnational criminal organizations that threaten the United States by using a prosecutor-led, intelligence-driven, multi-agency approach that leverages the strengths of federal, state, and local law enforcement agencies against criminal networks.  
 

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Father and Son Executives Charged with Defrauding Sports Park Bondholders

Source: US FBI

Former Chairman and CEO Raised More Than $280 Million Using Forged Documents and Fake Revenue Projections

Matthew Podolsky, the Acting United States Attorney for the Southern District of New York, and Christopher G. Raia, the Assistant Director in Charge of the New York Field Office of the Federal Bureau of Investigation (“FBI”), announced today the unsealing of an Indictment charging RANDY MILLER, former Chairman and President of Legacy Sports, and his son, CHAD MILLER, former CEO of Legacy Sports, with engaging in a scheme to defraud investors of more than $280 million in two municipal bond offerings. RANDY MILLER and CHAD MILLER were arrested today and will be presented tomorrow in the U.S. District Court for the District of Arizona. The case has been assigned to U.S. District Judge Lewis A. Kaplan. 

Acting U.S. Attorney Matthew Podolsky said: “As alleged, Randy Miller and Chad Miller swindled investors out of over a quarter of a billion dollars by selling municipal bonds they knew were backed by forgeries and lies. Municipal bonds fund critical public projects and investors rely on accurate financial disclosures to make informed decisions. This Office is committed to protecting the integrity of the public finance system. When individuals abuse that system and investors’ trust, we will hold them accountable.”

FBI Assistant Director in Charge Christopher G. Raia said: “Fathers and sons have found shared bonds in sports for generation. Randy and Chad Miller allegedly chose to use a planned sports complex as a means to exploit and defraud investors.  The Millers allegedly executed the scheme using fraudulent documents to lie about the status of the proposed project in order to raise hundreds of millions of dollars which they used to enrich themselves.  The FBI will continue to ensure a level playing field by holding fraudsters accountable in the criminal justice system.”

According to the allegations contained in the Indictment:[1]

From November 2019 through May 2023, RANDY MILLER and CHAD MILLER engaged in a scheme to defraud investors in municipal bonds used to fund the development of a major sports complex in Mesa, Arizona called Legacy Park. The defendants worked together and with others to lie to potential bond investors about the interest sports organizations and other potential customers had in using or relocating to Legacy Park. The defendants and their associates forged and altered purported “binding” letters of intent and other documents from those potential customers to make it appear that the customers were committing to holding many events at Legacy Park, with a significant number of spectators, and agreeing to pay large fees – all far beyond what the organizations were considering, if they were considering Legacy Park at all. In some instances, RANDY MILLER and CHAD MILLER signed and directed others to sign customers’ names without the customers’ knowledge or permission. At other times the defendants copied and directed others to copy the signatures of other customers onto the fabricated letters, again without the customers’ knowledge or permission. As part of their scheme, the defendants forged documents on behalf of numerous persons and organizations, including an organization that promotes sports for disabled athletes.

RANDY MILLER and CHAD MILLER presented the fraudulent documents to prospective bond investors and incorporated them into their solicitation materials by claiming that Legacy Park would be 100% occupied at opening and would generate nearly $100 million in revenue in its first year of operations, more than enough to cover the bond payments. 

After the Legacy Park bonds were sold to investors, RANDY MILLER and CHAD MILLER used some of the proceeds to pay for personal expenses such as a home and SUVs. The defendants also paid themselves inflated salaries and withdrew hundreds of thousands of dollars in addition to their salaries.

While the defendants enriched themselves, Legacy Park struggled to survive. The park opened in 2022, but within months failed to generate enough revenue to make the monthly bond payments, and by October 2022 it was in default. On May 1, 2023, the project filed for bankruptcy and was later sold for less than $26 million. Of those proceeds, less than $2.5 million went to repay the approximately $284 million owed to Legacy Park bondholders. Accordingly, because of the defendants’ fraud, bondholders were left with near total losses.

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RANDY MILLER, 70, and CHAD MILLER, 41, both of Phoenix, Arizona, were both charged in the Indictment with one count of conspiracy to commit wire fraud and securities fraud, which carries a maximum term of five years in prison; one count of securities fraud and one count of wire fraud, each of which carries a maximum term of 20 years in prison; and one count of aggravated identity theft, which carries a mandatory minimum sentence of two years in prison.

The mandatory minimum and maximum potential sentences in this case are prescribed by Congress and provided here for informational purposes only, as any sentencing of the defendants will be determined by a judge. 

Mr. Podolsky praised the outstanding work of the FBI. Mr. Podolsky also thanked the U.S. Securities and Exchange Commission, which has filed a parallel civil action. 

The case is being handled by the Office’s Securities and Commodities Fraud Task Force. Assistant U.S. Attorneys Courtney L. Heavey and Matthew R. Shahabian are in charge of the prosecution.

 

[1] As the introductory phrase signifies, the entirety of the text of the Indictment and the descriptions of the Indictment constitute only allegations, and every fact described should be treated as an allegation. 

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Jury Convicts Colorado City Men in Child Sexual Abuse Conspiracy

Source: US FBI

PHOENIX, Ariz. – Today, a federal jury in Phoenix found LaDell Jay Bistline, Jr., 45, and Torrance Bistline, 36, both of Colorado City, Arizona, guilty of multiple charges related to their participation in a years-long child sexual abuse conspiracy that spanned several states and victimized at least 10 children. The defendants committed their crimes with others, including co-defendant Samuel Rappylee Bateman, the self-proclaimed leader of a religious sect based in Colorado City. Bateman and nine of his other followers pleaded guilty to charges related to the child sexual abuse conspiracy and were not part of the trial against brothers LaDell Jay Bistline, Jr. and Torrance Bistline.

“Today’s verdict is a step towards justice for the victims of LaDell and Torrance Bistline,” said U.S. Attorney Gary Restaino. “The Bistlines used their positions of power and trust to sexually exploit children and to profane their community. The devastating trauma and harm they inflicted is unfathomable. But today’s guilty verdicts hold them to account – for their despicable acts, for their breach of trust, and for their complete indifference to the mental and psychological scars their victims will live with for the rest of their lives. The United States Attorney’s Office, along with its state and federal law enforcement partners and other agencies, will continue to work tirelessly to protect the most vulnerable from abuse and exploitation, and to help them heal.”

“Protecting children is one of the many noble missions of the FBI,” said FBI Phoenix Special Agent in Charge Jose A. Perez. “Adults who exploit children for illicit activities are a danger and a disgrace. Today’s verdicts reflect the unwavering dedication by the FBI and its partners to ensure those who prey on children are held accountable and brought to justice.”

LaDell Jay Bistline, Jr. was convicted of one count of Receipt of Child Pornography; one count of Transfer of Obscene Material to a Minor; two counts of Persuading or Coercing Travel to Engage in Sexual Activity; two counts of Using a Means of Interstate Commerce to Persuade or Coerce a Minor to Engage in Sexual Activity; and two counts of Transportation of a Minor for Criminal Sexual Activity.

Torrance Bistline was convicted of one count of Using a Means of Interstate Commerce to Persuade or Coerce a Minor to Engage in Sexual Activity; two counts of Destruction of Records in an Official Proceeding; one count of Conspiracy to Commit Destruction of Records in an Official Proceeding; one count of Tampering with an Official Proceeding; and one count of Conspiracy to Commit Tampering with an Official Proceeding.

LaDell Jay Bistline, Jr. and Torrance Bistline were followers of Bateman, who represented himself as a religious prophet. In 2020 and 2021, Bateman’s followers gave their minor daughters and wards to him as child “brides” to sexually abuse. Bateman and others transported the victims between states, including Nebraska, Colorado, Utah, and Arizona to facilitate the sexual abuse. LaDell Jay Bistline, Jr. delivered two of his own daughters to Bateman to become child “brides” when the girls were nine and 11 years old. LaDell Jay Bistline, Jr. also participated in group sexual activity involving children, including one event he watched over a video livestream. Torrance Bistline, who financially supported Bateman’s group, sexually abused one of Bateman’s child “brides” during a group sexual activity. Torrance Bistline later tried to destroy and hide evidence to interfere with the investigation.

LaDell Jay Bistline, Jr. and Torrance Bistline each face a minimum penalty of 10 years in prison and a maximum penalty of life in prison. Sentencing for LaDell Jay Bistline, Jr. is currently scheduled for December 16, 2024, and sentencing for Torrance Bistline is currently scheduled for December 20, 2024, before United States District Judge Susan M. Brnovich. Bateman is currently scheduled to be sentenced by Judge Brnovich on October 28, 2024. Several other defendants have already been sentenced, and the remaining defendants will be sentenced in the coming months.

The Phoenix Field Office of the Federal Bureau of Investigation conducted the investigation in this case. The United States Attorney’s Office, District of Arizona, Phoenix, is handling the prosecution. The United States Attorney’s Office continues to extend special gratitude to the Arizona Department of Child Safety for its work rescuing and protecting Arizona children impacted by this matter, the Colorado City Police Department, the Iron County (Utah) Sheriff’s Office, the U.S. Marshals Service, and the St. George Resident Agency of the FBI’s Salt Lake City Field Office for their assistance in this matter.

CASE NUMBER:            CR-22-8092-PHX-SMB
RELEASE NUMBER:    2024-135_Bistline

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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on X @USAO_AZ for the latest news.

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Chinle Man Sentenced to 25 Years in Prison for Kidnapping and Assault

Source: US FBI

PHOENIX, Ariz. – Jared Josh John, 32, of Chinle, was sentenced on September 11, 2024, by United States District Judge Diane J. Humetewa to 25 years in prison, followed by five years of supervised release. After a jury trial in May 2023, John was convicted of Carjacking, Kidnapping, Robbery, Assault with a Dangerous Weapon, Assault with Intent to Commit Murder, Assault with Intent to Commit a Felony, and Assault Resulting in Serious Bodily Injury.

In July 2020, the victim was passing through the Navajo Nation on a road trip when John and a co-defendant broke into his car while he was resting for the night. Led by John, the two co-defendants drove the victim into the desert, where John slit the victim’s throat three times and left him to die. The victim survived by playing dead until the defendants left, and then used his clothes to fashion a tourniquet for his neck before going to find help.

John’s co-defendant, Everickk Matthew Begay, 55, of Chinle, pleaded guilty to Kidnapping, Robbery, and Assault with Intent to Commit a Felony on March 20, 2023. Begay was sentenced on August 14, 2023, to 97 months in prison, followed by five years of supervised release.

The Federal Bureau of Investigation and the Navajo Division of Public Safety conducted the investigation in this case. Assistant U.S. Attorneys Alanna R. Kennedy and Tracy Van Buskirk, District of Arizona, Phoenix, handed the prosecution.
 

CASE NUMBER:            CR-21-08113-PCT-DJH
RELEASE NUMBER:    2024-134_Begay et al.

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For more information on the U.S. Attorney’s Office, District of Arizona, visit http://www.justice.gov/usao/az/
Follow the U.S. Attorney’s Office, District of Arizona, on X @USAO_AZ for the latest news.

2024-134_Begay et al.

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Chicago Man, Woman Charged in Fraud Scheme Targeting North Pole Business

Source: US FBI

FAIRBANKS, Alaska – A federal grand jury in Alaska returned an indictment charging a Chicago man and woman with allegedly running a scheme to defraud a North Pole restaurant of over $128,000.

According to court documents, from July to August 2022, Jacob Centeno, 39, and Amber Davila, 35, allegedly illegally obtained banking and identification information for the restaurant and restaurant owner by gaining access to their email. The defendants used this information and access to misrepresent themselves as the owner and divert proceeds from the owner’s bank account to a different account registered under a false identity that the defendants created and had access to.

In total, roughly $128,246 was diverted to the defendants’ fraudulent bank account between Aug. 4 and Aug. 9, 2022.

As part of the scheme, Centeno and Davila allegedly purchased over $41,000 worth of money orders from the fraudulent bank account over the course of multiple days in Chicago. They then deposited the money orders into their various personal and business accounts in aggregate amounts of less than $10,000. Finally, to further conceal their scheme, they withdrew money from a business account registered in their names and deposited it into their personal accounts.

Centeno and Davila were arrested in Chicago on June 4 and are charged with one count of aggravated identity theft in violation of 18 U.S.C. §1028A(a)(1), one count of conspiracy to commit wire fraud in violation of 18 U.S.C. §1349, five counts of wire fraud in violation of 18 U.S.C. §1343, one count conspiracy to commit money laundering in violation of 18 U.S.C. §1956(h), 18 U.S.C. §1956(a)(1)(B)(i), and eight counts of money laundering in violation of 18 U.S.C. §1956(a)(1)(B)(i). The defendants will make their initial court appearance on a later date. If convicted, they face a mandatory minimum of two years for aggravated identity theft, which is served consecutive to any other sentence for their alleged crimes. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

U.S. Attorney S. Lane Tucker of the District of Alaska and Special Agent in Charge Rebecca Day of the FBI Anchorage Field Office made the announcement.

The FBI Anchorage Field Office, FBI Fairbanks Resident Agency, FBI Chicago Field Office and North Pole Police Department are investigating the case.

Assistant U.S. Attorneys Carly Vosacek and Michael Heyman are prosecuting the case. The U.S. Attorney’s Office, Northern District of Illinois provided significant legal support in this case.

If you or someone you know might be a victim of fraud or other crime, you can report it to the FBI at tips.fbi.gov or through the Internet Crime Complaint Center (IC3) at ic3.gov.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

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UPDATE: This release has been updated to no longer state that the indictment came back “today” and correct the year in paragraph three from “2024” to “2022” in the text. 

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Ketchikan Man Sentenced to 13 Years and Four Months for Running Child Pornography Distribution Group Chat

Source: US FBI

JUNEAU, Alaska – A Ketchikan man was sentenced today to 13 years and 4 months in prison for distributing child pornography through a group messaging platform.

According to court documents, Walter William Onstad, 46, was an administrator of a messaging group known as “Anything Goes.” The chat was used exclusively to exchange child pornography, with some of the visuals depicting the sexual abuse of pre-pubescent minors.

Court documents say investigators with the National Center for Missing and Exploited Children received a tip in April 2022 that an individual, later identified as Onstad, sent at least 12 images and videos of child pornography to another user through the messaging platform.

An investigation revealed that Onstad solicited images depicting child sexual abuse from those wanting to enter the “Anything Goes” group chat. The defendant would personally verify the images, upload the images to the group chat and grant access to people who provided them.

As the investigation continued, the defendants cell phone was taken by law enforcement and over 300 images and 40 videos of child sexual abuse were in his possession on the phone. The defendant admitted to being responsible for the possession and distribution of over 600 images. Some of the images he possessed and distributed included the sexual abuse of minors as young as infants and toddlers.

“Mr. Onstad contributed to the victimization of children by running a child sexual abuse material distribution chat and was responsible for sharing hundreds of images of innocent children,” said U.S. Attorney S. Lane Tucker for the District of Alaska. “We will continue to work with law enforcement to relentlessly pursue, arrest and prosecute individuals who traffic images of child sexual abuse and hold them responsible for the incalculable damage they’ve caused.”

“Innocent children are revictimized each time CSAM is distributed,” said Special Agent in Charge Rebecca Day of the FBI Anchorage Field Office. “As an administrator of a CSAM distribution operation, Walter Onstad fueled a market that preys on our most vulnerable. No matter how they commit their crimes, those who sexually exploit children will be pursued and held accountable by the FBI and law enforcement partners, for justice and the safety of our children.”

The Juneau Resident Agency of the FBI Anchorage Field Office, with assistance from the Ketchikan Police Department and North Carolina’s Internet Crimes Against Children (ICAC) Task Force, investigated the case.

Assistant U.S. Attorney Jack Schmidt prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit https://www.justice.gov/psc.

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Arizona Man Sentenced to 10 Years for Role in Trafficking Fentanyl to Alaska

Source: US FBI

ANCHORAGE, Alaska – An Arizona man was sentenced today to 10 years in prison and three years’ supervised release for supplying hundreds of thousands of fentanyl pills to Alaska over multiple months.

According to court documents, Odarious Shaw, 25, distributed fentanyl pills to Alaska twice a week for over six months in quantities of 40-50,000 pills per shipment. In some instances, the defendant would ship as many as 500,000 pills at a time.

Law enforcement learned that Shaw would obtain pills in Arizona and instruct buyers in Alaska to send him $150 via a money transferring service to confirm the transaction. He would then provide a date when a courier would arrive on a commercial flight at the Anchorage airport with the drugs in their checked luggage. Upon arrival, the courier would deliver the pills to the buyer, pick up the cash payment for the drugs and immediately board a flight back to Arizona to deliver the money to Shaw.

On June 25, 2023, Shaw’s courier and codefendant, Corrion James, 26, arrived at the Ted Stevens International Airport in Anchorage on a flight from Phoenix, Arizona, with a package containing over 41,000 fentanyl pills. James was arrested at the airport after attempting to sell the pills to the arranged buyer. Those pills had an estimated street value of $400-600,000 in Anchorage, and as much as $4.8 million in rural Alaska.

Shaw continued to try to sell drugs in Alaska after James was arrested but was subsequently arrested in Arizona in August 2023. James pleaded guilty in February 2024 and was sentenced to over three years in prison for his role in the conspiracy.

At sentencing, Chief U.S. District Court Judge Sharon Gleason found that Shaw was a leader or organizer of the drug trafficking activity in this case and said that she hopes this sentence deters people motivated by greed from trafficking this deadly drug to Alaska.

“A single pill can destroy someone’s life and the amount of fentanyl Mr. Shaw supplied to Alaska could destroy entire communities,” said U.S. Attorney S. Lane Tucker for the District of Alaska. “Illegal fentanyl has absolutely no place here. My office will continue to hinder the inflow of illegal fentanyl into our state by working with our law enforcement partners to disrupt the supply and distribution of this poisonous drug.”

“During the course of this investigation, the FBI and our law enforcement partners intercepted tens of thousands of illicit fentanyl pills before reaching local Alaska communities, preventing untold violence and devastation,” said Special Agent in Charge Rebecca Day of the FBI Anchorage Field Office. “With a task force approach, the FBI and our law enforcement partners will continue to identify, disrupt, and hold accountable those who are fueling drug trafficking activities in Alaska.”

The Alaska State Troopers, Anchorage Police Department and the FBI Anchorage Field Office investigated the case as part of the FBI Safe Streets Task Force and the Alaska High-Intensity Drug Trafficking Area (HIDTA) initiative.

Assistant U.S. Attorney Christopher Schroeder prosecuted the case.

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Rochester Man Charged with Receipt and Possession of Child Pornography

Source: US FBI

ROCHESTER, N.Y.-U.S. Attorney Michael DiGiacomo announced today that Daniel P. Walsh, 58, of Rochester, NY, was arrested and charged by criminal complaint with receipt and possession of child pornography. The charges carry a maximum penalty of 20 years in prison, and a $250,000 fine.

Assistant U.S. Attorney, Kyle P. Rossi, who is handling the case, stated that the according to the complaint, in November 2024, the National Center for Missing and Exploited Children received a report from Google that an individual using an account registered in Walsh’s name, from Walsh’s IP address, uploaded multiple images of child pornography to Google’s platforms. Rochester Police and the FBI executed a search warrant at Walsh’s residence, during which they seized multiple computers and other digital devices. A forensic examination of those devices revealed that Walsh had received and possessed hundreds of images of child pornography, to include child pornography depicting prepubescent minors engaged in sexual conduct with adults. In many instances, Walsh had superimposed the faces of minors that he knew onto the images.

The defendant made an initial appearance before U.S. Magistrate Judge Mark W. Pedersen and was released on conditions.

The criminal complaint is the result of an investigation by the Rochester Police Department, under the direction of Chief David Smith and the Federal Bureau of Investigation Child Exploitation Task Force, under the direction of Special Agent-in-Charge Matthew Miraglia.                  

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

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