Law Enforcement

SAN FRANCISCO -- Attorney General Kamala D. Harris announced a 42-year prison sentence for a Northern California man who ran a Ponzi scheme that defrauded more than 400 investors, most of them elderly, out of more than $90 million.

James Koenig, 60, of Redding, owned Assent Real Estate Corporation (AREI) from 1999 to 2008. The company specialized in the acquisition, management and resale of commercial property and elder care facilities. Most victims of his Ponzi scheme were elderly individuals from the Bay Area.

In May, Koenig was found guilty of 35 felony counts, including conspiracy, use of a scheme to defraud in connection with sales of securities, sales of securities by means of false statements, and residential burglary relating to the sales of fraudulent investments. The jury also found special enhancements for “great takings” because of the large amount of loss involved.

“This individual ran a ruthless Ponzi scheme that robbed investors, including vulnerable elderly people, of their life savings,” said Attorney General Harris. “The 42-year prison sentence represents justice given the severity of this crime and the deep impact on victims. I commend the work of the Department of Justice attorneys and support staff who worked on this complex case.”

Koenig did not inform investors that he had a prior federal conviction for mail fraud, which prevented him from getting favorable loan terms for his company. He also did not disclose AREI’s dire financial condition. Many of the investors were elderly and placed their life savings or home equity into the securities offered by Koenig.

The company’s early losses were managed by using the funds of new investors to pay off the original investors. By 2007, AREI had accumulated $163 million in debt that was unsecured or significantly under-secured and required monthly payments of more than $1.8 million to maintain. In April 2007, AREI stopped making payments to investors, while continuing to solicit and sell securities to new investors. The Ponzi scheme finally failed in the spring of 2008.

The case was based on 32 of the more than 400 victims, whose losses exceeded $8 million – $3.8 million of which came from investments made after April 2007 – when AREI stopped paying its current investors. At the time of sentencing, the total losses by victims were reported to be in excess of $90 million. 

Koenig was sentenced in Shasta County Superior Court on Friday. A restitution hearing will occur at a later date.

SACRAMENTO – The California Department of Justice today released the Crime in California 2012 report which shows crime changed incrementally in 2012 compared to the prior year.

Based on data from local law enforcement agencies throughout California, the report notes that 2012 violent and property crime rates per 100,000 population remain at half the rate seen just 20 years ago. 

According to the FBI, many factors can affect the volume and type of crime occurring, including local economies, reporting practices and population density. 

The Crime in California report is compiled by the California Department of Justice and pulls together data reported by police and sheriff’s departments in all of California’s 58 counties. It presents an overview of the state’s criminal justice system through statistics for reported crimes, arrests, dispositions of adult felony arrests, adult related calls for assistance, and law enforcement officers killed or assaulted.

 The complete report is attached to the electronic version of this press release at: http://oag.ca.gov/news.

SACRAMENTO -- Attorney General Kamala D. Harris today announced the arrest of three individuals who allegedly engaged in fraud against the State of California by taking bribes, misappropriating taxpayer money and forging documents.

The complaint alleges that Michael Mathison, owner of Veteran Toners Services, supplied inflated quotes to the Department of Fish and Wildlife and the California Department of Transportation (CalTrans) for office supplies. Mathison then produced counterfeit quotes from non-existent competitors with even higher prices. As a result, Veteran Toners Services was awarded the office supplies business at the original inflated price and two department employees – in return for giving Veteran’s the contract – received kickbacks in the form of money orders, gift cards and vacations. 

“These workers conspired to defraud taxpayers for personal gain,” said Attorney General Harris. “We take government fraud very seriously. I thank our state partners for working closely with Department of Justice agents on this case.”

Stephanie Clark, 42, of Fair Oaks, Danny Gray Compson, 62, of Yuba City and Mike Mathison, 50 of San Pedro, were arrested today and face charges of bribery, conspiracy and misappropriation of state funds.  Clark and Compson also face charges of embezzlement by a public officer.

Clark and Compson were booked into the Sacramento and Sutter county jails, respectively, on $75,000 bail each, while Mathison was booked into the Los Angeles County Jail on $250,000 bail.

The arrests came after a year-long investigation by the California Attorney General Office’s Bureau of Investigation after the office received an anonymous tip. The arrests followed the service of six search warrants on Monday and Tuesday, including some at state office buildings. All agencies involved cooperated with the investigation once they were made aware of it.

Clark, who works for the California Department of Fish and Wildlife, took more than 50 bribes for a total of $23,800 over the course of five years, the complaint alleges. Agents discovered more than 50 postal money orders deposited to Clark’s bank account. The agents also uncovered more than 200 separate purchase orders for office supplies and a sampling of 13 of those showed approximately $50,000 in over-charges.

Compson, who works for the California Department of Transportation, also accepted bribes from Mathison. The complaint alleges he submitted invoices worth as much as $5,000 a week to be paid, but he never received the product.

The investigation into any further wrongdoing is ongoing.

The Attorney General works to protect the state against fraud and other financial misconduct through the enforcement of the California False Claims Act. Investigations and prosecutions brought pursuant to the Act have resulted in the recovery of hundreds of millions of dollars in wrongfully obtained public funds.  The False Claims Unit of the Corporate Fraud Section investigates alleged violations of the Act based upon referrals from state, federal and local agencies, tips from members of the public and qui tam complaints, otherwise known as whistleblower complaints.

SACRAMENTO -- Attorney General Kamala D. Harris today announced a nine-year state prison sentence of a man who defrauded the California Department of Transportation (CalTrans) out of nearly $1.9 million.

Eric Hodgson, 43, of Elk Grove, agreed to a plea deal that in addition to the nine-year prison sentence, included forfeiture of his personal and real property, which includes two residences, two cars, several retirement accounts and a collection of Star Wars items worth more than $10,000.

Hodgson was arrested in April on 22 counts of grand theft following a California Department of Justice investigation that began after Caltrans staff discovered fraudulent invoices for print advertisements that had never actually run in local newspapers as promised. On Thursday, Hodgson pleaded guilty in Sacramento Superior Court to seven of the 22 counts as part of the plea deal.

Hodgson, as the owner of Phenix Print & Image, was hired by Caltrans to publicly advertise new construction contracts to bidders, as required by statute. Caltrans employees discovered the alleged fraud during a routine request for information and proof of publication for the construction contract advertisements. A subsequent internal review confirmed likely fraudulent activity and, as consistent with state law, the matter was turned over to the California Department of Justice for further investigation.

The investigation of invoices submitted by Phenix found two print advertising contracts, awarded in 2008 and 2009, that totaled more than $1.8 million. Caltrans terminated a third contract, awarded to Phenix in 2011 for more than $800,000, before any invoices were paid.

The California Department of Justice investigation found that Hodgson defrauded Caltrans of nearly $1.9 million by using false and fraudulent documentation.  He instead used the money to pay off a mortgage, make purchases of toys and comics, and pay for exotic trips for him and his company staff.

Photos of the forfeited property are attached to the electronic version of this release at: http://oag.ca.gov/news.

SACRAMENTO -- Attorney General Kamala D. Harris today announced the seizure of nine firearms, including eight unregistered assault weapons, 20,000 rounds of ammunition and 100 large capacity magazines from an individual legally barred from possessing firearms due to prior felony convictions. 

On Tuesday night, agents from the Attorney General’s Bureau of Firearms conducted an Armed and Prohibited Persons (APPS) investigation in Sacramento County involving Britton Edward McFetridge, 37, who was on probation due to a 2010 conviction for felony battery with serious bodily injury. 

During a probation search of the basement at McFetridge’s home, agents located eight unregistered assault weapons, one bolt action rifle, eight large capacity drum magazines, 100 large capacity magazines and more than 20,000 large caliber rounds of ammunition. Agents determined the firearms had been illegally purchased within the last three to five years from private parties and that the magazines were illegally purchased online.

Later that evening, McFetridge was later arrested at his place of business in Sacramento and booked into the Sacramento County Jail on charges of being a felon in possession of a firearm, possession of unregistered assault weapons, felon in possession of ammunition and large capacity magazines and violation of probation. 

The APPS database cross-references five databases to find people who legally purchased handguns and registered assault weapons since 1996 with people who are prohibited from owning or possessing firearms. California is the first and only state in the nation to establish an automated system for tracking handgun and assault weapon owners who might fall into a prohibited status.

Photos of weapons seized during this investigation are attached to the electronic version of this release at: http://oag.ca.gov/news

SACRAMENTO – Attorney General Kamala D. Harris today announced the arrest of four individuals, including suspected Sureños gang members, and the seizure of an estimated $2 million in marijuana during a California Department of Justice raid of a marijuana growing operation in Sacramento County.

The arrests represent the culmination of a month-long investigation by Special Agents with the California Department of Justice. Agents seized more than 7,000 marijuana plants and 100 pounds of processed marijuana with an estimated street value of $2 million. Two 12-gauge shotguns and one .22 caliber semi automatic handgun were also seized.

“These armed gang members are learning the hard way that operating a massive, illegal drug operation on state property is a very bad idea,” Attorney General Kamala D. Harris said. “I commend the men and women of the California Department of Justice for their continuing efforts to identify and dismantle illegal and dangerous operations like this one.”

In May, California Department of Justice agents began an investigation into suspected members of the Sureño gang in Tulare County who they believed were involved in an illegal marijuana growing operation. The investigation led agents the state-owned Stone Lakes Preserve in Sacramento County, which contained a large-scale illegal marijuana growing, processing and packaging operation.

In a raid on Tuesday, agents arrested Anthony Uasiarez, 34, and Ruben Guzman, 18, both from Mexico, and Jorge Vargas Garcia, 22, and Jose Estrada, 23, both from Tulare County. Garcia and Estrada are suspected Sureños gang members. 

The suspects have been booked into the Sacramento County Jail and face charges that include possession of marijuana for sale, cultivation of marijuana, conspiracy and being armed in the commission of a felony. The four individuals are being held on $500,000 bail each. 

The Mountain and Valley Marijuana Investigation Team (MAVMIT) led the operation and was assisted by the California Department of Fish and Wildlife and the California Department of Corrections and Rehabilitation. MAVMIT is an investigation team focused on illegal marijuana-related cases.

Photos of items seized during Tuesday’s operation are attached to the electronic version of this press release at http://oag.ca.gov/news.

The charges in the complaints are only allegations and the defendants are presumed innocent until and unless they are proven guilty beyond a reasonable doubt.

SACRAMENTO – Spearheading efforts to dismantle sex trafficking networks in California, Attorney General Kamala D. Harris today announced the arrest of four individuals accused of pimping young women in a network of brothels located in Northern California.

The arrests are the culmination of a five-month investigation into an organized prostitution ring that trafficked women from Boston and New York to brothels located in residential areas of Sacramento and San Mateo counties. Once in Northern California, the defendants rotated the women between their brothels on an organized schedule. 

“Sex trafficking rings like the one we dismantled yesterday destroy the lives of young women and degrade the social fabric of our communities,” said Attorney General Harris. “I am committed to using all of the law enforcement tools at my disposal to bring to justice those who profit from the cruel and depraved business of sex trafficking.”

On Thursday night, agents with the California Department of Justice’s Bureau of Investigation, with the assistance of the Sacramento Police Department and the Federal Bureau of Investigation, served arrest and search warrants at multiple locations in Sacramento and San Mateo counties.

As a result of the sweep, four individuals operating the brothels were charged with pimping and/or pandering:

• Xiu Juan Bai, 43, Sacramento County
• Ken Wong, 58, Sacramento County
• Yoon Chin, 55, Sacramento County
• Zhi Liu, 49, San Mateo County

The charges in the complaints are only allegations and the defendants are presumed innocent until and unless they are proven guilty beyond a reasonable doubt.

The operation was part of an ongoing campaign by Attorney General Harris to investigate, prosecute and punish sex traffickers in California. Last year, Attorney General Harris released The State of Human Trafficking in California. The report outlines the growing prevalence of the crime of human trafficking in the state, the increasing involvement of sophisticated transnational gangs in perpetrating the crime and the modern technologies that traffickers use to facilitate it.

The report was released at a Human Trafficking Leadership Symposium, where Attorney General Harris was joined by leaders from law enforcement, victim service groups, non-government organizations, and other groups to share the best strategies and tactics to use in the fight against forced labor and sex trafficking.

Attorney General Harris regularly convenes law enforcement officials in the state to discuss how to recognize, investigate and prosecute human trafficking cases.

Last month, three defendants in a human trafficking ring in which women from Mexico were used as prostitutes in five Northern California cities were sentenced to three years in jail.

For more information on human trafficking, go to: http://www.oag.ca.gov/human-trafficking

SAN FRANCISCO -- Attorney General Kamala D. Harris today announced criminal charges and the arraignment of three brothers who face up to five years in prison for operating an illegal website that allowed users to watch bootleg versions of copyrighted television shows and movies.

Hop Hoang, 26, Tony Hoang, 23, and Huynh Hoang, 20, all brothers, were arraigned in Alameda County Superior Court on Thursday, June 13 for allegedly operating the website mediamp4.com which allowed users to illegally stream more than 1,000 copyrighted television and movie titles on computers and mobile devices. The three have each been charged with one count of conspiracy, four counts of receiving stolen property and one count of grand theft.

“Digital piracy is theft. It is a serious crime that harms one of California’s most important economic engines – our entertainment industry,” said Attorney General Harris. “This case sends a clear message that the California Department of Justice will investigate digital piracy and prosecute violators to the fullest extent of the law.” 

The Motion Picture Association of America (MPAA) initially began an investigation into iphonetvshows.net and movieiphone.net and sent a cease and desist letter to Tony Hoang. Thereafter, Tony Hoang and his co-defendant brothers allegedly resumed the illegal operation under a new domain name, mediamp4.com.  The Attorney General’s office then initiated an investigation into mediamp4.com, executed a search warrant, seized property used in connection with the illegal operation and filed charges against the Hoang brothers.

“The MPAA deeply appreciates the leadership of Attorney General Harris and her office in helping to combat websites that illegally profit from the creative content produced by the men and women of the American movie and television community,” said former Senator Chris Dodd, the MPAA’s CEO and Chairman.  “There are now nearly 80 legal online services in the United States dedicated to providing movies and television shows to viewers.  But to realize the enormous potential of these businesses and ensure an Internet that works for everyone, it is critical that government, content creators, the tech community and others work together to stop illegal rogue sites.”

Over the 18 months of the website’s operation, the brothers earned approximately $150,000 in advertising revenue. Hop Hoang allegedly confirmed that the brothers generated traffic to the website through Google search ads.

Subscribers could illegally access television shows like “How I Met Your Mother,” along with films such as “Black Swan,” “Tangled” and “Harry Potter and the Deadly Hallows Part 1.”

The investigation was conducted by the eCrime Unit of the California Attorney General’s Office, California Highway Patrol, and REACT, a law enforcement task force located in Santa Clara, CA specializing in investigating technology crimes and identity theft. The Attorney General’s eCrime Unit conducted the forensic analysis of the computer seized during a search and is prosecuting the case.

In 2011, Attorney General Harris created the eCrime Unit to identify and prosecute identity theft crimes, cybercrimes and other crimes involving the use of technology.

The charges in the complaints are only allegations, and the defendants are presumed innocent until and unless they are proven guilty beyond a reasonable doubt.

SACRAMENTO -- Attorney General Kamala D. Harris today announced the sentencing of three defendants in a human trafficking ring in which women from Mexico were used as prostitutes in five Northern California cities.

Nery Najarro-Rodriguez, 42, Jorge Perez-Hernandez, 37, and Luis Mata, 30, pled no contest to conspiracy to commit pimping and pandering as part of a multi-county investigation. The defendants were each sentenced in Sacramento County Superior Court to three years in county jail.

The charges stemmed from an extensive FBI investigation into a human trafficking network that spanned several northern California counties. Young women, ages 21 to 30, were trafficked from Mexico and sold for sex to as many as 20 clients in a single day. The sex acts occurred in brothels identified in Chico, Stockton, Yuba City, Fairfield and Sacramento.

“Human trafficking is a horrific crime that brutalizes millions of victims,” said Attorney General Harris. “It is important that we investigate, prosecute and imprison those who force this kind of cruelty and depravity upon women. These sentences send a message that human traffickers will be prosecuted and punished.” 

In January, the FBI served arrest and search warrants at the brothel houses and recovered evidence which was presented to the Attorney General’s Special Crimes Unit. FBI surveillance showed that the women spent approximately one week at a particular brothel before being driven to a bus station or another brothel location.

Federal prosecutors have charged three additional defendants with harboring an alien and conspiracy to harbor an alien. That case is still pending.

California Department of Justice Special Agents obtained arrest warrants for five suspects on state conspiracy and pimping charges. Three of those five suspects were sentenced today. A fourth suspect, Adelaida Teran-Bravo, 42, was previously convicted of felony accessory and sentenced to six months in county jail. Charges against the fifth defendant, Garrido Fuentas, 32, are currently pending in Butte County Superior Court. 

Last year, Attorney General Harris released The State of Human Trafficking in California 2012, a report that outlines the growing threat of the crime of human trafficking, as well as the increasing involvement of sophisticated transnational gangs in perpetrating the crime and the use of the Internet in both facilitating and preventing it.

For more information on human trafficking, go to: http://www.oag.ca.gov/human-trafficking

LOS ANGELES -- Attorney General Kamala D. Harris today convened a Leadership Group of the state’s district attorneys to collectively develop smart and practical recommendations to reduce gun violence through enforcement of existing laws and prevention efforts.

“Gun violence continues to be a distressing and persistent problem in the United States, but California is leading the nation in smart, common-sense gun policies designed to protect our communities,” said Attorney General Harris. “By working together, law enforcement and our state’s district attorneys can make a difference by improving enforcement and increasing prevention to help keep all Californians safe from gun violence.”

At the meeting, district attorneys discussed current programs that effectively reduce gun violence and how to better enforce current gun laws. The Leadership Group will prepare a report of best practices that will serve as models for law enforcement in other communities to adopt and as models for potential legislative reform.

Attorney General Harris discussed the importance of the Armed Prohibited Persons System (APPS) which takes guns out of the hands of those prohibited from owning them.

“The APPS program is unique to California and it is simple common-sense that prohibited persons should not possess firearms in violation of the law,” Attorney General Harris said. “The Department of Justice will be increasing the number of agents conducting these smart and effective operations.”

Earlier this month, Governor Jerry Brown signed into law Senate Bill 140, which gives $24 million to the APPS program. With the funds, the Attorney General will hire 36 additional agents. The Department of Justice will be able to increase enforcement operations statewide, including in Los Angeles, San Francisco, Sacramento, Fresno and Riverside.

California is the only state with a program like APPS, which identifies people who previously purchased one or more guns, but are later prohibited from owning them. A person becomes prohibited if he or she is convicted of a felony or a violent misdemeanor, is placed under a domestic violence restraining order or is determined to be mentally unstable.

Over the last two years, DOJ agents have investigated nearly 4,000 people and seized nearly 4,000 weapons, including nearly 2,000 handguns and more than 300 assault weapons. In the first four months of 2013, agents have collected 461 firearms and 23,080 rounds of ammunition statewide and collected 84 firearms and 9,482 rounds in the Los Angeles area.