Category: US Department of Justice

Source: United States Department of Justice News

SAN JUAN, Puerto Rico – On April 20, 2023, a federal grand jury returned an indictment charging Alexander Joel Rivera-Santos, 25, of Salinas, Puerto Rico, with possession and transportation of child sexual abuse material, announced W. Stephen Muldrow, U.S. Attorney for the District of Puerto Rico. The arrest follows an investigation by Homeland Security Investigations (HSI) with the assistance of the Puerto Rico Police Bureau (PRPB) and the U.S. Attorney’s Office for the District of Puerto Rico.

According to the indictment, from May 2021 through June 2022, Rivera-Santos knowingly possessed images of child pornography, including child pornography of a minor who had not attained 12 years of age, in violation of 18 U.S.C. § 2252A. As such, Rivera-Santos faces a mandatory minimum sentence of 5 years and a maximum of 20 years of imprisonment, if convicted.

“The U.S. Attorney’s Office will continue to work with its law enforcement partners to aggressively investigate and prosecute persons who use technology to victimize children who are victims of child exploitation crimes,” said U.S. Attorney Muldrow.

“Our HSI San Juan agents are collaborating relentlessly with agents from all over the nation to identify and prosecute with solid evidence all those who have the intent to damage the innocence of our children. They can try to hide in chat rooms or cyber spaces, but rest assured, we will find them,” said Rebecca C. González, Acting Special Agent in Charge of HSI San Juan.

Rivera-Santos had his initial appearance before U.S. Magistrate Judge Marcos López and was ordered to remain temporarily detained at the Guaynabo Metropolitan Detention Center pending further proceedings.

Assistant United States Attorney Emelina Agrait-Barreto, of the Child Exploitation and Immigration Unit, is in charge of the prosecution of this case.

HSI is the principal investigative arm of DHS and a vital U.S. asset in combatting transnational crimes and threats. One of HSI’s top priorities is to protect the public from crimes of victimization, and HSI’s child exploitation investigations program is a central component of this mission. HSI is recognized as a global leader in this investigative discipline, and is committed to utilizing its vast authorities, international footprint and strong government and non-government partnerships to identify and rescue child victims, identify and apprehend offenders, prevent transnational child sexual abuse and help make the internet a safer place for children.

For more information about HSI’s efforts to protect children from online sexual abuse, visit https://www.ice.gov/topics/iGuardians.

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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Source: United States Department of Justice Criminal Division

Two federal indictments were unsealed today in the District of Columbia charging a North Korean Foreign Trade Bank (FTB) representative for his role in separate money laundering conspiracies designed to generate revenue for the Democratic People’s Republic of Korea through the use of cryptocurrency.

“The charges announced today respond to innovative attempts by North Korean operatives to evade sanctions by exploiting the technological features of virtual assets to facilitate payments and profits, and targeting virtual currency companies for theft,” said Assistant Attorney General Kenneth A. Polite, Jr. of the Justice Department’s Criminal Division. “We will continue to work to disrupt and deter North Korean actors and those who aid them by following the money on the blockchain and shining a light on their conduct.”

According to court documents, Sim Hyon Sop (Sim), 39, is charged with allegedly conspiring with over-the-counter (OTC) cryptocurrency traders to use stolen funds to buy goods for North Korea and for conspiring with North Korean IT workers to generate revenue through illegal employment at blockchain development companies in the United States.

The first indictment involves a conspiracy between Sim and three OTC traders to launder stolen funds from virtual currency exchange hacks to make payments in U.S. dollars for goods on behalf of the North Korean government. The second involves a conspiracy between Sim and various North Korean IT workers to launder proceeds of illegal IT development work, where the IT workers gained employment at U.S. blockchain development companies using fake identities, and then laundered their ill-gotten gains through Sim for the benefit of the North Korean regime, and in contravention of sanctions imposed against North Korea by the Department of the Treasury’s Office of Foreign Assets Control (OFAC) and the United Nations. Those sanctions were imposed to impede the development of North Korea’s ballistic missiles, weapons production, and research and development programs.

“Today’s indictments reveal North Korea’s continued use of various means to circumvent U.S. sanctions,” said U.S. Attorney Matthew M. Graves for the District of Columbia. “We can and will ‘follow the money,’ be it through cryptocurrency or the traditional banking system, to bring appropriate charges against those who would help to fund this corrupt regime.” 

According to court documents, North Korean national Sim, Chinese national Wu Huihu (Wu), Hong Kong British National (Overseas) Cheng Hung Man (Cheng), and the user of the online moniker live:jammychen0150 (“Jammy Chen”) conspired to launder stolen cryptocurrency and then used those funds to purchase goods through Hong Kong-based front companies on behalf of North Korea. Sim directed these payments, which were made in U.S. dollars, through “Jammy Chen.” “Jammy Chen” then recruited Wu and Cheng, both of whom were OTC traders, to find sham front companies and facilitate the payments to avoid U.S. sanctions against North Korea.

Sim also allegedly conspired to launder funds generated by North Korean IT workers who obtained illegal employment in the tech and crypto industry. These IT workers used fake personas to get jobs, including jobs at U.S.-based companies, and then asked to be paid in cryptocurrencies, such as stablecoins like USD Tether (USDT) and USD Coin (USDC), which are pegged to the U.S. dollar. After receiving payment, they funneled their earnings back to North Korea through Sim.

According to court documents, the Reconnaissance General Bureau (RGB) is North Korea’s primary intelligence and clandestine operations unit, known to have a cyber capability that has come to be known within the cybersecurity community as both Lazarus Group and Advanced Persistent Threat 38 (APT38). APT38 is a financially motivated North Korean regime-backed group responsible for conducting destructive cyber-attacks since at least 2014 to generate revenue for its ballistic missile and WMD programs. Specifically, these North Korean hackers have worked in concert to conduct cyber-attacks against victims located in the United States and around the world, including hacks against financial institutions and virtual asset service providers. North Korean actors have gained unauthorized access to these victim networks as part of their fraudulent scheme through a variety of means, including through spear-phishing messages designed to induce victims to download and execute malicious software developed by the hackers.  

Since 2017, as part of its cyber campaign, North Korean hackers have also executed virtual currency-related thefts to generate revenue for the regime, including through the hacking of virtual asset services providers, such as virtual currency exchanges. A portion of the proceeds from those virtual currency theft and fraud schemes was sent to virtual currency address 1G3Qj4Y4trA8S64zHFsaD5GtiSwX19qwFv, which Sim and his OTC trader coconspirators used to fund payments for goods for North Korea.

To generate revenue for the regime, North Korea also deploys IT workers to obtain illegal employment in the cryptocurrency industry. According to court documents, North Koreans apply for jobs in remote IT development work without disclosing that they are North Korean. These IT workers bypass security and due diligence checks through the false or fraudulent use of identity documents and other obfuscation strategies, such as virtual private networks to hide their true location from online payment facilitators and hiring platforms. The IT workers request payment for their services in virtual currency and then send their earnings back to North Korea via, among other methods, FTB representatives such as Sim.

A third indictment also unsealed today in the District of Columbia separately charges Wu with operating an unlicensed money transmitting business. According to court documents, Wu operated as an OTC trader on a U.S.-based virtual currency exchange and conducted over 1,500 trades for U.S. customers without obtaining the necessary licenses.

The FBI Chicago Field Office and FBI’s Virtual Assets Unit (VAU) are investigating the cases.

The charge of conspiring to launder monetary instruments is punishable by a maximum of 20 years in prison. The charge of operating an unlicensed money transmitting business is punishable by a maximum of five years in prison.

Trial Attorney Jessica Peck of the Justice Department’s National Cryptocurrency Enforcement Team (NCET) and Computer Crime and Intellectual Property Section, Assistant U.S. Attorneys Steven Wasserman and Christopher Tortorice for the District of Columbia, and Trial Attorney Emma Ellenrieder of the National Security Division’s Counterintelligence and Export Control Section are prosecuting the cases. Paralegal Specialists Brian Rickers and Angela De Falco and Legal Assistant Jessica McCormick provided valuable assistance. Significant assistance was also provided by the U.S. Attorney’s Office for the Central District of California, FBI Los Angeles Field Office, Criminal Division’s Money Laundering and Asset Recovery Section, former Special Agent Chris Janczewski of the IRS Criminal Investigation, and former FBI analyst Nick Carlsen.

The NCET was created in October 2021 to combat the growing illicit use of cryptocurrencies and digital assets. Under the supervision of the Criminal Division, the NCET conducts and supports investigations into individuals and entities that enable the use of digital assets to commit and facilitate a variety of crimes, with a particular focus on virtual currency exchanges, mixing and tumbling services, and infrastructure providers. The NCET also sets strategic priorities regarding digital asset technologies, identifies areas for increased investigative and prosecutorial focus, and leads the department’s efforts to collaborate with domestic and foreign government agencies as well as the private sector to aggressively investigate and prosecute crimes involving cryptocurrency and digital assets.

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

Source: United States Department of Justice News

Stanlee Fazi, 41, of Louisa, Virginia, pleaded guilty in federal court in Alexandria to trafficking turtles in violation of the Lacey Act. Sentencing is scheduled for July 26.

Fazi admitted that between July 31, 2017, and June 29, 2020, he illegally collected eastern box turtles from the wild and sold them on at least 27 occasions to buyers in California, Colorado, Florida, Maryland, New Jersey, Ohio, Texas and Wisconsin. Fazi received approximately $12,700 using Facebook Marketplace for these sales. Many of Fazi’s purchasers, in turn, smuggled the turtles from the United States to Hong Kong and China for the illegal pet trade. Fazi acknowledged binding the turtles in socks and shipping them by FedEx from Fredericksburg.

The federal Lacey Act is the nation’s oldest wildlife trafficking statute and prohibits, among other things, transporting or selling wildlife in interstate commerce if the wildlife were illegally taken or possessed under state laws. The Commonwealth of Virginia also prohibits taking turtles from the wild or selling them. The maximum sentence under the Lacey Act is five years in prison and a $250,000 fine.

The eastern box turtle (Terrapene carolina carolina) is a subspecies of the common box turtle (Terrapene carolina). The eastern box turtle is native to forested regions of the eastern United States, including Virginia, with some isolated populations in the Midwest. The turtles typically reach a length of up to six inches and can live more than 100 years. The turtles have a domed carapace, which can display radiated lines or spots. Turtles with colorful markings are particularly prized in the domestic and foreign pet trade market.

The U.S. Fish and Wildlife Service Offices of Law Enforcement in Baltimore and Vero Beach, Florida, conducted the investigation as part of Operation Middleman. The operation focused on the trafficking of reptiles from the United States to China.

The government is represented by Senior Trial Attorney Ryan Connors of the Environment and Natural Resource Division’s Environmental Crimes Section and Assistant U.S. Attorney Gordon Kromberg for the Eastern District of Virginia.

Source: United States Department of Justice News

Baltimore, Maryland – U.S. District Judge Ellen L. Hollander today sentenced Steven McCullough, age 36, of Baltimore, Maryland, to 58 months in federal prison, followed by three years of supervised release, for  being a felon in possession of a firearm an ammunition.  

The sentence was announced by Erek L. Barron, United States Attorney for the District of Maryland; Special Agent in Charge Toni M. Crosby of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Baltimore Field Division; and Commissioner Michael Harrison of the Baltimore Police Department.

“Our strategy of preventing violence by removing illegal guns and repeat offenders from the streets by any legal means necessary is paying off,” said United States Attorney Erek L. Barron.  “As of today, homicides in Baltimore are down more than 17% from last year and non-fatal shootings are down nearly 20%.  We remain laser-focused on reducing violent crime in Baltimore and throughout the state.”

According to his guilty plea, on December 3, 2020, McCullough posted a video of himself on social media, which shows him approaching a vehicle holding a black handgun.  Baltimore Police officers saw the video, recognized that McCullough was in the 1200 block of North Luzerne Avenue and responded to that location.  Officers located McCullough, wearing the same gray sweatshirt and sweatpants as in the video, and attempted to place him under arrest.  McCullough ran, pulling a black firearm from his sweatshirt pocket.  A short distance later, McCullough tripped, with the gun still in his hand, and tossed the firearm out of his reach.  McCullough was arrested and the gun, a 10mm pistol was recovered.  The handgun was loaded with one round of 10mm jacketed hollow point ammunition in the chamber but was missing a magazine.  A canvass of the path of pursuit recovered a magazine loaded with nine rounds of 10mm ammunition identical to the round found in the gun.  McCullough was searched and officers also recovered approximately 36 vials containing a total of approximately 40 grams of cocaine for distribution.  McCullough admitted that he knew he has a previous felony conviction and was prohibited from possessing a firearm or ammunition.

In two separate cases last week, defendants pleaded guilty to illegal possession of a firearm in a school zone.  Terrence Johnson, age 23, of Baltimore, posted a video on social media showing him driving a car with a black and brown handgun between the center console and the driver’s seat.  Johnson was located within 1,000 feet of Green Street Academy and detectives recovered the gun, a 9mm semi-automatic pistol loaded with eight rounds of 9mm ammunition from Johnson’s waistband.  Johnson was sentenced to six months in federal prison and ordered to forfeit the gun and ammunition.

In the second case, Gerald Dean, age 31, of Baltimore, was found by BPD officers asleep in a car with the lights on and the engine running.  The pink handle of a handgun was seen protruding from under the armrest of the center console.  Officers opened the door, secured Dean, and recovered the handgun from under the armrest of the center console.  Dean was searched and officers recovered eight small green containers of crack cocaine, four small black containers of heroin, sixteen pills of methamphetamine, and one sublingual strip.  At the time, Dean was within 1,000 feet of the grounds of a school zone, specifically Katherine Johnson Global Academy (formerly Calverton Elementary/Middle School).  Dean will be sentenced on July 27, 2023.

These cases are part of Project Safe Neighborhoods (“PSN”), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and gun violence, and to make our neighborhoods safer for everyone.  On May 26, 2021, the Department launched a violent crime reduction strategy strengthening PSN based on these core principles: fostering trust and legitimacy in our communities, supporting community-based organizations that help prevent violence from occurring in the first place, setting focused and strategic enforcement priorities, and measuring the results.

United States Attorney Erek L. Barron commended the ATF and the Baltimore Police Department for their work in these investigations.  Mr. Barron thanked Assistant U.S. Attorneys Martin J. Clarke and Brandon K. Moore, who prosecuted the McCullough case and thanked Special Assistant U.S. Attorneys Liane Kozik and Jonathan Tsuei, who prosecuted the Johnson and Dean cases, respectively.

For more information on the Maryland U.S. Attorney’s Office, its priorities, and resources available to help the community, please visit https://www.justice.gov/usao-md/project-safe-neighborhoods-psn and https://www.justice.gov/usao-md/community-outreach.

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Source: United States Department of Justice News

Gree USA, Inc., the U.S. subsidiary of a Chinese appliance company, was sentenced today to pay a $500,000 criminal fine after pleading guilty to failing to notify the U.S. Consumer Product Safety Commission (CPSC) that millions of dehumidifiers it sold to U.S. consumers were defective and could catch fire.

Gree pleaded guilty to a felony violation of the Consumer Product Safety Act (CPSA). The fine, along with provisions to pay restitution to victims, was part of a $91 million resolution with three related Gree companies that represents the first corporate criminal enforcement action ever brought under the CPSA.

Gree USA, based in City of Industry, California, and a U.S. subsidiary of Hong Kong Gree Electric Appliances Sales Co., Ltd. (Gree Hong Kong), entered into a plea agreement in connection with a criminal information filed in 2021 in the U.S. District Court for the Central District of California. The criminal information filed along with the plea agreement charges Gree USA with one felony count under the CPSA of willfully failing to report consumer product safety information to the CPSC.

Gree Electric Appliances, Inc. of Zhuhai (Gree Zhuhai), a global appliance manufacturer headquartered in Zhuhai, China, and Gree Hong Kong entered into a deferred prosecution agreement (DPA) in connection with the same criminal information. Under the terms of the DPA, Gree Zhuhai and Gree Hong Kong agreed to a total monetary penalty of $91 million and also agreed to provide restitution for any uncompensated victims of fires caused by the companies’ defective dehumidifiers. Consistent with Justice Department policy, the DPA with Gree Zhuhai and Gree Hong Kong credits the Gree Companies’ earlier payment of $15.45 million in civil penalties to the CPSC against the agreed-upon $91 million total monetary penalty.

According to court filings, Gree Zhuhai, Gree Hong Kong and Gree USA (collectively, the Gree Companies) knew their dehumidifiers were defective, failed to meet applicable safety standards, and could catch fire, but the companies failed to report that information to the CPSC for months. The companies reported and recalled the dehumidifiers only after consumer complaints of fires and resulting harm continued to mount.

The Consumer Protection Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Central District of California previously indicted Charley Loh, 64, of Arcadia, California, and Simon Chu, 67, of Chino Hills, California – the Chief Executive Officer and Chief Administrative Officer of Gree USA, respectively – with felony CPSA and wire fraud charges for their alleged roles in the failure to report the defective dehumidifiers. Loh and Chu have pleaded not guilty and are scheduled for trial on April 25, 2023, in Los Angeles. An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

“Today’s sentencing of Gree USA is part of the Department of Justice’s ongoing efforts to hold accountable companies and executives that purposefully delay reporting dangerous consumer products to the CPSC,” said Principal Deputy Assistant Attorney General Brian M. Boynton, head of the Justice Department’s Civil Division. “The Department will continue to work closely with the CPSC to ensure consumers’ safety.”

“This corporation endangered the safety of American consumers by failing to promptly report a known problem with their defective humidifiers,” said U.S. Attorney Martin Estrada for the Central District of California. “Fortunately, authorities were able to stop this practice before Gree USA, Inc. could cause greater harm. This historic case underscores our commitment to protect the public from dangerous products that could cause consumers real harm and to hold accountable corporate entities who knowing violate our laws in promotion of their greed.”

“Today’s sentencing should serve as an example that companies will be held to account when they put profits before consumer safety,” said Chair Alex Hoehn-Saric of the CPSC. “The egregious behavior detailed in this case cannot be tolerated, and we are grateful for the support of the Department of Justice in bringing this company to justice and keeping consumers safe.”

“Homeland Security Investigations (HSI) works tirelessly to protect the American consumer from health and safety risks posed by sub-standard products entering the United States,” said Acting Special in Charge Eddy Wang of HSI Los Angeles. “HSI, the Department of Justice, and the Consumer Protection Safety Commission will continue to hold corporations accountable for placing profits above people.”

As part of the Gree USA plea agreement and the Gree Zhuhai and Gree Hong Kong DPA, the Gree Companies admitted that, between 2007 and 2013, they sold in the United States more than two million dehumidifiers manufactured by Gree Zhuhai and imported by Gree Hong Kong. In September 2012, employees of the Gree Companies, including high-level executives, learned that the Gree dehumidifiers had defects that could cause them to overheat and catch fire, and that consumers had reported fires caused by the dehumidifiers. Those same employees also knew of the obligation to report dangerous consumer products to the CPSC. Despite this knowledge, Gree USA continued to sell the defective dehumidifiers in the United States for at least another six months. The Gree Companies delayed reporting knowledge of the fires to the CPSC for approximately six months, and did not report the defects in the dehumidifiers for approximately nine months. Ultimately, Gree Zhuhai recalled the defective dehumidifiers almost a year after learning about the products’ dangerous defects.

HSI investigated this case.

Assistant Director Allan Gordus and Trial Attorneys Natalie Sanders and Maryann McGuire of the Justice Department’s Consumer Protection Branch and Assistant U.S. Attorney Joseph Johns for the Central District of California prosecuted the case with the assistance of Patricia Vieira of the CPSC’s Office of General Counsel.

Additional information about the Consumer Protection Branch and its enforcement efforts may be found at http://www.justice.gov/civil/consumer-protection-branch.