Tag Archives: Drug Trafficking

San Gabriel Valley: Doctor Charged With Drug Dealing

STAFF REPORTS

SGV – A San Gabriel Valley doctor has pleaded not guilty to federal drug trafficking charges that allege he illegally distributed drugs that include the powerful and addictive painkiller, oxycodone.

Dr. Daniel Cham, 47, was arraigned on a 31-count indictment on Thurs., Oct. 23, at which time a trial was scheduled for December 16.  Cham was arrested on Oct. 22 at his residence in Covina. At the arraignment, bond was set at $140,000, and Cham was ordered to serve home detention while free on bond and was prohibited from practicing medicine.

According to the United States Attorney’s Office, the indictment, which was returned by a federal grand jury on Oct. 7 and unsealed when the defendant was arrested, charges Cham with drug trafficking, money laundering, fraud and making false statements to federal authorities. The indictment focuses on prescriptions Cham wrote at various locations, including his medical offices in La Puente and Artesia. The drugs involved in the allegedly illegal prescriptions include oxycodone (a powerful narcotic painkiller best known under the brand name OxyContin), hydrocodone (a narcotic painkiller often sold under the brand names Vicodin and Norco), alprazolam (commonly known by the brand name Xanax), and carisoprodol (as muscle relaxer best known as Soma).

“The problem of pharmaceuticals being diverted to the black market continues to grow, which feeds drug addiction and leads to additional criminal acts by addicts,” said Acting United States Attorney Stephanie Yonekura. “Unscrupulous doctors who prescribe controlled substances without a legitimate medical purpose are simply fueling a black market of narcotics. These doctors are the same as street dealers who face lengthy sentences in federal prison.”

In May 2014, investigators executed federal search warrants at 13 locations, including Cham’s residence and medical offices. According to the affidavit in support of the search warrants, which was unsealed at Cham’s arraignment, the doctor often saw patients between 8 p.m. and 2 a.m. on Fridays, Saturdays and Sundays, and he post-dated prescriptions to make them appear to have been written on weekdays. In the year that ended in March 2014, Cham issued more than 5,500 prescriptions for controlled substances – primarily for oxycodone, hydrocodone, alprazolam and carisoprodol – and he issued more than 42,000 such prescriptions since July 2010, according to the affidavit.

The affidavit also discussed how an undercover officer made three visits to Cham’s La Puente office earlier this year, and how Cham wrote prescriptions for controlled substances in exchange for $200 or $300 in cash or money orders. As discussed in the affidavit, Cham issued a prescription for oxycodone even though the undercover operative said he “had been high and drunk while receiving controlled substance prescriptions” previously from Cham. On another occasion, Cham prescribed oxycodone even though the undercover law enforcement officer presented, in lieu of photo identification, a written notice that his license had been suspended for driving under the influence.

“Daniel Cham’s arrest sends a clear message to doctors who violate their sworn public duty by selling prescriptions for highly addictive opioids – the DEA will shut down your operation and put you behind bars,” said Anthony D. Williams, Special Agent in Charge of the DEA’s Los Angeles Field Division. “Along with our law enforcement partners, we continue to aggressively target medical professionals who act as drug traffickers cloaked in a white lab coat.”

An investigation by IRS – Criminal Investigation and the Drug Enforcement Administration’s Financial Investigation Group showed that Cham used at least four bank accounts to launder the proceeds of his illegal prescriptions. The indictment charges Cham with concealing proceeds derived from the undercover visits by depositing them into an account held in the name of a separate business.

If convicted of the 31 counts in the indictment, Cham would face a statutory maximum sentence of 339 years in federal prison.

 

Orange County: Two Men Arrested in Synthetic Drug Ring

STAFF REPORTS

Santa Ana – Two Orange County men were arrested on Fri., June 13, on federal drug trafficking charges that allege they were part of a far-reaching conspiracy to smuggle, manufacture and distribute millions of dollars’ worth of analogue drugs commonly called “spice” and “bath salts.”

 

According to a news release from the Assistant United States Attorney’s Office, the men were taken into custody pursuant to a 16-count grand jury indictment – the first in Southern California alleging violations of the Controlled Substances Analogue Enforcement Act. This federal law makes it illegal to manufacture or possess chemicals intended for human consumption that are similar to controlled substances – such as Ecstasy and marijuana – and have effects similar to these narcotics.

 

Sean Libbert, 38, of Newport Coast, and Kyle Kledzik, 26, of Dana Point, were arrested by federal agents associated with the Los Angeles HIDTA (High-Intensity Drug Trafficking Area) Southern California Drug Task Force. Those involved in the investigation include special agents with U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI), the Drug Enforcement Administration and IRS – Criminal Investigation.

 

The case against Libbert, Kledzik and four Chinese nationals focuses on the smuggling and distribution of cannabinoids, which include synthetic marijuana or “spice,” and synthetic cathinones, otherwise known as “bath salts. The indictment charges a series of criminal violations, including conspiracy to manufacture, possession with the intent to distribute, and distribution of controlled substance analogues. The indictment also alleges that the defendants smuggled chemical products and engaged in money laundering. Additionally, Libbert – who has prior convictions that include narcotics offenses – is accused of being a felon in possession of firearms and ammunition.

 

The charges are the result of a nearly three-year HIDTA investigation that targeted an organization allegedly headed by Libbert. Authorities believe Libbert’s organization was one of the nation’s largest importers and shippers of synthetic narcotics. According to the indictment, from March 2010 until July 2012, Libbert and his coconspirators smuggled more than 300 kilograms of chemicals into the U.S. at a cost of more than $1.4 million. The organization also allegedly purchased more than 300 kilograms of chemicals from domestic sources.

 

As part of the scheme, the defendants allegedly formed a company called RCS Labs, and used various Internet websites to sell more than $12 million worth of chemical products and analogue substances to people across the United States, including other distributors and individual users. The ring is also accused of manufacturing its own synthetic marijuana, which they marketed and sold under the brand, “Da Kine Blend.”

 

According to the indictment, one customer who purchased approximately six grams of cannabinoids from the organization nearly died after ingesting the drug. Due to his prior criminal history, Libbert could face a mandatory minimum life sentence if convicted on this count.

 

The indictment also charges four Chinese nationals who allegedly served as Libbert’s suppliers. Three of the defendants reside in China and their full identities are unknown at this time. The fourth Chinese defendant, Jin Liu, 30, is in federal custody in Jacksonville, Florida, on unrelated narcotics charges.

 

“These substances may have benign names like ‘spice’ and ‘bath salts,’ but they’ve been linked to serious health complications and even death,” said Claude Arnold, Special Agent in Charge for HSI Los Angeles. “Compounding the concern is the fact that the distributors of these dangerous synthetic drugs are packaging and marketing them to appeal to young people. For that reason, those involved in this emerging side of the illicit drug trade should be on notice, this may be the first federal prosecution of its kind in the greater Los Angeles area, but it will not be the last.”

 

In addition to the drug and firearms charges, Libbert is accused of laundering the profits of drug sales through various bank transactions and spending the proceeds to buy luxury vehicles, vacations and a $1.4 million home in San Juan Capistrano. As part of the indictment, the government is seeking the forfeiture of property and proceeds related to the scheme. So far, investigators have seized more than $1.1 million in assets connected to the case, including more than $700,000 in profits from the sale of Libbert’s former San Juan Capistrano home.

 

“The use and distribution of synthetic drugs cause irreparable harm to our society,” said IRS Criminal Investigation Special Agent in Charge, Erick Martinez.  “The magnitude and complexity of this particular ring required multi-agency cooperation to take down. IRS pursued financial leads in this investigation to attack the group’s ability to further profit from their illegal activity and to hold them accountable for their actions.”

Diamond Bar: Local Man Sentenced For Laundering Scheme

STAFF REPORTS

Diamond Bar – A Diamond Bar man was sentenced today to 24 months confinement for participating in an elaborate scheme known as a Black Market Peso Exchange, which is an underground money-transfer system that enables international drug trafficking organizations to launder narcotics proceeds.

Jia “Gary” Hui Zhou, 44, was ordered to serve 18 months in federal prison, followed by six months in a residential re-entry facility. He was also ordered to pay a $10,000 fine. In May 2013, Zhou’s wife, Dan “Daisy” Xin Li, 44, was ordered to serve a total of 14 months in custody and she is currently serving her sentence of six months home confinement.

The couple were owners of the Industry-based Woody Toys, Inc., a Los Angeles-area toy wholesale.
As part of their agreements with federal prosecutors, the couple forfeited to the federal government $2 million in proceeds that were derived from their money laundering scheme, according to a U.S. Attorney’s Office news release. Zhou and Li pleaded guilty in September 2012 to conspiring to structure currency transactions with a U.S. financial institution to avoid the filing of a Currency Transaction Report.

The scheme used “structured” cash deposits in the United States to launder illicit proceeds generated by drug trafficking organizations based in Mexico and Colombia, according to the report. Structured deposits are cash deposits of $10,000 or less that are designed to avoid laws requiring all cash transactions over $10,000 to be reported to federal authorities. From 2005 through 2011, approximately $3 million in structured, out-of-state cash was deposited into Woody Toys’ bank accounts, according to court documents. During that same time, Woody Toys took in approximately $3 million in cash without filing the required federal documents, according to the news release.

As part of the Black Market Peso Exchange scheme alleged in this case, foreign toy retailers with Colombian and Mexican pesos would contact currency brokers to buy discounted U.S. dollars, which they used to purchase merchandise from Woody Toys. The dollars being “sold” were allegedly proceeds from illegal drug sales that had been deposited in the toy company’s accounts or delivered to the business, the news release stated. The Colombian or Mexican pesos the currency broker received from the foreign toy retailer were remitted to the drug trafficking organizations. In a sentencing memo to the court, prosecutors described Woody Toys as “the last ‘spoke in the wheel,’ that cleaned illicit proceeds and enabled drug trafficking organizations to convert their dirty dollars into clean pesos.”

The case involving Woody Toys is the result of an investigation conducted by U.S. Immigration and Customs Enforcement’s (ICE) Homeland Security Investigations (HSI), IRS-Criminal Investigation, and the multi-agency Southern California Drug Task Force, which is spearheaded by the Drug Enforcement Administration.

Previously in this case, Woody Toys, Inc. was sentenced to five years of probation in November after pleading guilty to money laundering conspiracy charges involving drug proceeds. The sentence prohibited the company from receiving payments of more than $2,000 in cash and the business was not allowed to received cash from anyone who was not a customer. The company had to report the identity and contact information of all its customers, and had to comply with unannounced examinations of its books and records.

The probe targeting Woody Toys began in November 2010 after evidence was uncovered in a similar investigation targeting another Los Angeles-area toy wholesaler called Angel Toys, whose owners also went to prison. Several former employees of Angel Toys supposedly went to work for Woody Toys.
Investigators say schemes of this kind benefit criminal organizations by giving them a means to launder illicit proceeds using international trade. According to the U.S. Attorney’s office, the system also gives foreign retailers access to discounted U.S. currency, which enables the foreign retailers to avoid steep exchange rates and other fees. Finally, for the U.S.-based company, the scheme is a way to substantially increase sales volume and cash flow.