A California-based man pleaded guilty today to conspiring with others to defraud shareholders of publicly traded companies, transmitting millions of dollars through the operation of an unlicensed money-services business in California, and falsifying multiple years of federal tax returns.
Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney Robert S. Brewer for the Southern District of California, Special Agent in Charge Ryan L. Korner of IRS Criminal Investigation’s (IRS-CI) Los Angeles Field Office and Special Agent in Charge Cardell Morant of U.S. Immigration and Customs Enforcement’s Homeland Security Investigation (HSI) made the announcement.
David Nava, 62, of La Jolla, California, pleaded guilty to one count of conspiracy to commit securities fraud, one count of operating an unlicensed money transmitting business (MTB), and one count of tax fraud before U.S. Magistrate Judge Karen S. Crawford of the Southern District of California. Sentencing is set for Jan. 8, 2021.
According to the plea agreement filed in court, Nava was at all relevant times the CEO of the Surf Financial Group LLC (Surf Financial), a financial-services firm based in La Jolla, California. In 1994, federal securities regulators permanently banned and censured Nava from participating in the securities industry. Despite the two-decades’ old ban, Nava admitted in the plea agreement that he and other co-conspirators, including a licensed attorney, converted the debt of various publicly traded companies under materially false and fraudulent pretenses into unrestricted stock and then sold the stock for profit. Nava further admitted that he and his co-conspirators carried out their fraudulent scheme by entering into agreements in which Nava sold shares of various entities’ stock in public-market exchanges, only after fraudulently claiming an exemption from the U.S. Securities and Exchange Commission’s (SEC) registration requirements for selling securities in the public marketplace.
In the plea agreement, Nava admitted that he directed at least one attorney, as well other co-conspirators, to prepare fraudulent attorney opinion letters that were used to remove restrictions on various publicly traded companies’ stocks so that they could be freely traded on the open market. These fraudulent attorney opinion letters permitted Nava and his co-conspirators to sell their shares of stock at times of their choosing and unlawfully to circumvent the SEC’s regulations governing the offer and sale of securities.
To conceal his involvement in the scheme, Nava admitted he used various nominees to ensure that, as Nava described it, he was a “ghost” in the transactions. Brokerage firms relied on the purported truth and accuracy of the attorney opinion letters in evaluating whether to clear the sale of shares of the restricted stocks on public markets. After the stocks were cleared for sale as a result of the false attorney opinion letters, Nava and his co-conspirators sold millions of shares of these stocks to the investing public. Nava further admitted that, after selling these shares and securities, he transferred the proceeds derived from the securities-fraud scheme into bank accounts under his direct control.
Nava also admitted that, from approximately 2017 to 2018, he owned and operated an unlicensed MTB as a means to transmit financial proceeds from foreign locations, including Hong Kong and the Bahamas, all of which disguised the source, origin and control of such financial proceeds. As Nava further admitted, in 2017, Nava entered into a business partnership with at least one co-conspirator who resided in Mexico and delivered dairy products for a living. To conceal Nava’s control over the MTB, Nava directed the Mexican resident to fraudulently open a deposit account in his name at a financial institution in San Diego, and to transmit funds as a nominee and as directed by Nava. According to the plea agreement, Nava’s unlicensed MTB transacted millions of dollars in international wire transfers with entities purportedly involved in investment-banking services and which sold futures and securities. Nava failed to register his MTB with the U.S. Treasury Department’s Financial Crimes Enforcement Network, or FinCEN, as required under federal law.
As stated in the plea agreement, Nava also falsified his tax returns for years 2014, 2015 and 2016. He admitted that he falsely and fraudulently underreported Surf Financial’s profits, and he did so for the purpose of underreporting Nava’s true income and tax liability.
This case was investigated by IRS- CI and HSI. Trial Attorney Kevin Lowell of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Daniel Silva of the U.S. Attorney’s Office for the Southern District of California are prosecuting the case.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
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- Oil and Gas: Interior Should Strengthen Management of Key Data Systems Used to Oversee Development on Federal LandsBy Sam NewsJune 29, 2021What GAO Found The Department of the Interior (Interior) uses three key data systems to oversee oil and gas development on leased federal lands: the Automated Fluid Minerals Support System (AFMSS), Legacy Rehost 2000 (LR2000), and the Minerals Revenue Management Support System. Interior's Bureau of Land Management (BLM) and Office of Natural Resources Revenue (ONRR) staff rely on data across these systems to carry out responsibilities such as processing permits for drilling wells and ensuring appropriate payments are made based on production. According to agency documents and officials, limited automated sharing of data among these systems is one of four challenges. Although the systems use some of the same information, such as lease and well numbers, they do not fully connect or communicate with each other, complicating oversight. For example, GAO calculated, based on agency estimates, that ONRR spends the equivalent of approximately 10 full-time employees in staff hours every year on conversion and error correction due to fragmented systems. Best practices call for coordinating and sharing data assets across federal agencies. Though Interior is developing replacement data systems, it does not have a finalized plan to facilitate comprehensive data sharing among them. Without such a plan, Interior risks continuing to spend staff time that could be better spent on other priorities. Example of Oil and Gas Data Shared between BLM and ONRR Data Systems Interior has not fully implemented leading practices in developing requirements to ensure the replacement systems meet user needs. Such practices have been found to improve development of federal data systems. BLM officials said they are developing replacement systems using an agile software development approach, which builds software incrementally based on users' requirements and continuously evaluates functionality, quality, and customer satisfaction. For example, BLM program offices responsible for developing systems to replace AFMSS and LR2000 stated that they meet quarterly with system stakeholders to prioritize and agree on features and functionality. However, the program offices do not have a defined process to implement the agile approach because it is not addressed in Interior's guidance on data system development. By updating the guidance to reflect how program offices can implement an agile development approach, Interior would have better assurance that its new data systems will function as intended to meet user needs and reduce budget and schedule risks. Why GAO Did This Study Development of oil and gas resources on federal lands helps supply the U.S. with energy and generates billions of dollars annually in revenues. To oversee this development, Interior relies on aging data systems, which it is planning to replace. GAO was asked to review the data systems Interior uses to oversee oil and gas development on federal lands and waters. This report (1) describes how Interior uses key data systems to oversee oil and gas development on federal lands, (2) examines challenges Interior faces in using these systems, and (3) evaluates Interior's implementation of leading practices in developing requirements for replacement systems. GAO reviewed documents, interviewed officials from federal and state agencies, visited BLM and ONRR offices in Colorado and New Mexico, and assessed Interior's implementation of relevant leading practices.[Read More…]
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- IRS Reorganization: Planning Addressed Key Reform Practices, but Goals and Measures for the Plan Have Not Been FinalizedBy Sam NewsNovember 18, 2020GAO identified advantages of, challenges related to, and options for improving the Internal Revenue Service's (IRS) current organizational structure, based on GAO's review of prior work and interviews with IRS officials and stakeholders. For example, one advantage of the current structure, according to several interviewees, is that IRS's divisions have developed specialized expertise on different types of taxpayers with similar needs, such as small businesses. Several interviewees also believed that addressing some of IRS's challenges may not require significant changes to IRS's organizational structure. GAO and others have identified challenges and options to improve IRS's structure, processes, and operations in the following areas: (1) customer service; (2) communication and coordination within IRS; (3) technology; and (4) strategic human capital management and training. While developing its reorganization plan required by the Taxpayer First Act, IRS addressed or partially addressed all six of the key practices for agency reforms that GAO reviewed (see table below). GAO Assessment of IRS's Reorganization Planning Process against Key Reform Practices Key reform practice Extent addressed Establishing goals and outcomes ◑ Involving employees and key stakeholders ● Using data and evidence ● Addressing fragmentation, overlap, and duplication ◑ Addressing high-risk areas and long-standing management challenges ◑ Leadership focus and attention ● Legend: ● Generally addressed ◑ Partially addressed ○ Not addressed Source: GAO analysis of Internal Revenue Service (IRS) information. | GAO-21-18 IRS established a senior-level team—the Taxpayer First Act Office—to lead the reorganization planning, involved employees and key stakeholders, and used multiple sources of data and evidence to inform its planning. Although IRS has developed preliminary goals for the plan, it has not yet finalized and communicated the goals and performance measures for the plan. IRS has also researched potential actions it could take to address long-standing management challenges at IRS, such as those related to areas of fragmentation, overlap, duplication, and high risk that GAO has identified. However, IRS has not yet decided on specific actions to address those areas in its plan. IRS officials told us that they intend to take these additional steps, but COVID-19 delayed the completion of their reorganization plan to December 2020. As a result, it is still unclear whether the reorganization plan will have outcome-oriented goals and performance measures or whether it will identify specific actions to address long-standing management challenges. Taking these steps could help IRS identify and achieve the intended outcomes of the reorganization plan, and identify reforms that can create long-term gains in efficiency and effectiveness. The Taxpayer First Act required that a comprehensive written plan to redesign IRS be submitted to Congress by September 30, 2020. Reforming and reorganizing a federal agency as large and complex as IRS is not an easy task. However, a potential reorganization could provide IRS with an opportunity to address emerging and long-standing challenges. GAO was asked to review IRS's organizational structure and IRS's plans to reform it. This report examines (1) reported advantages of, challenges related to, and options for potentially improving IRS's organizational structure; and (2) the extent to which IRS's reorganization planning process is consistent with selected leading practices. GAO reviewed documents from IRS and other sources; interviewed IRS officials and stakeholders, including three former IRS commissioners; and assessed IRS's reorganization planning process against selected key practices for agency reform efforts developed by GAO. GAO is making three recommendations to IRS as it finalizes its reorganization plan, including that IRS should finalize goals and performance measures, and identify specific actions to address long-standing management challenges. IRS responded that it plans to implement GAO's recommendations when it submits its final reorganization plan to Congress in December 2020. For more information, contact James R. McTigue, Jr. at (202) 512-9110 or email@example.com.[Read More…]
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- Maryland Man Pleads Guilty to Submitting False Claim to Steal Funds Intended for Afghanistan ReconstructionBy Sam NewsDecember 4, 2020A Maryland man pleaded guilty today to filing a false claim for his role in a scheme to divert hundreds of thousands of dollars in State Department funds to his own use.[Read More…]
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- Two Virginia Men Convicted for Their Roles in Investment Fraud SchemeBy Sam NewsNovember 3, 2020A federal jury found two representatives of a purported investment company based in the United Kingdom guilty on Oct. 30 for their roles in an investment fraud scheme by which they stole at least $5 million from victim investors.[Read More…]
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- Man Convicted of Receiving, Soliciting, and Promoting Child PornographyBy Sam NewsMarch 4, 2021A federal jury convicted a Virginia man today for downloading images and videos depicting children as young as four years old being sexually abused and for utilizing the Darknet to solicit and promote child pornography.[Read More…]
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- Judiciary Launches Redesigned PACER WebsiteBy Sam NewsIn U.S CourtsJune 26, 2020The Administrative Office of the U.S Courts on June 28 will launch a redesigned informational website for the Judiciary’s electronic court records system, known as PACER (Public Access to Court Electronic Records).[Read More…]
- Alabama Salesman Sentenced to Prison for Tax EvasionBy Sam NewsOctober 28, 2020A Hoover, Alabama, salesman was sentenced to 24 months in prison yesterday for tax evasion, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney Prim F. Escalona for the Northern District of Alabama.[Read More…]
- Operation Legend Expanded to Cleveland, Detroit, and MilwaukeeBy Sam NewsJuly 29, 2020Today, the expansion of Operation Legend was announced in Cleveland, Detroit, and Milwaukee. Operation Legend is a sustained, systematic and coordinated law enforcement initiative in which federal law enforcement agencies work in conjunction with state and local law enforcement officials to fight violent crime. The Operation was first launched on July 8 in Kansas City, Missouri, and expanded on July 22, 2020, to Chicago and Albuquerque. Operation Legend is named in honor of four-year-old LeGend Taliferro, who was shot and killed while he slept early in the morning of June 29 in Kansas City. The first federal arrest under Operation Legend was announced on July 20.[Read More…]
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- Veterans with Disabilities: VA Could Better Inform Veterans with Disabilities about Their Education Benefit OptionsBy Sam NewsJuly 29, 2021What GAO Found Most school and veteran service organization (VSO) officials GAO interviewed stated that when given the choice between the Post 9/11 GI Bill (GI Bill) and the Veteran Readiness and Employment (VR&E) program, veterans with disabilities will base their choice on which program best suits their unique goals, preferences, and circumstances. For example, certain veterans may prefer the GI Bill's flexibility to independently select courses of study, whereas others may prefer to have the assistance of a counselor to select a course of study as part of an employment plan, as provided under VR&E. However, most officials GAO interviewed said veterans with disabilities often use the GI Bill for education benefits without knowing that the VR&E program exists, or that it can pay for education, provide assistive equipment for their disability, or offer unique benefits of working with a counselor. Selected Comments Regarding the Post-9/11 GI Bill and Veteran Readiness & Employment Programs “Had I known about VR&E I would have [used it.]” -Veteran with disabilities “I often think of VR&E as sort of a hidden program when it comes to education benefits.” -VSO official ”Veterans with disabilities are often not aware of the differences between the two programs.” -School official Source: GAO survey of veterans and GAO interviews with school and VSO officials | GAO-21-450 VA provides information about education benefits to veterans with disabilities through various methods, including in-person communication, online materials, and written communications. However, on the agency website, VA.gov, few webpages devoted to VR&E explicitly mention that it can help pay for a college degree. In addition, the letters that VA sends to veterans when they receive their disability rating do not specifically mention that VR&E can cover education costs for a college degree. VA's online GI Bill Comparison Tool allows veterans to learn more about the tuition amounts each program will cover for certain schools, but it does not inform veterans on the key differences in program features across the programs. Most school and VSO officials GAO interviewed said VA's efforts do not adequately inform veterans with disabilities about their potential education benefit options, as evidenced by the number of veterans with disabilities they encounter who are unaware that VR&E exists or who do not fully understand the benefits VR&E can provide. Including more information about how VR&E can help veterans pay for higher education, and facilitating direct comparison between the features of the GI Bill and VR&E, would help better position veterans with disabilities to choose the program that best meets their needs. Why GAO Did This Study VA offers education benefits to veterans with disabilities through the GI Bill, VA's largest education program, and VR&E, which helps veterans with service-connected disabilities re-enter the workforce. Each offers distinct features that may better serve veterans depending on their individual circumstances. However, veterans with disabilities may not know that VR&E can help pay for education as part of its employment services. GAO was asked to what extent eligible veterans are aware of the comparative features of the programs. This report examines (1) the reported factors that influence whether veterans with disabilities select the Post-9/11 GI Bill or VR&E, and (2) how VA informs veterans with disabilities about the education benefits available to them from each program, and the effectiveness of those efforts. For both programs, GAO reviewed relevant federal laws; analyzed participant data; conducted semi-structured interviews with officials from schools and VSOs selected for their depth of knowledge about veteran affairs, and reviewed relevant VA informational materials.[Read More…]
- VA Vet Centers: Evaluations Needed of Expectations for Counselor Productivity and Centers’ StaffingBy Sam NewsSeptember 23, 2020The Veterans Health Administration's (VHA) Readjustment Counseling Service (RCS) provides counseling through 300 Vet Centers, which can be found in community settings and are separate from other VHA facilities. RCS has set expectations for counselor productivity at Vet Centers. For example, one expectation is for counselors to achieve an average of 1.5 visits for each hour they provide direct services. However, RCS officials told GAO that they have not conducted, and do not have plans to conduct, an evaluation of the expectations. VA Vet Center Productivity Expectations for Counselors Although most counselors met the productivity expectations in fiscal year 2019, counselors GAO spoke with said the expectations led them to change work practices in ways that could negatively affect client care. For example, counselors at one Vet Center told GAO that, to meet productivity expectations, they spend less time with each client to fit more clients into their schedules. Without an evaluation of its productivity expectations, RCS lacks reasonable assurance that it is identifying any unintended or potentially negative effects of the expectations on counselor practices and client care. RCS officials told GAO that by the start of fiscal year 2021 they plan to implement a staffing model to identify criteria for determining staffing needs at Vet Centers. The model incorporates data on counselors' productivity (work hours and number of visits), and total clients to determine criteria for adding or removing a counselor position from a Vet Center. However, the model does not fully address key practices in staffing model design GAO identified in previous work. For example, the model does not include the input of Vet Center counselors, or client data associated with directors, who also provide counseling. As a result, RCS is at risk of making decisions about Vet Center staffing that may not be responsive to changing client needs. Shortages of mental health staff within VHA coupled with the increasing veteran demand for mental health services highlight the critical importance of ensuring appropriate Vet Center staffing. VHA's RCS provided counseling (individual, group, marriage, and family) and outreach services through Vet Centers to more than 300,000 veterans and their families in fiscal year 2019. In 2017, RCS implemented changes to expectations that it uses to assess Vet Center counselor productivity, setting expectations for counselors' percentage of time with clients and number of client visits. GAO was asked to review Vet Center productivity expectations for counselors and staffing. Among other issues, this report examines the extent to which VHA (1) evaluates its productivity expectations; and (2) assesses Vet Centers' staffing needs. To do this work, GAO reviewed RCS documentation regarding counselors' productivity expectations and analyzed RCS data on counselor productivity expectations and staffing, for fiscal year 2019. GAO interviewed RCS leadership, including district directors, and directors and counselors from 12 Vet Centers, selected for variation in geographic location and total number of clients, among other factors. GAO is making four recommendations, including that VHA (1) evaluate Vet Center productivity expectations for counselors; and (2) develop and implement a staffing model that incorporates key practices. The Department of Veterans Affairs concurred with GAO's recommendations and identified actions VHA is taking to implement them. For more information, contact Debra A. Draper at (202) 512-7114 or firstname.lastname@example.org.[Read More…]
- Visa and Plaid Abandon Merger After Antitrust Division’s Suit to BlockBy Sam NewsJanuary 12, 2021The Department of Justice announced today that Visa Inc. and Plaid Inc. have abandoned their planned $5.3 billion merger.[Read More…]
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