Former U.S. Consulate Guard Pleads Guilty to Attempting to Communicate National Defense Information to China

August 31, 2012

The Federal Bureau of Investigation (FBI) on August 30, 2012 released the following:

“WASHINGTON— Bryan Underwood, a former civilian guard at a U.S. Consulate compound under construction in China, pleaded guilty today in the District of Columbia in connection with his efforts to sell for personal financial gain classified photographs, information, and access related to the U.S. Consulate to China’s Ministry of State Security (MSS).

At a hearing today before U.S. District Judge Ellen S. Huvelle, Underwood pleaded guilty to one count of attempting to communicate national defense information to a foreign government with intent or reason to believe that the documents, photographs, or information in question were to be used to the injury of the United States or to the advantage of a foreign nation.

The guilty plea was announced by Lisa Monaco, Assistant Attorney General for National Security; Ronald C. Machen, Jr., U.S. Attorney for the District of Columbia; James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office; and Eric J. Boswell, Assistant Secretary of State for Diplomatic Security.

Underwood, 32, a former resident of Indiana, was first charged in an indictment on August 31, 2011, with two counts of making false statements and was arrested on September 1, 2011. On September 21, 2011, he failed to appear at a scheduled status hearing in federal court in the District of Columbia. The FBI later located Underwood in a hotel in Los Angeles and arrested him there on September 24, 2011. On September 28, 2011, Underwood was charged in a superseding indictment with one count of attempting to communicate national defense information to a foreign government, two counts of making false statements, and one count of failing to appear in court pursuant to his conditions of release. Sentencing for Underwood has been scheduled for November 19, 2012. He faces a maximum potential sentence of life in prison.

“Bryan Underwood was charged with protecting a new U.S. Consulate compound against foreign espionage, but, facing financial hardship, he attempted to betray his country for personal gain,” said Assistant Attorney General Monaco. “This prosecution demonstrates that we remain vigilant in protecting America’s secrets and in bringing to justice those who attempt to compromise them.”

“Bryan Underwood was determined to make millions by selling secret photos of restricted areas inside a U.S. Consulate in China,” said U.S. Attorney Machen. “His greed drove him to exploit his access to America’s secrets to line his own pockets. The lengthy prison sentence facing Underwood should chasten anyone who is tempted to put our nation at risk for personal gain.”

“Bryan Underwood sought to benefit from his access to sensitive information, but his attempted betrayal was detected before our nation’s secrets fell into the wrong hands,” said FBI Assistant Director in Charge McJunkin. “Together with our partners, the FBI will continue to work to expose, investigate, and prevent acts of espionage that threaten our national security.”

“The close working relationship between the U.S. Department of State’s Diplomatic Security Service, the FBI, and the U.S. Attorney’s Office resulted in the capture and conviction of Bryan Underwood before he could harm the security of our country,” said Assistant Secretary of State Boswell. “The Diplomatic Security Service is firmly committed to thoroughly investigating all potential intelligence threats to our nation.”

According to court documents, from November 2009 to August 2011, Underwood worked as a cleared American guard (CAG) at the construction site of a new U.S. Consulate compound in Guangzhou, China. CAGs are American civilian security guards with top secret clearances who serve to prevent foreign governments from improperly obtaining sensitive or classified information from the U.S. Consulate. Underwood received briefings on how to handle and protect classified information as well as briefings and instructions on security protocols for the U.S. Consulate, including the prohibition on photography in certain areas of the consulate.

Plan to Sell Information and Access for $3 Million to $5 Million

In February 2011, Underwood was asked by U.S. law enforcement to assist in a project at the consulate, and he agreed. In March 2011, Underwood lost a substantial amount of money in the stock market. According to court documents, Underwood then devised a plan to use his assistance to U.S. law enforcement as a “cover” for making contact with the Chinese government. According to his subsequent statements to U.S. law enforcement, Underwood intended to sell his information about and access to the U.S. Consulate to the Chinese MSS for $3 million to $5 million. If any U.S. personnel caught him, he planned to falsely claim he was assisting U.S. law enforcement.

As part of his plan, Underwood wrote a letter to the Chinese MSS expressing his “interest in initiating a business arrangement with your offices” and stating, “I know I have information and skills that would be beneficial to your offices [sic] goals. And I know your office can assist me in my financial endeavors.” According to court documents, Underwood attempted to deliver this letter to the offices of the Chinese MSS in Guangzhou but was turned away by a guard who declined to accept the letter. Underwood then left the letter in the open in his apartment hoping that the Chinese MSS would find it, as he believed the MSS routinely conducted searches of apartments occupied by Americans.

In May 2011, Underwood secreted a camera into the U.S. Consulate compound and took photographs of a restricted building and its contents. Many of these photographs depict areas or information classified at the secret level. Underwood also created a schematic that listed all security upgrades to the U.S. Consulate and drew a diagram of the surveillance camera locations at the consulate. In addition, according to his subsequent statements to U.S. law enforcement, Underwood “mentally” constructed a plan in which the MSS could gain undetected access to a building at the U.S. Consulate to install listening devices or other technical penetrations.

According to court documents, the photographs Underwood took were reviewed by an expert at the State Department’s Bureau of Diplomatic Security who had original classification authority for facilities, security, and countermeasures at the U.S. Consulate. The expert determined that many of the photographs contained images classified at the secret level and that disclosure of such material could cause serious damage to the United States.

In early August 2011, Underwood was interviewed several times by FBI and Diplomatic Security agents, during which he admitted making efforts to contact the Chinese MSS, but falsely claimed that he took these actions to assist U.S. law enforcement. On August 19, 2011, Underwood was again interviewed by law enforcement agents, and he admitted that he planned to sell photos, information, and access to the U.S. Consulate in Guangzhou to the Chinese MSS for his personal financial gain.

The U.S. government has found no evidence that Underwood succeeded in passing classified information concerning the U.S. Consulate in Guangzhou to anyone at the Chinese MSS.

This investigation was conducted jointly by the FBI’s Washington Field Office and the State Department’s Bureau of Diplomatic Security. The prosecution is being handled by the U.S. Attorney’s Office for the District of Columbia and Trial Attorney Brandon L. Van Grack from the Counterespionage Section of the Justice Department’s National Security Division.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

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To find additional federal criminal news, please read Federal Criminal Defense Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition Defense, OFAC SDN Sanctions Removal, International Criminal Court Defense, and US Seizure of Non-Resident, Foreign-Owned Assets. Because we have experience dealing with INTERPOL, our firm understands the inter-relationship that INTERPOL’s “Red Notice” brings to this equation.

The author of this blog is Douglas C. McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


LaFrances Dudley O’Neal and Donald M. Ramsey Indicted in an Alleged Mortgage Fraud Scheme

December 11, 2011

The Federal Bureau of Investigation (FBI) on December 9, 2011 released the following:

“Two Indicted in Mortgage Fraud Scheme

D.C. Housing Authority was Among Targets of the Scam

WASHINGTON— LaFrances Dudley O’Neal, 47, of Clinton, Maryland, and Donald M. Ramsey, 44, of Alexandria, Virginia, have been indicted on charges that they took part in a mortgage fraud that cost lenders more than $700,000.

The indictments, unsealed today, were announced by U.S. Attorney Ronald C. Machen Jr., Daniel S. Cortez, Inspector in Charge, Washington Division, U.S. Postal Inspection Service, Kenneth R. Taylor, Special Agent in Charge of the Office of Inspector General of the U.S. Department of Housing and Urban Development, and James W. McJunkin, Assistant Director in Charge of the FBI’s Washington Field Office.

O’Neal and Ramsey were indicted on December 7, 2011 in the U.S. District Court for the District of Columbia on charges of bank fraud, mail fraud, and conspiracy to commit bank/mail fraud. The indictment also includes a forfeiture count seeking all proceeds from the defendants’ crimes. In addition, O’Neal was charged with one count of fraud under District of Columbia law. If convicted, under the federal sentencing guidelines, O’Neal and Ramsey face potential sentences of 37 to 46 months in prison. Both have pleaded not guilty to the charges.

According to the indictment, O’Neal, Ramsey and others identified homes in the Washington, D.C. area, as well as straw buyers to obtain mortgages through false loan applications, forged documents, and fraudulent settlements. According to the indictment, Ramsey acted as a mortgage broker. He and others are accused of providing false documentation to the lenders, such as false verifications of deposit, forged Uniform Residential Loan Applications, and false rental agreements, causing the lenders to believe that the straw buyers had the means and the willingness to pay the mortgages.

The indictment alleges that every one of the mortgages fell into default and the lenders were forced to foreclose, with an aggregate loss to the lenders in excess of $700,000.

The indictment further alleges that settlement companies paid both O’Neal and Ramsey money from the fraudulently obtained loan proceeds, at times using fraudulent “invoices” which falsely stated that renovation work had recently been completed or consulting services had been provided and that money was due at settlement. As a result of these false invoices and inaccurate settlement statements, settlement agents turned over more than $437,000 of fraudulent loan proceeds to O’Neal and Ramsey.

With respect to the fraud count under D.C. law, the indictment charges that O’Neal arranged for four of the houses, which were obtained through the mortgage fraud scheme, to be placed in the District of Columbia Housing Authority’s Section 8 Tenant-Based Assistance Housing Choice Voucher program. Using, at times, forged management agreements, O’Neal received money from the D.C. Housing Authority through Section 8 payments through her management company. She also received emergency rental payments or security deposits from charities or governmental agencies on behalf of the needy tenants.

However, she failed to maintain the Section 8 houses in decent, safe, and sanitary conditions, in spite of payments by the D.C. Housing Authority and the tenants. And, despite promising the straw buyers that she would pay the mortgages and even though she received Section 8 money from the D.C. Housing Authority and their client tenants, O’Neal failed to pay the mortgages on all four properties and the lenders foreclosed on them.

An indictment is merely a formal charge that a defendant has committed a violation of criminal laws and every defendant is presumed innocent until, and unless, proven guilty.

The case was investigated by the U.S. Postal Inspection Service, the Office of the Inspector General of the U.S. Department of Housing and Urban Development, the FBI’s Washington Field Office, the Metropolitan Police Department, and the District of Columbia Department of Insurance Securities and Banking. It is being prosecuted by Assistant U.S. Attorney Virginia Cheatham, with assistance from the U.S. Attorney’s Office’s Asset Forfeiture and Money Laundering Section, paralegal specialist Sarah Reis, forensic accountant Crystal Boodoo, and legal assistant Krishawn Graham.”

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Douglas McNabb – McNabb Associates, P.C.’s
Federal Criminal Defense Attorneys Videos:

Federal Crimes – Be Careful

Federal Crimes – Be Proactive

Federal Crimes – Federal Indictment

Federal Crimes – Detention Hearing

Federal Mail Fraud Crimes

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To find additional federal criminal news, please read Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write and/or report extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN Sanctions Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.


Stewart Chase, Former Background Investigator For Federal Government, Pleads Guilty to Making a False Statement

July 22, 2011

The U.S. Attorneys Office District of Columbia on July 21, 2011 released the following:

“WASHINGTON – Stewart Chase, 53, a former background investigator who did work under contract for the U.S. Office of Personnel Management (OPM), pled guilty today to a charge stemming from his falsification of work on background investigations of federal employees and contractors, announced U.S. Attorney Ronald C. Machen Jr. and Patrick E. McFarland, Inspector General for the Office of Personnel Management.

Chase, of Sterling, Virginia, pled guilty in the U.S. District Court for the District of Columbia to a charge of making a false statement. The Honorable James E. Boasberg scheduled sentencing for October 6, 2011. The charge carries a statutory penalty of up to five years in prison and a fine of up to $250,000. As part of the guilty plea, Chase has agreed to pay $131,101 in restitution to the federal government.

According to a statement of offense submitted to the Court, Chase was employed by United States Investigations Services and CACI International Inc. as an investigator under contract to conduct background investigations on behalf of OPM’s Federal Investigative Services.

Between July 2006 and December 2007, in more than four dozen Reports of Investigations on background investigations, Chase represented that he had interviewed a source or reviewed a record regarding the subject of the background investigation when, in fact, he had not conducted the interview or obtained the record. These reports were utilized and relied upon by the agencies requesting the background investigations to determine whether the subjects were suitable for positions having access to classified information, for positions impacting national security, or for receiving or retaining security clearances.

Chase’s false representations have required OPM’s Federal Investigative Services to reopen and rework numerous background investigations that were assigned to him during the time period of his falsifications, at an estimated cost of $131,101 to the U.S. government. The restitution in this case will be paid to Federal Investigative Services.

This is one of several cases prosecuted by the U.S. Attorney’s Office for the District of Columbia in the last three years involving false representations by background investigators and record checkers working on federal background investigations. Eight background investigatorsand two record checkers previously were convicted of charges.

Federal Investigative Services, formerly known as the Center for Federal Investigative Services or the Federal Investigative Services Division, through its workforce of approximately 7,300 investigators, is responsible for conducting background investigations for numerous federal agencies and their contractors, on individuals either employed by or seeking employment with those agencies or contractors. Federal Investigative Services processed approximately 2 million investigations in the 2010 fiscal year.

In conducting background investigations, the investigators conduct interviews of individuals who have information about the person who is the subject of the review. In addition, the investigators seek out, obtain, and review documentary evidence, such as employment records, to verify and corroborate information provided by either the subject of the background investigation or by persons interviewed during the investigation. After conducting interviews and obtaining documentary evidence, the investigators prepare a Report of Investigation containing the results of the interviews and document reviews, and electronically submit the material to OPM in Washington, D.C. OPM then provides a copy of the investigative file to the requesting agency, which can use the information to determine an individual’s eligibility for employment or a security clearance.

In announcing the guilty plea, U.S. Attorney Machen and Inspector General McFarland praised the efforts of Special Agent Christopher Sulhoff, OPM, Office of the Inspector General, and Philip Kroop, Chief of Quality and Integrity Assurance, OPM-Federal Investigative Services. Mr. Machen and Mr. McFarland also acknowledged the work of Assistant U.S. Attorneys Ellen Chubin Epstein, Mary Chris Dobbie and Seth B. Waxman, who investigated and prosecuted this matter.”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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Judge Weighs Mistrial in Clemens Case

July 14, 2011

The Wall Street Journal on July 14, 2011 released the following:

“By Devlin Barrett

The judge in the Roger Clemens trial said Thursday he will probably have to declare a mistrial after jurors improperly heard details that he had previously ruled were inadmissible.

“I can’t in good faith leave this case in a situation where a man’s liberty is at risk when the government should have taken steps to ensure that we were not in this situation,’’ said Judge Reggie Walton, who is overseeing the trial at federal court in Washington, D.C. “I don’t see how I can unring the bell.’’

Clemens, considered one of the greatest pitchers in baseball history, is on trial for allegedly lying to lawmakers when he repeatedly claimed under oath in 2008 that he had not used steroids or human growth hormone. He faces a possible prison sentence if convicted.

The second day of testimony came to a grinding halt Thursday morning after prosecutors played tape of Clemens being questioned by a member of Congress. In the video shown to the jury, a lawmaker asks Clemens about statements made by Laura Pettitte, the wife of Andy Pettitte, a friend and former teammate of Clemens on the New York Yankees and Houston Astros.

The judge had previously ruled that the jurors would not be told that Ms. Pettitte had confirmed her husband’s account that Clemens once admitted using human growth hormone. She told investigators that her husband told her about that conversation shortly after it happened in 1999 or 2000.

The judge ruled the conversation with the wife was hearsay, and not admissible. Yet the video shown to the jury showed a mention of that statement by Laura Pettitte.

“I think a first year law student would know that you can’t bolster the credibility of a witness with clearly inadmissible evidence,’’ Judge Walton told prosecutors on Thursday. “There must be a total misunderstanding on the government’s part,’’ said the judge. “I thought I had made it perfectly clear.’’”

To find additional federal criminal news, please read The Federal Crimes Watch Daily.

Douglas McNabb and other members of the U.S. law firm practice and write extensively on matters involving Federal Criminal Defense, INTERPOL Red Notice Removal, International Extradition and OFAC SDN List Removal.

The author of this blog is Douglas McNabb. Please feel free to contact him directly at mcnabb@mcnabbassociates.com or at one of the offices listed above.

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