Criminal Investigations

NORFOLK, Va. – Nathan Allen Dunn, 30, of Brookwood, Ala., was sentenced today to 87 months in prison, followed by three years of supervised release, for wire fraud and for receiving bribes in his position as a USCG Transportation Administrator.  Dunn was also ordered to pay $779,549.85 in restitution to the U.S. Treasury. 

            Neil H. MacBride, United States Attorney for the Eastern District of Virginia; Otis E. Harris, Jr., Special Agent in Charge, Coast Guard Investigative Service, Chesapeake Region; and Michael P. Dawson, Special Agent in Charge, Department of Homeland Security, Office of Inspector General, Washington Field Office, made the announcement after sentencing by   United States District Judge Mark S. Davis. 

            Dunn previously pled guilty to the charges on January 4, 2013.  According to court documents, Dunn, formerly an active duty U.S. Coast Guard (USCG) Petty Officer, Second Class was assigned as a Transportation Administrator at the Surface Forces Logistics Center in Norfolk, Va.  Dunn’s primary duty was to coordinate the shipping of large freight such as boats, trailers, generators, etc., between USCG bases located throughout the United States.  Dunn was responsible for operating the Department of Defense Transportation Command (TransCom) automated system to bid out and then contract the shipments with authorized freight brokerage companies. 

            Dunn’s co-conspirator, Huffman Earl Monk, was the owner and operator of 12 freight brokerage companies that were headquartered in a single office in Brookwood, Ala. Most of Monk’s freight brokerage companies contracted with TransCom to ship military-related freight. 

In September 2009, Monk traveled to Norfolk to meet with Dunn, who was only recently assigned as a USCG Transportation Administrator.  As a result of their discussions, Dunn and Monk entered into an agreement whereby Dunn would agree to issue over-priced USCG freight contracts to Monk’s freight companies, in exchange for Monk giving bribes in the form of kickbacks as percentage of the contract profits to Dunn.  Shortly after Monk and Dunn entered into their agreement, Monk began giving monetary bribes to Dunn by providing him with debit cards linked to several of Monk’s business bank accounts.  In order to inflate the profits Monk and Dunn would earn from each contract, Monk encouraged Dunn to fraudulently manipulate various data entered into the TransCom computer system in order to artificially inflate the price of the shipping contracts Dunn steered to Monk’s freight companies.  Dunn and Monk also engaged in creating at least six false shipping contracts for military freight shipments that did not exist, thereafter awarding the contract and profits to one or more of Monk’s companies.  Since no freight was actually shipped pursuant to these false contracts, the USCG payments to Monk’s companies were all profit, resulting in Dunn receiving half of the contract award payments from Monk.  Over a two-year period, Dunn received over $220,000 in bribe payments from Monk.  The total loss to the United States based on these fraudulent military shipping contracts was $779,549.85.

            The military has recently implemented a number of internal changes to TransCom’s computer systems to enhance the integrity of the bidding and contracting process used by Department of Defense and Department of Homeland Security Transportation Officers.



Judge Davis previously sentenced Huffman Monk on April 29, 2013 in Norfolk, Virginia, to a term of 63 months imprisonment, followed by three years of supervised release, for wire fraud and for paying bribes to Dunn.  Monk was also ordered to pay a fine of $15,000 and $779,549.85 in restitution to the U.S. Treasury.  



This investigation was brought as part of the Hampton Roads Procurement Fraud Initiative, a collaboration of defense investigative agencies, Inspectors General, and law enforcement dedicated to strengthening the integrity of the federal procurement system.

This case was investigated by the United States Coast Guard Investigative Service and the Department of Homeland Security, Office of the Inspector General, Washington Field Office, with the cooperation and assistance of the Coast Guard Surface Forces Logistics Center.  Assistant United States Attorneys Stephen W. Haynie and V. Kathleen Dougherty are prosecuting the case on behalf of the United States.

A copy of this press release may be found on the website of the United States Attorney's Office for the Eastern District of Virginia at http://www.justice.gov/usao/vae.  Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia at http://www.vaed.uscourts.gov/ or on https://pcl.uscourts.gov/.

Former U.S. Border Patrol Agents Raul and Fidel Villarreal, brothers who smuggled at least 1,000 illegal immigrants into the United States in exchange for more than $1 million in bribes, were sentenced today to 35 and 30 years in prison, respectively.

The brothers were convicted by a federal jury on August 10, 2012, of conspiracy to bring in illegal aliens for financial gain, multiple counts of bringing in illegal aliens for financial gain, conspiracy to launder money and receiving bribes. The brothers smuggled their customers while on duty, in uniform and in their Border Patrol vehicles and were assisted by a Tijuana police chief.

In handing down the sentences and $250,000 fines for each, U.S. District Judge John A. Houston told the brothers he was “disgusted” by their actions. The judge also noted that ignoring their duty to protect the border “impacted national security,” and that he wanted the lengthy sentences to send a message that such a serious violation of the public’s trust would not be tolerated.

At the hearing, Assistant U.S. Attorney Tim Salel urged the judge to impose the harshest sentence, primarily because the brothers abused the sacred trust of the public and neglected to protect the border. But he also noted that as law enforcement closed in, the brothers planned to kill co-conspirators to prevent them from testifying. And he argued the brothers deserved a long sentence because they had no regard for the safety of the illegal border crossers who were recklessly jammed into Border Patrol vehicles and transported at high speeds over treacherous terrain, just to maximize profits.

“This is a case of unmitigated greed and betrayal by two senior Border Patrol agents who smuggled aliens while on duty instead of patrolling the border,” Salel told the court. “The defendants are experienced agents, 10-year veterans. This was not a case of misguided rookies who got involved with the wrong crowd. They knew they had pledged to defend the border. Yet these guys set up their own organization to line their pockets.”

U.S. Attorney Laura Duffy said she was very pleased with the outcome of the case.

“The audacious way these brothers so easily tossed aside their loyalty to their country and to fellow agents,who put their lives on the line every day protecting our borders, is appalling,” Duffy said. “This sentence provides justice for a public betrayed, and reflects that this was, by far, among the most egregious violations of the public’s trust we’ve seen by federal officials in many years.”

“Today’s sentencing sends a clear message: DHS will not tolerate any type of employee misconduct, especially criminal activity that undermines the core values of our organization and the thousands of DHS employees who uphold those values in their mission to protect the American public,” said Joe Jeronimo, special agent in charge for the Office of Professional Responsibility, Western Region. “I commend the integrity and perseverance of all the investigators and prosecutors who worked tirelessly to ensure that justice was fully served in a criminal case that unfortunately involved a very egregious breach of public trust.”

Dennis M. McGunagle, special agent in charge of the Office of Inspector General, Department of Homeland Security, said, “The DHS Office of Inspector General has no tolerance for acts of corruption committed by DHS employees. We commend the efforts of the U.S. Attorney’s office for bringing these individuals to justice.”

While working as agents, the brothers formed a smuggling organization with what seemed to be the perfect cover: Many of their customers were shuttled in squad cars by a Tijuana police chief to the border. The customers would be transported down rugged Otay Mountain trails or through remote areas near Imperial Beach by the Villarreals in Border Patrol vehicles on the way to remote drop-off locations. If anyone were to question them, they could claim the passengers were being arrested. It’s what they referred to as the “guaranteed method.”

“The Villarreals used their specialized training and knowledge of the border – particularly the vulnerable smuggling routes near Imperial Beach and Otay Mountain – to smuggle aliens,” Salel wrote in court documents. “By pretending to arrest the aliens and transporting them in their assigned Border Patrol vehicles, the Villarreals could ‘hide in plain sight’ and maintain plausible deniability if another law enforcement agent was watching them.”

Raul Villarreal, the younger brother who was hired by the Border Patrol in 1995 to work at the Imperial Beach station, eventually became a public information officer and once made a public service announcement warning the Mexican people about the dangers of alien smugglers who take advantage of illegal border crossers. Ironically, for the announcement Raul played the part of an unscrupulous smuggler who showed callous indifference to the welfare of crossers. Judge Houston said his sentence was longer because he was the organizer and ring leader.

Fidel Villarreal, who was hired in 1998, also rose through the ranks to become a mountain supervisor for the Brown Field Border Patrol station. He was the supervisor and manager of the smuggling operation.

The brothers operated the smuggling business for 14 months in 2005 and 2006, conspiring with partners in Tijuana – including Claudia Gonzalez, Armando Garcia and even a Tijuana police chief.

Gonzalez would leave envelopes containing cash – usually around $10,000 to $13,000 per smuggling trip, three or four times a week and sometimes multiple times a day - under the front seat of the Villarreals’ luxury vehicles, which were usually parked at a shopping mall in Tijuana. Fidel had a BMW and Raul had a Mercedes SUV.

During the investigation, agents used multiple confidential informants to infiltrate the criminal organization, and installed cameras on poles in areas where migrants were dropped off. They planted undercover recording devices, put tracking instruments on Border Patrol vehicles and even followed a smuggling load by airplane.

In June of 2006, the Villarreals were tipped off about the investigation, abruptly resigned and fled to Guadalajara along with other coconspirators. While living in Mexico, they kept tabs on the investigation and warned members of the organization not to cooperate with authorities. The brothers’ desperation piqued and they made plans to have coconspirators murdered in Mexico. The murders never took place.

In one instance, they held a gun to the head of a coconspirator, who supervised some of the drivers who the Villarreals suspected of cooperating with U.S. officials, but he was able to escape. Unbeknownst to the Villarreals, The coconspirator met with another coconspirator in a graveyard in Tijuana, warning her of the plot to kill her and urging her to go to San Diego.

In April of 2008, the brothers were indicted, along with Garcia and Gonzalez. They were arrested in Tijuana in October of 2008 and eventually extradited to the U.S. to face trial. Garcia was convicted along with the Villarreal brothers; Gonzalez pled guilty on December 10, 2009 to conspiracy to bring in illegal aliens for financial gain, bribery, and money laundering. Garcia is scheduled for sentencing on July 22. Gonzalez was sentenced in August 2012 to time served, which was three years, 10 months.

Derek Matthews, 46, of Harwood, Md., pleaded guilty today to accepting bribes from a government contracting company in exchange for using his position to help the company find and win contracts. 

Neil H. MacBride, U. S. Attorney for the Eastern District of Virginia, Mythili Raman, Acting Assistant Attorney General for the Justice Department’s Criminal Division, and Charles K. Edwards, U.S. Department of Homeland Security (DHS) Deputy Inspector General, made the announcement after the plea was accepted by U.S. District Judge Leonie M. Brinkema. 

Matthews was charged by criminal information on April 11, 2013, with one count of conspiracy to commit bribery.  Matthews faces a maximum penalty of five years in prison when he is sentenced on July 19, 2013.    

Matthews served as Deputy Assistant Director for Operations for the DHS’s Federal Protective Services (FPS) and was later promoted to FPS Regional Director for the National Capital Region.  In the fall of 2011, Matthews agreed with Keith Hedman, an executive at an Arlington, Va., security service consulting company referred to as Company B in court records, that in exchange for a monthly payment from Company B and a percentage of any new business obtained, Matthews would use his position to help Company B find and win U.S. government contracts, including with FPS.  Matthews engaged in a series of official acts, including lobbying of government officials and sharing of information with Hedman, in an effort to obtain business for Hedman and Company B. In turn, Hedman and Company B paid Matthews three monthly payments totaling $12,500.

Hedman pleaded guilty on March 18, 2013, to conspiracy to commit bribery in connection with Matthews’ scheme, along with conspiracy to commit major government fraud as part of a separate scheme to fraudulently obtain more than $31 million in government contract payments that should have gone to disadvantaged small businesses.

This case was investigated by the Washington Field Office for the DHS Office of the Inspector General (OIG), the National Aeronautics and Space Administration OIG, the Small Business Administration OIG, the Defense Criminal Investigative Service, and the General Services Administration OIG. Assistant U.S. Attorneys Chad Golder and Ryan Faulconer  are prosecuting the case on behalf of the United States.