South Bay Resident Pleads Guilty To Money Laundering And Witness Tampering In Connection With Scheme To Sell Stolen Computer Parts

SAN JOSE – Kenneth Tam pleaded guilty today to money laundering and witness tampering in connection with a scheme to sell stolen computer parts announced United States Attorney David L. Anderson and Special Agent in Charge of the Internal Revenue Service, Criminal Investigation (IRS-CI), Kareem Carter.  The plea was accepted by the Honorable Edward J. Davila, U.S. District Judge.

According to the plea agreement, Tam, 59, formerly of San Jose, admitted that from January 2006 through July 2010, he was an employee of a San Francisco Bay Area manufacturer of computer parts.  During that period, and until at least the end of 2010, Tam knowingly obtained stolen merchandise from his employer and sold it to his co-conspirator, Cuong Cao Dang.  Dang owned a company whose business was overwhelmingly that of buying and selling merchandise stolen from Tam’s employer.  Tam admitted that in most instances, he would take cash from Dang as payment for delivery of stolen computer parts.  Tam further admitted that he would deposit the proceeds from the stolen equipment into accounts owned by a foreign national who had given Tam power-of-attorney over the accounts.

Tam’s plea agreement describes various aspects of the money-laundering scheme.  For example, on February 3, 2010, Dang provided Tam with a check for $500,000 made out to the foreign national whose name Tam was using as the nominal owner of the accounts.  The check was provided to Tam for payment of previously provided stolen parts, as well as in pre-payment for additional stolen parts that Tam planned to provide.  Nevertheless, Tam instructed Dang to write “loan” on the memo line of the check; this was an effort to disguise the true purpose of the payment.  Then, after Tam learned there was an investigation into Dang’s company, Tam gave Dang a backdated check for $500,000 to make it appear as though a loan was made and re-paid.   

Tam also admitted various aspects of his scheme to tamper with witnesses.  For example, Tam told Dang that he would lie to his employer and to any investigators about his knowledge and involvement with Dang and Dang’s company.  Tam also contacted the foreign national who owned the accounts in which Tam deposited the funds from the stolen equipment; Tam provided the foreign national with a false cover story to use if she was contacted by law enforcement agents investigating the accounts.  

On October 26, 2017, a federal grand jury handed down a superseding indictment charging Tam with two counts of witness tampering, in violation of 18 U.S.C. § 1512(b)(1), as well as one count each of conspiracy to commit mail fraud, in violation of 18 U.S.C. 1349; money laundering, in violation of 18 U.S.C. § 1956; structuring financial transactions, in violation of 31 U.S.C. § 5324(a)(1) and (a)(3); making a false statement to government agents, in violation of 18 U.S.C. § 1001; and contempt, in violation of 18 U.S.C.§  401(3).  Tam pleaded guilty to one count of money laundering and one count of witness tampering.  The remaining counts will be dismissed at sentencing if Tam complies with the terms of the plea agreement.  

Judge Davila scheduled Tam’s sentencing for May 6, 2019.  Tam faces a maximum sentence of 20 years of imprisonment, and a fine of $500,000 for the money laundering count and a maximum sentence of up to $250,000 for the witness tampering count.  However, the court will consider the U.S. Sentencing Guidelines and the federal statute governing the imposition of a sentence, 18 U.S.C. § 3553, prior to imposing a sentence.

On December 11, 2015, Dang pleaded guilty for his role in the scheme and on October 31, 2017, Judge Davila sentenced Dang to 90 months in prison to be followed by three years of supervised release.              

Assistant United States Attorneys Amie Rooney and Robert Leach are prosecuting the case with the assistance of Lakisha Holliman and Elise Etter.  The prosecution is the result of an investigation by the IRS-CI and the Santa Clara REACT Task Force.