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No.

-CR-09 00928 JFp\JT


Case5:09-cr-00928-JF Document8 Filed09/23/09 Page1 of 7

UNITED STATES DISTRICT COVltlD


NORTHERN DISTRICT OF CALIF~~Al3 A II: 25

',ICHIIRO w. WIEKING
SAN JOSE DIVISION , CLERK
lJ 5. DiSTRlfT COURl
fio. DlSl O~ CA. S..!.
THE UNITED STATES OF AMERICA
VS.

SETH SUNDBERGE-tiHn9

INDICTMENT
COUNT ONE: 18 U.S.C. § 1341 - Mail Fraud

COUNT TWO: 26 U.S.C. § 7206(1) - Fraud and False Statement in Tax Return

COUNT THREE: 18 U.S.C. § 287 - False and Fraudulent Claims

A true hill.

Foreperson

Filed in open court this ---""----1'---

A.D. 2009

UNITE TEJUDGE
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page2 of 7

ORIGINAL
1 JOSEPH P. RUSSONIELLO (CSBN ~'a\jJ)E 0
United States Attorney ,
2
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St.? '2."3 A \'\ 'lL
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3

5
E-filing
6

8 UNITED STATES DISTRICT COURT


9 NORTHERN DISTRICT OF CALIFORNIA
10 SAN JOSE DIVISION
11 UNITED STATES OF AMERICA,
Plaintiff, ell -69 00928 F
12

13 v. )
) VIOLATIONS: 18 U.S.C. § 1341-Mail
Fraud; 26 U.S.C. § 7206(1) - False
PVT
) Statement on Tax Return; 18 U.S.C. § 287-

~
14 SETH SUNDBERG, False Claim Against the United States
15 Defendant. )
------------------------) SAN JOSE VENUE
16
17 INDICTMENT
C-J
18 The Grand Jury charges:
19 The Scheme and Artifice to Defraud
20 At all times relevant to this Indictment:
21 1. Defendant Seth Sundberg ("Sundberg") resided in San Carlos, California.
22 2 On or about April 14, 2009, Sundberg signed under the penalties of perjury and
23 filed a Form 1040 Individual Income Tax Return for the 2008 tax year with the United States
24 Department of Treasury, Internal Revenue Service ("IRS").
25 3. On that 2008 income tax return, Sundberg made the following false statements,
26 among others:
27 a. in Schedule B (Interest and Ordinary Dividends), Sundberg claimed to have
28 received $5,732,580 in taxable "original issue discount" ("OlD") interest income;
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page3 of 7

1 b. also in Schedule B, Sundberg claimed to have paid $5,732,441 in tax as a


2 result of that purported OID income;
3 c. in box 71 of the Form 1040, Sundberg claimed to have made total tax
4 payments to the IRS of $5,087,059;
5 d. in box 73a of the Form 1040, Sundberg claimed that he was owed a refund
6 from the IRS of $5,084,010.
7 4. As a result of the false statements and claims he made in his 2008 tax return, on or
8 about May 29, 2009 the IRS mailed Sundberg a refund check in the amount of $5,083,609.25.
9 COUNT ONE: (18 U.S.C. § 1341 - Mail Fraud)
10 5. Paragraphs 1 through 4 are realleged and incorporated as if fully set forth here.
11 6. On or about May 29, 2009, in the Northern District of California, and elsewhere,
12 the defendant,
13 SETH SUNDBERG,
14 having devised and intended to devise a scheme and artifice (A) to defraud as to a material
15 matter, and (B) to obtain money by means of materially false and fraudulent pretenses,
16 representations, and promises, for the purpose of executing such scheme and artifice and
17 attempting so to do, did knowingly cause to be delivered by United States mail a federal income
18 tax refund check;
19 All in violation of Title 18, United States Code, Section 1341.
20 COUNT TWO: (26 U.S.C. § 7206(1) - Fraud and False Statement in Tax Return)
21 7. Paragraphs 1 through 4 are realleged and incorporated as if fully set forth here.
22 8. On or about April 14, 2009, in the Northern District of California, the defendant,
23 SETH SUNDBERG,
24 did willfully make and subscribe a U.S. Individual Income Tax Return which he verified by a
25 written declaration that it was made under the penalties of perjury, and which he did not believe

26 to be true and correct as to every material matter, in violation of Title 26, United States Code,
27 Section 7206(1).
28 II
2
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page4 of 7

1 COUNT THREE: (18 U.S.C. § 287 - False or Fraudulent Claims)


2 9. Paragraphs 1 through 4 are realleged and incorporated as if fully set forth here.
3 10. On or about April 14, 2009, in the Northern District of California, the defendant,
4 SETH SUNDBERG,
5 did make and present a claim upon and against the United States and a department and agency
6 thereof, knowing at the time he made the claim that it was false, fictitious, and fraudulent, in
7 violation of Title 18, United States Code, Section 287.
8 FORFEITURE ALLEGATION: (18 U.S.C. § 98I(a)(I)(D)(v) and 28 U.S.c. § 246I(c)-
Forfeiture of Proceeds of Mail Fraud)
9

10 11. The factual allegations contained in Count 1 of this Indictment are re-alleged and
11 by this reference fully incorporated here for the purpose of alleging forfeiture pursuant to the
12 provisions of 18 U.S.C. § 981 (a)(1)(D)(v) and 28 U.S.C. 2461 (c).
13 12. Upon a conviction of the offense alleged in Count 1, the defendant,
14 SETH SUNDBERG,
15 shall forfeit to the United States all property, constituting and derived from proceeds traceable to
16 said offense, including but not limited to the following property:
17 (a) Money Judgment: a sum of money equal to $5,083,609, representing the
18 gross proceeds obtained as a result of the offense.
19 (b) Cash, Currency, and Monetary Instruments:
20 I. $322,000 in cashier's checks recovered from Seth Sundberg on
21 September 9, 2009.
22 2. $117,473 in cash recovered from Seth Sundberg on September 9,
23 2009.
24 3. $75,729 in gold and silver coins recovered from Seth Sundberg on
25 September 9,2009.
26 13. If any of said property, as a result of any act or omission of the defendant-
27 (a) cannot be located upon the exercise of due diligence;
28 (b) has been transferred or sold to or deposited with, a third person;
3
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page5 of 7

1 (c) has been placed beyond the jurisdiction of the Court;


2 (d) has been substantially diminished in value; or
3 (e) has been commingled with other property which cannot be subdivided
without difficulty;
4 any and all interest defendant has in other property shall be vested in the United States and
5 forfeited to the United States pursuant to Title 21, United States Code, Section 853(P), as
6 incorporated by Title 28, United States Code, Section 2461(c) and Rule 32.2 of the Federal Rules
7 of Criminal Procedure.
8
DATED: ~ TRUE BILL
9

10
d\Y'I/\-- ~J-f~
11 FOREPERSON
12
JOSEPH P. RUSSONIELLO
13 United States Attorney

16

17
(Approved as to form: T*ihIi''<nc.."..,...,..,,-'
18 A

19

20

21

22

23

24

25

26

27

28
4
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page6 of 7
AO 257 (R""ev,,-.",617,,8>1-)____
DEFE~_~!-NT IN-FO~MATION RELATIVE TO A CRIMINAL ACTION - IN U.S. DISTRICT COURT ~
[ __
BY: 0 COMPLA!I:!U\O'ii~MATION IZI INDICTMENT
\ \
, ' - Name of District Court, and/or Judge/Magi.trate Location

,;
0 SUPER ED
S IN
G
~.
: ~'
QNORTHERN DISTRICT OF CALIFORNIA
--J
.. - - - OFFENSE CHARGElJ.. -\\, 2--, 1...<' z-'---- .------~
18 U.S.c. § J~ 'S~il2F1aud;Z6 U.S.c. § D ~,:f " DEFENDANT· U.S.
7206(1) - FiIl~~Statement on Tax R~twn; 18 Petty
U.S.C. § 287 -False R~*g:&\Qt'lli.e United 0 Minor • . ---------------
States \1,\Cl-lf' CLl:.l',\\ COIlRI
Si?ICI S J
0 Misde-
meanor I
SETH SUNDBERG
==--------------
Il S. III -r Of Ci\· . . r7I Felony I DISTRICT COURT NUMBER
lio- \jIS 1- U!...!
. PENALTY:
See Attachment
CR . 09 00928 ~--------- DEFENDANT -------~
JF P
l_ ------ .. _--- -=:::-:-=--====: IS NOT IN CUSTODY
( - - - - - - - - - - . - - PROCEEDING
Has not been arrested, pending outcome this proceeding.
i Name of Complaintant Agency. or Person (&Title. if any)
1) D If not detained give date any prior summons'-
! Internal Revenue Service
was served on above charges .,
----I

person is awaiting trial in another Federal or State


2) 0 Is a Fugitive
D Court, give name of court 3) 0 Is on Bailor Release from (show District)

I this person/proceeding is transferred from another ----------_._-----_._-

I
D district per (circle one) FRCrP 20. 21 or 40. Show
District IS IN CUSTODY

4) IZI On this charge


this is a reprosecution of 5) 0 On another conviction

D
charges-previously dismissed
which were dismissed on SHOW
6) D Awalllng mal on omer
,.h~rnp.~
} 0 Fed'i 0 State

I o
motion of:
U.S. Att'y 0 Defense
} DOCKET NO. If answer to (6) is "Yes", show name of institution

tljis' prosecution relates to a


'1
0 pending case involving this same If "Yes"
defendant
prior proceedings or appearance(s)
MAGISTRATE
Has detainer
been filed?
DYes
o No
} give date

:I IZI CASE NO. filed


before U.S. Magistrate regarding •
this defendant were recorded under Month/DayNear
I 09-70796-RS DATE OF
'----------- ARREST
Name and Office of Person Or... if Arresting Agency & Warrant were not
Furnishing Information on JOSEPH P. RUSSONIELLO
THIS FORM Month/DayNear
IZI U_S_ Att'y D Other U.S_ Agency
DATE TRANSFERRED.
TO U.S. CUSTODY
----===---=-..=---=--=
. .-
Name of Ass!, U.S. Att'y
(if assigned) JEFFREY B. SCHENK o This report amends AD 257 previously submitted

------- - - - - .. ------. - - - - ADDITIONAL INFORMATION OR COMMENTS - - - - - - - - - - - - -


PROCESS:
o SUMMONS IZI NO PROCESS' D WARRANT Bail Amount:
If Summons, complete following:
o Arraignment D Initial Appearance *Where defendant previously apprehended on complaint, no new summons
or warrant needed, since Magistrate has scheduled arraignment
Defendant Address:
Daterrime:
-----------
Before Judge:
-----------
Case5:09-cr-00928-JF Document8 Filed09/23/09 Page7 of 7

United States v. Seth Sundberg


Maximum Penalties

18 U.S.C. § 1341 - Mail Fraud


10 years imprisonment
3 years Supervised Release
$250,000 fine
$100 Special Assessment Fee

26 U.S.C. § 7206(1) - False Statement on Tax Return


3 years imprisonment .
1 year Supervised Release
$100,000 fine (plus costs of prosecution)
$100 Special Assessment Fee

18 U.S.C. § 287 - False Claim Against the United States


5 years imprisonment
3 years Supervised Release
$250,000 fine (or twice the value ofthe gross gain or loss)
$100 Special Assessment
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page1 of 27

for the

United States of America


v.
SETH SUNDBERG,
alk/a Franco Metcalf

Defendant

CRIMINAL COMPLAINT

I, the complainant in this case, state that the following is true to the best of my knowledge and belief.

On or about the date of 0411412009 in the county of __


S_an_M-ea",tecco__ in the _-,N.:..0:..crtc..hc..:e.:..rn-,-_ District of
California ,the defendant violated 26 U. S. C. § 7206(1) and 18 U.S.C. 287
, an offense described as follows:
Count One: that the defendant did knowingly and willfully make and subscribe a Form 1040 federal income tax return,
which was verified by a written declaration stating that it was made under penalty of perjury, knowing full well that the
said tax return contained a false statement as to a material matter, to wit, that $5,087,059 in 1099-01D income had
been withheld by various payers; Count Two: that the defendant did knowinlgy make a false, fictitious, and fraudulent
claim against the United States Internal Revenue Service, to wit: a claim made on a Form 1040 federal income tax
return for a refund of $5,084,010.

REQUESTED PROCESS: Arrest warrant

REQUESTED BAIL: No bail (government will request detention)

This criminal complaint is based on these facts:


PENALTIES: 18 U.S.C. 287: 5 years prison, 3 year TSR, $250,000 fine (or twice value of the gross gain or loss), $100
SAF; 26 U.S.C. 7206(1): 3 years imprisonment, 1 year TSR; $100,000 fine (plus costs of prosecution), $100 SAF.

See attached affidavit of SIA Quyen Madrigal for facts underlying this complaint.

16 Continued on the attached sheet.

Printed name and title

Sworn to before me and signed in my presence.

Date: 't r/1l/O~


City and state: SAN JOSE, CA RICHARD SEEBORG, U.S. Magistrate Judge
Printed name and ti &OCUKriENT NO. eSA's

1t
lNlTIA
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page2 of 27

AFFIDAVIT IN SUPPORT OF
APPLICATION FOR SEARCH WARRANT

I, Quyen Madrigal, Special Agent with the Internal Revenue Service, Criminal
Investigation, being duly sworn, do hereby state the following:
INTRODUCTION
I make this affidavit in support of an application for an arrest and search warrant. The
arrest warrant is for:
SETH SUNDBERG (SUNDBERG), born July 8, 1975 who resides at 26 King Court, San
Mateo, California. The facts set forth in this affidavit establish that there is probable
cause to believe that SUNDBERG is guilty of filing a false tax return and submitting a
false claim to the government.
The search warrant application is for authorization to search the locations set forth below,
each of which is more fully described in Attachments A-I through A-5 to this Affidavit, for
documents, records, materials, and items relating to violations of Title 26, United States Code,
Section 7206(1) (Fraud and False Statement) and Title 18, United States Code, Section 287
(False or Fraudulent Claims). As this Affidavit will show, there is probable cause to believe that
SUNDBERG filed a fraudulent federal income tax return Form 1040 for the tax year 2008, in
which he reported a false 1099-0ID (Original Issue Discount) amount and adjustment that
resulted in a fraudulent refund check being issued to him for over five million dollars
($5,083,609). The locations to be searched are:
a) SUNDBERG'S residence located at 26 King Court, San Mateo, California (more fully
described in Attachment A-I);
b) SUNDBERG's 2003 Lincoln SUV, California license plate # 5CRK074 (more fully
described in Attachment A-2);
c) SUNDBERG's business, Access Mortgage and Financial, located at 1660 S. Amphlett
Blvd. #308, San Mateo, California (more fully described in Attachment A-3);
d) SUNDBERG's mailing address, located at 870 Sunset Dr., San Carlos, California
(more fully described in Attachment A-4); and
e) Homestead Suites, Room 127, located at 3 Circle Star Way, San Carlos, California
(more fully described in Attachment A-5).

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page I of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page3 of 27

I respectfully submit that evidence, fruits, andlor instrumentalities of the criminal


offenses described above will be found at each of the locations to be searched.
APPLICABLE LAW
The following criminal statutes, among others, are applicable to the conduct described in
this affidavit. A violation of:
a. 26 U.S.c. § 7206(1) makes it a crime to willfully make and subscribe any return,
statement, or other document, which contains or is verified by a written declaration that it
is made under the penalties of perjury, and which he does not believe to be true and
correct as to every material matter;
b. 18 USC § 287 makes it a crime for a person to submit, or cause another to submit, any
claim upon or against the United States, or any department or agency thereof, knowing
such claim to be false, fictitious, or fraudulent.
AFFIANT'S BACKGROUND AND EXPERIENCE
REGARDING ITEMS TO BE SEIZED
I am a Special Agent with the Internal Revenue Service, Criminal Investigation (IRS-CI),
and have been so employed since April 2004. My duties and responsibilities include the
investigation of possible criminal violations of the Internal Revenue laws (Title 26, United States
Code), the Bank Secrecy Act, (Title 31, United States Code), the Money Laundering Control Act
of 1986 (Title 18, United States Code, Sections 1956 and 1957), and related offenses.
I have a Bachelor of Science degree in Business Administration, with an emphasis in
Computer. Information Systems and Telecommunications from California State East Bay
(formerly California State University Hayward). I have also earned a Masters of Business
Administration degree in Telecommunications and Strategic Management from CSUH. I
received six months of intensive training at the Federal Law Enforcement Training Center in
Glynco, Georgia, to become a Special Agent. This training emphasized the investigation of
criminal offenses under Titles 26, 18, and 31 of the United States Code. I have also been trained
in the criminal procedures related to searches and seizures. I have received training in the
planning, preparation and execution of search warrants for financial documents.
I have conducted and assisted in numerous investigations involving financial crimes. I
have personally conducted search warrants, surveillances and have interviewed many witnesses

Affidavit of Special Agent Quyen Madrigal. IRS-CI


In Support of an Arrest and Search Warrant Application
Page 2 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page4 of 27

and defendants who were involved in, or had knowledge of, violations of the Internal Revenue
Code, the Bank Secrecy Act, and the Money Laundering Control Act.
In the course of my employment with IRS-CI, I have conducted or been involved in
numerous investigations of alleged criminal violations, which have included: filing a false return
(26 U.S.C. 7206(1); tax evasion (26 U.S.C. 7201); aiding or assisting in the preparation offalse
tax returns (26 U.S.C. § 7206(2)); conspiring to defraud the United States with respect to claims
(18 U.S.C. § 286); false or fraudulent claims (18, U.S.c. § 287); money laundering (18 U.S.C. §§
1956, 1957); identity fraud (18 U.S.c. § 1028); structuring cash transactions (31 U.S.c. §
5324(a)); mail fraud (18 U.S.c. § 1341); wire fraud (18 U.S.c. § 1343); and forfeiture (18
U.S.C. §§ 981,982).
I have participated in the execution of Federal search warrants involving the seizure of
contraband and records relating to the concealment of assets and proceeds from fraud, and the
execution of consensual searches of records. These records included, but were not limited to,
telephone bills, personal telephone books, e-mails, photographs and letters that have identified
co-conspirators and others involved in the fraud, records pertaining to the purchase of real and
personal property, bank records, escrow records, credit card records, tax returns, business books
and records, and computer hardware and software.
From my experience, I know that individuals normally maintain records of their financial
activity, such as receipts for expenditures by cash and check, bank records and other financial
documents at their place of business, their residence, as well as, sometimes, in their vehicles.
Furthermore, individuals engaged in an income-producing business keep records of the financial
activities of the business for numerous reasons and often use accountants to complete financial
statements and tax returns for their business and personal returns.
Persons engaged in fraudulent tax schemes frequently retain records of their
correspondence and transactions within their residence, place of business rented storage units,
vehicles or other places under their control. These records may be in the form of written notes
and correspondence, receipts, negotiated instruments, contracts, bank statements, tax returns and
other records. Records of this kind are also often stored on computer media.
Persons engaged in fr,\udulent tax schemes often maintain such records for long periods
of time, particularly when they are involved in ongoing criminal conduct. There are many
reasons why criminal offenders maintain evidence for lengthy periods of time. The evidence

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
, Page 3 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page5 of 27

may appear innocuous at first glance (e.g. financial, credit card and banking documents, travel
documents, receipts, documents reflecting purchases of assets, personal calendars, telephone and
address directories, check books, videotapes and photographs, utility records, ownership records,
letters and note, tax returns and financial records, escrow files, telephone and pager bills, keys to
safe deposit boxes, packaging materials, computer hardware and software), but have significance
and relevance when considered together and in light of other evidence. The criminal offender
may no longer realize he or she still possesses the evidence, or may believe that law enforcement
would not be able to obtain a warrant to seize the evidence. The criminal offender may also be
under the mistaken belief that he or she has deleted, hidden, or otherwise destroyed computer-
related evidence, but which evidence may yet be retrievable by a trained forensic computer
expert.
Persons engaged in fraudulent tax schemes, and specifically schemes involving the
frivolous preparation of tax returns, have become a significant problem for the IRS. As a result,
the IRS Criminal Investigation Return Preparer Program (RPP) was implemented in 1996, and
established procedures to foster compliance by identifying, investigating, and prosecuting
abusive return preparers. The program was developed to enhance compliance among return-
preparers by engaging in enforcement actions and/or asserting appropriate civil penalties against
unscrupulous or incompetent return preparers. The Fraud Detection Center (FDC) is the first
unit in the IRS that identifies fraudulent and frivolous tax return schemes.
The IRS centralized the Frivolous Return Program (FRP) in Ogden, Utah. The IRS
started the process of centralization in August of 2000 and completed it in January of 2001. Part
of the reason for centralizing the program was that frivolous filings require specialized
processing. Once the program was centralized in Ogden, the expertise was available and the
processes improved for consistency and efficiency.
The FRP has the responsibility to identify returns filed with the IRS which qualify as
frivolous returns subject to the penalty imposed by Congress under IRC § 6702. In IRC § 6702,
Congress directed the imposition of a penalty of $500 (which was increased to $5,000 in
December of 2006) when an individual files an income tax return or what purports to be an
income tax return (or as of December, 2006, a specified frivolous submission) which asserts a
frivolous argument or position. The FRP notifies the taxpayer of the need to correct the filing or
have the penalty imposed. Unless the taxpayer files a corrected return, the FRP assesses the

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 4 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page6 of 27

penalty under IRC § 6702. The FRP then reviews the returns for audit and, when appropriate,
issues a notice of deficiency.
From my experience, I know that fraudulent return preparers frequently prepare and file
false and fraudulent tax returns for large numbers of taxpayers using a variety of methods to
formulate fraudulent and illegal deductions for reducing taxable income andlor obtaining
fraudulent refunds. These methods include, but are not limited to, inflated personal or business
expenses, false deductions, false withholding, unallowable credits, excessive exemptions, or
fraudulent tax credits.
BACKGROUND ON FILING A FORM 1099 OlD TAX RETURN
There are legitimate financial transactions that involve original issue discounts. Those
transactions are governed by Internal Revenue Code, Section 1275. Publication 550, Investment
Income and Expenses for 2008 tax returns, explains that OID is a form of imputed interest. A
Form 1099-0ID is generally included in a taxpayer's income as it accrues over the term of the
debt instrument, whether or not the taxpayer receives any interest payments from the issuer. A
debt instrument generally has OID when the instrument is issued at a discount, i.e., at a price that
is less than the stated redemption price at maturity. OID is the difference between the stated
redemption price at maturity and the issue price.
For example, if a taxpayer pays $800 for aiD-year bond with a stated redemption price at
maturity of $1,000, the OID is $200 and the taxpayer must include the OID in income as it
accrues over the term of the bond - in this example, the OID would be $20 per year. The
taxpayer is required to pay tax on that imputed interest even though he did not actually receive it.
The issuer of the debt instrument (or the broker, if the instrument was held through a
broker) should give the taxpayer a Form 1099-0ID, or a similar statement, if the total OID for
the calendar year is $10 or more. Form 1099-0ID will show, in box 1, the amount of OID for the
part of the year that the taxpayer held the bond. It also will show, in box 2, the stated interest that
the taxpayer must include in his or her income. A copy of the Form 1099-0ID will be sent to the
IRS. If the taxpayer reports OlD in an amount greater or less than the amount shown on the
Form 1099-0ID, he must include an "adjustment" of the discrepancy. That adjustment is
reported on Schedule B of the tax return.
II

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 5 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page7 of 27

Example of a Proper Use of an OlD Adjustment


A helpful explanation of the proper use of an OlD adjustment is found at this website:
http://www.associatedcontent.comlarticleI731809/a basic understanding of the 1099 oid.html
?cat=3 ("A Basic Understanding of the 1099 OID Could Save You Thousands of Dollars in
Taxes," Ed Winslow).
Consider the case of the market-linked CD. These are zero
coupon, principal protected instruments that pay interest at
maturity based upon the performance of an underlying
index such as the S&P500, Dow Jones Eurostoxx 50,
commodity indexes/prices or even foreign currency
movements relative to the dollar. There is no interest paid
until matnrity. Holders of these secnrities receive annual
1099-OlD reporting even though it's unknown whether or
not there will be any interest paid at maturity. For example,
an eight year S&P 500 linked CD bought in March of 2000
for $20,000 when the index was at 1500 returned $20,000
in March of 2008 with the S&P 500 at 1300. The full
amount of the original investment was retnrned despite the
. 13% drop in the index because of the underlying principal
guarantee. In this example, eight years of OID was reported
to the owner of this CD and has been reported as interest on
the tax retum. Using a simplifYing assumption of a 5% rate
per year this will amount to over $8,000 of OID interest
that was reported but never received.

In this market-linked CD example an $8,000 OID


adjustment is required to properly recognize the fact that no
profit or loss was recognized on this investment. The
adjustment is shown as a negative number on Schedule B
of the tax retnrn.

Fraudulent Use of "Adjustment" to Form 1099-0ID


There are numerous kinds of 1099-0ID fraud that vary, in their degree of complexity.
One version is simply to invent amounts to treat as 1099-0ID interest, then "adjust" those
amounts by another invented figure, all for the fraudulent purpose of generating a tax refund
when no such refund is due.
That is what SUNDBERG did. In his 2008 tax return, as described in more detail below,
he submitted schedules showing huge amounts of interest income that there is no evidence he in
fact received. He offset that fictitious income with an equally (or almost equally) large "OlD

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 6 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page8 of 27

adjustment." SUNDBERG then carried that fraudulent adjustment from his Schedule B to page
two, line 62 ("Federal income tax withheld from Forms W-2 and 1099") of his Form 1040,
resulting in a huge, and entirely undeserved, tax refund.
Background Regarding Tax Challengers Who Commit OlD Fraud

According to the IRS Frivolous Return Program,Sr. Technical Advisor Shauna Henline,
OlD fraud is one of the latest schemes to be addressed by the "tax challenger" community. The
scheme is based on the perceived notion that the government has created a "straw man" for each
United States citizen and that there is a "secret" account at the Treasury for each "straw man."
This fantasy is compounded by the equally false notion that a taxpayer can "issue" a Form 1099
OlD to a creditor, drawing upon the Treasury funds in the "secret" account corresponding to the
taxpayer's "straw man," and thereby paying the creditor with the Treasury's funds instead of the
taxpayer's own money. An IRS publication, "The Truth About Frivolous Tax Arguments,"
explains the "theory":

Advocates of this contention encourage individuals to use a


Form 1099-0ID, Original Issue Discount, or a bogus
financial instrument such as a bonded promissory note as
what purports to be a debt payment method for credit cards
or mortgage debt. This scheme has evolved somewhat
from an earlier frivolous position under which a secret bank
account (sometimes referred to as a "straw man" account)
was supposedly created at the Treasury Department for
each U.S. citizen that individuals could use to pay tax and
non-tax debts and claim withholding credits. Those who
put forth this theory often argue that the proper way to
redeem or draw on the account is to use some form of
made-up financial instrument. This has frequently involved
what looks like a check drawn on the United States
Treasury or other similar paper instruments, e.g., bonded
promissory notes.

More recently, this redemption theory asserts that persons


can draw on the secret or "straw man" Treasury account by
sending a Form 1099-0ID to a creditor and the creditor can
present the form to the Treasury Department and receive
full payment of the debt. In addition, the proponents
appear to assert that the Form 1099-0ID permits them to
access their secret Treasury Account for an amount equal to
the face amount of the Form 1099-0ID in the form of a tax
refund.

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 7 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page9 of 27

http://www.irs.gov/pub/irs-utllfriv tax.pdf

Some promoters, incl~ding, as will be discussed below, certain individuals with whom
SUNDBERG is associated, market a package, kit, or other materials that claim to show taxpayers
how they can avoid paying income taxes based on the "straw man" and other meritless
arguments.
FACTS SUPPORTING PROBABLE CAUSE
On or about July 30, 2009 IRS-CI received information from a Senior Analyst in IRS-CI
headquarters regarding a 1099 OID refund scheme. The referral was initiated by Chris Greiner,
Intelligence Analyst, Bureau of Prisons to Jeff Gordon, Treasury Inspector General for Tax
Administration (TIGTA). In a report dated July 21, 2009 Greiner reported to TIGTA that ajail
conversation had occurred on Jnne 16, 2009, from inmate Kurt Johnson to his father Fred
Johnson, during which Fred Johnson stated that SUNDBERG had received money for the 1099
OID in the amonnt of over six figures. Fred Johnson went on to state that SUNDBERG needed
to move the money out of his name right away.
Mr. Greiner's memo also reported that during telephone calls made by Kurt Johnson to
Marc Anderson on July 7 & 8, 2009, Johnson discussed bonds and securities and told Marc to
contact SUNDBERG for instructions on what to do next since SUNDBERG had had success.
Mr. Greiner's memo' also reflects that one Robert Knupp (Knupp) was not used to E-file
SUNDBERG's Return. Knupp is a current target of a federal criminal investigation by IRS-CI.
It is anticipated that Knupp will be charged with eight connts of violating 18 U.S.C. § 287. Five
of the connts are based on Knupp's personal returns and two are electronic returns he prepared
for others. In addition to his own returns, Knupp prepared or filed 49 electronic returns fitting
the OID scheme. According to Special Agent Joel Ernst, who is investigating Knupp, it appears
that Knupp has filed OID returns for Kurt Johnson while Johnson has been incarcerated.
SUNDBERG is a 34 year old male who resides at 26 King Ct., San Mateo, CA. The
California Department of Motor Vehicles provided two CDLs nnder the CDL #A8112722. One
was nnder the name Seth C. Sundberg, 870 Snnset Dr., San Carlos, CA (date of issue
05/17/2008), and the other was nnder the name Franco Metcalf, 439 Manor Dr., Pacifica, CA
(date of issue 1111712008). Both photos are of the same person. SUNDBERG has two weapons
registered to him: a 9 mm Berretta and a 9 mm Springfield.

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 8 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page10 of 27

SUNDBERG currently works for Access Mortgage and Financial located at 1660 S.
Amphlett Blvd. #308, San Mateo, CA. Internet research shows that SUNDBERG is the branch
manager and that the business is a mortgage and financial business. In addition, Internet
research on Access Mortgage and Financial indicates that SUNDBERG was one of the founders
of the company, which offers residential and commercial lending.
SUNDBERG is also the Principal for Sound Mountain Investments, LLC (SMI) located
at 870 Sunset Dr., San Carlos, CA 94070. Internet research shows that SMI is an Investments
and Property Management corporation which specializes in consulting, private placement
investments, marketing and real estate property management. The Sound Mountain Investments
website states, "The only real wealth hedge against inflation is to acquire gold and silver."
IRS records show that SUNDBERG filed a U.S. Individual Income Tax Return for the
tax year 2008 with the IRS. The return reported that SUNDBERG claimed a $5,732,580 interest
income amount on Line 1 of his Schedule B (Interest and Ordinary Dividends), Part I - Interest.
In addition, he reported an "OlD Adjustment" of (-$5,732,441). Below is a summary of
SUNDBERG'S 2008 tax return information:
Summary of Tax Return

Income
Wages $ 3,539.00
Taxable Interest $ 139.00
Business Income (or Loss) $ 21,285.00
Capital Gain $ 5,968.00
IRA Distribution $ 10,950.00
Pensions and Annuities $ 406.00
Rental Real Estate, Partnerships, sCarps $ (177,968.00)
Total Income $ (135,681.00)

AGI
One half SE Tax $ 1,504.00
Total AGI $ (137,185.00)

Tax and Credits


Itemized Deductions $ 5,450.00
AGI Less Itemized Deductions $ (142,635,00)
Exemption' $3,500 $ 3,500,00
'No Taxable Income'Reported on Line 43 $
'No Tax Amount Reported on Line 44 $
Affidavit of Special Agent Quyen Madrigal, IRS-CI
In Support of an Arrest and Search Warrant Application
Page 9 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page11 of 27

'No Alternative Minimum Tax on Line 45 $


'No Credits Reported (Lines 47-54) $
Credits Less Taxes (Line 55 - Line 46) $

Other Taxes
Self Employment Tax $ 3,008.00
Additional Tax on IRA $ 41.00
Total Tax $ 3,049.00

Payments
Federal Income Tax Witheld from Form W-2 and 1099 $ 5,087,059.00
'Refer to 3-2 for further details
Total Payments $ 5,087,059.00

Refund
Total Payments Less Total Tax $ 5,084,0 I 0.00
Refund Amount $ 5,084,010.00

Attached to the return was an Interest Income Summary which itemized the OlD amounts. See
below:
Summary of Schedule B-Interest Income Summary

Name of Broker or Other Payer Gross Interest Taxable Interest Adj Type OIDAdj Amt

Citibank $ 102.00 $ 102.00 $


Bank United $ 37.00 $ 37.00 $
Aegis Wholesale Corp $ 127,200.00 $ 127,200.00 OID $ 127,200.00
Aegis $ 31,800.00 $ 31,800.00 OID $ 31,800.00
Central Mortgage Company $ 127,200.00 $ 127,200.00 OID $ 127,200.00
GMAC Mortgage Co $ 31,800.00 $ 31,800.00 OID $ 31,800.00
San Mateo Credit Union $ 28,857.00 $ 28,857.00 OID $ 28,857.00
Bank United $ 562,000.00 $ 562,000.00 OID $ 562,000.00
Paul Financial LLC $ 798,400.00 $ 798,400.00 OID $ 798,400.00
GMAC Mortgage Corp $ 798,400.00 $ 798,400.00 OID $ 798,400.00
Aegis Wholesale Corp $ 147,220.00 $ 147,220.00 OID $ 147,220.00
Aegis Wholesale Corp $ 33,600.00 $ 33,600.00 OID $ 33,600.00
America s Servicing Co
1
$ 147,720.00 $ 147,720.00 010 $ 147,720.00
Indymac $ 33,600.00 $ 33,600.00 OID $ 33,600.00
Washington Mutual $ 450,000.00 $ 450,000.00 OID $ 450,000.00
CMGlnc $ 130,500.00 $ 130,500.00 OID $ 130,500.00
Affidavit of Special Agent Quyen Madrigal, IRS-CI
In Support of an Arrest and Search Warrant Application
Page 10 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page12 of 27

Aurora Loan Servicing $ 130,500.00 $ 130,500.00 OlD $ 130,500.00


First NatL Bank Arizona $ 176,000.00 $ 176,000.00 OlD $ 176,000.00
Ocala Nat! Bank $ 196,000.00 $ 196,000.00 OlD $ 196,000.00
GMACMortCo $ 36,930.00 $ 36,930.00 OlD $ 36,930.00
Aegis Wholesale Corp $ 36,930.00 $ 36,930.00 OlD $ 36,930.00
Aegis Wholesale Corp $ 31,800.00 $ 31,800.00 OlD $ 31,800.00
Aegis Wholesale Corp $ 127,200.00 $ 127,200.00 OlD $ 127,200.00
Central Mortgage Company $ 127,200.00 $ 127,200.00 OlD $ 127,200.00
GMAC $ 31,800.00 $ 31,800.00 OlD $ 31,800.00
Aegis Wholesale Corp $ 134,400.00 $ 134,400.00 OlD $ 134,400.00
America's Servicing Co $ 134,400.00 $ 134,400.00 OlD $ 134,400.00
Washington Mutual $ 150,000.00 $ 150,000.00 OID $ 150,000.00
Washington Mutual $ 149,000.00 $ 149,000.00 OID $ 149,000.00
Countrywide $ 176,000.00 $ 176,000.00 OID $ 176,000.00
First Florida Bank $ 165,695.00 $ 165,695.00 . OID $ 165,695.00
Borel Private Bank Trust $ 226,379.00 $ 226,379.00 OID $ 226,379.00
Bank of America $ 18,702.00 $ 18,702.00 OID $ 18,702.00
Wells Fargo $ 128,208.00 $ 128,208.00 OID $ 128,208.00
Chase $ 23,000.00 $ 23,000.00 OlD $ 23,000.00
Chase $ 20,500.00 $ 20,500.00 OID $ 20,500.00
Wells Fargo $ 23,000.00 $ 23,000.00 OlD $ 23,000.00
Wells Fargo $ 7,500.00 $ 7,500.00 OID $ 7,500.00
Discover $ 12,000.00 $ 12,000.00 OID $ 12,000.00
Citibank $ 21,000.00 $ 21,000.00 OID $ 21,000.00

Total $ 5,732,580.00 $ 5,732,580.00 $ 5,732,441.00

Based on the entries listed above, the IRS issued a refund check to SUNDBERG on May 29,
2009, for $5,083,609.25. The check was deposited into a Borel Private Bank & Trust Account
under SUNDBERG'S name (account # 175645-01). The account was opened on June 3, 2009
along with account # 175645-21. SUNDBERG is the sole signature authority for both accounts.
The following table shows the disposition of the refund after it was deposited by SUNDBERG at
Borel Private Bank & Trust.

Account # 117645-01

Date Deposit Wire Amollllt Check Amount Beneficiary/Payee


06/03/2009 $ 5,083,609.25 Seth Sundberg

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page II of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page13 of 27

06/03/2009 $ (2,585,609.25) Seth Sundberg


06/04/2009 $ (100,000.00) Seth Sundberg
06/04/2009 $ (801,000.00) Red Havana Holdings
06/0412009 $ (1,000,000,00) Seth Sundberg
06/0512009 $ (150,000.00) 130859 Acts Revival Center
06/05/2009 $ (150,000,00) 130860 Acts Revival Center
06/05/2009 $ (129,000.00) 130861 Acts Revival Center
06/0512009 $ (9,112.00) Cash
06/1512009 $ (20,000.00) Cash
06/04/2009 $ (100,000.00) Internet banking

TOTAL $ 5,083,609,25 $ (4,586,609.25) $ (458,112.00)

Account # 117645MOl Deposit $ 5,083,609.25


Summary of Activity Wires $ (4,586,609.25)
Checks $ (458,112.00)
BALANCE $ 38,888.00

Accouut # 117645-21

Date Deposit Wire Amount Check Amount Check # Bencficiarl:/Payee


06/03/2009 $ 2,585,609.25
06/05/2009 $ (100,000.00) 130872 Seth Sundberg
06/0512009 $ (50,000.00) 130874 Seth Sundberg
06/0512009 $ (50,000.00) 130877 Seth Sundberg
06/05/2009 $ (100,000.00) 130867 Seth Sundberg
06/05/2009 $ (100,000.00) 130868 Seth Sundberg
06/0512009 $ (100,000.00) 130869 Seth Sundberg
06/05/2009 $ (100,000.00) 130870 Seth Sundberg
06/05/2009 $ (100,000.00) 130871 Seth Sundberg
06/05/2009 $ (100,000.00) 130862 Seth Sundberg
06/05/2009 $ (100,000.00) 130863 Seth Sundberg
06/05/2009 $ (100,000.00) 130864 Seth Sundberg
06/05/2009 $ (100,000.00) 130865 Seth Sundberg
06105/2009 $ (100,000.00) 130866 Seth Sundberg
06/0812009 $ (100,000.00) 130893 Seth Sundberg
06/08/2009 $ (100,000.00) 130891 Seth Sundberg
06/08/2009 $ (100,000.00) 130892 Seth Sundberg
06/15/2009 $ (80,000.00)
06/25/2009 $ (900,000.00)

TOTAL $ 2,585,609.25 $ (900,000.00) $ (1,580,000.00)

Account # 117645-21 Deposit $ 2,585,609.25


Summary of Activity Wires $ (900,000.00)
Checks $ (1,580,000,00)
BALANCE $ 105,609.25

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 12 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page14 of 27

On July 30, 2009 Revenue Officer Paul Enjalran (RO Enjalran) placed levies on
SUNDBERG'S bank accounts at Borel Private Bank & Trust, Bank of America, and on August
,
4,2009, a levy was placed on SUNDBERG'S Citibank account. Information provided by Borel
Private Bank on August 18,2009 showed that $1,300,000 in cashier's checks made payable to
SUNDBERG have not yet been endorsed.
Portion of the Fraudulent Funds Issued to an Entity in San Jose
Three cashier's checks were issued to Acts Revival Center on June 5, 2009 from account
number 117564-01 and were "cleared" between the period of June 17,2009 and July 20,2009.
Acts Revival Center corresponds to tax identification number 77-0559437, Michael-John Toste,
whose address is listed as 1124 Crescent Drive, San Jose, CA 95125.
SUNDBERG's Involvement With Fraudulent Promoters
In addition to the 2008 federal income tax return that SUNDBERG filed, the IRS
Frivolous Return Program received letters signed by SUNDBERG and dated February 24, 2009.
The first was received by the IRS on February 24, 2009 and was reviewed by the Frivolous
Return Unit on March 30, 2009. That letter was a "request for accountability and verification of
appropriation of funds" addressed to Aegis Wholesale Corporation. The letter states that
SUNDBERG, Mortgager is no longer responsible for any future payments to the lender and that
based on the SEC registration of Aegis, the" ... note we tendered to you has been sold numerous
times for the aggregate amount. Therefore, Aegis Wholesale Corporation owes the surplus of
funds that the trust created as stipulated by the Mortage or Deed of Trust." Two additional
letters from SUNDBERG to GMAC and America's Servicing Company dated February 24,2009
were also submitted to the IRS regarding "Constant Harassment and Unwanted Phone Calls."
This type of correspondence is common among those who file frivolous returns. The IRS sent
SUNDBERG a 3175c letter -- Frivolous Correspondence Response -- on 5120/2009. The IRS
Frivolous Return Unit also received letters from SUNDBERG on April 8, 2009, April 14, 2009,
and May 13,2009.
Nicole Bermudez: Information from the Memphis Fraud Detection Center (FDC) shows
that SUNDBERG'S 1099 OID information was submitted electronically to the IRS by Nicole D.
Bermudez, 1940 Marina Way, Buford, GA. Ms. Bermudez has been identified as a preparer of
fraudulent or frivolous returns by the FDC. Further, the FDC has provided a list of at least 9
additional fraudulent/frivolous Form 1099-0ID Information Returns (IRP) submitted by Ms.

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 13 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page15 of 27

Bermudez, all with OID interest income and OID withholding amounts that were in large
amounts and almost equal in value and which caused large refunds to be generated.
The IRS utilizes Information Returns Processing (IRP) data reported to them by financial
institutions to cross-reference against income reported on tax returns by the taxpayer. If interest
or dividend income reported by a taxpayer is inconsistent with information reported by a
financial institution, this discrepancy would come to the attention of the IRS. Submitting
fraudulent IRP data is, therefore, a more sophisticated method of committing tax fraud: the
taxpayer reports a fraudulent amount of income received, and arranges to have IRP data
submitted to the IRS to correspond to the amount fraudulently reported.
Bermudez input frivolous 1099 information on behalf of SUNDBERG to the IRS using
two different types of Forms 1099 which should have been reported by the financial information
from which SUNDBERG earned income. Bermudez made 76 entries to the IRS for 1099 OlD
information on behalf of SUNDBERG, totaling $ 67,171,204 from March 31, 2009 through
April 29, 2009. In addition, she made 38 entries to input 1099-A (Acquisition or Abandonment
of Secured Property) totaling $5,732,942 from April 2, 2009 through April 8, 2009.
Bank records obtained from Borel Private Bank show that SUNDBERG paid Bermudez
$801,000 on June 4, 2009. This payment is presumably for filing SUNDBERG'S 1099 OID
information. A payment from SUNDBERG'S Borel account was sent to Red Havana Holdings,
1940 Marina Way, Buford, GA 30518. According to Revenue Officer Paul Enjalran, IRS
records show that a tax identification number of 26-6283790 belongs to the Bermudez Family
Trust, Red Havana Holdings Trustee, 1940 Marina Way, Buford, GA 30518. In addition, an
outgoing wire for $25,000 was conducted from an account maintained by Sound Mountain
Investments LLC to a Bank of America account in the name CNM Revolutions LLC. IRS
records show that CNM Revolutions LLC maintains a TIN of 32-0079965, Carlos Bermudez of
1940 Marina Way, Buford, GA 30518.
Karen Liane Miller: Information from Special Agent Suzanne Poshedly from the IRS-
CI Nashville Field Office indicates that her subject, Karen Miller is a promoter of frivolous tax
schemes. During her investigation, it was discovered that Miller filed a 2008 joint federal
income tax return for Nicole and Carlos Bermudez which reflected amounts owed to creditors as
income on their Schedule B. Information from the IRS-FDC in Memphis shows that a refund of
$473,975 was issued due to the false withholding amount of$688,303.

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 14 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page16 of 27

In February 2009, the FRP identified Karen Liane Miller and Knupp (previously
mentioned in the jail conversation by Kurt Johnson) as likely co-conspirators, preparing
fraudulent tax returns utilizing the 1099-0ID scheme characteristics.
On or about February 23, 2009, the IRS-CI Nashville Field Office initiated an
investigation concerning Karen Liane Miller, who prepared 37 electronically filed 2008 Forms
1040, U.S. Individual Income Tax Returns. These returns were identified as potentially
fraudulent due to claims of large interest income with nearly-matching amounts of federal
withholding, resulting in exorbitant claims for refund.
On or about March 4, 2009, Special Agent Joel Ernst, IRS-CI Atlanta Field Office was
contacted by the Nashville Field Office to interview Dylette Knupp, residing at 231 Lindsey
Place, Marietta, Georgia 30067 and whose 2008 return was one of the 37 potentially fraudulent
returns prepared by Miller. The filing of Dylette Knupp's 2008 tax return resulted in a released
refund of $73,228. Dylette Knupp's husband, Knupp, who resides at the same address, was also
identified as having his 2008 Form 1040 prepared by Miller.
Robert Knupp: The FRP investigation discovered that Knupp was also preparing tax
returns believed to be fraudulent in a manner consistent with those filed by Miller. On or about
March 17, 2009, the FRP notified Atlanta IRS-CI of Robert Knupp's actions and a criminal
investigation was immediately initiated. Thus far, the investigation has uncovered at least 33
potentially fraudulent 2008 Forms 1040, U.S. Individual Income Tax Returns, which were
electronically filed with the IRS between February 21, 2009 and March 26, 2009. These 33
returns were filed using the Electronic Filing Identification Number (EFIN) 674938, assigned to
Robert Knupp, and each tax return identifies "ROBERT KNUPP" as the return preparer and
RLK Inc. as his firm name.
Furthermore, the FRP and the Nashville IRS-CI offices established a connection between
Robert Knupp and Miller by identifying Robert Knupp's role as a third party designee for at least
10 of37 tax returns that were prepared and filed by Miller. Robert Knupp's role as a third party
designee allows him to discuss the filed tax return with the IRS.
All 33 returns designating Robert Knupp as the preparer contain substantial interest
income and nearly-matching federal withholding amounts, generating refund claims between
$6,102 and $994,747.

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 15 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page17 of 27

Knupp prepared 33 returns that have characteristics consistent with the Form 1099-0ID
scheme: disproportionately large amounts of federal income tax withheld compared to total
income reported. In the returns Knupp prepared, "Interest Income" claimed on the returns
constitutes the majority of the total income claimed. Additionally, the claimed federal income
tax withheld is very similar in amount to the "Interest Income" listed. Such similarities in
income and withholding amounts have been identified by the IRS as an indicator of fraud.
Kurt Johnson: Johnson and his co-defendant Dale Scott Heineman were convicted and
sentenced on March 18, 2008 for orchestrating a nationwide debt elimination scheme through
their company, the Dorean Group. The mortgage elimination scheme entailed fraudulent
documents recorded as part of their clients' titles to make it appear as though mortgage lenders'
secured interests in the properties were canceled when, in fact, the corresponding mortgage and

home equity loans had not been fully repaid. At the direction of the Dorean Group, some of its
clients used these fraudulently-generated "free and clear" titles to obtain hundreds of thousands
of dollars in new home equity loans from lenders who were led to believe that the properties
were unencumbered by loans.
Johnson and the Dorean Group are also related to Robert Knupp. According to Special
Agent Joel Ernst, Knupp's personal residence is owned by Glenn Crocker, who put the home in
the name ofthe Crocker Family Trust. The trustee of the trust is Kurt Jo~son.
Concept Marketing International: SUNDBERG reported on his 2008 tax return,
Schedule C-EZ (Net Profit From Business) that he is involved in a marketing business, Concept
Marketing International (CMI) located in Lee's Summit, Missouri. Internet research on
SUNDBERG shows that he was a "CSA" of Concept Marketing International from 2006-2008.
CMI was a retail and direct sales company that sold American Silver Eagle Coins. CMI
representatives advised their customers that purchasing American Silver Eagle coins would
constitute a legitimate home-based business. They told their customers that they could claim to
have home-based businesses in order to deduct personal living expenses from their income.
Research on CMI resulted in the following findings. On January 23, 2004, CMI was ordered by
the State of Missouri to cease and desist offering or selling notes or evidence of indebtedness in
CMI. On June 27, 2006 the founder of CMI, James Aldridge was indicted for filing false income
tax returns and aiding and abetting others to file false tax returns.

Affidavit of Special Agent Quyen'Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 16 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page18 of 27

Raymond A. Renfrow: On March 22, 2007 a Complaint for Permanent Injunction and
Other Equitable Relief was filed against Raymond A. Renfrow. Renfrow is the Regional Sales
Director and a trustee of CMI trust. Renfrow provides tax preparation and training courses for
CMI customers. He also conducts monthly "Income Tax Boot Camps" throughout the country in
2006 and 2007 to promote tax fraud schemes. Renfrow is a self-proclaimed as a tax challenger
and knows or has reason to know that the CMI tax-fraud scheme is illegal. Renfrow devised and
promoted to CMI customers that they could falsely claim to have home-based businesses in order
to fraudulently deduct personal living expenses from their taxable income, including deductions
for non-deductible items (i.e. groceries, furniture, housekeeping, etc.).
PROBABLE CAUSE TO SEARCH SPECIFIC LOCATIONS
2008 Tax Return: SUNDBERG listed 870 Sunset Drive, San Carlos, California, as
his home address on the 2008 federal income tax return he filed with the IRS. The refund check
for $5,083,609.25 was mailed to SUNDBERG at 870 Sunset Drive, in San Carlos.
Financial Information: The signature card provided by Borel Private Bank and Trust
lists 870 Sunset Drive, San Carlos, as SUNDBERG's address. A Currency Transaction Report
was also filed by Borel Private Bank and Trust on SUNDBERG dated June 11, 2009 for
$100,000 cash out. The address listed on the CTR is 870 Sunset Drive, in San Carlos.
Information from Citibank and Bank of America also indicates that SUNDBERG listed 870
Sunset Dr., San Carlos, CA as his address with those banks. This shows that SUNDBERG
receIves financial information, such as bank statements and other correspondence, at that
address.
SUNDBERG also filed seven documents with the United States Bankruptcy Court,
Northern District of California from January 5, 2009 through June 16, 2009. Five of those
documents listed his address as 870 Sunset Dr., San Carlos, CA, and one listed 870 Sunset Dr.,
San Mateo, CA. (One document did not require an address to be listed.) 1

1 One of the bankruptcy documents provides some insight into SUNDBERG's unusual worldview. He
writes: "Now, by special appearance, comes Seth C. Sundberg, the flesh and blood man, unschooled in
law, to make the following REQUEST, as per II u.s.c. 52IIi)(3), with clean hands, full disclosure and
no intent to defraud, to request additional time, 30 more days to file the prescribed documents. ~l My
yea is my yea and my nay is my nay."
Affidavit of Special Agent Quyen Madrigal, IRS·CI
In Support of an Arrest and Search Warrant Application
Page 17 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page19 of 27

"Trash Runs." Law enforcement agents conducted three trash pickups of


SUNDBERG's garbage. The first occurred on August 4, 2009 at 870 Sunset Drive, San Carlos,
CA. The second occurred on August 13, 2009 at 26 King Ct., San Mateo, CA and the third
occurred on August 20, 2009, also at 26 King Ct., San Mateo, CA. Evidence gathered from the
garbage pickups indicates that SUNDBERG uses 870 Sunset Drive, San Carlos, CA as his
mailing address, but that he uses 26 King Ct., San Mateo, CA as his resiQence and "ship to"
address. Mail addressed to SUNDBERG at 870 Sunset Drive was found in the garbage collected
at 26 King Ct., San Mateo, CA. The collections show that SUNDBERG receives financial and
tax documents through the mail, maintains financial and tax related documents (both personal
and business) at his residence, and uses or has access to a computer. In addition, records relative
to CM! were found in the trash, which shows that additional tax fraud materials or
correspondence may be located at SUNDBERG's residence.
In particular, on August 20, 2009, a trash run at 26 King Court, in San Mateo, revealed
the following items addressed to SUNDBERG at 870 Sunset Dr., San Carlos, CA:
An envelope from Kurt Johnson #13177-081, Federal Detention Center. The envelope
contained a letter dated September 24, 2007 addressed to Sundberg. The following are excerpts
from Johnson's letter:
• "It was quite a surprise hearing from you. My father had been keeping me
informed of your dealings in his bragging upon you. I am glad things are
going wei! for you."
• "Once I've finished my battle I look forward to meeting with you again."
• "Soon you'll discover that I will be one of the prominent figures in the
financial markets. The government assured me this role when they decided to
prosecute me. I told them on television this was the dumbest thing they could
do but being populated with a gaggle of dolts is not the milieu of wisdom."
• "My father said you have a proclivity to finance so I'm sure you'll find what
I'm accomplishing very interesting."
In addition, documents found during the trash run at 26 King Court included records
related to the business at 1660 S. Arnphlett Blvd. #308, San Mateo, CA; a receipt reflecting the
billing address of sethsundberg@sbcglobal.net, 870 Sunset Dr., San Carlos, CA and billing
address of 1660 S. Arnphlett Blvd., suite 308, San Mateo, CA 94402; four rental applications for

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 18 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page20 of 27

910 Sunset Dr., San Carlos, CA; a cover letter from Access Mortgage and Financial signed by
Sundberg related to the rental property at 910 Sunset Dr., San Carlos, CA; and an engagement
Letter from the Law Offices of Hoang-Chi Truong to Seth Sundberg, Access Mortgage and
Financial Inc. dated July 2005. Also found was a Personal Information Sheet in which
SUNDBERG states that he maintains a safe deposit box at Bank of America, 955 El Camino
Real, South San Francisco, Box #P1306.
In addition, I found the following records reflecting SUNDBERG's connection to CMI
and Renfrow: CMI Invitation System Introduction for conference calls for use by any CMI
Master Syndication member. A flyer for Concept Marketing International, Top 10, the Ultimate
Financial Information (with a quote from R. Renfrow "After attending this seminar, financial
security is no longer my Goal, it's my Destiny."). A CMI Flyer titled the Ultimate Benefit Plan
which includes the company history. Part of the history states, "Due to unique financial
opportunities and information opened to its Founder Executive Trustee and National Trust
Counselor, Mr. James E. Aldridge, Jr., CM! has since evolved into a financial education firm,
teaching families how to live, work and playas the privileged few have for generations."
I also located tax related documents during the search of 26 King Court, including two
envelopes from Chiorini, Hunt and Jacobs Business cOllSultants/CPAs. Each envelope contained
an invoice; the first was dated 10-31-08 for Sound Mountain Investments, LLC at 870 Sunset Dr.
San Carlos, CA. and the second was dated 10-31-08 for Seth Sundberg 870 Sunset Dr., San
Carlos, CA. I found two additional invoices dated 11-21-08 from Chiorini, Hunt and Jacobs to
Sound Mountain Investments LLC and to Seth Sundberg at 870 Sunset Dr., San Carlos, CA, as
well as a flyer for Tax Forms Helper 2008 (tax-preparation software); correspondence from the
Department of Treasury to Sundberg Family Foundation, clo Seth Sundberg TTEE 870 Sunset
Dr., San Carlos, CA; blank forms 1099-MISC for 2008; and a past due notice from the IRS for
tax period July 31, 2006 dated October 29,2007.
I also found records reflecting a "bill to" address of 870 Sunset Drive, San Carlos, CA
and a "ship to" address of 26 King Ct., San Mateo, CA for Seth Sundberg. This shows that
SUNDBERG receives mail at both addresses, and transfers mail from one location to another.
Interview Determines that 870 Sunset is the residence of SUNDBERG's mother. RO
Enjalran visited the residence at 870 Sunset Drive on July 30, 2009, where he spoke to Leslie

Affidavit of Special Agent Quyen Madrigal, lRS-Cl


In Support of an Arrest and Search Warrant Application
Page 19 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page21 of 27

Maynard, SUNDBERG'S mother. Mrs. Maynard told RO Enjalran that she accepts mail at her
residence for SUNDBERG.
Surveillance Further Establishes SUNDBERG's Use of Search Locations
Three surveillances were conducted on SUNDBERG from his residence address at 26
King Ct., San Mateo, CA to various locations including his business, 1660 S. Amphlett Blvd.
#308, San Mateo, CA. The surveillances showed that SUNDBERG carries a laptop bag and
other documents from his residence, into his vehicle, and to his business. The pattern observed
during the surveillance indicates that SUNDBERG maintains documents at his residence, in his
vehicle, and at his business. Surveillance on August 18, 2009 also showed that SUNDBERG
posted a notice on the front door of his residence warning trespassers that "Public/Corporate
Officials and their Agents, Employees or franchises thereof abide by the provisions of the
Supreme Law of the Land: ... " and that the owner of the property under U.S.C. Title 18,33109
may "use force to remove those who trespass." In addition, the note states "violators may be
fined not more than $10,000.00 imprisoned not more than ten years or both, and life if death
results. U.S.C. Title 18, Section 241 & 242."
August 18, 2009: Surveillance on SUNDBERG showed he left his residence at
approximately 8:01 AM with what appeared to be a black laptop bag and other items. He
entered his Lincoln SUV #5CRK074 and proceeded to a local Starbucks and then to his business
located at 1660 S. Amphlett Blvd. where he parked. He exited the vehicle with the same laptop
bag and went into Suite 308. Inside the office #308, IRS CI Special Agent Mike Hammond
observed piles offolders inside the office. SUNDBERG flagged down a Shred-It company male
employee at 8:25 AM who went to #308 with SUNDBERG and assisted him with bringing
several blue bags down to the Shred-It truck where the documents in the bags were shredded. At
8:50 AM, all the blue bags were empty and SUNDBERG paid the Shred-It employee. He
received a receipt and went to his vehicle and retrieved items from the car. At 11 :33 AM
SUNDBERG had gone to a nearby cafe and proceeded to move his vehicle onto a back street.
He exited the vehicle with a binder and documents and went back into 1660 S. Amphlett #308.
At 11 :49 AM, he went back to his vehicle and retrieved manila folders with papers and placed
those documents into his laptop bag and went back into the building. At 11 :57 he went back to
his vehicle with the laptop bag and paperwork. SUNDBERG later ran various errands in his

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 20 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page22 of 27

vehicle taking documents with him. At 1:05 PM he returned to 26 King Ct. and at 2:00 PM he
went into the residence with documents and a binder.
August 19, 2009: SUNDBERG was seen leaving his residence, 26 King Ct., San Mateo,
CA with a laptop bag and dark colored portfolio with documents visible he entered into his
vehicle. He left the house at 10:22 AM and went to 1660 S. Amphlett Blvd., #308 in San Mateo,
CA. He entered #308 with his bag. At 10:40 AM, SUNDBERG returned to his vehicle with the
laptop bag and proceeded to a Kinko's store in San Mateo where he was observed with a binder
and documents. He used the computer to browse public storage facilities and craigslist
apartments on the Internet.
August 26, 2009: SUNDBERG left his residence with his laptop bag and four bankers'
boxes that he put into his vehicle. He made various stops before he arrived at Homestead Suites
in Foster City. He entered the hotel room with two bankers' boxes for approximately five
'minutes. He then left with the. two boxes and re-entered his vehicle. He later went to Homestead
Suites in San Carlos with two banker's boxes and left the boxes in room 127. SUNDBERG later
went to Staples in Foster City and purchased a Road Atlas. After this purchase, he proceeded to
his business, 1660 S. Amphlett Rd. #308, San Mateo, CA with his laptop bag and black portfolio.
The two other bankers boxes remained in his vehicle.
Internet Research Confirms SUNDBERG's Connection to Locations to be Searched
Internet research reveals that SUNDBERG uses his business address for marketing
himself as an associate of CMI and therefore records related to tax fraud schemes may be stored
at his business. It also indicates that he uses the computer to conduct business and therefore
electronic evidence related to tax fraud schemes may be stored on his computer or laptop.
• A Google link -CivilOrder to Show Cause ... Seth Sundberg name change to Franco
Metcalf.
• An Internet page: http://www.plaxo.comldirectory/profile... For SUNDBERG. The
page shows SUNDBERG'S photograph as a representative for Concept Marketing
InternationaL The contact information is as follows:
Email: sethsundberg@sbcglobaLnet for work and home
Phone numbers: 650-670-7861 and 650-655-4655
Address: 1660 S. Amphlett Blvd. #308, San Mateo, CA

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 21 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page23 of 27

• A "linkedin" profile which lists that he was a "CSA" at Concept Marketing International
and a Branch Manager at Access Mortgage and Financial
• The Access Mortgage and Financial Website states that SUNDBERG is the branch
manager and one of the original founders of Access Mortgage and Financial. The contact
information is: 1660 South Amphlett Blvd., Suite 308 San Mateo, CA and lists the phone
number as 650-655-4653.
SEARCH OF DIGITAL MEDIA IN GENERAL
Based on my experience in investigating fraudulent online/electronic refund schemes, I
know that computers are used extensively. In particular, they are commonly used to 1) produce
electronic versions of Income Tax Returns; 2) transmit those returns to third parties for
submission to the IRS; and 3) maintain copies or records of both the returns and the
transmission/submission thereof.
Knowing the above, the affiant consulted with IRS Criminal Investigation Special Agent
and SSA-Computer Investigative Specialist (CIS) Jeff Jack regarding the seizure of computers
and aspects of properly retrieving and analyzing electronically stored computer data. Special
Agent Jack has been employed with IRS Cl for seventeen years. In addition to attending training
in financial investigation techniques and accounting, he has also attended the IRS CI Seized
Computer Evidence Recovery School (BCERT) at the Federal Law Enforcement Training Center
in Glynco, Georgia, where he learned about the operation of computer systems and the correct
procedures for seizure and analysis of computer systems. During the past seventeen years,
Special Agent Jack has participated in over one hundred search warrants and consent searches
during which he has participated in the seizure or imaging of over one hundred computers.
Special Agent Jack has been responsible for analyzing seized electronic data and records from
over one hundred computers including those seized pursuant to the search warrants/consent
searches.
Based on his knowledge, training, and experience, Special Agent Jack has advised me
that properly retrieving and analyzing all electronic stored (computer) data, document and
authenticating such data, and preventing the loss of data either from accidental or deliberate
programmed destruction, requires on site and laboratory analysis by a qualified computer
specialist. To effect such accuracy and completeness may require the seizure of all computer
equipment and peripherals which may be interdependent, the software to operate the computer

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 22 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page24 of 27

system, data security devices (including passwords and decryption keys), and related instruction,
manuals which contain directions concerning the operation of the computer system and software
programs. This is because the peripheral devices, which allow users to enter or retrieve data from
storage devices, vary widely in their compatibility with other hardware and software. Many
system storage devices require particular input/output devices in order to read the data on the
system. It may be important that the computer system be re configurable to accurately retrieve
the evidence on crime.
Searching computer systems is a highly technical process, which reqUires specific
expertise and specialized equipment. There are so many types of computer hardware and
software in use today that it is impossible to bring to the search site all of the necessary technical
manuals and specialized equipment necessary to conduct a thorough search. In addition, it may
also be necessary to consult with computer personnel who have specific expertise in the type of
computer, software application, or operating system that is being searched.
Searching computer systems requires the use of precise, scientific procedures which are
designed to maintain the integrity of the evidence and to recover "hidden", erased, compressed,
encrypted, or password protected data. Computer hardware and storage devices may contain
"booby traps" that destroy or alter data if certain procedures are not scrupulously followed.
Since computer data is particularly vulnerable to inadvertent or intentional modification or
destruction, a controlled environment, such as a law enforcement laboratory, is essential to
conducting a complete and accurate analysis of the equipment and storage devices from which
the data will be extracted.
The volume of data stored on many computer systems and storage devices will typically
be so large that it will be highly impractical to search for data during the execution of the
physical search of the premises. A single megabyte of storage space is the equivalent of 500
double spaced pages of text. A single gigabyte of storage space, or 1,000 megabytes, is the
equivalent of 500,000 double spaced pages of text. Storage devices capable of storing fifteen
gigabytes of data are now commonplace in desktop computers. Consequently, each non
networked, desktop computer found during a search can easily contain the equivalent of 7.5
million pages of data, which, printed out, would completely fill a 10' x 12' x 10' room to the
ceiling.

Affidavit of Special Agent Quyen Madrigal, IRS-Cl


In Support of an Arrest and Search Warrant Application
Page 23 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page25 of 27

Computer users can attempt to conceal data within computer equipment and storage
devices through a number of methods, including the use of innocuous or misleading file names
and extensions. For example, files with the extension 'Jpg" often are image files; however, a
user can easily change the extension to ".txt" to conceal the image and make it appear that the
file contains text. Computer users can also attempt to conceal data by using encryption, which
means that a password or device, such as a "dongle" or "keycard", is necessary to decrypt the
data into readable form. In addition, computer users can conceal data within another seemingly
unrelated and innocuous file in a process called "steganography." For example, by using
steganography a computer user can conceal text in an image file, which cannot be viewed when
the image file is opened. Therefore, a substantial amount of time is necessary to extract and sort
through data that is concealed or encrypted to determine whether it is evidence, contraband, or
instrumentalities of a crime.
SEARCH OF DIGITAL MEDIA IN LIGHT OF LAST WEEK'S
NINTH CIRCUIT RULING IN CDT
On August 26, 2009, the Ninth Circuit Court of Appeals issued an en banc opinion in
United States v. Comprehensive Drug Testing Inc. ("CDT''). That decision has called into
question the established computer search protocols in this circuit and replaced them with
guidance that is still being digested. CIS Jack has advised me that he "has no idea" how the
CDT opinion is ultimately going to affect the computer searches he conducts, and David
Callaway, the Assistant United States Attorney assisting me with the preparation of this affidavit,
has advised me that his office is still reviewing the opinion and determining how to respond.
As the investigating case agent, I can only state my view that there is probable cause to
believe that evidence of the federal criminal violations described in this affidavit are located on
SUNDBERG's computers: both the laptop computer I have personally seen him carrying around,
as well as on any desktop computers that may be located at his business or residence at 26 King
Court, in San Mateo.
In view of the current uncertainty regarding computer searches and seizures, I therefore
seek this Court's authority, for the moment, to do only the following: to permit IRS forensic
computer examiners to image SUNDBERG's laptop computer, as well as any desktop computers
found at the business (Attachment A-3) and SUNDBERG's residence (Attachment A-I), such
imaging to be conducted onsite, if that course is determined to be practicable by CIS Jack or,

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 24 of26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page26 of 27

alternatively, within ten days if CIS Jack determines that such imaging cannot, with due
diligence, be accomplished on the date the search warrants are executed.
As set forth in Attachment C, no search of any seized computer, or of its imaged copy,
will be conducted under the authority of this search warrant. Rather, the evidence contained on
the seized computers will be preserved, but not searched unless and until a further warrant, with
specific protocols consistent with the Ninth Circuit's guidance in CDT, is obtained from this
Court. I would respectfully submit that this procedure, for purposes of Fourth Amendment
analysis, is the functional equivalent of the accepted practice of "freezing" a location while a
search warrant is obtained.
REQUEST FOR SEALING
As this investigation is continuing, disclosure of the arrest warrants, search warrants,
seizure warrants, this affidavit, or this application and the attachments thereto could jeopardize
the progress of the investigation. Such disclosure would give the subject an opportunity to cease
his criminal activities, destroy evidence, notify confederates, flee, or otherwise interfere with the
investigation. Accordingly, I request that the Court issue an order that the arrest and search
warrants, this affidavit, the application for search warrant, and all attachments thereto be filed
under seal until further order of this Court.
CONCLUSION
Based on the facts stated above, my experience and training, and consultation with other
IRS employees, I respectfully submit that there exists probable cause to believe that
SUNDBERG has committed violations of 26 U.S.C. § 7206(1) and 18 U.S.C. § 287, and that
evidence, fruits, and instrumentalities of those violations, as more specifically described in
Attachment B, will be located at each of the locations set forth in Attachments A-I through A-S.
Digital evidence shall be handled only in accordance with Attachment C. All of the attachments
are incorporated fully here by this reference.
In addition, based on the foregoing facts, including that SUNDBERG has recently
acquired an alias ("Franco Metcalf') and, to the best of my knowledge, still has in his possession
over one million dollars in fraudulently-obtained, unendorsed cashier's checks payable to
himself, I further request that a "No Bail" warrant be issued for his immediate arrest.
II

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 25 0[26
Case5:09-mj-70796-RS Document1 Filed09/01/09 Page27 of 27

The above information is true and correct to the best of my knowledge, information, and
belief.

Q~
Special Agent, IRS-CI

Sworn to and subscribed to before me


this \.5 1:" day of ~br ,2009,
at San Jose, California.

United States Magistrate Judge

Affidavit of Special Agent Quyen Madrigal, IRS-CI


In Support of an Arrest and Search Warrant Application
Page 26 of26
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page1 of 9

FilE D
RESTRICTED APPEARANCE OF DEC 3 1 2009
Seth-Cameron; Sundberg, Per Per
3RD PARTY INTERVENER RICHARD W. WIEKING
870 Sunset Drive CLERK, U.S DISTfill~tOllNTERVENE;
San Carlos, California 94044 NORTHERN DISTRICT[eo~tfiJTIONAL QUESTION]
ORDER AND CERTIFICATE OF SEVICE

IN THE UNITED STATES DISTRICT COURT


FOR THE NORTHERN DISTRICT OF CALIFORNIA
SAN JOSE DIVISION
280 SOUTH 1ST STREET, SAN JOSE, CALIFORNIA 95113

UNITED STATES OF AMERICA, ADMIRALTY ACTION

Plaintiff, IN REM
VS.
26 USC 7206(1), 26 USC 7201,
SETH CAMERON SUNDBERG, 18 USC 287

Defendant, IN RE:
AND MOTION TO INTERVENE
[Constitutional Question]
Seth-Cameron; Sundberg, Pro Per,

3rd Party Intervener, CASE NO: CR09-00928JF

MOTION TO DISMISS

AND NOW, comes the Movant and 3rd Party Intervener, Seth-Cameron; Sundberg, the

living man, created in the image of God, my Creator; a sovereign national on the land,

making a restricted appearance, within the organic law and organic geographic boundaries

of the Confederacy of the united States of America; in honor and at arm's length and clean

hands, as the secured party; holder-in-due-course and the only authorized signatory for the

defendant, SETH CAMERON SUNDBERG, the grantor and beneficiary of the expressed

Trust; having a home Port of residence located at: 870 Sunset Drive, San Carlos, San Mateo

County, California.

1
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page2 of 9

WHEREFORE THE 3RD PARTY INTEVENER: hereby Moves this District

to permit his intervention in the above captioned criminal suit, regarding a

Constitutional Question, which declares the principle of [NO LAW = NO REMEDY].

The defendants' only hope for a remedy is to bring these facts into the courtroom and have

the court either confirm this claim or dismiss the action and redeem the injured parties ...

TO WIT:

28 USC> PART VI> CHAPTER 161> § 2403; Intervention by the United States or a
State [Constitutional Question].

fa] In any action, suit or proceeding in a court of the United States to which the United
States or any agency, officer or employee thereofis not a party, wherein the
constitutionality of any Act of Congress affecting the public interest is drawn in
question, the Court shall certify such fact to the Attorney General, and shall permit the
United States to intervene for presentation of evidence, if evidence is otherwise
admissible in the case, andfor argument on the question of constitutionality. The
United States shall, subject to the applicable provisions of law, have all the rights of a
party and be subject to all liabilities of a party as to court costs to the extent necessary
for a proper presentation of the facts and law relating to the question of
constitutionality.

fb] In any action, suit, or proceeding in a court of the United States to which a State or
any agency, officer, or employee thereof is not a party, wherein the constitutionality of
any statute of that State affecting the public interest is drawn in question, the court
shall certify such fact to the attorney general of the State, and shall permit the State to
intervene for presentation of evidence, if evidence is otherwise admissible in the case,
andfor argument on the question of constitutionality. The State shall, subject to the
applicable provisions of law, have all rights of a party and be subject to all liabilities of
a party as to court costs to the extent necessary for a proper presentation of the facts
and law relating to the question of constitutionality.

IV. PARTIES> F.R.C.P. Rule 24. Intervention.

(a) Intervention of Right.


Upon timely application anyone shall be permitted to intervene in an action: (1) when a
statute of the United States confers an unconditional right to intervene; or (2) when the
applicant claims an interest relating to the property or transaction which is the subject
of the action and the applicant is so situated that the disposition of the action may as a

2
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page3 of 9

practical matter impair or impede the applicant's ability to protect that interest, uni'ess:
the applicant's interest is adequately represented by existing parties.

(b) Permissive Intervention.


Upon timely application anyone may be permitted to intervene in an action:

(I) When a statute of the United States confers a conditional right to intervene; or

(2) When an applicant's claim or defense and the main action have a question of law
or fact in common. When a party to an action relies for ground of claim or
defense upon any statute or executive order administered by afederal or state
governmental officer or agency or upon any regulation, order, requirement, or
agreement issued or made pursuant to the statute or executive order, the officer or
agency upon timely application may be permitted to intervene in the action. In
exercising its discretion the court shall consider whether the intervention will
unduly delay or prejudice the adjudication of the rights of the original parties.

(c) Procedure.

A person desiring to intervene shall serve a motion to intervene upon the parties as
provided in Rule 5. The motion shall state the grounds therefore and shall be
accompanied by a pleading setting forth the claim or defense for which intervention is
sought...

MOVANT RESPECTFULLY REPRESENTS THAT:

1] Ever since George Washington overthrew the first civilian government of America

under the Articles of Confederation, which had been ratified on November 15, 1777 by

the first Continental Congress; George subsequently installed the defacto corporate

military government, which remains in place today. Evidence of that military

government is openly reflected in the Titles assigned to high offices [e.g.] Commander

in Chief; Attorney General; Surgeon General; Auditor General; Postmaster General,

etc. Evidence of the incorporated government is defined under USC Title 5 and in the

Clearfield Doctrine rendered by the US Supreme Court in 1943.

USC Title 5> Chapter 1> Section 103.


For the Purpose of this title-

3
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page4 of 9

(1) "Government corporation" means a corporation owned or controlled by the


Government of the of the United States; and
(2) "Government controlled corporation" does not include a corporation owned by
the Government of the United States.

The Clea1jield Doctrine:


"that when governments descend to the level of a mere corporation and takes on the
characteristics of a private citizen,for the purposes of suit, such corporations and
individuals are regarded as 'private entities' entirely separate from government." [The
Clearfield Trust v. The United States, 318 U.S. 363-37 (1943) U.S. Supreme Court...]

2] America is under the jurisdiction of a corporate military authority, administered by a

civil authority with its courts calling the shots. Peace was never declared after the Civil

War and we are still operating under the War Powers Act! The Organic Constitution of

1787 was never ratified [adopted] by the federal government and was secretly rewritten

in 1865, without the consent of the public or a constitutional convention. The Declaration

of Independence; the Articles of Confederation and the Constitutions' of each of the

government controlled incorporated States, have been suspended without the knowledge or

consent of the public. Still, this federal government continues to express that we are a

nation governed by law and protected by a Constitution!

3] Every State and there Courts are under the control ofthe federal government. Evidence

of such control is referenced under USC Title 5, Chapter 1, Section 103 (2) and can easily

be verified by opening the Codes of any State government on a computer search bar. Once

the glossary appears for the Codes, under search, type in the words, "District of Columbia"

and hit enter. These words are repeated over 1000 times. Everything in the Codes connects

to the federal government.

4
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page5 of 9

4] Absent a root in the Organic Law of America, the government of America is deJtacto ~

and every law created by this government is defacto as well. Those Organic Laws are: a]

The Declaration of Independence of July 4, 1776; b] The Articles of Confederation of

November 15, 1777; c] The Constitution of the United States of America of September

17, 1787 and d] The Northwest Ordinance of April 23, 1784 and July 13, 1787. These

Laws are still in tact and have never been repealed. The Organic Laws of America remove

all authority, power, venue and jurisdiction of these governments over or against the

American public, except by lawful contract. A lawful contract that doesn't exist! The

organic law places no burden upon the living man and prohibits the enforcement of written

law by any government against the inhabitants of America.

5] A lawful contract heretoforementioned, must comply with the Law of Contracts however

"Mutality" eliminates any contractual relationship alleged between the public and the

government. Absent the requirement of Mutality, all such contracts are unconscionable.

6] The Defendant, SETH CAMERON SUNDBERG, is being treated as a corporate fiction,

owned by the government. This deception was instituted by a forced registration of births

and issue of birth certificates. These certificates were recorded under the Department of

Transportation as government owned Vessels and then converted into International

Securities and marketed as investment funds. The proceeds of the sale of these Securities

was deposited into a "Foreign Sidus Trust" in the name of the registered birth applicant. The

purpose for doing this was to create an [indefeasible defense] in the event of the arrest and

prosecution of these government representatives for Treason.

5
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page6 of 9

7] The establishment of the Social Security Administration was just another govelnnlerl~

ploy to capitalize upon the good faith, credit and sweat equity of the American public.

applications for admission into the Social Security Administration were converted into

Bearer Certificates, assigned a CUSIP# and marketed as a govermnent investment mutual

fund through Fidelity Mutual Insurance Company. The proceeds of this investment is

deposited into a "cestui que trust" under the name of the applicant.

8] This govermnent has never come out and made a statement of fact that America is a

defacto nation, with defacto courts and defacto Judges sitting under the Rule of Necessity

and that we Americans have No Remedy in the Courts. For every law written there

must be a remedy provided, and absent that Remedy there can be no Law!

9] Every written law created by this defacto govermnent, by their own Rules, F.R.C.P.

17(a), is suppose to be certified by the Supreme Court as constitutional before it can be

implemented. A Grand Jury cannot certify the constitutionality of any law because it is

beyond their educational comprehension and ability. Obviously, no written law of a

defacto nation can be certified constitutional when such laws are not rooted in the Organic

Constitution or compliant with the other Organic Laws of America!

10] If these defacto govermnents believe they are operating under International Law,

they require three things to be a nation under that status:


a] dejure money;

b] dejure law, and a

c] dejure military.

America has none ofthese in operation and the defendants' only hope for a remedy is to

6
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page7 of 9

bring these facts into the courtroom and have the court either confirm this claim or dismlss\:

the action and upon a dismissal, redeem the injured parties for damages.

"Nothing can be more material to the obligation than the means of enforcement. Absent
the remedy, the contract may, indeed, in the sense of the law, be said not to exist, and its
obligation to fall within the class of those moral and social duties, which depend for their
fulfillment wholly upon the will of the individual. The ideas of validity and remedy are
inseparable, and both are parts of the obligation, which is guaranteed by the Constitution
against invasion. The obligation of a contract is the law which binds the parties to
petform their agreement. " [Von Hoffman v. City of Quincy, 4 Wall 535, 552.] [Red
Cross Line v. Atlantic Fruit Company. No. 112, Supreme Court of the United States,
264 US 109,68 L. Ed. 582, 44 S.Ct. 274 February 18, 1924].

IJ,mitted by:

llieHb-o:- z$2
date •
2tt'(
!!~~:~s~u~n~dreb;er~g~"}'~~"
3rd Party Intervener and the only
authorized signatory for
SETH CAMERON SUNDBERG
[Grantor and Beneficiary of the expressed Trust]

7
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page8 of 9

UNITED STATES OF AMERICA,

Plaintiff,
VS.

SETH CAMERON SUNDBERG,

Defendant, SS.
AND

Seth-Cameron; Sundberg, Pro Per,

3rd Party Intervener,

JURAT

I, Seth-Cameron; Sundberg, Pro per, the Movant and 3rd Party Intervener, hereby

affirms upon his unlimited credit and liability that the contents of this Motion is

true and correct to the best of his information, knowif

By: --:--L..-'<
~~~~"'tT<4
un Pro per
.U./
3rd Party Intervener and the only
authorized signatory for
SETH CAMERON SUNDBERG
[Grantor and Beneficiary of the expressed Trust]

Sworn to and sub~cribed ,before me this


j1<,1b day of ~ ,
2009, at ~?T f(JL() Alae
in -5M'\. ~ County, CA. "\
l_ ~ SARA E. HALLER (
COMM.# 1747781 III
/". NOTARY PUBLIC-CALIFORNIA _

~Q;r~T~ 1.
UI
.; CoutnY OF SAN M.AJEO ,.I;
My CO~!.\. Exp. MAY 28, 201:.;
California Notary Public
License No: ,-:)..J..tt1-i?> I
My Commission Exp: .).\."-"-\ 2E j "lJ; /1

8
Case5:09-cr-00928-JF Document37 Filed12/31/09 Page9 of 9

l
Seth-Cameron; Sundberg
870 Sunset Drive
San Carlos, California 94044

December 28, 2009

Clerk of Courts
United States District Court
Northern District of California
800 North Humboldt Street
San Mateo, California 94401

In Re: United States vs. Seth-Cameron; Sundberg,


[i.e.] Federal Case No. CR09-00928JF,
[Motion to Intervene]

PRECIPE

1. The attached Petition is a MOTION TO INTERVENE with ORDER, regarding the


above referenced Case. One additional copy is provided for the Clerk's files.

2. You are to record this document into the case file and present the Motion and Order
to Judge Fogel, to schedule a hearing and signature.

3. Movant shall serve the Plaintiff with a complete copy of this Motion and submit a
Certificate of Service for the case file.

4. Timing is essential in this matter and therefore upon receipt of the signed Order,
you are to contact the Movant to pickup the Order to serve on the Plaintiff. The
Movant will submit a Certificate of Service for the case file.

5. Lastly, you are to file this matter for the date, courtroom and
Judge.

CC: file
: U.S. District Court

12