Eastern District of Pennsylvania
Press releases recorded for this federal judicial district.
Investment Advisor Indicted for Fraud While Out on Bail for Similar OffensesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jason C. Weigand, 50, of Denver, PA has been charged by Indictment with mail fraud, wire fraud, and interstate transportation of stolen securities, while on bail for separate, similar offenses.
The Indictment announced today alleges that Weigand helped a former client of his, identified in court documents as “AH,” recover on life insurance policies when her husband died. Weigand later convinced AH to provide him with at least $239,000, which he told her that he would invest on her behalf. However, according to the Indictment, Weigand did not invest the client’s money in appropriate investments as he promised, but instead used the money for his own personal and business purposes, including payments to his personal line of credit, his Visa credit card, and his Lincoln MKZ and Chevy Suburban car loans.
In October 2017, Weigand was charged in a separate federal Indictment with allegedly misusing funds belonging to his clients. He was arrested on those charges and released subject to conditions including that he not commit any “Federal, State, or local crime during the period of release.” He allegedly violated those conditions by committing some of the offenses alleged in the current Indictment. Further, during the relevant time period, Weigand did not even possess a license to act as an investment advisor.
According to the Indictment, Weigand was a registered investment advisor in Pennsylvania between 2009 and 2014, and in New Jersey between 2011 and 2014. He voluntarily surrendered his licenses as an investment advisor in both states in 2014. In the case of his Pennsylvania license, Weigand terminated it on April 10, 2014—the same day that he was questioned by investigators from the Pennsylvania Department of Banking and Securities about his investment advisor activities.
“Weigand is alleged to be a serial fraudster with no respect for the law,” said U.S. Attorney McSwain. “Rather than serving his clients, he served himself. Prosecuting financial and securities fraud -- and thereby safeguarding innocent investors -- has been and will continue to be a top priority of my Office.”
“Jason Weigand was first arrested in 2017 by Postal Inspectors from the Philadelphia Division for stealing money from his investment advisory clients,” said Postal Inspector in Charge, Damon Wood. “Since 2017, while preparing to defend himself on those charges, Mr. Weigand went back to his old ways, stealing money from his investment clients. I applaud the diligence of the investigators and prosecutors in this case to not only prepare for trial but to follow up on allegations of new crimes. The Postal Inspection Service has long prided itself as being a leader in investigating investments frauds. From snake oil salesmen in the 19th century to modern day Wall Street frauds, if the United States Mail is used, Postal Inspectors will work tirelessly to bring the perpetrators to justice.”
If convicted, the defendant faces a maximum possible sentence of 120 years imprisonment, $1,500,000 fine, 3 years supervised release, $600 special assessment.
The case was investigated by the United States Postal Inspection Service, and is being prosecuted by Assistant United States Attorneys Katherine Driscoll and Paul Shapiro.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Catholic Charities of Southern Nevada Agrees to Pay over $200K to Resolve Claims It Fraudulently Billed the United States for Community Service GrantsRead the Press Release
PHILADELPHIA and LAS VEGAS – United States Attorney for the Eastern District of Pennsylvania, William M. McSwain, and United States Attorney for the District of Nevada, Nicholas A. Trutanich, jointly announced that Catholic Charities of Southern Nevada (Catholic Charities) has agreed to pay $206,368.35 to resolve claims arising from its administration of community service grants funded through the Corporation for National and Community Service (CNCS).
From 2003 until 2018, Catholic Charities administered multiple grants in CNCS’s Senior Corps program. These grants included the Foster Grandparent Program, which places seniors in school and community settings to serve youth with exceptional needs, and the Senior Companion Program, which places seniors in community and residential settings to assist other seniors who have difficulty with tasks of daily living. These programs provide small hourly stipends to the volunteers performing these services.
The settlement resolves claims that in 2014 and 2015, Catholic Charities’ employees who oversaw the Foster Grandparent and Senior Companion programs falsified records for the stipend recipients. They also directed recipients to falsify records, leading to CNCS grant funds being used to pay stipends for hours that were never actually worked, were in violation of program requirements, or were inflated.
When Catholic Charities executive management discovered the fraudulent actions of its employees, it voluntarily disclosed them through the CNCS-OIG hotline. It terminated the employees who had perpetrated the fraud and cooperated fully in the United States’ investigation of its administration of these grants. In 2018, Catholic Charities relinquished the grants entirely.
“Every federal grantee, including community service organizations, is required to honestly and openly report the service that its volunteers perform. Every dollar spent on an hour that was not actually served is one that is not available to support other community service efforts,” said U.S. Attorney McSwain. “Strict compliance with grant requirements ensures that federal funds reach those who need it most.”
“Each day, Catholic Charities of Southern Nevada feeds the hungry, provides shelter for the homeless, and supports families and seniors in need of assistance. The federal government relies on its non-profit partners to help ensure that federal grant funds are being used to assist their communities,” said U.S. Attorney Trutanich. “Today’s settlement is a reminder that everyone receiving federal grant funds must adhere to grant compliance requirements and self-report misuse of federal grant funds, as Catholic Charities of Southern Nevada did here. “
“Catholic Charities acted responsibly upon discovering fraud, promptly reported the misconduct, cooperated actively with the investigation and willingly made the taxpayers whole,” said CNCS’s Inspector General Deborah J. Jeffrey. “As a result, Catholic Charities was appropriately spared substantial penalties and fines. We thank our partners at the U.S. Attorney’s Offices in the Eastern District of Pennsylvania and Nevada for protecting the integrity of CNCS.”
United States Attorneys McSwain and Trutanich also praised Catholic Charities’ work in addressing the issues in these programs: “We commend Catholic Charities of Southern Nevada for promptly reporting these issues when they were discovered and for working with the Department of Justice and the Corporation for National and Community Service to make the government whole. We hope this settlement will serve as a message to other senior managers to be vigilant in overseeing government-funded programs and to ensure that their employees do not attempt to conceal any non-compliance. All organizations accepting federal funds should take their responsibility to the American taxpayers seriously to come forward promptly and cooperate fully if they discover that they have not lived up to their promises.”
This investigation was conducted jointly by the United States Attorney’s Offices for the Eastern District of Pennsylvania and District of Nevada with the Corporation for National and Community Service Office of Inspector General. Assistant United States Attorneys Paul W. Kaufman and Veronica Finkelstein of the Eastern District of Pennsylvania and Troy Flake of the District of Nevada handled the investigation and settlement. This case was initiated as a part of the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s Affirmative Civil Enforcement Strike Force focus on grant fraud.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Fugitive Bethlehem Drug Dealer Arrested at Miami International AirportRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Timothy Stanley Wilkins, 41, of Bethlehem, PA was arrested last night in Miami, Florida. Wilkins was a fugitive from justice on federal drug trafficking and firearms offenses. After being charged, Wilkins fled the country and was apprehended by federal agents at Miami International Airport, while attempting to re-enter the United States.
On March 11, 2020, Wilkins was charged in a three-count Indictment with possession with intent to distribute fentanyl and cocaine, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of a firearm. He is scheduled to have his initial appearance today in the Southern District of Florida and then will be extradited to the Eastern District of Pennsylvania.
“As alleged in the Indictment, charging him with firearms and drug offenses, Wilkins has a brazen disrespect for the law,” said U.S. Attorney McSwain. “In response to the charges, he fled the country, but all that did was postpone the inevitable. If you are charged in the Eastern District of Pennsylvania with a federal offense, there is no place to hide, here or abroad. We will not rest until we find you and hold you accountable.”
“I would like to take an opportunity to recognize the cooperation among our law enforcement agencies responsible for getting a dangerous drug dealer off the streets,” said Northampton County District Attorney Terence P. Houck. “It is important for people to know that together, we will investigate, arrest and convict these law breakers by exhausting all federal and state efforts in the pursuit of this cause.”
“Timothy Wilkins fled to evade prosecution on state charges brought against him,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Now he’s in the federal system, indicted on these drug and gun charges and safely in custody. The FBI and our partners at the Bethlehem Police Department will continue to work together to protect our community from those engaged in illegal and dangerous activity.”
If convicted, the defendant faces a maximum possible sentence of life imprisonment, a mandatory minimum 15 years imprisonment, 8 years supervised release, a $1,500,000 fine, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation, Allentown Resident Agency, the City of Bethlehem Police Department, and the Northampton County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Kelly A. Lewis Fallenstein.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Chicago Man Sentenced to 22 Years for Engaging in a Nationwide Online Child Exploitation EnterpriseRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Marqueal Bonds, 22, of Chicago, Illinois, was sentenced today to 22 years in prison and lifetime supervised release by United States District Court Judge Harvey Bartle, III, for engaging in a child exploitation enterprise. Bonds was also ordered to pay a total of $33,221 in restitution to various victims.
In March 2020, Bonds pleaded guilty in the middle of trial to charges of engaging in a child exploitation enterprise and conspiracy to advertise child pornography. Using Discord, an online communications application that allows users to share files and communicate via chat messages, Bonds and his co-conspirators connected in private chat rooms to discuss how to find children and exploit them to produce child pornography. Bonds and his co-conspirators would also share child pornography on Discord, which included sexual depictions of children as young as toddlers. After discovering evidence of child pornography on Discord’s servers, federal agents executed a search warrant at Bonds’ house, and the defendant confessed to his involvement in this enterprise.
“Bonds and others like him will be held accountable by my Office no matter which dark corners of the Internet they are lurking in,” said U.S. Attorney McSwain. “Bonds and his co-conspirators trolled the Internet on legitimate sites like Snapchat, Periscope, and Live.me for vulnerable victims, tricked these children into believing they were chatting with boys or girls their own ages, and then obtained video and naked photos of them to share on Discord. Today’s lengthy sentence ensures that Bonds is out of business and serves as a warning to anybody who would consider exploiting children via the Internet.”
“Marqueal Bonds manipulated underage girls into providing explicit images of themselves,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He and his co-conspirators teamed up to sexually exploit children across the country and share the vile results. These are predators who harmed young girls without a second thought. Locking them up ensures they won’t be victimizing anyone else.”
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant U. S. Attorney Kevin Jayne and Trial Attorney Kaylynn Foulon, of the U.S. Department of Justice’s Child Exploitation and Obscenity Section.
Allentown Man Sentenced to 10 Years for Multiple Firearms Violations, Dealing Drugs Near a SchoolRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Francisco Cruz-Pica, a/k/a “Javi,” 38, of Allentown, PA was sentenced to 10 years in prison, eight years of supervised release and ordered to pay a $1,200 fine by United States District Judge Jeffrey Schmehl for trafficking drugs and illegally possessing firearms, including a machine gun.
In January 2020, Cruz-Pica pleaded guilty to an 11-count Indictment charging drug trafficking and multiple firearms offenses, including distribution of heroin within 1,000 feet of a public school, maintaining a drug house, being a felon in possession of a firearm, possession of a machine gun, and possession of a firearm in furtherance of a drug trafficking crime. He committed these offenses while on supervised release for a previous felony firearms conviction in the District of Puerto Rico, and is a notorious drug dealer known to authorities operating in and around Allentown.
“This defendant clearly has no respect for the law or for the Allentown community,” said U.S. Attorney McSwain. “Not only did he illegally possess multiple firearms and deal drugs near a school – a place that is supposed to be a safe haven for children – but he did so while on supervised release for a previous felony conviction. My Office is committed to working with our local law enforcement partners, like District Attorney Martin and the Allentown Police Department, to protect the Allentown community by investigating and convicting criminals like Cruz-Pica, and put them behind bars.”
“I commend the Allentown Resident Office of the FBI and the Allentown Police Department on their investigation, which has enabled an effective prosecution by the U. S. Attorney and has resulted in a dangerous criminal being taken off the streets of our community,” said Lehigh County District Attorney Jim Martin.
“Cruz-Pica illegally armed himself to the teeth as he flooded the streets of Allentown with drugs,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “All while on supervised release imposed for an earlier gun crime. Today’s sentence, obtained through the efforts of the FBI and our partners on the Lehigh Valley Safe Streets Task Force, ensures this repeat offender and threat to public safety remains behind bars for some time.”
The case was investigated by the Federal Bureau of Investigation, Allentown Resident Agency, the City of Allentown Police Department, and the Lehigh County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Kelly A. Lewis Fallenstein.
New Jersey Man Sentenced to Three Years in Prison and over $9 Million in Restitution for Drug Rehab Health Care Fraud SchemeRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jason Gerner, 46, of Shamung, New Jersey, was sentenced to 36 months imprisonment and three years of supervised release by United States District Court Judge Wendy Beetlestone for his role in multiple healthcare fraud schemes as a co-founder of the drug and alcohol rehabilitation facility Liberation Way, which had locations in Yardley, Bala Cynwyd and Fort Washington, Pennsylvania. As part of his sentence, he was also ordered to pay restitution in the amount of $9,338,607 and ordered to forfeit $444,983.
In August 2019, the defendant pleaded guilty to charges of conspiracy to commit health care fraud and conspiracy to commit money laundering for his role as a founder and operating partner of Liberation Way. An investigation into the operations and management of the facility exposed an array of schemes, including: fraudulently purchasing premium insurance policies on behalf of prospective patients so that Liberation Way could bill for expensive “treatments” that it never provided; using pre-signed medical orders for tests and treatments for patients who were not actually seen or examined by the only doctor employed by Liberation Way; paying a different doctor to sign urine-testing orders for patients who were never seen or examined; shipping those urine samples for testing to laboratories in Florida in order to submit claims that were excessive and medically unnecessary, in order to maximize billing to insurance companies; receiving kickbacks for the insurance payments made to the laboratories for these overly frequent and expensive tests; and conspiring to hide the proceeds of the illegal urine-testing kickback scheme through a series of financial transactions involving payments to various shell companies disguised as consulting payments.
“My Office will not tolerate health care fraud in any form, especially the kind that takes advantage of at-risk patients and exploits their addictions,” said U.S. Attorney McSwain. “Those who think that they can game our health care system -- which is already strained under the weight of an ongoing opioid epidemic -- and prey upon vulnerable people will face the consequences. Gerner will rightly spend years in prison and pay millions of dollars as the result of his criminal conduct.”
“The employees of Liberation Way looked at the opioid epidemic devastating Pennsylvania and saw an opportunity to make a buck off the backs of vulnerable people. Pennsylvanians with substance abuse disorder, who deserved care from Liberation Way, were harmed instead,” said Attorney General Josh Shapiro. “I’m proud of the work we’ve done with our partners in the U.S. Attorney’s Office to hold these scam artists accountable and get justice for the people of Pennsylvania.”
“Gerner and his colleagues operated Liberation Way under the guise of helping addicts get healthy,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “In reality, the only things that benefitted were these fraudsters’ bank balances. Their elaborate, years-long swindle of the health care system victimized vulnerable patients for profit. The FBI is gratified all involved are being held accountable.”
“The U.S. Department of Labor, Employee Benefits Security Administration (EBSA), works closely with our federal and state law enforcement colleagues to bring to justice those who would, by their criminal activities, tamper with the hard–earned health benefits due the American worker,” said Employee Benefits Security Administration Philadelphia Regional Director Michael Schloss.
The case was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services, the Office of Personnel Management, and the Department of Labor Employee Benefits Security Administration, in conjunction with the Pennsylvania Attorney General’s Office, and is being prosecuted by Assistant United States Attorney Nancy Beam Winter and Special Assistant United States Attorneys Robert Labar and Kristy Christ.
Former Bucks County Youth Basketball Coach Sentenced to 20 Years for Child Exploitation OffensesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that James Hardcastle, 42, of Bensalem, PA, was sentenced to 20 years in prison, 20 years of supervised release, and ordered to pay $75,000 in fines by United States District Judge Gerald J. Pappert for multiple child exploitation offenses stemming from his conduct at an over-night basketball tournament in Wildwood, New Jersey and at his home in Bensalem.
In June 2016, Hardcastle transported three minor boys, ages 15, 16 and 16, as their coach to Wildwood, New Jersey to participate in a basketball tournament, and shared a motel room with them in which there was no shower curtain. The defendant installed a USB drive containing a hidden camera in a power outlet in the bathroom and surreptitiously filmed each of the minors taking showers. Previously, in June and July 2015, the defendant also attempted to videotape two minors in a bathroom using a hidden camera while the minors were visiting his home in Bensalem. The defendant pleaded guilty in December 2019 to three counts of transporting minors with the intent to engage in criminal sexual activity and two counts of attempted production of child pornography.
“This defendant took advantage of his position of trust as a youth basketball coach to exploit children for his own satisfaction,” U.S. Attorney McSwain said. “This is heinous and reprehensible behavior that deserves the serious punishment that was meted out today. My Office will continue to prioritize the protection of children from such predation.”
“The boys James Hardcastle victimized will never forget their trusted coach’s betrayal,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He used his relationship with them for his own gratification, setting them up for his illicit secret recordings. The FBI will never stand by when we learn of the sexual exploitation of children. Such predators need to be taken off the street so they can’t harm anyone else.”
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Police Department Special Victims Unit and the Bensalem Police Department, and is being prosecuted by Assistant United States Attorney Michelle L. Morgan.
United States Attorney McSwain Delivers Remarks on the Escalating Public Safety Crisis in PhiladelphiaRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain convened a press conference today outside the Byrne United States Courthouse after the sentencing hearing for Jovaun Patterson, the man convicted of shooting a Philadelphia shop owner with a military-style assault rifle during an attempted robbery. During his remarks, U.S. Attorney McSwain addressed the escalating violent crime crisis in Philadelphia, the anti-law enforcement bias pushed by certain groups, and the devastating impact that both continue to have on minority communities in the City.
Remarks as Prepared for Delivery
Jovaun Patterson has been sentenced to over 14 years in federal prison for shooting and attempting to rob Philadelphia shop owner, Mike Poeng. Mr. Patterson has been held accountable for his violent criminal behavior and will now serve an appropriate sentence. This was only possible because the U.S. Attorney’s Office stepped in and charged Mr. Patterson after the local authorities had bent over backwards to give him a break, negotiating an overly lenient sentence that sent a message that violent crime has little consequences.
That sad state of affairs – where the mishandling of Mr. Patterson’s original case necessitated federal involvement – is symbolic of a larger catastrophe that is playing out before our eyes in Philadelphia. Homicides, shootings, and serious violent crime have all skyrocketed in 2020 – from already intolerable levels that existed in 2019 and 2018. Almost all the victims are racial minorities, the vast majority of whom are Black. This past weekend alone, at least 25 people were shot. So far this year, over 100 children have been shot, a 68% increase as compared to last year. Again, almost all of these child victims are racial minorities, the vast majority of whom are Black. And we all know about Zamar Jones, the 7 year-old boy who was murdered earlier this month while playing on his front porch in West Philadelphia.
This is . . . infuriating. There is nothing more important than the safety of children. But where is the sense of outrage, where is the anger, where is the sense of urgency among City leaders? This slaughter in our streets has largely been met with indifference, a sense of inevitability, even a shrug of the shoulders. Or as the District Attorney frequently puts it: “poverty equals bullets.”
“Poverty equals bullets.” That condescending statement is a slap in the face to every law-abiding, low-income resident in the City. There are scores of low-income people in the City who respect the law, never shoot anybody, love their neighbors, and work hard to improve their neighborhood. Poverty is never an excuse for violent crime, and certainly not for murder. There is no possible justification for walking up to somebody and shooting them. Furthermore, poverty isn’t going away overnight. As law enforcement leaders, we can’t put the violence problem at the doorstep of poverty and just leave it there. That is the equivalent of abandoning the people we are sworn to protect and serve.
Instead, we must do something. At the U.S. Attorney’s Office, we have and we are – unlike the District Attorney’s Office. With our anti-violence public messaging campaign that we launched last month, the law-abiding citizens of Philadelphia know where the U.S. Attorney’s Office stands – with them and with our law enforcement partners. The campaign also puts potential criminals on notice that if they commit a crime with a gun and we have federal jurisdiction, we will prosecute them to the fullest extent of the law. We will come after them with everything that we have. We are spreading that message of deterrence through billboards, bus shelter advertisements, posters, the Internet, social media, videos, radio, and TV. It’s a message that is sorely needed in the City, and one that I believe will make neighborhoods safer and save lives.
And this is not just messaging. It is backed up by federal resources and results. The U.S. Attorney’s Office prosecuted 53% more violent crime cases in the Eastern District of Pennsylvania this past fiscal year than we prosecuted the year before. In Philadelphia’s most dangerous neighborhoods – what are designated as Project Safe Neighborhood (or PSN) target districts – we charged 72% more violent crime and weapons cases than the year before. And, where necessary, we have provided federal oversight in cases like today’s Patterson sentencing. Still, we know that in order to meet today’s challenges, we must do even more.
But the federal authorities cannot do it alone. We need City leaders to speak with one voice in condemning violence – not making excuses for it and not treating violent defendants like they are somehow the victims in all of this. And most importantly, the rhetoric should be backed up by aggressive local prosecution that holds criminals accountable and therefore makes neighborhoods safer.
City leaders also should speak with one voice in rejecting the extreme anti-law enforcement bias that is currently being peddled by certain irresponsible fringe groups. This bias – especially if it is not forcefully condemned by City leaders – puts the police on their heels and puts violent criminals on their toes, ready to stride forward confidently. One year ago, I stood in this spot and decried the culture of disrespect for law enforcement in the City – a culture that celebrated chants like “F*** the police” and “No good cops in a racist system.” Today, the bile and vitriol coming from some elements of the mob makes those chants sound quaint by comparison.
The vast majority of Philadelphia police officers do their jobs faithfully and honorably – and by putting on the uniform and doing the dangerous work inherent in their mission, they show that they value the lives of others more than they value their own. They, like all responsible citizens, abhor police brutality and are in favor of accountability for police. We can and should work towards better relations between the police and the community without indulging infantile notions that the police as a whole make communities more dangerous. Obviously, they do just the opposite. So to those of you out there who say that we should “abolish the police,” or “defund the police,” or “abolish prisons,” or one of my favorites, that “communities should be left to police themselves,” I have a message for you: your ideas are absurd and deserve nothing but scorn. Moreover, those ideas would cause great harm to the most vulnerable members of our society. Victims of violent crime, like Mike Poeng, are the ones who suffer the consequences of these foolish notions. As is often the case, the policies demanded by the self-righteous mob would come at the expense of minority communities.
Everybody in our City deserves to live in a safe neighborhood – regardless of race or income level. It is time for City leaders to step forward and do everything that they can to make that a reality. We won’t get there by treating violent criminals like they are victims, or by undermining law enforcement, or by grasping for excuses – like conveniently blaming the pandemic. It’s true that the virus isn’t making things any easier, but violence is contagious, too. It can easily spread across a City or even beyond. We must confront it and stop it and put the good people of this City first. Thank you.
Philadelphia Man Sentenced to 14+ Years for Shooting and Attempted Armed Robbery of West Philadelphia Convenience StoreRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jovaun Patterson, 31, of Philadelphia, PA was sentenced to 171 months in prison (14 years and three months) and 5 years of supervised release by United States District Judge Mitchell S. Goldberg for the attempted robbery of a convenience store in West Philadelphia in 2018.
In December 2019, Patterson pleaded guilty to charges of attempted Hobbs Act robbery, and using, carrying and discharging a firearm during and in relation to a crime of violence. These charges stem from the defendant’s attempted armed robbery on May 5, 2018, of the KCJ, Inc. convenience store, during which Patterson shot the store owner, Li “Mike “ Poeng, with an assault rifle. Mr. Poeng is a refugee from Cambodia who became a U.S. citizen in 1998. As a result of the shooting, Mr. Poeng is confined to a wheelchair. The Philadelphia District Attorney’s Office originally charged Patterson with multiple crimes, including attempted murder and aggravated assault, but then dropped the attempted murder charges and agreed to an overly lenient plea deal of only 3 ½ to 10 years imprisonment. The U.S. Attorney’s Office then stepped in to correct this injustice.
“Violent crime is a severe problem in Philadelphia, as shootings and homicides have sharply increased in 2020 from already intolerable levels. Confronting this crime wave is a top priority of my Office,” said U.S. Attorney McSwain. “It is important for potential criminals to know that committing a violent crime will result in grave consequences. It is also important for the general public to know that we are fighting hard to protect Philadelphia neighborhoods and to seek justice for victims. Taking Jovaun Patterson off the streets for an appropriate amount of time is part of that fight. I want to thank Mike Poeng for his courage throughout this case. Sadly, we can never make him completely whole, but today’s sentence is part of his healing process and will also help to deter future violence.”
“Today an extremely violent offender has been sentenced to a lengthy prison term,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division. “The outcome is the result of ATF’s collaborative effort with the Philadelphia Police Department to combat gun violence. Along with our other local, state and federal partners, we are committed to investigating gun crimes in Philadelphia and working with the US Attorney’s Office to prosecute those who violate the gun laws.”
Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of the Office’s new anti-violence public awareness campaign. You can learn more about this campaign on the District website.
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The case was investigated by The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Salvatore L. Astolfi.
Reading, PA Man Sentenced to 19+ Years for Stockpile of 200,000+ Images of Child PornographyRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that James Millette, 33, of Reading, PA, was sentenced to 235 months (over 19 years) in prison and lifetime supervised release by United States District Judge Joseph F. Leeson, Jr., for multiple child pornography charges. The defendant was also ordered to pay a total of $66,000 in restitution to the various victims depicted in these images.
In February 2020, Millette pleaded guilty to charges of possession and receipt of child pornography. The charges stem from the defendant’s February 7, 2019 arrest at his apartment, during which he was found to be in possession of an enormous collection of child pornography, including images depicting prepubescent minors. In total, more than 200,000 images and videos depicting child pornography were recovered from various electronic devices found in the defendant’s possession.
“The amount of child pornography seized in this case is stunning,” said U.S. Attorney McSwain. “Millette is a depraved hoarder of these illegal images – every one of which was made at the expense of an innocent child, whose life will never be the same. Protecting children by prosecuting criminals like Millette is a top priority of my Office.”
“James Millette couldn’t get enough of these abhorrent images of young children being sexually abused,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “Consumers of child pornography like him perpetuate the exploitation of child victims, something the FBI simply won’t abide. May this lengthy prison sentence be a warning to others involved with such repulsive material. Our Child Exploitation Task Force could soon be knocking at your door.”
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Matthew Newcomer.
Philadelphia Cash-Advance Business Owner Indicted and Detained on Weapons ChargesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Joseph LaForte, 49, of Haverford, PA, was arrested and charged by Indictment with possession of a firearm and ammunition by a convicted felon.
The Indictment alleges that on July 28, 2020, the defendant, a twice-convicted felon, knowingly possessed seven firearms in his home: two shotguns, four loaded handguns, and a loaded rifle.
After the defendant was arrested on August 7, 2020, the Government moved for his detention on the grounds that he was both a risk of flight and a danger to the community. The Government cited, among other things, death threats that LaForte had allegedly made to the customers of his business, Par Funding, a cash advance company based in Philadelphia. After his appearance in federal court yesterday, United States Magistrate Judge Marilyn Heffley detained the defendant until his trial.
“We’re pleased that the Court recognized that no conditions of release would be sufficient here,” said U.S. Attorney McSwain. “Joseph LaForte is where he belongs – in prison – and will now face the consequences of his alleged criminal behavior.”
“Joseph LaForte is a previously convicted felon who continues to demonstrate that he is a threat to the community,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. "This indictment is just another example of his disregard for the law.”
If convicted, the defendant faces a maximum possible sentence of ten years of imprisonment, a $250,000 fine, 3 years of supervised release, and a $100 special assessment.
The case is being investigated by the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General, and the Internal Revenue Service, with assistance from the Lower Merion Township Police and the Pennsylvania State Police Bureau of Criminal Investigations, and is being prosecuted by Assistant United States Attorneys Jonathan Ortiz and Patrick J. Murray.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Sentenced to 45 Years for Sex Trafficking Children in Northeast PhiladelphiaRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Artavius Horne, a/k/a “Lo”, 36, of Philadelphia, PA was sentenced to 45 years in prison and 10 years of supervised release by United States District Court Judge Gerald J. Pappert for sex trafficking three children for years.
In September 2019, Horne was convicted at trial of three counts of sex trafficking minors by force, fraud or coercion. During the week-long trial, the government proved that the defendant organized, operated and led a sex trafficking venture based in and around Northeast Philadelphia between 2013 and 2015, and in 2018. As part of the scheme, the defendant recruited, enticed and maintained three minor children, one of whom was as young as 13 years old, to engage in commercial sexual encounters. Horne created Internet advertisements for each of the victims on the website Backpage.com, and he transported them across state lines to New Jersey, New York, Washington D.C., and Maryland for the purpose of engaging in commercial sex acts. He also kept the victims in apartments throughout Philadelphia, known as “trap houses,” where they were made to engage in commercial sex for the benefit of the defendant. In 2017, Horne was convicted of similar offenses in Bucks County, PA.
“Horne committed these heinous acts while on parole for doing the exact same thing,” said U.S. Attorney McSwain. “He has no regard for the law -- or even basic human decency -- as evidenced by his willingness to sell the bodies of children for sex to benefit himself. He deserves every minute of the 45 years that he received today.”
“Artavius Horne made his living by sexually exploiting children, advertising underage girls for sex with strangers,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He even transported them to other cities and states, determined to keep the money coming in at their expense. Know that the FBI and our law enforcement partners are working every day to put traffickers like Horne behind bars and ensure some justice for their victims. We ask anyone with knowledge of child or adult sex trafficking to let us know about it, so we can help. Call 1-800-CALL-FBI or go online to tips.fbi.gov. Tipsters can remain anonymous, if they like.”
The case was investigated by the Federal Bureau of Investigation, and it is being prosecuted by Assistant United States Attorney Melanie Babb Wilmoth.
Bucks County Man Charged with Distribution of Child PornographyRead the Press Release
PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Patrick Shaknitz, 29, of Croydon, PA, has been arrested and charged by Complaint with one count each of distribution and attempted distribution of child pornography. These charges arise out of the defendant’s alleged distribution of images and videos of child pornography to others, including undercover federal agents, over the Internet.
According to the Complaint, beginning in November 2019, undercover federal agents exchanged private messages with a user identified as “intoeverything1991,” who distributed images and videos containing child pornography. One such video depicts an adult female in a dark blue face mask molesting a minor child. During chats with the agents, the same user described in explicit detail how he abused other children. Subpoenas issued for “intoeverything1991” revealed an IP address and other identifying information allegedly belonging to Shaknitz.
“As alleged in the Complaint, Shaknitz is a depraved abuser of children who multiplied the impact of that abuse by sharing images of it over the Internet,” said U.S. Attorney McSwain. “These children will have to deal with the impact of this abuse for the rest of their lives. We can never make them fully whole again, but we can bring them some measure of justice by investigating and prosecuting the people responsible for stealing their innocence.”
“The distribution of child pornography results in the continued sexual exploitation of innocent children,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “That’s what pushes the FBI to keep investigating these disturbing but important cases. Protecting kids is paramount and we’ll never give up that fight.”
If convicted, Shaknitz faces a statutory maximum sentence of 20 years’ incarceration with a 5-year mandatory minimum sentence of imprisonment, a lifetime of supervised release, and a $250,000 fine.
The case is being investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Kathryn Deal.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Two Philadelphia Men Indicted for Brazen Armed Robbery of Armored Truck and Shootout in University CityRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jerry Collins, 40, and Tyree Lamont Holmes, 28, both of Philadelphia, PA, were indicted for armed robbery of a Garda armored truck on the 3500 block of Market Street in the University City section of West Philadelphia just over one year ago.
According to the indictment, on August 1, 2019, at approximately 10:00 a.m., Holmes and a second unidentified suspect, both wearing masks and gloves, one armed with a loaded Glock 17 semi-automatic handgun and the other with a loaded assault rifle with an attached drum-style magazine, exited a Chevy Trailblazer that was parked behind a Garda armored truck. As one of the guards removed three black bags containing a total of $434,000 cash, Holmes and his accomplice approached the guard, pointed their firearms at him and announced a robbery while Collins waited in the driver’s seat of the getaway vehicle, the Trailblazer. Holmes allegedly grabbed the bags of money and attempted to get back into the vehicle when two guards drew their firearms and began shooting at the fleeing robbers, who fired back. During the shootout, Holmes dropped the bags of money on the ground and fled on foot while the second robber got into the Trailblazer with Collins and fled the scene.
Collins was arrested by the FBI on August 7, 2020; Holmes was arrested by the Philadelphia Police Department on February 18, 2020. Both defendants were indicted for conspiracy to commit Hobbs Act robbery, robbery which interfered with interstate commerce, and using, carrying and brandishing a firearm during and in relation to a crime of violence. Holmes is detained pending trial; the Government has moved to detain Collins, as well, who will appear in federal court for his detention hearing tomorrow, August 11, 2020.
“Robbing any type of business – especially a brazen armed robbery of an armored vehicle in broad daylight – is a serious federal offense that can carry stiff penalties,” said U.S. Attorney McSwain. “And here, the alleged robbery precipitated a shootout on a busy city block that endangered many innocent bystanders. It is remarkable that nobody was struck and killed. This type of criminal behavior is completely unacceptable and my Office is focused on rooting it out.”
“This was a risky armed robbery carried out on a dense and active block in University City,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The robbery crew showed up armed to the teeth to accost Garda personnel, prompting a barrage of gunfire. Holmes, Collins, and their accomplices put countless innocent people in danger by allegedly planning and carrying out this daylight gunpoint heist. It’s imperative all involved are held accountable, both to keep them off the street and send a message to anyone else who may contemplate such a dangerous assault on our community.”
Each defendant faces a maximum term of life imprisonment with a mandatory minimum term of seven years’ imprisonment without the possibility of parole, up to five years of supervised release, and a $750,000 fine. Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of the Office’s new anti-violence public awareness campaign.
The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department, with assistance from the University of Pennsylvania Police Department, and is being prosecuted by Assistant United States Attorney José Arteaga.
Two Philadelphia Men Indicted for Robbing West Philadelphia Mini MartRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Khaleef Huskey, 20, and Rasheen Mainor, 20, both of Philadelphia, PA were charged by Indictment with robbing a West Philadelphia convenience store while brandishing a firearm.
The Indictment alleges that early on the morning of January 14, 2020, the defendants robbed the Dollar & Smoker’s Point store, also known as the Chester Mini Market, at 5401 Chester Avenue, and took merchandise and approximately $500 cash. The defendants committed their alleged crime by brandishing a firearm and forcing their victim to leave the store at gunpoint.
“Robbing any type of business – whether it’s a bank, a corner store, or anything in between – is a serious federal offense that can carry stiff penalties,” said U.S. Attorney McSwain. “If convicted, Huskey and Mainor face many years behind bars. Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of our new anti-violence public awareness campaign. You can learn more about this campaign on our District website.”
“In the early hours of the morning, Huskey, Mainor, and an accomplice allegedly stormed into a store, confronted an employee at gunpoint, and proceeded to take whatever they wanted,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Protecting the people of Philadelphia from violent crime is a priority for the FBI, and our Safe Streets Task Force will never cede this city to armed criminals willing to break the law without a second thought.”
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
If convicted, both defendants face a maximum possible sentence of life imprisonment.
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michael R. Miller.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Reading, PA Man Charged with Attempted Murder of FBI AgentsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Rafael Vega-Rodriguez, 38, of Reading, PA was charged by Indictment with three counts of attempted murder of a federal law enforcement officer, three counts of assault on a federal officer with a deadly weapon, and related firearms charges stemming from an incident earlier this year when he allegedly opened fire on three FBI Special Agents.
On March 1, 2020, FBI Special Agents were conducting surveillance in the area of Gordon Street in Reading, PA, looking for the defendant, who was the subject of an active state arrest warrant for a parole violation. At approximately 11:45 p.m., the agents saw the defendant walking in the area of West Greenwich Street with a second individual. When the agents attempted to stop him, Vega-Rodriguez drew a handgun from under his sweatshirt and shot in their direction, continuing to shoot as he and the second individual fled from the scene.
After an intense man-hunt, investigators discovered that Vega-Rodriguez had fled to Leola, PA, approximately 30 miles southwest of Reading. He was arrested there by FBI Special Agents and Pennsylvania State Police Troopers in the early morning hours of March 3, 2020.
“Shooting at FBI Agents is one of the absolute worst – and dumbest – things that an individual can do,” said U.S. Attorney McSwain. “Such alleged behavior is guaranteed to bring the full force of the federal government crashing down on your head. This case has my full attention and we will not rest until justice is served.”
“Anyone who tries to kill an FBI Agent, knowing the ramifications that would bring, is dangerous, desperate, and an extreme threat to public safety,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “That’s someone who needs to be taken off the street immediately, and we’ll bring all available resources to bear to do just that. As alleged, Rafael Vega-Rodriguez was determined not to be apprehended and had no compunction about opening fire on our agents. We’re now equally determined to see him brought to justice.”
If convicted the defendant faces a maximum possible sentence of 140 years imprisonment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Mary A. Futcher.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Green Energy Fraudster Sentenced to Seven Years in Prison for Scamming Multiple Federal Agencies and CustomersRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that David Dunham, 40, of Bethlehem, PA was sentenced to serve 84 months in prison, followed by three years of supervised release, and ordered to pay over $10.2 million in restitution by United States District Court Judge Jeffrey L. Schmehl.
Following a four week trial in April 2019, a federal jury convicted Dunham, owner of Smarter Fuel LLC in Wind Gap, PA, and co-owner of Greenworks Holdings LLC in Allentown, PA, of conspiracy to commit wire fraud and to defraud the United States, wire fraud, filing false tax documents, and obstruction of justice. The conviction arose from Dunham’s planning and execution of a scheme to defraud the Environmental Protection Agency (EPA), the Internal Revenue Service (IRS), the United States Department of Agriculture (USDA), and his customers, to obtain renewable fuel credits in his “green energy” biofuel business.
To carry out his green energy scam, from 2010 to 2015 Dunham fraudulently applied for, received, and sold EPA “credits” for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place. Dunham also sought and received millions of dollars from the IRS and the USDA based on the same falsehoods. In total, based on the repeated falsehoods he told the federal agencies, Dunham obtained nearly $50 million in fraudulent revenue. Dunham’s co-defendant, Ralph Tomasso, the co-owner of Greenworks, previously pleaded guilty to conspiracy to defraud federal programs.
The evidence at trial also showed that Dunham engaged in multiple cover-ups designed to hide his crimes from authorities. These included altering his accounting records the day before an IRS audit in 2010, and providing a USDA auditor with dozens of falsified records, which Dunham had ordered an employee to fabricate, during an audit in 2012.
“David Dunham is a thief, dressed up in ‘green energy’ clothing,” said U.S. Attorney McSwain. “He thought he could con not just one, but several federal agencies. Eventually, his lies caught up to him and now his reward is a long stint in federal prison.”
“This sentence sends a clear message that the Department of Justice will not tolerate fraud and will not hesitate to prosecute those who seek to undermine support for true American-made renewable fuel,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division. “Mr. Dunham’s crimes were longstanding and elaborate, but this did not stop the Department from ensuring that such crimes are punished and justice is done.”
“David Dunham used false and fraudulent pretenses to steal millions of dollars from the Government,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His loss of liberty today is the price he must pay for scamming the Government and stealing from hard working American taxpayers.”
“Today’s sentencing demonstrates there are real consequences for those defrauding the Renewable Identification Numbers (RINs) program,” said Director Jessica Taylor of EPA’s Criminal Investigation Division. “EPA, together with our federal partners, uncovered criminal activities by the defendants, and in doing so levelled the playing field for those who legally participate in the RINs program.”
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, the Internal Revenue Service’s Criminal Investigation Division, and the United States Department of Agriculture’s Office of Inspector General. The case is being prosecuted by Assistant United States Attorney Mary E. Crawley and Trial Attorney Adam Cullman of the ENRD.
Biofuel Fraudster Sentenced to Seven Years in Prison for Scamming Multiple Federal Agencies and CustomersRead the Press Release
The owner of a biofuel company was sentenced to seven years in prison followed by a three-year term of supervised release and ordered to pay $10,207,000 in restitution for defrauding multiple federal agencies and customers.
Following a four-week trial before U.S. District Judge Jeffrey L. Schmehl, a federal jury in the Eastern District of Pennsylvania convicted David Dunham, owner of Smarter Fuel LLC in Wind Gap, Pennsylvania and co-owner of Greenworks Holdings LLC of Allentown, Pennsylvania, of conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents and obstruction of justice.
The conviction arose from Dunham’s planning and executing a scheme to defraud the Environmental Protection Agency (EPA), the IRS, the U.S. Department of Agriculture (USDA), and his customers, to obtain renewable fuel credits in his “green energy” business.
“This sentence sends a clear message that the Department of Justice will not tolerate fraud and will not hesitate to prosecute those who seek to undermine support for true American-made renewable fuel,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division. “Mr. Dunham’s crimes were longstanding and elaborate, but this did not stop the Department from ensuring that such crimes are punished and justice is done.”
“David Dunham is a thief, dressed up in ‘green energy’ clothing,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania. “He thought he could con not just one, but several federal agencies. Eventually, his lies caught up to him and now his reward is a long stint in federal prison.”
“David Dunham used false and fraudulent pretenses to steal millions of dollars from the Government,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His loss of liberty today is the price he must pay for scamming the Government and stealing from hard working American taxpayers.”
To carry out his green energy scam, from 2010 to 2015 Dunham fraudulently applied for, received, and sold EPA “credits” for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place. Dunham also sought and received millions of dollars from the IRS and the USDA based on the same falsehoods. All told, based on the repeated falsehoods he told the federal agencies, Dunham obtained nearly $50 million in fraudulent revenue. In carrying out this massive fraud, Dunham used his businesses, Smarter Fuel, which he owned, and Greenworks Holdings, which he operated with his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.
The evidence at trial also showed that Dunham engaged in multiple cover-ups designed to hide his crimes from authorities. These included altering his accounting records the day before an IRS audit in 2010, and providing a USDA auditor with dozens of falsified records, which Dunham had ordered an employee to produce, during a 2012 audit.
The case was investigated by the EPA’s Criminal Investigation Division, the IRS Criminal Investigation, and the USDA’s Office of Inspector General. The case is being prosecuted by Assistant U.S. Attorney Mary E. Crawley and Trial Attorney Adam Cullman of the Environment and Natural Resources Division.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Three Philadelphia Men Sentenced for Running “Drug Delivery Service” along 7th Street Corridor in South PhiladelphiaRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Stefan Tucker, 33, of Philadelphia, PA was sentenced to 200 months (over 16 years) in prison by United States District Judge Gerald J. Pappert for his involvement in an almost around-the-clock drug delivery service for several years in South Philadelphia. Two of Tucker’s co-defendants, Stephen Wilkerson, 30, and Jerome Tucker, 29, both of Philadelphia, PA, were also recently sentenced and received ten years and five years in prison, respectively. All three pleaded guilty to multiple drug offenses in January and February, 2020.
Between 2013 and 2016, the defendants and their co-conspirators, known as the “Friends” and the “7th Street” drug trafficking group, delivered crack cocaine and heroin to customers along the 7th Street corridor in South Philadelphia using a shared drug phone. The defendants used the phone to take orders and communicate with customers; they would pass the phone off in shifts to keep their operation going almost 24 hours per day. FBI agents conducted surveillance and controlled purchases of narcotics from the defendants using audio and video recording devices. During the course of the investigation, agents also intercepted phone calls and text messages from the shared drug phone, which documented the defendants’ illicit activities. Three co-defendants, Antoine Clark, Gerald Spruell, and Daniel Robinson, were convicted at trial in February 2020 of multiple drug offenses stemming from their involvement in the drug operation and await sentencing.
“Trafficking in heroin and crack cocaine destroys neighborhoods, it’s deadly, and it’s obviously illegal – for good reason,” said U.S. Attorney McSwain. “And it will land you in federal prison for many years. The 7th Street drug trafficking group is now gone, and we bid it good riddance.”
“This group’s constant churn of drug transactions kept the 7th Street corridor awash in heroin, crack, and other narcotics,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Shutting them down makes the community safer and these sentences will put them out of business.”
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Matthew Newcomer and Jason Grenell.
Former Philadelphia City Controller’s Office Employee Pleads Guilty to Public Corruption ChargesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jeffrey Blackwell, 47, of Philadelphia, PA, pleaded guilty today to charges of honest services wire fraud, filing a false tax return, and two counts of failure to file a tax return. The defendant was charged by Superseding Indictment in September 2019.
Blackwell, a former City of Philadelphia employee in the Office of the City Controller, committed a series of frauds, accepting more than $20,000 in bribes and kickbacks. Between 2013 and 2015, while serving in the Investigations Division of the Controller’s Office, Blackwell misused his official position to enrich himself by soliciting money in exchange for official actions or the promise of official actions, but rarely provided the promised permits or contracts.
At his plea hearing, he admitted that he solicited bribes from at least five individuals who were seeking permits or contracts from the City. One of these individuals owned a furniture store and paid Blackwell for permits to park a storage container on the street. The second person was renovating a house and paid Blackwell for permits to allow that renovation. The third person owned a construction business and paid Blackwell to obtain a plumbing permit. The fourth person owned an auto body shop and paid Blackwell in the hope of getting a license to buy and sell cars as well as a City contract to install decals on police vehicles. The fifth person, who was cooperating with the FBI at the time, told Blackwell that he needed permits from the City of Philadelphia to renovate a house.
Blackwell also admitted that he filed a false 2012 federal income tax return that falsely deducted travel expenses and falsely claimed a dependent, and he admitted that he failed to file a return as required by law for tax years 2013 and 2014.
“Philadelphians deserve public employees who do their jobs honestly and faithfully. Blackwell did not meet this standard – instead choosing to use his public position to extort money for himself,” said U.S. Attorney McSwain. “Now he will face the consequences. My Office will continue to attack and destroy the cancer of corruption wherever we find it in Philadelphia or elsewhere in the District.”
“Jeffrey Blackwell traded on his official position, seeking bribes in order to pad his pockets,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He put his own interests above those of the people he served, depriving Philadelphians of their right to honest services from city workers. The FBI is committed to protecting the integrity of government at all levels from the plunder of public corruption.”
“Mr. Blackwell had a duty to report all of his income to the IRS and to pay the correct tax on that income,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Mr. Blackwell’s decision to shirk this duty undermines public confidence in our tax system. His admission of guilt and acceptance of responsibility is a reminder that no one is above the law.”
“This case is one of a bad actor who abused his position and took advantage of the system for his own personal gain. When offenders, like this one, are held accountable, we’re taking an important step toward restoring the public’s trust in government and committing to the idea that Philadelphia works for everyone, not just the connected,” said Philadelphia City Controller Rebecca Rhynhart. “But it is important to underscore that this case is not reflective of all city employees, most of whom are hardworking, do their job with integrity and want to make Philadelphia a better place.”
The defendant faces a maximum possible sentence of 24 years’ imprisonment, a three-year period of supervised release, $600,000 fine, and a $225 special assessment. United States District Judge Chad F. Kenney set sentencing for December 2020.
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service with assistance from the Philadelphia Office of Inspector General, and is being prosecuted by Assistant United States Attorney David J. Ignall.
Philadelphia Area Drug Trafficker Sentenced to over 26 Years in Prison After Being Convicted at TrialRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Vontez Scales, 29, of Philadelphia, PA was sentenced to 320 months in prison, ten years of supervised release, and ordered to pay a $4,000 fine by United States District Judge Mark A. Kearney for his leadership role in a large scale drug trafficking ring.
Following a lengthy investigation in 2018, including a series of court-ordered wiretaps, the defendant and his co-conspirators were charged by Indictment with multiple drug offenses, including conspiracy to distribute narcotics and possession with intent to distribute narcotics. Scales was a member of the “Skipworth” drug trafficking organization, which sold bulk quantities of crystal methamphetamine, fentanyl, heroin and cocaine worth millions of dollars in Philadelphia and its surrounding suburban counties. Scales’ co-conspirators, Damir Skipworth (the group’s ring leader), Jarrett Cobb, and Tyrone Smith all previously pleaded guilty to federal drug trafficking charges in this case and received significant prison sentences: Skipworth more than eight years, Cobb more than five years, and Smith more than three years.
In December 2019, Scales was convicted at trial of possession with intent to distribute and conspiracy to distribute methamphetamine and heroin, arising from his sales and purchases of large quantities of drugs to and from co-conspirators. The defendant bought crystal methamphetamine in pound quantities from a co-conspirator, with the intention to sell it, and in turn sold large quantities of heroin laced with fentanyl back to the co-conspirator to distribute to other members of the group. Scales used the cash proceeds from his illegal drug dealing for things like car rentals, hotels and luxury clothing, including purchases at Saks Fifth Avenue of over $28,000. Scales was previously convicted twice of drug trafficking, and each time received a lengthy prison term.
“Scales and his co-conspirators pumped huge quantities of deadly, addictive drugs into Philadelphia and its suburbs,” said U.S. Attorney McSwain. “Drug trafficking is an extremely dangerous business for those engaged in it and for everyone else around them. Our Office is determined to protect the communities impacted by drug trafficking by investigating and convicting criminals like those in the Skipworth organization.”
“By conducting millions of dollars of business in meth, heroin, cocaine and fentanyl, the Skipworth drug trafficking organization was a blight on all of southeastern Pennsylvania,” said Bucks County District Attorney Matthew D. Weintraub. “Thanks to the collaborative efforts of the DEA and the Bucks County Drug Strike Force, this criminal organization’s doors have been shut for good.”
The case was investigated by the Bucks County Detective Bureau and the Drug Enforcement Administration, and is being prosecuted by Assistant United States Attorneys Christopher Parisi and Andrea Foulkes.
United States Attorney William M. McSwain Testifies before Presidential Commission on Law Enforcement and Administration of JusticeRead the Press Release
PHILADELPHIA – On July 21, 2020, United States Attorney William M. McSwain delivered testimony at a hearing before the Presidential Commission on Law Enforcement and Administration of Justice. He spoke on a panel addressing Respect for Law Enforcement and the Rule of Law, and addressed the negative impact that certain policies, enacted by some local district attorneys, are having on public safety, especially in large cities where violent crime is on the rise. These self-proclaimed “progressive prosecutors” are promoting a culture of disrespect for law enforcement and the rule of law, which has had the predictable effect of jeopardizing public safety. U.S. Attorney McSwain concluded that, in order to restore the public’s trust in law enforcement and ensure equal justice under the law, U.S. Attorneys have a responsibility to serve as a counter-weight to radical “reform” policies that are causing far more harm than good.
Remarks as Prepared for Delivery
Introduction
Thank you, Chairman Keith and thank you to the Commission for the important work you are doing on behalf of the Department. It is an honor to be here today to provide testimony on the importance of respect for law enforcement and the rule of law in our country.
I have served as the United States Attorney for the Eastern District of Pennsylvania since April 2018, and my Office is one of the nation’s largest U.S. Attorney’s Offices. We serve a population of over five million citizens and cover a geographic area of roughly 4,700 miles across nine counties in southeastern Pennsylvania – Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton, and Philadelphia counties. In addition to the suburban and rural areas within the District’s borders, we serve five of Pennsylvania’s eight major cities: Philadelphia, Allentown, Reading, Bethlehem, and Lancaster. In our District, the criminal behavior that we encounter runs the gamut, with a mix of issues to confront: big-city problems, small-town problems, and everything in between.
Despite these differences, every law-abiding citizen wants the same thing – to live in a community that is safe for themselves and their families. This is why this Commission’s work is so critical: the study of crime, including its causal factors, is essential to reduce its prevalence.
President Trump’s Executive Order establishing this Commission directed it to study “important current issues facing law enforcement and the criminal justice system.”[1] One of the specific subjects identified for study was “refusals by the state and local prosecutors to enforce laws or prosecute categories of crime.”[2]
Which brings me to the topic of this hearing and my testimony today. Though respect for law enforcement and the rule of law are broad concepts, my testimony today will primarily focus on one important and troubling recent development – that is, the undeniable fact that the rule of law and law enforcement officers are currently under attack in many parts of our nation. In many cities and counties across the country, so-called progressive prosecutors have been elected on an agenda of sending fewer people to jail, by whatever means necessary, and with little regard for the public safety consequences.[3]
Philadelphia is, in many ways, ground zero for this experiment. But there are many other cities across the United States where the top local prosecutors are pushing progressive policies.[4] And in many of these cities, prosecutors are decriminalizing certain conduct, encouraging overly lenient plea bargaining, [5] firing career prosecutors who might not share their viewpoints,[6] and shifting significant resources away from prosecution and into conviction integrity units,[7] among other significant policy changes.
My testimony today focuses on the work we have done in the Eastern District of Pennsylvania to serve as a counter-weight to some of the worst excesses of this movement. In the two-plus years I have served as U.S. Attorney, I have worked to restore a culture of respect for law enforcement and to uphold the rule of law and ensure that it is enforced in a consistent, impartial manner. I believe that the steps we have taken in the Eastern District of Pennsylvania can serve as a model for other federal districts that are facing the predictable rise in crime and chaos that results from radical “reform” policies.
The Public Safety Crisis in Philadelphia and Its Root Causes
There can be no doubt that there is a public safety crisis in Philadelphia; one need only look to the staggering rise in serious violent crime in the past two-plus years as proof. The timing coincides with a decline in the number of local cases charged in several key categories and recently, a decline in the homicide clearance rate.[8]
In 2019, Philadelphia recorded its highest number of homicides since 2007, and more people were shot in Philadelphia in 2019 than in any other year since 2010, according to Philadelphia Police statistics. The 2020 numbers are on track to be even worse. As of July 12, 2020, there have been 227 homicides, a 28% increase from the same date in 2019, and 1,578 shooting incidents, a 55% increase from the same date in 2019. On Sunday, July 6, 2020, a staggering 23 people were shot across Philadelphia – the most in a single day in years. Of these victims, six of them died, including a six-year old boy.
These statistics undoubtedly establish the problem. And in Philadelphia and other large cities where murders and shootings continue to rise at an alarming rate,[9] one of the root causes is that criminals believe that there will be no consequences for their actions.
There are two main reasons why criminals think there are no consequences.
First, the local criminal justice system does not hold them fully accountable. Criminals bank on the fact that certain progressive policies – things like requiring assistant district attorneys to decline charges and to offer lenient plea deals in a broad swath of cases – will give them some breathing room to ply their trade.
Second, criminals believe they can commit crime without facing the consequences because the community is too often told that police are the enemy, which discourages witnesses from cooperating with the police and results in crimes remaining unsolved. This has grave consequences for the community. Such mistrust also results in deadly assaults on police officers – of which unfortunately, Philadelphia has had its fair share recently.
The culture of disrespect for law enforcement was on full display in front of a national audience this past August when Maurice Hill, a convicted felon with a long rap sheet, opened fire on Philadelphia police officers as they attempted to execute a search warrant. This confrontation left six officers wounded and a neighborhood in North Philadelphia traumatized. It is a miracle that every officer survived this attack.[10]
In March of this year, the Philadelphia police were not as fortunate. On March 13, 2020, Philadelphia Police Sergeant and SWAT member James O’Connor was gunned down while trying to arrest Hassan Elliot, a known affiliate of a dangerous drug gang who was wanted by local authorities for murder and multiple other offenses.[11]
And just last month, 27 Philadelphia Police Officers were injured after a period of violence, rioting, and looting that swept across several sections of Philadelphia. What began on May 30, 2020 as peaceful protests concerning the death of George Floyd turned violent, and over the course of several days, officers sustained injuries ranging from chemical burns, head injuries, and broken bones.[12] One officer was hospitalized after suffering severe damage to his upper body – a crushed shoulder and broken ribs – when a woman drove over him when protesters turned violent during a demonstration that look place at Seventh and Chestnut Streets – steps away from Independence Hall and my Office.
As tensions continue to mount between the police and the public, police officers remain on their heels, which gives violent criminals the room to operate that they seek. Criminals literally think they can get away with murder, shootings, looting, and rioting. And in many cases, they are.
EDPA’s Response to the Rise in Violent Crime and Culture of Lawlessness
The U.S. Attorney’s Office for the Eastern District of Pennsylvania is committed to stemming the wave of violent crime that is occurring in parts of our District. This section highlights the ways in which my Office has worked to promote the rule of law and respect for law enforcement.
1. Increase Focus on Violent Crime Prosecutions
The first strategy my Office has employed is to increase our violent crime prosecutions District-wide. For example, in Fiscal Year 2019, our Violent Crime Unit charged the largest number of cases in all of the Criminal Division Units in my Office. We charged 208 violent crime cases, as compared to 136 the year before, which represents a 53% increase.
And in Philadelphia’s most dangerous neighborhoods – police districts that are designated as “Project Safe Neighborhood” hot spots – federal prosecutions continue to rise. Project Safe Neighborhood (PSN) is a collaborative effort by federal, state, and local law enforcement agencies and prosecutors to deter and punish gang and gun violence. The Department of Justice’s PSN Strategy requires each District to identify PSN “target areas” with the highest violent crime rates and adopt cases for federal prosecution in those areas. In the Eastern District of Pennsylvania, our PSN target areas are all located in police districts in Philadelphia. In Fiscal Year 2019, my Office charged 143 violent crime and illegal gun possession cases (against 195 defendants) in PSN target areas as compared to 82 cases (against 92 defendants) charged in the previous year. That amounts to a 72% increase in the number of PSN cases this Office pursued and a 112% increase in the number of defendants prosecuted.
To manage the increase in caseload, the Office has dedicated additional resources to our Violent Crime Unit. In addition to adding multiple Assistant U.S. Attorneys to the Unit, this past year, we earmarked our District’s PSN grant funds to hire two experienced prosecutors from the Criminal Law Division of the Pennsylvania Attorney General’s Office who are stationed full-time in our Violent Crime Unit, working solely on cases in the PSN target areas. We are currently in the process of hiring a third full-time attorney. These cross-designated Special Assistant United States Attorneys have served as a force multiplier in our fight against rising violent crime.
2. Seize Opportunities to Take on High Impact Cases that Serve Deterrence
My Office has also been involved in a variety of impactful criminal and civil cases and remains at the forefront of many important areas of federal law enforcement. In the face of the uncertainty created by district attorneys and city leaders who advocate pro-violent defendant policies, it is important for federal prosecutors to show the public – law abiding citizens and would-be criminals alike – that federal law enforcement will step in to fill the law enforcement vacuum. Doing so has an important deterrent effect.
For example, my Office charged a criminal case against Jouvan Patterson, who shot and nearly killed a Cambodian store owner in South Philadelphia with an AK-47 during a store robbery. We charged Patterson federally after he received an overly lenient plea deal from local authorities. Even though the victim is confined to a wheelchair, the plea deal he received on the state charge could have meant that Patterson would serve as little as 3 ½ years in prison. He faces a much longer, more appropriate sentence in our case.
In the wake of statements by Philadelphia leaders that suggested plans of leniency toward the rioters and looters who turned peaceful protests over George Floyd’s death into mayhem, my Office has offered a swift response. For example, we charged Lore-Elisabeth Blumenthal with two counts of arson after allegedly setting two Philadelphia police cars on fire in front of City Hall on May 30. We have also brought charges against defendants accused of taking advantage of the unrest by, among other things, blowing up ATM machines and burglarizing banks, and we have many active, ongoing investigations that we expect will lead to many more arrests.
In the civil context, my Office filed a civil lawsuit to prevent the opening in Philadelphia of the first-ever supervised heroin injection site in the United States. Those who support such injection sites – including some city officials – are attempting an end-run around the federal Controlled Substance Act (CSA). The case is currently on appeal before the U.S. Court of Appeals for the Third Circuit, and we expect a decision later this year.
3. Communicate Support for the Police and Share Our Deterrent Message with the Public
The progressive prosecutor reform movement has garnered significant media attention across the country. The best way to counter disrespect for law enforcement and the rule of law is to publicly challenge those who promote an anti-law enforcement culture. It is important for federal prosecutors to speak out when public safety is at risk and to support our federal, state, and law enforcement officers whenever possible.
One of the first things I did when I began my tenure as U.S. Attorney was to form a new unit called the Office of Public Affairs and External Engagement (OPAEE). OPAEE is designed to promote transparency with the community, foster relationships with law enforcement stakeholders and the public, and work with community groups on deterrence initiatives and crime prevention.
My Office has increased transparency in a number of ways. For example, I appear and speak to civic, legal, and law enforcement groups whenever possible, and take every opportunity to publicly communicate my steadfast support of the police. When significant local events occur that have a negative impact on law enforcement efforts, I share my views with the community we serve. In addition, I recently launched an anti-violence campaign across the District to deter violent crime by raising public awareness about the types of federal criminal charges that can be brought when firearms are involved. The campaign, #fedcrimegetsfedtime, features public service announcements encouraging would-be offenders to put the guns down and make the right choice for their future.
Conclusion
As senior Department of Justice officials, U.S. Attorneys have a platform and a voice to stand up for the rule of law and respect for law enforcement, which go hand-in-hand. We should use that platform responsibly and forcefully and serve as a counter-weight to radical “reform” policies that threaten public safety. As Attorney General Barr has put it, the first duty of the government is to protect the safety of our citizens. The law is the foundation of our society, and we at the Department are the caretakers of the law. By upholding the law, we make possible the common life of our nation and the freedom, safety, and equality under the law that define our country.
[1] Exec. Order No. 13896, 84 Fed. Reg. 58595 (2019), www.federalregister.gov/documents/2019/11/01/2019-24040/commission-on-law-enforcement-and-the-administration-of-justice.
[2] Id.
[3] See Emily Bazelon & Miriam Krinsky, There’s a Wave of New Prosecutors. And They Mean Justice, N.Y. Times (Dec. 11, 2018), http://www.nytimes.com/2018/12/11/opinion/how-local-prosecutors-can-reform-their-justice-systems.html.
[4] See Mark Berman, These Prosecutors Won Office Vowing to Fight the System. Now, the System is Fighting Back, Wash. Post (Nov. 9, 2019), https://www.washingtonpost.com/national/these-prosecutors-won-office-vowing-to-fight-the-system-now-the-system-is-fighting-back/2019/11/05/20d863f6-afc1-11e9-a0c9-6d2d7818f3da_story.html. The nearly two dozen prosecutors who consider themselves in this category include Chesa Boudin (District Attorney of San Francisco, California); John Creuzot (District Attorney of Dallas County, Texas); Kim Foxx (State’s Attorney of Cook County, Illinois (Chicago)); Eric Gonzalez (District Attorney of Brooklyn, New York); and Rachael Rollins (District Attorney of Suffolk County, Massachusetts (Boston)).
[5] See, e.g., The Rachel Rollins Policy Memo (Mar. 2019), http://files.suffolkdistrictattorney.com/The-Rachael-Rollins-Policy-Memo.pdf. (last visited July 19, 2020).
[6] See, e.g., Gabe Dreschler, Why Did San Francisco’s New District Attorney Fire Seven Prosecutors?, KQED News, (Jan. 12, 2020), https://www.kqed.org/news/11795676/why-did-san-franciscos-new-district-attorney-fire-seven-prosecutors.
[7] Chicago District Attorney Kim Foxx revamped Cook County’s Conviction Integrity Unit, which to date, has reversed convictions of over 20 defendants. https://www.law.upenn.edu/live/profiles/1248-kimberly-m-foxx/profiles/quattroneadvisory (last visited July 19, 2020).
[8] The Philadelphia District Attorney’s Public Data Dashboard provides statistics relating to charges filed and outcomes across various types of criminal offenses. Examining the Year-to-Date Count of Cases Charged by Offense Category, as of July 17, 2020, the Dashboard reports that the District Attorney’s Office charged 30% fewer cases overall as compared to the same time period in 2019. It also reports 20% fewer violent crime cases charged, 48% fewer drug cases charged, and 31% fewer retail theft cases as compared to the same time period in 2019. https://data.philadao.com/Charge_Report.html (last visited July 19, 2020). And in reporting case outcomes year-to-date (January 1, 2020 to July 17, 2020) as compared to the same time in 2019, the Dashboard reports a decrease in outcomes (defined as “the various ways a criminal case can end”) in several key categories of cases charged. For example, in the category of violent offenses, case outcomes have decreased 53 percent. When broken down further, case outcomes in the category of robberies with a gun are down 65 percent; and homicide outcomes are down 62 percent. https://data.philadao.com/Case_Outcomes_Report.html (last visited July 19, 2020).
[9] Safia Samee Ali, Gun Violence Is Surging in Cities, and Hitting Communities of Color Hardest, NBC News (July 9, 2020) (discussing rise in shootings and homicides in Philadelphia, Chicago, and other major cities), https://www.nbcnews.com/news/us-news/gun-violence-surging-cities-hitting-communities-color-hardest-n1233269.
[10] Statement by United States Attorney William M. McSwain on the Shooting of Six Philadelphia Police Officers (Aug. 15, 2019), https://www.justice.gov/usao-edpa/pr/statement-united-states-attorney-william-m-mcswain-shooting-six-philadelphia-police.
[11] Statement of William M. McSwain Regarding the Murder of Philadelphia Police Corporal James O’Connor (Mar. 16, 2020), https://www.justice.gov/usao-edpa/pr/statement-us-attorney-william-m-mcswain-regarding-murder-philadelphia-police-corporal.
[12] See Fox29 News, Commissioner: 768 Arrests, 27 Officers Injured in Continued Violence in Philadelphia (June 7, 2020), https://www.fox29.com/news/commissioner-768-arrests-27-officers-injured-in-continued-violence-around-philadelphia.
Lehigh University Agrees to Pay $200,000 Settlement to Resolve False Claims Act Allegations Arising from Convicted Professor’s Grant FraudRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Lehigh University in Bethlehem, Pennsylvania, has agreed to pay $200,000 and abide by compliance requirements in connection with any application seeking federal grant funds or cooperative agreements with any federal agency. The settlement agreement resolves allegations under the False Claims Act relating to Small Business Innovation Research (“SBIR”) grants awarded to ArkLight, a company owned by Dr. Yujie Ding, a former Lehigh University professor.
The Small Business Innovation Research program is a competitive program that encourages American small businesses to engage in research on behalf of the federal government that has the potential for commercialization. Although small businesses may subcontract a portion of the work to other entities, including universities, the small business itself must perform a majority of the work under the program.
Between 2004 and 2013, Lehigh University employed Dr. Yujie Ding, first as an Associate Professor and then as a Professor. During that time, Ding used a sole proprietorship he created called ArkLight to apply for SBIR program research grants funded by the National Aeronautics and Space Administration (“NASA”), the United States Department of the Army, the United States Air Force, and the National Science Foundation (“NSF”). ArkLight received grants totaling $2,740,000.
In each proposal, Yuliya Zotova, Ding’s wife, was listed as ArkLight’s principal investigator, the person designated to lead the scientific and technical effort. Under applicable program rules, Professor Ding was not eligible to serve as the principal investigator. The proposals represented that ArkLight would do a majority of the work under the leadership of Zotova. Lehigh University agreed to act as a subcontractor on some of ArkLight’s grants.
Under the applicant programs, ArkLight was to complete a majority of the research work. In reality, and unbeknownst to Lehigh University, none of the work was completed by ArkLight. Instead, all of the work was done by graduate students and others working in Ding’s university laboratory, under Ding’s supervision. The United States contends that, at the time, Lehigh University had an inadequate compliance program in place to detect and prevent Ding’s fraud. Although the work was done at Lehigh University, the University was ineligible for payment because there was no small business serving as the primary contractor. As the nominal subcontractor, Lehigh was paid over $1 million.
Ding and Zotova were criminally were charged by Indictment by the U.S. Attorney’s Office for the Eastern District of Pennsylvania. That indictment was unsealed on February 5, 2015, and on November 12, 2015, a jury returned guilty verdicts against Ding and Zotova on six counts of wire fraud. Ding was sentenced to a year and a day in prison for his role in the fraud. He was also ordered to pay a fine of $3,000 and restitution of $72,000. Zotova, was sentenced to 3 months in prison, along with a fine and restitution. Lehigh University cooperated in the criminal investigation and trial of Ding and Zotova by responding to subpoenas and making witnesses available for interviews.
“Institutions that receive research funding from the federal government must be rigorous in rooting out fraud.” said U.S. Attorney McSwain. “While it did not detect the problems itself, Lehigh University, to its credit, did take proactive steps to improve its existing compliance program once it learned that one of its employees had committed fraud. We value Lehigh University’s research contributions and hope that the enhanced compliance measures will have a positive impact in the future. We also appreciate the University’s cooperation in the criminal prosecutions of Ding and Zotova.”
“The success of SBIR programs often lies with small business awardees, and its subcontractors, being good stewards of taxpayers’ dollars when conducting Federal Research. The NASA Office of Inspector General (OIG), along with its law enforcement partners, will continue to aggressively investigate those individuals and entities that take advantage of the trust of the American taxpayers,” stated Special Agent-in-Charge, Mark. J. Zielinski, Eastern Field Office, NASA OIG.
“Ensuring the integrity of the Air and Space Forces’ research and development process is a top investigative priority of the Air Force Office of Special Investigations (OSI). Those who seek to conduct business with the Department of the Air Force must be candid and truthful. OSI will aggressively investigate those who attempt to defraud the Air Force and will work with our law enforcement partners to identify and prosecute those who would take advantage of the Air and Space force and their interests. I’d like to thank Lehigh University for their cooperation in the investigation,” said Special Agent in Charge Jason T. Hein, OSI, Office of Procurement Fraud Investigations Detachment 6.
“The settlement agreement announced today is the result of joint investigative effort to protect Small Business Innovative Research contracts from fraud and abuse," stated Special Agent in Charge Leigh-Alistair Barzey, Defense Criminal Investigative Service (DCIS), Northeast Field Office. “The DCIS is committed to working with its law enforcement partners and the U.S. Attorney’s Office to ensure the integrity of federal research and development procurement programs, such as SBIRs. Of note, in addition to entering into this civil settlement agreement, Lehigh University provided assistance in a related criminal investigation of a former Lehigh professor and his spouse who defrauded the SBIR program.”
Since its enactment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses compete for federal research and development awards, which have enhanced the nation’s defense. “The proactive efforts of agencies like NASA, the Air Force, the DCIS, and the NSF are critical to identifying potential fraud and safeguarding limited government resources,” said U.S. Attorney McSwain.
The investigation was conducted by NASA, the Air Force, the DCIS, and the NSF. The civil case is being handled by Assistant U.S. Attorney Veronica J. Finkelstein.
The claims resolved by this settlement are allegations only and there has been no determination of liability.
United States Attorney McSwain Announces 2019 Affirmative Civil Enforcement Achievements and Ongoing 2020 Efforts Resulting in Recoveries of over $260 MillionRead the Press Release
PHILADELPHIA, PA – United States Attorney William M. McSwain announced affirmative civil enforcement (ACE) achievements in 2019 by the Civil Division of the United States Attorney’s Office for the Eastern District of Pennsylvania, and its ongoing efforts in the first half of 2020 to stop fraud, waste, and abuse against the government. The number of affirmative civil enforcement settlements rose to an all-time high in 2019, solidifying the Office’s Civil Division as one of the busiest and most productive in the nation.
The Office’s Civil Division recovered over $260 million in settlements and judgments from civil cases involving fraud against the government in 2019 and the first half of 2020. These matters originated from qui tam, or whistleblower, filings under the False Claims Act (FCA), referrals from agency partnerships, and proactive efforts including data analytics. In 2019, the Civil Division also opened a record-setting number of ACE investigations into alleged fraud against the government, Controlled Substances Act violations, and civil rights violations. Much of the Office’s affirmative success came from a renewed focus on generating and supporting investigations using data analytics, which helps to identify fraud trends.
“This past year’s results reflect creative and groundbreaking resolutions across a variety of programs that appropriately address violations by health care providers, government contractors, and federal grant recipients, while encouraging those same entities and their employees to come forward and self-disclose when they are aware of non-compliance with federal laws,” said U.S. Attorney McSwain. “In our District, we have one of the most sophisticated whistleblower bars in the country. We thank those whistleblowers and their counsel who have brought allegations of fraud to our attention. The willingness of whistleblowers, or relators, to come forward and shed light on claims of fraud resulted in the return of millions of dollars to the federal government programs that were defrauded.”
U.S. Attorney McSwain continued, “We also thank our federal enforcement partners for their dedication in the matters summarized below, including: the United States Department of Health and Human Services, Office of the Inspector General; the Defense Investigative Service, Office of the Inspector General; the Department of Veterans Affairs; the Drug Enforcement Administration; the United States Office of Personnel Management, Office of the Inspector General; and the United States Postal Inspection Service. My Office would not have achieved the level of success it did without the benefit of their dedication and expertise.”
“Our Civil Division’s affirmative achievements show that we will fight fraud and hold companies and individuals accountable, no matter the methods, schemes, or amounts at play,” U.S. Attorney McSwain said. “I look forward to ongoing ACE success and continued enforcement in the areas of health care fraud, grant fraud, Controlled Substances Act enforcement, and civil rights enforcement.”
Below are some of the case highlights from 2019 and thus far in 2020.
2019 ACE Achievements Spanned Multiple Enforcement Areas
FCA Healthcare Fraud Settlements
Pentec Health. Pentec Health, a provider of compounded infusion drugs and nutritional supplements for use by patients with end-stage renal disease, paid $17 million to resolve allegations that, from 2007 to 2018, it billed Medicare and other federal healthcare programs for excessive amounts of product wasted during the compounding of its nutritional supplement Proplete for dialysis patients, and routinely waived patient copayments and deductible obligations in order to induce prescriptions and use of Proplete. Along with this settlement, Pentec executed a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General. https://www.justice.gov/usao-edpa/pr/pentec-health-inc-pay-17-million-settle-false-claims-act-allegations
Mallinckrodt/Questcor Pharmaceuticals. Mallinckrodt ARD LLC (formerly known as Mallinckrodt ARD, Inc. and previously Questcor Pharmaceuticals, Inc.) paid $15.4 million to resolve claims that Questcor paid illegal kickbacks to doctors from 2009 through 2013 in the form of lavish dinners and entertainment, to induce prescriptions of the company’s drug, H.P. Acthar Gel, for the treatment of complications from multiple sclerosis. The company allegedly paid kickbacks to induce referrals from health care providers in violation of the Anti-Kickback Statute and to induce the submission of false claims to Medicare. https://www.justice.gov/usao-edpa/pr/drug-maker-mallinckrodt-agrees-pay-154-million-resolve-false-claims-act-allegations
Heritage Pharmaceuticals. Generic drug manufacturer Heritage Pharmaceuticals paid $7.1 million to resolve allegations that from 2012 to 2015, it engaged in a scheme to artificially inflate generic drug prices and other anti-competitive behavior, causing a loss to Medicare, Medicaid, and the Department of Defense’s Tricare program beneficiaries, as well as the Department of Veterans Affairs. Separately, Heritage entered into a three-year deferred prosecution agreement with the Antitrust Division with regard to a criminal charge that the company conspired to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices in violation of the Sherman Act. https://www.justice.gov/usao-edpa/pr/heritage-pharmaceuticals-pays-over-7-million-resolve-civil-false-claims-act-allegations
Controlled Substances Act Enforcement
Spiro Kassis, M.D. Dr. Kassis paid $1.4 million, committed to never obtaining a controlled substance registration, and consented to a 15-year exclusion from Medicare and Medicaid to resolve allegations that he improperly prescribed Schedule II controlled substances to patients between 2014 and 2017.
In a parallel criminal proceeding, Kassis pled guilty to 14 counts of illegal distribution of controlled substances. According to the criminal charges, Kassis, who claimed to be a specialist in psychiatry and addiction medicine, operated medical offices in East Norriton Township, PA and Scranton, PA and used his offices to operate a prescription “pill mill” where he sold medically unnecessary prescriptions for opioids such as oxycodone for approximately $200 cash each.
This opioid settlement, the first of its kind in this Office, simultaneously resolved all three aspects of liability – under the Controlled Substances Act, FCA, and forfeiture statutes – in a single civil settlement agreement. https://www.justice.gov/usao-edpa/pr/montgomery-county-doctor-agrees-pay-14-million-resolve-allegations-improper-opioid
FCA Procurement and Grant Fraud Settlements
Drexel University. Drexel agreed to pay the United States $189,062 to resolve potential FCA liability for a former professor’s use of grant funds to fund trips to “gentlemen’s clubs,” sports bars, and other improper purchases. The government’s investigation began in 2017 after Drexel voluntarily disclosed the improper charges to eight federal grants for energy and naval technology related research that it received from the Department of the Navy, the Department of Energy, and the National Science Foundation. https://www.justice.gov/usao-edpa/pr/drexel-university-pay-189062-resolve-potential-false-claims-liability
Ambu. Ambu, a provider of medical supplies, paid $3.3 million to resolve allegations that it submitted false claims for manufactured products in China and Malaysia for sale to United States government agencies in violation of the Trade Agreements Act (“TAA”). The TAA requires that products sold to government agencies must come only from countries with which the United States has a trade agreement. https://www.justice.gov/usao-edpa/pr/defense-contractor-pay-33m-resolve-false-claims-act-allegations
Our Lady of Lourdes. Our Lady of Lourdes Health Foundation and two related Our Lady of Lourdes companies paid $1,143,881 to resolve claims arising from Lourdes’ administration of community service grants funded through the Corporation for National and Community Service (CNCS)’s Senior Corps program. Specifically, the fraud affected the Foster Grandparent Program, which places seniors in school and community settings to serve alongside youth with exceptional needs, and the Senior Companion Program, which places seniors in community and residential settings to assist other seniors who have difficulty with tasks of daily living. These programs provide small hourly stipends to the volunteers performing these services, who must clear criminal history checks to ensure their suitability for service. Lourdes allegedly either failed to perform these criminal history checks or failed to keep records of doing so for 46 individuals. When a monitoring visit was scheduled in 2017, Lourdes employees cut-and-pasted other background checks in an attempt to conceal this failure from CNCS officials. https://www.justice.gov/usao-edpa/pr/our-lady-lourdes-agrees-pay-over-11m-resolve-claims-it-failed-perform-background-checks
Civil Rights Settlements
Thomas Jefferson University Hospital. Thomas Jefferson University Hospitals, Inc., and Outpatient Imaging Affiliates, LLC, the owners and operators of Jefferson Outpatient Imaging and Radiology (“Jefferson Outpatient”), resolved allegations that Jefferson Outpatient violated the Americans with Disabilities Act (ADA) by denying full and equal access to services based on an individual’s disability and use of a wheelchair. Under the ADA, facilities like Jefferson Outpatient, as a place of public accommodation, must provide outpatient and radiology services to members of the general public. In response to allegations that it failed to provide access to DEXA bone density scans to individuals with disabilities at its facilities in the greater Philadelphia area, Jefferson Outpatient agreed to comply with its obligations under the ADA, provide employee training, pay compensatory damages to the complainant, adopt and incorporate a non-discrimination policy into its existing policies, and post the policy in conspicuous locations in all of its offices and on its website. https://www.justice.gov/usao-edpa/pr/eastern-district-pennsylvania-reaches-settlement-agreement-thomas-jefferson-university
ACE Achievements Continue in 2020, Despite Coronavirus Pandemic
The coronavirus pandemic has not impeded the Office’s continued work in the civil enforcement area, as resolutions of significant FCA matters have continued into 2020:
In February 2020, Guardian Elder Care Holdings, Inc., and its related companies, paid over $15 million to settle claims that the skilled nursing home chain provided medically unnecessary rehabilitation therapy to residents in order to meet revenue goals. Guardian Elder Care operates more than fifty facilities throughout Pennsylvania – including locations in the Lehigh Valley, the Poconos, and Bucks County – as well as in Ohio and West Virginia. https://www.justice.gov/usao-edpa/pr/pennsylvania-nursing-home-chain-pay-155-million-settle-false-claims-act-allegations
In April 2020, Logan Laboratories, Inc. and two former executives, Michael T. Doyle and Christopher Utz Toepke, agreed to pay $41 million to resolve alleged FCA violations for billing federal health care programs for medically unnecessary urine drug testing. https://www.justice.gov/usao-edpa/pr/florida-based-laboratory-pain-clinic-and-two-former-executives-agree-pay-41-million
In July 2020, Universal Health Services, Inc. and UHS of Delaware, Inc. (UHS), headquartered in King of Prussia, PA, agreed to pay $117 million to resolve alleged FCA violations for billing for medically unnecessary inpatient behavioral health services and for failing to provide adequate and appropriate services for adults and children admitted to UHS psychiatric and behavioral treatment facilities nationwide. https://www.justice.gov/usao-edpa/pr/universal-health-services-inc-pay-117-million-settle-false-claims-act-allegations
As the year continues to unfold, the Office’s Civil Division is prepared to fight any coronavirus-related fraud through the enforcement of the FCA. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $2 trillion in federal funds to fight the ongoing health and economic crisis caused by the coronavirus and was the largest economic stimulus package in U.S. history. It provided $349 billion in loans for small businesses, $130 billion in relief for hospitals and medical suppliers, and $500 billion in assistance to other businesses, states, and municipalities. Unfortunately, there are unscrupulous actors who are attempting to take advantage of these financial outlays by committing fraud, especially when there is so much money at stake.
Attorney General Barr has directed the Department of Justice to prioritize fraud schemes arising out of the coronavirus pandemic. If there are federal funds involved in any coronavirus-related fraud in the Eastern District of Pennsylvania, whether through Medicare, Medicaid, defense contracting, or other government contracts, this Office will dedicate resources to holding companies and individuals appropriately accountable. The FCA remains an extremely powerful tool to combat fraud on the government.
“During this difficult time, protecting our communities from fraudsters who prey on federal programs and federal taxpayers is paramount,” said U.S. Attorney McSwain. “Previous experience has shown that there are people who will seek to illegally profit from disasters. But my Office is committed to using all of the criminal and civil tools at our disposal to protect federal programs.”
U.S. Attorney McSwain Announces Fraudsters Thwarted from Stealing $44 Million of State Stimulus MoneyRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that federal and state law enforcement, in collaboration with the Pennsylvania Department of Labor & Industry, and together with measures implemented by US Bank, have successfully prevented over $44 million from reaching criminals who attempted to steal Pandemic Unemployment Assistance (PUA) funds in Pennsylvania. The U.S. Department of Labor Office of Inspector General (DOL-OIG) utilized sophisticated data analytics to identify the fraudulent claims. The Department of Labor & Industry provided program assistance and data, and DOL-OIG was supported by the U.S. Attorney’s Office-led Coronavirus Working Group of federal and state law enforcement agencies in Southeastern Pennsylvania, including the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the United States Secret Service, the Social Security Administration Office of Inspector General, and the Pennsylvania Office of Attorney General.
PUA is funded entirely by federal dollars under the CARES Act and the program is administered by the state. Data analytics enabled DOL-OIG and the other law enforcement agencies to trace clusters of fraudulent claims for PUA funds back to the same criminals. The Department of Labor & Industry then used the information to stop the payment of PUA funds to those criminals.
The outstanding work of law enforcement saved over $28 million in PUA funds that would have been paid to fraudsters by check or direct deposit. In addition, US Bank administers the Pennsylvania debit card program used to make some PUA payments. US Bank applied analytics to identify an additional $16 million in fraudulent claims, and those funds will be returned to the Pennsylvania Department of Treasury.
Many of the fraudsters stole identities of real Pennsylvanians to file their fraudulent claims. Law enforcement’s ability to track the fraud was greatly enhanced by Pennsylvanians who came forward and reported that they had received PUA funds but had never applied for them. Anyone who receives state unemployment compensation funds that they did not apply for, whether by check, direct deposit or debit card, are probably victims of identity theft. If you find yourself in that position, U.S. Attorney McSwain strongly encourages you to report it immediately to the Department of Labor & Industry and return the funds.
“Pandemic Unemployment Assistance funds are intended to help Pennsylvanians who lost their jobs because of the coronavirus,” said U.S. Attorney Bill McSwain. “Thieves who attempt to take these funds are taking advantage of others’ misfortune – ripping them off while also ripping off all taxpayers who fund the program. I want to commend the outstanding cooperation and coordination among federal and state agencies, and private banking institutions, that together achieved this remarkable success. The U.S. Attorney’s Office Coronavirus Working Group enables us to combine the tremendous resources and skill of federal and state law enforcement to do what it takes to bring these criminals to justice.”
“The ongoing work of this joint task force has prevented criminals from stealing tens of millions of dollars meant for out-of-work Pennsylvanians,” Attorney General Josh Shapiro said. “If you receive unemployment compensation you did not apply for, notify state officials right away. With your help we will take down these sophisticated scammers who are trying to use the COVID-19 pandemic for their own selfish, illegal, gain.”
“Criminals continue to exploit the Unemployment Insurance program for personal gain, and with selfish disregard for their fellow citizens. Fraud against the UI program distracts state workforce agencies from serving individuals in need of assistance, and siphons taxpayer funds from those who are qualified and eligible to receive UI benefits. The Office of Inspector General will continue to work closely with the U.S. Attorney’s Office, the Pennsylvania Department of Labor & Industry, and our many law enforcement partners, to see to it that these criminals are sought out and held accountable,” said Derek Pickle, Acting Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.
U.S. Attorney McSwain and Acting Special Agent-in-Charge Pickle identified the following potentially fraudulent activities for Pennsylvanians to be alert to:
- You have not applied for unemployment benefits but you receive a PA Treasury check or direct deposit or a debit card issued by US Bank that you did not know about or apply for.
- You receive correspondence from the PA Department of Labor & Industry or the PA Department of Treasury about receiving unemployment assistance that you did not apply for.
- Someone comes to your home that you do not know and tells you that their unemployment assistance check or debit card was mistakenly mailed to you.
- Someone asks you to use your bank account to deposit their unemployment assistance.
- Someone, in person or electronically, tells you that you are entitled to unemployment assistance and requests personal identifying information from you.
- Someone offers to help you file for unemployment benefits for a fee.
- Someone claims to be from the government and asks for a fee or personal information to complete your PUA application.
If any of these suspicious activities happen to you, you should not assist or confront the fraudster. End the interaction immediately and report the activity to the Department of Labor & Industry on their Benefits Fraud Form available at dlisecureweb.pa.gov/FRTS/BenefitsFraud.aspx or call the PA Fraud Hotline at 1-800-692-7469.
United States Attorney William M. McSwain Commemorates the 30th Anniversary of the Americans with Disabilities ActRead the Press Release
PHILADELPHIA – Yesterday marked the 30th Anniversary of the Americans with Disabilities Act (ADA). Today, William M. McSwain, U.S. Attorney for the Eastern District of Pennsylvania, commemorated President George H.W. Bush’s historic July 26, 1990 signing of the ADA into law and announced that his Office will be hosting a virtual roundtable event with community leaders to discuss the ADA and his Office’s enforcement work under the statute.
“This landmark civil rights legislation sought to eliminate discrimination against millions of Americans with disabilities by outlawing the societal barriers that for so long excluded them from fully participating in some of the most fundamental aspects of American life, like seeking and holding a job, accessing transportation and medical care, patronizing a business, and voting,” said U.S. Attorney McSwain. “Although the ADA has been a transformative statute, our work is not done. Thirty years after its passage, illegal barriers still exist that prohibit people with disabilities from fully participating in our communities and deny them the ADA’s promise of equal opportunity and access. In recent years, my Office has removed many barriers to access in places of public accommodation in our District, such as hotels, restaurants, and medical facilities, and in state government services and buildings such as courthouses, schools, and polling places. We will continue to make ADA compliance a top priority.”
U.S. Attorney McSwain noted that his Office often hears from the targets of ADA investigations that they did not consider the ADA in opening their business, designing or renovating their building, or developing their program, or mistakenly believed the ADA did not apply to them. “There is no ‘grandfather’ clause to the ADA,” McSwain emphasized. “On the thirtieth anniversary of the ADA, I want the public to know that when my Office receives a complaint under the ADA, we will investigate and, where appropriate, take enforcement action.”
The U.S. Attorney’s Office for the Eastern District of Pennsylvania has a proud history of prioritizing civil rights enforcement and the ADA in particular; it has continued that tradition in recent efforts. For example, in February 2020, the Office began a review of all polling places in the District to ensure compliance with the ADA in advance of the November 2020 election. In April 2019, in response to an investigation initiated by the Office, Thomas Jefferson University Hospitals, Inc., executed a settlement agreement in which it agreed to address barriers to access for individuals who use wheelchairs in Jefferson’s radiology outpatient clinic. After a lengthy investigation, in March 2019, the Pennsylvania Department of Education signed a settlement agreement to address alleged discrimination against students with disabilities in its alternate education programs. In a March 2018 settlement agreement, Allergy & Asthma Specialists, P.C. agreed to fix barriers to access for deaf individuals at its Jenkintown facility. And in October 2018, after the Office initiated a review of several Philadelphia restaurants’ ADA compliance, twelve agreed to resolve a multitude of ADA access issues in their businesses.
Assistant U.S. Attorney Jacqueline C. Romero, the Civil Rights Coordinator for the Eastern District of Pennsylvania, will be organizing the upcoming roundtable to educate local stakeholders about this important work with regard to the ADA and the Department of Justice’s jurisdiction under the statute, and to hear from disability rights advocates about recurring issues in the community.
U.S. Attorney McSwain urges people who believe they are being discriminated against in violation of the ADA to file complaints with the Department of Justice. Complaints may be filed online at https://www.ada.gov/filing_complaint.htm, by calling the Department of Justice’s toll-free information line at (800) 514-0301 or (800) 514-0383 (TDD), or via email to the following address: [email protected].
Delaware County Man Sentenced to over 12 Years for Bank Robbery Spree in Montgomery and Delaware CountiesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that David Charles Hayes, 33, of Sharon Hill, PA, was sentenced to 151 months in prison, three years of supervised release and ordered to pay $43,632 in restitution by United States District Judge Mark A. Kearney for robbing nine banks in Montgomery and Delaware counties between April and December 2018.
In November 2019, Hayes pleaded guilty to all nine robberies. He robbed these banks by entering with his face covered, usually with a bandana, hat and sunglasses, and approaching tellers and demanding that money be handed over. In each case, he issued threats to the bank employees he encountered, ranging from physical harm (e.g., “don’t do anything goofy or I will hurt you”) to threats of death (e.g., “if you want to make it home to your kids, don’t push any buttons or try anything”). The defendant stole over $43,000 total during these robberies.
During the commission of one of the robberies, the defendant was given a security dye pack along with the stolen money, which began smoking and released a colored dye when it was removed from the bank. Hayes discarded the dye pack and the gloves he was wearing, and police recovered this evidence, which was tested for DNA. The defendant was found to be match and a warrant for his arrest was issued. He was taken into custody at Sugar House Casino, where he admitted to gambling his robbery proceeds.
“Bank robbery is a serious federal offense that can carry stiff penalties,” said U.S. Attorney McSwain. “During his crime spree, Hayes threatened many innocent people and now he will pay the price. I want people to know that committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the point of our new anti-violence public awareness campaign. You can learn more about this campaign on our District website.”
“David Hayes was quite a prolific robber, targeting nine banks in nine months across multiple police jurisdictions,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The FBI and our law enforcement partners were determined to put a stop to his one-man spree. Working together, we were able to take him off the street and see him brought to justice.”
The case was investigated by the Federal Bureau of Investigation, with assistance from the Ridley Township Police Department, the Glenolden Borough Police Department, the Sharon Hill Police Department, the Radnor Township Police Department, the Lower Merion Township Police Department, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorney Amanda R. Reinitz.
U.S. Attorney McSwain Announces Detention of Alleged Burglar Accused of Stealing $104,000 During Recent Rioting in PhiladelphiaRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Raphael Shaw, 20, of Philadelphia, PA was ordered detained pending trial at a detention hearing today in federal court on charges of burglarizing $104,000 from a Wells Fargo Bank branch in the Parkside section of Philadelphia during the recent riots and looting in the city. The defendant was arrested and taken into federal custody last week and made his initial appearance in court on Friday, July 17, 2020.
Following peaceful protests in the early afternoon of May 30, 2020 in response to the killing of George Floyd in Minneapolis, MN, civil unrest began to unfold later that afternoon in Philadelphia that resulted in widespread looting, burglary, arson, destruction of property, and other violent acts.
One such burglary occurred on May 31, 2020, when the defendant and his confederates allegedly broke into the Wells Fargo bank located on the 1500 block of north 52nd Street, pointed a rifle at people inside the bank, and removed a cash vault containing $104,000. According to the criminal complaint, the burglars used a forklift stolen from a nearby Lowe’s home improvement store to remove the vault. Surveillance footage from the bank showed a male wearing a blonde wig with distinctive tattoos on his right forearm, and several other individuals, surrounding a large object and moving it through the bank.
Shaw was identified as the individual in the blonde wig after a Philadelphia Police Officer who patrols the Parkside neighborhood, and who has interacted with Shaw multiple times in the last year, recognized the tattoos on his arm. Investigators were also able to further identify Shaw as the suspect based on photos posted to his publicly accessible Instagram account which showed a photo of an individual with the same arm tattoos, displaying large amounts of cash. A separate criminal complaint filed in federal court earlier this month charged Shaw’s alleged associate, Xavier Nolley-Hall, with entering the bank with intent to commit a felony.
“We at the U.S. Attorney’s Office will not allow violent criminal behavior to hijack the First Amendment right of the people to assemble peaceably and to petition their government,” said U.S. Attorney McSwain. “We accomplish that mission not only by arresting and prosecuting the perpetrators, but also by detaining them with no bail, when appropriate. That was the case here. Shaw will now face the consequences of his alleged actions, and he will do so while sitting in federal prison, where he belongs, prior to his trial. The bottom line is that if you committed a federal crime during the rioting and looting in Philadelphia, we are coming for you.”
“Amid peaceful protests and an outbreak of civil unrest, criminal opportunists sought to take advantage of the chaos,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Numerous banks across the city experienced vandalism and forced entry, but this daylight forklift burglary was the most brazen incident by far. The FBI/Philadelphia Police Violent Crimes Task Force continues to work the case, to identify the others involved. Our message to those folks: we’ll see you soon.”
If convicted, Shaw faces a maximum possible sentence of twenty years in prison, followed by three years of supervised release, and a fine of up to $250,000.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael R. Miller.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Two Owners of Tony Luke’s Philadelphia Cheesesteak Restaurant Indicted for Tax EvasionRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that two owners of a popular cheesesteak restaurant were charged with conspiracy to defraud the IRS, tax evasion, and aiding and assisting in the filing of false tax returns.
According to the Indictment, Anthony Lucidonio Sr., 82, and his son, Nicholas Lucidonio, 54, both of New Jersey, owned and operated Tony Luke’s, a cheesesteak and sandwich restaurant located in South Philadelphia. The Indictment alleges that from 2006 to 2016, the defendants hid from the IRS more than $8 million in cash receipts by, among other things, depositing only a portion of Tony Luke’s receipts into business bank accounts, providing incomplete information concerning receipts and income to their accountant, and filing fraudulent corporate and individual tax returns that substantially understated business receipts and income. The defendants also willfully evaded substantial individual income taxes that they owed.
The Indictment also alleges that the Lucidonios committed employment tax fraud by paying employees “off the books” in cash. To evade detection, defendants would pay most employees a portion of their wages and salaries “on the books” based on only a portion of the hours they worked. The defendants would then pay substantial additional cash wages for the remaining hours worked without withholding or paying over to the IRS the required employment taxes. They caused their accountant to prepare and file fraudulent quarterly employment tax returns with the IRS that substantially understated wages paid and the taxes that were due.
It is further alleged that when a dispute over franchising rights arose between the two defendants and another individual in 2015, the Lucidonios became concerned that their tax fraud scheme would be revealed, so they directed that the prior year’s tax returns be amended to increase reported sales. But it is alleged that the Lucidonios, in amending their returns, substantially offset the increase in reported sales and the additional taxes that would be due by claiming additional false and fraudulent expenses, thereby continuing their tax fraud scheme.
“Tony Luke’s is an iconic Philadelphia brand, but that is not what matters in the eyes of the law. These are serious allegations and it should go without saying that everyone has an obligation to follow the law. This alleged scheme victimized honest taxpayers in two ways: first, by hiding more than $8 million in revenue from the IRS and second, by avoiding payroll taxes,” said U.S. Attorney McSwain. “And when the defendants thought their scheme might be discovered, they allegedly cooked the books even further to cover their tracks.”
“Collecting and paying over employment tax is an obligation, not a choice,” said IRS Criminal Investigations Special Agent in Charge Thomas Fattorusso. “Anthony Lucidonio and Nicholas Lucidonio willfully chose to ignore this obligation. Their actions not only caused a loss to the government, but it also put their employees at risk of losing future Social Security and Medicare benefits.”
The defendants are charged with conspiring to defraud the United States, 19 counts of aiding and assisting in the filing of false personal and corporate tax returns, and four counts of tax evasion. If convicted, the defendants face a maximum sentence of five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge. Each defendant also faces a maximum period of five years of supervised release, a $6,000,000 fine, and a $2,400 special assessment
An Indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
The case was investigated by Special Agents of the IRS Criminal Investigation Division and is being prosecuted by Assistant U.S. Attorney Paul L. Gray and Assistant Chief John N. Kane of the Department of Justice Tax Division.
Owners of Philadelphia Cheesesteak Restaurant Indicted for Tax EvasionRead the Press Release
A federal grand jury in Philadelphia returned an indictment that was unsealed today, charging the owners of a popular cheesesteak restaurant with conspiracy to defraud the IRS, tax evasion, and aiding and assisting in filing false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania.
According to the indictment, Anthony Lucidonio Sr., and his son, Nicholas Lucidonio, both of New Jersey, owned and operated Tony Luke, a cheesesteak and sandwich restaurant located in South Philadelphia. From 2006 through 2016, the Lucidonios allegedly hid from the IRS more than $8 million in receipts by depositing only a portion of Tony Luke’s receipts into business bank accounts and filing with the IRS false business and personal tax returns that substantially understated their income.
The indictment further alleges that the Lucidonios committed employment tax fraud by paying employees a portion of their wages and salaries “on the books” for some hours they worked, but then paying substantial additional wages for the remaining hours worked “off the books” in cash, without withholding and paying to the IRS the required employment taxes. From 2014 through 2015, they also allegedly filed false quarterly employment tax returns with the IRS substantially understating wages paid and taxes due.
It is also alleged that after a dispute over franchising rights arose between the Lucidonios and another individual in 2015, the Lucidonios, concerned that their tax fraud scheme would be revealed, amended prior year tax returns to increase reported sales, but then falsely offset the increased income by inflating expenses.
If convicted, the defendants face a maximum sentence of five years in prison for the conspiracy charge and each count of tax evasion, and three years in prison for each false return charge. Defendants also face a period of supervised release, restitution, and monetary penalties.
An indictment merely alleges that crimes have been committed. The defendants are presumed innocent until proven guilty beyond a reasonable doubt.
Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney McSwain commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant Chief John Kane of the Tax Division and Assistant U.S. Attorney Paul Gray, who are prosecuting the case.
Additional information about the Tax Division and its enforcement efforts may be found on the Division’s website.
U.S. Attorney William M. McSwain Announces Election Fraud Charges Against Former U.S. Congressman and Philadelphia Political OperativeRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that former U.S. Congressman Michael “Ozzie” Myers, 77, of Philadelphia, Pennsylvania, has been charged by Indictment with multiple counts, including conspiring to violate voting rights by fraudulently stuffing the ballot boxes for specific Democratic candidates in the 2014, 2015, and 2016 Pennsylvania primary elections, bribery of an election official, falsification of records, voting more than once in federal elections, and obstruction of justice. U.S. Attorney McSwain’s video statement providing additional details about this case is available on the Office website here: https://www.justice.gov/usao-edpa/video/us-attorney-william-m-mcswain-announces-indictment-former-congressman-election-fraud.
Specifically, Myers is alleged to have bribed the Judge of Elections for the 39th Ward, 36th Division in South Philadelphia, Domenick J. Demuro, in a fraudulent scheme over several years. Demuro, who was charged separately and pleaded guilty in May 2020, was responsible for overseeing the entire election process and all voter activities of his Division in accord with federal and state election laws.
The voting machines at each polling station, including in the 39th Ward, 36th Division, generate records in the form of a printed receipt documenting the use of each voting machine. This printed receipt, also known as the “results receipt,” shows the vote totals, and the Judge of Elections and other Election Board Officials at each polling place attest to the accuracy of machine results.
Myers is charged with bribing Demuro to illegally add votes for certain candidates of their mutual political party in primary elections. Some of these candidates were individuals running for judicial office whose campaigns had hired Myers, and others were candidates for various federal, state, and local elective offices that Myers favored for a variety of reasons. According to the Indictment, Myers would solicit payments from his clients in the form of cash or checks as “consulting fees,” and then use portions of these funds to pay Demuro and others to tamper with election results.
After receiving payments ranging from between $300 to $5,000 per election from Myers, Demuro would add fraudulent votes on the voting machine – also known as “ringing up” votes – for Myers’ clients and preferred candidates, thereby diluting the value of ballots cast by actual voters. At Myers’ direction, Demuro would add these fraudulent votes to the totals during Election Day, and then would later falsely certify that the voting machine results were accurate. Myers is also accused of directing Demuro to lie to investigators about the circumstances of the bribes and the ballot-stuffing scheme.
“Voting is the cornerstone of our democracy. If only one vote has been illegally rung up or fraudulently stuffed into a ballot box, the integrity of that entire election is undermined,” said U.S. Attorney McSwain. “Votes are not things to be purchased and democracy is not for sale. If you are a political consultant, Election Official, or work with the polling places in any way, I urge you to do your job honestly and faithfully. That is what the public deserves, it is what democracy demands, and it is what my Office will enforce.”
“Free and fair elections are the hallmark of our system of government,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The Department of Justice has zero tolerance for corruption of the electoral process, and we will spare no effort in investigating and prosecuting those who would seek an unfair advantage at the polls by bribing state and local officials responsible for ensuring the fairness of our elections.”
“Transparent and fair elections are integral to the proper functioning of our democracy,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Those who seek to corrupt the vote threaten the public’s trust in the process and must be brought to justice. The FBI is determined to protect the integrity of our electoral system.”
“These charges, announced today by the Justice Department, clearly illustrate allegations of absolute disregard for the sanctity of our electoral system,” said Captain Leo D. Hannon Jr., Director of the Special Investigations Division of the Pennsylvania State Police. “As disheartening as this conduct may be for the voting public in Philadelphia and elsewhere, the citizens we serve should be reassured by the fearless and tireless work of the attorneys, agents, and troopers tasked with the continuation of this active investigation. Particularly in the current atmosphere of impending elections, the Pennsylvania State Police prioritize investigations into allegations of voter fraud and public corruption.”
If convicted, the defendant faces a maximum possible sentence of 90 years in prison and two million dollars in fines.
This case is being investigated by the Federal Bureau of Investigation, with assistance from the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorney Eric L. Gibson and Richard C. Pilger, Director of Elections Crimes Branch, Criminal Division, Public Integrity Section, U.S. Department of Justice.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Remarks by United States Attorney William M. McSwain Regarding Election Fraud Charges Against Former U.S. Congressman and Philadelphia Political ConsultantRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain released a video on July 23, 2020, with his remarks concerning the criminal charges against former United States Congressman Michael “Ozzie” Myers. The video is available on the Office website here: https://www.justice.gov/usao-edpa/video/us-attorney-william-m-mcswain-announces-indictment-former-congressman-election-fraud. Below are U.S. Attorney McSwain’s remarks, as prepared for delivery.
*****
Good morning. I am here to announce that the U.S. Attorney’s Office has unsealed criminal charges against Michael “Ozzie” Myers, a political consultant and former United States Congressman in Philadelphia. Myers has been charged with eight counts: one count of conspiracy to deprive individuals of their civil rights; one count of conspiring to illegally vote in a federal election; two counts of violating the Travel Act, which forbids the use of any facility in interstate commerce (here, a cell phone) with the intent to promote certain illegal activity (here, bribery); two counts of falsification of records; one count of voting more than once in a federal election; and one count of obstruction of justice.
This prosecution has been a team effort, and before I get into a more detailed description of the allegations, there are several people that I want to recognize and thank. First, from the FBI, Mike Driscoll, who is the Special Agent in Charge of the FBI’s Philadelphia Field Office, as well as Special Agent Carmen DiMario, who is the lead investigator on the case. I want to thank the Public Integrity Section at the U.S. Department of Justice in Washington, and specifically Section Chief Corey Amundson, Deputy Chief John Keller, and the Director of the Election Crimes Branch of the Section, Richard Pilger. I also want to thank Assistant U.S. Attorney Richard Barrett, who is the Chief of our Public Corruption Unit at the U.S. Attorney’s Office, and Assistant U.S. Attorney Eric Gibson, who is the lead prosecutor on the case. And finally, I would like to thank the Pennsylvania State Police for their assistance in this investigation.
Our election system relies on the honesty and the integrity of those involved in the electoral process. If Election Officials are corrupt, the system is corrupt, which creates opportunities for election fraud and for the counting of fake votes. According to the Indictment, the election system in Philadelphia’s 39th Ward, 36th Division was corrupted by Ozzie Myers and his co-conspirators.
Myers held himself out as an effective and successful political operative capable of ensuring his clients' electoral success. Myers allegedly did so by working in a number of ways to exert influence and control over Philadelphia’s 39th Ward. According to the Indictment, Myers distributed cash payments and supported family, friends, and allies for elective office in the 39th Ward, and installed Ward Leaders, Judges of Elections, and Democratic State Committee Persons. Through the alleged scheme, Myers advanced his political and financial interests through fraudulent and corrupt means by engaging in a “ballot stuffing” scheme that enabled him to take credit for the electoral success of his Philadelphia-based clients and preferred candidates. This secured his standing in local party politics that enabled him to control and influence the 39th Ward, and influence the distribution of local patronage jobs.
I would like to take you to the 39th Ward, 36th Division to show you where the action happened. I have two photographs that I am going to share at this point to provide some context about the polling place involved. First, there is a picture of the outside of the polling place, which is adjacent to a bocce ball court. Here is that photo. Then, we go inside the polling place, with a picture of the actual machines on an election day.
As charged, Myers would solicit monetary payments from his clients in the form of cash or checks as “consulting fees.” Myers would then take portions of these funds and make payments to Election Board Officials in return for the officials tampering with the election results. Specifically, Myers gave directions and paid money to Dominick J. Demuro, Judge of Elections in Philadelphia’s 39th Ward, who would illegally add votes for certain Democratic candidates on the primary ballots in 2014, 2015, and 2016. These candidates were individuals running for judicial office whose campaigns had hired Myers, as well as other candidates for various federal, state, and local elective offices who were preferred by Myers for a variety of reasons.
After receiving payments from Myers ranging between $300 to $5,000 per election, Demuro would add fraudulent votes - also known as “ringing up” votes – for Myers’ clients and preferred candidates, thereby diluting the ballots cast by actual voters. Myers would relay instructions to Demuro over a cellphone regarding which candidates Demuro should “ring up” on Election Day. Demuro would add the fraudulent votes by literally standing in the voting booth and voting over and over, as fast as he could, when he thought the coast was clear.
Demuro would then falsely certify the Voting Machine results from the 39th Ward, 36th Division as valid. Myers is also charged with obstruction of justice for instructing Demuro about how best to avoid detection concerning these fraudulent votes. Myers allegedly paid Demuro at specific times to avoid campaign financial reporting requirements, and told Demuro to lie about the reason for those payments if he were ever asked.
These fraudulent votes added up. In May 2014, DeMuro stuffed the ballot box with 27 fraudulent ballots during the primary election. In May 2015, DeMuro padded the ballot box with 40 fraudulent votes; in 2016, it was 46 fraudulent votes. These numbers may sound relatively small, but they made up a significant percentage of the total votes cast at the polling place. In 2014, 118 total ballots were reported in the 36th Division of the 39th Ward. That means that the fraudulent votes accounted for over 22% of the total voting in that Division in 2014. In 2015, the fraud accounted for over 15% of the votes in the Division; in 2016, the fraud accounted for over 17% of the votes. And when it comes to these local elections, these numbers are not insignificant. Local elections can often be decided by hundreds, or at times, dozens of votes. These fraudulent votes had the potential to alter a local election’s final result.
But at the end of the day, the specific number of votes does not really matter. Voting is the cornerstone of our democracy. If only one vote has been illegally rung up or fraudulently stuffed into a ballot box, the integrity of that entire election is undermined. As President Lincoln once said, “Elections belong to the people.” The people. To each and every citizen, who has the right to cast one vote. Elections do not and will never belong to corrupt election officials who attempt to buy elections. Votes are not things to be purchased, and democracy is not for sale.
Demuro, who was charged earlier this year by my Office, has accepted responsibility for his crimes by pleading guilty to all charges and is currently awaiting sentencing. And this election fraud investigation is on-going. My Office is taking every possible step that we can to ensure the integrity of every election in the Eastern District of Pennsylvania in 2020. We will work day and night to make sure that every citizen’s civil rights are protected, whether that is through access to the polls or making every legitimate vote count. If you tamper with anyone’s right to vote or try to fix the results of any election in the Eastern District of Pennsylvania, my Office will hold you accountable. If you are a political consultant, Election Official, or work with the polling places in any way, I urge you to do your job honestly and faithfully. That is what the public deserves, it is what democracy demands, and it is what my Office will enforce. Thank you.
Former Congressman Charged with Ballot Stuffing, Bribery, and ObstructionRead the Press Release
A former U.S. Congressman was charged Tuesday in an indictment unsealed today, with conspiring to violate voting rights by fraudulently stuffing the ballot boxes for specific candidates in the 2014, 2015, and 2016 primary elections, bribery of an election official, falsification of records, voting more than once in federal elections, and obstruction of justice.
Michael “Ozzie” Myers, 77, of Philadelphia, Pennsylvania, is charged with conspiring with and bribing the former Judge of Elections for the 39th Ward, 36th Division, Domenick J. Demuro. Demuro, who pleaded guilty previously in federal court in Philadelphia, was responsible for overseeing the entire election process and all voter activities of his division in accord with federal and state election laws.
“Free and fair elections are the hallmark of our system of government,” said Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division. “The Department of Justice has zero tolerance for corruption of the electoral process, and we will spare no effort in investigating and prosecuting those who would seek an unfair advantage at the polls by bribing state and local officials responsible for ensuring the fairness of our elections.”
“Voting is the cornerstone of our democracy. If only one vote has been illegally rung up or fraudulently stuffed into a ballot box, the integrity of that entire election is undermined,” said U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania. “Votes are not things to be purchased and democracy is not for sale. If you are a political consultant, election official, or work with the polling places in any way, I urge you to do your job honestly and faithfully. That is what the public deserves, it is what democracy demands, and it is what my office will enforce.”
“Transparent and fair elections are integral to the proper functioning of our democracy,” said Special Agent in Charge Michael J. Driscoll of the FBI’s Philadelphia Division. “Those who seek to corrupt the vote threaten the public’s trust in the process and must be brought to justice. The FBI is determined to protect the integrity of our electoral system.”
“These charges, announced today by the Justice Department, clearly illustrate allegations of absolute disregard for the sanctity of our electoral system,” said Captain Leo D. Hannon Jr., Director of the Special Investigations Division of the Pennsylvania State Police. “As disheartening as this conduct may be for the voting public in Philadelphia and elsewhere, the citizens we serve should be reassured by the fearless and tireless work of the attorneys, agents, and troopers tasked with the continuation of this active investigation. Particularly in the current atmosphere of impending elections, the Pennsylvania State Police prioritize investigations into allegations of voter fraud and public corruption.”
Myers is charged with bribing Demuro to illegally add votes for certain candidates of their mutual party in primary elections. Some of these candidates were individuals running for judicial office whose campaigns had hired Myers, and others were candidates for various federal, state, and local elective offices whom Myers favored for a variety of reasons. According to the indictment, Myers would solicit payments from his clients in the form of cash or checks as “consulting fees,” and then use portions of these funds to pay Demuro and others in return for tampering with election results.
After receiving payments ranging from between $300 to $5,000 per election from the consultant, the court papers allege Demuro would add fraudulent votes on the voting machine – also known as “ringing up” votes – for Myers’ clients and preferred candidates, thereby diluting the value of ballots cast by actual voters. At Myers’ direction, Demuro would add these fraudulent votes to the totals during Election Day, and then would later falsely certify that the voting machine results were accurate. Myers is also accused of directing Demuro to lie about the circumstances of the bribes and the ballot-stuffing scheme to investigators.
This case is being investigated by the FBI with assistance from the Pennsylvania State Police. It is being prosecuted by Richard C. Pilger, Director of the Elections Crimes Branch of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorney Eric L. Gibson.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
The year 2020 marks the 150th anniversary of the Department of Justice. Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.
Bucks County Man Pleads Guilty to Faking a Military Career as a Navy SEAL, Stealing from the Government, and Straw Purchasing FirearmsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Richard Meleski, 58, of Chalfont, PA, pleaded guilty to multiple charges, including healthcare fraud, mail fraud, stolen valor, and aiding and abetting straw purchases of firearms.
In November 2019, Meleski was charged by Indictment for his scheme to defraud the government of hundreds of thousands of dollars in benefits. To perpetrate the scheme, Meleski faked serving in the U.S. military, specifically the Navy SEALs, and falsely represented that he had been a Prisoner of War, in order to secure healthcare benefits from the Veterans Administration (VA) worth over $300,000. Due to his false representation as a POW, the defendant received healthcare from the VA in Priority Group 3, effectively receiving healthcare before other deserving military service members. In reality, Meleski never served a single day in the United States military.
Meleski also filed for monetary compensation from the VA for PTSD he supposedly suffered during an armed conflict in Beirut in which he rescued injured service members. In his application for disability benefits for PTSD, Meleski falsely represented that he had been awarded the Silver Star for heroic actions during his time as a Navy SEAL. Again, Meleski never served a single day in the United States military and of course was never awarded any service medals. Meleski also submitted another application to the VA for monetary compensation in which he included obituaries of actual Navy SEALs alongside whom he had supposedly served. In short, he traded on the actions of true heroes in an attempt to bolster his false application for monetary benefits.
The defendant also filed for disability benefits from The United States Social Security Administration (SSA) for injuries he claimed to have received during his time in the service. Meleski falsely testified under oath in connection with an SSA Disability proceeding.
After being arrested for fraud, it was discovered that the defendant had also engaged in aiding and abetting the straw purchase of two separate firearms; he also pleaded guilty to this conduct.
“Meleski faked a record as a decorated U.S. Navy SEAL in order to steal numerous forms of compensation,” said U.S. Attorney McSwain. “Everything about this case is profoundly offensive. Our veterans fought for the freedoms we hold dear, and we owe them a debt that we can never fully repay. But holding individuals like Meleski accountable for their crimes is one small way that we can honor our veterans’ service.”
“This guilty plea is a warning to those who make false statements in applying for Social Security disability benefits,” said Gail S. Ennis, Inspector General of Social Security. "I want to recognize the efforts of the VA OIG and ATF in investigating this case, and the United States Attorney’s Office for bringing these charges.”
The case was investigated by Department of Veterans Affairs Office of the Inspector General, Social Security Administration Office of the Inspector General, and the Bureau of Alcohol, Tobacco and Firearms. It is being prosecuted by Special Assistant United States Attorney Megan Curran.
Berks County Accountant Sentenced to Ten Years in Prison in One of the Largest Pennsylvania-Based Ponzi Schemes in HistoryRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Philip Elvin Riehl, 68, of Bethel Township, Berks County, PA, was sentenced to 120 months in prison, three years supervised release, and was ordered to pay $59,688,297 in restitution and $59,688,297 in forfeiture by United States District Judge Edward G. Smith for orchestrating a massive Ponzi scheme that targeted members of the Mennonite and Amish religious communities in Pennsylvania and elsewhere. Riehl was also ordered to forfeit two pieces of real estate, $22 million in loans receivable and $1.145 million in payments.
In February 2020, Riehl pleaded guilty to one count of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud. The defendant, a Berks County–based accountant, fraudulently solicited tens of millions of dollars in investments from his accounting clients and others (who are mostly members of the Mennonite or Amish communities) into an investment program that he operated.
Riehl then diverted funds from the program to Trickling Springs Creamery, LLC, a Franklin County–based creamery of which he was the majority owner. Riehl also fraudulently solicited direct investments in Trickling Springs Creamery. The defendant made material misrepresentations about the safety and security of these investments in his program and about the performance of the program, as well as misrepresentations and omissions about the creamery’s business and financial condition. Trickling Springs Creamery announced it was ceasing operations in September 2019 and filed a bankruptcy petition in December 2019. Investor losses are estimated to be around $60 million, making this one of the largest Pennsylvania-based Ponzi schemes ever.
The entire scheme is what is commonly referred to as “affinity fraud,” which typically involves investment scams that prey upon members of identifiable groups, such as religious or ethnic communities. These types of scams exploit the trust and friendship that exist in groups of people who share common interests or beliefs.
“The people who invested their money, sometimes their entire life’s savings, with Philip Riehl believed implicitly that they could trust him because he was one of their own,” said U.S. Attorney McSwain. “Riehl preyed upon that trust, swindling them out of tens of millions of dollars in an effort to keep his creamery business from going under. No matter what community they belong to, fraudsters like Riehl must be held accountable under the law for justice to prevail.”
“While no form of fraud is ever acceptable, it takes a particularly vile person to target their own religious community,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Philip Riehl’s investors knew him and they took him at his word. He fully exploited that trust, misleading them repeatedly, with some $60 million of their hard-earned money disappearing into what proved nothing more than a giant Ponzi scheme. While we can never make his victims whole financially or emotionally, today he is being held accountable and that is some measure of justice for those he’s wronged.”
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michael J. Rinaldi. The U.S. Attorney’s Office appreciates the assistance of the Pennsylvania Department of Banking and Securities and the U.S. Securities and Exchange Commission.
Philadelphia Man Sentenced to 28 Years in Prison for Six Armed RobberiesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Phillip Cottman, 40, of Philadelphia, PA, was sentenced to 28 years (336 months) and one day in prison by United States District Judge Berle M. Schiller for a spate of armed robberies over a three year period.
Between July 2015 and April 2018, Cottman committed six armed robberies: three Republic Bank branches (on 18th & Market Streets, 16th & Walnut Streets, and 8th & Chestnut Streets), two Dunkin Donuts shops (on 21st & Market Streets and 15th Street & Washington Avenue), and one 7-Eleven convenience store (on 17th & South Streets), all in Center City Philadelphia.
During all six robberies, the defendant pointed a gun at his victims and demanded money, stealing a few thousand dollars from one bank branch and as little as $60 from one shop. He was charged by criminal complaint and arrested in April 2018; at the time of his arrest, he was carrying a loaded Smith & Wesson SD40 VE handgun, despite being a convicted felon which prohibits him from possessing a firearm. In June 2019, a grand jury returned an Indictment formally charging the defendant with all six robberies, including three counts of armed bank robbery, three counts of Hobbs Act robbery, six counts of using and carrying a firearm during a crime of violence and one count of possession of a firearm by a convicted felon. Cottman pleaded guilty in January 2020.
“Robbing any type of business – whether it’s a bank, a corner store, or anything in between – is a serious federal offense that can carry stiff penalties, as Cottman can now attest,” said U.S. Attorney McSwain. “Over the course of six robberies during which he threatened innocent people with a gun, the defendant stole a total of about $5,000 and is now going to spend nearly three decades behind bars for his crimes. Committing a violent crime is just not worth it. I want people to know that committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the point of our new anti-violence public awareness campaign. You can learn more about this campaign on our District website.”
“Phillip Cottman was a serial armed robber,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He was more than comfortable barging into city banks and businesses, terrorizing innocent employees and witnesses at gunpoint, and stealing cash. Had Cottman not been identified and arrested by the FBI/Philadelphia Police Violent Crimes Task Force, he’d still be at it. Philadelphia is safer with him behind bars.”
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The case was investigated by the Federal Bureau of Investigation and Philadelphia Police Department FBI Task Force officers, and is being prosecuted by Assistant United States Attorney Timothy M. Stengel.
Associate of “Born to Kill” Drug Gang Leader Sentenced to Ten Months in Prison for Lying to the FBIRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Hai Nguyen, 37, of New Castle, Delaware, was sentenced to ten months in prison and three years of supervised release by United States District Court Judge J. Curtis Joyner for lying to the FBI during the course of a double homicide investigation.
On the night of August 26, 2014, Tam Le and four associates kidnapped three Philadelphia drug dealers who had failed to pay a substantial drug debt. Le was a member of a gang called “BTK” or “Born to Kill.” Le and his associates transported the three victims to the Schuylkill River, bound them with duct tape, weighed down their bodies, stabbed them, and dumped all three victims into the river. Two victims died in the river while the third somehow managed to crawl out of the river and flag down a passing motorist on Kelly Drive for assistance.
Hai Nguyen was a close friend of Tam Le. Immediately following the murders, Nguyen traveled from Delaware to Le’s house in Philadelphia. Le knew that the Philadelphia Police would be looking to arrest him for the murders, so he asked Nguyen to drive him and his family to New York State. The U.S. Marshals Service eventually hunted down Le and placed him under arrest. He was charged with the murders and convicted at trial. A Philadelphia County jury sentenced him to death.
At the same time, the FBI began investigating the crime in order to bring the other perpetrators, some of whom lived in New York, to justice. On three occasions, the FBI interviewed Hai Nguyen about traveling to Tam Le’s house following the murders. During those interviews, Nguyen repeatedly lied to the FBI and stated that he did not travel to Le’s house that night. The FBI subsequently obtained cell site data from Hai Nguyen’s phone and proved his lies.
“Lying to the FBI or to any federal investigating agency is always a serious offense, one which we will prosecute vigorously,” said U.S. Attorney McSwain. “But lying in the course of a federal double homicide investigation is a sure way to land in prison. This type of criminal dishonesty is reprehensible and will never be tolerated.”
The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Police Department. The case is being prosecuted by Assistant United States Attorney Robert J. Livermore.
Venezuelan National Extradited from Trinidad and Tobago Sentenced to 12+ Years in Prison for Smuggling CocaineRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Eduardo Gregorio Azocar, 48, of Venezuela was sentenced to more than 12 years (151 months) in prison and five years of supervised release by United States District Judge Harvey Bartle, III, for the attempted distribution of more than 30 kilograms of cocaine for purpose of unlawful importation to the United States, and the distribution of more than 4 kilograms of cocaine for purpose of unlawful importation to the United States.
Azocar, who resided in Venezuela, used the Caribbean country of Trinidad and Tobago to facilitate his distribution of kilogram quantities of cocaine. In the summer of 2015, the Drug Enforcement Administration (DEA) and Trinidadian law enforcement received information that Azocar had 50 kilograms of cocaine that he wanted to sell to a U.S. buyer. On August 26, 2015, Trinidadian law enforcement agents watched the defendant access a locked storage container in Trinidad to inspect his cocaine. On August 27, 2015, an undercover detective in the United States made a series of telephone calls to Azocar. Posing as a Philadelphia-area resident, the undercover detective said he was interested in buying kilogram quantities of cocaine and negotiated the purchase price with the defendant. Before those negotiations were completed, Trinidadian law enforcement agents searched the storage container and seized a total of 30.4 kilograms of cocaine.
The undercover detective also introduced a confidential source to Azocar. The confidential source traveled from the United States to the island of Trinidad on multiple dates, meeting with Azocar in person in Trinidad. On October 4, 2015, at Azocar’s direction, an associate of Azocar sold to the confidential source 4.1 kilograms of cocaine which was destined for the United States. On October 26, 2015, the confidential source met Azocar in a Trinidadian hotel and paid him $22,500 for the previously negotiated cocaine sale. In a recorded conversation, the defendant told the confidential source: “I’ve been looking for a contact just like you and I found you. I am really happy.” In that same conversation, the confidential source and Azocar discussed the cost of moving the cocaine from Trinidad to Philadelphia, the price of a kilogram of cocaine in Philadelphia, and the price of a kilogram of heroin in Philadelphia.
Azocar was indicted in the Eastern District of Pennsylvania and arrested in Trinidad on June 16, 2016. He fought extradition for years in Trinidadian courts, but was eventually extradited to Philadelphia, PA, on July 23, 2019 to face justice. The defendant pleaded guilty in February 2020.
“Drug trafficking preys on individuals in addiction and makes our entire city less safe,” said U.S. Attorney McSwain. “Narcotics don’t just magically appear on Philadelphia streets -- they are smuggled in by people like Azocar, seeking to profit off the suffering of our people and communities. My Office is committed to working with our law enforcement partners at all levels, and in other jurisdictions and nations, to investigate and convict those who are poisoning our neighborhoods with deadly drugs and put them behind bars, where they belong.”
“Azocar mistakenly thought that he could elude the reach of United States law by remaining outside the US as he sold multi-kilogram quantities of cocaine destined for Philadelphia. As a result of the coordinated efforts of DEA and prosecutors in the US and Trinidad, Azocar was arrested in Trinidad and extradited to Philadelphia to face US justice,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “The DEA is most appreciative of the cooperation and support provided by Trinidadian police and prosecutors. DEA has offices around the world and will continue to work tirelessly to extradite significant drug-traffickers like Azocar who pose the greatest threat to our country.”
The case was investigated by the Drug Enforcement Adminstration, and is being prosecuted by Assistant United States Attorney Jason P. Bologna.
Former CEO of Lancaster County Oil & Gas Company Sentenced to 14 Years in Prison for $65 Million Bank FraudRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Jeffrey Lyons, 59, of Lancaster, PA was sentenced to fourteen years in prison, and ordered to pay restitution of $53 million to Fulton Bank and $550,000 to the IRS, by Judge Jeffrey L. Schmehl for orchestrating a massive bank fraud scheme over many years.
In October 2019, Lyons, the former CEO of Worley & Obetz, pleaded guilty to one count of defrauding Fulton Bank of over $65 million between 2003 and 2018. Lyons also pleaded guilty to one count of tax evasion. The defendant admitted that he, along with Worley & Obetz’s two controllers, Karen Connelly and Judith Avilez, committed bank fraud by providing Fulton Bank with dozens of fraudulent financial statements and a fraudulently altered supply agreement between Worley & Obetz and its largest customer, Giant Food. Worley & Obetz was an oil and gas company in Manheim, PA, that provided services and home heating oil, gasoline, diesel, and propane to its customers.
Lyons enlisted the help of the Worley & Obetz controllers to create the fraudulent financial statements, making it appear to the bank and the company’s owners that it had over $55 million in accounts receivable from Giant Food for purported fuel that Giant had supposedly purchased from Worley & Obetz. In truth, Giant rarely purchased fuel from Worley & Obetz after 2011, and when they did, it was in small amounts. The falsified financial statements made Worley & Obetz appear to have millions more revenue and accounts receivable than it did. Each month, for more than fifteen years, Lyons and the company controllers created false Worley & Obetz financial statements, which Lyons presented to Fulton Bank in support of his request for additional loans or extensions on existing lines of credit. Fulton Bank relied on the fraudulent financial statements when it lent Worley & Obetz over $65 million.
Lyons used the Fulton loans to pay Worley & Obetz expenses, which included his annual salary of over $500,000. He also used the borrowed money to make Worley & Obetz appear profitable when it was actually operating at a loss, to pay interest on the earlier loans he borrowed from Fulton, and to fund some of his personal expenses including real estate worth millions. Additionally, from 2012 through 2017, Lyons failed to report over $1.4 million of income to the IRS.
After Lyons’ scheme was discovered, Worley & Obetz and its related companies did not have the assets to repay the massive amount of Fulton loans that Lyons had accumulated. In June 2018, Worley & Obetz declared bankruptcy. It notified its approximately 275 employees that they no longer had jobs and, after 72 years, the family-owned company closed its doors forever. As a result of Lyons’ fraud, many in the Manheim, PA community suffered greatly – both financially and emotionally.
“The scope and duration of the fraud committed by Lyons is simply stunning,” said U.S. Attorney McSwain. “He stole tens of millions of dollars from bank lenders, all while willfully ignoring his fiduciary duty to the company and the hundreds of people who made their livelihoods working there. This case is a tragedy for the many honest, hardworking people who placed their trust in Lyons. My Office will continue to work aggressively with our law enforcement partners to protect innocent individuals and businesses from being victimized by financial fraud.”
“Over the course of 15 years, at Jeffrey Lyons’ direction, financial records were repeatedly falsified to inflate his company’s revenue,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “This long-running scheme helped prop Lyons up both personally and professionally, as Worley & Obetz amassed millions upon millions in fraudulent loans. In the end, though, his actions bankrupted the business, cost hundreds of innocent people their jobs, and have landed Lyons in federal prison. The FBI is committed to holding accountable anyone engaged in such egregious financial fraud.”
“Mr. Lyons willfully and intentionally violated his known legal duty to file a correct tax return and pay his fair share of taxes,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His failure to report all of his income is a violation of tax laws; one that the courts do not take lightly, as evidenced by the sentence handed down today.”
The case was investigated by the Federal Bureau of Investigation, IRS Criminal Investigations, and Northern Lancaster County Regional Police Department and is being prosecuted by Assistant United States Attorney Tiwana Wright.
Bethlehem-Area Chiropractor Pleads Guilty to Health Care FraudRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Nicholas Bufanio, 53, of Hellertown, PA pleaded guilty to one count of health care fraud before United States District Court Judge Joseph F. Leeson, Jr.
Bufanio is a doctor of chiropractic medicine, who has operated Community Chiropractic, Inc. in Bethlehem, PA, since at least 2011. The defendant submitted fraudulent claims to health insurers of approximately $236,000 for chiropractic services he did not render. He routinely submitted claims for patients who failed to appear for scheduled appointments, falsely asserting that he saw the patients and provided chiropractic care. He also submitted fraudulent claims for days when he was not even in the office.
Additionally, from November 2017 until approximately December 2018, Bufanio was convalescing at home. Although he did not see patients during this time, the defendant submitted bogus claims to health insurers pretending that he was keeping normal office hours and rendering chiropractic treatment.
“Physicians and other medical professionals who fraudulently bill insurance companies are thieves – they steal from both the companies and the honest subscribers,” said U.S. Attorney McSwain. “Dr. Bufanio was arrogant enough to think that he could get paid for doing nothing. My Office will continue to use every tool at its disposal to investigate, prosecute, and punish this type of fraud.”
“Through our criminal enforcement program, the U.S. Department of Labor, Employee Benefits Security Administration (EBSA), will vigorously pursue those who violate the criminal laws protecting private–sector employee benefit plans,” said EBSA Philadelphia Regional Director Michael Schloss.
The case was investigated by U.S. Department of Labor-Employee Benefits Security Administration, and is being prosecuted by Assistant United States Attorney M. Beth Leahy.
Second Leader of North Philadelphia Drug Gang Sentenced to Twelve Years in PrisonRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Brandon Smith, 30, of Philadelphia, Pennsylvania, was sentenced to twelve years in prison, to be followed by five years of supervised release, by United States District Court Judge C. Darnell Jones.
In November 2019, the defendant pleaded guilty to multiple criminal counts, including conspiracy to distribute and attempted possession with intent to distribute controlled substances. The charges arose from his leadership role in a large drug trafficking organization that shipped hundreds of pounds of narcotics -- including methamphetamine, cocaine, heroin, and fentanyl -- from California to Philadelphia via United States mail, from at least early 2016 until November 2017.
To obtain the narcotics, Smith and other members of the organization flew from Philadelphia to Los Angeles to purchase the drugs directly from a source in California, concealing large amounts of cash between clothing packed in their carry-on luggage. After purchasing the drugs, members of the organization shipped the narcotics in boxes addressed to businesses in the Feltonville neighborhood of North Philadelphia, and then coordinated the delivery of the drugs to various locations, so they could then be prepared for distribution.
Another leader of the drug trafficking group and a co-defendant in this case, George Felts, 33, also of Philadelphia, was previously sentenced to sixteen years in prison for similar charges.
“Smith and other members of this drug gang pumped huge quantities of deadly drugs into our community,” said U.S. Attorney McSwain. “The punishment handed down today cannot undo the damage that Smith caused, but his conviction and lengthy sentence have made Philadelphia safer. My Office is committed to aggressively investigating and prosecuting drug trafficking organizations that prey on the community.”
“Today, another defendant was sentenced to more than a decade in jail for his participation in the organized distribution of illegal and dangerous narcotics in Philadelphia neighborhoods,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division of the United States Postal Inspection Service. “I again would like to thank and congratulate the officers from the Philadelphia Police Department, the agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Drug Enforcement Administration, the prosecutors from the United States Attorney’s Office, and the Postal Inspectors from the Philadelphia Division who worked tirelessly on this case to protect the US mail system from criminal misuse and to ensure Mr. Smith faced justice for the harm he has caused to the Philadelphia community.”
The case was investigated by the United States Postal Inspection Service, with the assistance of the Philadelphia Police Department, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, and Firearms. It is being prosecuted by Assistant United States Attorney Nancy Beam Winter.
United States Attorney William M. McSwain Announces Launch of Violent Crime Prevention and Public Awareness CampaignRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced the launch of a public awareness campaign aimed at discouraging violent crime, specifically robbery and gun crimes, throughout the Eastern District of Pennsylvania. The campaign employs targeted messaging to educate and inform the public that crimes committed with a gun can often violate federal laws, and therefore carry stiffer potential penalties than crimes prosecuted under local and state statutes. One component of the campaign is a series of public service announcements (PSAs) that will run on television, radio, and streaming platforms urging individuals to rethink committing violent crimes that could be federal offenses.
For example, under a federal statute called the Hobbs Act, passed by the United States Congress in 1946, it is a federal crime to use force or threats of force to rob a commercial business – like a pharmacy, a convenience store, or even a corner market. It does not matter whether the robber steals thousands of dollars from the cash register or nothing more than a pack of cigarettes. Because these stores operate in “interstate commerce,” the U.S. Attorney’s Office can take these cases federally. And that is exactly what it will do to get justice for the victims in these cases – store owners and their patrons who live in fear in their neighborhoods.
Violent crime, particularly gun crime, has become a pervasive issue in Philadelphia and other parts of the Eastern District of Pennsylvania. For example, in 2019, 2,181 robberies with a gun occurred in Philadelphia. So far in 2020, there have been 219 homicides, with the past two weekends in July becoming particularly violent. The U.S. Attorney’s Office has committed to a strong response to violent crime in this District. Part of that response has been to increase the number of violent crime prosecutions: in 2019, the Violent Crime Unit of the U.S. Attorney’s Office charged 53% more cases than in the previous year. Another part of the Office’s response is deterrence: the primary goal of this public awareness campaign is to put potential offenders and the community on notice and reduce violent crime throughout the District. The campaign will appear in Philadelphia and its surrounding collar counties, and will also reach audiences in Lancaster, Berks, Lehigh and Northampton counties.
The campaign will focus on informing the public of the legal consequences of committing a federal violent crime and thereby discourage potential perpetrators of violence and gun crimes by raising awareness of the potential for federal jail time. The slogan “Fed Crime Gets Fed Time,” accompanied by #FedCrimeGetsFedTime, will be deployed across social media platforms, traditional media, and public service announcements on television and radio in communities throughout the District’s nine counties.
“When criminals think there are no consequences for their actions, serious violent crime rises. That is the root of the crisis we are facing in Philadelphia today,” said U.S. Attorney McSwain. “Anyone who commits a federal violent crime in the Eastern District of Pennsylvania will feel the full force of the law. My message to would-be criminals is simple: put the guns down and think about your future.”
For more information and to see the campaign materials, visit the “Fed Crime Gets Fed Time” website.
Universal Health Services, Inc. to Pay $117 Million to Settle False Claims Act AllegationsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain today announced that Universal Health Services, Inc. and UHS of Delaware, Inc. (together, UHS) have agreed to pay $117 million to resolve alleged violations of the False Claims Act for billing for medically unnecessary inpatient behavioral health services and failing to provide adequate and appropriate services. UHS, which is headquartered in King of Prussia, Pennsylvania, owns and provides management and administrative services to nearly 200 acute care inpatient psychiatric hospitals and residential psychiatric and behavioral treatment facilities nationwide.
The resolution of these claims in the Eastern District of Pennsylvania is part of a comprehensive settlement between the Department of Justice and UHS, which arose out of UHS’s billing practices in multiple healthcare institutions across the United States. UHS will pay the United States and participating states a total of $117 million to resolve allegations that its hospitals and facilities knowingly submitted false claims for payment to the Medicare, Medicaid, TRICARE, Department of Veterans Affairs, and Federal Employee Health Benefit programs for inpatient behavioral health services that were not reasonable or medically necessary and/or failed to provide adequate and appropriate services for adults and children admitted to UHS facilities across the country.
The government alleged that between January 2006 and December 2018, UHS facilities admitted as patients federal healthcare beneficiaries who were not eligible for inpatient or residential treatment because their conditions did not require that level of care, while also failing to properly discharge appropriately admitted beneficiaries when they no longer required inpatient care. The government further alleged that UHS facilities billed for services not rendered, billed for improper and excessive lengths of stay, failed to provide adequate staffing, training, and/or supervision of staff, and improperly used physical and chemical restraints and seclusion. In addition, UHS facilities allegedly failed to develop and/or update individual assessments and treatment plans for patients, failed to provide adequate discharge planning, and failed to provide required individual and group therapy services in accordance with federal and state regulations.
Of the $117 million to be paid by UHS to resolve these claims, the federal government will receive a total of $88,124,761.27, and a total of $28,875,238.73 will be returned to individual states, which jointly fund state Medicaid programs.
“Quality mental health treatment is critical for the patients who place their trust in the hands of service providers,” said U.S. Attorney McSwain. “The allegations involved in this matter -- inappropriate billing and inadequate care – have no place in our health care system. Behavioral health service entities must have strong mechanisms in place, including appropriate supervision and oversight, to avoid fraud and abuse in order to ensure they provide the level of care that their patients deserve.”
The government’s investigation included 19 lawsuits filed under the whistleblower provision of the False Claims Act, which permits private citizens to file suit on behalf of the United States for false claims and share in a portion of the government’s recovery. The global settlement with UHS involved 18 cases that are currently pending in the Eastern District of Pennsylvania, Western District of Michigan, the Eastern District of Michigan, and Northern District of Georgia. As part of the resolution with UHS, the whistleblowers will receive $15,862,457.03, from the federal share of the settlement.
“We sincerely thank the relators in these cases. Together with their lawyers, these citizens provided essential assistance to the government throughout this case. Without the willingness of relators to shed light on allegations of fraud, preserving government program funds would be far more challenging. Their efforts played a vital role in the resolution of these cases,” said U.S. Attorney McSwain.
“The Department of Justice is committed to protecting patients and taxpayers by ensuring that the treatment provided to federal healthcare beneficiaries is reasonable, necessary, and free from illegal inducements,” said Acting Assistant Attorney General Ethan P. Davis for the Department of Justice’s Civil Division. “The Department will continue to be especially vigilant when vulnerable patient populations are involved, like those served by behavioral healthcare providers.”
In connection with the settlements, UHS has entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services, Office of Inspector General (OIG), which will remain in effect for five years. UHS must retain an independent monitor, selected by the OIG, which will assess UHS’s Behavioral Health Division’s patient care protections and report to the OIG. In addition, an independent review organization will perform annual reviews of UHS inpatient behavioral health claims to federal health care programs.
“Today’s settlement resolves allegations of failing to provide adequate and appropriate mental health services to beneficiaries of multiple federal health care programs, to include Medicare and Medicaid,” said Maureen R. Dixon, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services in Philadelphia. “We will continue to work with the U.S. Attorney’s Office to investigate violations of the False Claims Act and ensure the integrity of our federal health care programs.”
The settlement with UHS was the result of a collaborative effort among numerous federal and state agencies. The Commercial Litigation Branch of the Justice Department’s Civil Division and the U.S. Attorney’s Office for the Eastern District of Pennsylvania handled the cases, with substantial assistance from the U.S. Attorney’s Offices for the Middle District of Florida, the Northern District of Georgia, the Eastern District of Michigan, the Western District of Michigan, the Middle District of Georgia, the Northern District of Illinois, the Middle District of North Carolina, the Western District of North Carolina, the District of Oregon, the Middle District of Pennsylvania, the Southern District of Texas, the District of Utah, the Eastern District of Virginia, the Western District of Virginia, the Northern District of Oklahoma, and the District of Wyoming, as well as the National Association of Medicaid Fraud Control Units (NAMFCU). The nationwide investigation was a coordinated effort among the DOJ Civil Frauds Division, NAMFCU, and the Office of Inspector General for the Department of Health and Human Services; the Department of Defense Criminal Investigative Service; the Department of Veterans Affairs, Office of Inspector General; the Office of Personnel Management, Office of Inspector General; and the Federal Bureau of Investigation.
The civil settlement with UHS involved the cases that are captioned: United States ex rel. Gardner v. Universal Health Services, Inc., 2:17-cv-03332-AB (E.D. Pa.); United States ex rel. Naylor v. Universal Health Services, Inc., 2:14-cv-06198-AB (E.D. Pa.); United States ex rel. Jain v. Universal Health Services, Inc., et al., No. 2:13-cv-06499-AB (E.D. Pa.); United States ex rel. Chisholm v. Universal Health Services, Inc., et al., 2:17-cv-01892-AB (E.D. Pa.); United States ex rel. Doe, et al. v. Universal Health Services, Inc., et al., No. 2:14-cv-00921 (E.D. Pa.); United States ex rel. Pate v. Behavioral Hospital of Bellaire, et al., 2:15-cv-00554-AB (E.D. Pa.); United States ex rel. Brinson, et al. v. Universal Health Services, Inc., et al., 2:14-cv-07275-AB (E.D. Pa.); United States ex rel. Mitchell v. Turning Point Care Center, Inc., et al., 2:15-cv-00259-AB (E.D. Pa.); United States ex rel. Peterson v. Universal Health Services, Inc., et al., 2:17-cv-01897-AB (E.D. Pa.); United States ex rel. Conaway, et al. v. Universal Health Services, Inc., et al., 2:17-cv-02233-AB (E.D. Pa.); United States ex rel. Eborall v. Universal Health Services, Inc., et al., 2:17-cv-03249-AB (E.D. Pa.); United States ex rel. Sachs, et al. v. Universal Health Services, Inc., et al., 2:17-cv-03604-AB (E.D. Pa.); United States ex rel. Klotz v. Universal Health Services, Inc., et al., 2:17-cv-05163-AB (E.D. Pa.); United States ex rel. Brockman, et al. v. Universal Health Services, Inc., et al., 2:17-cv-05350-AB (E.D. Pa.); United States ex rel. Glass v. Hughes Center, LLC., et al., 2:18-04018-AB (E.D. Pa.); United States ex rel. Parent-Leonard v. Forest View Psychiatric Hospital, et al., No. 1:18-cv-1426 (W.D. Mich.); United States ex rel. Russell, et al. v. Universal Healthcare Services, Inc., et al., No. 1:19-CV-0764 (N.D. Ga.); United States ex rel. McLauchlin, et al. v. Havenwyck Holdings, Inc., et al., No. 2:19-cv-10832 (E.D. Mich).
The claims resolved by these settlements are allegations only, and there has been no determination of liability.
Assistant United States Attorney Charlene Keller Fullmer, Deputy Chief for the Civil Division, Assistant United States Attorney Stacey L.B. Smith, and Auditor Dawn Wiggins handled the matters filed in the Eastern District of Pennsylvania, working jointly with the Civil Frauds Division of the Department of Justice.
Physician Assistant to Pay $25,000 to Resolve Allegations of Receiving Kickbacks from Pharmaceutical CompanyRead the Press Release
PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that physician assistant Sarah Malstrom will pay $25,000 to resolve allegations that she received kickbacks from the company formerly named Aqua Pharmaceuticals, in order to incentivize Malstrom to prescribe Aqua’s dermatology drugs.
The settlement resolves allegations that Malstrom knowingly solicited and received kickbacks from Aqua Pharmaceuticals. Malstrom allegedly received different forms of kickbacks from Aqua, through its sales representatives and executives, such as improper in-office and out-of-office meals and food items, gift cards, and gifts, and also entered into speaking engagements, advisory boards, and consulting services in exchange for compensation intended in part to induce Malstrom to prescribe Aqua drugs. This settlement follows the resolution with the pharmaceutical company, which called for a $3.5 million payment to resolve the kickback allegations.
“Our Office is committed to ensuring the integrity of the healthcare system by investigating and challenging improper arrangements between pharmaceutical companies and healthcare providers, especially when they distort prescribing decisions made by healthcare providers,” said First Assistant U.S. Attorney Williams. “That commitment to accountability extends not just to the pharmaceutical companies, but also to the individual providers. This resolution marks another important step in that commitment and our Office’s ongoing investigation.”
“We consider kickbacks offered to healthcare providers to be an area of serious concern,” said Maureen R. Dixon, Special Agent in Charge of the Office of Inspector General, U.S. Department of Health and Human Services in Philadelphia. “We will continue to work with the U.S. Attorney’s Office to hold companies and providers accountable for illegal kickback conduct and to root out fraud, waste and abuse in our federal health care programs.”
"I commend the Department of Justice and the U.S. Attorney’s Office for continuing to be vigilant in holding health care providers accountable to ensure taxpayer dollars are appropriately utilized,” said Lt. Gen. Ron Place, director of the Defense Health Agency. “The efforts of the Department of Justice strengthen the protection of health care benefits our service members, veterans and their families receive. The Defense Health Agency continues its commitment to work closely with the Justice Department, and other state and federal agencies to investigate all those who participate in fraudulent practices.”
This investigation was conducted with the Office of the Inspector General of the Department of Health and Human Services and the Defense Health Agency. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Dawn Wiggins handled the investigation and settlement.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Richboro Man Sentenced to Fifteen Years for Manufacturing Child Pornography and Enticement of a MinorRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Michael Shore, 35, of Richboro, Pennsylvania, was sentenced to 180 months in prison, lifetime supervised release, a prohibition on contact with any of his victims or their families, and a lifetime restriction on his Internet usage by United States District Court Judge Timothy R. Savage for manufacturing child pornography involving multiple victims, as well as enticing a minor to engage in illicit sexual conduct. His sentence also requires him to register as a sex offender under Megan’s Law for the rest of his life.
In October 2017, Shore was convicted of manufacturing child pornography and exploitation of four minor victims on multiple occasions over a span of almost two years. At least two of his victims he met at Comic-Con, which is an annual entertainment and comic book convention held in San Diego, where he worked with his family. His victims included a 12-year old girl in the 6th grade, two teenaged girls, and one child who is on the autism spectrum. Shore corresponded with these girls online at all times of the day and night, and coerced them to self-produce sexually explicit images and send them to him. For one child, he then distributed her images out over the Internet – showing her face and naked body - in an effort to engage in sexual activity with yet another person online. After communicating at length with one of his victims, Shore traveled from Pennsylvania to Florida and engaged in sexual intercourse with her on multiple occasions.
The Federal Bureau of Investigation was called in by local authorities after the 12-year old victim’s mother alerted police. A search warrant was executed on Shore’s home, and federal agents recovered more than 2,500 images of child pornography that Shore had downloaded and saved from the Internet over an eight year period. Shore confessed to the FBI on the day they searched his home, and later pleaded guilty to a 10-count federal indictment charging him with manufacturing, distributing, and possessing child pornography, as well as enticing a minor to engage in illicit sexual conduct.
“Michael Shore is a serial sexual predator who took advantage of some of the most vulnerable among us – young children, one of whom has autism. This criminal behavior is reprehensible,” said U.S. Attorney McSwain. “Further, at least one of these children will continue to be victimized for years to come because Shore shared explicit images of her on the Internet with others. Fortunately, he will now sit behind bars where he belongs for many years, unable to victimize anyone else in the meantime.”
“Child exploitation is among the most heinous crimes we investigate,” said Michael J. Driscoll, special agent in charge of the Philadelphia Division. “Shore robbed these young girls of their innocence and childhood. Although today’s sentence cannot repair the damage Shore caused, it sends the message to other predators that the FBI remains committed to hunting them down and holding them accountable.”
This case is part of Project Safe Childhood (PSC), a program bringing together all levels of law enforcement and the communities they serve to reduce the sexual exploitation and abuse of children. The case was investigated by the Federal Bureau of Investigation and the Saint Mary’s County Sheriff’s Office in Maryland. It is being prosecuted by Assistant United States Attorney Michelle Rotella.
Independence Day Message from U.S. Attorney William M. McSwainRead the Press Release
To the Residents of the Eastern District of Pennsylvania:
I wanted to wish you and your families a wonderful holiday weekend, as we celebrate the birth of our nation on July 4th. The last four months have been a time for critical thinking about a lot of things, including our values. Self-examination is a good thing: it helps us, individually and as a nation, to improve. And putting that sort of meaningful, critical thinking into action is only possible in a free and democratic society like ours. It is one of the defining characteristics of America.
Two years ago, I reflected on the meaning of the American experiment at my investiture, and here is what I said:
“I love this country. I love what she stands for. The history of the world is largely a history of tribal warfare, monarchy, grinding poverty and misery. And then . . . there’s America. America is the greatest force for good in the history of the world. It is a country founded on ideas. And not just any ideas, but the right ideas – ideas that have unlocked human potential and enabled human flourishing. Self-government, freedom, liberty, individual rights, freedom of speech, freedom of thought, freedom of religion, free markets, capitalism, economic opportunity, and equality under the law.”
Those words were true then, they are true today, and they will remain true as we embrace the future. We have a lot of important work left to do to make our country better. We cannot be complacent. But this holiday weekend is an appropriate time to focus on what unites us as Americans. God Bless you and your families, and God Bless the United States of America.
Sincerely,
Bill McSwain
Villanova Businessman Sentenced to a Year and a Day in Prison for False Statements, Concealment of Assets in Bankruptcy FilingsRead the Press Release
PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Scott Korn, 57, of Villanova, Pennsylvania, was sentenced to one year and one day in prison, three years of supervised release and a $50,000 fine by United States District Judge Eduardo C. Robreno for false statements and financial fraud.
In August 2019, Korn pleaded guilty to an Indictment charging him with concealment of assets in a bankruptcy proceeding, and swearing a false oath or account. Those charges arose from the following set of facts. In 2009, a lawsuit was filed against the defendant and several of his companies for breach of contract among other issues. In April 2014, the case proceeded to trial in the Philadelphia Court of Common Pleas and the jury returned a verdict against Korn and his companies in the amount of approximately $2.4 million.
Over the course of the next few days following the verdict, Korn purchased a BMW X3, a Porsche 911, a Porsche Cayman, charging all three luxury vehicles to his American Express credit card. Additionally, Korn purchased a cashier’s check for almost $200,000, payable to himself, drawn on his personal bank account. The defendant cashed this check the following day at a check casher, receiving approximately $196,000 in cash and paying a check cashing fee of about $4,000. He then filed for Chapter 11 bankruptcy.
Under the bankruptcy code, debtors must complete financial Schedules, including a schedule listing all of their personal property (assets) , and a Statement of Financial Affairs which discloses all financial data. Debtors must also file a Declaration, under penalty of perjury, that they have read the schedules and summary they are submitting and that all are true and correct to the best of their knowledge. In Korn’s filings, he did not list the recently purchased luxury vehicles among his assets or in his schedule of personal property, but he did include American Express in his schedule of creditors, along with the total debt that he owed American Express – an amount that included the purchase price of the cars – without revealing what was purchased on this credit card. The defendant also did not disclose the recent liquidation of nearly $200,000 in cash from his bank account, instead listing that bank account with an approximate balance of only $9,300. Korn also omitted other assets from his bankruptcy statements including a 21-foot ski boat and two wave runners. At a later proceeding in the bankruptcy, Korn swore an oath under penalty of perjury and testified that he did not own any carsand only had an old motorcycle and a leased Honda.
“Mr. Korn abused the bankruptcy court system in an effort to enrich himself while cheating his creditors,” said First Assistant U.S. Attorney Williams. “He tried to play games to avoid fulfilling his fiduciary obligations, but the dedicated investigators on this case uncovered his lies. Today’s sentence provides justice to those Mr. Korn attempted to swindle.”
“Perjury and concealment of assets in a bankruptcy case are serious crimes,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Scott Korn sought to use the federal courts to defraud his creditors and today’s sentence holds him accountable. It should also serve as a warning to anyone else looking to game the system. Expect to be caught and prosecuted.”
The case was investigated by Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Karen Grigsby.
Leader of North Philadelphia Drug Gang Sentenced to Sixteen Years in PrisonRead the Press Release
PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that George Felts, 33, of Philadelphia, Pennsylvania, was sentenced to sixteen years in prison, to be followed by five years of supervised release, by United States District Court Judge C. Darnell Jones.
In November 2019, the defendant pleaded guilty to multiple counts of controlled substance offenses including conspiracy to distribute and possession with intent to distribute controlled substances. The charges arose from his leadership role in a large drug trafficking organization which shipped hundreds of pounds of narcotics including methamphetamine, cocaine, heroin, and fentanyl from California to Philadelphia via United States mail, from at least early 2016 until November 2017. To obtain the narcotics, Felts and other members of the organization flew from Philadelphia to Los Angeles to purchase the drugs directly from a source in California, concealing large amounts of cash between clothing packed in their carry-on luggage. After purchasing the drugs, members of the organization shipped the narcotics in boxes addressed to businesses in the Feltonville neighborhood of North Philadelphia, and then coordinated the delivery of the drugs to various locations, so they could then be prepared for distribution.
“Felts and other members of this drug organization pumped huge quantities of highly toxic and often deadly drugs into our community,” said First Assistant U.S. Attorney Williams. “Simply put, drug trafficking delivers destruction to our neighborhoods. The sentencing of Mr. Felts cannot undo the damage he caused, but his conviction and lengthy sentence have made our community safer. When it comes to drug trafficking, our Office is determined to investigate and convict these criminals, and put them behind bars."
“Today, a dangerous individual was sentenced to sixteen years in prison for his role in importing large quantities of illegal and dangerous narcotics to the streets of Philadelphia,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division of the United States Postal Inspection Service. “I would like to thank and congratulate the Philadelphia Police Department, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the United States Attorney’s Office, and the Postal Inspectors who worked tirelessly on this case to protect the US mail system from criminal misuse and to ensure Mr. Felts faced justice for the harm he has caused to the Philadelphia community.”
The case was investigated by the United States Postal Inspection Service, with the assistance of the Philadelphia Police Department, the Drug Enforcement Administration, and the Bureau of Alcohol, Tobacco, and Firearms. It is being prosecuted by Assistant United States Attorney Nancy Beam Winter.
United States Settles Disability Discrimination Case Involving Residents and Prospective Residents of a Senior Housing CommunityRead the Press Release
The United States announced yesterday that the U.S. District Court for the Eastern District of Pennsylvania has approved a consent order resolving allegations that three defendants — Heritage Senior Living LLC; Westrum Hanover LP; and GAHC3 Bethlehem PA ILF LLC — violated the Fair Housing Act by discriminating against residents and prospective residents with disabilities at Traditions of Hanover (Traditions), a senior housing apartment complex in Bethlehem, Pennsylvania.
The lawsuit, which the United States filed on May 13, 2020, alleges that from at least 2005 to the present, defendants created and implemented a series of discriminatory tenant occupancy and eligibility policies and practices that discriminate against persons with disabilities, including requiring residents to sign a lease that imposes conditions such as requiring an initial physical assessment as a requirement of tenancy and potential eviction if a resident develops certain health conditions. In addition, Traditions maintained policies that required residents who use wheelchairs to transfer from their wheelchairs into a dining room chair and required residents who used motorized and non-motorized wheelchairs to pay a non-refundable deposit. In addition, the complaint alleges that the defendants provide transportation as an amenity and that until 2013, that transportation was inaccessible to people who used wheelchairs, in violation of the Fair Housing Act.
Under the consent order, defendants will pay a minimum of $250,000 and a maximum of $325,000 into a settlement fund to compensate residents and prospective residents who were harmed by these policies. Defendants will also pay a $55,000 civil penalty to the United States. In addition, defendants will appoint a Fair Housing Act compliance officer at Traditions and other senior living facilities, and will implement new resident policies, including a new reasonable accommodation policy and a new motorized wheelchair policy.
“The Fair Housing Act protects the right of individuals with disabilities to enjoy a home to the same extent as everyone else. Common decency, our shared humanity, our nation’s commitment to justice, and our inalienable right to pursue happiness demands no less, and so does the law. Discriminating against people with disabilities is wrong and illegal, and the Justice Department will vigorously continue to enforce the Fair Housing Act to combat this unlawful conduct and obtain relief for its victims,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “This consent order will ensure that all prospective and current residents at Traditions and other senior living facilities are treated equally and that victims of past discrimination receive compensation for the harms they have suffered.”
“Seniors should not have to worry about losing their lease simply because they become disabled,” said U.S. Attorney McSwain for the Eastern District of Pennsylvania. “The Fair Housing Act protects them, and everyone, from discrimination in housing, and my office will continue to ensure that apartment buildings follow the law.”
Individuals who are entitled to share in the settlement fund will be identified through a process established in the consent order. Persons who believe that they or their family members were subjected to unlawful discrimination at Traditions should contact the Justice Department toll-free at 1-800-896-7743 mailbox #92 or e-mail the Justice Department at [email protected].
The federal Fair Housing Act prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status. More information about the Civil Rights Division and the laws it enforces is available at www.justice.gov/crt. Individuals who believe that they may have been victims of housing discrimination can call the Justice Department at 1-800-896-7743, e-mail the Justice Department at [email protected], or contact the Department of Housing and Urban Development at 1-800-669-9777 or through its website at http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp.
United States Resolves Allegations of Disability Discrimination at Bethlehem Senior Housing ComplexRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that the United States has reached a settlement agreement to resolve allegations of disability discrimination filed in a civil lawsuit against Heritage Senior Living LLC, its owner, and former owner. The complaint alleges that Traditions of Hanover, an apartment complex for seniors located in Bethlehem, Pennsylvania, discriminated against residents and prospective residents based on disability in violation of the federal Fair Housing Act, which prohibits discrimination in housing based on race, color, religion, national origin, sex, disability and familial status.
According to the complaint, since at least 2013, Traditions of Hanover required residents to be able to “live independently” as a condition of their lease. In doing so, the apartment complex allegedly decided who could live independently, rather than allowing residents and their families to decide for themselves. Traditions of Hanover allegedly reserved its right to assess residents’ physical health, and to terminate leases based on health condition. The apartment complex also allegedly screened prospective residents to determine if they were appropriate to live in the building based on their health condition.
In addition, Traditions of Hanover allegedly charged residents a fee to use motorized wheelchairs, prohibited residents from using wheelchairs in the common dining area, and, before 2013, offered transportation services that were not accessible to wheelchair users.
The United States and defendants have reached a settlement to resolve the case through a consent order. Under the order, defendants must establish a tiered settlement fund of up to $325,000 to compensate persons harmed by the policies and practices, as well as pay a penalty of $55,000. The United States and defendants adjusted the deadlines in the consent order to accommodate concerns about the COVID-19 pandemic.
Besides the monetary payments, the consent order requires defendants to modify their policies, appoint a compliance officer, train employees about the Fair Housing Act, and provide periodic compliance reports to the United States. These requirements apply to 16 different facilities managed by Heritage Senior Living, including one in Bucks County (The Birches at Newtown); four in Berks County (Keystone Villa at Douglassville, The Manor at Market Square in Reading, Chestnut Knoll in Boyertown, and Keystone Villa at Fleetwood); and one in Montgomery County (The Birches at Harleysville). The consent order prohibits defendants from raising rent or fees to pay for any of these obligations, or to pay for the settlement fund.
“Seniors should not have to worry about losing their lease simply because they become disabled,” said U.S. Attorney McSwain. “The Fair Housing Act protects them, and everyone, from discrimination in housing, and my Office will continue to ensure that apartment buildings follow the law.”
“Discriminating against people with disabilities is wrong and illegal, and the Justice Department will vigorously enforce the Fair Housing Act to combat this unlawful conduct and obtain relief for its victims,” said Assistant Attorney General Eric Dreiband of the Civil Rights Division. “This consent order will ensure that all prospective and current residents at Traditions and other senior living facilities are treated equally and that victims of past discrimination receive compensation for the harms they have suffered.”
Individuals who are entitled to share in the settlement fund will be identified through a process established in the consent order. Persons who believe they were subjected to unlawful discrimination at Traditions of Hanover should contact the Justice Department toll-free at 1-800-896-7743 mailbox #92 or e-mail the Justice Department at [email protected].
The case is docketed as United States v. Heritage Senior Living, LLC, et al., Civil Action No. 20-cv-2272 (E.D. Pa.). There has been no determination of civil liability. The settled civil claims are allegations only.
Assistant United States Attorney Michael S. Macko handled the case in the Eastern District of Pennsylvania, working jointly with the Civil Rights Division of the Department of Justice.