Eastern District of Pennsylvania

PHILADELPHIA – Last Friday, Philadelphia Police Corporal and SWAT team member, James O’Connor, a proud 23-year veteran of the Department from a family of police officers, was gunned down in the City’s Frankford section while trying to arrest Hassan Elliott, who was wanted for murder.  Elliott was on the street for one reason:  because of District Attorney Krasner’s pro-violent defendant policies.  Those policies – which include permissive bail conditions for violent offenders, failing to pursue serious probation and parole violations by violent criminals, offering lenient plea deals for violent offenses, and outright withdrawing cases against violent felons – put dangerous criminals like Elliott on the street.

All Philadelphians have been living with the negative, and often tragic, consequences of these policies for the 2+ years that the City has had to endure the Krasner regime.  But now those consequences could not be clearer.  Corporal O’Connor’s widow, his children, his brothers and sisters in law enforcement, and the entire City deserve to know why he died.

Here are the facts:

Hassan Elliott is a 21 year-old man from the Frankford section of Northeast Philadelphia.  He is known by law enforcement because of his longtime involvement with a violent gang called “1700” that blights the area of 1700 Brill Street and 1700 Scattergood Street.  This gang is alleged to be responsible for many shootings in the area and is brazen about their access to firearms.  For a taste of what this gang is all about, visit YouTube and look at the video entitled “Frankford Purge,” which depicts Elliott at the 1:29 mark, partially masked, brandishing a firearm.[1]

On June 8, 2017, Elliott was arrested on firearms charges, stemming from an incident in which he threatened a neighborhood resident with a gun.  On January 24, 2018, he entered into a negotiated plea:  Krasner’s office offered, and Elliott accepted, a below-guidelines sentence of 9 to 23 months’ incarceration, followed by 3 years of reporting probation.  Elliott was paroled on January 25, 2018, the day after his plea; he spent a total of 7 months and 16 days incarcerated for this offense.

Following his release, the Philadelphia Probation and Parole Department categorized Elliott as a “high risk” offender, and placed him under the supervision of the Anti-Violence High Risk Unit.  Protocol in this unit requires weekly visits and regular urinalyses.  Elliott violated his parole almost immediately by failing numerous drug tests, and also by repeatedly failing to report to his parole officer.  Eventually, the court scheduled a violation hearing for February 6, 2019.

Prior to that hearing, however, on January 29, 2019, Elliott was arrested and charged with possession of cocaine.  After a foot pursuit by police, 15 packets of cocaine were found in Elliott’s pockets.  This arrest was in direct violation of Elliott’s parole, but the District Attorney’s Office did not pursue a detainer against him or make any attempt to have Elliott taken into custody for this serious violation.  The office allowed Elliott to be released on his own recognizance – no bail was set.  This is stunning, considering that Elliott was on parole for his 2018 firearms conviction.  Here, there was an arrest and multiple parole violations and the Krasner regime did nothing.   

In February 2019, soon after his cocaine arrest, the Philadelphia Police Department identified Elliott as an “Operation Pinpoint” target offender.  Operation Pinpoint is a data-driven crime fighting strategy that targets the worst violent offenders in the City.  Even with Elliott now identified as one of the City’s worst violent offenders, Krasner’s office still did nothing in response to Elliott’s violation of his parole through his cocaine arrest.

On March 1, 2019, Elliott attended a pre-trial status listing for his cocaine case, where he received and signed a subpoena for the trial, which was scheduled for March 27, 2019.  It turns out that March 1 was a busy day for Elliott:  after leaving his pre-trial status listing, he allegedly murdered Tyree Tyrone on the 5300 block of Duffield Street.  Elliott and another man, both armed with handguns, approached Tyrone, who was sitting in his car, and allegedly opened fire at close range.  Video showed Elliott fleeing the scene and his fingerprints were found on one of the alleged murder weapons.

On March 26, 2019, the District Attorney’s Office procured a warrant for Elliott’s arrest for the Tyrone murder.  The next day, March 27, Elliott was scheduled to go on trial in the cocaine case.

On that day, March 27, which was the first trial listing in the case, Elliott failed to appear.  Despite his absence, and the outstanding murder warrant, the District Attorney’s Office withdrew the cocaine case against Elliott, citing prosecutorial discretion.  Elliott then remained at-large until the murder of Corporal O’Connor. 

These facts paint a damning picture of a prosecutor’s office that prioritizes “decarceration” of violent offenders over public safety. 

First, it is inexcusable that the District Attorney’s Office made no attempt to take Elliott into custody after his cocaine arrest.  Had he been detained after his January 29, 2019 arrest – which was a direct violation of his parole on the earlier gun conviction – he certainly would have been in prison on March 1, 2019, when he allegedly murdered Tyree Tyrone.  And if that were the case, Corporal O’Connor would not have been trying to arrest Elliott for that murder last Friday.  Instead, Corporal O’Connor would be alive today, as would Mr. Tyrone.

Krasner’s office had many opportunities and avenues to detain Elliott after his drug arrest, but failed to utilize any of them.  The District Attorney’s Office can always contact probation and ask that a detainer be lodged based on a new arrest, or the District Attorney’s Office could have petitioned Elliott’s supervising judge and requested that a detainer be issued.  The office did neither.  And even if all that had failed, the office could have requested high bail to ensure that Elliott was held pending trial on his new drug case.  Again, the office did nothing. 

The District Attorney’s Office had an additional opportunity to ask that Elliott be held on February 6, 2019.  On that date, Elliott was listed for a violation of parole hearing based on the new cocaine arrest, as well as Elliott’s issues with repeated drug use and his repeated failure to report to his parole officer.  But the docket states that the “detainer [was] to remain lifted” – meaning that no detainer had been or would be lodged – and therefore the violation hearing was continued pending the resolution of the cocaine case.  Yet another opportunity wasted. 

Second, it is inexcusable that Krasner’s office dropped the cocaine case against Elliott.  No responsible prosecutor’s office would ever voluntarily withdraw a case against a violent defendant who doesn’t show up for his first trial date.  And here, the defendant had been identified by the Philadelphia Police Department as one of the worst violent offenders in the City.  He was a gang-banger wanted for murder. 

Moreover, the drug case against Elliott was strong:  he had been caught red-handed with multiple packets of cocaine in his pockets.  A conviction in the drug case would have surely resulted in prison time, as it would have been a direct violation of his parole for the earlier firearms conviction.

Just as importantly, the drug case should not have been dropped because it could have – and should have – been used as a means to get Elliott into custody and off the street on the murder warrant.  If Elliott had shown up for court, he would have been arrested for murder.  He didn’t know that there was an existing murder warrant, so there was certainly a chance that he would eventually show up for the drug trial if the case had not been withdrawn (he had, in fact, already shown up for it once, on March 1).  But that possibility was eliminated when Krasner’s office eagerly withdrew the case.  Instead, Corporal O’Connor and his fellow SWAT officers were left to try to hunt Elliott down, with tragic consequences.

How could any rational human being possibly decide to withdraw the cocaine case against Elliott in these circumstances?  Krasner might try to say that his office had to drop the case because one of the police officers involved in it could not testify (due to a potential problem with this officer’s credibility in a separate, unrelated case that the U.S. Attorney’s Office investigated and declined to prosecute).  If Krasner tries to deflect blame and says this, it is a lie. 

That issue had nothing to do with Krasner’s office dropping Elliott’s drug case, which is why the assigned Assistant District Attorney said nothing about it in court on March 27 when withdrawing the case.  Moreover, even if Krasner had been aware of the possible credibility problem when his office dropped the drug case, that issue was irrelevant because the primary officer who had recovered the drugs in Elliott’s pockets had no credibility problems and easily could have testified to all aspects of the case.  The other officer was not needed at trial.

The bottom line is that there is no excuse for dropping the cocaine case against Elliott.  The case was dropped for the same reason that Krasner’s office ignored the many opportunities to purse the serious parole violation in the first place – because this District Attorney’s priorities always lie with violent offenders, consequences be damned.

This destructive ideology has earned Krasner the enmity of the Philadelphia Police Department.  The Department’s disdain was on full display at Temple Hospital on Friday morning, where officers formed a line to block Krasner’s entrance into the hospital when he tried to visit Corporal O’Connor and his family, who wanted nothing to do with him.

Krasner has much to answer for at this moment in our City’s history.  He should be asked tough questions and not allowed to fall back on his lazy, irrelevant and all-purpose reply to any legitimate criticism that I level against his policies – that the U.S. Attorney is a Trump appointee.  This is not about the President.  And it is not about me.  It is about two entirely preventable tragedies that have claimed the life of a Philadelphia Police Officer and another young life.

Krasner has infected the District Attorney’s Office with a sickness that has deadly consequences for the entire City.  Enough is enough.  This madness must stop.

[1] https://www.youtube.com/watch?v=qFgZj01XsvU

PHILADELPHIA – United States Attorney William M. McSwain announced that Stephen Stroh, 56, of Morton, PA, and Vaughan Reiser, 21, of Landenberg, PA, have been sentenced to prison by United States District Judge C. Darnell Jones II for conspiracy to import numerous controlled substances from China using the dark web, conspiracy to distribute those substances, and related drug offenses. Stroh was sentenced to 17-and-a-half years in prison, while Reiser was sentenced to six-and-a-half years in prison.

From Spring 2017 until December 2017, the defendants conspired to import controlled substances, including furanyl fentanyl, methoxyacetyl fentanyl, U-47700, and other synthetic narcotics, from China into the Eastern District of Pennsylvania. Upon receiving these deadly substances through the mail, the defendants conducted research on various dark net websites to learn how to combine the substances to manufacture counterfeit pills. Some of the pills they made were counterfeit oxycodone pills which contained fentanyl and counterfeit Adderall pills which contained methamphetamine.

The defendants also used the dark web to order machinery and related parts from China in order to press the substances into pills. The defendants then distributed these counterfeit pills to customers via the Internet and through the mail. The pills were also distributed to customers who would test and provide feedback as to the quality of the counterfeit pills. The defendants were paid in bitcoin, and used cellular telephones, computers, and self-destructing messaging applications to communicate with one another.

“Stroh and Reiser are dangerous drug traffickers, pure and simple – it makes no difference that they were using the Internet as opposed to working street corners. If anything, it makes their criminal conduct even worse, given the reach of the Internet,” said U.S. Attorney McSwain. “The drugs these defendants were importing and distributing are extremely deadly, compounded by the fact that they were intentionally mislabeling them. A critical aspect of my Office’s efforts to combat the opioid epidemic is stopping and holding accountable international drug traffickers like these defendants, who richly deserve their significant prison sentences.”

“As Philadelphia continues to deal with a staggering opioid epidemic, these sentencings should serve as a reminder that trafficking in this poison will result in severe consequences,” said William S. Walker, Acting Special Agent in Charge of Homeland Security Investigations Philadelphia. “Additionally, HSI Philadelphia’s Cyber Crimes Investigations Task Force and our partners remain vigilant in protecting our communities from all cyber-enabled drug trafficking.”

The case was investigated by Homeland Security Investigations, and it is being prosecuted by Senior Advisor to the U.S. Attorney Clare Putnam Pozos and Assistant United States Attorney MaryTeresa Soltis.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Charles F. Kohlerman, IV, 50, of Media, PA, was sentenced to three years’ imprisonment and two years of supervised release by United States District Court Judge R. Barclay Surrick for one count of conspiracy to commit wire fraud and 14 counts of distributing and dispensing oxycodone outside the course of professional practice and not for a legitimate medical purpose. The Court further ordered the defendant to pay a special assessment of $1,500 and a forfeiture of $1.7 million. Kohlerman pleaded guilty to these criminal charges in September 2019.

The charges stem from Kohlerman’s role as a licensed pharmacist and the owner of Kohlerman Pharmacy. Kohlerman’s patients sought to fill prescriptions of brand-name Lipitor® and its generic equivalent, atorvastatin calcium. Regardless of their need, and often without their knowledge, Kohlerman enrolled the vast majority of these patients in Manufacturer One’s Lipitor Savings Card coupon program (the “Program”). Under the Program, Kohlerman billed a patient’s private insurance and then submitted a secondary claim to Manufacturer One for payment to his pharmacy in a scheme to defraud the Program.

In order to carry out his scheme, Kohlerman purchased a negligible quantity of brand-name Lipitor® for his pharmacy and significant quantities of its much cheaper generic equivalent. Kohlerman dispensed the generic equivalent in bottles with brand-name Lipitor® on the labels and then submitted claims to Manufacturer One for reimbursement for the brand-name drug that he neither purchased nor dispensed. To maximize his fraudulent returns, Kohlerman created fake prescriptions for Lipitor®—that neither he nor his pharmacy dispensed—and submitted claims for those fake prescriptions to the Program. Kohlerman also changed physician-issued, one-month supply prescriptions of Lipitor® to a three-month supply prescription to triple the fraudulent refund he would receive from Manufacturer One. Additionally, Kohlerman altered legitimate prescriptions that permitted generic substitution to require distribution of the brand name drug, all while he filled actual brand-only prescriptions with the generic equivalent. Kohlerman submitted false and fraudulent claims to Manufacturer One of $4,562,834.97 and was paid $1,696,566.22.

As part of his scheme, Kohlerman also submitted approximately 126 false and fraudulent Lipitor® claims to the Medicare program, approximately two false and fraudulent Lipitor® claims to the Medicaid program, and approximately 18 false and fraudulent Lipitor® claims to federal employee health benefits programs paid for by the Office of Personnel Management (OPM). Kohlerman was reimbursed $106,986.70 from Medicare, $2,686.60 from Medicaid, and $5,600.31 from OPM.

In addition to the wire fraud scheme, Kohlerman also ignored suspicious activity on 14 separate occasions and, in each instance, distributed or caused to be distributed 120 oxycodone 30 mg tablets to a purported pharmacy customer. The customer, however, was not the individual for whom the oxycodone was prescribed. Additional warning signs that Kohlerman ignored included: (1) the quantity of narcotics exceeded Center for Disease Control recommendations for standard medical usage; (2) both the customer and the purported patient lived over 45 minutes away from the pharmacy; (3) the purported patient’s prescribing physician practiced a similar distance away; (4) the purported patient never picked up his/her prescriptions in person and did not visit the pharmacy in person; and (5) the customer filled prescriptions on behalf of the purported patient before they were eligible for refills.

Finally, as part of a civil resolution, Kohlerman and Kohlerman Pharmacy have agreed to pay the United States $300,000.00 to resolve allegations under the False Claims Act, 31 U.S.C. §§ 3729 et seq., that both Kohlerman and the pharmacy submitted or caused the submission of approximately 146 false claims for Lipitor® when they had, in fact, substituted the generic equivalent for those claims. The civil allegations against Kohlerman Pharmacy are allegations only and there has been no finding of liability as to the pharmacy.

“Kohlerman put his own greed above his patients’ well-being,” said U.S. Attorney McSwain. “By changing patients’ legitimately prescribed medications, unbeknownst to them, Kohlerman pumped up the amount of money he could steal. By doing so, he ripped off the American taxpayer and private industry alike. Kohlerman’s self-interest is also reflected in his wanton distribution of illegal painkillers. This criminal sentence and civil resolution demonstrate the coordination between My Office’s Criminal and Civil Divisions and our Health Care Fraud Strike Force. We will use every weapon in our arsenal—criminal and civil—to prosecute medical professionals who put profits over the well-being of patients.”

Thomas W. South, Deputy Assistant Inspector General for Investigations, OPM OIG, said: “In addition to unethically changing patients’ prescriptions without their knowledge or consent, Mr. Kohlerman’s greed also endangered patients’ health through the careless prescription of opioids. The opioid crisis is fueled by corrupt providers that dispense and distribute narcotics outside the course of professional practice and for no legitimate medical purpose. OPM OIG will not tolerate those who put profits above the well-being of patients.”

“As a pharmacist, Kohlerman has a corresponding responsibility, similar to that of a doctor, to insure that prescriptions for controlled substances are filled for a legitimate medical purpose and within the course of professional practice,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s Philadelphia Field Division. “Kohlerman repeatedly ignored that responsibility by dispensing multiple prescriptions for powerful prescription painkillers such as oxycodone to people other than the patient named on the prescription, dispensed before they were eligible for refills, and for patients that lived over 45 minutes away from his pharmacy—all of which are indicative of illegal diversion activity.”

“Chuck Kohlerman used pharmacy patrons as pawns in his money-making scheme, soon adding phony prescriptions into the mix,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “All told, his litany of fraudulent claims netted nearly $2 million to which he wasn’t entitled. Add to that his reckless dispensing of addictive opioids, and it’s clear that the guiding principle here was greed. One of these days, medical professionals will get the message that health care fraud is a high priority for the FBI and we’re working every day to hold perpetrators accountable.”

“Kohlerman chose himself over his patients,” said Special Agent in Charge Maureen R. Dixon, Office of the Inspector General for the Department of Health and Human Services (HHS-OIG). “HHS-OIG and our law enforcement partners will continue to investigate and prosecute individuals who chose to enrich themselves at the expense of patients.”

The case was investigated by the Office of Personnel Management, Drug Enforcement Administration, Federal Bureau of Investigation, Health and Human Services Office of Inspector General, and the U.S. Marshals, and is being prosecuted by Assistant United States Attorney Paul J. Koob and Trial Attorney Adam G. Yoffie. Deputy Chief for Affirmative Litigation Charlene Keller Fullmer of the Eastern District of Pennsylvania is handling the parallel civil case.

PHILADELPHIA – United States Attorney William M. McSwain announced that Lukeen Gerald, 31, of Philadelphia, PA, was sentenced to 56 years’ imprisonment by United States District Court Judge Petrese B. Tucker for a series of armed robberies in Philadelphia. The Court further ordered the defendant to serve three years’ supervised release and to pay $4,330 in restitution and a special assessment of $1,500.

The defendant committed a staggering seven armed robberies of convenience stores and a bar in Philadelphia over a four-week period in early 2015. During each robbery, Gerald brandished a gun and wore a mask. In one armed robbery of a Dunkin Donuts, he accused the store employee of moving too slowly in handing over the store’s cash and fired his gun in anger.

Gerald was arrested after his seventh robbery when his car was stopped by Philadelphia Police officers. Following his arrest, the police recovered a shotgun, ski mask, and cash from his car. After receiving his Miranda warnings, not only did the defendant admit he committed the robberies, but also he described each robbery in detail and told law enforcement where they could find evidence linking him to his crimes. The defendant has previously been convicted of a felony and therefore was prohibited by law from possessing a firearm. After a five-day trial, he was convicted on all 15 counts of the federal Indictment.

“Gerald and criminals like him selfishly engage in violent acts that cause harm to innocent small business owners, their employees, and our community as a whole,” said U.S. Attorney McSwain. “Showing total disregard for the lives and property of others, Gerald terrorized people who were simply trying to earn an honest living. These law-abiding residents deserve protection, and my Office is working tirelessly to make sure that they have it.”

“Lukeen Gerald is a vicious and violent offender whose armed robbery spree left his victims traumatized,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “In the course of a month, he targeted seven different establishments, and history suggests he’d have kept at it, had he not been stopped by the Philadelphia Police Department. Know that the FBI and PPD are working together every day to make this city safer by putting criminals like Gerald behind bars.”

“The investigation, arrest, and successful prosecution of Lukeen Gerald is further evidence of the merits of a collaborative approach to combating violent crime,” said Danielle Outlaw, Philadelphia Police Department Commissioner. “We are privileged to have worked alongside our law enforcement partners in securing the conviction, and anticipate that the attendant sentencing will have an appreciable effect on the safety of the community we serve.”

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 the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorneys Sarah Damiani and Roberta Benjamin.

PHILADELPHIA – United States Attorney William M. McSwain announced that Angelo Perrucci, Jr., of Bangor, PA, has pleaded guilty to five counts of wire fraud before United States District Court Judge Joseph F. Leeson, Jr. The charges arise out of Perrucci’s scheme to defraud the estate of a client and its heirs by taking funds from the estate for his own personal use.

The defendant is an attorney licensed to practice law in New Jersey and Pennsylvania. In 2015, he was contacted by his former neighbor to provide end-of-life legal services for her ill father. Following the father’s death in early 2016, Perrucci filed a motion in court seeking to be appointed as the administrator of the estate. The court granted the motion, and the defendant opened a bank account in the name of the estate. Within two weeks of opening the estate account, Perrucci withdrew more than $36,000 for his own personal use. He continued this fraud for over three years. Between March 2016 and May 2019, Perrucci fraudulently issued more than 80 checks to himself, stealing more than $300,000 and depleting the estate account.

“Attorneys take an oath to act in accordance with the law – not to use it as a way to manipulate innocent and vulnerable people for personal profit and gain,” said U.S. Attorney McSwain. “Perrucci was entrusted with a sensitive and important task – the care of an estate – and he used that trust to commit fraud and steal from the beneficiaries. This is truly despicable behavior that deserves the full condemnation of the legal community and society as a whole. My Office will continue to target and aggressively prosecute predators like this defendant.”

“The Postal Inspection Service has long investigated those among us who use the mail to commit fraud,” said John Walker, the Assistant Inspector in Charge of the Philadelphia Division of the Postal Inspection Service. “This defendant, a lawyer, used his position of trust and authority in an area of the law many of us don’t fully understand and are not in a position to effectively police to steal money from his clients. Thanks to the hard work of the Inspectors in my office and the attorneys of the United States Attorney’s Office, Mr. Perrucci is being held accountable for his deceitful practices.”

The case was investigated by the United States Postal Inspection Service, and is being prosecuted by Assistant United States Attorney Christopher J. Mannion.

PHILADELPHIA – United States Attorney William M. McSwain announced that Ryan Antrim, 29, of Allentown, Pennsylvania was sentenced to 20 years’ imprisonment and a lifetime of supervised release by United States District Court Judge Edward G. Smith, for the distribution, receipt, and possession of child pornography.

Between July and November 2017, the defendant utilized Kik Messenger (Kik), a free proprietary instant messaging software application primarily for mobile devices, as a way to join a Kik group focused on the sexual abuse of children. As a member of this group, Antrim distributed various images and videos, and also received sexually explicit images of young children under the age of twelve years old. On February 15, 2019, Antrim pled guilty to all charges. 

“Antrim took part in a repugnant online community that glorified the sexual exploitation of children,” said U.S. Attorney McSwain. “Distributing sexually explicit videos and photos of young children is reprehensible behavior that demands swift justice. My Office will continue to aggressively prosecute these types of crimes in order to deter this repulsive behavior and protect children.”

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 United States 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 United States Attorney Sherri A. Stephan.

PHILADELPHIA – United States Attorney William M. McSwain announced that Michael Gordon, 32, of Philadelphia, PA, was sentenced today by United States District Court Judge Paul S. Diamond to serve 20 years’ imprisonment, followed by three years’ supervised release, for conspiracy to traffic in counterfeit goods and conspiracy to commit money laundering. The Court further ordered the defendant to pay over $2.7 million in restitution and to forfeit over $300,000.

From approximately December 2017 until October 2018, Gordon was involved in a sophisticated scheme to obtain counterfeit Xanax on the dark web in order to sell the counterfeit pills for a profit. He took numerous steps to conceal his illegal activity: for example, he coordinated the mailing of packages in covert ways, having them addressed to fictitious recipients and mailed to a variety of locations Gordon himself controlled in an attempt to thwart any investigative efforts. Additionally, he paid for the counterfeit pills using Bitcoin, re-sold the counterfeit pills for a profit, and then laundered the proceeds of his illicit drug business in order to conceal the true nature of the funds obtained from the scheme. Before he was stopped by law enforcement, the defendant illegally obtained hundreds of thousands of these highly addictive pills and re-distributed them. He pleaded guilty to the charges in June 2019.

“Simply put, Gordon placed the well-being of others at risk in order to satisfy his own greed,” said U.S Attorney McSwain. “Xanax can be highly addictive under normal circumstances, but the counterfeit version of Xanax can be even more addictive and potentially deadly. Gordon did not think twice about this danger, as he was focused solely on how to profit from the misery of others. He is now in prison, where he belongs.”

“Abuse of benzodiazepines, such as Xanax, is a critical issue for a greater Philadelphia-area that is already experiencing an opioid abuse epidemic.  Add in the trafficking of counterfeit prescription drugs made of unknown substances from China and, now, we have significantly increased the risk to vulnerable consumers,” said William S. Walker, acting Special Agent in Charge for HSI Philadelphia. “Homeland Security Investigations and our law enforcement partners will continue to work tirelessly to investigate and remove dangerous narcotic traffickers from our communities.”    

This case was investigated by Homeland Security Investigations Philadelphia’s Cyber Crimes Investigations Task Force (C2iTF) – a multi-agency initiative targeting cyber-enabled criminal activity. The Task Force is comprised of investigators and analysts from the Liberty Mid-Atlantic High Drug Trafficking Area Initiative, the U.S. Postal Inspection Service, the Drug Enforcement Administration, the U.S. Postal Service - Office of the Inspector General, the Pennsylvania State Police, the Pennsylvania National Guard, and the U.S. Secret Service. The case is being prosecuted by Assistant United States Attorney Nancy Beam Winter.

PHILADELPHIA – United States Attorney William M. McSwain announced that Harris Roy Rosen, 65, of Sag Harbor, New York, pleaded guilty before United States District Court Judge Wendy Beetlestone to fraud charges stemming from a scheme to steal funds from his clients.

The defendant, an attorney who practiced law in Philadelphia through the business Rosen and Rosen PC, was charged by Information in February 2020 with wire fraud, aggravated identity theft, and tax evasion. From approximately 2013 through 2017, he perpetrated a complex fraud scheme through which he stole settlement and estate funds from his clients to support his lavish lifestyle, including the purchase of homes in both Philadelphia and the Hamptons, NY, and a Mercedes-Benz vehicle. As part of the scheme, Rosen routinely lied to clients about the status of their funds; forged clients’ names on settlement checks to deposit them into his personal bank accounts; forged checks to steal money from a client; and created fake bank statements to lull clients into believing that their settlement or estate funds were in appropriate bank accounts waiting to be disbursed. Ultimately, many clients did not get any of the settlement or estate funds to which they were entitled. Rosen also intentionally failed to file tax returns to avoid reporting his illicit income.

Through his fraud scheme, the defendant defrauded clients of approximately $796,000. Based upon his evasion of federal taxes, he has a criminal tax due and owing to the Internal Revenue Service of approximately $261,000.

“Attorneys work in positions of trust and therefore must be held to the highest standards of ethical conduct,” said U.S. Attorney McSwain. “In this case, Rosen took advantage of his clients and swindled them in order to bankroll his lifestyle. That is reprehensible. My Office will continue to protect the public against fraudsters like Rosen who abuse their positions of trust.”

“Rosen funded his lavish lifestyle with money he stole from his clients,” said Michael Montanez, Acting Special Agent in Charge of IRS-Criminal Investigation. “Rosen utilized various means to conceal his theft from his clients and evade his tax liability. At this time of year, when hard-working Americans are sitting down to prepare their tax returns, it is especially disappointing to see the overt steps some individuals will take to hide their taxable income from the government.”

“Put simply, this is a case about greed and the abuse of trust,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “For years, Harris Rosen lived extravagantly on the money he stole from his clients. While they counted on him to act in their best interests, he considered only his own. The FBI will always work to shut down fraudsters like this, bring justice for their victims, and protect the public.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigative Division, and is being prosecuted by Assistant United States Attorney Lesley S. Bonney.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Marqueal Bonds, 22, of Chicago, IL, pleaded guilty to engaging in a nationwide child exploitation enterprise and conspiracy to advertise child pornography. Bonds entered a guilty plea mid-trial before Senior United States District Judge Harvey Bartle, III.

Using Discord, an electronic communications service that allows users to share files and communicate via text chat messages, Bonds and his co-conspirators participated in two separate collections of chat rooms to discuss and share files containing child pornography. Shortly after federal agents executed a search warrant of Discord’s servers in October 2018, revealing messages about child pornography, the defendant confessed to his participation in this child exploitation enterprise. Subsequent forensic analysis of his digital devices confirmed his confession.

“Bonds was part of a deplorable group of sexual predators who exploited thousands of young girls on Discord, a web-based chatroom application,” said U.S. Attorney McSwain. “Bonds and his co-conspirators employed a familiar ruse to lure their victims:  they trolled the Internet on legitimate sites like Snapchat, Periscope, and Live.me for vulnerable victims, tricked them 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. Bonds’ guilty plea ensures that he will be held accountable for this exploitation, and my Office will continue to aggressively prosecute child predators in all their noxious forms.”

“Marqueal Bonds not only manipulated underage girls into providing him explicit images of themselves, he shared them online, perpetuating the sexual exploitation of these children,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “We’re pleased that Bonds finally recognized how much damning digital evidence the FBI’s investigation turned up and decided, mid-trial, it was in his best interests to change his plea to guilty. The FBI is working aggressively every day to put predators like this behind bars and prevent them from targeting additional victims.”

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 United States 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. This case was prosecuted by Assistant United States Attorney Kevin Jayne and Department of Justice Trial Attorney Kaylynn Foulon, of the Child Exploitation and Obscenity Section.

PHILADELPHIA – United States Attorney William M. McSwain announced that Neil I. Mittin, 64, of Huntingdon Valley, PA was sentenced to five years in prison and ordered to pay $3.4 million in restitution by Senior United States District Court Judge Michael M. Baylson for his scheme to steal numerous personal injury cases and other legal matters from his law firm between 2008 and 2018.

The defendant pleaded guilty to mail fraud in September 2019. He worked for approximately 38 years as an associate for a Philadelphia, Pennsylvania law firm (“the Law Firm”). The Law Firm specialized in representing plaintiffs in personal injury and other types of legal matters. From 2008 through 2018, Mittin engaged in a scheme to steal numerous personal injury and other legal matters from the Law Firm by secretly referring them to outside attorneys.

The Law Firm clients did not ask him to refer their matters to outside attorneys and often did not know or understand what Mittin was doing. The defendant concealed his conduct from the Law Firm by closing the files for those matters and making it appear in the records of the Law Firm that there was no settlement or resolution and that the cases were not viable.

Following the fraudulent referrals, the outside attorneys to whom Mittin referred these matters attempted to resolve them with a settlement or a trial. If the matter was resolved successfully, the attorneys paid Mittin a referral fee, on average, of between 33 and 40 percent of the contingency fees obtained by the attorneys. The attorneys also paid Mittin a reimbursement amount for the costs that the Law Firm incurred before Mittin referred the cases out. The defendant illegally pocketed these referral payments and reimbursement costs and did not disclose to the Law Firm that the matters were resolved in this fashion.

The personal injury cases and other legal matters that the defendant referred to other lawyers generated approximately $10,800,000 in financial recoveries for the Law Firm’s former clients. As a result of this scheme, Mittin defrauded the Law Firm of approximately $4,200,000 in legal fees and costs, including the share of those fees and costs that he obtained from the outside lawyers.

“As officers of the court, attorneys are expected to uphold the law, but Mittin did just the opposite,” said U.S. Attorney McSwain. “He siphoned millions of dollars away from his firm for nearly a decade by stealing clients, covering his tracks, and lining his pockets with bogus referral fees and reimbursements for costs he never incurred. Today, he has been held accountable for his actions, and rightly so.”

“Neil Mittin diverted millions of dollars of business from his longtime employer, a firm where he worked for more than half his life,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “He cheated his colleagues, misled and poached his clients, and pocketed the proceeds in the form of referral fees. He’ll now be held to account for this decade-long, multimillion-dollar fraud.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Deputy United States Attorney Louis D. Lappen.

PHILADELPHIA – United States Attorney William M. McSwain announced that Dennis D. Davis, 34, of Levittown, PA was convicted today at trial of one count of possession of a firearm by a convicted felon and one count of possession with intent to distribute a controlled substance. The trial took place before United States District Judge Mitchell S. Goldberg.

Davis was arrested after a dramatic car chase in July 2017. The defendant refused to pull over for Middletown Township Police, and a pursuit ensued. Davis continued to flee at a high speed and caused a crash at a busy intersection near the border of Middletown and Bristol Townships. He pulled his damaged vehicle into a parking lot and fled on foot. As he fled from police officers, Davis discarded a purse containing a firearm, drug paraphernalia, and crack cocaine. Police officers eventually caught Davis and took him into custody. The officers recovered the purse and its contents and also found over $1,000 in cash in the defendant’s car.

The government presented evidence at trial that included the physical evidence recovered at the scene, fingerprints from the gun, civilian eyewitnesses, and several law enforcement witnesses who participated in the chase and the defendant’s arrest.

“Firearms and drugs in the hands of convicted felons like Davis undeniably pose a serious threat to our community” said U.S. Attorney McSwain. “Davis further endangered the community by refusing to comply with officers’ lawful commands and causing an unnecessary high speed chase and subsequent crash. Luckily, no innocent civilians were hurt or killed and Davis has now been held accountable for his criminal conduct. We remain steadfast in our commitment to working with our federal partners to clear the streets of illegal firearms and drugs and to protect the public.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Michael J. Rinaldi and Melanie Babb Wilmoth.

PHILADELPHIA – United States Attorney William M. McSwain announced that Melvin Fishburn, 57, of Charleston, South Carolina was sentenced to 15 months imprisonment and three years’ supervised release by United States District Judge Edward G. Smith for stealing from the International Brotherhood of Electrical Workers, AFL-CIO, Local Union #743 (“IBEW Local 743”) and National Electrical Contractors Association Penn-Del-Jersey Chapter, Reading Division Retirement Plan (the “Retirement Plan”). He was also ordered to pay restitution of $81,413 and a special assessment of $800.

On July 17, 2019, Fishburn entered a guilty plea to an indictment charging him with four counts of embezzlement and four counts of wire fraud. Fishburn was the business manager for IBEW Local 743 and a trustee of the Retirement Plan. From July 2010 until June 2014, he stole $81,413 from the Retirement Plan and plan participants through an elaborate scheme by which he submitted disbursement requests from a shell entity he created for services that were never provided to, and expenses that were never incurred by, the Retirement Plan. Fishburn, in his capacity as trustee of the Retirement Plan, authorized the illegal payment of plan assets to the shell entity and had the checks mailed to a Post Office Box under his control.

“Fishburn abused his position of trust and betrayed union members to line his own pockets,” said U.S. Attorney McSwain. “That is reprehensible. He had a fiduciary duty under ERISA to take actions that benefit the Retirement Plan, but instead, he breached that duty in order to serve his own interests. My Office will aggressively pursue criminal conduct like this and will hold accountable those who deprive workers of benefits that are rightfully theirs.”

“Melvin Fishburn created a fictitious consulting company for the sole purpose of embezzling more than $80,000 from the IBEW Retirement Plan. Fishburn abused his position as a plan trustee in order to deprive hard-working union members of money set aside for their retirement. We will continue to work with the Employee Benefit Security Administration and our other law enforcement partners to protect the integrity of labor unions and their benefit plans,” said Derek Pickle, Acting Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

“Prosecuting those who misuse funds from employee benefit plans is a vital aspect of EBSA’s mission to protect the rights of America’s workers,” said Michael Schloss, Employee Benefit Security Administration’s (EBSA) Regional Director in Philadelphia. “EBSA will continue to aggressively investigate such crimes on behalf of workers nationwide.”

The case was investigated by the United States Department of Labor, Office of Inspector General, Office of Investigations-Labor Racketeering and Fraud, as well as the Employee Benefits Security Administration. It is being prosecuted by Assistant United States Attorney Mary Kay Costello.

PHILADELPHIA – United States Attorney William M. McSwain announced that Reece A. Line, 23, of Pearland, Texas, was charged today by Information with 22 counts of mail fraud, eight counts of wire fraud, and three counts of tax evasion.

The Information alleges that the defendant perpetrated a scheme to defraud Cisco Systems Inc. (“Cisco”), the Neat Company (“Neat”), iRobot Corporation (“iRobot”), APC by Schneider Electric (“APC”), Amazon.com (“Amazon”), and other companies by engaging in a sophisticated warranty fraud scheme. The charges state that the defendant and his co-schemers obtained serial numbers to products sold or manufactured by Cisco, Neat, iRobot, and APC. They allegedly proceeded to register false domain names, obtain false email addresses, and submit false warranty claims, pretending to own products sold or manufactured by these companies that they claimed were not working. The Information alleges that the defendant provided customer service representatives with descriptions of the non-existent defects that he knew they could not solve by troubleshooting and would require replacement with new products. Cisco, Neat, iRobot, and APC then shipped the replacement products to the defendant and his co-schemers, which they promptly sold via eBay, on Amazon, or through computer resellers.

The Information further alleges that the defendant and his co-schemers defrauded Amazon by using false identities, domain names, email addresses, and mailing addresses to order products that they falsely claimed never arrived or arrived broken, thereby inducing Amazon to repeatedly send replacement products. The Information alleges that the defendant and his co-schemers then sold the products obtained in this manner via eBay.

All told, the defendant and his co-schemers successfully obtained at least $1,950,000 worth of products from the victim companies through their alleged fraud. The Information also alleges that the defendant evaded the payment of any income tax on the income he earned from his fraud for tax years 2014 through 2016 by, among other things, failing to file returns, storing his fraud proceeds in bank accounts and PayPal accounts in the names of co-schemers, storing cash at his residence, paying his personal living expenses with cash, and using false email addresses, false domain names, prepaid gift cards, and false identities to conceal his involvement in the fraud scheme.

“As alleged, the defendant engaged in a sophisticated fraud scheme that netted almost $2 million worth of products,” said U.S. Attorney McSwain. “Retail fraud, whether in brick-and-mortar stores or online, is a serious crime that must be punished and deterred. I would like to thank both the FBI and the IRS for their dedication and partnership in this matter.”

“Taxpayers are required to cooperate with the tax system by filing honest and accurate returns and paying their fair share,” said Michael Montanez, Acting Special Agent in Charge of IRS-Criminal Investigation. “The Special Agents of IRS-CI will continue to investigate and bring charges against those who intentionally violate our tax system.”

The defendant faces a maximum sentence of 825 years’ incarceration, a five-year period of supervised release, and a fine of $8,250,000.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, Criminal Investigation Division, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

An Indictment, Information, or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

Sandoz Inc., a generic pharmaceutical company headquartered in New Jersey, was charged for conspiring to allocate customers, rig bids, and fix prices for generic drugs, the Department of Justice announced.  A four-count felony charge was filed today in the United States District Court for the Eastern District of Pennsylvania in Philadelphia, charging Sandoz with participating in four criminal antitrust conspiracies, each with a competing manufacturer of generic drugs and various individuals.  This represents the third pharmaceutical company to admit to criminal antitrust charges in the Antitrust Division’s ongoing investigation.  The charged conspiracies took place between 2013 and 2015.

The Antitrust Division also announced a deferred prosecution agreement resolving the charges against Sandoz, under which the company agreed to pay a $195 million criminal penalty and admitted that its sales affected by the charged conspiracies exceeded $500 million.  Under the deferred prosecution agreement, Sandoz has agreed to cooperate fully with the Antitrust Division’s ongoing criminal investigation.  As part of the agreement, the parties will file a joint motion, which is subject to approval by the Court, to defer for the term of the DPA any prosecution and trial of the charges filed against the defendant.

“Today’s resolution, with one of the largest manufacturers of generic drugs, is a significant step toward ensuring that prices for generic drugs are set by competition, not collusion, and rooting out antitrust crimes that cheated American purchasers of vital medicines,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “Sandoz conspired for years with other manufacturers and their executives to raise prices for critical medications, and the Antitrust Division will continue its ongoing investigation to hold both individuals and corporations accountable for these crimes.”

“This significant resolution is a critical step toward ensuring a free and open marketplace for the competitive pricing of generic drugs,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General.  “The outstanding work by the legal and investigative teams effectively quashed an environment of bid rigging, market allocation and price fixing within the generics industry.  Along with our partners at the Department of Justice’s Antitrust Division and the Federal Bureau of Investigation, the U.S. Postal Service Office of Inspector General will continue to aggressively investigate this type of detrimental behavior.” 

“This resolution demonstrates the continued dedication of the FBI and our partners to root out collusion and dishonest business practices within the pharmaceutical industry, on behalf of the American people,” said Timothy M. Dunham, Special Agent in Charge of the FBI Washington Field Office’s Criminal Division.  “We will not turn a blind eye while companies and executives pad their pocketbooks.  The FBI will continue to fight for the public to have access to a competitive marketplace of medications that Americans count on.”

“When a pharmaceutical company participates in bid-rigging and price-fixing, the entire community suffers,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania.  “My Office will continue to work with the Department of Justice and all of our law enforcement partners to ensure that prices for medicine are set legally, and not through illegal means to benefit pure greed.”

In the deferred prosecution agreement, Sandoz admitted that it participated in the charged antitrust conspiracies, as follows:

• Count One charges Sandoz for its role in a conspiracy with a generic drug company based in New York and other individuals.  Sandoz admitted that drugs affected by this conspiracy included clobetasol (cream, emollient cream, gel, ointment, and solution), desonide ointment, and nystatin triamcinolone cream.
• Count Two charges Sandoz for its role in a conspiracy with Kavod Pharmaceuticals LLC (formerly known as Rising Pharmaceuticals) to allocate customers and fix prices of benazepril HCTZ.  Rising was charged and entered into a deferred prosecution agreement in December 2019 for its participation in the same conspiracy. 
• Count Three charges Sandoz for its role in a conspiracy with a generic drug company based in Michigan.  Sandoz admitted that drugs affected by this conspiracy included desonide ointment.
• Count Four charges Sandoz for its role in a conspiracy with a generic drug company based in Pennsylvania.  Sandoz admitted that drugs affected by this conspiracy included tobramycin inhalation solution. 

Today’s case is the seventh to be filed in the Antitrust Division’s ongoing investigation into the generic pharmaceutical industry.  Sandoz is the third company to be charged; the previous two companies also entered into deferred prosecution agreements.  Four individual charges have been filed in the investigation.  Three executives have pleaded guilty, including former Sandoz executive Hector Armando Kellum.  Ara Aprahamian, a former executive of a company based in New York, was indicted in February 2020 and is awaiting trial. 

The charged offense carries a statutory maximum penalty of a $100 million fine per count for corporations, which may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $100 million. 

This charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the generic pharmaceutical industry, which is being conducted by the Antitrust Division with the assistance of the United States Postal Service Office of Inspector General, the FBI’s Washington Field Office, the FBI’s Philadelphia Field Office, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.  Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to the generic pharmaceutical industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

PHILADELPHIA – United States Attorney William M. McSwain announced that Damon Daniels, 49, of Bronx, New York, was sentenced today to 24 months’ imprisonment and three years’ supervised release by the United States District Court Judge R. Barclay Surrick for his participation in a conspiracy to produce and sell counterfeit tickets to sporting events and concerts. One of his co-defendants, Rahiem Watts, 31, also of Bronx, New York, was sentenced last week to 41 months’ imprisonment and three years’ supervised release, also by Judge Surrick for his role in the same scheme.

Daniels pleaded guilty in September 2019 to charges including conspiracy to commit wire fraud, wire fraud, and conspiracy to traffic in counterfeit goods, and Watts pleaded guilty to similar charges in November 2019. The charges stem from both defendants’ participation in a scheme with others to create counterfeit tickets to sporting events and concerts held in Philadelphia and throughout the country. The counterfeit tickets bore the authentic trademarks of the respective organization or agency that was registered with the United States Patent and Trademark Office.

Specifically, Daniels and Watts printed counterfeit tickets for events, sold the counterfeit tickets at various venues, and also distributed the counterfeit tickets to other sellers nationwide for resale to victims. The defendants and their associates advertised the fake tickets on websites like Craigslist, tricking unsuspecting fans into paying hundreds of dollars with nothing to show for it.

High-profile games for which the group created counterfeit tickets include Super Bowl LI (51) in Houston, Texas between the Patriots and the Falcons; the September 2017 Eagles v. Giants NFL game in Philadelphia; and the March 2017 NCAA Men’s Basketball ACC Conference Championship game between Duke and Notre Dame at Barclays Center in Brooklyn, New York.

High-profile concerts for which the group created counterfeit tickets include the September 2016 Adele show at Wells Fargo Center in Philadelphia, and the June 2017 U2 “The Joshua Tree Tour” at Lincoln Financial Field, also in Philadelphia.

“Big games and concerts obviously draw the interest of fans, but unfortunately, they also draw the interest of scammers,” said U.S. Attorney McSwain. “These criminals try to use these events to make a quick buck at the expense of unsuspecting fans. In order to protect against fraud, I encourage event-goers to purchase tickets through authorized vendors and to be skeptical when it comes to ticket deals that seem too good to be true.”

“Watts and Daniels peddled their fake tickets for real profit and burned a lot of innocent people in the process,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Victims lost not only their money, but their shot to attend some very special events. Know that the FBI will keep cracking down on counterfeiters trying to sell the public a false bill of goods.”

The case was investigated by the Federal Bureau of Investigation, with the assistance of the Manhattan District Attorney’s Office, the New York City Police Department, and the Duluth, Georgia Police Department. It is being prosecuted by Assistant United States Attorneys Joan E. Burnes and Anita Eve.

PHILADELPHIA – United States Attorney William M. McSwain and Principal Deputy Assistant Attorney General Richard E. Zuckerman, announced that Nvahbulai “Kosh” Quisiah, 44, of Philadelphia, PA was convicted today after a jury trial on charges of preparing false tax returns, aggravated identity theft and related crimes.

As the owner and operator of a Philadelphia-based tax preparation business on Woodland Avenue, First Premier Tax Service also d/b/a Kosh & Associates, the defendant prepared tax returns for clients that fraudulently inflated itemized deductions, claimed fictitious Schedule C businesses, and claimed false dependents for tax years 2009 through 2016.  This resulted in inflated tax refunds for his clients to which the clients were not entitled. Quisiah also bought and sold the personal identifying information of children in order to falsely claim the children as dependents on tax returns.

“Today’s verdict serves as a reminder to tax preparers (and tax payers) as we find ourselves in the middle of tax season: don’t try to defraud the federal government,” said U.S. Attorney McSwain. “When tax preparers fraudulently inflate tax refunds, every honest American tax payer loses. My Office will continue to work with our federal partners here and in Washington D.C. to investigate and prosecute these crimes.”

“The Justice Department and the IRS will continue to vigorously investigate and prosecute corrupt tax return preparers,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.  “Preparing false tax returns for clients, and using minors’ identities to do so, will not be tolerated.”

“When people like Mr. Quisiah cheat the tax system, they victimize the hard-working taxpayers of America”, said Guy Ficco, Special Agent in Charge of IRS-Criminal Investigation.  “Today’s verdict hopefully shows other potential criminals that the Special Agents of IRS-CI are working every day to protect the integrity of the tax system.”  

The defendant faces a mandatory minimum sentence of two years’ imprisonment for aggravated identity theft, and up to a maximum of 89 years’ imprisonment for the other convictions of conspiracy, wire fraud, and preparing false tax returns.

The case was investigated by the Internal Revenue Service’s Criminal Investigation Division and is being prosecuted by Assistant United States Attorney Anthony Wzorek and Department of Justice Tax Division Attorney Ann M. Cherry.

A federal jury in Philadelphia, Pennsylvania, found Nvahbulai Quisiah guilty today of conspiracy to defraud the United States, preparing false client tax returns, wire fraud, and identity theft, 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 evidence presented at trial, Quisiah owned and operated First Premier Tax Service, a tax return preparation business in Philadelphia.  From 2010 through 2017, Quisiah falsified clients tax returns by claiming false dependents, itemized deductions, and business losses to fraudulently increase the refunds paid by the Internal Revenue Service (IRS). 

“The Justice Department and the IRS will continue to vigorously investigate and prosecute corrupt tax return preparers,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.  “Preparing false tax returns for clients, and using minors’ identities to do so, will not be tolerated.”

“Today’s verdict serves as a reminder to tax preparers (and tax payers) as we find ourselves in the middle of tax season: don’t try to defraud the federal government,” said U.S. Attorney McSwain for the Eastern District of Pennsylvania. “When tax preparers fraudulently inflate tax refunds, every honest American tax payer loses. My Office will continue to work with our federal partners here and in Washington D.C. to investigate and prosecute these crimes.”

U.S. District Judge Nitza I. Quinones Alejandro scheduled sentencing for June 10, 2020. At sentencing, Quisiah faces 20 years in prison for each wire fraud count, a maximum of five years in prison for conspiracy, three years in prison for aiding and assisting in preparing tax returns, and a mandatory minimum sentence of two years in prison for aggravated identity theft. He also faces a period of supervised release, restitution, and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney McSwain thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Ann M. Cherry of the Tax Division and Assistant U.S. Attorney Anthony Wzorek, who prosecuted the case. 

PHILADELPHIA – United States Attorney William M. McSwain released the following statement regarding the proposed drug injection site in South Philadelphia today:

Yesterday morning, Safehouse announced during a press conference that it intends to open a heroin injection site in South Philadelphia next week – although it did not specify the precise location or the precise date, in keeping with Safehouse’s consistent lack of transparency in dealing with the community.  By contrast, I wanted to update the community on the efforts of the U.S. Attorney’s Office to prevent this proposed site from opening.  First, yesterday afternoon, my Office filed its official Notice of Appeal with the U.S. District Court, which begins the process of the U.S. Court of Appeals for the Third Circuit’s review of the District Court’s decision.  Second, my Office will be filing a motion today for the District Court to stay its final order during the pendency of the appeal.

This request for a stay is critically important.  My Office filed suit against Safehouse in the first place to bring order, reason and fairness to a potentially explosive situation.  The current dispute over injection sites should be settled in the courts, not in the streets.  But, that court process is not over, and I believe that a stay is appropriate so that the dispute will continue to be resolved via careful, reasoned analysis and not deteriorate into a literal street fight.  Here, a stay would preserve the status quo while the Third Circuit examines the legality of the proposed site, and would prevent the chaos that would occur should Safehouse lurch forward with an opening while the case is still ongoing.

This unnecessary chaos was on full display at Safehouse’s press conference yesterday morning.  That press conference was a dumpster fire. 

The press conference featured, among other things, understandably angry South Philadelphia residents yelling at former Governor Rendell, calling him unworthy of the title of Governor and berating him as a “sneak” for hiding his intention to locate the first injection site in South Philadelphia, as well as a sitting City Councilman (Mark Squilla) screaming at Safehouse’s founders that their proposal was “horrible and a disgrace” and “not a part of democracy” because he and his constituents had never been informed about Safehouse’s plans. 

It also featured plenty of logical inconsistency: Governor Rendell, for example, claimed that an injection site in Philadelphia would have saved the life of his friend’s son (who tragically overdosed in his parents’ home) on the assumption that this young man would have traveled from the suburbs to the site to inject.  Immediately contradicting this, Safehouse co-founder Ronda Goldfein, in response to angry questions from South Philadelphia residents who fear that the site would draw addicts to their neighborhood, adamantly insisted that “nobody” from outside the South Philadelphia neighborhood would use the site.  Goldfein quickly became irritated with the residents’ legitimate questions; things got so bad that she threw in the towel and deferred any questions to an imaginary, future community meeting to be held at an unnamed time and place.

The sad fact is that Safehouse’s secretive, haphazard “plan” has not been vetted with any of the affected neighborhood residents, community groups, City Council members, State Representatives or State Senators.  It is being unfairly foisted on them on the assumption that they don’t matter.  It is treating them like fools.

The residents of Philadelphia deserve better than this.  And my Office will continue to fight for it – and for them.

PHILADELPHIA – United States Attorney William M. McSwain announced that Craig A. Cohen, 55, of Blue Bell, PA was sentenced to 60 months’ imprisonment, three years’ supervised release and ordered to pay over $3.4 million in restitution by United States District Court Eduardo C. Robreno for his scheme to steal money from various entities through his work as an attorney.

The defendant pleaded guilty to mail fraud in November 2019. For approximately eight years, Cohen worked for a Philadelphia-based law firm. He specialized in representing insurance companies in subrogation matters, particularly those matters involving losses generated by water damage. As a subrogation attorney, Cohen filed claims on behalf of insurance companies to obtain recoveries against product manufacturers and class action settlement funds after the insurance companies covered losses of insured individuals due to water damage resulting from defective products.

Over the course of approximately four years, from 2015 through 2019, Cohen engaged in a fraudulent scheme to obtain millions of dollars in financial recoveries from product manufacturers and class action settlement funds. He committed this fraud by filing fraudulent subrogation claims that illegally funneled the financial recoveries directly to him.

Cohen operated the scheme primarily from his home in Blue Bell where he created a legal entity, WLSP, PLLC (“WLSP”), which he used to file the fabricated claims. He also opened a post office box in Philadelphia and created internet domains and email addresses for his company so that his fraudulent business could function effectively and appear legitimate.

In total, Cohen submitted dozens of fraudulent claims, causing losses to numerous victims, including product manufacturers, class action settlement funds, insurance companies, and his employer, for a total loss of over $3.4 million.

“Attorneys take an oath to uphold the law and to act in the best interest of their clients – not to use their position to steal,” said U.S. Attorney McSwain. “Mr. Cohen went to great lengths to deceive and defraud his employer, its clients, and other entities of millions of dollars. This is illegal conduct for an employee in any line of work, but it is especially reprehensible for a lawyer.”

“Cohen’s elaborate fraud scheme spanned several years, during which he stole more than $3.4 million of his victims’ money,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “He lied to his employer and clients, fabricated supporting evidence, and cashed in on bogus claims. The FBI is committed to bringing such egregious financial crimes to light and the perpetrators to justice.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Deputy United States Attorney Louis D. Lappen.

PHILADELPHIA – United States Attorney William M. McSwain announced that Imad Dawara, 39, of Swarthmore, PA and Bahaa Dawara, 31, of Woodlyn, PA, were charged by Indictment today with conspiracy to defraud the United States by evading the assessment of their income tax liabilities from 2015-2017. This Indictment is the second Indictment charging the brothers in criminal activities. On July 18, 2019, a grand jury returned a 10-count Indictment charging both Dawara brothers with planning and causing the arson of their business at 239-241 Chestnut Street in Philadelphia on February 18, 2018 in order to receive insurance proceeds from the destruction, as well as mail and wire fraud.

Today’s Indictment alleges that the defendants co-owned and operated multiple businesses including B-Side Complex, a nightclub and hookah lounge located at 927 North Delaware Avenue, Noche, and Baba Restaurant, which generated income that they concealed from the IRS by underreporting the gross receipts of the businesses. The defendants are both currently in federal prison because of the July 2019 Indictment for arson and fraud.

“As alleged in this Indictment, the Dawara brothers were engaged in illegal financial schemes associated with the businesses they owned and operated in Philadelphia,” said U.S. Attorney McSwain. “This second Indictment demonstrates my Office’s commitment to investigating and prosecuting all types of harm perpetrated against the government and the community at large. The investigation in this case may have begun with the arson on Chestnut Street, but it didn’t end there. We will pursue every facet of this case until justice has been served.”

If convicted, each defendant faces a maximum possible sentence of five years’ imprisonment, a $250,000 fine, and three years of supervised release.

The case was investigated by Internal Revenue Service, and is being prosecuted by Assistant United States Attorneys Jeanine M. Linehan and Katherine E. Driscoll.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Philip Elvin Riehl, 68, of Bethel Township, Berks County, PA, pleaded guilty to conspiracy and fraud charges related to a Ponzi scheme he operated worth approximately $60 million. The fraud targeted members of the Mennonite and Amish religious communities in Pennsylvania and elsewhere, of which the defendant is a member.

The defendant was charged in January 2020 with one count each of conspiracy to commit securities fraud and wire fraud, one count of securities fraud, and one count of wire fraud. Riehl, a Berks County–based accountant, fraudulently solicited tens of millions of dollars in investments, from his accounting clients and others who are mostly Mennonite or Amish, 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.

“Riehl’s victims trusted him to handle their investments with honesty and integrity. Instead, he took advantage of their trust based on their mutual religious affiliation,” said U.S. Attorney McSwain. “In some cases, the defendant swindled individuals out of millions of dollars. It is only natural for members of a tightly knit community to want to take care of one another, but Riehl wasn’t concerned with taking care of anyone but himself and he doesn’t deserve the loyalty of his victims now. These types of devastating crimes must be reported, and the guilty parties must be held accountable under the law.”

“Investment fraud can be devastating for its victims, with nest eggs or even life savings lost in a flash,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “When criminals are willing to exploit trusting members of their own church or community in such a way, it adds significant insult to that financial injury. Philip Riehl repeatedly misled his investors, drawing them into a giant Ponzi scheme that swallowed up some $60 million of their money. The FBI is gratified to help hold him accountable for his crimes and bring some measure of justice for his victims.”

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 – A federal judge ruled today that a nonprofit seeking to open a facility in Philadelphia for the injection of illegal drugs would not violate a federal drug law known commonly as the federal “crack house statute.”  The decision by United States District Court Judge Gerald A. McHugh in favor of nonprofit Safehouse makes final a prior ruling and paves the way for a showdown on appeal.

“We respectfully disagree with the District Court’s ruling and plan to appeal immediately,” said United States Attorney William M. McSwain. “What Safehouse proposes is a radical experiment that would invite thousands of people onto its property for the purpose of injecting illegal drugs. In our view, this would plainly violate the law and we look forward to presenting our case to the U.S. Court of Appeals for the Third Circuit.”

The application of the law in question, which prohibits any person from maintaining a place for the purpose of illegal drug use, is hotly contested. Safehouse contends that allowing illegal drug use on its property is necessary to prevent overdoses. The so-called “supervised injection site” proposed by Safehouse would be the first of its kind in the United States.

This effort is staunchly opposed by a growing number of federal authorities, including the U.S. Department of Justice and the U.S. Surgeon General. In anticipation of this ruling, U.S. Deputy Attorney General Jeffrey A. Rosen published an editorial in the Philadelphia Inquirer earlier this month, condemning Safehouse’s plan and committing to an appeal. Last month, U.S. Surgeon General Jerome M. Adams cautioned, “I have looked at the data,” and “we want to optimize the things that we know work before we start having conversations about more controversial interventions.”

Community groups in neighborhoods where Safehouse is rumored to be considering opening an injection site have also objected. “We believe that Safehouse’s proposed activity threatens to institutionalize the scourge of illegal drug use – and all the problems that come with it – in Philadelphia neighborhoods,” said U.S. Attorney McSwain. “In light of these concerns, Safehouse should act prudently and not rush to open while the appeal is pending. But if it does rush forward, my Office will evaluate all options available under the law.”

While no timeline has yet been set for the appeal, the United States will seek an expedited ruling from the Third Circuit.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Antoine Clark, 30, Gerald Spruell, 32, and Daniel Robinson, 36, all of Philadelphia, PA, were convicted after more than two weeks at trial of charges including conspiracy to distribute controlled substances, and distribution or possession with intent to distribute crack cocaine and heroin arising from their operation of an almost around-the-clock drug delivery service for several years in South Philadelphia.

Between 2013 and 2016, the defendants and their co-conspirators, known as the “Friends” and “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. Agents recovered narcotics sold by the defendants after stopping their drug customers. 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. Upon defendant Spruell’s arrest in June 2016, Philadelphia Police officers recovered a number of items related to drug trafficking, including two firearms and live rounds of ammunition.

“The defendants in this case ran a drug delivery operation akin to a ‘GrubHub’ or ‘UberEats’ for narcotics,” said First Assistant U.S. Attorney Williams. “But despite their ‘friendly’ moniker, they were no friends to this community.  To the contrary, they jeopardized the safety of an entire neighborhood in South Philadelphia.  This conviction marks the definitive end to their enterprise, and a new beginning for the 7th Street corridor.”

Each defendant faces a mandatory minimum sentence of 25 years’ imprisonment, and a maximum of lifetime imprisonment.

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Matthew Newcomer and Jason Grenell.

PHILADELPHIA – Deputy United States Attorney Louis D. Lappen announced that Charlie Kien, 45, of King of Prussia, PA, was sentenced to six months’ imprisonment, three years’ supervised release, and ordered to pay a $10,000 fine by United States District Court Judge Mark A. Kearney for multiple charges of tax fraud.

The defendant pleaded guilty in October 2019 to charges of failing to pay employment taxes and filing false tax returns in connection with the operation of his former Philadelphia-based labor leasing company, CK’s Business Services. The company had contracts to provide temporary employees to two local businesses: a flag manufacturer and military bandage manufacturer. In preparing and filing IRS Form 941 for both of these contracts, Kien failed to account for the correct number of the company’s employees and wages paid, and also failed to file IRS Form W-2 for the unclaimed employees.

Further, the defendant paid many of his employees in cash – failing to collect and pay employment taxes to the IRS. For the tax years 2010 through 2012, the total amount of lost employment tax (employer and employee) was approximately $565,872. Kien also filed false personal income tax returns: for tax years 2010 through 2012, he failed to pay approximately $474,059 in taxes.

“Knowingly falsifying documents to avoid reporting income to the IRS is a crime,” said Deputy U.S. Attorney Lappen. “Dishonest business owners like the defendant use a variety of methods to cheat the government and all honest taxpayers. Our Office will continue to work with our federal partners to hold accountable those who commit tax fraud.”

The case was investigated by the Internal Revenue Service, Criminal Investigations Service, and is being prosecuted by Assistant United States Attorney Terri A. Marinari.

PHILADELPHIA – Deputy United States Attorney Louis D. Lappen announced that Matt “Mack” Jones, 37, of Bensalem, PA, was sentenced to 240 months’ imprisonment and eight years’ supervised release by Senior United States District Court Judge R. Barclay Surrick. Jones was convicted at trial in October 2019 on charges of distribution of heroin and possession of firearms by a convicted felon.

In January 2018, the Philadelphia Division of the Drug Enforcement Administration, New Jersey State Police, and the Philadelphia Police Department began a joint investigation of the defendant and other co-conspirators. Officers learned that the defendant was a heroin supplier, and that he supplied two female associates with bags of heroin and directed them to deliver the bags to customers in New Jersey and the Philadelphia area.

Investigators conducted several controlled buys of heroin from the defendant and his co-conspirators with the assistance of a cooperating witness at the Cherry Hill Mall in Cherry Hill, New Jersey, and the Philadelphia Mills Mall (formerly Franklin Mills Mall) in Philadelphia. Laboratory analysis of the seized material confirmed the presence of heroin mixed with fentanyl. In July 2018, officers searched the defendant’s home and found firearms, including a Colt .38 handgun and a 12 gauge shotgun, ammunition, half a kilogram of heroin, cocaine, marijuana, drug packaging paraphernalia and more than $100,000 cash.

“Jones and other members of this drug organization pumped huge quantities of deadly drugs into our community for years,” said Deputy U.S. Attorney Lappen.  “Drug trafficking is a serious federal offense which will earn those convicted of it serious time behind bars, as this sentence demonstrates.  Our Office is determined to investigate and convict these criminals to keep the streets of our communities safer.”

The case was investigated by the Drug Enforcement Administration, the Philadelphia Police Department, the New Jersey State Police, the Bensalem Township Police, and the Philadelphia District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Christopher E. Parisi.

PHILADELPHIA – United States Attorney William M. McSwain announced that Maudilio Diaz-Vazquez, a/k/a “Magdilio Diaz-Vazquez,” age 23, of Quarryville, PA was sentenced today to the statutory maximum of two years’ imprisonment by United States District Court Judge Joseph F. Leeson, Jr., after pleading guilty to the federal crime of illegal reentry after deportation.

The defendant, an illegal alien and citizen of Guatemala, was previously deported from the United States in May 2012. Following this deportation, Diaz-Vazquez illegally reentered the United States and traveled to Lancaster County. While residing there, the defendant repeatedly raped a 12 year-old child. The defendant was convicted of these offenses in Lancaster County in January 2019 and sentenced to 7-20 years’ incarceration in Pennsylvania state prison. His federal sentence will run consecutive to the state sentence.

“This case is a tragedy: an illegal alien -- who should not have been in the country to begin with – raped a young child. He has been held accountable for the rape and now he has been held accountable for the illegal reentry into our country. He will serve his sentences and then be deported,” said U.S. Attorney McSwain. “Working together with ICE, my Office will continue to uphold the rule of law and protect the community from dangerous criminal aliens like Diaz-Vazquez.”

“Diaz-Vazquez unlawfully entered the United States and was removed,” said Simona L. Flores-Lund, Field Office Director for U.S. Immigration and Customs Enforcement (ICE) Enforcement and Removal Operations (ERO) Philadelphia.  “He illegally reentered the country and committed the unconscionable act of victimizing a child. The men and women of ICE have the vital role of arresting and removing criminal aliens like Diaz-Vazquez, and will continue to perform their duties as intended by Congress with veracity, courage, and professionalism.”

The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Kelly Harrell.

PHILADELPHIA – United States Attorney William M. McSwain announced that Marshall Brooks, 54, was sentenced to 135 months’ imprisonment by Senior United States District Judge Jan E. Dubois for two armed bank robberies and four armed robberies of stores, all located in lower Bucks County, Pennsylvania.

In July 2019, the defendant pleaded guilty to all six counts charged in the Indictment, including two counts of armed bank robbery and four counts of robbery which interferes with interstate commerce. The charges were the result of the defendant using actual and threatened force, violence, and fear of injury to rob two banks in December 2018, and four businesses in December 2018 and February 2019, in Bensalem, Bristol, Trevose, and Feasterville. During his crime spree, he held a weapon directly against employees’ and customers’ bodies and held them hostage while he stole money and goods from the businesses. He committed this string of offenses just one month after being released from state prison after serving a 15-year sentence for yet another bank robbery. 

“When Brooks was released from his 15-year prison sentence, he had a choice: he could become a law-abiding citizen or he could revert to his criminal ways,” said U.S. Attorney McSwain. “Unfortunately for the victims he terrorized during his crime spree, he took the latter path – the one that will lead him straight back to prison. The streets of lower Bucks County are far safer now that Brooks will be spending the next decade behind bars.”

“After serving out his prison time for a prior bank robbery, Marshall Brooks went right back to his old ways,” said Tara McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Imagine being physically manhandled by a stranger aiming a gun at you, demanding money. It isn’t something terrified armed robbery victims soon forget. Brooks is a clear danger to the public, and today’s sentence ensures he’ll remain behind bars for quite some time. The FBI’s BucksMont Safe Streets Task Force is committed to making our neighborhoods safer by diligently combating violent crime in our communities.”

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, Bensalem Police Department, Bristol Borough Police Department, and Lower Southampton Police Department, and is being prosecuted by Assistant United States Attorney Priya T. De Souza.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that his Office has launched a review of all polling places in the Eastern District of Pennsylvania to determine if they are in compliance with the Americans with Disabilities Act (ADA) of 1990. The initiative is in accordance with the federal government’s congressionally-mandated responsibility to review compliance with the ADA; it is not in response to any specific complaint against a county or individual polling location.

As part of the review, election officials in Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton, and Philadelphia counties are being asked to complete survey questions pertaining to polling place accessibility in their county. Investigators may then conduct on-site inspections to confirm survey responses and to evaluate compliance with federal ADA regulations. Counties found to be non-compliant will have the option of resolving issues informally, and if that effort fails, entering into a Voluntary Compliance Agreement with the government whereby they voluntarily agree to upgrade their facilities and address issues in order to meet ADA requirements before the November 2020 election. Counties found to be engaging in a pattern or practice of discrimination, or that fail to enter into Voluntary Compliance Agreements, may face a civil lawsuit brought by the government and/or be subject to penalties, including monetary penalties and civil fines.

The ADA prohibits discrimination on the basis of disability in all programs, activities, and services provided by public entities. The ADA requires that public entities provide voting facilities that are accessible to people with disabilities.

“People with disabilities who live in the Eastern District of Pennsylvania deserve equal access to polling places and we are committed to making sure that they have it,” said U.S. Attorney McSwain. “This year marks the 30th anniversary of the Americans with Disabilities Act, so there can be no doubt that counties have had more than enough time to ensure that their polling places provide full access to individuals with disabilities. We will take all reasonable steps within our power to ensure that any counties that fall short of compliance make the necessary changes in time for the 2020 election.”

Any citizen with polling place concerns in the Eastern District of Pennsylvania is encouraged to contact Assistant United States Attorney Jacqueline C. Romero, Civil Rights Coordinator, at 215-861-8200.

PITTSBURGH – United States Attorney Scott W. Brady announced today that Guardian Elder Care Holdings, Inc. and its related companies will pay $15,466,278 to settle claims that the skilled nursing home chain provided medically unnecessary rehabilitation therapy to residents in order to meet revenue goals, instead of clinical needs. Guardian Elder Care, headquartered in Brockway, operates more than 50 facilities throughout Pennsylvania—including locations in Allegheny, Beaver, Clearfield, Fayette, Indiana, Jefferson, McKean and Westmoreland counties— as well as Ohio and West Virginia.

The settlement resolves allegations in a whistleblower complaint filed in federal court in the Eastern District of Pennsylvania under the qui tam provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The whistleblowers, Philippa Krauss and Julie White, will share approximately $2.8 million of the recovery between them. Guardian Elder Care formerly employed both of these whistleblowers.

The whistleblowers generally alleged that Guardian Elder Care pressured its rehabilitation therapists to provide services to meet financial targets and maximize revenue without regard to clinical need. For example, they alleged that certain patients suffered from dementia and did not need or want rehabilitation therapy, but Guardian Elder Care allegedly pressured therapists to provide those services anyway to meet revenue goals.

Other patients were allegedly dying and receiving hospice care—and therefore had no medical need for intensive therapy—but Guardian Elder Care allegedly pressured therapists to treat those patients, as well, in order to meet the same financial goals. Today’s announced settlement agreement resolves the allegations arising from Guardian Elder Care’s facilities management practices from January 2011 through December 2017.

Additionally, while the government was investigating these allegations, Guardian Elder Care voluntarily disclosed that it had employed two people who were excluded from federal healthcare programs. The settlement therefore encompasses claims that Guardian Elder Care inappropriately received payment for services provided through these excluded persons during their term of exclusion. The public can search the government’s database of excluded providers at the website: https://exclusions.oig.hhs.gov/.

"Billing federal healthcare programs for medically unnecessary rehabilitation services not only depletes these programs’ funds but also exploits our most vulnerable citizens," said United States Attorney Brady. "Our office will continue to aggressively pursue providers who take advantage of our seniors by putting financial gain ahead of patient care."

"Too much rehabilitation therapy can actually harm patients, just like giving them too many pills or too much medicine," said United States Attorney William M. McSwain of the Eastern District of Pennsylvania. "And of course it harms taxpayers who foot the bill for unnecessary treatment. We thank Ms. Krauss and Ms. White for their role in bringing this alleged scheme to light. We also commend Guardian Elder Care for telling us about its employment of the excluded providers. It is in their best interest for companies to make voluntary disclosures and emphasize compliance going forward, as my Office will take this sort of cooperation into consideration when determining an appropriate resolution."

“Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The Department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”  

"Protecting our beneficiaries from unnecessary services is a priority and we will not tolerate companies putting financial gain ahead of quality of care," said Maureen R. Dixon, Special Agent in Charge, Office of the Inspector General-U.S. Department of Health and Human Services (HHS-OIG). "HHS-OIG will continue to work with our partners at the Department of Justice and OPM-OIG to root out fraud, waste and abuse in the Medicare and Medicaid programs."

OPM OIG Deputy Assistant Inspector General for Investigations Thomas W. South, Deputy Assistant Inspector General for Investigations said, "Subjecting vulnerable patients to unnecessary treatments for financial gain is unconscionable. First and foremost, OPM OIG prioritizes protecting Federal employees and their dependents from patient harm. I am proud that we were able to work with our law enforcement partners to hold Guardian Elder Care accountable for their unscrupulous behavior."

In addition to the nearly $15.5 million payment, Guardian agreed to enter into a chain-wide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. Such agreements promote compliance and protect vulnerable nursing home residents.

Assistant United States Attorney Rachael L. Mamula handled this case in the Western District of Pennsylvania working jointly with Assistant United States Attorneys Michael S. Macko and Scott W. Reid in the Eastern District of Pennsylvania and Susan Lynch, Senior Counsel for Elder Justice, of the Civil Fraud Section of the Department of Justice, and with investigative assistance from auditor Dawn Wiggins. The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, and the U.S. Office of Personnel Management Office of Inspector General.

This case was supported by the Department of Justice’s Elder Justice and Nursing Home Initiative, which coordinates the Department’s activities combatting elder abuse, neglect, and financial exploitation, especially as they affect beneficiaries of Medicare, Medicaid, and other federal health care programs. For more information about the Department’s Elder Justice Initiative, see https://www.justice.gov/elderjustice/.

The case is docketed as United States ex rel. Krauss, et al. v. Guardian Elder Care Holdings, Inc., et al., Civil Action No. 3:15-cv-6850 (E.D. Pa.). There has been no determination of civil liability. The settled civil claims are allegations only.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Guardian Elder Care Holdings, Inc., and its related companies will pay $15,466,278 to settle claims that the skilled nursing home chain provided medically unnecessary rehabilitation therapy to residents in order to meet revenue goals, instead of clinical needs. 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.

The settlement resolves allegations in a whistleblower complaint filed in federal court in the Eastern District of Pennsylvania under the qui tam provisions of the False Claims Act. These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery. The whistleblowers, Philippa Krauss and Julie White, will share approximately $2.8 million of the recovery between them. Guardian Elder Care formerly employed both of these whistleblowers.

The whistleblowers generally alleged that Guardian Elder Care pressured its rehabilitation therapists to provide services to meet financial targets and maximize revenue, without regard to clinical need. For example, they alleged that certain patients suffered from dementia and did not need or want rehabilitation therapy, but Guardian Elder Care allegedly pressured therapists to provide those services anyway to meet revenue goals.

Other patients were allegedly dying and receiving hospice care—and therefore had no medical need for intensive therapy—but Guardian Elder Care allegedly pressured therapists to treat those patients, as well, in order to meet the same financial goals. Today’s announced settlement agreement resolves the allegations arising from Guardian Elder Care’s facilities management practices from January 2011 through December 2017.

Additionally, while the government was investigating these allegations, Guardian Elder Care voluntarily disclosed that it had employed two people who were excluded from federal healthcare programs. The settlement therefore encompasses claims that Guardian Elder Care inappropriately received payment for services provided through these excluded persons during their term of exclusion. The public can search the government’s database of excluded providers on the website: http://exclusions.oig.hhs.gov/.

“Too much rehabilitation therapy can actually harm patients, just like giving them too many pills or too much medicine,” said U.S. Attorney McSwain. “And of course it harms taxpayers who foot the bill for unnecessary treatment. We thank Ms. Krauss and Ms. White for their role in bringing this alleged scheme to light. We also commend Guardian Elder Care for telling us about its employment of the excluded providers. It is in their best interest for companies to make voluntary disclosures and emphasize compliance going forward, as my Office will take this sort of cooperation into consideration when determining an appropriate resolution.”

“Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The Department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”  

​“Billing federal healthcare programs for medically unnecessary rehabilitation services not only depletes these programs’ funds but also exploits our most vulnerable citizens,” said U.S. Attorney Scott W. Brady of the Western District of Pennsylvania. “Our office will continue to aggressively pursue providers who take advantage of our seniors by putting financial gain ahead of patient care.”

“Protecting our beneficiaries from unnecessary services is a priority and we will not tolerate companies putting financial gain ahead of quality of care,” said Maureen R. Dixon, Special Agent in Charge, Office of the Inspector General-U.S. Department of Health and Human Services (HHS-OIG). “HHS-OIG will continue to work with our partners at the Department of Justice and OPM-OIG to root out fraud, waste and abuse in the Medicare and Medicaid programs.”

OPM OIG Deputy Assistant Inspector General for Investigations Thomas W. South, Deputy Assistant Inspector General for Investigations said: “Subjecting vulnerable patients to unnecessary treatments for financial gain is unconscionable. First and foremost, OPM OIG prioritizes protecting Federal employees and their dependents from patient harm. I am proud that we were able to work with our law enforcement partners to hold Guardian Elder Care accountable for their unscrupulous behavior.”

In addition to the nearly $15.5 million payment, Guardian agreed to enter into a chain-wide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General. Such agreements promote compliance and protect vulnerable nursing home residents.  

Assistant United States Attorneys Michael S. Macko and Scott W. Reid handled the case in the Eastern District of Pennsylvania, with assistance from auditor Dawn Wiggins, and worked jointly with Assistant U.S. Attorney Rachael L. Mamula of the Western District of Pennsylvania and Susan Lynch, Senior Counsel for Elder Justice, of the Civil Fraud Section of the Department of Justice. The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, and the U.S. Office of Personnel Management Office of Inspector General.

This case was supported by the Department of Justice’s Elder Justice and Nursing Home Initiative, which coordinates the Department’s activities combatting elder abuse, neglect, and financial exploitation, especially as they affect beneficiaries of Medicare, Medicaid, and other federal health care programs. The case was also a product of the Elder Justice Task Force of the United States Attorney’s Office for the Eastern District of Pennsylvania that launched four years ago. For more information about the Department’s Elder Justice Initiative and the Elder Justice Task Force, see https://www.justice.gov/elderjustice/.  

The case is docketed as United States ex rel. Krauss v. Guardian Elder Care Holdings, Inc., et al., Civil Action No. 3:15-cv-6850 (E.D. Pa.). There has been no determination of civil liability. The settled civil claims are allegations only.

PHILADELPHIA – United States Attorney William M. McSwain announced that Dr. Spiro Y. Kassis, 66, of Plymouth Township, PA was sentenced to 48 months’ incarceration, two years’ supervised release and a $25,000 fine by United States District Judge Gene E. K. Pratter after pleading guilty to 14 counts of distributing controlled substances outside the course of professional practice and without a legitimate medical purpose. Separately, in a related civil case which reached settlement in November 2019, the defendant agreed to pay $1.4 million to resolve similar allegations.

The defendant, who represented himself as a specialist in psychiatry and addiction medicine, operated medical offices in East Norriton Township, PA and Scranton, PA. He used those offices to operate a “prescription pill mill” whereby he sold medically unnecessary prescriptions for opioid drugs such as oxycodone and burprenorphine, as well as other controlled substances. Kassis sold prescriptions for dangerous and addictive drugs for approximately $200 cash. At the East Norriton office, Kassis saw approximately 45 patients per day, who lined up outside a back room where Kassis sat behind a desk. As each patient filed in, Kassis collected $200 cash, counted the money and placed it in a safe -- and then issued the requested prescriptions electronically to the patient’s pharmacy. Often, the defendant issued dangerous cocktails that included oxycodone, methadone, and buprenorphine, all to the same patient. 

“My Office is committed to stopping drug dealing doctors like Kassis,” said U.S. Attorney McSwain. “As a physician, he was well aware of the inherently dangerous nature of the drugs he cavalierly handed out. Nevertheless, he took advantage of vulnerable people struggling with addiction, all the while sitting comfortably behind a desk, watching the money pile up.”

The case was investigated by the Drug Enforcement Agency; Federal Bureau of Investigation; Health and Human Services – Office of Inspector General; and Montgomery County Detective Bureau’s Narcotics Enforcement Team. It is being prosecuted by Assistant United States Attorney M. Beth Leahy, and Special Assistant United States Attorney James Price, who was cross-designated by the Montgomery County District Attorney for this prosecution. The related civil action is being handled by Assistant United States Attorney Anthony Scicchitano.

Guardian Elder Care Holdings Inc., and related companies Guardian LTC Management Inc., Guardian Elder Care Management Inc., Guardian Elder Care Management I Inc., and Guardian Rehabilitation Services Inc., (Guardian) agreed to pay $15,466,278 to resolve False Claims Act allegations that they knowingly overbilled Medicare and the Federal Employees Health Benefits Program for medically unnecessary rehabilitation therapy services, the Department of Justice announced today.  Guardian operates more than 50 nursing facilities throughout Pennsylvania, as well as in Ohio and West Virginia.

“Seniors rely on the Medicare program to provide them with appropriate care, and to ensure that they are treated with dignity and respect,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The department will not tolerate nursing home operators that put their own economic gain ahead of the needs of their residents, and will continue to hold accountable those operators who bill Medicare for unnecessary rehabilitation services.”  

The settlement announced today resolve claims by the United States that from Jan. 1, 2011, through Dec. 31, 2017, Guardian caused certain facilities in Pennsylvania, West Virginia, and Ohio to bill for patients at the highest level of Medicare reimbursement, when services at that level were not medically necessary and were influenced by financial considerations rather than resident needs.  These allegations were originally brought by two former Guardian employees, Phillipa Krause and Julie White, under the whistleblower, or qui tam, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to share in any recovery.  The whistleblowers in this case will receive approximately $2.8 million.

The settlement also resolves allegations voluntarily disclosed by Guardian that it had employed two people who were excluded from federal healthcare programs. As a result of its employment of these two excluded individuals, Guardian inappropriately received payment for ineligible services.

“Too much rehabilitation therapy can actually harm patients, just like giving them too many pills or too much medicine,” said U.S. Attorney William McSwain of the Eastern District of Pennsylvania.  “And of course it harms taxpayers who foot the bill for unnecessary treatment.  We thank Ms. Krauss and Ms. White for their role in bringing this alleged scheme to light.  We also commend Guardian Elder Care for telling us about its employment of the excluded providers.  It is in their best interest for companies to make voluntary disclosures and emphasize compliance going forward, as my office will take this sort of cooperation into consideration when determining an appropriate resolution.”

​“Billing federal healthcare programs for medically unnecessary rehabilitation services not only depletes these programs’ funds but also exploits our most vulnerable citizens,” said U.S. Attorney Scott W. Brady of the Western District of Pennsylvania.  “Our office will continue to aggressively pursue providers who take advantage of our seniors by putting financial gain ahead of patient care.”

“Protecting our beneficiaries from unnecessary services is a priority and we will not tolerate companies putting financial gain ahead of quality of care,” said Maureen R. Dixon, Special Agent in Charge, Office of the Inspector General-U.S. Department of Health and Human Services (HHS-OIG).  “HHS-OIG will continue to work with our partners at the Department of Justice and OPM-OIG to root out fraud, waste and abuse in the Medicare and Medicaid programs.”

“Subjecting vulnerable patients to unnecessary treatments for financial gain is unconscionable," said Deputy Assistant Inspector General for Investigations Thomas W. South, Office of the Inspector General-U.S. Office of Personnel Management (OPM-OIG).  "First and foremost, OPM-OIG prioritizes protecting Federal employees and their dependents from patient harm.  I am proud that we were able to work with our law enforcement partners to hold Guardian Elder Care accountable for their unscrupulous behavior.”

Contemporaneous with the civil settlement, Guardian agreed to enter into a chain-wide Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General.  Such agreements promote compliance and protect vulnerable nursing home residents.  

This case was handled by the Civil Division’s Commercial Litigation Branch, the U.S. Attorneys’ Offices for the Eastern District of Pennsylvania and for the Western District of Pennsylvania; HHS-OIG; and OPM-OIG.  This case was supported by the Department of Justice’s Elder Justice and Nursing Home Initiative, which coordinates the department’s activities combating elder abuse, neglect, and financial exploitation, especially as they impact beneficiaries of Medicare, Medicaid, and other federal health care programs.  This case was also a product of the Elder Justice Task Force of the U.S. Attorney’s Office for the Eastern District of Pennsylvania that launched four years ago.  For more information about the Department’s Elder Justice Initiative and the Elder Justice Task Force, see https://www.justice.gov/elderjustice/. 

The case is docketed as United States ex rel. Krauss v. Guardian Elder Care Holdings, Inc., et al., Civil Action No. 3:15-cv-6850 (E.D. Pa.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

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.

PHILADELPHIA – United States Attorney William M. McSwain announced that Branden Coluccio, 32, of Doylestown, PA entered a guilty plea to a one-count Information, charging him with conspiracy to commit health care fraud. The charges against the defendant stem from federal and state investigations into elaborate insurance fraud schemes involving a Bucks and Montgomery County-based addiction treatment center, Liberation Way.

The investigations exposed an array of health care fraud schemes committed by individuals associated with Liberation Way, including an over-billing scheme connected with the facility’s medical director, as well as an elaborate kick-back scheme involving thousands of medically-unnecessary urine tests which were sent to Florida-based laboratories for analysis. Coluccio, a co-founder of Liberation Way, participated in yet another scheme by fraudulently purchasing premium insurance policies for prospective patients on their behalf, which then allowed Liberation Way to bill insurance companies for expensive “treatment” purportedly provided to these patients. Liberation Way represented that the patients were buying and paying for these policies themselves, when in reality Liberation Way was paying the premiums, which is illegal.

The defendant pleaded guilty before U.S. District Court Judge Wendy Beetlestone today, pursuant to a plea agreement which recommends that the Court impose a 37-month sentence. The agreement also requires payment of over $3 million in restitution, as well as additional forfeiture, by the time of sentencing. Sentencing is scheduled for May 22, 2020.

This case was investigated in conjunction with the Pennsylvania Attorney General’s Office, and is the fifth federal Information that has been filed against defendants associated with Liberation Way. The four other defendants -- Dr. Dominick Braccia, Dr. Ramesh Sarvaiya, Jesse Peters, and Jason Gerner – have all pleaded guilty. The latter three have yet to be sentenced. Dr. Braccia was sentenced by Judge Beetlestone in September 2019 to a term of 37 months in prison.

“Liberation Way was essentially a front for several multi-layered, years-long schemes that crossed state lines and victimized hundreds of people who needed help,” said U.S. Attorney McSwain. “The convictions coming out of this case send a clear message to those attempting to profit from fraud and the despair of individuals battling addiction: if you behave in this manner, you will be held accountable. We have been proud to work with the Office of the Pennsylvania Attorney General and our federal agency partners to bring all of the defendants in this case to justice.”

“The defendant took advantage of vulnerable people and their families for profit,” said Attorney General Josh Shapiro. “I’m proud of the hard work done by The U.S. Attorney’s Office and the Office of Attorney General to hold these individuals accountable.”

“Coluccio defrauded insurance programs for millions of dollars and he used vulnerable patients seeking help for their addictions to do it,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Health care fraud isn’t some quick and easy way to bulk up your bank account. It’s a costly, consequential federal crime and a high priority for the FBI.”

“Coluccio admitted to defrauding federal health care programs and compounded his crime by seizing on the plight of drug-addicted patients,” said Maureen R. Dixon, Special Agent in Charge, of the Office of the Inspector General for the U.S. Department of Health and Human Services.  “We will continue to work with our State and Federal law enforcement partners to protect the integrity of all HHS Programs.”

The case was investigated by the Pennsylvania Attorney General’s Office, the Federal Bureau of Investigation, the Department of Health and Human Services, Office of Personnel Management, and the Department of Labor. It is being prosecuted by Assistant United States Attorney Nancy Beam Winter and Special Assistant United States Attorneys Kristy Christ and Robert Labar, both of the Pennsylvania Attorney General’s Office.

PHILADELPHIA – United States Attorney William M. McSwain announced that Craig Alex Levin, 64, of King of Prussia, PA was charged by Indictment with child exploitation offenses related to his travel to the Philippines. The Indictment was filed in December 2019 and unsealed today. The defendant is currently in custody in the Philippines and awaiting deportation back to the United States.

Levin was originally charged through a Criminal Complaint and Warrant in July 2019. The Indictment unsealed today alleges that the defendant used the internet to persuade, induce, entice and coerce a child into sex trafficking (count one), and that he travelled internationally from the United States to the Philippines for the purposes of engaging in illicit sexual conduct with minor children (count two).

“As alleged in the Indictment, the defendant is a dangerous predator who targeted vulnerable children in a foreign country. This is reprehensible,” said U.S. Attorney McSwain. “Indeed, at the time of the defendant’s arrest last year in the Philippines, he was escorting a 15 year-old girl to his hotel room. Holding child sexual offenders accountable, no matter where they prey on children, will continue to be a top priority of my Office and the entire Department of Justice.”

“Craig Levin felt safe in the Philippines. He traveled there repeatedly, stayed for months at a time, and sexually exploited numerous underage girls, as alleged,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “If Mr. Levin thought no one in the U.S. would know or care about the abuse because it took place on the other side of the world, he was badly mistaken. Child sexual exploitation is abhorrent anywhere, and the FBI won’t hesitate to go after these offenders wherever we find them. Protecting vulnerable underage victims and aggressively investigating predators who prey on them continues to be one of the FBI’s highest priorities.” 

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 United States 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.

If convicted, the defendant faces a maximum possible sentence of lifetime imprisonment with a mandatory minimum of ten years, lifetime supervised release, a $500,000 fine, and an additional $10,000 mandatory special assessment.

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Daniel Velez.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

A former senior executive pleaded guilty today for his role in a conspiracy to fix prices, rig bids, and allocate customers for generic drugs, the Department of Justice announced.  

According to court documents, from at least March 2013 until at least June 2015, Hector Armando Kellum, a former senior executive at a generic pharmaceutical company based in New Jersey, conspired to fix prices, rig bids, and allocate customers for generic drugs. The conspiracy affected products including, but not limited to, clobetasol and nystatin triamcinolone cream.  Kellum’s co-conspirators included a generic pharmaceutical company headquartered in New York and various individuals, including Ara Aprahamian, who was indicted in Philadelphia on Feb. 4, 2020.  Kellum has agreed to cooperate with the Antitrust Division’s ongoing investigation into criminal antitrust violations in the generic drug industry.

“With today’s guilty plea, the Antitrust Division continues its prosecution of high-ranking executives who conspired to cheat America’s most vulnerable elderly consumers by raising prices for vital drugs,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “Competition in our healthcare system is a critical focus for the Antitrust Division, and rooting out collusion by executives is a key priority in keeping our markets free.” 

“Today’s guilty plea by the former pharmaceutical senior executive is yet another example of the dedication and determination exhibited by the legal and investigative teams,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General. “Along with our partners at the Department of Justice and the Federal Bureau of Investigation, the U.S. Postal Service Office of Inspector General will continue to aggressively investigate those individuals responsible for unlawful behavior within the generic drug industry.”

“Kellum’s plea shows he lost sight of the basic principle that medicine is intended to heal sick people, not line an individual's pockets by colluding to rig bids and manipulate drug prices," said Timothy R. Slater, Assistant Director in Charge of the FBI Washington Field Office. "The FBI and our partners will continue to fight for the American public to have access to a competitive marketplace for pharmaceuticals. We will not stand by while large corporations and business executives in power try to skirt the rules at the expense of unsuspecting citizens.”

Kellum is the fourth executive to be charged in this investigation, and the third to plead guilty. To date, two companies have also been charged.  The corporate charges were resolved by deferred prosecution agreement.

A violation of the charged offense carries a statutory maximum penalty of 10 years in prison and a $1 million criminal fine for individuals. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by the victims of the crime, if either of those amounts is greater than the statutory maximum fine.

This case is the result of an ongoing federal antitrust investigation being conducted by the Antitrust Division with the assistance of the United States Postal Service Office of Inspector General, the FBI’s Washington Field Office, the FBI’s Philadelphia Field Office, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania. Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to the generic drug industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

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.

PHILADELPHIA – United States Attorney William M. McSwain announced that Myles Hannigan, 48, of Newtown Square, PA was sentenced to 52 months’ incarceration, one year supervised release, and ordered to pay $3,270,566 in restitution by United States District Judge Chad F. Kenney for filing false tax information with the Internal Revenue Service on behalf of his clients. At the conclusion of today’s sentencing hearing, Mr. Hannigan was immediately taken into custody and sent to federal prison.

The defendant pleaded guilty in July 2019 to obstructing the due administration of the IRS and seventeen counts of preparing materially false income tax returns, in connection with owning and operating Payroll Professionals, Incorporated (“PPI”) located in Media, Pennsylvania. PPI is a third-party payroll processor, which assists its clients by issuing payroll checks and forwarding tax payments to federal, state, and local authorities. PPI’s clients were small- to medium-sized businesses, and the clients relied on Hannigan to prepare and file tax Form 941, among others, with the IRS. Form 941 details employee wages that were paid by a company, and payroll tax withheld and paid to the IRS based on those wages. 

Beginning in January 2012 and continuing up to December 2016, Hannigan prepared and submitted Forms 941 that falsely reported information to the IRS. In particular, Hannigan reported depositing more money to pay tax debt than he had actually sent to the IRS, causing 35 of PPI’s client companies (who are considered victims in this case) to collectively underpay the IRS $3,270,566.89 for those tax years. These victims/companies gave Hannigan access to all necessary funds to pay the full tax debt, but Hannigan failed to do so. Hannigan hid his behavior from these victims/companies by presenting bogus documents that purported to be confirmation of payments he had made to the IRS on their behalf, and by re-directing IRS correspondence to his business address.

“This defendant – an accountant whose business it was to handle payroll taxes – committed fraud and stole from clients and the United States government,” said U.S. Attorney McSwain. “He also stole from the pockets of all taxpayers who do the right thing every year by paying their taxes. As we enter tax season this year, let this sentence serve as a warning to anyone who might be considering trying to get away with cheating the IRS: don’t do it – because it will not end well.”

“As the third-party payroll processor, Mr. Hannigan’s clients trusted him to prepare accurate employment tax returns and remit their payroll taxes to the IRS. Instead, he prepared fraudulent employment tax returns, lied to his clients and failed to remit their payroll taxes,” stated John R. Tafur, Special Agent in Charge, IRS Criminal Investigation, Newark Field Office. “Today’s sentencing holds Mr. Hannigan accountable for his crimes and shows how serious IRS Criminal Investigation is about pursuing individuals who intentionally cheat not only their clients but the entire taxpaying public.”

The case was investigated by the IRS and the Treasury Inspector General for Tax Administration, and is being prosecuted by Assistant United States Attorney Jason Bologna.

PHILADELPHIA – United States Attorney William M. McSwain announced that Fred Arena, 41, of Salem, New Jersey, was sentenced to six months’ imprisonment and two years’ supervised release by United States District Court Judge John R. Padova for making false statements to government agents.

Arena, who was an employee of a federal contractor at the Philadelphia Navy Yard and as such was required to obtain a federal security clearance, lied to obtain the clearance. He also subsequently lied to federal investigators who asked him about his answers to questions on the security clearance paperwork. He was arrested and detained in October 2019, and pleaded guilty to the charges in December 2019.

On January 10, 2019, Arena completed the standard Form SF-86 to obtain a federal security clearance for his employment. On that form, he was required to disclose whether he had ever been a member of an organization that used (or advocated the use of) force or violence to prevent others from exercising their constitutional rights. He falsely answered that he had not. In fact, Arena was an avowed member of Vanguard America, a white supremacist group that fits that description. His membership in Vanguard America and his participation in their activities were demonstrated by his many admissions and photos on social media, including events surrounding the 2017 ‘Unite the Right’ rally in Charlottesville, Virginia. On the same application, Arena was asked whether he had had property repossessed within the past seven years. He falsely answered that he had not. In fact, Arena had previously defaulted on a car loan, and his car was repossessed within the seven year window.

As part of his sentence, the Court specifically ordered that Arena shall, during the period of supervised release, be barred from membership and participation in any organization that advocates or practices unlawful acts of force or violence to discourage others from exercising their rights under the United States Constitution or any state of the United States.

“Lying on federal security clearance forms and to government agents are very serious matters,” said U.S. Attorney McSwain. “Further, no employee working for the federal government, being paid with taxpayer dollars, has any business being a member of a white supremacist group or espousing white supremacist views. Under the terms of today’s sentence, Arena’s activities will be closely monitored by the Court and Probation after he finishes his jail term in order to prevent him from engaging in new criminal behavior that may violate the civil rights of others and endanger the public.”

“Fred Arena lied about being a white supremacist to land a security clearance and government job he never should have had,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “When the FBI questioned him about his background, he continued this pattern of deception. There must be serious consequences for actively deceiving federal agents. Otherwise, critical investigations would grind to a halt, hobbling our justice system and giving criminals and terrorists the upper hand.”

The case was investigated by the Federal Bureau of Investigation – Joint Terrorism Task Force, the Defense Counterintelligence and Security Agency, the Gloucester County Prosecutor’s Office, the Salem County Prosecutor’s Office, the New Jersey State Police, the Camden County Police Department, the Naval Criminal Investigative Service (NCIS), and the New Jersey Office of Homeland Security and Preparedness, with assistance from the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney for the Eastern District of Pennsylvania Joseph LaBar and Assistant United States Attorney for the District of New Jersey Martha Nye.

PHILADELPHIA – U.S. Attorney McSwain was the keynote speaker at the Union League of Philadelphia’s annual Lincoln Day celebration.  In his remarks, U.S. Attorney McSwain discussed the importance of the rule of law, President Lincoln’s almost religious devotion to it, and how the rule of law is under attack today in Philadelphia on a number of fronts.  Finally, he offered his thoughts on what should be done in response and encouraged his fellow patriots to fight back against the City’s lawlessness.  His remarks as prepared for delivery are below.

***

Thank you, Charlie [Davidson], for that very kind introduction and for your leadership of the Union League.  Thank you, Ed Turzanski, for emcee-ing today and for being the Chair of these wonderful Lincoln Day festivities.  Thank you, Joan Carter, for your work as Chair of the Union League Legacy Foundation, which hosts and presents today’s program.  Thank you, John Meko, for your important work as the Executive Director of the Union League Legacy Foundation.  And a few final thank-yous to others at my table: thank you, Bob and Darlene Cavalier, for the invitation to speak here today; thank you, Frank and Dottie Giordano, for your many years of dedication to the Union League; and thank you, Bruce Meyer, Tom Pappas and Jim Straw, for your leadership.  I also want to acknowledge and thank my Senior Advisor, Clare Putnam Pozos, for her help in crafting today’s message and for her wise counsel, which I benefit from daily.

When I look out over this crowd of fellow patriots, I feel joy, I feel optimism, I feel solidarity, I feel strength, but most of all, I feel the blessings of God.  One of those blessings was the life of Abraham Lincoln.

I invite you to take a trip with me.  A trip through some of the streets and monuments of Washington D.C.  Whenever I make an overnight visit to our nation’s capital, I always stay at the Army-Navy Club on Farragut Square, just a few blocks from the White House.  My favorite thing to do in Washington – and one of my favorite things in life – is to rise early, step outside the Army-Navy Club, and run. 

I run along Farragut Square and make a left onto 17th Street.  It’s flat for a bit, and then it slopes downward.  I run by the Eisenhower Executive Office Building and the White House on my left – feeling pretty good at this point, mostly because I’m running downhill.  I pass the American Red Cross Headquarters on my right, and the ground flattens out.  I cross Constitution Avenue and see the World War II Memorial straight ahead.  As I approach, I briefly think about the Greatest Generation, and then I hang a right.  I wind my way around the World War II Memorial and I emerge onto the beauty of the Reflecting Pool.

It’s still mostly dark out, but the sun is starting to rise, and as I run with the Pool on my left, I can see the huge edifice of the Lincoln Memorial looming ahead of me.  At this point, I’ve found my stride.  I run with a purpose – to get to that Memorial as fast as possible.  Sometimes I even think to myself: I had better not slow down, President Lincoln is watching and he would not be impressed. 

As I approach the Memorial, I hop over the series of stairs that lead to the plaza, and I reach the foot of the Memorial, pausing for a second to stare up at the 58 steps that lead to the chamber, where President Lincoln sits.  (Yes, I have counted those steps, many times).  And then I run up those steps, greet the President, and turn around so that I’m now facing east, looking down along the Reflecting Pool towards the Washington Monument, pointing to the sky, with the sun rising behind it.  As I take in this remarkable vista, I say a silent prayer, thanking God for the blessing of America. 

I like being at the top.  For the purpose of my workout, I should probably get going down the stairs and along the Reflecting Pool again.  But sometimes I linger.  I turn around and I look at President Lincoln.  And I look at the words of the Gettysburg Address inscribed in the wall.  Staring at those words never gets old.  They are, in my opinion, the 10 greatest sentences ever spoken or written in the English language:

Four score and seven years ago, our fathers brought forth on this continent, a new nation, conceived in Liberty, and dedicated to the proposition that all men are created equal.  Now we are engaged in a great civil war, testing whether that nation, or any nation so conceived and so dedicated, can long endure.  We are met on a great battlefield of that war.  We have come to dedicate a portion of that field, as a final resting place for those who here gave their lives that that nation might live.  It is altogether fitting and proper that we should do this.

But in a larger sense, we cannot dedicate – we cannot consecrate – we cannot hallow – this ground.  The brave men, living and dead, who struggled here, have consecrated it, far above our poor power to add or detract.  The world will little note, nor long remember, what we say here, but it can never forget what they did here.  It is for us the living, rather, to be dedicated here to the unfinished work which they who fought here have thus far so nobly advanced.  It is rather for us to be here dedicated to the great task remaining before us – that from these honored dead we take increased devotion to that cause for which they gave the last full measure of devotion – that we here highly resolve that these dead shall not have died in vain – that this nation, under God, shall have a new birth of freedom – and that government of the people, by the people, for the people, shall not perish from the earth.

I can’t see, read, or say those words without feeling a jolt go through my body.  Having had my time with President Lincoln, I run down the steps of the Memorial and back along the Reflecting Pool, past the World War II Monument again, and up a slight rise to the Washington Monument.  After pausing there briefly, I turn back towards the Army-Navy Club – down the hill, across Constitution Avenue, up the hill along 17th Street, past the White House on my right, through Farragut Square, and finally, I arrive where I started.  My body is tired, but my heart is full.

So what did President Lincoln mean when he uttered those famous words – what was he really getting at?  President Lincoln was addressing the beauty and the promise of the law.  And he was addressing the will of the people.  In America, it is the law that is the will of the people.  The law is the manifestation of government “of the people, by the people, for the people.”  It is the law that gives birth to freedom.   

Moreover, it is federal law that reigns supreme: it is federal law that expresses the will of the nation.  But that federal law will only have lasting legitimacy – and will only live up to the potential that the Framers could see in it – if it protects all Americans, and does not exclude and subjugate an entire race. 

But the law is not self-enforcing.  It is the rule of law – namely, the enforcement of the law in an impartial, consistent manner – that gives the will of the people its power and its meaning.  President Lincoln held the rule of law in such high esteem that it almost had a spiritual quality to him.  The rule of law is literally the foundation of this nation and the foundation of everything that we hold dear as Americans.

Sadly, today, the rule of law is under attack, right here in Philadelphia.  The examples are all around us.  Presently, we have two of the most powerful members of City Council under federal indictment for allegations of selling their office.  The Mayor’s reaction to this is utter indifference.  But the City Council president’s reaction is even worse: he has rewarded both of these Councilmen with a promotion – handing them plum committee assignments and chairmanships.  Yes, these Councilmen are entitled to their day in court, and they will have it.  But these are grave allegations that should not elicit a shrug of the shoulders from our City leaders – especially given the City’s sorry track record of political corruption.  Just to name a few, one of the City’s recent U.S. Congressmen, the City’s previous District Attorney, and the City’s previous Sheriff are all currently sitting in federal prison.  And not too long ago, the most powerful state senator in the City’s history finished serving his federal sentence for 137 felony convictions.

Our City is also subjected to a District Attorney who willfully – even gleefully – ignores entire sections of the criminal code.  This District Attorney’s stated priority is “decarceration,” or in other words, emptying the jails in service of his radical, anti-law enforcement, political ideology.  An ideology which has nothing to do with guilt or innocence, or accountability, or public safety, or justice, or the rule of law.

Our City is further subjected to the radical concept of a so-called “safe injection site,” for the injection of illegal drugs, like heroin.  Any use of heroin for any purpose, anywhere, by anybody, in this country is illegal under federal law – there are no exceptions.  It should be self-evident that setting up a place for the purpose of injecting heroin is a grievous affront to the rule of law.  But we have a Mayor, and a District Attorney, and a handful of loud, misguided activists in our City who think otherwise – because to them, the rule of law is not the foundation of our nation, but rather something to be ignored when it suits their purposes.   

But the most flagrant affront to the rule of law in Philadelphia is its status as a so-called “sanctuary city.”  This is such an absurd concept that it’s hard to even wrap one’s head around it.  A sanctuary city?  Sanctuary from what, exactly?  A sanctuary from the enforcement of federal law.  Yes, a sanctuary from the supreme law of the land, the law that binds our nation together, enacted by our democratically-elected Congress, exercising its authority in our constitutional republic.

What an amazing concept – one that would have elated those who opposed the desegregation of lunch counters in the Deep South, or those who told Rosa Parks to go to the back of the bus, or those who stood in the schoolhouse doorway to prevent African-American children from entering. 

And this concept would have absolutely thrilled Southern slave owners.  A sanctuary from federal law, where they could continue their practice of human bondage.  They might have even been willing to fight a war in defense of that concept.  They lost that war.  And thank God for that.

The secessionists who defied federal authority during our nation’s Civil War are gone but not forgotten.  They did not fight in vain.  No, their spirit lives on, right here in Philadelphia, in the Cradle of Liberty.  Their spirit lives on in the hearts and minds of those who declare Philadelphia a “sanctuary city.”

President Lincoln would have been appalled by all of this.  Even at the young age of 28, he knew where he stood on the rule of law.  Here are his words from his Lyceum Address in Springfield, Illinois:

Let every American, every lover of liberty, every well wisher to his posterity, swear by the blood of the Revolution, never to violate in the least particular, the laws of this country; and never to tolerate their violation by others.  As the patriots of seventy-six did to the support of the Declaration of Independence, so to the support of the Constitution and Laws, let every American pledge his life, his property, and his sacred honor – let every man remember that to violate the law, is to trample on the blood of his father, and to tear the character of his own, and his children’s liberty.  Let reverence for the laws, be breathed by every American mother, to the lisping babe, that prattles on her lap – let it be taught in schools, in seminaries, and in colleges; let it be written in Primers, spelling books, and in Almanacs – let it be preached from the pulpit, proclaimed in legislative halls, and enforced in courts of justice.  And, in short, let it become the political religion of the nation; and let the old and the young, the rich and the poor, the grave and the gay, of all sexes and tongues, and colors and conditions, sacrifice unceasingly upon its altars.

So what should we do – what can we do – when the rule of law is under attack?  Come with me again to the National Mall.  I’ve thought about this question while running along the Reflecting Pool, while bounding up the steps of the Lincoln Memorial, and while standing at the top, looking back at the Washington Monument.  There’s a cleansing quality to exercise, a purity that comes with the physical exertion, as the noise from the outside world falls away.  It provides a mental clarity that answers our question.

And the answer is this:  we . . . must . . . fight.  We must fight for our nation’s founding values and we must fight for the rule of law.  When the rule of law is under attack, we must be willing to stand up and say – not in my neighborhood, not in my City, not in America, not on my watch.  We must fight for the principles that Abraham Lincoln lived and died for.

I am a son of Lincoln.  Everybody in this room is a son or daughter of Lincoln.  We are all children of Lincoln.  From this day forward, my friends, let us go forth together – and make him proud.

God bless you, God bless the Union League and God bless the United States of America.  Thank you.

PHILADELPHIA – United States Attorney William M. McSwain announced that Anthony Rocco Major, 47, of Willow Grove, PA was sentenced to 325 months’ imprisonment and 20 years’ supervised release by United States District Court Judge Joel Slomsky for multiple child exploitation offenses.

In July 2019, the defendant pleaded guilty to multiple counts of manufacturing child pornography. The charges arise from Major’s abuse of a girl under the age of 10. While the defendant was living in his mother’s home, he lured the victim to his upstairs bedroom with the promise of playing computer games. While upstairs and separated from other adults in the house, the defendant undressed the child and filmed himself sexually assaulting her. The victim suffered in silence for years, only coming forward after her mother caught the defendant in the act of molesting the victim’s younger sister in the home’s pool. Videos of the sexual assaults, along with other images of child pornography, were recovered from the computer in the defendant’s bedroom.

“The defendant is a dangerous predator who targeted very young children for years while living in his mother’s home, right under her nose,” said U.S. Attorney McSwain. “Instead of acting as a trusted, caring adult, Major violated the trust of these children, their mother and his own family in the most heinous way – and recorded his depravity for posterity. Today’s significant sentence will keep him safely behind bars and unable to commit similar crimes. Holding child sexual offenders accountable will continue to be a top priority of my Office and the entire Department of Justice.”

“Anthony Rocco Major will spend the rest of his life behind bars where he can no longer harm children,” said William S. Walker, Acting Special Agent in Charge of HSI Philadelphia. “The defendant violated his young victim twice. First, via sexual assault, and second by creating images of that depraved and horrific crime. Today’s sentence is well deserved. In partnering with our federal, state, local law enforcement allies, Homeland Security Investigations will remain steadfast in our efforts to rid our communities of child predators.”

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 United States 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 Department of Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Veronica J. Finkelstein.

The Department of Justice today announced that the following defendants were arrested and charged by Complaint on charges of conspiracy and violating the International Emergency Economic Powers Act (IEEPA) based on their attempt to transact in sanctioned Iranian oil:

• Nicholas Hovan, 33, of New York, NY;
• Zhenyu Wang, a/k/a “Bill Wang,” 39, of Dallas, TX;
• Robert Thwaites, 30, of Dallas, TX;
• Nicholas James Fuchs, 26, of Dallas, TX; and
• Daniel Ray Lane, 38, of McKinney, TX.

The defendants are each charged with one count of conspiracy and one count of violating IEEPA, based on allegations that from July 2019 to February 2020 they conspired in Philadelphia and elsewhere to arrange for the purchase of oil from the Islamic Republic of Iran, in violation of United States economic sanctions imposed on Iran, for sale to a refinery in China. 

The Complaint alleges that defendants Nicholas Hovan, James Fuchs, Robert Thwaites, and Daniel Ray Lane arranged to purchase the oil and sell it to a refinery in China represented by defendant Zhenyu Wang, a/k/a “Bill Wang.”

According to the Complaint, defendant Lane offered to further the conspiracy by laundering money through his company, STACK Royalties.  The charges further allege that the defendants agreed to use a Polish shell corporation as a straw seller of the illicit oil, and that they planned two shipments of oil per month going forward, all for great profit.  In addition, the charges allege that defendants Fuchs and Thwaites agreed to apply for foreign passports in order to set up offshore accounts that would not be reported to U.S. authorities.  

“With the goal of illegally enriching themselves, the defendants conspired for over eight months to devise a scheme to violate U.S. sanctions imposed on Iran, particularly the ban on foreign oil sales,” said Assistant Attorney General for National Security John C. Demers.  “The sale of oil is the lifeblood of the Iranian economy.  At the same time the United States was increasing its sanctions in order to pressure Iran to stop its malign activities, these defendants put greed ahead of country.  I commend the efforts of the agents and prosecutors who investigated and uncovered this brazen evasion of U.S. law.”

“The defendants in this case allegedly committed serious federal crimes that flew in direct contradiction to the United States’ national security interests,” said U.S. Attorney McSwain for the Eastern District of Pennsylvania.  “By devising a scheme to purchase oil from Iran, conceal its origins via a refinery in China and make tremendous profits, the defendants were also directly financially benefitting the nation of Iran in its quest to become a nuclear power, thus jeopardizing the safety and security of the United States and our allies.  These five defendants will be prosecuted to the fullest extent of the law in order to send the message that this type of subversion of U.S. policy and law will not be tolerated.”

If convicted, the defendants each face a maximum possible sentence of 25 years’ incarceration, as well as a maximum possible fine of $1.25 million.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Michael Rinaldi and First Assistant United States Attorney Jennifer Arbittier Williams, in partnership with Trial Attorney David Recker of the Department of Justice’s National Security Division, Counterintelligence and Export Control Section.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – United States Attorney William M. McSwain and Assistant Attorney General for National Security John C. Demers announced that the following defendants were arrested and charged by Complaint on charges of conspiracy and violating the International Emergency Economic Powers Act (“IEEPA”) based on their attempt to transact in sanctioned Iranian oil:

• Nicholas Hovan, age 33, of New York, NY;
• Zhenyu Wang, a/k/a “Bill Wang,” age 39, of Dallas, TX;
• Robert Thwaites, age 30, of Dallas, TX;
• Nicholas James Fuchs, age 26, of Dallas, TX; and
• Daniel Ray Lane, age 38, of McKinney, TX.

The defendants are each charged with one count of conspiracy and one count of violating IEEPA, based on allegations that from July 2019 to February 2020 they conspired in Philadelphia and elsewhere to arrange for the purchase of oil from the Islamic Republic of Iran, in violation of United States economic sanctions imposed on Iran, for sale to a refinery in China. 

The Complaint alleges that defendants Nicholas Hovan, James Fuchs, Robert Thwaites, and Daniel Ray Lane arranged to purchase the illegal oil and sell it to a refinery in China represented by defendant Zhenyu Wang, a/k/a “Bill Wang.”

According to the Complaint, defendant Lane offered to further the conspiracy by laundering money through his company, STACK Royalties.  The charges further allege that the defendants agreed to use a Polish shell corporation as a straw seller of the illicit oil, and that they planned two shipments of oil per month going forward, all for an expected profit of roughly $28 million-per-month.  In addition, the charges allege that defendants Fuchs and Wang agreed to apply for foreign passports in order to set up offshore accounts that would not be reported to U.S. authorities.  

“The defendants in this case allegedly committed serious federal crimes that are in direct contradiction to the United States’ national security interests,” said U.S. Attorney McSwain.  “By devising a scheme to purchase oil from Iran, conceal its origins via a refinery in China and make tremendous profits, the defendants were attempting to enrich both themselves and the nation of Iran -- thus jeopardizing the safety and security of the United States and our allies.  This type of subversion of U.S. policy and law will not be tolerated: these defendants will be prosecuted to the fullest extent of the law.”

“With the goal of illegally enriching themselves, the defendants conspired for over eight months to devise a scheme to violate U.S. sanctions imposed on Iran, particularly the ban on foreign oil sales,” said Assistant Attorney General for National Security John C. Demers.  “The sale of oil is the lifeblood of the Iranian economy.  At the same time the United States was increasing its sanctions in order to pressure Iran to stop its malign activities, these defendants put greed ahead of country.  I commend the efforts of the agents and prosecutors who investigated and uncovered this brazen evasion of U.S. law.”

“These defendants allegedly conspired to circumvent economic sanctions enacted to protect the United States’ national security,” said Tara A. McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “In their minds, sanctions weren’t so much an impediment as an opportunity. They thought they could make their millions and escape the United States Government’s notice. Well, as these charges show, they were wrong. The FBI takes sanctions violations extremely seriously and will bring all our investigative resources to bear, to end such harmful and illegal activity.”

If convicted, the defendants each face a maximum possible sentence of 25 years’ incarceration, as well as a maximum possible fine of $1.25 million.  Four of the arrests occurred in Philadelphia and one occurred in Texas.  The four defendants arrested in Philadelphia had initial appearances in federal court today.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael Rinaldi and First Assistant United States Attorney Jennifer Arbittier Williams, in partnership with Trial Attorney David Recker of the Department of Justice’s National Security Division, Counterespionage Section.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that James Connor, 24, of West Chester, PA was sentenced to 300 months’ imprisonment and a lifetime of supervised release by United States District Court Judge Juan R. Sanchez for multiple child exploitation offenses including manufacturing and possessing child pornography. His sentence also prohibits all contact with his victims and requires that he register as a sex offender under Megan’s Law.

The defendant pleaded guilty in August 2019 to multiple criminal charges involving his manufacture of child pornography and his sexual abuse and exploitation of a 14-year old child from January 2018 through April 2018. Connor was also convicted of collecting more than 21,000 images of child pornography downloaded from the internet that depicted children who were abused and photographed around the world. At the time he committed these crimes, Connor was already a convicted sex offender, having been convicted in the District of Massachusetts in connection with his cyberstalking and extortion involving a different 14-year old victim just two years prior, in 2016. He was on federal supervised release at the time of these crimes against his second 14-year old victim in 2018, and he was being supervised by the United States Probation Office.

“The defendant is a dangerous predator who repeatedly targeted children for sexual exploitation, even after facing prior criminal consequences,” said First Assistant U.S. Attorney Williams. “Clearly, Connor’s original conviction and prison sentence did nothing to dissuade him from preying on vulnerable children. Today’s significant sentence will keep him safely behind bars and unable to commit similar crimes for a much longer time. Protecting children from this type of abuse and holding their abusers accountable will always be a priority of our Office and the Department of Justice.”

“The victimization of a child is unconscionable,” said William S. Walker, Acting Special Agent in Charge of HSI Philadelphia. “Yet these crimes take place too often in our communities. Homeland Security Investigations and our law enforcement partners remain committed to wiping out the exploitation of children online. Today’s sentencing sends a strong message that there are clear consequences for such menacing behavior.”

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 United States 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 Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Michelle Rotella.

PHILADELPHIA – United States Attorney William M. McSwain announced that Mark Manigault, 41, of Philadelphia, PA was convicted at trial of being a felon in possession of a firearm, arising from his illegal possession of a 9mm pistol, loaded with 12 live rounds of ammunition.

On September 27, 2016, two Philadelphia Police officers observed the defendant and another individual sitting outside near a bar. Subsequently, the officers found a firearm hidden in the wheel well of a car parked near the defendants. Upon further investigation, the officers found a second firearm placed in the wheel well of another car. Using surveillance footage from the bar and from a private residence down the street, the officers determined that Manigault and the other individual possessed the firearms and had placed them in the wheel wells.

“Prosecuting, deterring and preventing violent crime in Philadelphia are top priorities of my Office,” said U.S. Attorney McSwain. “Illegal gun possession undeniably poses a serious threat to public safety because it often leads to violence. We are committed to working with the Philadelphia Police Department to combat this threat. Simply put, the more firearms we can take out of the hands of convicted felons, the safer our City will be. And when we bring illegal gun possession cases, the offenders must suffer serious punishment and not be routed into bogus diversionary programs like the ones being championed by the Philadelphia District Attorney. Otherwise, the prosecutions have no deterrent effect and the offenders are free to return to their life of crime.”

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, and is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.

PHILADELPHIA – United States Attorney William M. McSwain announced that Edward Stinson, 30, of Philadelphia, PA was sentenced to 360 months’ imprisonment and five years’ supervised release by United States District Court Judge Paul S. Diamond for leading the Stinson Drug Trafficking Group, which sold crack cocaine in and around the Norman Blumberg Apartment Complex in North Philadelphia from about 2010 through 2015.

In January 2019, the defendant was found guilty at trial of conspiracy to distribute 280 grams or more of cocaine base (“crack”) near a public housing facility, and several related drug charges, including unlawful use of a communication facility in furtherance of a drug felony. Stinson was the leader of the group, and he was assisted in the daily operations of the drug gang by multiple individuals, including his co-defendant at trial, Debra Baylor. They obtained bulk quantities of cocaine from suppliers and arranged for it to be cooked into crack cocaine inside various apartments in Blumberg. The crack cocaine was then distributed on the streets of North Philadelphia, often accompanied by violence that terrorized the neighborhood.

“For at least half a decade, Stinson and the members of his gang controlled the illicit drug market in this neighborhood,” said U.S. Attorney McSwain. “His drug trafficking organization operated 24 hours a day, 7 days a week, tearing at the fabric of the neighborhood at the expense of the families, seniors, and other neighbors living there. Today, justice prevailed and Stinson got what he deserved.”

The case was investigated by the Federal Bureau of Investigation and the Drug Enforcement Administration, and is being prosecuted by Assistant United States Attorneys Josh A. Davison and Joseph T. Labrum, III.

PHILADELPHIA – United States Attorney William M. McSwain announced that Richard Boyle, a/k/a the “Straw Hat Bandit,” 60, of Doylestown, PA, was sentenced today to 852 months’ imprisonment, five years’ supervised release and ordered to pay $495,000 restitution by United States District Court Judge Gene E.K. Pratter for committing 11 bank robberies, using a firearm during the commission of 10 of those robberies, and laundering the stolen proceeds.

During a brazen string of 11 separate bank robberies across Bucks and Montgomery counties between 2012 and 2016, the defendant stole a total of $495,686. A serial bank robber, sometimes referred to as the “Straw Hat Bandit” due to his preferred disguise, Boyle stole that stunning total by using threats of violence, including forcing bank employees to open their vaults and cash-rich ATM machines at gunpoint. He made careful plans to avoid apprehension, utilizing disguises, gloves, and even spreading bleach on the floor of the banks to conceal his DNA. Immediately prior to some of the robberies, the defendant attempted to slow the police response time to the bank robbery alarms by calling police or security about false reports, including a bomb threat at a country club, a planned attack at a mall, and a man with a gun at Temple University. After the robberies, the defendant laundered the stolen money by routing the funds through his photography business, Sky Eye View, in an attempt to conceal the source of this income.

“The days of the ‘Straw Hat Bandit’ terrorizing the Philadelphia suburbs are over,” said U.S. Attorney McSwain. “He will no longer be stealing, playing games with the police, or putting innocent lives at risk. Instead, he will be spending the rest of his life in prison – something that he richly deserves.”

“Richard Boyle served time in prison for a prior string of bank robberies,” said Tara McMahon, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Once out, he not only picked up where he’d left off, he escalated his crimes – carefully plotting diversions and disguises, and arming himself with a gun. For terrorizing the employees of nearly a dozen banks and putting people’s lives at risk, he’s back behind bars, and this lengthy sentence ensures the so-called ‘Straw Hat Bandit’ won’t ride again anytime soon.”

The case was investigated by the Federal Bureau of Investigation and the Plymouth Township Police Department with assistance from the Pennsylvania State Police, the Montgomery County Department of Public Safety, the Horsham Police Department, the Lower Makefield Township Police Department, the Montgomery Township Police Department, the Middletown Police Department, the Philadelphia Police Department, the Newtown Township Police Department, the Upper Dublin Police Department, the Upper Providence Township Police Department, the Whitpain Township Police Department, the Pennsylvania Department of Corrections, and the Pennsylvania Board of Probation and Parole. The case was prosecuted by Assistant United States Attorneys Robert J. Livermore and Sean P. McDonnell.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Donnie Smith, 40, Abid Stevens, 39, and Maurice Quinn, 41, all of Philadelphia, PA were convicted at trial of Hobbs Act robbery and carrying and using a firearm during the commission of a federal crime. The charges stem from an armed robbery of a corner grocery store in East Mount Airy in Philadelphia.

In March 2019, defendant Quinn entered RD Grocery and complained to a store employee that the store’s ATM had given him fake money. He then attempted to take $100 from the register, as well as a firearm kept by the owner behind the counter. When he was unsuccessful in grabbing the money or the firearm, Quinn left and returned with defendants Smith and Stevens, both of whom were armed with black semi-automatic handguns. Smith brandished his firearm in the store employee’s face and took the store owner’s firearm from behind the counter. Quinn again attempted to take cash from the register but failed. He then demanded that the store employee open the register for him; the employee withdrew $100 in cash and the defendants left.

Philadelphia Police officers arrived as defendant Smith drove away in his car. After a brief pursuit, Smith abandoned his car and fled on foot. Officers recovered the stolen firearm and an article of clothing from Smith’s car. Using the recovered items and surveillance footage of the robbery, Philadelphia Police officers were able to identify the defendants.

“If you rob a store with a gun in Philadelphia, you can stand by for serious federal consequences,” said U.S. Attorney McSwain. “The store employee here was simply doing his job and putting in an honest day’s work – he should not have had to worry about someone putting a semi-automatic weapon in his face. My Office is focused on punishing and deterring this type of violent crime as we grapple with the public safety crisis in Philadelphia that is being abetted by the District Attorney’s reckless policies.”

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 Robert Eckert and Special Assistant United States Attorney Ashley N. Martin.

UPDATE

The indictment described in the press release below was dismissed with prejudice by the court on November 29, 2023.

A federal grand jury in the U.S. District Court for the Eastern District of Pennsylvania returned an indictment against a former senior executive for his role in conspiracies to fix prices, rig bids, and allocate customers for generic drugs, and for making a false statement to federal agents who were investigating those conspiracies, the Department of Justice announced today.

The three-count indictment, filed today in Philadelphia, charges Ara Aprahamian, a former top executive at a generic pharmaceutical company, with participating in two conspiracies to fix prices, rig bids, and allocate customers for generic drugs. Aprahamian is charged with participating in the conspiracies when he was the Vice President of Marketing, and then the Vice President of Sales and Marketing at a corporation headquartered in New York engaged in the marketing and sale of generic drugs in the United States.

Count One charges Aprahamian for his role in a conspiracy with a generic drug company based in New Jersey and other individuals, from at least as early as March 2013 and continuing until at least June 2015. Count Two charges Aprahamian for his role in a conspiracy with a generic drug company based in Pennsylvania and other individuals, from at least as early as May 2013 and continuing until at least December 2015. According to the indictment, the defendant and his co-conspirators agreed to increase prices and allocate customers for numerous drugs, including, but not limited to, medications used to treat and manage arthritis, seizures, pain, various skin conditions, and blood clots.

In addition, Count Three of the indictment charges Aprahamian with making a false statement to an FBI agent when the FBI executed a search warrant at Aprahamian’s employer’s headquarters in September 2016. According to the indictment, Aprahamian falsely stated to the FBI that he never had a conversation with a competitor about the pricing of a product before that product was launched.

“Today’s charges demonstrate the Antitrust Division’s resolve in rooting out collusion that corrupted the marketplace for generic drugs and led to higher prices for critical medications used by millions of Americans,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Along with our law enforcement partners, the Division will ensure that executives who cheat consumers are not immune from our antitrust laws, and that those who seek to impede or obstruct our investigations are prosecuted to the full extent of the law.”

“The U.S. Postal Service Office of Inspector General is committed to ensuring that any activity related to price-fixing, bid-rigging and/or market allocation in the generic drugs industry is identified and aggressively investigated,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General. “The U.S. Postal Service spends hundreds of millions of dollars every year on health care costs, including expenses related to prescription drugs. This indictment is a testament to the dedication and determination of the legal and investigative teams and sends a clear message to anyone who would participate in this sort of activity. Along with our colleagues at the Department of Justice Antitrust Division and the Federal Bureau of Investigation, the U.S. Postal Service Office of Inspector General stands ready to support these critical inquiries going forward.”

“Americans suffering from chronic health problems and pain conditions should not have to be concerned about collusion by pharmaceutical executives that could increase the price of their essential medications,” said Timothy R. Slater, Assistant Director in Charge of the FBI’s Washington Field Office. “The FBI is dedicated to investigating and bringing those responsible for these crimes to justice, on behalf of the American public.”

“My Office is proud to announce yet another enforcement action in this ongoing criminal investigation with the Antitrust Division,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania. “This is the third pharmaceutical price fixing case announced in our District in just the last year, following cases against Rising Pharmaceuticals in December 2019, and Heritage Pharmaceuticals in May 2019. Along with our partners at the Antitrust Division, we remain heavily focused on illegal price fixing and market allocation in generic drugs and on addressing the impact those practices have on federal healthcare programs like Medicare and Medicaid. These criminal charges against a former top corporate executive are yet another important step in that fight.”

Aprahamian is the third executive charged for his participation in conspiracies to fix prices, rig bids, and allocate customers for generic drugs. The two individuals previously charged entered guilty pleas in January 2017. To date, two companies have also been charged. Both corporate charges were resolved by deferred prosecution agreement.

An indictment merely alleges that crimes have been committed, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt.

The offense charged in Counts One and Two carries a statutory maximum penalty of 10 years in prison and a $1 million fine. The maximum fine may be increased to twice the gain derived from the crime or twice the loss suffered by victims if either amount is greater than $1 million. The offense charged in Count Three is punishable by imprisonment for not more than five years, and a fine of not more than $250,000.

This case is the result of an ongoing federal antitrust investigation into price fixing, bid rigging and other anticompetitive conduct in the generic pharmaceutical industry, which is being conducted by the Antitrust Division with the assistance of the United States Postal Service Office of Inspector General, the FBI’s Washington Field Office, the FBI’s Philadelphia Field Office, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania. Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to the generic pharmaceutical industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258 or visit www.justice.gov/atr/contact/newcase.html.

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.

PHILADELPHIA – United States Attorney William M. McSwain announced that Philip Elvin Riehl, 68, of Bethel Township, Berks County, PA, was charged by Information with conspiracy, securities fraud, and wire fraud, stemming from an investigation into a Ponzi scheme worth approximately $60 million. The alleged fraud targeted members of the Mennonite and Amish religious communities in Pennsylvania and elsewhere and is one of the largest Pennsylvania-based alleged Ponzi schemes in history.

Riehl, an accountant, is alleged to have fraudulently solicited tens of millions of dollars in investments, from his accounting clients and others, into a bogus 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 Information further alleges that Riehl 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.

The allegations constitute what is sometimes 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 victims of Riehl’s alleged scheme were generally members of the Mennonite or Amish religious communities who wanted a safe and secure investment, operated within their community and in a manner consistent with their religious principles. The charges note that Riehl was a co-religionist in the Mennonite religious community.

 “These investors were looking for honesty and integrity when deciding where and with whom to invest their money,” said U.S. Attorney McSwain. “According to the Information, Riehl presented himself as a trusted member of their religious community, only to betray that trust and swindle them out of tens of millions of dollars. It is only natural for members of a tightly knit community to want to take care of one another, but Riehl did not care about anyone but himself. Fraudsters must be held accountable under the law – no matter what community they belong to – for justice to prevail.”

“So long as there are people with money to invest, there will be swindlers ready to take their money under false pretenses,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “But it is particularly loathsome when these criminals exploit trusting members of their own church or community. According to the Information, Philip Riehl repeatedly misrepresented what he was doing with his investors’ money – people who took him at his word. The FBI will continue to investigate and hold accountable those who engage in such financial fraud.”

If convicted, the defendant faces a maximum possible sentence of 45 years in prison, a $5,500,000 fine, a 3-year term of supervised release, forfeiture, and mandatory restitution.

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.

An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – United States Attorney William M. McSwain announced that Abdoulaye Coumbassa, 44, of Philadelphia, PA was sentenced to 24 months’ imprisonment, one year supervised release, and ordered to pay $224,478 in restitution to the IRS by United States District Court Judge R. Barclay Surrick for preparing and filing false tax returns for clients of his tax preparation business, Abbi Tax Services and Accounting, in Philadelphia.

The defendant pleaded guilty in October 2019 to the offense of aiding and assisting in the preparation of false returns, and agreed with an estimate of the tax losses he caused exceeding $2 million. From at least 2012 to 2015, Coumbassa prepared and filed fraudulent Income Tax Returns, and related forms and schedules, on behalf of his clients. Coumbassa primarily falsified these returns by attaching false ‘Schedule C’ forms to the clients’ returns. These ‘Schedule C’ forms falsely claimed that the client had a business that lost money, and the inclusion of these false Schedules offset the clients’ taxable income -- thereby either inflating the refunds his clients would otherwise be owed, or causing entitlement to refunds where taxes should have been owed.

“Tax preparers are supposed to be part of the gatekeeping system that ensures that our tax laws are followed. Here, the defendant did just the opposite and planned a massive fraud,” said U.S. Attorney McSwain. “When our tax laws are ignored, especially to this extent, we all lose. The defendant not only broke the law, but he also victimized individuals who simply wanted to do the right thing and pay their taxes – and they are now working to get their fiscal lives back in order. This sentence should send a message to tax cheats: don’t do it, or else my Office will investigate your crimes and you may soon be headed to jail.”

“Tax refunds should only be issued to taxpayers who are entitled to them,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. “Falsifying a tax return to obtain or bolster a tax refund is a crime; one that the courts take very seriously, as evidenced by the sentence Mr. Coumbassa received.”

The case was investigated by the Internal Revenue Service, and is being prosecuted by Assistant United States Attorney Bea L. Witzleben and Department of Justice Tax Division Trial Attorney Sarah Ranney.

A former Philadelphia tax return preparer was sentenced to 24 months in prison today for aiding in the preparation of a false client tax return, 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 court documents and statements made in court, Abdoulaye Coumbassa owned and operated Abbi Tax Services and Accounting (Abbi Tax). From at least 2012 to 2015, Coumbassa prepared and filed fraudulent tax returns and related forms and schedules on behalf of his clients. By reporting fictitious businesses with false business losses, Coumbassa sought inflated refunds for his clients from the Internal Revenue Service (IRS). At times, Coumbassa included the fake business losses without the client’s knowledge. In total, Coumbassa caused a tax loss of $2.1 million to the IRS.

In addition to the term of imprisonment, U.S. District Judge R. Barclay Surrick ordered Coumbassa to serve one year of supervised release and to pay approximately $250,000 in restitution to the United States.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney McSwain commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Assistant U.S. Attorney Bea Witzleben, and Trial Attorney Sarah Ranney of the Tax Division, who prosecuted the case.

Additional information about the Tax Division’s enforcement efforts can be found on the division’s website.