Eastern District of Pennsylvania
Press releases recorded for this federal judicial district.
Former Tinto Dishwasher Sentenced to Nearly Four Years in Prison for Unemployment Fraud Scheme Targeting CoworkersRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Terron Mason Moore, 34, of Philadelphia, PA was sentenced to 45 months’ incarceration, three years supervised release and restitution of $171,895 by Judge Gerald J. Pappert. In February 2019, defendant pled guilty to seventeen counts of mail fraud, conversion of government funds, and aggravated identity theft in connection with his scheme to defraud the Pennsylvania Unemployment Compensation Fund of $171,895.
For over three years, the defendant operated a fraud and identity theft scheme, by stealing the personal identifiable information of approximately twenty-one individuals, including their social security numbers. He used this information to file fraudulent unemployment compensation claims for the purpose of unlawfully obtaining government funds which are reserved for the purpose of assisting working people who have lost their jobs.
The defendant chose targets known to him as they all worked at his same employer, the popular Philadelphia restaurant Tinto. Many of the victims were students or at the start of their careers, who have suffered financial harm due to defendant’s crimes. By taking advantage of his coworkers, the defendant funded a lifestyle which he otherwise would not have enjoyed including trips to Jamaica and Las Vegas.
“Instead of putting in an honest day’s work and being paid for those efforts, like his victims all did, the defendant resorted to fraud and theft,” said U.S. Attorney McSwain. “He stole from his peers – people who were working hard to build their lives in an honest manner, which have now been compromised, and who have suffered great emotional distress as they try to reconstruct their credit and good names. And ironically, he stole from the very same taxpayer funded program that assisted him when he previously filed his own unemployment claim to receive benefits after losing his restaurant job.”
“Terron Mason-Moore defrauded the Pennsylvania Department of Labor and Industry by misusing the stolen identities of his co-workers to obtain over $170,000 in unemployment compensation benefits to which he was not entitled. We will continue to work with our law enforcement partners and state workforce agencies to protect the integrity of unemployment insurance benefit programs,” stated Richard Deer, Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.
The case was investigated by U.S. Department of Labor, United States Postal Inspection – Office of Inspector General, Social Security Administration, and is being prosecuted by Special Assistant United States Attorney Megan Curran.
Former Bucks County Judge Sentenced to 6 ½ Years in Prison for Public CorruptionRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that John Waltman, 61, of Trevose, Pennsylvania was sentenced to 78 months’ incarceration by Judge Gene E.K. Pratter. In January 2019, the defendant pleaded guilty to conspiracy to commit money laundering and Hobbs Act Extortion Under Color of Official Right.
From 2011 to December 2016, Waltman served as a Magisterial District Judge in Bucks County, Pennsylvania. Together with his co-defendants who will both be sentenced later this week, Bernard Rafferty and Robert Hoopes, Waltman participated in a scheme to extort bribes and kickbacks from Bucks County businessmen. They also conspired to launder money for individuals they believed were engaged in narcotics trafficking and health care fraud.
For example, in November 2016, Waltman, Hoopes, and Rafferty accepted a bribe of $1,000, as well as the promise of other fees, in exchange for Waltman, Hoopes, and Rafferty to use their positions as public officials to “fix” a traffic case before Waltman in Bucks County Magisterial District Court.
In addition, from June 2015 to November 2016, Waltman, Hoopes, and Rafferty conspired to launder funds represented to be proceeds from health care fraud, illegal drug trafficking, and bank fraud. From June 2016 to August 2016, Waltman, Hoopes, and Rafferty laundered $400,000 in cash, represented to be proceeds from health care fraud and illegal drug trafficking, and took money laundering fees totaling $80,000 in cash.
“The laws of the land apply to everyone – especially to public officials who hold office to serve the public good,” said U.S. Attorney McSwain. “When public servants choose to flout the rule of law, they disgrace themselves and the offices they hold. Every public official should be on notice after today’s sentence: federal law enforcement is watching and we will hold you accountable if you make the wrong choices.”
“A crooked judge trading on his position of trust is beyond disheartening,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “It's offensive. At every level, the justice system must operate in a fair and impartial manner. This is exactly the sort of case that deepens the public's distrust of elected officials and government, which is why the FBI takes public corruption so seriously.”
“It is unacceptable for anyone, let alone an elected public official, to engage in such conduct,” said IRS-Criminal Investigation Special Agent in Charge Guy Ficco. “John Waltman betrayed the public’s trust when he accepted bribes in exchange for official acts. The sentence he received shows that there is no tolerance for such criminal behavior.”
“Today’s sentencing reflects Homeland Security Investigations’ commitment to, and focus on, the investigation of financial crimes,” said Marlon V. Miller, Special Agent in Charge of HSI Philadelphia. “By using his official position for his personal gain, Mr. Waltman violated the trust placed in him by the public. HSI and our law enforcement partners will continue to vigorously investigate those who conspire to knowingly launder illicit funds derived from criminal activities.”
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigations, Homeland Security Investigations, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorneys Louis Lappen and Richard Barrett.
Three Child Predators Sentenced in Federal Court This WeekRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that three men from across the Eastern District of Pennsylvania have been sentenced to prison this week by federal judges for child exploitation offenses in separate cases. Arthur Schlegel, 48 of Roseto, PA was sentenced to fifteen years imprisonment, twenty years supervised release and $10,000 restitution by Judge Joseph Leeson on June 4, 2019; Kenneth Laporte, 43, of Philadelphia, PA was sentenced to fifteen years imprisonment and lifetime supervised release by Judge Harvey Bartle III on June 4, 2019; and Michael Seibert, 32, of Allentown, PA was sentenced to thirty years imprisonment and lifetime supervised release by Judge Joseph Leeson on June 6, 2019.
In the Schlegel case, the defendant pleaded guilty to multiple counts of possession and distribution of child pornography. For years, Schlegel amassed a collection of over a thousand images and videos depicting the sexual abuse of children. He also shared child sexual assault images and videos online.
In the Laporte case, the defendant pleaded guilty to multiple counts of receipt and possession of child pornography for events that occurred within months of the defendant being released from federal prison after serving a sentence for similar charges.
In the Seibert case, the defendant pleaded guilty to multiple counts of manufacturing and possession of child pornography. Posing as a teenage boy, Seibert visited internet chat rooms to communicate with multiple minor girls between the ages of 10 and 14, and persuaded them to take pornographic images of themselves and send the images to him. The defendant also downloaded hundreds of digital images and dozens of videos of child pornography from internet websites.
“The nature of these crimes is horrifying and the negative impact on the victims can never be fully understood or appreciated, which is why my Office is committed to working with our law enforcement partners to identify, investigate and prosecute these dangerous predators,” said U.S. Attorney William M. McSwain. “Child exploitation is a pervasive problem — made more so by the accessibility of the internet — that demands an aggressive response. We thank the Judges in these cases for delivering justice to these defendants through lengthy sentences.”
“Laporte took advantage of the justice system by sexually exploiting children just months after being released from federal prison for similar offenses,” said Michael Harpster, Special Agent in Charge of the Philadelphia Division of the FBI. “Not only did he blatantly disregard the court, but he continued exploiting innocent children. This lengthy sentence makes certain that Laporte will not be afforded any further opportunity to commit these heinous acts. Society is a safer place with Laporte behind bars.”
“Child sexual exploitation is one of the most despicable crimes committed,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “These substantial prison sentences serve as a reminder of the strong commitment by Homeland Security Investigations to collaborate with our law enforcement and community partners to bring online child predators to justice.”
These cases were 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 Schlegel case was investigated by the Department of Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Sherri Stephan. The Laporte case was investigated by the Federal Bureau of Investigation and the United States Probation Office, and is being prosecuted by Assistant United States Attorney Everett Witherell. The Seibert case was investigated by Department of Homeland Security Investigations and the Delaware County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Frank Labor.
United States Intervenes in False Claims Act Lawsuit Against Drug Maker Mallinckrodt Alleging Illegal KickbacksRead the Press Release
The United States filed a complaint under the False Claims Act against Mallinckrodt ARD LLC, formerly known as Mallinckrodt ARD Inc. and previously Questcor Pharmaceuticals Inc., in the U.S. District Court for the Eastern District of Pennsylvania, the Department of Justice announced today. The government alleges that Mallinckrodt and Questcor (collectively Mallinckrodt) engaged in conduct that violated the False Claims Act by using a foundation as a conduit to pay kickbacks in connection with its drug H.P. Acthar Gel (Acthar) from 2010 through 2014.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.
The government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies for Acthar so it could market the drug as “free” to doctors and patients while increasing its price. Mallinckrodt allegedly paid these illegal subsidies through three funds that Mallinckrodt had a foundation set up to pay Acthar Medicare copays to the exclusion of other drugs. The government alleges that Mallinckrodt then routed patients with Acthar prescriptions to these funds. Mallinckrodt allegedly made continuing payments as the sole “donor” to these funds, to keep subsidizing Acthar Medicare copays as it expanded its sales of the drug. The government alleges that the Company paid these subsidies to induce Medicare-reimbursed purchases of Acthar at its ever-increasing price, and used the subsidies to counteract doctor and patient concerns about the drug’s high cost and to market the drug as “free.” The government further alleges that since its acquisition of Acthar in 2001, Mallinckrodt had raised its price from approximately $50 to over $32,200 per 5 milliliter vial by the end of 2014.
“Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices.”
“Medicare Part D is an important program that our nation instituted to help seniors cover prescription drug costs, and Congress enacted safeguards to ensure Part D’s fiscal viability for those citizens,” said United States Attorney William M. McSwain. “In my office’s continued commitment to fighting health care fraud, we will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise cannot do – pay patients’ co-pays to circumvent these safeguards and increase their profits.”
"Medicare rules are designed to protect beneficiaries and taxpayer dollars," said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. "HHS-OIG and the U.S. Attorney's Office will continue to work together to fight health care fraud and investigate allegations of co-pay and kickback violations."
The allegations that are the subject of the government’s complaint were originally brought in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act. The act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases here, which are captioned United States of America ex rel. Strunck et al. v. Mallinckrodt ARD, Inc., No. 12-CV-0175 (E.D. Pa.), and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).
This matter is being handled by the Civil Division’s Commercial Litigation Branch, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the U.S. Department of Health and Human Services Office of Inspector General.
The claims asserted by the United States are allegations only and there has been no determination of liability.
United States Files Lawsuit Against Drug Maker That Jacked up Drug Prices from $50 to $32,000Read the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that the United States filed a complaint under the False Claims Act against Mallinckrodt ARD LLC, formerly known as Questcor Pharmaceuticals, Inc. (“Mallinckrodt”), in the U.S. District Court for the Eastern District of Pennsylvania. The government alleges that Mallinckrodt violated the False Claims Act by using a foundation as a conduit to pay kickbacks in connection with its drug H.P. Acthar Gel (“Acthar”) from 2010 through 2014 in a scheme that was designed to enable Mallinckrodt to raise the price of a vial of Acthar from $50 to $32,000. Acthar is a drug available to treat certain conditions including acute exacerbations in multiple sclerosis, lupus, and rheumatoid arthritis.
When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively, “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations.
The government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies for Acthar, so it could market the drug as “free” to doctors and patients despite increasing Acthar’s price astronomically. Mallinckrodt allegedly paid these illegal subsidies through three funds that it established at the foundation to the exclusion of other drugs. The government alleges that Mallinckrodt was the sole “donor” to these funds and routed Acthar patients there to receive virtually guaranteed copay subsidies to counteract doctor and patient concerns about the drug’s high cost. By doing so, Mallinckrodt marketed Acthar as “free” to patients and caused the submission of millions of dollars in false Acthar claims to Medicare. The subsidies it routed through these funds drove Acthar prescribing and was a proven method that negated concerns about the cost of the drug, allowing Mallincrkodt to continually raise its price.
From the time of Mallinckrodt’s acquisition of the drug Acthar in 2001, Mallinckrodt raised the price from approximately $50 per vial to over $32,000 per vial by the end of 2014.
“Drug companies are not allowed to pay patients’ co-pays. That rule is designed to prevent the very thing Mallinckrodt allegedly did here – outrageously jack up Acthar’s price and leave the government with the entire bill,” said U.S. Attorney McSwain. “We will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise are not allowed to do. That’s an illegal kickback and undermines the viability of Medicare Part D, which our nation instituted to help seniors cover prescription drug costs.”
“Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices.”
“Medicare rules are designed to protect beneficiaries and taxpayer dollars,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. “HHS-OIG and the U.S. Attorney's Office will continue to work together to fight health care fraud and investigate allegations of co-pay and kickback violations.”
The allegations in this case were brought in two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.
“We sincerely thank the relators in this case. Together with their lawyers, these three citizens provided essential assistance to the government throughout its investigation. Without their willingness to shed light on allegations of fraud, preserving government program funds would be far more challenging,” said U.S. Attorney McSwain.
This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Pennsylvania in conjunction with Civil Division’s Commercial Litigation Branch, and the U.S. Department of Health and Human Services Office of Inspector General. For the U.S. Attorney’s Office, this case is handled by Assistant United States Attorney Colin Cherico and Auditor George Niedzwicki.
The cases are captioned United States of America ex rel. Charles Strunck et al. v. Questor Pharmaceuticals, Inc., No. 12-CV-0175 (E.D. Pa.) and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The United States filed a notice of intervention in these two cases on March 6, 2019.
The claims asserted against defendant are allegations only and there has been no determination of liability.
Langhorne Podiatrist to Pay $75,000 and Cease Prescribing Schedule II Opioids for Two YearsRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Langhorne podiatrist Dr. Ronald Klein will pay $75,000 and stop prescribing Schedule II opioids, a class of controlled substances with a high potential for abuse, for two years to resolve allegations that he improperly prescribed opioids to one of his patients from October 2014 to October 2016.
The settlement resolves allegations that over two years, Dr. Klein wrote prescriptions for one of his patients that had no legitimate medical purpose and were not issued in the usual course of professional practice. In particular, Klein allegedly wrote improper prescriptions, including for opioids, when multiple prescriptions were written for the same drug on the same day, were written too early based upon the previous prescription’s supply and directions for use, and were not supported by contemporaneous medical histories or physical examinations.
“Healthcare providers have an unwavering duty to their patients to ensure that opioid prescriptions are written for a legitimate medical purpose, and are consistent with the law and the accepted standard of care,” said U.S. Attorney McSwain. “This settlement is the latest example of my Office’s commitment to using all of our enforcement tools to ensure that providers are living up to that duty, and more broadly, of our commitment to taking a multi-pronged approach to combatting the opioid epidemic. We are grateful to our partners at the Drug Enforcement Administration for helping us investigate improper opioid prescriptions.”
This investigation was conducted with the Philadelphia Field Division of the Drug Enforcement Administration. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Denis Cooke handled the investigation and settlement.
The claims resolved by the settlement are allegations only; there has been no determination of liability.
Delaware County Man Indicted on Multiple Child Exploitation ChargesRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that John C. Dellarocco, Jr., 24, of Holmes, Pennsylvania was indicted today on four counts of use of an interstate commerce facility to entice and attempt to entice a minor to engage in sexual conduct, seven counts of manufacture and attempted manufacture of child pornography, and one count of possession of child pornography.
These charges arise from an investigation into the defendant’s communications with at least eleven minor female children on an Internet-based application in which the defendant persuaded the girls to engage in sexual activity and sexually explicit conduct by photographing themselves engaging in that conduct and transmitting the images to the defendant via the Internet.
“Child exploitation is a pervasive problem – made more so by the accessibility of the Internet and digital media – that demands an aggressive response,” said U.S. Attorney McSwain. “The allegations in this case are particularly disturbing because of the number of children the defendant was able to target and communicate with on the Internet. We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”
“Child predators who produce child pornography are among the worst offenders. The FBI and our law enforcement partners work tirelessly to protect children from predators like Dellarocco. Today's Indictment sends the message that the FBI remains committed to pursuing justice for these young victims,” said FBI Special Agent-in-Charge Michael Harpster.
If convicted, the defendant faces a maximum possible sentence of life imprisonment.
The case was investigated by the Federal Bureau of Investigation (FBI) and the Delaware County District Attorney's Internet Crimes Against Children Taskforce, and is being prosecuted by Assistant United States Attorney Roberta Benjamin.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pharmaceutical Company Admits to Price Fixing in Violation of Antitrust Law, Resolves Related False Claims Act ViolationsRead the Press Release
Heritage Pharmaceuticals Inc., a generic pharmaceutical company headquartered in Eatontown, New Jersey, was charged for conspiring with its competitors to fix prices, rig bids, and allocate customers, the Department of Justice announced today.
According to a one-count felony charge filed yesterday in the United States District Court for the Eastern District of Pennsylvania in Philadelphia, from about April 2014 until at least December 2015, Heritage participated in a criminal antitrust conspiracy with other companies and individuals engaged in the production and sale of generic pharmaceuticals, a purpose of which was to fix prices, rig bids, and allocate customers for glyburide, a medicine used to treat diabetes. This charge is the third in the Department of Justice’s Antitrust Division’s ongoing investigation; Heritage’s former CEO and its former president were previously charged.
The Antitrust Division also announced a deferred prosecution agreement resolving the charge, under which Heritage admits that it conspired to fix prices, rig bids, and allocate customers for glyburide. Under the agreement’s terms, Heritage will pay a $225,000 criminal penalty and cooperate fully with the ongoing criminal investigation. The United States will defer prosecuting Heritage for a period of three years to allow the company to comply with the agreement’s terms. The agreement will not be final until accepted by the court.
“American consumers have the right to generic drugs sold at prices set by competition, not collusion,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “It is particularly galling that, when healthcare prices in the United States are already high, certain generic pharmaceutical companies and executives engaged in collusive conduct at the expense of individuals who depend on critical medications. Heritage and its co-conspirators cheated and exploited vulnerable American patients to pad their bottom line.” Delrahim continued, “this resolution — requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation — sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated. The Division and its law enforcement partners, including the FBI and the U.S. Postal Service Office of Inspector General, will continue to hold companies and individuals accountable for collusion that undermines the integrity of the market for drugs.”
The Antitrust Division entered into the deferred prosecution agreement with Heritage based on the individual facts and circumstances of this case. Among those facts and circumstances, the agreement specifically identifies the company’s substantial and ongoing cooperation with the investigation to date, including its disclosure of information regarding criminal antitrust violations involving drugs other than those identified in the criminal charge and the agreement. According to the agreement, this cooperation has allowed the United States to advance its investigation into criminal antitrust conspiracies among other manufacturers of generic pharmaceuticals. Other facts and circumstances identified in the agreement include: Heritage has agreed to resolve all civil claims relating to federal health care programs arising from its conduct; and a conviction (including a guilty plea) would likely result in the Office of the Inspector General of the Department of Health and Human Services imposing mandatory exclusion of Heritage from all federal health care programs under 42 U.S.C. § 1320a-7 for a period of at least five years, which would result in substantial consequences, including to American consumers. The agreement can ensure that integrity has been restored to Heritage’s operations and preserve its financial viability while preserving the United States’ ability to prosecute it should material breaches occur.
“Price fixing, bid rigging and market allocation promote an environment antithetical to free and open competition in the marketplace. When this occurs, the consumer is not guaranteed the best products at the lowest prices,” 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 associated costs, including expenses related to prescription drugs. Along with the Department of Justice and our federal law enforcement partners, the USPS Office of Inspector General will aggressively investigate those who would engage in this type of harmful conduct.”
“The availability of generic medications should be a boon to the public, giving them access to proven drugs at lower prices,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “When generic pharmaceutical firms engage in price fixing and bid rigging in order to pad their profits, they not only disrupt the free market but do so on the backs of the folks who depend on these drugs. The FBI will continue to investigate and hold accountable companies engaged in such illegal and anticompetitive acts.”
In a separate civil resolution, Heritage has agreed to pay $7.1 million to resolve allegations under the False Claims Act related to the price-fixing conspiracy. The government alleged that between 2012 and 2015, Heritage paid and received remuneration through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers for certain generic drugs in violation of the Anti-Kickback Statute, and that its sale of such drugs resulted in claims submitted to or purchases by federal healthcare programs. The drugs allegedly implicated in this scheme address a wide variety of health conditions, and include hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide.
“Price fixing of generic drugs harms federal health care programs and the beneficiaries those programs serve,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “The Department of Justice will use every tool at its disposal to hold generic drug manufacturers accountable for wrongdoing.”
“My Office is proud to announce both the civil healthcare fraud settlement with the Civil Division and the deferred prosecution agreement with the Antitrust Division,” said U.S. Attorney McSwain. “Price fixing and market allocation in generic drugs will not be tolerated, especially when such actions artificially inflate prices and negatively impact federal healthcare programs like Medicare and Medicaid. This resolution with Heritage is an important milestone, and my Office will continue to investigate and pursue illegal conduct regarding generic drugs.”
“Plotting to raise prices on generic medications is illegal and may result in patients’ inability to afford vital medicines,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. “Along with our law enforcement partners at the DOJ, FBI, and Postal-OIG, we will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”
The Anti-Kickback Statute prohibits companies from receiving or paying remuneration in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program. These provisions are designed to ensure that the supply and price of health care items are not compromised by improper financial incentives. This settlement reflects the important role of the False Claims Act to ensure that the United States is fully compensated when it is the victim of kickbacks paid to further anticompetitive conduct.
The criminal 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 FBI’s Philadelphia Division, the FBI headquarters’ International Corruption Unit, the United States Postal Service Office of Inspector General, 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, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Philadelphia Division at 215-418-4000.
The civil settlement was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Pennsylvania with support from the Department of Health and Human Services Office of the Inspector General, Defense Health Agency Program Integrity, and the Office of Inspector General for the Department of Veterans Affairs. Except for those facts admitted to in the deferred prosecution agreement, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.
Heritage Pharmaceuticals Pays over $7 Million to Resolve Civil False Claims Act AllegationsRead the Press Release
PHILADELPHIA, PA – United States Attorney William M. McSwain today announced that generic drug manufacturer Heritage Pharmaceuticals, Inc. will pay over $7 million in a civil settlement to resolve allegations of a scheme to fix prices and allocate customers for several of its drugs. The civil resolution of these allegations in the Eastern District is a component of the company’s larger resolution with the Department of Justice’s (DOJ) Antitrust Division and Civil Division.
This over $7 million civil healthcare fraud settlement resolves False Claims Act allegations that Heritage paid and received remuneration from other drug manufacturers between 2012 and 2015, and engaged in a scheme to artificially inflate and fix prices on certain generic drugs. These drugs were supplied to Medicare, Medicaid, and the Department of Defense’s TRICARE program beneficiaries, as well as the Department of Veterans Affairs. The drugs allegedly implicated in this scheme address a wide variety of health conditions, and include hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide, used to treat diabetes.
Separately, Heritage has entered into a three-year deferred prosecution agreement with the DOJ Antitrust Division with regard to a criminal charge that the company conspired to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices in violation of the Sherman Act. The deferred prosecution agreement was also filed in the Eastern District of Pennsylvania. Under the terms of the deferred prosecution agreement, Heritage will pay a $250,000 monetary penalty and will avoid prosecution if it complies with the terms and conditions of the agreement.
“My Office is proud to announce this important civil healthcare fraud settlement with the Civil Division, and the deferred prosecution agreement with the Antitrust Division,” said U.S. Attorney McSwain. “Price-fixing and market allocation in generic drugs will not be tolerated, especially when such actions artificially inflate prices and negatively impact federal healthcare programs like Medicare and Medicaid. This resolution with Heritage is an important milestone, and my Office will continue to investigate and pursue illegal conduct regarding generic drugs.”
“Consumers have the right to generic drugs sold at prices set by competition, not collusion,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Heritage and its co-conspirators cheated and exploited American patients to pad their bottom line. Today’s resolution—requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation—sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated. The Division and its law enforcement partners, including the Federal Bureau of Investigation and United States Postal Service-Office of the Inspector General, will continue to hold companies and individuals accountable for collusion that undermines the integrity of the market for drugs that should be a less expensive alternative to brand name pharmaceuticals.”
“Plotting to raise prices on generic medications is illegal and may result in patients’ inability to afford vital medicines,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “Along with our law enforcement partners at the Department of Justice, the Federal Bureau of Investigation, and United States Postal Service-Office of the Inspector General, we will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”
The civil settlement was handled by the United States Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch, with support from HHS-OIG, Defense Health Agency Program Integrity, and the Office of Inspector General for the Department of Veterans Affairs. The investigation and settlement for the U.S. Attorney’s Office for the Eastern District of Pennsylvania were handled by Assistant U.S. Attorneys Landon Jones and Anthony Scicchitano.
The civil claims resolved by the settlement are allegations against Heritage only, and there has been no determination of liability.
Former Horsham Pastor Charged with Multiple Child Exploitation OffensesRead the Press Release
PHILADELPHIA — U.S. Attorney William McSwain announced today that Jerry Zweitzig, 71, of Hatboro, Pennsylvania was charged by Indictment with multiple counts of child exploitation offenses, including enticing a minor to engage in illicit sexual conduct and possession of child pornography, according to federal authorities. The defendant is the former pastor of Horsham Bible Church on Upland Avenue in Horsham.
“Child exploitation is a pervasive problem – made more so by the accessibility of the internet and digital media – that demands an aggressive response,” said U.S. Attorney McSwain. “The allegations in this case are particularly disturbing due to the defendant’s history as a spiritual leader in a position of community trust. We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”
“Crimes against children are disgraceful and unacceptable,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “HSI will continue working with our partners to aggressively investigate cases in which child predators use the internet to further exploit children within our community, and around the world.”
If convicted, the defendant faces a maximum possible sentence of 170 years imprisonment, a minimum mandatory term of 15 years, 5 years of supervised release, and a $1,500,000, fine.
The case was investigated by Homeland Security Investigations and the Horsham Police Department, and is being prosecuted by Assistant United States Attorney Eric L. Gibson.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pharmaceutical Company to Pay $3.5M to Resolve Allegations of Paying Kickbacks to DoctorsRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that pharmaceutical company Almirall, LLC, formerly named Aqua Pharmaceuticals, LLC (“Aqua”), will pay $3.5 million to resolve allegations that it employed illegal kickbacks to incentivize physicians to prescribe Aqua’s dermatology pharmaceutical drugs.
The settlement resolves allegations that, between 2012 and 2017, Aqua knowingly paid kickbacks to dermatology providers in order to induce prescriptions of their drugs. Aqua, through its sales representatives and other employees, allegedly provided physicians with improper in-office and out-of-office meals and food items, entertainment, trips, gift cards, and gifts. It also engaged health care providers for speaking engagements, advisory boards, and consulting services where one purpose of the compensation was to induce providers to prescribe Aqua drugs.
“Federal law is designed to ensure that doctors and other providers are not improperly influenced by pharmaceutical companies in deciding which drugs to prescribe,” said U.S. Attorney McSwain. “Our office will do everything in its power to ensure that pharmaceutical companies and prescribers are playing by the rules and that they are not enriching themselves at the expense of patients’ well-being, especially those covered by Medicare and Tricare, the insurance for members of the armed services. This settlement is just the latest example of our office’s strong partnership with HHS-OIG and the Defense Health Agency to protect the integrity of our health care programs.”
“Pharmaceutical companies that ignore rules designed to protect patients will be held accountable. Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” 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 in Philadelphia. “We will continue to work with the U.S. Attorney’s Office in this District to root out all forms of waste, fraud and abuse in our federal health care programs.”
“I applaud the Department of Justice and the U.S. Attorney for their continued efforts to hold health care providers accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The efforts of the Department of Justice safeguard the health care benefits of our service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate all those who participate in fraudulent practices.”
This settlement resolves allegations in a lawsuit filed in the Eastern District of Pennsylvania by a former Aqua sales representative, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive $735,000 as her share of the recovery in the case. The relator was represented by Brian J. McCormick, Jr., Esq. of Ross Feller Casey LLP, and Claudine Homolash, Esq., of the CQH Firm.
“We thank the whistleblower for coming forward and providing essential assistance to the government. This concerned citizen’s information and assistance were critical to our office’s discovery and investigative efforts in this matter, and we deeply appreciate her contribution,” said U.S. Attorney McSwain.
The federal investigation was conducted in cooperation with the California Department of Insurance, which conducted its own investigation. The Department of Insurance separately agreed to a resolution of $3.1 million with Aqua to resolve similar allegations.
This case was a cooperative effort among the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the Office of the Inspector General of the Department of Health and Human Services, and the Defense Health Agency. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Dawn Wiggins handled the investigation and settlement.
The lawsuit is captioned United States ex rel. John Doe v. Aqua Pharmaceuticals, LLC et al., Civil Action No. 15-5086 (E.D. Pa.). The claims resolved by the settlement are allegations only; there has been no determination of liability.
Montgomery County Woman Convicted of Distributing Heroin, Killing Friend Sentenced to 21 Years in PrisonRead the Press Release
PHILADELPHIA – First Assistant U.S. Attorney Jennifer Arbittier Williams announced that Emma Semler, 23, of Collegeville, PA was sentenced today to 21 years’ incarceration, six years supervised release, and a $2,500 fine by the Honorable Gene E.K. Pratter. The defendant was convicted by a jury in December 2018 of one count of distribution, and aiding and abetting the distribution, of heroin resulting in death, and one count of distribution, and aiding and abetting the distribution, of heroin resulting in death within 1,000 feet of a playground.
Semler and the victim first became friends when they met at a drug rehabilitation facility in November 2013. On May 9, 2014, the victim contacted Semler via Facebook Messenger about obtaining heroin. Semler told the victim that Semler knew a place where they could get heroin and said Semler would bring her younger sister along with them. Semler also agreed to provide the syringe for the victim to use to inject the heroin.
The three women then traveled to the Overbrook section of West Philadelphia to purchase drugs from someone known to Semler. Upon Semler purchasing the heroin, the women went to a nearby Kentucky Fried Chicken (KFC) restaurant, located at 61st Street and Lancaster Avenue in Philadelphia. All three women went into the women’s restroom, where Semler distributed a packet of heroin along with a syringe to the victim. The victim injected the heroin and began to display symptoms of overdosing. When she realized that the victim was overdosing, Semler did not help the victim or call 911. Instead, Semler and her sister cleaned the bathroom of the evidence of their drug use and fled the KFC without contacting anyone regarding the victim’s condition, leaving her alone and fighting for her life on the bathroom floor. The victim was later found by a KFC employee, who immediately called 911. Despite efforts by first responders and later a hospital, the victim was pronounced dead. The KFC was located within 1,000 feet of a playground.
“This defendant acted with complete disregard for another human life, the life of a supposed friend,” said First Assistant U.S. Attorney Williams. “The defendant continued to engage in criminal behavior and was arrested for possession of heroin again after the victim’s death. Aggressively prosecuting egregious drug crimes like this case is part of this Office’s multi-layered approach to confronting the opioid epidemic ravaging our neighborhoods. The sentence handed down today is in the interest of justice.”
“Semler was convicted at trial of providing the victim with the heroin that lead to her fatal overdose,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “The fact that Semler left the victim alone as she was overdosing is particularly disturbing, as she most likely could have been aided by first responders.”
The case was investigated by the Drug Enforcement Administration, and the case is being prosecuted by Assistant United States Attorney A. Nicole Phillips.
Horsham Man Charged with Enticement, Manufacturing Child PornographyRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced the unsealing of an indictment charging Richard Blong, age 28, of Horsham, PA with multiple counts of child exploitation offenses including enticing a minor to engage in illicit sexual conduct, manufacturing child pornography, and possession of child pornography.
These charges arise out of an investigation into the defendant’s online solicitation of three minor victims (all between the ages of 14 and 16 years old) to produce and send him sexually explicit photos of themselves, and his in-person meeting with one of the minor victims, during which he engaged in sexual contact with her and produced sexually explicit photos of her. These offenses occurred throughout 2018.
“Child exploitation is a pervasive problem – made more so by the accessibility of the internet – that demands an aggressive response,” said U.S. Attorney McSwain. “We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children using online resources.”
“Blong preyed on children and manufactured videos of minors being sexually abused,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “The unsealing of today’s indictment is the first step in holding him accountable for his reprehensible actions. Homeland Security Investigations will work with our law enforcement partners to utilize every resource available to investigate child exploitation cases in Pennsylvania and around the country.”
If convicted, the defendant faces a maximum possible sentence of life imprisonment, which includes a 15-year mandatory minimum sentence, and up to a lifetime of supervised release.
The case was investigated by Homeland Security Investigations, the Montgomery County District Attorney’s Office County Detective Bureau, and the Detective Bureau of the Union County, New Jersey Prosecutor’s Office and is being prosecuted by Assistant United States Attorney Kelly Harrell.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Attorney Convicted of Defrauding Elderly Woman Sentenced to Almost 4 Years in PrisonRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that John Kelvin Conner, 63, of Elkins Park, Pennsylvania, was sentenced today to nearly four years (46 months) imprisonment, three years supervised release, ordered to forfeit $14,923 and pay an additional $14,923 in restitution by United States District Judge Gerald M. McHugh. Conner was convicted in February 2019 by a jury of 19 counts of wire fraud and one count of making a false statement to federal agents. The defendant, an attorney and former federal agent, devised and participated in a scheme to defraud an elderly woman out of more than $95,000 so that he could gamble with her money at casinos.
In July 2016, the 85-years old victim signed a Power of Attorney (“POA”) agreement with the defendant that granted him authority to manage the victim’s finances and pay her bills. At the time, the victim lived at home, but required the assistance of multiple caregivers, and her only source of income was a monthly pension. The evidence presented at trial showed that Conner used the POA agreement to liquidate a life annuity policy that the victim owned, deposit the proceeds into one of her bank accounts, and siphon nearly all of that money for his personal use at casinos.
From August 16, 2016 until April 22, 2017, the defendant used an ATM card to make at least 176 unauthorized withdrawals at Pennsylvania and New Jersey casinos totaling at least $95,688 from the victim’s bank account. During this time, the defendant neglected to pay the victim’s bills, which led to her temporarily losing basic utilities like heat, hot water, electricity, and telephone services. Additionally, many checks paid to the home caregivers were returned because of insufficient balances in the victim’s checking account. Ultimately, Conner left the elderly victim with just $15.07 in her bank accounts before he was caught. When questioned by FBI agents about the ATM withdrawals, the defendant falsely told the agents a ridiculous story that the victim had authorized him to use her money to gamble at casinos.
“The defendant’s conduct in this case was egregious,” said U.S. Attorney McSwain. “Stealing an elderly woman’s life-savings, gambling it away at casinos, and then lying about it to federal agents – all as an officer of the court, an attorney who took an oath to act in the best interest of his clients and with a high moral standard. This is the very definition of someone with power preying upon the most vulnerable. I am grateful that the Judge held him accountable for his despicable actions.”
“Ripping off an elderly and vulnerable woman, gambling away her money even as her utilities were being shut off — the callousness of John Conner's crimes is staggering,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “While we can't undo all of the stress and damage caused, the FBI takes great satisfaction in bringing crooks like Connor to justice and preventing them from doing any more harm. Elder fraud and abuse are utterly unacceptable. If you're being victimized or know of someone who is, please reach out to the FBI. As always, tipsters can remain anonymous.”
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Delaware County Child Predator Sentenced for Naturalization FraudRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Weixing Chen, 30, of Brookhaven, PA was sentenced today to 12 months imprisonment and three years supervised release by Judge Paul S. Diamond. Chen pleaded guilty on December 5, 2018 to one count of procuring naturalization unlawfully and two counts of making a false statement in a naturalization proceeding. The defendant will lose his United States citizenship and will be deported to China after he serves his term of imprisonment.
During the filing of his naturalization application and the interview process with United States Citizenship and Immigration Services (“USCIS”), the defendant deliberately concealed the fact that he was currently soliciting sex from minors and collecting child pornography. He also falsely claimed that he had not committed any crimes prior to applying for naturalization. In reality, before being sworn in as a United States citizen, the defendant was electronically communicating with two individuals whom he believed to be minors in order to have sexual contact with them. He was convicted of various child exploitation offenses in Delaware County in 2015 after becoming a citizen.
“An important purpose of federal immigration and naturalization laws is to ensure the safety and security of the United States,” said U.S. Attorney McSwain. “This defendant flouted our laws, preyed upon children, and lied about all of it to gain entry into our country unlawfully. This sentence confirms that my Office will continue to hold every person accountable who violates federal law – no matter who you are or where you come from.”
“Homeland Security Investigations will aggressively pursue cases where individuals unlawfully obtain immigration benefits, especially in a circumstance like this one, which involves a child predator,” said Marlon V. Miller, Special Agent in Charge of HSI Philadelphia. “We will continue to work tirelessly with our law enforcement counterparts to investigate criminals who manipulate and exploit the immigration system and see that they are brought to justice.”
The case was investigated by Homeland Security Investigations, and is being prosecuted by Assistant United States Attorney Josh A. Davison.
Third Individual Charged in Insider Trading Case Linked to Former NFL Player and Investment Bank AnalystRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that an indictment was unsealed today against Mark Wayne Ramsey, 29, of San Francisco, California, charging him with conspiracy to commit securities fraud and four counts of securities fraud.
According to the indictment, Ramsey conspired with Damilare Sonoiki and Marvin Mychal Kendricks, both of whom have already pleaded guilty to similar charges. The indictment alleges that Sonoiki (then an analyst at a global investment bank in New York) provided material, non-public information to Kendricks (then a linebacker for the Philadelphia Eagles) and to Ramsey, who was Kendricks’ roommate. The information that Sonoiki provided was about upcoming mergers involving four investment bank clients. Sonoiki obtained this information in violation of his duty of confidentiality that he owed to the investment bank.
The indictment alleges that Kendricks gave Ramsey access to his brokerage account. Relying on the material, non-public information they received from Sonoiki, Kendricks and Ramsey purchased call options between July 2014 and November 2014 in the target companies: Compuware Corporation, Move, Inc., Sapient Corporation, and Oplink Communications LLC. When the proposed merger was announced in each case, the value of the options went up significantly. During the period of the conspiracy, Kendricks made a profit of nearly $1.2 million. The indictment alleges that Kendricks provided, among other things, $15,000 to Ramsey for his participation in the scheme.
“When individuals engage in insider trading – buying and selling securities based on material, non-public information – it undermines faith in our financial markets and harms ordinary investors who play by the rules,” said U.S. Attorney McSwain. “As alleged, Mr. Ramsey cheated the market, cheated other investors, and placed himself above the law. My Office will continue to work with our law enforcement partners to maintain the integrity of the financial markets, which is one of our top priorities.”
“Those engaged in insider trading fundamentally undermine the trust necessary for our nation's financial markets to function,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “The FBI is committed to ensuring that those markets are a level playing field, not just profiting those with friends in the know.”
If convicted, Ramsey faces a maximum possible sentence of 85 years’ imprisonment, a three year period of supervised release, a $20,250,000 fine, and a $500 special assessment. Forfeiture of all proceeds from the offenses also may be ordered.
The case was investigated by Federal Bureau of Investigation and the Securities and Exchange Commission, and is being prosecuted by Assistant United States Attorney David J. Ignall.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Berks County Child Predator Sentenced to Eighteen YearsRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Sean Fager, 54, of Reading, Pennsylvania was sentenced to 18 years imprisonment, followed by lifetime supervised release by Judge Jeffrey L. Schmehl. In January 2019, Fager pleaded guilty to charges of production, transportation and possession of child pornography, including amassing a collection of more than 400 digital images and several videos found on his personal computer.
In March 2014, the National Center for Missing and Exploited Children shared a tip with law enforcement about suspected child pornography being uploaded from an IP address belonging to the defendant. An investigation revealed hundreds of images of child pornography, some of which appeared to be homemade, and evidence that the defendant participated in bondage and diaper fetish behavior. Most egregiously, Fager took photos of two children, a boy and a girl both around the age of 5, depicting these fetishes for his own sexual gratification.
“This defendant’s conduct was abhorrent. He preyed on the most vulnerable of victims – two five-year-old children. Fager, and others like him who participate in the world of child pornography, perpetuate the harm to the victims by creating demand and fueling this market,” said U.S. Attorney McSwain. “These children are victimized every time their images are downloaded, purchased, or viewed by another person. Their exploitation is ongoing and relentless. This sentence demonstrates the seriousness of these crimes and the ferocity with which we will prosecute them.”
“Anyone willing to sexually exploit children deserves to feel the full force of the law,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Sean Fager eagerly victimized two young children. Society is unquestionably safer with predators like him behind bars, and the FBI will never stop working to bring such criminals to justice.”
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Amanda Reinitz and Christine Sykes.
Remarks by United States Attorney William M. McSwain at the Anti-Terrorism Advisory Council Conference on BioterrorismRead the Press Release
PHILADELPHIA – Earlier this week, United States Attorney William M. McSwain was honored to deliver opening remarks at the Eastern District of Pennsylvania’s annual Anti-Terrorism Advisory Council (ATAC) Conference in Philadelphia. The conference drew attendees from a variety of fields, including medicine, public health, and law enforcement. U.S. Attorney McSwain was introduced by Ronald Stanko, Deputy Director, Pennsylvania Department of Homeland Security.
Remarks as Prepared for Delivery
*****
Thank you, Ron, for that introduction, and thank you all for traveling to Philadelphia to be here today. On behalf of my Office, we are honored to host today’s annual ATAC conference. The Eastern District’s Anti-Terrorism Advisory Committee was created in the aftermath of 9/11, when the U.S. Department of Justice directed each United States Attorney’s Office to form an Anti-Terrorism Advisory Council whose charge was clear: to promote information sharing between federal, state, and local authorities; to serve as a coordinating body for carrying out the anti-terrorism plan; and to provide an organizational structure for responding to any future terrorist incidents in that district.
And we gather here today to continue to carry out that mission.
I would like to thank those who made this conference possible. From my Office, thank you to Tom Perricone and Christine Sykes, Chief and Deputy Chief, respectively, of our National Security unit; Michele Mucellin, our Law Enforcement Coordinator; and Mickey Pease, our Intelligence Analyst.
From outside of the U.S. Attorney’s Office, thank you to Michael Harpster, Special Agent in Charge of the FBI’s Philadelphia Field Office and Kevin Bosch, Special Agent and Weapons of Mass Destruction Coordinator of the FBI’s Philadelphia Field Office; Nancy Baron Baer, Regional Director, and Jeremy Bannett, Associate Regional Director of the Anti-Defamation League; Stacy Irving, Senior Advisor for Homeland Security Planning Programs and Strategic Partnerships at the Delaware Valley Intelligence Center (or the DVIC); and last but certainly not least, everyone from the Pennsylvania Department of Homeland Security, especially Col. Marcus Brown, the Director, Ron Stanko, the Deputy Director, and Kristin Daniels, Outreach Coordinator, who have been a real driving force in organizing this conference. This day would not have been possible without all of your dedication and hard work. Please join me in giving the conference planners a big round of applause.
There is no question that we live in dangerous times. Safeguarding our national security is – and always must be – the number one priority of the U.S. Department of Justice and every United States Attorney’s Office in the country.
Our law enforcement and intelligence communities have no greater responsibility than the safety and security of the American people. Every citizen should both feel safe and be safe, whether at their place of work, traveling on an airplane, or gathering to worship. We are blessed to live in the strongest, freest and most resilient country in the history of the world, and we thrive because of our shared values of freedom and liberty. It is our solemn duty to protect those values and the American way of life by prevailing over our enemies. We can only succeed in confronting and combatting terrorism with the collaboration and partnership of every person in this room.
As we will hear today, some of the most urgent threats to our safety and security involve biothreats. Whether a natural outbreak, an accidental release, or a deliberate attack, biological threats can present grave health, economic, and national security impacts. Therefore, promoting our health security must be a national security imperative.
As biothreats continue to evolve in the 21st century, so must our biodefense capabilities. Conceptually speaking, biodefense entails a range of coordinated actions to counter biothreats, reduce risks – and prepare for, respond to, and recover from incidents. Today’s conference brings together thought-leaders in several key fields involved in this critical task. Today you will hear from experts in the fields of public health, epidemiology, medicine, and law enforcement. They all share the same goal: to manage the risks to human life posed by biothreats that could cause catastrophic harm. And, as you will see from the distinguished group of speakers gathered today, the knowledge and expertise drawn from each field plays a critical role in our continued health security.
First, we must understand the nature of the biothreats that presently exist. Several of our speakers will touch on that topic, but it will be explored in detail in two presentations: the morning presentation entitled “The Inevitable Threat of Bioterrorism and Pandemics,” by Dr. Ali Khan, Dean, College of Public Health at the University of Nebraska Medical Center; and in the afternoon presentation on Agroterrorism by Dr. Gary Smith, from the University of Pennsylvania’s School of Veterinary Medicine.
Second, we must identify best practices for mobilizing and coordinating federal, state, and local law enforcement’s response to a bioterrorism attack or disease outbreak. Several presentations will touch on that topic, but the panel discussion, “Elements of Emergency Response,” with Rhona Cooper, Clinical Coordinator from the Pennsylvania Department of Health; Kristin Faust, Countermeasures Coordinator from the Pennsylvania Department of Health, and John Wojtowicz, Senior Inspector, U.S. Marshals Service, will address that topic in depth.
Third, we must draw on past experiences so that we can develop a deeper understanding of how to respond to future health security crises from a public health point of view. We will hear from Samuel Shartar and Sharon Vanairsdale, senior administrators from Emory University Hospital, who will discuss the lessons learned from the hospital’s remarkable handling of its treatment of four patients suffering from the Ebola virus. Over the past year, Emory physicians, nurses, and scientists have worked with the Centers for Disease Control and other institutions to share lessons of preparedness, prevention, and treatment with groups (like ours) throughout the United States.
And finally, we will hear from several speakers that will bring the law enforcement perspective to bear on these threats, highlighting some of the investigatory tools we have to address bioterrorism and health safety preservation.
- Supervisory Special Agent Edward You of the FBI’s Weapons of Mass Destruction Directorate will discuss “Safeguarding the Bioeconomy”;
- FBI Special Agent Kevin Bosch, Weapons of Mass Destruction Coordinator, and Elizabeth Negron, of the Bureau of Epidemiology, Pennsylvania Department of Health, will discuss “Principles of Joint Criminal and Epidemiological Investigation of Biological Agents and Toxins”;
- FBI Special Agent Thomas Stewart, Weapons of Mass Destruction Coordinator, will review the investigation and prosecution of U.S. v. Betty Jean Miller, a case in which a 70-year old woman was charged with possession of ricin in her home.
- And finally, Paul Nardella, Assistant Area Port Director, Area Port of Philadelphia, and Douglas Wiegelt and Jennifer Torres, both from the Centers for Disease Control, will end the day with their presentation entitled “Enhancing Health Security at our US Borders and Beyond.”
While I’m on the topic of law enforcement, there is one group among us, in particular, that deserves special recognition today for working tirelessly to keep our communities safe. Actually, this group deserves our thanks every day, but especially today – as we are in the midst of National Police Week.
That group, of course, is our police officers. If you are a police officer in attendance today, please stand up. To you, I say this: You are our mightiest counterterrorism tool. You are the heroes – those among us who put your lives on the line, every day, to keep our communities safe. Thank you for your service.
In conclusion, the goal of this year’s ATAC conference is to improve our District’s readiness and response capabilities to combat biologic and pathogenic threats. The breadth of disciplines represented here today attests to the myriad ways our nation is fighting terrorism. The fact that there are over 300 medical professionals attending this conference today, alongside an almost equivalent number of law enforcement officers in the audience, confirms the need for these kinds of opportunities to share insight and information. I look forward to the exchange of ideas and opinions that today’s conference will bring.
Again, I want to thank everyone for being here today. May God bless you and the United States of America. Thank you.
Finance Director for Bucks County-based Company Charged with Wire FraudRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Matthew Chancler, 57, of Pottstown, Pennsylvania was charged by Information today with one count of wire fraud. The defendant was a Certified Public Accountant and the Director of Finance for an unnamed company located in Bristol, Pennsylvania. In this role, Chancler oversaw the financial operations of the company: accounts payable, accounts receivable, payroll, and auditing.
During an approximately two-year period, from August 2016 through July 2018, Chancler abused his position of trust by using company issued credit cards for over 1,800 personal purchases and over 400 cash withdrawals from ATMs, while disguising the true nature of these transactions in the company’s financial records in order to cover his tracks. Those personal purchases included clothing, electronics, food, travel, jewelry, sporting equipment, and other personal items and entertainment. In total, the defendant stole over $350,000 through his fraudulent use of the cards.
Chancler also manipulated the company’s payroll system to add additional funds to his own paycheck, citing them as “miscellaneous non-taxable income”. During the same time period, Chancler added several hundred dollars to each paycheck, totaling approximately $12,500.
“What’s most apparent here is the defendant’s alleged greed and willingness to abuse his position of authority,” said U.S. Attorney McSwain. “Businesses rely on professionals to maintain the financial health of their operations, as well as to abide by the law – not funnel money for their own personal use.”
If convicted, the defendant faces a maximum possible sentence of 20 years in prison.
The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Deputy United States Attorney Louis D. Lappen.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Convicted of Illegally Possessing a FirearmRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Kevin Jamelle Archie, 37, of Philadelphia, Pennsylvania was convicted today at trial of one count of felon in possession of a firearm.
On September 10, 2016, Philadelphia Police officers arrested the defendant after responding to a 911 call and finding him in possession of a firearm loaded with ten rounds of ammunition at the corner of Frankford Avenue and East Pacific Street in the Harrowgate section of lower Northeast Philadelphia. The defendant had previously been convicted of a felony – possession with the intent to distribute controlled substances – which barred him from legally possessing a firearm.
“Reducing violent crime is a top priority of my Office and of the Department of Justice, and successful prosecutions of cases like this remain a key part of our deterrence strategy,” said U.S. Attorney McSwain. “My Office is committed to working with the Philadelphia Police Department to clear the city streets of firearms in the hands of convicted felons, which undeniably pose a serious threat to the safety of all residents.”
“Public safety is the core responsibility of all who work in the field of law enforcement. Regardless of our specific agencies or titles, keeping our communities safe is at the heart of our primary mission,” said Philadelphia Police Commissioner Richard Ross. “In order for us to accomplish our mission, collaboration between our law enforcement partners, the community, and initiatives like Project Safe Neighborhoods must remain a priority. The investigation, arrest, and successful prosecution of Mr. Archie serves as evidence of the effectiveness of strong and consistent collaboration between stakeholder agencies.”
This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and is being prosecuted by Assistant United States Attorney Tom Zaleski.
Eight Charged in Connection with North Philadelphia Business Owner Murder-KidnappingRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that eight individuals were charged in an indictment unsealed today with one count each of conspiracy to commit kidnapping. Seven of those individuals were also charged with the actual kidnapping, and five of the individuals were charged with firearms offenses. The charges stem from an investigation into the kidnapping and murder of a business owner from North Philadelphia in June 2018, whose body was later found in Cecil County, Maryland.
The indictment alleges that on June 19, 2018, the victim was kidnapped in a home in Philadelphia by seven of the defendants. During the kidnapping, the victim was restrained through the use of duct tape, hand cuffs, and zip ties. He was transported to Chester County, Pennsylvania in the course of the kidnapping, and ransom calls demanding hundreds of thousands of dollars were made to the victim’s wife, and to an associate of the victim. During the kidnapping, the victim was shot and killed, and his body was dumped in Maryland.
“As alleged in the indictment, these ruthless individuals are a serious threat to the safety of our neighborhoods – not just in Philadelphia, but the entire mid-Atlantic region and beyond,” said U.S. Attorney William McSwain. “This indictment reflects our Office’s steadfast commitment to rid the streets of people who resort to intimidation and extreme violence to try to get what they want. This case is also an excellent example of why prosecuting violent crime is a priority for the Eastern District of Pennsylvania and the entire Department of Justice. I want to thank our law enforcement partners in Pennsylvania and Maryland for their hard work investigating this heinous crime.”
“Anyone willing to abduct another human being and try to trade their life for money is a danger to society,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Just imagine the terror of being kidnapped, restrained, and at the total mercy of armed criminals. The FBI will never stop working to make our communities safer from violent thugs who care nothing for the lives of others.”
Those charged with conspiracy to commit kidnapping are: Ivan Rangel Prieto, 34, of Asheboro, North Carolina; Jose Castillo, 44, of Albuquerque, New Mexico; Jose Bernal, 30, of Newark, Delaware; Jose Delgado, 40, of Warminster, Pennsylvania; Salvador Sanchez Guerrero, 47, of Philadelphia, Pennsylvania; Robert Favors, 39, of Philadelphia, Pennsylvania; John Perkins, 31, of Philadelphia, Pennsylvania; and Fermín Perez Mejia, 35, of Norristown, Pennsylvania.
Those charged with kidnapping are: Rangel Prieto, Castillo, Bernal, Delgado, Sanchez Guerrero, Favors, and Perkins. Those charged with using a firearm in connection with a crime of violence are: Rangel Prieto, Castillo, Bernal, Delgado, and Sanchez Guerrero.
If convicted, Rangel Prieto, Castillo, Bernal, Delgado, Sanchez Guerrero, Favors, and Perkins face a mandatory sentence of life imprisonment. The statute also provides for the possibility of the death penalty. If convicted, Perez Mejia faces a maximum possible sentence of life imprisonment.
The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department, with assistance from the Cecil County, Maryland Sherriff’s Office, the Southern Chester County Regional Police Department, and the Plymouth Township Police Department, and is being prosecuted by Assistant United States Attorneys Amanda R. Reinitz and Everett Witherell. U.S. Attorney McSwain and SAC Harpster would like to thank FBI Albuquerque, the New Mexico State Police, the Farmington (NM) Police Department, and FBI Charlotte - Greensboro Resident Agency, for their assistance with this matter.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia La Cosa Nostra Member and Associate Plead Guilty to Making and Collecting Extortionate LoansRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Philip Narducci, 56, of Philadelphia, and James Gallo, 44, of Philadelphia, entered pleas of guilty today before Judge Timothy Savage on several counts relating to making and collecting upon extortionate loans. Narducci is a member of the Philadelphia organized crime family La Cosa Nostra (LCN), and Gallo is his associate.
At the hearing, the defendants both admitted that Narducci made usurious and extortionate loans involving tens of thousands of dollars to an unnamed borrower. When the borrower failed to make weekly interest payments – sometimes with an interest rate above 80 percent - Narducci used threats of violence and actual physical assault to force the borrower to repay the loans. One such incident occurred at Chick’s Philly, a bar and restaurant operated by Narducci, on Washington Avenue in South Philadelphia. In one particularly disturbing exchange, Gallo told the borrower he should be scared of Narducci, saying, “He’s a killer you f***ing idiot. He’s killed f***ing eight people.”
“Philadelphians deserve to be safe and live without the fear or threat of violence, especially from unscrupulous defendants like these,” said U.S. Attorney McSwain. “My Office takes organized crime in this District very seriously, and will investigate and prosecute it to the fullest extent of the law.”
“This organized crime network threatened the safety of our neighborhoods by extorting and assaulting Philadelphians,” said Attorney General Josh Shapiro. “Thanks to strong collaboration between our law enforcement partners, we were able to put an end to this criminal behavior and keep the people of Philadelphia safe. We will continue working together to investigate and prosecute organized crime wherever we find it.”
The case was investigated by the Federal Bureau of Investigation, the Pennsylvania State Police, and the Pennsylvania Office of the Attorney General, and is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section, and Assistant United States Attorney Jonathan B. Ortiz.
Philadelphia Correctional Officers Charged in Beating of InmateRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Robert Berger, 35, and Nathaniel Morris, 47, both of Philadelphia, PA, were charged by Indictment with depriving an inmate at the Curran-Fromhold Correctional Facility of his constitutional right to be free from unreasonable force. Berger and Morris, both arrested earlier today, were also charged with making false statements relating to the incident.
The defendants are City of Philadelphia correctional officers who are alleged to have beaten an inmate in their custody on September 10, 2018. As outlined in the indictment, Berger and Morris allegedly repeatedly punched and kicked the inmate, even though the inmate was compliant and not posing a physical threat to anyone.
“The United States criminal justice system works because everyone, regardless of where they are in the system, is guaranteed constitutional rights along the way,” said U.S. Attorney McSwain. “These two defendants, whose jobs it is to maintain the safety and security of inmates while in custody, allegedly violated the law in a brutal, violent manner. The federal government will not tolerate this kind of lawless behavior.”
“Corrections officers have a difficult job,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “That doesn't give them impunity to lash out violently and treat inmates like punching bags. Incarcerated men and women lose their freedom, not their humanity — and not their civil rights. The FBI will always seek justice for victims of violence, no matter who or where they are.”
If convicted, each defendant faces a maximum possible sentence of twenty years imprisonment. The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Faithe Moore Taylor.
An indictment, information, or criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Kirkbride Center Agrees to Fine to Resolve Claims of Failing to Maintain Accurate Records of OpioidsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that CoreCare Behavioral Health Management, Inc., which does business as “Kirkbride Center,” a health care facility in Philadelphia, Pennsylvania, has agreed to pay the United States $160,200 in penalties to resolve allegations that it failed properly to account for highly addictive and frequently abused opioids, including methadone.
In addition to paying $160,200 in settlement to resolve the government’s allegations, Kirkbride Center has agreed to implement new practices and procedures to ensure accountability of its controlled substances, including the purchase of a new software system for secure and automated dispensing and tracking of methadone in clinical treatment settings.
This settlement arises from a Drug Enforcement Administration (DEA) investigation into Kirkbride Center’s opioid dispensing practices between 2014 and 2017. In response to the Department of Justice’s focus on combatting the opioid epidemic, the DEA has continued to conduct inspections and audits of pharmacies and narcotics treatment programs throughout the Eastern District of Pennsylvania, including Kirkbride Center.
The Controlled Substances Act (CSA) applies to all registered handlers of controlled substances, including pharmacies and narcotics treatment programs, and subjects them to strict requirements regarding inventory control and recordkeeping. These requirements ensure that DEA-licensed pharmacies and narcotics treatment programs account for controlled substances from the time they are purchased until they are dispensed to patients. The United States alleges that Kirkbride Center violated the CSA by negligently failing to keep accurate records and inventories associated with methadone liquid and tablets that Kirkbride Center purchased and dispensed for its narcotics treatment program between 2014 and 2017.
“This settlement demonstrates my office’s continued commitment to combating the opioid epidemic on all fronts,” said U.S. Attorney McSwain. “Part of our strategy is making sure that registered opioid handlers keep accurate records of these highly addictive and potentially dangerous drugs. All individuals and facilities, large or small, licensed to dispense controlled substances are responsible for maintaining accurate records, and all will be held accountable for any failures.”
The case was handled by Assistant United States Attorney Mark J. Sherer, with investigative assistance from auditor Denis Cooke and U.S. Drug Enforcement Administration Diversion Investigator Alexander Stross of the Philadelphia Field Division.
Liberation Way Doctor Pleads Guilty to Health Care FraudRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Dr. Domenick Braccia, 57, of Perkasie, PA entered a plea of guilty before Judge Wendy Beetlestone on one count of conspiracy to commit health care fraud. The charges against the defendant stem from federal and state investigations into an elaborate insurance fraud scheme involving a Bucks County-based addiction treatment center, Liberation Way.
Dr. Braccia served as the Medical Director of Liberation Way, and, as the sole doctor, was the head of medical treatment at all three of its facilities. As such, he was tasked with overseeing the care of all the patients seeking addiction treatment, ordering all medically necessary tests, evaluating the results of all medical tests and incorporating their results into any treatment plan, prescribing medications, and overseeing the staff who were tasked with other non-medical therapy and care of patients. However, Braccia did not provide the amount of medical care that was billed to insurance companies in his name, and he never even stepped foot in one of the three treatment centers that billed in his name.
Instead, Braccia signed blank forms and patient orders, averred to the medical necessity of testing for patients whom he never saw, prescribed for patients he did not see, and signed blank prescription forms. As a consequence, insurance companies lost millions of dollars paying for care that was not provided by Braccia, and patients did not receive the individualized medical care they needed.
State and federal criminal charges were announced in March 2019 against eleven people and nine businesses in connection with this health care fraud case. The investigation revealed an array of health care fraud schemes committed by individuals associated with Liberation Way, which is based in Yardley, Bucks County and has two other locations in Bala Cynwyd and Fort Washington, Montgomery County. These schemes included Braccia’s over-billing scheme as well as an elaborate kick-back scheme involving thousands of medically-unnecessary urine tests which were sent to the Florida-based laboratories for analysis.
“This prosecution and today’s guilty plea should send a clear message to those seeking to build their fortunes on fraud and the despair of individuals battling addiction: health care fraud and the opioid epidemic are major priorities for the United States Attorney’s Office, and your illegal actions will be uncovered and prosecuted,” said First Assistant United States Attorney Jennifer Arbittier Williams.
“This doctor was responsible for overseeing the medical care of people suffering from opioid addiction, and instead he conspired to commit fraud by signing blank prescription forms and attesting to treatment for patients he did not see,” said Pennsylvania Attorney General Josh Shapiro. “He did these acts to help perpetrate a massive insurance fraud that lined the pockets of Liberation Way’s founders and co-conspirators with millions of dollars. I am grateful for our partners in the U.S. Attorney’s Office, the FBI, and other agencies in Pennsylvania and Florida for their hard work in bringing this defendant to justice.”
“At Liberation Way, medical practices were shoddy and substantive treatment minimal,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Dr. Braccia abrogated his professional ethics and responsibilities in order to line his pockets and is now being held accountable for his actions. The FBI will continue to make health care fraud investigations a priority, to the benefit of both patients and taxpayers.”
“This case demonstrates the commitment of the OPM OIG, the Department of Justice, and our law enforcement partners to ensuring that federal health care programs, including the Federal Employees Health Benefits Program, are protected from fraud and abuse,” said Thomas W. South, Deputy Assistant Inspector General for Investigations, U.S. Office of Personnel Management. “I am immensely proud of the work our office has done to not only safeguard taxpayer dollars, but also protect the health and wellbeing of federal employees, annuitants, and their families.”
The case was investigated by the Federal Bureau of Investigation, Department of Health and Human Services, the Office of Personnel Management, and the Department of Labor, and is being prosecuted by Assistant United States Attorney Nancy Beam Winter.
Former Children’s Swim School Employee Pleads Guilty to Child Pornography ChargesRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Danielle Sebenick, 27, of Glenside, PA entered a guilty plea today before the Honorable Petrese B. Tucker, admitting to the crimes of possession and distribution of child pornography.
Sebenick was indicted by a federal grand jury in January of 2019 as a result of her trafficking in videos of child pornography on the Internet during November of 2018, while she was employed at the Kids First Swim School in Jenkintown, PA.
“Not only did this defendant commit the heinous crime of possessing and distributing child pornography, she did it while employed at a business that specializes in teaching children an important life skill,” said U.S. Attorney McSwain. “Parents and caregivers bring their children to facilities like this with the expectation that the staff will teach them and keep them safe; they shouldn’t be worried that their children are in the presence of a sexual predator.”
“Homeland Security Investigations will remain steadfast in our dedication to identify, investigate and apprehend those who abuse the most vulnerable of our society – our children,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “Investigating and prosecuting the perpetrators of these horrendous crimes is one of our highest priorities and HSI will continue to work with our law enforcement partners to bring these criminals to justice.”
The case was investigated by Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Kelly Harrell.
Bethlehem Man Found Guilty of Entering United States Illegally for Fourth TimeRead the Press Release
EASTON, PA – U.S. Attorney William M. McSwain announced that Martin Castro-Molina, a/k/a “Jose Noe Galsano-Castellano”, 42, of Bethlehem, PA was found guilty by a federal jury of one count of reentering the United States after deportation. He was removed from the United States on three prior occasions between 2008 and 2017, before being found unlawfully in the United States on or about August 24, 2018. At the time of his arrest, the defendant gave multiple fictitious names to authorities.
“The defendant in this case clearly has no respect for the laws of this country,” said U.S. Attorney McSwain. “After being removed on three previous occasions, Castro-Molina decided yet again to snub our immigration system by entering the United States illegally. I am glad that the jury in this case agreed and held him responsible for his actions.”
“The brave men and women of ICE contribute to making our communities safer by arresting criminal aliens like Martin Castro-Molina,” said Simona L. Flores, Field Office Director for ICE Enforcement and Removal Operations (ERO) Philadelphia. “We will ensure that aliens who may pose a threat to our communities are not released onto the streets to potentially reoffend and harm individuals living within our communities.”
The case was investigated by the Department of Homeland Security, Immigration and Customs Enforcement, and is being prosecuted by Assistant United States Attorneys Meaghan Flannery and Jose Arteaga.
Super Bowl, All-Star and NCAA Championship Counterfeit Ticket Producer Sentenced to 4+ Years in PrisonRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Eugene Smith, 45, of Lithonia, GA was sentenced today to 51 months imprisonment after being convicted of conspiracy to commit wire fraud, wire fraud, conspiracy to traffic in counterfeit goods, and trafficking in counterfeit goods, arising from Smith’s leadership role in the production and sale of counterfeit tickets to sporting events, including the National Football League’s Super Bowl LI (51) in Houston (between the Patriots and the Falcons) and Super Bowl LII (52) in Minneapolis (between the Eagles and the Patriots), a National Basketball Association All-Star game, National Collegiate Athletic Association Championship football and basketball games, and other sporting events and concerts. The counterfeit tickets bore the authentic trademarks of the respective organization or agency that was registered with the United States Patent and Trademark Office. Smith sold the counterfeit tickets at the various venues and also distributed the counterfeit tickets to other sellers nationwide for resale to victims.
Smith targeted events and victims based on profitability – the bigger the event, the bigger the payoff. The scheme involved several steps and multiple players: after determining which events would draw the most profit, Smith provided a real ticket to the event to his printer for use in the production of multiple tickets for the event. Smith would then travel to venues to sell the counterfeit tickets or he provided the counterfeit tickets to other sellers to resell to unwitting fans. This scheme involved sophisticated printing that mimicked the authentic tickets’ markings and hologram.
At Smith’s sentencing hearing, Eric Ferguson, who was also charged with the same offenses, testified that he was recruited by Smith to produce the counterfeit tickets for the sporting events and concerts. The government presented evidence that the face value of the counterfeit tickets printed by Ferguson was at least $170,000, but the government estimated that the actual resale value of the tickets, particularly the Super Bowl tickets, far exceeded their face value.
“This case isn’t just about taking advantage of sports fans’ willingness to spend their hard-earned dollars to enjoy a game; this is about ensuring that consumers of all types can trust that when they spend their money, they are getting the authentic product for which they paid,” said U.S. Attorney McSwain. “Smith is nothing more than a con-artist and thief, and I’m grateful that the judge saw it that way and gave him a sentence that ensures justice for his victims.”
The case was investigated by the Federal Bureau of Investigation and prosecuted by Assistant United States Attorneys Joan E. Burnes and Anita Eve.
Former Pediatric Medical Assistant Sentenced to 12+ Years in Child Sexual Exploitation CaseRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Cameron Carlucci, 27, of Philadelphia was sentenced by the Honorable Berle M. Schiller to 151 months in federal prison, followed by 10 years supervised release. Carlucci was convicted of distributing and possessing child pornography from 2016 through his arrest in 2018. During that time, he amassed more than 56,000 images and videos that depicted mostly prepubescent boys, infants, and toddlers being sexually abused and exploited.
At the time that Carlucci distributed these images and videos over the Internet, he had already been convicted in Philadelphia in 2011 for possession of obscene and other sexual materials, for which he received a 5-year probationary sentence. Almost immediately after the termination of his probation, Carlucci began committing the sexual crimes against children in this case. At the same time that he was committing these crimes, Carlucci sought out and obtained employment at Valley Pediatrics in Warminster, PA as a medical technician. To obtain his employment with Valley Pediatrics, Carlucci falsified his application by denying his criminal history.
“Not only did this defendant commit the heinous crime of possessing and distributing child pornography, he lied to get a job that would put him in close proximity to children,” said U.S. Attorney McSwain. “Parents and caregivers bring their children to doctors’ offices with the expectation that they will be safe and cared for, not in the presence of a known sexual predator. We thank the judge in this case for ensuring that Carlucci will be behind bars and unable to be in contact with children for a very long time.”
The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Michelle Rotella.
Political Consultant and Attorney Sentenced to 18 Months for Role in Two Campaign Finance SchemesRead the Press Release
PHILADELPHIA – William M. McSwain, U.S. Attorney for the Eastern District of Pennsylvania, and Brian A. Benczkowski, the Assistant Attorney General of the Criminal Division of the United States Department of Justice, announced that Kenneth Smukler, 58, a long-time Philadelphia-area political consultant and attorney, was sentenced today by the Honorable Jan E. DuBois to 18 months in prison, one year supervised release and a $75,000 fine for his role in two separate criminal schemes to violate federal campaign finance laws.
The first scheme involved the 2012 Democratic primary election for Pennsylvania’s First Congressional District. Jimmie Moore, a former Philadelphia Municipal Court Judge, ran against the incumbent, Congressman Bob Brady. Moore struck a corrupt deal by which he agreed to withdraw from the race in exchange for funds from the Bob Brady for Congress campaign (the “Brady campaign”) to be used to pay off Moore’s campaign debts. Those debts included money that Jimmie Moore for Congress (the “Moore campaign”) owed to several vendors, to Moore himself, and to Moore’s campaign manager, Carolyn Cavaness.
On February 29, 2012, Moore withdrew from the race. Moore and Cavaness had prepared a list of debts owed by the Moore campaign which was subsequently provided to Smukler, a campaign consultant for the Brady campaign. Smukler arranged for the Moore campaign to receive $90,000 from the Brady campaign through false documents and a series of illegal pass-throughs, including the consulting firm of another Brady associate and co-conspirator, D.A. Jones. None of the payments, which exceeded the applicable contribution limits, was reported to the Federal Election Commission (“FEC”). Per the arrangement, the three installments were illegally disguised as payments for a poll and consulting services.
The second scheme involved the 2014 Democratic primary election for Pennsylvania’s Thirteenth Congressional District. Marjorie Margolies, a former member of the U.S. House of Representatives, was running in the primary and Smukler, a veteran of prior Margolies political campaigns, was running the Margolies campaign. By early April 2014, the primary race was close, and the Margolies campaign was running out of money that the campaign could legally spend in the primary. Smukler caused the Margolies campaign to illegally spend general election funds in his attempt to win the primary election for his candidate, then lied about it to the campaign’s lawyer. That lawyer, in turn, unwittingly reported the lies to the FEC in response to a complaint filed by one of Margolies’ opponents. Additionally, Smukler caused excessive campaign contributions and illegal conduit contributions, all of which were hidden in FEC filings.
On December 3, 2018, a jury found Smukler guilty of one count of conspiracy to defraud the United States; two counts of causing unlawful campaign contributions; one count of causing false campaign expenditure reports; two counts of causing false statements; two counts of making contributions in the name of another; and one count of obstruction.
“In order to win at all costs, Smukler knowingly and purposefully undermined our democratic process by misusing campaign funds and lying about it,” said U.S. Attorney McSwain. “My Office will continue to prosecute public corruption wherever and whenever we uncover it. Now Smukler is headed to jail, and I am grateful that the Court imposed a just sentence reinforcing the fact that this kind of corruption will never be tolerated.”
“Campaign finance laws exist to ensure transparency and fairness in the electoral process,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “When corruption weakens the public's trust in that process, our democracy itself is dealt a blow. Kenneth Smukler played fast and loose with the system to try to give his candidates a leg up. He broke the law repeatedly and now is being held accountable.”
The case was investigated by the Federal Bureau of Investigation, and the case is being prosecuted by Assistant United States Attorney Eric Gibson and Trial Attorneys Richard Pilger and Rebecca Moses of the Criminal Division’s Public Integrity Section. It was previously investigated by former Public Integrity Section Trial Attorney Jonathan I. Kravis.
Philadelphia-Area Political Consultant and Attorney Sentenced After Conviction in Two Campaign Finance SchemesRead the Press Release
A long-time Philadelphia-area political consultant and attorney was sentenced today for his role in two criminal schemes to violate federal campaign finance laws announced Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division and U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania.
Kenneth Smukler, 57, of Villanova, Pennsylvania, was sentenced to 18 months in prison followed by one year of supervised release by the Honorable Jan E. DuBois. In the 2012 Democratic primary election for Pennsylvania’s First Congressional District, Jimmie Moore, a former Philadelphia Municipal Court Judge, ran against the incumbent Congressman Bob Brady. Assisted and directed by Smukler, Moore executed a corrupt deal in which he agreed to withdraw from the race in exchange for funds from the Bob Brady for Congress campaign (the Brady campaign) to be used to pay off Moore’s campaign debts. Those debts included money that Jimmie Moore for Congress (the Moore campaign) owed to several vendors, to Moore himself and to Moore’s campaign manager, Carolyn Cavaness. On Feb. 29, 2012, Moore withdrew from the race and Cavaness had prepared a list of debts owed by the Moore campaign, which they provided to Smukler, a campaign consultant for the Brady campaign. Smukler arranged for the Moore campaign to receive $90,000 from the Brady campaign through false documents and a series of concealing pass-throughs, including the consulting firm of another Brady associate and co-conspirator, D.A. Jones. Smukler ensured that the Brady campaign reported none of the concealed payments, which exceeded the federal contribution limits, to the Federal Election Commission (FEC). Rather, he executed the scheme by ensuring that the three installments were falsely and illegally disguised from the FEC and the public as payments for poll and consulting services.
Later, during the 2014 Democratic primary election for Pennsylvania’s Thirteenth Congressional District, Smukler again committed federal campaign finance offenses, this time for the benefit of another client, Marjorie Margolies, a former Member of the U.S. House of Representatives. Smukler, a veteran of prior Margolies political campaigns, ran the Margolies campaign in 2014.
In April 2014, during a close primary race, the Margolies campaign was running out of money that it could legally spend in the primary. Smukler then caused the Margolies campaign to illegally spend general election funds in his attempt to win the primary election for his client. He further lied about his illegal spending to the campaign’s lawyer. That lawyer, in turn, unwittingly reported Smukler’s lies to the FEC in response to a complaint filed by another candidate. Additionally, Smukler caused excessive campaign contributions and illegal conduit contributions to the Margolies campaign, all of which were hidden or disguised from the campaign’s FEC filings.
“When political operatives like Kenneth Smukler engage in hidden illegal campaign finance schemes, they undermine the integrity of the electoral process,” said Assistant Attorney General Benczkowski. “This is a just sentence that reflects the seriousness of these crimes.”
“In order to win at all costs, Smukler knowingly and purposefully undermined our democratic process by misusing campaign funds and lying about it,” said U.S. Attorney McSwain. “My Office will continue to prosecute public corruption wherever and whenever we uncover it. Now Smukler is headed to jail, and I am grateful that the Court imposed a just sentence reinforcing the fact that this kind of corruption will never be tolerated.”
On Dec. 3, 2018, a jury found Smukler guilty of one count of conspiracy, two counts of excessive campaign contributions, two counts of false statements, two counts of conduit contributions, one count of willfully causing a false statement to the FEC and one count of obstruction of justice.
Former Public Integrity Section Trial Attorney Jonathan I. Kravis and the FBI investigated the case. Richard C. Pilger, Director of the Election Crimes Branch of the Public Integrity Section, Trial Attorney Rebecca Moses of the Public Integrity Section and Assistant U.S. Attorney Eric L. Gibson of the Eastern District of Pennsylvania prosecuted the case.
U.S. Attorney McSwain Delivers Keynote Address at the FOP Lodge 5 Luncheon Following Living Flame Memorial ServiceRead the Press Release
PHILADELPHIA – On May 1, 2019, United States Attorney William M. McSwain delivered the keynote address at a luncheon honoring the families of fallen Philadelphia police officers and firefighters. The luncheon, hosted by the Fraternal Order of Police Lodge 5, immediately followed the Living Flame Memorial Service, an annual event honoring the men and women who lost their lives in service to the City. U.S. Attorney McSwain was invited to speak, and introduced by, Lodge #5 President, John McNesby.
Remarks as Prepared for Delivery
Thank you, John, for that kind introduction, for your friendship, and for your many years of dedicated leadership of the FOP. I am grateful for the partnership that you have helped to foster between my Office and the Philadelphia Police Department. I also want to thank the FOP’s Executive Leadership for your work in organizing today’s event. It is an honor to be here with all of you on this important day of remembrance. Police Commissioner Ross and Fire Commissioner Thiel, you are both trusted friends and I want to thank you for your service and for your partnerships with my Office. I know I speak for everybody in my Office when I say that your rank-and-file members are the best law enforcement partners any prosecutor could ask for.
When I was at the Living Flame Memorial earlier today, I thought about what that light represented, which is each life that has been lost. And I thought about the purpose of the event: to pay tribute to those who are missing from this crowd – those police officers and firefighters who made the ultimate sacrifice; those who gave their lives so that their fellow citizens could be safe and their communities secure.
And it’s also a day to pay tribute to, and to support, each of you – the family and friends of these heroes. We can never repay the debt that we owe to the fallen officers and firefighters and to their family members. But what we can do is promise that we will work hard every day to make sure that the sacrifices you and your loved ones have made on behalf of this great City will never be forgotten. And together we will keep their memories alive.
Public service is a noble calling, but the kind of public service we remember and celebrate today is truly special: the kind where brave men and women put on their uniform every day in the knowledge that they may have to risk – and even give – their lives to protect others. In doing so, they show their love for their community and their fellow citizens. It is a powerful, awe-inspiring form of love because it is so generous and selfless. It takes an extraordinary person to be willing to act in such a manner, to sign up for the job – and then to actually do it. Such people are not takers, they are givers. They don’t ask for much, if anything, in return. But we must give them something. We owe them something.
What we owe them – and their loved ones – is our sincere and solemn gratitude and support. They have that – and you have that – from me and from every single member of my Office. You also have that from the vast majority of your fellow citizens. For example, just this past week, the Philadelphia Inquirer noted that, according to recent polling, the voters’ No. 1 issue was crime. According to the voters in this City, it is the single biggest issue that city officials should be focused on – by far. That means that the citizens of Philadelphia care deeply about the mission of the police and that they desperately need and want the police to aggressively investigate, punish, and deter crime.
But what is upsetting to me – what bothers me to my core – is that there are public officials in this City who do not express the gratitude and support that the police deserve. There are public officials in this City who in fact undermine the police and make their inherently difficult jobs even more difficult, if not impossible. Those people do not understand and appreciate the sacrifices that you and your loved ones have made. Those people do not understand and appreciate the dedication and bravery that makes you and your loved ones who you are. Those people have no shame. I say to you: pay them no mind. They are unworthy.
Instead, think of this: think of how proud you are of your loved ones’ service. Think of how proud they are, looking down on us today, for our gathering here in their honor, and for remembering, and promising to always remember. And think of the love that binds you with them, and that binds you with this City.
In closing, I would like to leave you with one of my favorite Bible verses (from Galatians chapter 6, verse 9), because it sums up my feelings about today’s event and what it means. In the words of the Apostle Paul, “Let us not become weary in doing good, for at the proper time we will reap a harvest if we do not give up.”
Thank you, and God Bless you all.
Mexican Citizen Indicted for Illegal Reentry after Five Previous DeportationsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that Juan Manuel Bedolla-Lopez, 33, of Toughkenamon, PA, was charged today by indictment with illegal reentry after deportation.
The indictment alleges that Bedolla-Lopez, an illegal alien, and native and citizen of Mexico, was previously deported from the United States on or about December 20, 2010, May 6, 2011, May 12, 2011, May 25, 2011, and March 19, 2012. Following the latest of his five deportations, Bedolla-Lopez allegedly reentered the United States illegally. If convicted of this current illegal reentry offense, the defendant faces a maximum possible sentence of two years’ imprisonment.
“The United States of America is a nation of laws, including laws about how people can enter the country,” said U.S. Attorney McSwain. “This man has allegedly been removed from the United States five times, and yet he continues to reenter illegally and defy our laws. This blatant flouting of our nation’s immigration laws will not be tolerated.”
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Special Assistant United States Attorney Mark T. Sendek.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Chester Drug Trafficker Sentenced to 360 Months for Multiple Drug Trafficking ConvictionsRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Paris Church, 57, of Chester, Pennsylvania was sentenced to 360 months’ imprisonment by United States District Judge Gerald A. McHugh. Church was convicted three separate times by a federal jury in March 2016, February 2017, and again in June 2017 of multiple counts of conspiracy to distribute cocaine, crack cocaine and heroin, as well as related offenses in a case stemming from the investigation of a drug trafficking ring in Chester.
An investigation revealed that from about August 2012 until September 2014, Church and his criminal cohorts conspired to distribute illegal narcotics on the streets of Chester, PA. More specifically, in early 2014, Church and his cohorts conspired to source roughly 20 kilograms of cocaine from a Mexican supplier. Church was also involved in a conspiracy to receive illegal drugs from a supplier in California.
“Paris Church is a menace to the neighborhoods of Chester who needed to be convicted on federal charges three times to get the message: dealing illegal drugs and decimating neighborhoods will get you locked up for a long time,” said U.S Attorney McSwain. “This type of drug trafficking is dangerous and fanning the flames of the drug epidemic in this country. My office will investigate and prosecute these cases with tenacity in order to protect the community.”
The case was investigated by Drug Enforcement Administration, Federal Bureau of Investigation, City of Chester Police Department, Pennsylvania State Police, and Delaware County District Attorney’s Office Criminal Investigation Division, and is being prosecuted by Assistant United States Attorneys A. Nicole Phillips, Faithe Moore Taylor, and Robert E. Eckert.
Green Energy Fraudster Convicted at Trial for Scamming Multiple Federal Agencies, CustomersRead the Press Release
PHILADELPHIA, PA – United States Attorney William M. McSwain and Assistant Attorney General Jeffrey Bossert Clark of the Environment and Natural Resources Division (ENRD) of Department of Justice announced today that a federal jury in Reading, Pennsylvania convicted David M. Dunham, Jr. of the following crimes: conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents; and obstruction of justice. The conviction stemmed from Dunham hatching and executing a scheme to defraud the Environmental Protection Agency, the Internal Revenue Service, the United States Department of Agriculture, and his customers to obtain renewable fuel credits in his “green energy” business. The government is also seeking forfeiture of approximately $1.7 million in fraudulently obtained revenue and several parcels of real estate. The trial lasted four weeks before United States District Judge Jeffrey L. Schmehl.
In Dunham’s green energy scam, he fraudulently applied for, received, and sold “credits” for selling renewable biofuels that he, in fact, did not sell and, in many instances, had never possessed in the first place. He obtained these credits from government agencies, which resulted in Dunham obtaining $50 million in fraudulent revenue. Dunham ran the scam from approximately 2010 to 2015, using his business, Smarter Fuels, and that of his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.
“Though this defendant tried to deflect blame on others, his years of scamming the government and his customers has finally caught up to him,” said U.S. Attorney McSwain. “And the truth is as simple as this: Everyone has to follow the rules. You cannot lie, steal, or cover up your misdeeds. If you do, we will hold you accountable. Experience shows that fraudsters like Dunham are always looking for the next best scam. As American consumers become increasingly more concerned with energy conservation, green energy scams like the one in this case provide criminals with an easy angle. We are grateful that the jury saw through Dunham’s lies and reached the correct result.”
“Today’s conviction sends a clear message to any future fraudsters out there: crime does not pay. Especially when that crime involves defrauding American customers and multiple federal agencies,” said Assistant Attorney General Clark. “When the defendant knowingly cheated a federal government program aimed at energy conservation, he gave himself an unfair advantage over his competitors and stole millions of dollars from the American taxpayer in the process. The Department of Justice will not tolerate this type of deception and will continue to work with its law enforcement partners to root out this unlawful conduct.”
“David Dunham created an elaborate scheme that served no purpose other than to mislead and defraud the government,” said IRS Special Agent in Charge Guy Ficco. “Unfortunately for him, our special agents were able to track the movement of paperwork and uncover the deceit behind his actions. We, along with our fellow law enforcement partners and the Department of Justice, will continue to investigate and prosecute those who commit similar crimes.”
“The defendant made numerous fraudulent claims to illegally profit from the Renewable Fuel Standard (RFS) Program,” said Jessica Taylor, Director of EPA’s Criminal Investigation Division. “Today’s conviction should send a clear signal that EPA and our law enforcement partners are committed to protecting the integrity of the Energy Independence and Security Act of 2007.”
USDA-OIG Special Agent-in-Charge Bethanne M. Dinkins said, “We appreciate the commitment of the Department of Justice and the cooperative efforts of our law enforcement partners throughout this significant investigation. Mr. Dunham’s conviction at trial sends a strong message regarding the benefit of working across agency lines to protect the integrity of Government programs like the USDA Advanced Biofuel Payment Program, established in the 2008 Farm Bill as an incentive for companies to produce and use alternative fuel sources. The USDA Office of Inspector General will continue to dedicate resources to protect the Department’s programs and assets by investigating those who commit fraud and compromise the integrity of USDA programs.”
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, the Internal Revenue Service’s Criminal Investigation Division, and the United States Department of Agriculture’s Office of Inspector General. The case is being prosecuted by Assistant United States Attorney John Gallagher and Trial Attorney Adam Cullman of the ENRD.
Green Energy Fraudster Convicted at Trial for Scamming Multiple Federal Agencies and his CustomersRead the Press Release
Assistant Attorney General Jeffrey Bossert Clark of the Department of Justice’s Environment and Natural Resources Division (ENRD) and United States Attorney William M. McSwain for the Eastern District of Pennsylvania announced today that a federal jury in Reading, Pennsylvania, convicted David M. Dunham Jr. of the following crimes: conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents; and obstruction of justice. The conviction stemmed from Dunham hatching and executing a scheme to defraud the Environmental Protection Agency, the Internal Revenue Service, and his customers to obtain renewable fuel credits in his “green energy” business. The government is also seeking forfeiture of approximately $1.7 million in fraudulently obtained revenue and several parcels of real estate. The trial lasted four weeks before United States District Judge Jeffrey L. Schmehl.
In Dunham’s green energy scam, he fraudulently applied for, received, and sold “credits” for selling renewable biofuels that he, in fact, did not sell and, in many instances, had never possessed in the first place. He obtained these credits from government agencies, which resulted in Dunham obtaining $50 million in fraudulent revenue. Dunham ran the scam from approximately 2010 to 2015, using his business, Smarter Fuels, and that of his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.
“Today’s conviction sends a clear message to any future fraudsters out there: crime does not pay. Especially when that crime involves defrauding American customers and multiple federal agencies,” said Assistant Attorney General Clark. “When the defendant knowingly cheated a federal government program aimed at energy conservation, he gave himself an unfair advantage over his competitors and stole millions of dollars from the American taxpayer in the process. The Department of Justice will not tolerate this type of deception and will continue to work with its law enforcement partners to root out this unlawful conduct.”
“Though this defendant tried to deflect blame on others, his years of scamming the government and his customers has finally caught up to him,” said U.S. Attorney McSwain. “And the truth is as simple as this: Everyone has to follow the rules. You cannot lie, steal, or cover up your misdeeds. If you do, we will hold you accountable. Experience shows that fraudsters like Dunham are always looking for the next best scam. As American consumers become increasingly more concerned with energy conservation, green energy scams like the one in this case provide criminals with an easy angle. We are grateful that the jury saw through Dunham’s lies and reached the correct result.”
“David Dunham created an elaborate scheme that served no purpose other than to mislead and defraud the government,” said IRS Special Agent in Charge Guy Ficco. “Unfortunately for him, our special agents were able to track the movement of paperwork and uncover the deceit behind his actions. We, along with our fellow law enforcement partners and the Department of Justice, will continue to investigate and prosecute those who commit similar crimes.”
“The defendant made numerous fraudulent claims to illegally profit from the Renewable Fuel Standard (RFS) Program,” said Director Jessica Taylor, Director of EPA’s Criminal Investigation Division. “Today’s conviction should send a clear signal that EPA and our law enforcement partners are committed to protecting the integrity of the Energy Independence and Security Act of 2007.”
“We appreciate the commitment of the Department of Justice and the cooperative efforts of our law enforcement partners throughout this significant investigation,” said USDA-OIG Special Agent-in-Charge Bethanne M. Dinkins. “Mr. Dunham’s conviction at trial sends a strong message regarding the benefit of working across agency lines to protect the integrity of Government programs like the USDA Advanced Biofuel Payment Program, established in the 2008 Farm Bill as an incentive for companies to produce and use alternative fuel sources. The USDA Office of Inspector General will continue to dedicate resources to protect the Department’s programs and assets by investigating those who commit fraud and compromise the integrity of USDA programs.”
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, the Internal Revenue Service’s Criminal Investigation Division, and the United States Department of Agriculture’s Office of Inspector General. The case is being prosecuted by Trial Attorney Adam Cullman of the Environmental Crimes Section and Assistant United States Attorney John Gallagher.
Political Consultant Sentenced to Five Years for Bribery of Allentown and Reading, PA OfficialsRead the Press Release
PHILADELPHIA – Deputy U.S. Attorney Louis D. Lappen announced that the political consultant to then-Allentown Mayor Edwin Pawlowski, Michael Fleck, 40, formerly of Allentown, PA was sentenced today to five years in prison followed by three years of supervised release by Chief U.S. District Court Judge Juan R. Sanchez. Fleck must also pay $134,487 in restitution. The defendant was immediately remanded to federal custody to begin serving his sentence. Fleck previously pleaded guilty to one count of conspiracy to commit extortion and bribery offenses and one count of tax evasion.
Fleck was a principal and co-owner of an Allentown-based consulting company that conducted fundraising and other campaign-related services for certain elected officials in Pennsylvania (“the political clients”), and lobbied these same political clients on behalf of individuals and companies who sought contracts and other favorable treatment from local governments (“the business clients”).
Mayor Vaughn Spencer of Reading, Mayor Edwin Pawlowski and Controller Mary Ellen Koval of Allentown were each elected officials in their respective cities as well as Fleck’s political clients. Spencer and Koval sought re-election to the offices they held, while Pawlowski aspired to win higher office through statewide election. Each of these three elected officials attempted to leverage their respective public offices – which gave them actual and perceived authority over the awarding of municipal contracts – for items of value, including campaign contributions.
As part of the “consulting” services that Fleck provided, he helped facilitate quid pro quo solicitations, offers and agreements, and obtained tens of thousands of dollars in campaign contributions from businesses and donors seeking to do business with the City of Allentown and the City of Reading for his political clients.
Fleck also filed fraudulent income tax returns for tax years 2011, 2012 and 2013, in which he concealed income from his consulting company of approximately $130,897.41, overstated certain deductions, and failed to remit approximately $43,467 in payroll taxes, causing a tax loss of approximately $77,738.
“Fleck manipulated our democratic systems of government to enrich himself and his associates at the expense of the citizens of Reading and Allentown,” said Deputy U.S. Attorney Lappen. “In doing so, Fleck and the corrupt mayors with whom he conspired did tremendous damage to the confidence that our citizens have in their local governments. Our Office remains committed to uncovering and prosecuting public corruption at all levels. Public officials and their cronies should start getting the message that they must serve the public rather than satisfy themselves and their venal desires.”
“Compliance with the tax laws in the United States relies heavily on self-assessments of taxes owed,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. “Michael Fleck took steps to prevent the assessment of his true tax liability; and the sentence he received shows how seriously the courts take federal tax crimes like this.”
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service and is being prosecuted by Assistant United States Attorneys Michelle Morgan and Anthony Wzorek.
Philadelphia Bookkeeper Convicted of Embezzling Almost $1.6 Million from Former EmployerRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Peter Goodchild, 56, of Philadelphia, PA, was convicted today at trial on charges of embezzling almost $1.6 million from his former employer, QwikSource, over a ten-year period beginning in 2005 and ending in 2015 through a wire fraud scheme. Goodchild was also convicted of money laundering, aggravated identity theft, and filing false income tax returns during this period.
Goodchild, former bookkeeper for QwikSource LLC/GMI Technical Sales LLC of Florham Park, NJ, opened a PayPal account using his employer’s name, transferred funds from QwikSource’s bank account to that PayPal account, from that PayPal account to another PayPal account belonging to his girlfriend, and from his girlfriend’s PayPal account to one or more of his personal bank accounts. The defendant further concealed the embezzlement by making financial entries on files he maintained for QwikSource that increased the cost of goods sold by the same amount of the money he wired from QwikSource’s account to the PayPal accounts and his personal bank accounts.
Further, Goodchild failed to pay taxes on his wealth. Between 2010 and 2015, he embezzled at least $854,800 and had unreported income of $231,100 in 2010, $215,100 in 2011, $83,600 in 2012, $125,000 in 2013, $152,000 in 2014, and $48,000 in 2015. His actions created a tax loss of approximately $240,648.
Goodchild was charged with and convicted on 48 counts of wire fraud, 10 counts of money laundering, six counts of filing a false income tax return, and one count of aggravated identity theft. Wire fraud and money laundering are punishable by up to 20 years in prison. Filing a false tax return is punishable by up to three years. Aggravated identity theft is punishable by a mandatory two years of prison that must follow any term imposed on the other counts. Additionally, Goodchild will be subject to restitution and/or forfeiture of money and substitute assets totaling $1,589,315.
“My office takes offenses like embezzlement, tax fraud and money laundering very seriously,” said U.S. Attorney McSwain. “The defendant stole more than a million dollars by abusing his position handling finances for his former employer. My Office will continue to work with our law enforcement partners to protect innocent individuals and businesses from being victimized by this type of fraud.”
“The role of IRS Criminal Investigation becomes even more important in embezzlement and fraud cases due to the complex financial transactions that can take time to unravel,” said Guy Ficco, Special Agent in Charge. “As we often see, federal tax laws are normally violated in these types of cases and IRS CI is committed to ensuring that everyone pays their fair share.”
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service and is being prosecuted by Assistant United States Attorney Anita Eve.
Philadelphia Police Officer Charged with Distribution of Child PornographyRead the Press Release
PHILADELPHIA - James Strohm, 47, a Philadelphia police officer and resident of Philadelphia, was charged today by Complaint and Warrant with distribution and attempted distribution of child pornography, announced United States Attorney William M. McSwain. If convicted of this offense the defendant faces a mandatory minimum sentence of 5 years’ incarceration.
The case was investigated by the Federal Bureau of Investigation (FBI), and is being prosecuted by Assistant United States Attorney Meaghan A. Flannery.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Reading Mayor Sentenced in Bribery SchemeRead the Press Release
PHILADELPHIA – First Assistant U.S. Attorney Jennifer Williams announced that former Mayor of Reading, Vaughn Spencer, 71, of Reading, Pennsylvania, was sentenced today to 96 months in prison, followed by three years of supervised release and a $35,000 fine by the Honorable Juan R. Sanchez, Chief Judge, United States District Court.
Spencer was the Mayor of Reading from January 2012 until January 2016. He was convicted by a jury on August 31, 2018 on eleven counts of bribery solicitation and related offenses, stemming from a conspiracy to solicit campaign contributions from specific vendors for the May 2015 democratic primary in exchange for lucrative municipal engineering contracts. T&M Associates and McTish Kunkle & Associates were among the engineering firms that engaged in this pay-to-play scheme.
Spencer, his Special Assistant, Eron Lloyd, and his campaign manager, Michael Fleck, also conspired to pay an $1,800 bribe to Reading School Board President Rebecca Acosta, who was running for district justice at the time, in exchange for her help and her husband, City Council President Francisco Acosta, in persuading Reading City Council to repeal a local ordinance that set an annual limit on individual campaign contributions to persons running for city office. Spencer pursued this because he was hoping to maximize his campaign contributions, and keep contributions he had already received well in excess of the limit.
Francisco Acosta pled guilty and was sentenced to, and has already served, 24 months in prison, and Rebecca Acosta pled guilty and is currently serving an 18-month sentence of incarceration. Lloyd pled guilty and was sentenced to 5 years’ probation with the first 6 months on house arrest, and Mark Neisser of T&M pled guilty and was sentenced to 5 years’ probation with the first 12 months on house arrest and a $25,000 fine. Fleck and Matthew McTish are scheduled to be sentenced on April 26, 2019.
“Spencer was so concerned with keeping his job, and the money to run a re-election campaign, that he forgot to do his job on behalf of the citizens of Reading,” said First Assistant U.S. Attorney Williams. “He used the position that voters had entrusted to him for his personal benefit. Our office is committed to uncovering and prosecuting public corruption, so officials should be on notice: if you abuse the powers of your office, the federal government is coming for you.”
“While mayor of Reading, Vaughan Spencer repeatedly sold off city contracts in an effort to cling to office,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Instead of working honestly on behalf of his constituents, he embraced these corrupt relationships and transactions for his own selfish benefit. The FBI is determined to root out the kickback culture seen all too frequently in this country's halls of power.”
“Spencer’s conscious decision to deceive and benefit personally at the expense of the citizens of Reading has cost him his liberty,” said Guy Ficco, IRS Criminal Investigation Special Agent in Charge. “Let his sentence serve as a stark reminder that if you commit a crime, status as a political leader will not protect you from federal prosecution.”
The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, and is being prosecuted by Assistant United States Attorneys Michelle L. Morgan and Anthony J. Wzorek.
Eastern District of Pennsylvania Hosts Roundtable Addressing Medication-Assisted Treatment for Opioid Use Disorder and the Americans with Disabilities ActRead the Press Release
PHILADELPHIA, PA – United States Attorney William M. McSwain announced that the Eastern District of Pennsylvania and the Justice Department’s Civil Rights Division hosted a roundtable today for community organizations, treatment centers, and healthcare providers in order to foster discussion about the nationwide opioid crisis. More specifically, the roundtable focused on the protections afforded by the Americans with Disabilities Act (ADA) for individuals using medication-assisted treatment (MAT) as a means to combat their opioid addiction and promote long-term recovery.
Today’s roundtable was part of the Department of Justice’s initiative to remove discriminatory barriers to MAT and to educate local stakeholders about how anti-discrimination laws protect people with opioid use and other substance use disorders. Representatives of dozens of local healthcare groups attended the roundtable event. U.S. Attorney McSwain invited these representatives because they often work with individuals who are addicted to opioids and using MAT as part of their treatment.
U.S. Attorney McSwain, Assistant U.S. Attorney Jacqueline C. Romero, the Civil Rights Coordinator for the Eastern District of Pennsylvania, and Charlotte Lanvers, an attorney with the U.S. Department of Justice’s Civil Rights Division in Washington, D.C., presented to the group and addressed ways in which the ADA can protect individuals from discrimination arising from their use of MAT.
“Locally and nationally, opioid addiction and illegal distribution of opioids continue to be at alarming levels. My Office is committed to stopping criminals from flooding our streets with these deadly drugs, as well as enforcing the ADA’s anti-discrimination protections against those who are lawfully using MAT as part of their addiction recovery plan,” said U.S. Attorney McSwain. “These two goals are compatible and, in fact, help to reinforce each other.”
People who believe they are being discriminated against with regard to their use of MAT should file complaints with DOJ at https://www.ada.gov/filing_complaint.htm. Individuals who believe they may have been victims of discrimination may also file a complaint with the U.S. Attorney’s Office at 615 Chestnut Street, Suite 1250, Philadelphia, PA 19106, ATTN: Jacqueline C. Romero, Civil Rights Coordinator.
Harrisburg Man Charged with Knifepoint Carjacking in Lancaster, PARead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Suudimon Washington, 32, of Harrisburg, Pennsylvania was charged by information today with one count of carjacking. The information charges Washington for taking of a vehicle from a person in Lancaster at knifepoint on October 12, 2018.
If convicted, the defendant faces a maximum penalty of 15 years’ imprisonment, and up to three years of supervised release. Additionally, Washington faces a possible $250,000 fine and a $100 special assessment.
“When charges are brought against a suspect in a high-profile, violent crime such as the one this defendant allegedly committed, it brings relief to a community on-edge with concern for the safety of their loved ones,” said U.S. Attorney McSwain. “The 85-year-old victim here was terrified. I want to thank our investigating partners at the federal and local level who did such tremendous work to allow our office to file these charges.”
“Violent crime can have such a chilling effect on a community,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “No one, let alone elderly folks, should have to worry about being victimized by an armed robber or carjacker. The FBI and our law enforcement partners will continue to investigate and lock up violent criminals who prey on others without compunction.”
The case is being investigated by the Federal Bureau of Investigation, the Lancaster City Bureau of Police, and the Philadelphia Police Department, and it is being prosecuted by Assistant United States Attorney Robert E. Eckert.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
President of Michigan Electric Company and Three Construction Firms Agree to Pay $466,500 to Settle False Claims Act AllegationsRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Tooles Contracting Group, LLC, of Detroit, Michigan, Commercial Contracting Corporation (CCC) of Auburn Hills, Michigan, G&B Electric, Inc., and G&B Electric’s President, James Gierlach, both of Ferndale, Michigan, have agreed to pay the United States $466,500 to resolve allegations that Gierlach, G&B Electric, and Tooles engaged in bid rigging and inflating invoices submitted to the National Railroad Passenger Corporation (Amtrak) as part of contracting work performed to increase the accessibility of Amtrak stations in Hammond, Louisiana, Beaumont, Texas, Alpine, Texas, and Little Rock, Arkansas. CCC, as the minority owner of Tooles, also contributed to the settlement.
Based on its investigation, the United States contends that Gierlach and a Tooles employee engaged in bid rigging when the Tooles employee shared a bid for the electrical work on the Beaumont, Texas, station with Gierlach. As part of this scheme, Gierlach paid cash to the Tooles employee in exchange for this information.
The United States also contends that Gierlach and G&B Electric submitted false invoices for their work at other Amtrak locations. First, in November 2010, at Tooles’ urging, Gierlach submitted an invoice for $28,440 in excess of the work that had been completed at the time. Second, Tooles and G&B Electric caused false claims related to carpenters to be submitted to Amtrak. Tooles requested that Gierlach place certain carpenters as subcontractors to G&B Electric and submit a change order for $115,000 to cover the cost of the carpenters. The true cost of this work was approximately half of that amount and G&B Electric and Tooles agreed that G&B Electric could keep the difference in exchange for future renovations of Tooles’ office building. Tooles approved the overinflated invoices that comprised the change order, which was then paid by CCC. All Amtrak contracts pass through Amtrak’s Philadelphia procurement office.
“Government contractors must be honest in their bidding and in their billing,” said U.S. Attorney McSwain. “Bid rigging damages both the government and the market by rewarding corruption. This settlement reflects the seriousness with which my Office takes these allegations and the lengths we will go to investigate false claims submitted by contractors that are the result of an unfair bidding process.”
“We’re proud of the tenacity displayed by our investigative staff and the U.S. Attorney’s office, a team effort that helped bring this complex case to its resolution,” said Kevin Winters, Amtrak’s Inspector General. “This work underscores the importance of our mission and our commitment to detecting and preventing fraud, waste, and abuse.”
The case was handled by Assistant United States Attorney Paul J. Koob. The case was investigated by the Amtrak Office of Inspector General.
Eastern District of Pennsylvania Reaches Settlement Agreement with Thomas Jefferson University Hospitals Outpatient Facilities to Provide Equal AccessRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Thomas Jefferson University Hospitals, Inc., and Outpatient Imaging Affiliates, LLC, collectively the owners and operators of Jefferson Outpatient Imaging and Radiology (“Jefferson Outpatient”), have entered into a settlement agreement with the United States to resolve allegations that Jefferson Outpatient violated the Americans with Disabilities Act (ADA) by denying full and equal access to Jefferson Outpatient services based on an individual’s disability and use of a wheelchair.
Under the ADA, facilities like Jefferson Outpatient, as a place of public accommodation, must provide outpatient and radiology services to members of the general public. This settlement arises out of an investigation into whether Jefferson Outpatient failed to provide access to dual energy x-ray absorptiometry (DEXA) bone density scans to individuals with disabilities at its facilities in the greater Philadelphia area, which is in violation of the ADA.
“This investigation and resolution illustrate that individuals with disabilities still face discrimination and obstacles when they seek access to healthcare,” said U.S. Attorney McSwain. “All individuals should have equal access to these services and the protections that the ADA affords to them.” U.S. Attorney McSwain added that “Jefferson Outpatient cooperated with the investigation, recognized the importance of providing access to all, and acted swiftly to put compliance measures in place once the issue was brought to their attention.”
To resolve the matter, Jefferson Outpatient has agreed to comply with its obligations under the ADA, pay compensatory damages to the complainant, and within 30 days, will adopt and incorporate a Non-Discrimination Policy into its existing policies and post it in conspicuous locations in all of its offices. Jefferson Outpatient will also post and maintain a hyperlink to the Non-Discrimination Policy on the home page of its website. In addition, Jefferson Outpatient will train all staff who interact with patients on the requirements of the ADA as they apply to healthcare facilities and on techniques for safely assisting individuals with mobility disabilities to transfer to imaging equipment or examination tables. Further, Jefferson Outpatient will incorporate the above training into its new employee orientation for all future employees who will have contact with patients.
The U.S. Attorney’s Office for the Eastern District of Pennsylvania is committed to investigating alleged violations of the ADA. Those interested in learning more about obligations under the ADA may access www.ada.gov, or call the Department of Justice’s toll-free information line at (800) 514-0301 or (800) 514-0383 (TDD). Information about filing a complaint, including instructions for filing a complaint online, can be found at https://www.justice.gov/crt/how-file-complaint.
Assistant U.S. Attorney Deborah W. Frey handled the matter in conjunction with Alyse Bass, Senior Trial Attorney, at the Department of Justice’s Civil Rights Division.
Eastern District of Pennsylvania Participates in Two Nationwide Department of Justice Health Care Fraud TakedownsRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced today that two individuals from the Eastern District of Pennsylvania have been charged in connection with two nationwide health care fraud takedowns. These two cases stem from the partnership between the United States Attorney’s Office for the Eastern District of Pennsylvania and the recently formed Newark/Philadelphia Regional Medicare Fraud Strike Force, which is staffed with prosecutors from the Health Care Fraud Unit in the Fraud Section of the Justice Department’s Criminal Division.
Federal prosecutors unsealed charges today against over 50 medical professionals in the Appalachian Regional Prescription Opioid (“ARPO”) Surge Takedown. Those professionals were responsible for more than 30 million illegally prescribed opioids given to nearly 30,000 patients. United States Department of Justice officials announced these charges today. Additionally, on April 9, Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division announced a national telemedicine takedown, with 24 defendants charged in a $1.2 billion dollar fraud scheme involving international call centers, telemedicine companies, licensed medical professionals, and durable medical equipment (“DME”) companies.
The two Eastern District of Pennsylvania cases involved in these takedowns are summarized below.
In United States v. Tayjha Brown, the defendant, 34, of Coastesville, Pennsylvania was a former licensed practical nurse who was charged by information in connection with the ARPO Surge Takedown with one count of conspiracy to distribute controlled substances. The charges stem from Brown’s role in filling fraudulent prescriptions in her name and in the names of others at a local pharmacy in order to obtain oxycodone for herself and to distribute. Brown forged the prescriptions primarily from prescription pads and paper she stole from her employers. The defendant provided approximately 30 oxycodone pills from each fraudulent prescription not written in her name to her co-conspirators.
In United States v. Randy Lee Swackhammer, the defendant, 60, of Goldsboro, North Carolina was a medical doctor licensed in four states who was charged by information with one count of conspiracy to commit health care fraud. The charges stem from Swackhammer’s role in the telemedicine fraud scheme in which he conspired with telemedicine companies to prescribe medically unnecessary orthotic braces to unsuspecting Medicare beneficiaries following brief phone calls. The referrals caused the submission of approximately $5 million in false and fraudulent claims to the Medicare program. Swackhammer neither conducted in-person examinations nor meaningful telephonic evaluations prior to prescribing at least one, and often multiple, orthotic braces.
“The Newark/Philadelphia Regional Medicare Fraud Strike Force is producing results for the people and businesses who are hurt by this type of crime and for all taxpayers who support government programs like Medicare,” said U.S. Attorney McSwain. “These two cases exemplify the great work being done to root out fraud, waste and corruption.”
“Whether it’s the unlawful diversion of Medicare funds or prescription drugs, the FBI will continue to crack down on all manner of health care fraud,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Medical professionals who choose to engage in these crimes should know that the next knock at your door could very well be Special Agents with a search warrant.”
The Brown case was investigated by the Office of Personnel Management-Office of Inspector General, Federal Bureau of Investigation, Department of Health and Human Services-Office of Inspector General, Drug Enforcement Administration and United States Marshals Service. The case is being handled by Assistant United States Attorney Paul J. Koob and DOJ Trial Attorney Adam G. Yoffie, who is one of two prosecutors assigned to the Eastern District of Pennsylvania from the Health Care Fraud Unit in the U.S. Justice Department’s Criminal Division’s Fraud Section.
The Swackhammer case was investigated by the Federal Bureau of Investigation, Department of Health and Human Services-Office of Inspector General, Internal Revenue Service, United States Postal Inspection Service, and auditor Dawn Wiggins. The case is being handled by DOJ Trial Attorney Adam G. Yoffie.
Philadelphia Man Convicted of Narcotics Distribution, Weapons PossessionRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that James Williams, 32, of Philadelphia, PA was convicted today at trial of distribution of heroin, possession with intent to distribute heroin and crack cocaine, and illegal possession of a firearm by a felon.
The defendant and his co-defendant, “A.J.,” became romantically involved in April 2017, after which the defendant began to supply A.J. with heroin to sell to her regular customers located in Bristol, PA. The defendant and A.J. shared the proceeds. Williams also sold narcotics to other customers outside of his relationship with A.J.
On July 18, 2017 A.J. arranged to meet a man, who was actually a confidential informant (“CI”) working with the Bensalem Township Police Department, in a shopping center in Bensalem, PA to sell him heroin and crack cocaine. A.J. and the defendant arrived together in the defendant’s Ford Mustang, and the CI got into the back seat of the defendant’s car to purchase the narcotics. The defendant and A.J. were immediately arrested. Bensalem Township Police officers then found a loaded firearm and more narcotics locked in the glovebox, and more narcotics hidden in the trunk of the defendant’s car. Williams had a prior felony conviction which prohibited him from legally possessing a firearm.
“Drug distribution and gun violence are an epidemic in Philadelphia and the federal government is aggressively prosecuting both and getting dangerous criminals off the streets,” said U.S. Attorney McSwain. “We want to thank our law enforcement partners in this case, ATF and the Bensalem Township Police Department, for their hard work and dedication.”
“There is no place in our community for those who use firearms for violent, criminal purposes,” said Donald Robinson, Special Agent in Charge of ATF’s Philadelphia Field Division. “ATF will continue to work with our law enforcement partners at the federal, state, and local levels to ensure those individuals are brought to justice.”
The case was investigated by Bensalem Township Police Department and the Bureau of Alcohol, Tobacco, Firearms and Explosives (“ATF”) and is being prosecuted by Assistant United States Attorneys Timothy Stengel and Eric Henson.
Philadelphia Man Sentenced to 87 Months in Prison for Gun TraffickingRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Renard Gray, of Philadelphia, was sentenced to 87 months in federal prison by United States District Judge Petrese B. Tucker for his participation in a criminal conspiracy to traffic firearms into the Philadelphia region.
Over the course of several months in 2017, Gray and his coconspirators illegally obtained straw-purchased and stolen firearms from Georgia and other states, which they then shipped to Philadelphia and sold in black market transactions in the city. In late 2017, an undercover officer infiltrated the trafficking ring and secretly recorded a number of gun transactions conducted by Gray and his coconspirators. During two of these transactions, Gray also sold quantities of cocaine to the undercover officer.
During one conversation recorded by the undercover officer, Gray boasted about the sophistication of his gun trafficking operation and predicted that law enforcement would never “track [the guns] back to me.” This prediction proved false on March 13, 2018, when a federal grand jury indicted Gray and two of his coconspirators on charges related to conspiracy, gun trafficking, illegally transporting firearms, and distributing cocaine. Gray plead guilty to all counts on May 31, 2018.
“Gun violence in the City of Philadelphia is a scourge on our city, one which is enabled by the illegal trafficking of firearms and black market sales to individuals who should not have access to them,” said U.S. Attorney McSwain. “Criminals like defendant Gray should be on notice that federal law enforcement will track these back to you, and we will prosecute you to the fullest extent the law allows. We thank our federal and local law enforcement partners for their work in this investigation.”
“The primary goal of ATF’s firearms trafficking strategy is to prevent violent crime by disrupting and dismantling the firearms trafficking organizations and networks responsible for supplying violent offenders with crime guns,” said Donald Robinson, Special Agent in Charge of the Philadelphia Field Division of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF). “Ensuring that firearms traffickers are aggressively investigated and swiftly brought to justice is a top priority for the Philadelphia Field Division.”
The case was investigated by the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), with assistance from the Philadelphia Police Department, and was prosecuted by Assistant United States Attorney Sean P. McDonnell.
Three Convicted at Trial of Sex Trafficking of Minors and OthersRead the Press Release
PHILADELPHIA – U.S. Attorney William M. McSwain announced that Dkyle Jamal Bridges, Kristian Jones, and Anthony Jones were convicted of sex trafficking of minors and sex trafficking by force, fraud, and coercion, as well as conspiracy to engage in sex trafficking following a three-week trial.
From 2012 through September 2017, Bridges led a prostitution enterprise in which various women and girls performed commercial sex acts in southeastern Pennsylvania, Delaware, Maryland, and elsewhere for Bridges’ financial benefit. Bridges frequently used violence and threats to cause the female victims to engage in the commercial sex acts. Kristian and Anthony Jones, among others, assisted Bridges in various capacities in running the business, including by recruiting and transporting victims, collecting money, and paying for hotel rooms.
In November 2016, a Tinicum Township police officer stopped a vehicle that had recently left a hotel known to be frequented by individuals engaged in prostitution. The driver admitted to the officer that he had just met a prostitute at the hotel and had arranged the “date” through a website called Backpage.com. Law enforcement went to the room that the customer had visited, and discovered Kristian Jones, two minor girls, condoms, and cell phones containing communications with Bridges about the prostitution business. The room had been rented by Anthony Jones.
That same month, a Newark, Delaware police officer, acting in an undercover capacity, responded to a Backpage.com ad offering commercial sex. When law enforcement arrived at the hotel for the “date,” they found a woman and a girl. In July 2017, the Philadelphia Police conducted a similar undercover operation, and when they arrived for the “date,” they found two adult women in the hotel room and Bridges waiting in his car. All of the victims were fraudulently promised payment by Bridges and once enlisted in his trafficking circle, they were subjected to Bridges’ violent acts or feared him based on observing his violence against others. Thus, all were trafficked by force, fraud, and coercion.
“Bridges’ years of trafficking women and girls by force and manipulation, and with the willing assistance of others, are over,” said U.S. Attorney McSwain. “Sex trafficking is a pervasive problem that demands an aggressive response. We stand ready with our federal partners to identify and dismantle organizations that perpetuate this abuse.”
“That these men felt they had the right to sexually exploit girls and women for money is abhorrent,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “The FBI and our law enforcement partners are working every day to put people like this behind bars and ensure some justice for their victims. We would ask anyone with knowledge of child or adult sex trafficking to let us know about it – anonymously, if need be. Call 1-800-CALL-FBI or go online to tips.fbi.gov.”
The case was investigated by FBI Philadelphia with assistance from the Tinicum Township Police Department; Newark, Delaware Police Department; Delaware State Police; and Philadelphia Police Department and was prosecuted by Assistant United States Attorney Priya DeSouza and Department of Justice Trial Attorney Jessica Urban.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.
Former Board President of Milwaukee Public Schools Charged in Bribery Scheme Linked to Philadelphia Non-ProfitRead the Press Release
PHILADELPHIA – First Assistant U.S. Attorney Jennifer Arbittier Williams announced that Michael Bonds, 60 of Milwaukee, Wisconsin, was charged today by Information with conspiracy to commit honest services wire fraud and a violation of the Travel Act arising from his participation in a bribery scheme whereby Bonds, acting in his capacity as President of the Milwaukee Public School (“MPS”) Board, accepted payments and things of value in exchange for official acts taken to benefit a Philadelphia-based, privately-operated education and development company (“Company 1”) and its senior executives.
Company 1 was an umbrella organization for several business entities that perform services related to education management, charter school operations and neighborhood development. Between 2012 and 2017, Company 1’s education component maintained management agreements with multiple schools operating in Philadelphia, Pennsylvania and Milwaukee, Wisconsin to manage the schools’ leadership teams, create the schools’ budgets and administer their payroll processes, and ensure that their financial reporting complied with various government entities. The main function of Company 1’s real estate development component was to redevelop residential properties into affordable housing in South Philadelphia neighborhoods.
Executive 1 was a Philadelphia-based founding member of Company 1 who served as the President and Chief Executive Officer since the organization's inception. Executive 2 was Company 1’s Philadelphia-based Chief Financial Officer. In that capacity, Executive 2 was responsible for Company 1’s overall financial and contract management.
The Information charges that Bonds engaged in a bribery scheme in which he received a series of payments and things of value from Executive 1, Executive 2, and Company 1 in exchange for a series of official acts that Bonds took on behalf of Executive 1, Executive 2, and Company 1.
The Information further charges that the conspirators disguised the bribes as payments for book sales from a company created by Bonds called “African American Books and Gifts.” According to the Information, the conspirators created fake documents disguising the bribery payments, including sham invoices and false entries in books, records, and tax returns. According to the Information, the conspirators also used a private commercial interstate carrier to transport bribe payments in the form of checks disguised as payments to “African American Books and Gifts,” and concealed from the MPS Board the payments Bonds received from Executive 1, Executive 2, and Company 1.
According to the Information, on December 9, 2014, Bonds appeared at a subcommittee meeting of the MPS Board and personally advocated in support of an expansion to include the opening of an additional campus by the charter school subsidiary of Company 1 in Milwaukee, Wisconsin. Bonds is then alleged to have brought a motion before an MPS Board subcommittee supporting a lease to house the additional campus, to have presided over the full MPS Board meeting at which the expansion was approved, and to have motioned the Board for approval of new lease terms favorable to Executive 1, Executive 2, and Company 1, which deferred lease payments of approximately $1,000,000 owed by the charter school subsidiary of Company 1.
“Public officials, including those like Michael Bonds who were elected by voters to manage public schools, have a duty to provide honest services to their constituents,” said First Assistant U.S. Attorney Williams. “In this case, some of those constituents are school children who have no choice but to depend on adults to make decisions in their best interest, which makes Bonds’ alleged actions even more egregious. Public officials cannot be allowed to use their positions and influence to enrich themselves.”
“Today’s indictment alleges that Mr. Bonds abused his positions of trust for person gain. That is unacceptable,” said Geoffrey Wood, Special Agent in Charge of the U.S. Department of Education Office of Inspector General’s Eastern Regional Office. “OIG Special Agents will continue to investigate allegations of fraud and pursue those who seek to enrich themselves at the expense of our nation’s students. America’s students, their families, and taxpayers deserve nothing less.”
“Rooting out public corruption remains one of IRS Criminal Investigation's highest priorities,” said Guy Ficco, IRS-CI Special Agent in Charge. “We, along with our law enforcement partners, will continue to be relentless in our mission to enforce the law and ensure public trust.”
"When an individual elected to work on local schools' and students' behalf is more focused on their own enrichment, they've failed their constituents and community," said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. "The lesson here: the FBI will continue to investigate corruption wherever we find it and bring those responsible to justice."
If convicted, Bonds faces a maximum possible sentence of ten years’ imprisonment, a three year period of supervised release, and a $500,000 fine. Forfeiture of $18,000 in bribery proceeds also may be ordered.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigations, and the U.S. Department of Education Office of Inspector General and is being prosecuted by Assistant United States Attorneys Eric Gibson and Mark Dubnoff.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Tax Return Preparers Indicted and Charged with Tax Fraud ConspiracyRead the Press Release
PHILADELPHIA – United States Attorney William M. McSwain announced that tax fraud conspiracy charges were filed against five former tax preparers, Florence Clark, 64, Israel Ortiz-Pena, 39, Alexander Salas, 39, Priscilla Rufino, a/k/a Priscilla Diaz, 37, and Mary Correa, 46, all residents of Philadelphia, who were owners and employees of a tax service business with numerous offices located in Philadelphia.
Each defendant is charged with conspiracy to knowingly defraud the United States by preparing and filing with the IRS false tax returns that fraudulently claimed tax refunds to which the individuals were not entitled, in violation of Title 18, United States Code, Section 371. Salas was also charged with under-reporting his own income and, as the result, filing a false income tax return, in violation of Title 26, United States Code, Section 7206(1). If convicted of the charges, Clark, Ortiz-Pena, Rufino, and Correa could face up to five years in prison. Salas could face up to eight years in prison.
The charging documents filed today allege that the defendants fabricated business income for their clients, which fraudulently inflated the Earned Income Tax Credit each client could claim and thereby increased each client’s refund. In addition, the defendants allegedly increased the preparation fees that they collected, in the form of kickbacks from the tax refunds, by fabricating business income for the clients.
“As alleged in the indictment, these defendants – tax return preparers – committed fraud and stole from the United States government,” said U.S. Attorney McSwain. “They also stole from the pockets of all taxpayers who do the right thing every April and pay their fair share of taxes.”
“Knowingly falsifying documents filed with the IRS is a crime,” said Guy Ficco, IRS Criminal Investigation Special Agent in Charge. “Dishonest tax return preparers, like those charged in this conspiracy, use a variety of methods to cheat the government. This is a reminder to take care when choosing a tax return preparer; as you, the taxpayer, are ultimately responsible for the accuracy of the information on your tax return.”
The case was investigated by the Internal Revenue Service and is being prosecuted by Assistant United States Attorney Anita Eve.