Eastern District of Pennsylvania
Press releases recorded for this federal judicial district.
Native of Mexico Charged with Illegal ReentryRead the Press Release
Antonio Carrillo-Ortiz, 53, a native of Mexico, was charged today by indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a statutory maximum sentence of 10 years in prison, a fine of up to $250,000, up to three years of supervised release, and a $100 special assessment.
The case was investigated by Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Nancy Rue.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Fugitive Wanted on Tax Charges Is CapturedRead the Press Release
Carmen Basilis, a fugitive and owner of Basilis Tax Services, of Allentown, PA, was arrested this morning on a 58-count indictment charging tax violations, announced United States Attorney Zane David Memeger. Basilis had been a fugitive since her indictment on September 27, 2011. She is charged with willfully aiding and assisting in the preparation and filing of false federal income tax returns. According to the indictment, Basilis prepared materially false federal income tax returns for tax years 2005 through 2008 by inflating expenses, deductions and dependency exemptions on the tax returns which caused the filers to receive tax refunds in amounts greater than they were entitled to receive.
An initial appearance was held today in Allentown. Basilis remains in custody pending an August 17, 2015 detention hearing. If convicted of all charges, Basilis faces a statutory maximum of 174 years in prison, a fine of $14.5 million, a special assessment of $5,800, and one year of supervised release.
The case was investigated by Internal Revenue Service Criminal Investigations and the United States Department of Labor. It is being prosecuted by Assistant United States Attorney Floyd J. Miller.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Chester County Woman Convicted of Worker's Compensation FraudRead the Press Release
PHILADELPHIA – Barbara Stanley, 62, of Nottingham, PA, was convicted by a jury today of five counts of wire fraud, two counts of theft of government funds, one count of making false statements, and two counts of making false statements regarding workers? compensation benefits, announced United States Attorney Zane David Memeger. The defendant was convicted of scheming to defraud the Department of Labor out of workers’ compensation benefits between July 2006 and December 2010 by concealing the fact that she had recovered from her work-related injury. She was also convicted of stealing the approximately $164,000 in workers’ compensation benefits that she received during that time period, and making false statements about her medical condition to the Department of Labor. The defendant was further convicted of stealing approximately $35,000 in Office of Personnel Management (OPM) disability retirement benefits that she received at the same time that she was receiving workers’ compensation benefits, and falsely denying her receipt of the OPM disability retirement benefits, resulting in total losses to the government of approximately $199,000.
U.S. District Court Judge Paul S. Diamond did not yet schedule sentencing. Stanley faces an estimated advisory sentencing guideline range of 24 to 30 months in prison.
The case was investigated by the United States Postal Service Office of the Inspector General, the Department of Labor Office of the Inspector General, and the Office of Personnel Management Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys MaryTeresa Soltis and Mary E. Crawley.
Former Philadelphia Police Officer Sentenced for Extortion SchemeRead the Press Release
PHILADELPHIA - Christopher Saravello, 38, of Philadelphia, PA, was sentenced today to 96 months in prison for a scheme to extort drugs and money from drug dealers and drug buyers while working as a Philadelphia Police Officer. Saravello pleaded guilty on February 6, 2015 to one count of conspiracy to commit Hobbs Act extortion and five counts of Hobbs Act extortion.
Between November 2011 and June 2012, while employed as a Philadelphia Police Officer assigned to the 6th District, Saravello conspired with others to rob drug dealers and drug buyers of cash and Oxycontin and other controlled substances. Saravello’s co-conspirators would alert him to a drug transaction. Saravello would then interrupt the planned drug transaction, driving up in a marked police vehicle, wearing a police uniform, displaying an official badge and identification, or verbally identifying himself as a police officer. He then extorted drugs or money from his victims. In two extortions, Saravello used his personal car and, rather than wearing a full uniform, wore clothing identifying himself as a police officer. During one extortion, Saravello unholstered his weapon, pointed his gun at the victim, ordered the victim to stand against a wall and threatened to shoot him if the extortion demand was not complied with. Saravello seized the money or narcotics brought to the transaction by the buyer or seller victim and shared the seized proceeds with his co-conspirators. The scheme resulted in the illegal taking of more than $9,800 in drug money and quantities of Oxycontin and other narcotics.
In addition to the prison term, U.S. District Court Judge Eduardo Robreno ordered three years of supervised release, and a $600 special assessment.
The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department. It was prosecuted by Assistant United States Attorney Arlene Fisk.
Philadelphia Man Charged with Bank Robbery and Attempted RobberiesRead the Press Release
PHILADELPHIA - Andre S. Lewis, 26, of Philadelphia, was charged today by indictment with bank robbery and attempted bank robbery, announced United States Attorney Zane David Memeger. According to the indictment, on June 15, 2015, Lewis robbed the Wells Fargo Bank located at 2843 N. Broad Street, Philadelphia, PA, and, on June 25, 2015 and July 14, 2015, he attempted to rob the Wells Fargo Bank located at 601 W. Erie Avenue, Philadelphia, PA.
If convicted the defendant faces a maximum possible sentence of 20 years in prison, three years of supervised release, a fine of $750,000, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Philadelphia Police Department, and the Philadelphia District Attorney=s Office, and is being prosecuted by Assistant United States Attorney Jessica Natali.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Norristown Man Charged with Possession of Child PornographyRead the Press Release
PHILADELPHIA - William Keller III, 60, of Norristown Borough, PA, was charged today by indictment with receipt and possession of child pornography, announced United States Attorney Zane David Memeger. The indictment charges Keller with five counts of receiving child pornography and one count of possessing child pornography.
If convicted, the defendant faces a mandatory minimum five years in prison up to a maximum possible statutory sentence of 110 years in prison, a fine of up to $1.5 million, and up to a lifetime of supervised release.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Paul W. Kaufman.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Nifty Fifty's Accountant Sentenced for Tax Fraud SchemeRead the Press Release
PHILADELPHIA - William J. Frio, 59, of Springfield Township, PA, was sentenced today to 60 months in prison for his role in a tax evasion scheme involving the Nifty Fifty’s restaurant chain as well as evasion of his own taxes, structuring of funds he embezzled from the organization, and loan fraud. Frio, who is an accountant and income tax preparer, provided services to the Nifty Fifty’s organization dating back to 1986. He pleaded guilty on January 26, 2015, to conspiracy to commit tax evasion, four counts of filing false tax returns, loan fraud and aggravated structuring of financial transactions. In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered $1.7 million restitution, a special assessment of $700, and four years of supervised release.
Frio and five others, including the restaurant chain’s owners and managers, participated in a long-running scheme to avoid paying millions of dollars in personal and employment taxes. The scheme defrauded the Internal Revenue Service by failing to properly account for more than $15 million in gross receipts. Frio and the owners and principals of Nifty Fifty’s conspired in a scheme to use skimmed cash to pay themselves and people and businesses who supplied goods and services to the Nifty Fifty’s restaurants, providing those persons and businesses with the opportunity to evade the payment of their own taxes. In 2008, Frio submitted a false loan application to Sovereign Bank, for a $417,000 mortgage for his personal residence. Frio submitted to the bank bogus federal income tax returns for 2006 and 2007, and bogus Forms W-2, falsely representing he had earned substantial income from Tanfasia, Inc., when, as the defendant knew, the 2006 and 2007 tax returns that he had actually submitted to the Internal Revenue Service showed far less income than the false returns supplied to Sovereign Bank, and that the defendant had not been employed by Tanfasia, Inc. in 2006 or 2007. Between January 2009 and November 2009, Frio knowingly structured transactions with Sovereign Bank, totaling more than $2.6 million, as part of a pattern of illegal activity involving transactions of more than $100,000 in a 12-month period. Frio used his position as the Nifty Fifty’s accountant to embezzle millions of dollars that belonged to the organization.
The case was investigated by IRS-Criminal Investigation and the FBI. It was prosecuted by Assistant United States Attorneys Paul G. Shapiro and Nancy E. Potts.
Indictment Charges Three in July 2015 Bank RobberyRead the Press Release
PHILADELPHIA – Three people were charged today by indictment in an armed bank robbery in Philadelphia, PA, announced United States Attorney Zane David Memeger. David Thomas, a/k/a David Thompson, 22, Shymeka Miller, a/k/a Shymeka Wright, 24, and Heather Lane, 26, all of Philadelphia, PA, were each charged with armed bank robbery and a related firearm charge for the July 15, 2015 armed robbery of the TD Bank at 5501 Ridge Avenue, Philadelphia. Thomas is also charged with being a convicted felon in possession of a firearm.
If convicted of the charges, each defendant faces a mandatory minimum sentenced of seven years in prison with a maximum sentence of life, up to five years of supervised release, possible fines, restitution, special assessments, and forfeiture of the firearm and ammunition.
This case was investigated by the Federal Bureau of Investigation, the Philadelphia Police Department, and the Philadelphia District Attorney=s Office. It is being prosecuted by Assistant United States Attorney Ewald Zittlau.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Four Charged in Armed Robberies of Check Cashing BusinessesRead the Press Release
PHILADELPHIA - Nysare Alston, 25, Christopher Corley, 27, Hassan Corley, 27, and Kenneth Thomas, 24, all of Philadelphia, Pennsylvania, were charged by indictment, unsealed today, in an alleged robbery spree involving Philadelphia check cashing businesses, announced United States Attorney Zane David Memeger. The defendants are charged with Hobbs Act robbery and related weapons offenses.
According to the indictment, the defendants committed the following armed robberies: on February 15, 2014, the America’s Cash Express, located at 5045 Wayne Avenue, of more than $49,000; on July 12, 2014, the Diamond Check Cashing, located at 4261 Frankford Avenue, of approximately $34,000; on July 25, 2014, the Ace Check Cashing, located at 2557 W. Sterner Street, of approximately $10,000; on September 10, 2014, Don’s Check Cashing, located at 1202 E. Hunting Park Avenue, of approximately $31,000; and the attempted armed robbery, on August 2, 2014, of Ace Check Cashing, located at 4244 N. Broad Street.
If convicted of all charges, Alston and Thomas each face a mandatory minimum sentence of 82 years in prison; C. Corley faces a mandatory minimum sentence of 32 years in prison; H. Corley faces a mandatory minimum term of seven years in prison; plus fines, supervised release, and special assessments.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Yvonne Osirim.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Real Estate Investment Firm Owner Pleads Guilty to FraudRead the Press Release
PHILADELPHIA - Michael Goldner, 44, of Glen Mills, PA, pleaded guilty today to a wire fraud and tax evasion after bilking would-be investors. U.S. District Court Judge Gerald A. McHugh scheduled a sentencing hearing for November 16, 2015.
Goldner was an accountant who owned a real estate investment firm, Arcadia Capital Group, Inc., which he started in 2003 with three other people. Arcadia ceased operations in the 4th quarter of 2009 and was out of business since the first quarter of 2009. Prior to 2007 and continuing into 2009, Goldner solicited individuals to invest in various real estate investments. Goldner promised a promissory note to at least one victim which, he said, would provide for regular payments and “occasional payments on the side.” One victim invested $25,000 on July 25, 2008, via a wire from his self-directed IRA. That victim then received a promissory note. At the time of that investment, the Arcadia bank account was overdrawn. Immediately following that investment, Goldner repaid three earlier investors and made one payment to LG Financial, which held a mortgage on a property Goldner part owned. Records from the Arcadia bank account show that from 2007 until Goldner closed the account in 2009, nearly $10 million was withdrawn from the account with less than $1 million going toward possible real estate deals. The remaining funds went to Goldner, his associates, and prior investors.
Goldner also owned an interest in Settlement Funds, LLC, and handled the day to day business of the company. Records from the Settlement Funds LLC bank account, which Goldner used after closing the Arcadia account, through April 2010 show that Goldner used the majority of the funds in the account on himself, his associates, and prior investors.
Goldner also had three tax clients from whom he stole funds the clients gave him to forward to the IRS. The clients gave Goldner funds to pay their tax obligations to the IRS but, instead, Goldner used the funds for his personal and business expenses.
Goldner faces a maximum possible sentence of 25 years in prison, possible restitution to the victims of more than $6 million, a $200 special assessment, and up to three years of supervised release.
The case was investigated by Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation. It is being prosecuted by Assistant United States Attorney David J. Ignall.
Reading City Council President Admits Taking Bribe to Repeal Ethics LawRead the Press Release
PHILADELPHIA - Francisco Acosta, 39, of Reading, PA, pleaded guilty today to an information charging him with conspiracy to commit bribery offenses, announced United States Attorney Zane David Memeger. At the time of the offense and until this morning, Acosta was the President of Reading City Council.
Certain anti-corruption statutes were enacted in Reading, PA, to limit the influence of money on political candidates and public officials. Section 1012 of Reading’s Code of Ethics establishes limits on campaign contributions to candidates seeking public office in Reading and Section 1006(H) of the Code prohibits the awarding of “no-bid contracts” to donors who have given campaign contributions in excess of those limits. During the guilty plea hearing, Acosta admitted the following:
In the spring of 2015, Acosta conspired with a person identified as “Public Official #1” to repeal these restrictions before the May 19, 2015 primary election through a bribery scheme, in violation of federal criminal law. Public Official #1 was a Reading public official who had the power to sign into law ordinances that had been passed by City Council. Public Official #1 was also a candidate in the Democratic Party’s primary election, scheduled for May 19, 2015. Public Official #1 decided to offer Acosta an $1,800 “loan” to the campaign committee of Acosta’s ally ( “Public Official #2”), which would be “forgiven” upon Acosta successfully orchestrating a repeal of Sections 1012 and 1006(H). Acosta accepted the payment on April 10, 2015 and then, three days later, introduced legislation to eliminate certain restrictions in the Code of Ethics in accordance with Public Official #1’s wishes (“the repeal bill”). As agreed to by Public Official #1 and Acosta, the repeal bill would have repealed Section 1012 in its entirety, thereby eliminating the restrictions on campaign contributions and nullifying Section 1006(H)’s prohibition on awarding “no-bid contracts” to certain donors.
To conceal his participation in the scheme, Public Official #1 sought to finance any campaign contributions to Public Official #2 with funding from third parties. Public Official #1 also sought to offer Acosta additional funding for the campaign committee of Public Official #2 as a reward for Acosta successfully orchestrating the passage of the repeal bill, although only a single payment – an $1,800 check payable to the campaign of Public Official #2 (“the bribe check”) – was ever provided to Acosta. When Acosta took possession of the bribe check, he agreed that, in order to avoid scrutiny of his agreement with Public Official #1, neither Acosta nor Public Official #2 would deposit the bribe check until a later date.
Acosta attempted to persuade other members of City Council to pass the repeal bill before the primary election by falsely asserting that he was motivated solely by the best financial interests of Reading and by concealing that he had received the bribe check. Then, on April 21, 2015, Acosta made materially false statements to FBI agents who were investigating the bribery scheme. Acosta falsely denied that he had accepted a bribery offer from Public Official #1 and that he had ever possessed or received the bribe check. In fact, as Acosta well knew, he had previously agreed to Public Official #1’s bribery offer and still had possession of the bribe check at the time of his false statements to the agents.
Within 24 hours of his interview with FBI agents on April 21, 2015, Acosta took affirmative steps to withdraw from the conspiracy, all without alerting other members of the conspiracy of the FBI’s inquiry into this matter. Acosta then met with the government at his earliest opportunity in order to accept responsibility for his wrongdoing. Acosta subsequently absented himself from the vote on the repeal bill, which was defeated unanimously by the remaining members of Reading City Council.
“Elected officials have an obligation to provide their constituents with honest services,” said Memeger. “When officials sell their services, particularly to repeal anti-corruption legislation, as Acosta admitted here, they do tremendous damage to the integrity of our governmental system. This office remains committed to investigating and prosecuting public corruption at all levels of government.”
“When government officials agree to sell their services, they betray their constituents who rightfully expect high ethical standards,” said FBI Special Agent-in-Charge William F. Sweeney. “The FBI will continue to aggressively investigate allegations of public corruption, and work with our partners to ensure that those who violate their obligation to the public are held accountable.”
After accepting Acosta’s guilty plea, U.S. District Court Judge Juan R. Sanchez scheduled a sentencing hearing for November 18, 2015. Acosta faces a maximum possible sentence of five years in prison, a fine of up to $250,000, three years of supervised release, and a $100 special assessment.
This case is being investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigation. It is being prosecuted by Assistant United States Attorneys Joe Khan and Nancy Beam Winter.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Pair of Philadelphians Charged with Counterfeiting SEPTA TransPassesRead the Press Release
PHILADELPHIA – Mark Cooper, 35, of Philadelphia, PA, was charged by indictment, unsealed today, in a conspiracy involving more than 2,000 counterfeit monthly passes for Southeastern Pennsylvania Transportation Authority (SEPTA), announced United States Attorney Zane David Memeger. Cooper is charged with conspiracy to commit access device fraud and possession of access device making equipment. Kimberly Adams, 35, of Philadelphia, PA, is charged by separate information, also unsealed today.
According to the indictment, between August 2013 and June 2015, Cooper conspired with Adams to produce and sell counterfeit SEPTA monthly TransPasses, which allow passengers to board SEPTA buses, trolleys and subway trains. Once Cooper created the counterfeit passes, he gave them to Adams who then met customers, predominately City of Philadelphia employees, inside and outside of City Hall and elsewhere, and sold the counterfeit passes, which normally sell for $91, for approximately $50. Cooper and Adams then split the proceeds. It is alleged that between August 2013 and June 2015, the defendants counterfeited and sold in excess of 2,000 monthly passes.
“This office will not tolerate fraud involving valuable government property,” said Memeger. “Those who counterfeit SEPTA passes, as the defendant allegedly did here, will be prosecuted and face serious criminal penalties.”
“We’re not going to let city employees siphon money away from one of the region’s public agencies—especially not in City Hall of all places,” said Philadelphia Inspector General Kurland. “Our administrative investigation into other employees who were involved in this conspiracy is ongoing.”
If convicted of all charges, the defendants each face a statutory maximum possible sentence of 20 years in prison, a fine of up to $500,000, four years of supervised release, and a $200 special assessment.
The case was initiated by the City of Philadelphia Office of the Inspector General, jointly investigated with the FBI and the SEPTA Office of the Inspector General. It is being prosecuted by Assistant United States Attorney Karen Marston.
An indictment or information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Reading Resident Charged with Illegal Reentry After DeportationRead the Press Release
Jesus Sandoval-Salvador, a/k/a “Miguel Sandoval-Salvador,” 35, of Reading, PA, was charged yesterday by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about April 10, 2015, Sandoval-Salvador, an alien, and native and citizen of Mexico, was found in the United States after having been deported from the United States on or about February 6, 2007 and March 1, 2013.
If convicted the defendant faces a maximum possible sentence of 20 years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Bea Witzleben.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Woman Charged with Stealing Dead Uncle's BenefitsRead the Press Release
PHILADELPHIA - Tareena Hudson, 41, of Philadelphia, Pennsylvania, was charged today by information with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the information, after her uncle’s death in November 2006 until March 2014 the defendant received retirement benefits intended for her uncle. The defendant’s alleged actions resulted in a loss to the government of approximately $102,993.
If convicted, Hudson faces a maximum possible sentence of 10 years in prison, a three‑year period of supervised release, restitution to the government of $102,993, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Social Security Administration Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Christopher E. Parisi.
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Indicted on Child Pornography ChargesRead the Press Release
PHILADELPHIA - Andrew F. Dickson, 51, of Philadelphia, PA, was charged yesterday by indictment with possession of child pornography and receipt of child pornography announced United States Attorney Zane David Memeger.
The indictment alleges that on multiple dates between February 21, 2015 and July 9, 2015, Dickson knowingly possessed child pornography and knowingly accessed the Internet with intent to view child pornography. It is further alleged that on October 19, 2013, Dickson knowingly received child pornography through the use of the Internet.
If convicted the defendant faces a mandatory minimum sentence of five years in prison with a possible advisory sentencing guideline range of up to 135 months, up to a lifetime of supervised release, a $200 special assessment, plus possible fines and restitution.
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. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by the Federal Bureau of Investigations with assistance from the Philadelphia Police Department Special Victims Unit. The case is being prosecuted by Assistant United States Attorney Priya T. De Souza.
An indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Tax Preparer Sentenced for Preparing False Tax ReturnsRead the Press Release
PHILADELPHIA – David Nixon, 50, of Philadelphia, PA, was sentenced today to 15 months in prison for preparing fraudulent income tax returns. U.S. District Court Judge Mary McLaughlin handed down the sentence for Nixon’s conviction, by a federal jury, on 63 counts of fraud. In addition to the prison term, Nixon must also serve six months of house arrest, followed by one year of supervised release, and must pay a $6,300 special assessment.
Evidence presented during the trial showed that Nixon, as the owner of Economy Tax Services at 3731 Stanton Street in Philadelphia, prepared materially false federal income tax returns for his clients for tax years 2007 through 2009. The fraudulent returns included credits for children, earned income credit, tuition and fees, residential energy efficiency credits, incorrect filing status, and false or falsely inflated Form 1040 Schedule A deductions for charitable contributions and employee business expenses. As a result of the false and fraudulent income tax returns prepared by Nixon, the government contended that the IRS was defrauded of more than $200,000 in fraudulently obtained refunds.
The case was investigated by the Internal Revenue Service Criminal Investigations and is being prosecuted by Assistant United States Attorney Anita Eve.
Philadelphia Woman Charged with Theft of Government FundsRead the Press Release
Peggy Holmes, 48, of Philadelphia, Pennsylvania, was charged by Information with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the Information, the defendant received retirement benefits intended for her mother, after her mother’s death in December 2010 until March 2014. The defendant’s alleged actions resulted in a loss to the government of approximately $33,952.
If convicted, the defendant faces a term of imprisonment, a three‑year period of supervised release, restitution to the government of $33,952, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Social Security Administration, Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Christopher E. Parisi.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Congressman and Associates Charged with Participating in Racketeering ConspiracyRead the Press Release
PHILADELPHIA – A Member of Congress and four of his associates were indicted today for their roles in a racketeering conspiracy involving several schemes that were intended to further the political and financial interests of the defendants and others by, among other tactics, misappropriating hundreds of thousands of dollars of federal, charitable and campaign funds.
Charged in a 29-count indictment are: Congressman Chaka Fattah Sr., 58, of Philadelphia, Bonnie Bowser, 59, of Philadelphia, Karen Nicholas, 57, of Williamstown, NJ, Herbert Vederman, 69, of Palm Beach, Florida, and Robert Brand, 69, of Philadelphia. The indictment charges participation in a racketeering conspiracy, bribery, conspiracy to commit wire, honest services and mail fraud, money laundering conspiracy, money laundering, bank fraud, false statements to a financial institution, and multiple counts of mail fraud, wire fraud, and falsification of records.
The charges were announced today by United States Attorney Zane David Memeger, Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division, FBI Special Agent-in-Charge Edward J. Hanko and IRS-Criminal Investigation Special Agent-in-Charge Akeia Conner.
Specifically, the indictment alleges that, in connection with his failed 2007 campaign to serve as mayor of Philadelphia, Fattah and certain associates borrowed $1 million from a wealthy supporter, and disguised the funds as a loan to a consulting company. After he lost the election, Fattah allegedly returned to the donor $400,000 that the campaign had not used, and arranged for Educational Advancement Alliance (EAA), a non-profit entity that he founded and controlled, to repay the remaining $600,000 using charitable and federal grant funds that passed through two other companies, including one run by Brand. To conceal the contribution and repayment scheme, the defendants and others allegedly created sham contracts, and made false entries in accounting records, tax returns and campaign finance disclosure statements.
In addition, the indictment alleges that, after his defeat in the mayoral election, Fattah sought to extinguish approximately $130,000 in campaign debt owed to a political consultant by agreeing to arrange for the award of federal grant funds to the consultant. According to the allegations in the indictment, Fattah directed the consultant to apply for a $15 million grant (which ultimately he did not receive) on behalf of a then non-existent non-profit entity. In exchange for Fattah’s efforts to arrange the award of the funds to the non-profit, the consultant allegedly agreed to forgive the debt owed by the campaign.
The indictment further alleges that Fattah misappropriated funds from his mayoral and congressional campaigns to repay his son’s student loan debt. To execute the scheme, Fattah and Bowser allegedly arranged for his campaigns to make payments to a political consulting company, which funds the company then used to lessen Fattah’s son’s student loan debt. According to the allegations in the indictment, between 2007 and 2011, the consultant made 34 successful loan payments on behalf of Fattah’s son, totaling approximately $23,000.
In another alleged scheme, beginning in 2008, Fattah communicated with individuals in the legislative and executive branches in an effort to secure for Vederman an ambassadorship or an appointment to the United States Trade Commission. In exchange, Vederman provided money and other items of value to Fattah. As part of this scheme, the indictment alleges that the defendants sought to conceal an $18,000 bribe payment from Vederman to Fattah by disguising it as a payment for a sham car sale that never actually took place.
Finally, the indictment alleges that Nicholas obtained $50,000 in federal grant funds that she claimed would be used by EAA to support a conference on higher education. The conference never took place. Instead, Nicholas used the grant funds to pay $20,000 to a political consultant, $10,000 to her attorney, and also wrote several checks to herself from EAA's operating account.
“The public expects their elected officials to act with honesty and integrity,” said Memeger. “By misusing campaign funds, misappropriating government funds, accepting bribes, and committing bank fraud, as alleged in the Indictment, Congressman Fattah and his co-conspirators have betrayed the public trust and undermined faith in government.”
“As charged in the indictment, Congressman Fattah and his associates embarked on a wide-ranging conspiracy involving bribery, concealment of unlawful campaign contributions and theft of charitable and federal funds to advance their own personal interests,” said Assistant Attorney General Caldwell. “When elected officials betray the trust and confidence placed in them by the public, the department will do everything we can to ensure that they are held accountable. Public corruption takes a particularly heavy toll on our democracy because it undermines people’s basic belief that our elected leaders are committed to serving the public interest, not to lining their own pockets.”
“These crimes and their cover up constitute a breach of the public trust,” said Hanko. “A founding principle of our democracy is that citizens place their faith and trust in the public servants they elect to represent them. It is the duty of the FBI, IRS, and Department of Justice to investigate and prosecute those who violate this trust and put personal gain above public service.”
“Public corruption by our elected officials and their associates undermines the American public’s confidence in our government,” said Conner. “When our elected officials and their associates violate the law and create sophisticated financial schemes to enrich themselves, the Internal Revenue Service Criminal Investigation will work diligently with our fellow law enforcement partners to restore the public’s trust.”
The case is being investigated by the FBI and IRS-Criminal Investigation. Assistance was provided by the Department of Justice Office of the Inspector General, the NASA Office of Inspector General and the Department of Commerce Office of Inspector General. It is being prosecuted by Assistant U.S. Attorney Paul L. Gray, Trial Attorneys Eric L. Gibson, T. Patrick Martin and Jonathan Kravis of the Criminal Division’s Public Integrity Section. Trial Attorney Bob Dalton of the Criminal Division’s Organized Crime and Gang Section also has provided assistance.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Philadelphia Police Officer Sentenced for Robbing Drug DealersRead the Press Release
PHILADELPHIA – Former Philadelphia Police Officer Jeffrey Walker, 47, of Philadelphia, was sentenced today to 42 months in prison for a scheme in which he planned to rob a drug dealer while on official duty. Walker pleaded guilty, on February 24, 2014, to attempted robbery which interferes with interstate commerce and carrying a firearm during and in relation to a crime of violence. In addition to the prison term, U.S. District Court Judge Eduardo Robreno ordered three years of supervised release, a $5,000 fine and a $200 special assessment.
Walker told a cooperating witness (CW) that he wanted the CW to help him identify a drug dealer so that Walker could conduct a car stop for suspected drug violations or plant drugs in the car. On May 21, 2013, the CW informed Walker of a car parked outside of a bar on West Girard Avenue. Walker drove up to the car, placed drugs inside the car, and then followed the driver when that person left the bar. When the car was pulled over, Walker took the key to the driver’s home. Walker and the CW went to the driver’s home. When they exited the home, Walker was arrested and was in possession of $15,000 that he had taken from the house.
The case was investigated by the FBI and Philadelphia Police Department. It was prosecuted by Assistant United States Attorneys Anthony Wzorek and Maureen McCartney.
Indictment Charges Philadelphia Resident with Illegal ReentryRead the Press Release
Joel Junior Lantigua-Lora, 28, of Philadelphia, PA, was charged today by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger. The indictment alleges that on or about June 24, 2015, Lantigua-Lora, an alien, and native and citizen of the Dominican Republic, was found in the United States after having been deported from the United States on or about August 23, 2012.
If convicted the defendant faces a maximum possible sentence of 20 years.
The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Joan E. Burnes.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Owner of Employee Leasing Company Sentenced for Immigration and Tax Fraud SchemeRead the Press Release
PHILADELPHIA - Kim Meas, 60, a native of Cambodia, was sentenced today to 30 months in prison for schemes to defraud the United States. Meas was the managing director of LS Services Corporation (“LS”), an employee leasing company in South Philadelphia. He pleaded guilty on November 24, 2014 to two counts of conspiracy to commit an offense against the United States, two counts of transporting illegal aliens and two counts of failure to collect and pay federal income and employment taxes. In addition to the prison term, U.S. District Court Judge Jan E. Dubois ordered restitution to the IRS in the amount of $1.7 million during three years of supervised release, a $600 special assessment, and $23 million in forfeiture.
As the principal corporate officer at LS, Meas negotiated labor leasing contracts with various companies throughout the greater Delaware Valley that leased temporary workers from LS. Meas also established approximately 14 shell companies to create the illusion that the workers that LS leased to other companies were employees of the shell corporations. As such, the shell corporations, and not LS, would be responsible for collecting and paying employment and income taxes for the employees. Meas attempted make it impossible for the IRS to determine the identity of the employer of the illegal aliens, as well as the amount of employment and income taxes that the employer of the illegal aliens was required to pay to the federal treasury. LS also transported the illegal aliens, free of charge, to various work locations in company vehicles. The companies, that leased employees from LS, did not withhold federal income taxes on the wages paid to the employees, nor did these companies collect and pay to the Internal Revenue Service, employment taxes on the income earned by the workers. Meas had two co-conspirators, Ken Sem and Vivi Fnu, who previously pleaded guilty.
This case was investigated by Homeland Security Investigations and Internal Revenue Service Criminal Investigation. It was prosecuted by Assistant United States Attorney Floyd J. Miller.
Lancaster County Man and His Three Sons Are Sentenced for Tax FraudRead the Press Release
PHILADELPHIA – Chester A. Bitterman Jr., 81, and his sons, Craig L. Bitterman, 55, C. Grant Bitterman, 53, and Curtis L. Bitterman, 61, were sentenced for conspiracy to defraud the United States. At sentencing hearings held on July 15, 17 and 22, U.S. District Court Judge James Knoll Gardner imposed the following sentences:
- Craig L. Bitterman, of Strasburg, PA, was sentenced to serve three years in prison and three years of supervised release with 1,000 hours of community service at a rate of at least 30 hours of service per week, and was ordered to pay a $10,000 fine;
- C. Grant Bitterman, of Willow Street, PA, was sentenced to serve 21 months in prison and three years of supervised release with 1,000 hours of community service at a rate of at least 30 hours of service per week, and was ordered to pay a $7,500 fine;
- Curtis L. Bitterman, of Lacaster, PA, was sentenced to serve 21 months in prison and three years of supervised release with 1,000 hours of community service at a rate of at least 30 hours of service per week, and was ordered to pay a $7,500 fine;
- Chester A. Bitterman Jr., of Willow Street, PA, was sentenced to serve three years’ probation to include six months of home confinement, due in part to his age and ailing spouse confined to hospice care, and was ordered to pay a $5,000 fine.
Each defendant was convicted following a three-week jury trial in October 2010. Craig Bitterman was additionally convicted of obstruction of justice. Prior to sentencing, the defendants paid $437,000 in restitution to the Internal Revenue Service (IRS).
According to the evidence at trial, from 1996 to 2005, the Bittermans owned and operated the Bitterman Scale Company, which now operates as Bitterman Scales LLC. To conceal their income and assets from the IRS, the Bittermans used aliases, offshore bank accounts and a complex series of sham paper transactions to disguise the income. The defendants transferred their personal and business assets to sham trusts purchased from the Commonwealth Trust Company, a tax protester organization that marketed trust products to clients for the purpose of avoiding federal income tax payment. The trusts were used to make it appear as though the defendants had little or no assets or income. In reality, the defendants retained complete access and control over their funds. In January 2008, the principal owners of the Commonwealth Trust Company were convicted at trial in the Eastern District of Pennsylvania of tax crimes for causing losses of over $17 million and were sentenced to prison.
The defendants paid themselves in cash and arranged bogus payments between the numerous trusts that they had created. These bogus payments were purported to be leases, management fees and fiduciary fees. The defendants submitted trust tax returns for their business and took fraudulent deductions for these payments to create the appearance of minimal or no taxable business income. After the IRS levied the business bank account and receivables, the defendants instructed their customers to pay another trust to thwart IRS collection efforts. The defendants also placed bogus liens and mortgages on their assets to make it appear to the IRS that the defendants had no assets that could be levied or seized as part of the tax collection process. Some of the defendants used aliases and bank accounts in the names of trusts to make school tuition payments for their children appear as if they were scholarships from third parties. In addition, to further conceal their assets from the IRS, at least one defendant used offshore bank accounts in the British Virgin Islands and three of the defendants arranged for sham transfers of real estate to their children.
During the investigation, after Craig Bitterman was served with federal grand jury subpoenas requiring the production of trust records, he failed to produce the records to the grand jury and instead shipped those trust records to Texas and New Mexico in an attempt to conceal them.
The case was investigated by the Internal Revenue Service Criminal Investigations and was prosecuted by Assistant U.S. Attorney Vineet Gauri and Trial Attorney Michael C. Vasiliadis of the Tax Division.
Former Owner of Title Agency Charged with Defrauding LendersRead the Press Release
PHILADELPHIA - Richard C. Roney, Jr., 46, of Laurel Springs, New Jersey, was charged today by information with four counts of wire fraud related to an alleged scheme that cost lenders more than $750,000, announced United States Attorney Zane David Memeger.
Roney was the owner of a title company called Park Avenue Abstract, Inc., based in Somerdale, New Jersey, which served as the title company on home mortgage transactions. According to the information, between June 2009 and April 2013, Roney unlawfully withdrew money from his company’s escrow accounts for his personal use and to pay for Park Avenue Abstract’s operating expenses, instead of using that money to close the mortgage transactions.
It is further alleged that while Roney returned much of the money, his misuse of Park Avenue Abstract escrow account funds prevented Park Avenue Abstract from timely satisfying outstanding first mortgages, which ultimately caused lenders to sustain actual losses of over $750,000.
Roney faces a likely advisory sentencing guideline sentence of 27-33 months, as well as a $4,000,000 fine, a $400 special assessment, and full restitution of as much as $751,750.
The case was investigated by the Federal Bureau of Investigation and the Department of Housing and Urban Development, Office of Inspector General, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Charged with Obstruction of MailRead the Press Release
PHILADELPHIA - Patrick D’Ambrosio, 48, of Philadelphia, PA, was charged by information, filed yesterday, with one count of obstruction of mail, announced United States Attorney Zane David Memeger. The information that D’Ambrosio was employed by the U.S. Postal Service between May 2014 and January 2015 when he obstructed the passage of approximately 22,500 pieces of mail.
If convicted the defendant faces a maximum statutory sentence of six months in prison, a fine, or both.
The case was investigated by the United States Postal Service Office of Inspector General and is being prosecuted by Assistant United States Attorney Marianne Cox.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Woman Charged with Receiving Dead Mother's BenefitsRead the Press Release
PHILADELPHIA - Johnsie Boone-Brown, 47, of Philadelphia, PA, was charged by information with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the information, the defendant received retirement benefits intended for her mother, after her mother’s death in May 2009 until her fraud was discovered in April 2014. The defendant’s alleged actions resulted in a loss to the government of approximately $22,569.86.
If convicted, the defendant faces a substantial period of incarceration, a 3‑year period of supervised release, restitution to the government of $22,569.86, a fine of up to $250,000, and a $100 special assessment.
The case was investigated by the Social Security Administration, Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Amanda R. Reinitz.
Philadelphia Man Indicted on Gun ChargeRead the Press Release
PHILADELPHIA – Rashion Michaels, 24, of Philadelphia, was charged today by indictment with possession of a firearm by a convicted felon, announced United States Attorney Zane David Memeger. According to the indictment, on May 20, 2014, Michaels was in possession of a Lorcin, Model L32, .32 caliber semi-automatic pistol, with an obliterated serial number that was restored to read: 006347, and a magazine loaded with 6 live rounds of .32 caliber ammunition.
If convicted, Michaels faces a maximum term of ten-years in prison, up to three-years of supervised release, a maximum fine of $250,000, and a $100 special assessment.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Eric A. Boden.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
New Jersey Man Sentenced for Submitting False Documents to City of PhiladelphiaRead the Press Release
PHILADELPHIA - Ronen Bakshi, 54, of Voorhees, New Jersey, was sentenced today to one year and one day in prison for falsifying records to obstruct a matter within the jurisdiction of the United States Environmental Protection Agency (EPA) and wire fraud. Bakshi submitted false documents to the City of Philadelphia’s Air Management Services office in connection with a project for removal of asbestos-containing material from a former church located at 1133 Spring Garden Street in Philadelphia, and billed the non-profit owner of the property for work he did not perform. He pleaded guilty on March 18, 2015 to both counts of the indictment.
United States District Court Judge Paul S. Diamond ordered that the defendant begin serving his sentence immediately. In addition to the prison term, Judge Diamond imposed a $30,000 fine, a $200 special assessment, and a year of supervised release to follow imprisonment.
The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, with assistance from the City of Philadelphia’s Air Management Services office. The case is being prosecuted by Special Assistant United States Attorneys Martin Harrell and Patricia C. Miller of EPA.
Federal Inmate Charged with Relatives in Theft SchemeRead the Press Release
PHILADELPHIA – Kenneth Hampton, 54, an inmate of a federal prison, was charged by indictment, unsealed today, with masterminding a scheme under which he and his coconspirators defrauded the City of Philadelphia, the State of Pennsylvania, and innocent owners and purchasers of Philadelphia real estate. The indictment charges one count of conspiracy, eleven counts of wire fraud, and two counts of aggravated identity theft. Charged with Hampton are his son Terrell Hampton, 34, of Philadelphia, PA, and his brother Ellis, 56, of Darby, PA, and fiancée Roxanne Mason, 33, of Philadelphia, both of whom were arrested this morning.
According to the indictment, during the time he was a federal inmate, Hampton led a scheme to file false and fraudulent deeds for residential properties in Philadelphia. Using the prison telephones Hampton would direct other members of the scheme to locate houses, prepare and file false deeds, reside in the properties, and then eventually sell the properties for a profit.
If convicted, the defendants face mandatory minimum terms of two years in prison with a possible advisory sentencing guideline range of between 24 months and 102 months in prison.
The case was investigated by the United States Secret Service and the Office of the Philadelphia Inspector General. It is being prosecuted by Assistant United States Attorney Paul G. Shapiro.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Ironworkers Business Manager Sentenced to 230 Months for Racketeering ConspiracyRead the Press Release
PHILADELPHIA – Joseph Dougherty, 73, of Philadelphia, former Business Manager/Financial Secretary/Treasurer of Ironworkers Local 401, was sentenced today to 230 months in prison for his role in a racketeering conspiracy involving a dozen members of Ironworkers Local 401, announced United States Attorney Zane David Memeger. Dougherty was found guilty, on January 20, 2015, of RICO conspiracy, malicious damage to property by means of fire, use of fire to commit a felony, attempted malicious damage to property by means of fire, and conspiracy to damage to property by means of fire. His 11 co-defendants in the case pleaded guilty. In addition to the prison term, U.S. District Court Judge Michael Baylson ordered three years of supervised release, $558,041.66 in restitution, and a $600 special assessment.
Dougherty and his co-defendants engaged in a systemic pattern of extortions, arsons, and assaults in an attempt to force non-union companies to hire union ironworkers. The union’s business agents would approach construction foremen at those work sites and imply or explicitly threaten violence, destruction of property, or other criminal acts unless union members were hired. The defendants relied on a reputation for violence and sabotage, which had been built up in the community over many years, in order to force contractors to hire union members. The defendants created “goon” squads, composed of union members and associates, to commit assaults, arsons, and destruction of property. One such squad referred to itself as the “The Helpful Union Guys,” “T.H.U.G’s.”
The jury convicted Dougherty for his participation in the 25 charged acts of arson and extortion in the racketeering conspiracy. Among the charged incidents included an arson at the Quaker Meetinghouse in Philadelphia, an arson at a warehouse under construction on Grays Avenue in Philadelphia, and an attempted arson of a commercial complex under construction in Malvern. Dougherty personally handed co-defendant James Walsh an acetylene torch to commit the Grays Avenue arson. On October 12, 2012, when co-defendants James Walsh and William Gillin arrived at the Malvern construction site with an acetylene torch which they intended to use to damage the site, FBI and local law enforcement officers arrested Walsh and Gillin before they could light the torch. Prior to their arrest, on October 9, 2012, Dougherty gave the greenlight for Walsh and Gillin to proceed with the arson by stating “that’s good. Alright. He [Walsh] just got to be careful.”
“The sentence in this case serves as a reminder that corrupt union practices and bullying tactics, like those employed in this case, will be met with severe consequences,” said Memeger. “Fear, intimidation and violence should not be a part of any union’s operational handbook and will not be tolerated in this district.”
During the extortion of a contractor working on an apartment building near the intersection of 31st and Spring Garden in Philadelphia, Dougherty told union business agent Edward Sweeeny that if the non-union contractor erected the building “and gets away with it, we’re tearing it the [expletive] down in broad, in broad daylight, broad [expletive] daylight. I’ll rent the [expletive] crane from work reservations. So, we’re not losing in center city, man. . . . We’ll take it right the [expletive] back down again. And then we’ll load it out, rent the truck, and we’ll steal the iron.”
During a July 8, 2013 phone call, Dougherty summarized his motivation for committing these crimes by describing the financial condition of the union: “I look at the general fund, ah the health fund. It's (expletive) hurting. And we’re hurting it every hour that the carpenter steals from us hurts. Every hour non-union steals from us hurts it, and we keep pumping more money into it, and that keeps us from getting jobs.”
The case was investigated jointly by the Federal Bureau of Investigation and Department of Labor Office of Inspector General, with assistance provided by the Philadelphia Police Department Corruption Task Force, East Whiteland Township Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Employee Benefit Security Administration. It is being prosecuted by Assistant United States Attorney Robert Livermore with legal assistance from Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.
Former Non-Profit Executive Sentenced for Stealing Funds Intended to Help the HomelessRead the Press Release
PHILADELPHIA - Nathaniel E. Robinson, 62, of Philadelphia, was sentenced today to 18 months in prison for stealing funds from SELF, Inc., a non-profit that helps the homeless. Robinson was the Chief Program Officer at SELF, Inc. He pleaded guilty on March 12, 2015 to theft from a program receiving federal funds.
Between 2006 and 2010, Robinson used his corporate American Express credit card at SELF to charge personal expenses in the amount of approximately $154,050. He reimbursed a total of $2,594.30 before his employment was terminated. Robinson used the corporate American Express card to pay for trips to Alabama, including airfare, lodging, and restaurants; lodging in Orlando, Florida, and the Philadelphia area; car rentals; car repairs; admission tickets to Six Flags Great Adventure and Clementon Amusement Park; Amtrak tickets; purchases at Walmart and Filene’s Basement; and restaurant charges in Washington, D.C. and Baltimore, MD.
In addition to the prison term, U.S. District Court Judge Berle M. Schiller ordered restitution in the amount of $151,455, three years of supervised release, and a $100 special assessment.
The case was investigated jointly by the FBI and the Philadelphia Office of the Inspector General, and was initiated by a tip to the Inspector General’s Office. It was prosecuted by Assistant United States Attorney Karen L. Grigsby.
Civil Complaint Alleges Fraud by Operators of Community Mental Health ClinicsRead the Press Release
PHILADELPHIA – On July 20, 2015, the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a civil health care fraud lawsuit under the False Claims Act against Melchor Martinez, Melissa Chlebowski, both of Allentown, PA, and their businesses Northeast Community Mental Health Centers (in Philadelphia), Lehigh Valley Community Mental Health Centers (in Allentown, Easton and Bethlehem), and North Carolina Community Mental Health Centers (in Raleigh, North Carolina). The institutional defendants are community mental health clinics funded largely by Medicaid and Medicare. The lawsuit was announced by United States Attorney Zane David Memeger.
Martinez was convicted of Medicaid fraud in 2000 by the Commonwealth of Pennsylvania. As a result, he was excluded from participating in all federally funded health care programs, including Medicaid and Medicare. The exclusion prohibited Martinez from owning, managing or receiving payments from any federally funded health care provider. The United States alleges that in spite of his exclusion, Martinez, assisted by his wife Chlebowski, continued to own and operate the Northeast and Lehigh Valley clinics, and that, in 2009, while his exclusion was ongoing, he started up the North Carolina clinic in Raleigh, North Carolina.
The United States alleges that during Martinez’s exclusion, the Northeast and Lehigh Valley clinics also billed Medicaid for psychiatrist visits of very brief duration, sometimes as little as two to three minutes, while fraudulently representing that patients were being seen for a 15 minute visit. In addition, the Northeast and Lehigh Valley clinics billed Medicaid and Medicare for the services of “therapists” who were not qualified to provide mental health services. The complaint also alleges that the Northeast and Lehigh Valley clinics fraudulently billed Medicare for therapy services allegedly provided without the requisite supervision.
“This civil complaint reflects our focus on pursuing individuals who defraud Medicaid and Medicare, especially after they have previously defrauded those programs and been barred from participating in them,” said Memeger.
The complaint was filed in a case brought under the qui tam provisions of the False Claims Act by a private citizen, called a “relator,” who may bring suit on behalf of the United States and share in any recovery. The United States may intervene in the case, as it has done here. Under the False Claims Act, a person that causes the submission of false or fraudulent claims to the government is liable for three times the government’s damages, plus civil penalties for each false claim. The claims asserted against the defendants are allegations only, and there has been no determination of liability.
This matter was investigated by the U.S. Department of Health and Human Services’ Office of Inspector General and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the Pennsylvania Office of Attorney General and the North Carolina Department of Justice. The case is assigned to Assistant U.S. Attorneys Judith A. Amorosa, Susan R. Becker, and Viveca D. Parker of the Civil Division, and health care fraud auditor George Niedzwicki.
The lawsuit is captioned United States v. Melchor Martinez, et al. (E.D. Pa.).
Judge Sentences Drug Smuggler to 300 Months for Scheme Involving International AirportRead the Press Release
PHILADELPHIA - Edwin Fernandez, 37, of Philadelphia, was sentenced today to 300 months in prison for smuggling cocaine into the United States via Philadelphia International Airport. Fernandez pleaded guilty on January 5, 2015 to all six counts of the indictment including conspiracy to import five kilograms or more of cocaine, importation of five kilograms or more of cocaine, attempted importation of five kilograms or more of cocaine, conspiracy to distribute five kilograms or more of cocaine, and two counts of attempted possession with the intent to distribute five kilograms or more of cocaine. In addition to the prison term, U.S. District Court Judge Stewart Dalzell ordered a $5,000 fine, 10 years of supervised release, and a $600 special assessment.
Between December 2011 and July 2012, Fernandez, worked with a Santo Domingo, Dominican Republic drug trafficking organization ("Santo Domingo DTO") to smuggle approximately 150 kilograms of cocaine into the United States through the Philadelphia International Airport. The Philadelphia organization recruited several individuals who worked at US Airways to assist in the operation.
The Santo Domingo DTO employed several individuals, including airport employees in Santo Domingo, to ensure that bags filled with kilograms of cocaine were safely loaded aboard commercial airplanes destined for Philadelphia, PA. After the bags were safely loaded onto the plane in Santo Domingo, members of the Santo Domingo DTO alerted Fernandez who then notified the recruits to assist in the offloading of the bags at the Philadelphia Airport. Once the plane arrived in Philadelphia, the recruited US Airways employees would offload the baggage from the plane and divert the bags with the drugs onto domestic baggage claim belts, rather than the international baggage claim belts. This avoided inspection by United States Customs and Border Protection officials. Fernandez then arranged for those bags to be retrieved from domestic baggage claim belts for distribution to domestic drug organizations.
The case was investigated by Homeland Security Investigations with assistance from U.S. Customs and Border Protection. It was prosecuted by Assistant United States Attorneys Maureen McCartney and Kishan Nair.
Two Reading Men Indicted on Gun ChargeRead the Press Release
PHILADELPHIA - Miguel Angel Castillo, 38, and Noel Alberto Manon, 29, both of Reading, PA, were charged by indictment, unsealed today, with dealing in firearms without a license, unlawful possession of firearms, and related offenses. Manon is additionally charged with distribution of methamphetamine, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.
If convicted the defendants each face a maximum statutory sentence of 110 years in prison, a fine of up to $6.52 million, three years supervised release, and a special assessment.
The case was investigated by the Federal Bureau of Investigation Allentown Office, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Superseding Indictment Adds Charges and Members of the Pagans to Pill Mill Case Against Pennsylvania DoctorRead the Press Release
Distribution Resulting in Death also Added to Indictment
A superseding indictment was unsealed today charging William J. O’Brien III, a doctor of osteopathic medicine, with causing a death through the illegal distribution of a controlled substance and charges eight new defendants with O’Brien in a second conspiracy to distribute controlled substances. The superseding indictment also charges O’Brien with 95 additional counts of distribution of controlled substances - oxycodone, methadone and amphetamines and charges O’Brien and his ex-wife, a ninth defendant, Elizabeth Hibbs, 54, with money laundering, bankruptcy fraud and making false statements under oath in a bankruptcy proceeding.
Charged in the conspiracy with O’Brien are: Michael Thompson, 49, Peter Marrandino, 48, Joseph Mehl, 48, Patrick Treacy, 47, Charles Johnson, 46, Frank Corazo, Jr, 52, Jennifer Lynn Chambers, 21, all of Philadelphia, and Joseph Mitchell, Sr, 39, of West Deptford, New Jersey, some of whom are members of the Pagans Motorcycle Club. Thompson and Corazo are also charged with health care fraud for allegedly using Medicaid health insurance to pay for the medically unnecessary controlled substances prescribed by O’Brien. Federal agents arrested six defendants this morning. According to the indictment, between March 2012 and January 2015, O’Brien dispensed and his coconspirators unlawfully obtained for resale, approximately 378,914 pills which contained 10 mg, 15 mg or 30 mg of oxycodone and approximately 160,492 methadone pills. The estimated street value of the controlled substances sold by the conspiracy was estimated at approximately $5 million. O’Brien generated for himself an estimated $2 million in cash proceeds from the alleged drug trafficking conspiracy.
The Conspiracy
According to the indictment, defendants Thompson, Marrandino, Mehl, Mitchell and Treacy were members or associates of the Pagans and conspired with O’Brien to distribute large quantities of dangerous and addictive controlled substances for profit. Through their connection to the Pagans, the defendants had access to illegal drug distributors. O’Brien and the defendants allegedly developed a scheme whereby so-called “patients,” who were recruited by the defendants, would typically pay O’Brien a $200 “co-pay” in cash in exchange for medically unnecessary prescriptions for controlled substances. With cash-paying “patients,” O’Brien could conceal money from creditors and the U.S. Bankruptcy Court where he had filed for Chapter 11 protection for his company WJO Inc., a group of medical practices which he owned. The indictment further alleges that after filling the prescriptions they got from O’Brien, the “patients” would turn the pills over to the defendants who would sell the pills to drug dealers. Certain controlled substances, such as oxycodone (30 mg), were in high demand.
Distribution of Controlled Substances Resulting in Death
According to the indictment, in addition to medically unnecessary controlled substances, O’Brien prescribed other drugs for “patients” to create the appearance that he was operating a legitimate medical practice. Among the other drugs he prescribed was cyclobenzaprine, a muscle relaxant aka Flexeril. The indictment alleges that on or about Dec. 17, 2013, in Levittown, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone and cyclobenzaprine, to Person #21 and the death of Person #21 resulted from the combined use of these substances.
Health Care Fraud
Defendants Thompson and Frank Corazo were each Medicaid beneficiaries. According to the indictment, Thompson and Corazo each used Keystone First benefits to pay for medically unnecessary prescriptions for oxycodone pills that they obtained from O’Brien for the purpose of resale to drug dealers. It is further alleged that Thompson and Corazo falsely represented to Keystone First that the prescriptions were medically necessary.
Money Laundering and Bankruptcy Fraud
Defendants O’Brien and Hibbs were also charged with conspiring to launder the proceeds of O’Brien’s drug distribution operation, and conspiring to commit fraud on the U.S. Bankruptcy Court by hiding income, including income from O’Brien’s drug distribution operation. On or about Nov. 15, 2010, O’Brien filed for bankruptcy protection for WJO Inc. Defendant Hibbs, who was married to O’Brien when the bankruptcy petition was filed, was, at various times, the Chief Operating Officer and the Chief Executive Officer for WJO Inc. The indictment charges that on or about July 10, 2012, O’Brien and Hibbs were fired from WJO Inc., by the trustee appointed by the U.S. Bankruptcy Court. O’Brien and Hibbs legally divorced in October 2012 but continued to reside and work together and continued to act as husband and wife. The indictment charges that O’Brien and Hibbs diverted assets from WJO Inc. to their personal accounts and to accounts controlled by them. In addition, it is alleged that O’Brien and Hibbs concealed other assets from the trustee and from creditors of WJO Inc. Both were also charged with knowingly making a false statement under oath during the bankruptcy proceedings.
If convicted of all charges, O’Brien faces a mandatory minimum sentence of 20 years in prison and a maximum sentence of life. The remaining defendants face substantial prison terms and fines and are subject to criminal forfeiture proceedings.
The case was investigated by the FBI, the Food and Drug Administration Office of Criminal Investigations and the Department of Health and Human Services Office of the Inspector General. It is being prosecuted by Assistant U.S. Attorney Mary Beth Leahy.
Superseding Indictment Adds Charges and Members of the Pagans to Pill Mill Case Against DoctorRead the Press Release
Distribution resulting in death also added to indictment
PHILADELPHIA – A superseding indictment was unsealed today charging William J. O’Brien III, a doctor of osteopathic medicine, with causing a death through the illegal distribution of a controlled substance, and charges eight new defendants with O’Brien in a second conspiracy to distribute controlled substances. The superseding indictment also charges O’Brien with 95 additional counts of distribution of controlled substances - oxycodone, methadone, and amphetamines; and charges O’Brien and his ex-wife, a ninth defendant, Elizabeth Hibbs, 54, with money laundering, bankruptcy fraud, and making false statements under oath in a bankruptcy proceeding.
Charged in the conspiracy with O’Brien are: Michael Thompson, 49, Peter Marrandino, 48, Joseph Mehl, 48, Patrick Treacy, 47, Charles Johnson, 46, Frank Corazo, Jr., 52, Jennifer Lynn Chambers, 21, all of Philadelphia, and Joseph Mitchell, Sr., 39, of West Deptford, NJ, some of whom are members of the Pagans Motorcycle Club. Thompson and Corazo are also charged with health care fraud for allegedly using Medicaid health insurance to pay for the medically unnecessary controlled substances prescribed by O’Brien. Federal agents arrested six defendants this morning. According to the indictment, between March 2012 and January 2015, O’Brien dispensed, and his coconspirators unlawfully obtained for resale, approximately 378,914 pills which contained 10 mg, 15 mg or 30 mg of oxycodone; and approximately 160,492 methadone pills. The estimated street value of the controlled substances sold by the conspiracy was estimated at approximately $5 million. O’Brien generated for himself an estimated $2 million in cash proceeds from the alleged drug trafficking conspiracy.
The Conspiracy
According to the indictment, defendants Thompson, Marrandino, Mehl, Mitchell, and Treacy were members or associates of the Pagans and conspired with O’Brien to distribute large quantities of dangerous and addictive controlled substances for profit. Through their connection to the Pagans, the defendants had access to illegal drug distributors. O’Brien and the defendants allegedly developed a scheme whereby so-called “patients,” who were recruited by the defendants, would typically pay O’Brien a $200 cash “co-pay” in exchange for medically unnecessary prescriptions for controlled substances. With cash-paying “patients,” O’Brien could conceal money from creditors and the United States Bankruptcy Court where he had filed for Chapter 11 protection for his company WJO, Inc., a group of medical practices which he owned. The indictment further alleges that after filling the prescriptions they got from O’Brien, the “patients” would turn the pills over to the defendants who would sell the pills to drug dealers. Certain controlled substances, such as oxycodone (30 mg), were in high demand.
Distribution of Controlled Substances Resulting in Death
According to the indictment, in addition to medically unnecessary controlled substances, O’Brien prescribed other drugs for “patients” to create the appearance that he was operating a legitimate medical practice. Among the other drugs he prescribed was cyclobenzaprine, a muscle relaxant also known as Flexeril®. The indictment alleges that on or about December 17, 2013, in Levittown, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone, and cyclobenzaprine, to Person #21, and the death of Person #21 resulted from the combined use of these substances.
Health Care Fraud
Defendants Michael Thompson and Frank Corazo, Jr., were each Medicaid beneficiaries. According to the indictment, Thompson and Corazo each used Keystone First benefits to pay for medically unnecessary prescriptions for oxycodone pills that they obtained from William J. O’Brien III for the purpose of resale to drug dealers. It is further alleged that Thompson and Corazo falsely represented to Keystone First that the prescriptions were medically necessary.
Money Laundering and Bankruptcy Fraud
Defendants O’Brien and Hibbs were also charged with conspiring to launder the proceeds of O’Brien’s drug distribution operation, and conspiring to commit fraud on the United States Bankruptcy Court by hiding income, including income from O’Brien’s drug distribution operation. On or about November 15, 2010, O’Brien filed for bankruptcy protection for WJO, Inc. Defendant Hibbs, who was married to O’Brien when the bankruptcy petition was filed, was, at various times, the Chief Operating Officer and the Chief Executive Officer for WJO, Inc. The indictment charges that on or about July 10, 2012, O’Brien and Hibbs were fired from WJO, Inc., by the Trustee appointed by the United States Bankruptcy Court. O’Brien and Hibbs legally divorced in October of 2012 but continued to reside and work together and continued to act as husband and wife. The indictment charges that O’Brien and Hibbs diverted assets from WJO, Inc. to their personal accounts and to accounts controlled by them. In addition, it is alleged that O’Brien and Hibbs concealed other assets from the Trustee and from creditors of WJO, Inc. Both were also charged with knowingly making a false statement under oath during the bankruptcy proceedings.
If convicted of all charges, O’Brien faces a mandatory minimum sentence of 20 years in prison and a maximum sentence of life. The remaining defendants face substantial prison terms and fines, and are subject to criminal forfeiture proceedings.
The case was investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General. It is being prosecuted by Assistant United States Attorney Mary Beth Leahy.
Philadelphia Man Charged with Sex TraffickingRead the Press Release
PHILADELPHIA - Daiquan Davis, 21, of Philadelphia, PA, was charged today by indictment with two counts of sex trafficking of a minor or by force, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a mandatory minimum sentence of 15 years in prison with a maximum possible sentence of life imprisonment, lifetime supervised release, a $500,000 fine and a $200 special assessment.
The case was investigated by the Federal Bureau of Investigation with assistance from Bensalem Township Police and the Bucks County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Michelle Morgan.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
New Jersey Man Charged with Damaging Employer's ComputerRead the Press Release
PHILADELPHIA - Lars Jepsen, 36, of Deptford, NJ was charged today by indictment with one count of intentionally causing damage to a protected computer and one count of fraud in connection with authentication features, announced United States Attorney Zane David Memeger.
The indictment charges that after being terminated by his employer, Jepsen, using the username and password of another employee, logged into his former employer’s network and crippled their Voice Over Internet Protocol (VOIP) telephone network.
If convicted the defendant faces a maximum possible sentence of 13 years in prison, three years of supervised release, a fine of up to $500,000, and a $200 special assessment.
The case was investigated by the United States Secret Service, and is being prosecuted by Assistant United States Attorney Michael L. Levy.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Lancaster Man Charged with Drug DistributionRead the Press Release
PHILADELPHIA - Felix Mendez, 40 of Lancaster, PA, was charged by indictment, unsealed today, with three counts of distribution of methamphetamine, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.
If convicted the defendant faces a maximum statutory sentence of 120 years in prison with a mandatory minimum five years in prison, four years of supervised release, a fine of up to $15 million, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office with assistance from the Pennsylvania State Police, the U.S. Marshals Service, and the Lancaster Police Department. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Indictment Charges Two in Gun ConspiracyRead the Press Release
PHILADELPHIA - Emilio Alvarez, 29, and Roberto Santiago, 33, both of Reading, Pennsylvania, were charged by Indictment, unsealed today, with conspiracy, dealing in firearms without a license, providing firearms to a convicted felon, and possession of stolen firearms, announced United States Attorney Zane David Memeger and Berks County district Attorney John T. Adams.
If convicted, defendant Alvarez faces a maximum statutory sentence of 40 years in prison, three years of supervised release, a fine of up to $1.25 million, and $500 special assessment; defendant Santiago faces a maximum statutory sentence of 30 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Bucks County Law Firm Partner Charged with Insider TradingRead the Press Release
PHILADELPHIA – Herbert Sudfeld, 64, of Doylestown, PA, was charged today by indictment with insider trading and making a false statement, announced United States Attorney Zane David Memeger.
Sudfeld was a partner in a Pennsylvania law firm that represented Harleysville Group, Inc., in its merger with Nationwide Mutual Insurance Company. According to the indictment, Sudfeld knew the merger was imminent and knew he had a fiduciary duty to keep it confidential. On September 28, 2011, prior to the public announcement of the merger agreement, Sudfeld allegedly contacted his stock broker to purchase Harleysville stock. On September 29, 2011, Harleysville and Nationwide publicly announced the merger and Harleysville stock rose by approximately 85 percent over the prior day’s trading. Sudfeld then sold the shares he had bought a day earlier, netting personal profits of approximately $75,530.
The indictment further alleges that Sudfeld falsely told FBI agents, who were investigating insider trading, that he was not aware of the Harleysville stock transactions until several days to a week later. According to the indictment, Sudfeld also falsely told investigators that he had informed his broker that he could not be involved in trades of Harleysville stock due to his position at his law firm. He further allegedly stated that he did not discuss Harleysville trades with his broker until after they were completed, which was also false.
If convicted, the defendant faces a maximum possible sentence of 25 years in prison, a three-year period of supervised release, and a $5.25 million fine.
The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Denise S. Wolf.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Berks County Man Indicted on Gun ChargeRead the Press Release
PHILADELPHIA - Quinn Bowers, 34, of Temple, Pennsylvania, was charged by indictment, unsealed today, with providing a firearm to a convicted felon, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.
If convicted, the defendant faces a maximum possible sentence of 10 years in prison, three years of supervised release, a fine of up to $250,000, and a $100 special assessment.
The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Philadelphia Man Charged with Tipping Tax Preparer to InvestigationRead the Press Release
PHILADELPHIA - Marcos Cruz-Diaz, 34, of Philadelphia, PA, was charged today by indictment with obstruction of justice for allegedly tipping off the target of an Internal Revenue Investigation, announced United States Attorney Zane David Memeger.
According to the indictment, Cruz-Diaz was a paid informant for several federal government agencies. In his capacity as an informant, Cruz-Diaz became aware of the Internal Revenue Service’s ongoing investigation of tax return preparers and employees of a tax preparation business with offices located in Philadelphia, Pennsylvania, and their intent to execute search warrants at the offices of the tax preparation business and to engage in an undercover operation.Cruz-Diaz knew someone who was involved in an intimate relationship with a tax return preparer associated with the targeted business and allegedly informed that person of the Internal Revenue Service’s plans.Cruz-Diaz subsequently met with that tax return preparer and allegedly demanded $2,000 for providing the tip. He allegedly offered to provide the tax return preparer with a list of 25 client files that were in the tax return preparer’s possession, that contained incriminating information, and to prepare a video that the tax return preparer could use as a defense, in exchange for an additional $25,000.
If convicted, Cruz-Dias faces a maximum statutory sentence of 25 years in prison, five years of supervised release, a $500,000 fine, and a $200 special assessment.
The case was investigated by the Internal Revenue Service-Criminal Investigation Division and is being prosecuted by Assistant United States Attorney Anita Eve.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former FBI Agent Sentenced for Obstruction and Drug PossessionRead the Press Release
PHILADELPHIA - Matthew Lowry, 33, of Upper Marlboro, Maryland, was sentenced today to 36 months in prison for various crimes arising from his stealing drug evidence while working as a Special Agent with the Federal Bureau of Investigation (“FBI”). Lowry pleaded guilty, on March 31, 2015, to 20 counts of obstruction of justice, 18 counts of falsification of records, 13 counts of conversion of property, and 13 counts of possession of heroin. U.S. District Court Judge Thomas F. Hogan, in the District of Columbia, also ordered two years of supervised release, a $15,000 fine, and a $5,425 special assessment. As a result of Lowry’s criminal activity, numerous federal investigations were compromised and convicted criminals were released from prison.
Lowry was assigned to a task force that investigated narcotics trafficking and violent gang activity, occurring in and around Washington D.C. and Prince George’s County, Maryland. From approximately July of 2013 through September of 2014, the defendant stole, from FBI custody, at least 20 bags of heroin (some containing hundreds of grams) that he and other agents had seized during the course of five large-scale investigations. The defendant kept the heroin in his government-issued car, in some instances for as long as several months, and he periodically ingested it, often while he was on duty. Before returning the heroin into evidence, the defendant calculated the quantity he had used and replaced it with a different substance, either a weightlifting supplement, Creatine, or a laxative, Purelax. To further conceal his misconduct, the defendant falsified evidence and chain of custody records, including by backdating them and forging his fellow agents’ signatures.
The matter was referred to the Department of Justice Office of the Inspector General, which conducted the investigation, with assistance from the Federal Bureau of Investigation as requested by the OIG. It was prosecuted by Assistant United States Attorneys Kevin R. Brenner and Maureen McCartney.
Because Lowry’s investigations, as an agent, occurred within the District of Columbia and the districts surrounding it, those offices were recused by the Department of Justice.
Bucks County Man Charged with Running Ponzi SchemeRead the Press Release
PHILADELPHIA - Bogdan K. Stepien, 34, of Richboro, PA, was charged today by indictment with running a Ponzi scheme in which he claimed to be a successful “day trader” and recruited friends and family members to “invest” with him. Stepien is charged with 19 counts of wire fraud, three counts of aggravated identity theft, and four counts of passing counterfeit and forged checks, announced United States Attorney Zane David Memeger.
According to the indictment, between 2011 and 2014, Stepien received funds from each of eight individuals and instead of engaging in high frequency trading with those funds, he used them to pay for his own personal expenses. It is further alleged that to lull his victims into believing that he was successfully investing their funds, Stepien sent them bogus trading account statements and spreadsheets that purported to show their growing investment returns. He allegedly used some of the investor funds to pay what he characterized as distributions or profits to some of his investors when, in fact, the funds were not profits but were merely some of the investors’ principal. In connection with the scheme, Stepien allegedly used the name, address, and forged signature of one of his victims in performing several wire transfers of the victim’s funds to an account in Stepien’s name and for Stepien’s benefit.
The indictment further alleges that on four separate occasions, between August 2014 and April 2015, Stepien passed counterfeit and forged checks in order to purchase luxury automobiles and real estate. Stepien allegedly used two checks, each for over $100,000, to purchase new, custom-ordered Mercedes-Benz automobiles. He allegedly used another check, for more than $70,000, to purchase a new GMC Yukon Denali automobile. He is also charged with purchasing real estate with a bogus $400,000 check. Most of these checks were altered so that they appeared to be official checks, and none of the checks were legitimate.
If convicted, the defendant faces a mandatory minimum prison term of two years for aggravated identity theft with a maximum possible sentence of 20 years for each count of wire fraud, ten years for each count of passing counterfeit and forged checks, three years of supervised release, a fine of up to $6.5 million, a $2,600 special assessment, and full restitution.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Nancy E. Potts.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
New York Man Admits Role in Scheme to Bilk Bank Customer AccountsRead the Press Release
PHILADELPHIA – Divine Garcia, 29, of New Rochelle, NY, pleaded guilty today to conspiracy and bank fraud. Garcia was a middleman in a fraud conspiracy that involved recruiting employees at various banks, between Pennsylvania and New York, to provide information about bank customers’ accounts. A sentencing date is scheduled for October 19, 2015.
Garcia and his co-conspirators, charged elsewhere, formed an organization based out of New York which stole large sums of money from FDIC insured banks across the United States, including some in the Eastern District of Pennsylvania. The organization included numerous bank employees, three of whom were recruited by Garcia to provide confidential information about customers and their accounts. The organization used this information to take control of the customers’ account. Once they had sufficient control, an imposter working for the organization would enter a branch carrying: (a) a fake identification card, which Garcia had given them, with the biographical information of the customer but the photo of the imposter; and (b) a pre-printed and signed withdrawal slip with a signature which mimicked the customer’s actual signature. Using the forged withdrawal slip and fake identification card, the imposter would typically withdraw large sums of U.S. currency at various branches. The imposters were often accompanied by a handler from the organization, who would organize and supervise the fraudulent transactions. In total, Garcia provided the bank fraud organization with 65 confidential customer account profiles. From those accounts, the organization stole $481,856.00.
Garcia faces a maximum statutory sentence of 35 years in prison, a fine of up to $4 million, five years of supervised release, and a $200 special assessment.
The case was investigated by Homeland Security Investigations and U.S. Secret Service. It is being prosecuted by Assistant United States Attorney Robert J. Livermore.
Jenkintown Payday Lender Pleads Guilty to RICO ConspiracyRead the Press Release
PHILADELPHIA - Adrian Rubin, 58, of Jenkintown, PA, pleaded guilty today to conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), for the operation of a “payday lending” business that violated the usury laws of Pennsylvania and other states. Rubin also admitted to conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud. U.S. District Court Judge Eduardo C. Robreno scheduled a sentencing hearing for October 28, 2015. Rubin faces a possible advisory sentencing guideline range of at least 10 years in prison with a statutory maximum sentence of 65 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.
Between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.” Rubin conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included: (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender; (b) relocating his operations to a state considered “usury friendly;” and (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.
Rubin and his co-conspirators also went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record. Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents. In total, Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.
Rubin also admitted helping his two sons with their own multi-million-dollar telemarketing scam that duped more than 70,000 people into buying a credit card http:/www.justice.gov/usao-edpa/pr/trio-charged-selling-worthless-credit-cards. The Platinum Trust card was falsely marketed as a general-purpose credit card that customers could use to buy merchandise over the Internet and improve their credit. Blake and Chase Rubin pleaded guilty and are awaiting sentencing.
This case was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Joel M. Sweet.
Settlements Announced with Two Pharmaceutical Companies Regarding the Medicaid Drug Rebate ProgramRead the Press Release
PHILADELPHIA – AstraZeneca LP has agreed to pay the United States and participating states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today. Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.
In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations. Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.
Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs. Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug. These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers. As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.
The two settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The amounts to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, have not yet been determined.
“We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs,” said First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania. “As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process.”
“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division. “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”
The settlement with AstraZeneca LP and Cephalon Inc. was the result of a coordinated effort among the U.S. Attorney’s Office of the Eastern District of Pennsylvania, the Civil Division’s Commercial Litigation Branch, and Health and Human Services-Office of Inspector General.
These settlements illustrate the government’s emphasis on combating health care fraud and mark another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.
The lawsuit is captioned United States ex rel. Streck v. Allergan, Inc., et al., Case No. 08-cv-5135 (E.D. Pa.). The claims settled by these agreements are allegations only, and there have been no determinations of liability.
AstraZeneca and Cephalon to Pay Millions for Allegedly Underpaying Medicaid RebatesRead the Press Release
PHILADELPHIA – AstraZeneca LP has agreed to pay the United States and participating individual states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today. Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.
In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations. Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.
Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs. The quarterly rebates are based, in part, on the average manufacturer prices (AMPs) that the manufacturers report to the government for each of their covered drugs. Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug. These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers. As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.
The settlements were announced today by First Assistant United States Attorney Louis D. Lappen and the Department of Justice. “We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs. As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process,” said Lappen.
The settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery. The amount to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, has not yet been determined.
“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Benjamin C. Mizer, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division. “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”
For the United States Attorney’s Office for the Eastern District of Pennsylvania, this investigation and settlements were handled by Assistant United States Attorney Eric D. Gill. The United States’ investigation and settlements were also conducted by the Justice Department’s Commercial Litigation Branch of the Civil Division. The claims settled by these agreements are allegations only, and there has been no determination of liability. The lawsuit is captioned United States ex rel. Streck v. Allergan, Inc., et al., Case No. 08-cv-5135 (E.D. Pa.).
These settlements illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services. The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation. One of the most powerful tools in this effort is the False Claims Act. Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.
Two Additional Defendants Charged in Kidnapping of Jewelry Store EmployeeRead the Press Release
PHILADELPHIA - Salahudin Shaheed, 34, Khayree Gay, 31, and Basil Buie, 23, all of Philadelphia, PA, were charged today by superseding indictment with conspiracy, kidnapping, and attempted Hobbs Act robbery, announced United States Attorney Zane David Memeger. The superseding indictment adds the conspiracy charge to the existing indictment that charged Gay with attempted Hobbs Act robbery and kidnapping, and adds defendants Shaheed and Buie.
According to the indictment, Shaheed recruited defendants Gay and Buie, a/k/a “Basil Tucker,” to rob National Watch and Diamond Exchange, at 101 S. 8th Street in Philadelphia, to obtain luxury watches, jewelry, and money which Shaheed said could be found there. It is further alleged that the defendants conducted surveillance of National Watch and its employees from a parking lot at 733 Chestnut Street, to identify and then, in disguise, abduct an employee from whom they would forcibly obtain keys, security codes, and the code to the company’s safe from which the robbers would steal luxury watches, jewelry, and money.
On April 3, 2015, Shaheed identified the employee to target but postponed the robbery when the victim entered the parking lot accompanied by other persons. The next day, the defendants returned. Upon seeing the employee enter the garage and approach her car, Shaheed and Buie, wearing masks, gloves, and sunglasses, confronted the victim, Shaheed assaulted her with a Taser, and they kidnapped her.
If convicted, each of the defendants face a maximum possible statutory sentence of life in prison, five years of supervised release, a fine of up to $750,000, and a $300 special assessment.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives and is being prosecuted by Assistant United States Attorney Jeanine Linehan.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Six Charged with Running Lottery ScamRead the Press Release
PHILADELPHIA – An indictment was filed today charging six people with running a “Jamaican lottery” scam in the United States between January 2012 and March 2015, announced United States Attorney Zane David Memeger and Homeland Security Investigations Special Agent-in-Charge John P. Kelleghan.Maurice Simmonds, were charged with conspiring to commit mail, bank and wire fraud in a scheme that obtained more than $200,000 from mostly elderly victims with diminished mental capacity.Simmonds, the organizer and leader of the conspirators, and some of the other members of the conspiracy were also charged with wire fraud and travel fraud as the result of specifically defrauding an elderly resident of Drexel Hill, Pennsylvania.
According to the indictment, the victims were informed that they had won the “Jamaican lottery” but that in order to claim their winnings they first needed to pay tens of thousands of dollars for certain “fees.” The victims were repeatedly coerced to provide the conspirators with cash, checks, and property but never received any winnings from the purported lottery.
If convicted, each defendant faces a substantial prison term, possible fines, special assessments, and supervised release.
The case was investigated by Homeland Security Investigations, the Delaware County District Attorney's Criminal Investigation Division Senior Exploitation Unit, and the Delaware County Office of Services for the Aging. It is being prosecuted by Assistant United States Attorney Anita Eve.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.