Eastern District of Pennsylvania
Press releases recorded for this federal judicial district.
Upper Darby Man Charged with Transporting Child PornographyRead the Press Release
PHILADELPHIA - David A. Seiver, 77, of Upper Darby, PA, was charged today by indictment with transportation of child pornography, announced United States Attorney Zane David Memeger. According to the indictment, Seiver transported and shipped a video file of an adult male raping a child.
If convicted the defendant faces a mandatory minimum sentence of 15 years in prison with a maximum possible sentence of 40 years in prison, and a fine of up to $250,000.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Virgil B. Walker.
Former Philadelphia Police Officer Pleads Guilty to Extortion SchemeRead the Press Release
PHILADELPHIA - Christopher Saravello, 37, of Philadelphia, PA, pleaded guilty today, to a scheme to extort drugs and money from drug dealers and drug buyers while working as a Philadelphia Police Officer. He was charged with 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, identifying himself as a law enforcement officer by approaching the transaction in a marked police vehicle, wearing a police uniform, displaying an official badge and identification, or verbally identifying himself as a police officer. 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. In doing so, Saravello used his position as a police officer to extort drugs and money from others. The scheme resulted in the illegal taking of more than $9,800 in drug money and quantities of Oxycontin and other narcotics.
U.S. district Court Judge Eduardo Robreno scheduled a sentencing hearing for June 2, 2015. Saravello faces a maximum possible sentence of 120 years in prison, $1.5 million fine, 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 is being prosecuted by Assistant United States Attorney Arlene Fisk.
Allentown Man Sentenced to More Than 24 Years for Sex TraffickingRead the Press Release
PHILADELPHIA - Deshawn King, 35, of Allentown, PA, was sentenced today to years 293 months in prison for running a sex trafficking operation, incorporating heroin as a means of punishing and controlling the victims. King pleaded guilty on January 10, 2014 to conspiracy to commit sex trafficking of women by force, fraud, and coercion; two counts of sex trafficking by force, fraud, or coercion; and two counts of attempted sex trafficking by force, fraud, and coercion. King’s co-defendant, Daniel Blount, also pleaded guilty and was sentenced on July 15, 2014 to 20 years in prison.
Between October 2012 and April 2013, King and Blount recruited and enticed heroin-addicted women to perform commercial sex acts at their direction by promising a continuous supply of money and heroin. The defendants used the website “backpage.com” to post sexually explicit photos of the women in advertising them for commercial sex acts. “Johns” (men wanting to have sex with the recruited women) called the telephone number posted in the ad and met the women at hotels designated and paid for by the defendants. King and Blount provided heroin to the women as a means of control or withheld the heroin as a form of punishment, causing the women to suffer withdrawal; used physical force, including a taser, and threats of force against the women to cause or attempt to cause them to continue performing commercial sex acts; and received and kept all the proceeds generated by the women engaging in commercial sex acts. The defendants also threatened to kill at least two of the victims and took turns raping at least one of the victims.
In addition to the prison term, U.S. District Court Judge James Knoll Gardner ordered 15 years of supervised release, a $1,000 fine and a $500 special assessment.
The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations, with assistance from the Allentown Police Department and the Office of the Lehigh County District Attorney. It was prosecuted by Assistant United States Attorney Sherri A. Stephan.
Allentown Man Charged with Threatening the President of the United StatesRead the Press Release
PHILADELPHIA - Glen Joseph, 45, of Allentown, Pennsylvania, was charged today by Superseding Indictment with making threats against the President of the United States, threats against law enforcement officers, and the interstate communication of threats, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of 55 years in prison, three years’ supervised release, a $2.25 million fine, and a $900 special assessment.
The case was investigated by the Federal Bureau of Investigation and the U.S. Secret Service, and is being prosecuted by Assistant United States Attorney V. Paige Pratter.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Allentown Man Charged with Making Threats Against the President of the United StatesRead the Press Release
Defendant Glen Joseph, 45, of Allentown, Pennsylvania, was charged today by Superseding Indictment with making threats against the President of the United States, threats against law enforcement officers, and the interstate communication of threats, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of 55 years in prison, three years’ supervised release, a $2,250,000 fine, and a $900 special assessment.
The case was investigated by the Federal Bureau of Investigation and the U.S. Secret Service, and is being prosecuted by Assistant United States Attorney V. Paige Pratter.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Malvern Company Pays $265,000 to Resolve Overbilling AllegationsRead the Press Release
PHILADELPHIA - Silicon Power Corporation, a manufacturer of semiconductor devices and high-power utility systems in Malvern, Pennsylvania, has agreed to pay $265,000 to resolve civil allegations that the facility overbilled and mischarged the United States Army under two contracts, announced United States Attorney Zane David Memeger.
Specifically, the United States alleged that between 2004 and 2012, Silicon Power overbilled and mischarged the Army under the contracts by billing: the same amount on multiple vouchers; sums reflected in purchase orders when the invoices reflected lower actual costs; sums that subcontractors had credited back to Silicon Power; sums that reflected accrued expenses when Silicon Power incurred lower actual invoiced expenses; sums that failed to reflect volume discounts that Silicon Power received; sums for travel expenses that were higher than Silicon Power’s internal cost reports for the travel; sums that Silicon Power carried over from previous vouchers without adjusting to reflect current costs; and sums for project numbers for which the contracts did not allow payment. As part of the settlement, Silicon Power did not admit to liability or wrongdoing.
“This agreement demonstrates our commitment to ensuring that defense contractors meet their obligations and comply with Department of Defense rules and regulations,” said Memeger. “Agreements like these preserve the integrity of the procurement system and save money for the United States and the taxpayers.”
The allegations arose from an investigation led by the Defense Criminal Investigative Service and the United States Army Criminal Investigation Command – Major Procurement Fraud Unit. The case was handled by Assistant United States Attorneys Michael S. Macko and Mark J. Sherer.
Lehigh County Couple Charged in Scheme to Defraud the GovernmentRead the Press Release
Yujie Ding, 52, and Yuliya Zotova, 40, of Center Valley, Pennsylvania, were charged by indictment, unsealed today, with ten counts of wire fraud related to a government program meant to increase research and development opportunities for small businesses, announced United States Attorney Zane David Memeger.
The Small Business Innovation Research (SBIR) program was created by Congress in 1982 and has requirements aimed to combat fraud, waste, and abuse. According to the indictment, in August 2009, Ding and Zotova submitted a proposal to NASA to fund a research project aimed at creating a device to detect trace levels of chemicals. The defendants’ proposal claimed they would conduct the research at their business, ArkLight, and would subcontract some of the work to an area university where Ding was employed. The indictment alleges that the defendants knew they had no such facility in which to conduct the research and were, instead, using ArkLight as a front to funnel federal grant money to themselves for research performed by students and others working in Ding’s university lab. It is further alleged that the defendants sent to NASA, via electronic transmission, invoices totaling $560,000 for work that was not performed to the specifications of the proposals and received a portion of that amount.
If convicted of all charges, each defendant faces a maximum possible statutory sentence of 200 years in prison, three years of supervised release, a fine of up to $2.5 million, a $1,000 special assessment, and forfeiture.
The case was investigated by the National Aeronautics and Space Administration's Office of Inspector General, the Defense Criminal Investigative Service, and the United States Air Force Office of Special Investigations. It is being prosecuted by Assistant United States Attorneys Elizabeth Abrams and Gregory David.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Judge Sends Former Philadelphia Police Officers to Prison for Robbery and Drug SchemeRead the Press Release
PHILADELPHIA - Former Philadelphia Police Officers Jonathan Garcia, 26, and Sydemy Joanis, 28, both of Philadelphia, were sentenced today to 210 months and 63 months, respectively, for a scheme to rob drug dealers of their cash proceeds. Garcia pleaded guilty July 30, 2013 to distribution of heroin, conspiracy to commit robbery, robbery, attempted robbery, and carrying a firearm during and in relation to a crime of violence. Joanis pleaded guilty February 11, 2014 to conspiracy to commit robbery, robbery, attempted robbery, and carrying a firearm during and in relation to a crime of violence.
The defendants were assigned to the 17th Police District when, in December 2009, they entered into a scheme by which they agreed to rob suspected drug dealers. Sometimes the defendants would stop and frisk individuals who were allegedly loitering, and if the defendants recovered any drugs, they would arrest the person and steal some or all of his money. Other times the defendants utilized Person #1, who, at the defendants’ direction, would meet with a suspected drug dealer inside the dealer’s car, buy a small quantity of drugs (usually crack cocaine), and then leave some of the drugs in plain view on the floorboard of the car. After Person #1 exited the dealer’s car, the defendants would pull up in their PPD patrol car, stop the dealer, and after seeing the drugs in plain view, arrest the dealer and ultimately steal some or all of the dealer’s money, which the defendants would split amongst themselves. When committing these robberies, the defendants wore their PPD uniform and openly carried firearms. To conceal their crimes, the defendants falsified police reports by failing to disclose their use of Person #1 and fabricating the basis for the stop, and by failing to disclose some or all of the money that they had stolen.
In addition to the prison terms, U.S. District Court Judge Legrome Davis ordered Garcia to pay a fine of $5,000, a special assessment of $900, and ordered five years of supervised release; Joanis was ordered to pay a fine of $2,000, a special assessment of $400, and was ordered to complete three years of supervised release.
The case was investigated by the FBI and the Philadelphia Police Department and was prosecuted by Assistant United States Attorney Kevin R. Brenner.
Doctor Indicted on Charges He Illegally Distributed Drugs from Two OfficesRead the Press Release
PHILADELPHIA – Dr. Jeffrey Bado, 59, of Philadelphia, PA, was charged today by indictment with illegally distributing pain medications from his Philadelphia and Bryn Mawr medical offices, announced United States Attorney Zane David Memeger. Bado is charged with two counts of maintaining a drug-involved premises, 200 counts of illegally distributing oxycodone, a Schedule II controlled substance, outside the usual course of professional practice and for no legitimate medical purpose, as well as 33 counts of health care fraud and four counts of making false statements to federal agents.
According to the indictment, Bado, a doctor of Osteopathic Medicine, gave prescriptions for large numbers of oxycodone pills to “patients” who paid in cash for an “office visit” during which the “patient” would receive at most a cursory physical examination and little other medical care or treatment. During their first visit to Bado’s practice, new patients would still get prescriptions for large amounts of oxycodone even though they provided little or no recent medical records to verify their claim of pain, or provided medical records that were not consistent with their claims of pain.
The indictment alleges that Bado’s prescribing mirrored the needs of drug addicts and drug traffickers. Bado would allegedly comply with patient requests for pills with specific concentrations of oxycodone, and Bado would allegedly switch patients to pills with a higher street value even though there was no medical justification for the switch. Bado allegedly continued to prescribe high amounts of oxycodone even when he knew that his patients were addicted to oxycodone, were using illegal drugs, or were not even taking the oxycodone pills as prescribed.
The indictment further alleges that Bado committed health care insurance fraud by billing Medicare and private insurers for patient visits that occurred in February 2010, when Bado was out of the office and traveling in Haiti. Bado allegedly directed residents, nurses and other staff to see patients while he was away, and allegedly directed that they provide the patients with prescriptions that Bado had already filled out and signed. Before departing for his trip, Bado allegedly made notations in and signed medical charts to make it appear as though he had seen the patients when in fact he was away in Haiti during their appointments. Bado then allegedly had his office staff submit fraudulent claims to these patients’ health care insurers for the cost of the patients’ office visit as if Bado had seen these patients. It is alleged that Bado subsequently made several materially false statements to federal agents regarding the arrangements he made before leaving for Haiti, including falsely claiming that he had not filled out in advance out any medical records for the patient appointments that occurred while he was in Haiti.
If convicted of all charges, Bado faces an estimated sentencing guideline range of at least 24 years in prison with a maximum sentence of 20 years in prison for each count of oxycodone distribution and maintaining a drug premises counts, 10 years in prison for each count of health care fraud, and five years in prison for each count of making false statement counts. He also faces substantial fines and criminal forfeiture.
The case was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services Office of the Inspector General, the Haverford Township Police Department and the Philadelphia Police Department. It is being prosecuted by Assistant U.S. Attorneys Nancy Beam Winter and Andrew J. Schell.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
Easton Woman Sentenced for Fraud SchemeRead the Press Release
Felicia Anne Straub, 42, of Easton, Pennsylvania, was sentenced today to six years in prison for three counts of wire fraud, one count of aggravated identity theft, and one count of tax evasion. Between September 5, 2006 and December 26, 2010, Straub was the office manager of Financial Adjuster’s, Inc. She embezzled FAI funds of at least $459,332 and used the money to pay for personal purchases of goods and services and to pay her husband’s personal credit card bills.
In addition to the prison term, U.S. District Court Judge Edward G. Smith ordered restitution in the amount of $459,332, three years of supervised release, and a $500 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, the Lehigh County District Attorney’s Office, and the Whitehall Township Police Department, and is being prosecuted by Assistant United States Attorney Kishan Nair.
Coatesville Woman Charged with Bilking Comcast Employee Retirement AccountsRead the Press Release
PHILADELPHIA - Laura Wayne, 37, of Coatesville, Pennsylvania, was charged today by information with seven counts of wire fraud, announced United States Attorney Zane David Memeger. While employed as an administrator of employee retirement accounts at the Comcast Corporation, Wayne created dummy retirement accounts and used the accounts to defraud Comcast of approximately $124,876.
According to the information, Wayne created dummy accounts that appeared to be 401(k) retirement accounts managed by Fidelity Company for the benefit of Comcast employees; used the names of non-employees and their actual birthdates and social security numbers to create fraudulent employee 401(k) accounts; entered dollar amounts in the dummy accounts on the spreadsheets she sent to Fidelity so that Comcast would put money into the dummy employee accounts; and created fake on-line Fidelity accounts so that she could access the dummy employee accounts. It is further alleged that between April 2013 and January 2014, Wayne used the fake on-line accounts that she had created to direct that Fidelity transfer funds from the dummy accounts to bank accounts that she controlled.
If convicted, the defendant faces a maximum possible sentence of 140 years of in prison, three years of supervised release, restitution, a $1.75 million fine, and a $700 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Laurie Magid.
UNITED STATES ATTORNEY'S OFFICE Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106
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Tax Preparer Charged in Tax Fraud SchemeRead the Press Release
PHILADELPHIA - David Nixon, 50, of Philadelphia, Pennsylvania, was charged today by superseding indictment with 84 counts of aiding and assisting in the preparation of materially false income tax returns, announced United States Attorney Zane David Memeger.
According to the superseding indictment, Nixon, the owner of Economy Tax Services, prepared materially false federal income tax returns for tax years 2007 through 2009 which included fraudulent credits for children, earned income, tuition and fees, and residential energy efficiency property; incorrect filing status; and false or falsely inflated Form 1040 Schedule A deductions for charitable contributions and employee business expenses. The prepared and filed returns reduced the amount of tax owned by Nixon's clients and increased the amount of the refunds to the clients. The indictment alleges that as the result of the false and fraudulent income tax returns, Nixon's clients received more than $200,000 in fraudulently inflated refunds.
If convicted the defendant faces a maximum possible sentence of 252 years of in prison, a fine of $21 million, one year of supervised release, and a special assessment of $8,400.
The case was investigated by the Internal Revenue Service Criminal Investigations and is being prosecuted by Assistant United States Attorney Anita Eve.
An indictment or Information is only an accusation. A defendant is presumed innocent unless and until proven guilty.
Pennsylvania Doctor and Receptionist Charged with Running "Pill Mill"Read the Press Release
PHILADELPHIA – William J. O’Brien III, 49, and Angela Rongione, 29, both of Philadelphia, were charged by indictment, unsealed today, with running a “pill mill” from O’Brien’s medical offices in Philadelphia and Levittown, PA, announced United States Attorney Zane David Memeger. Both defendants are charged with one count of conspiracy to distribute controlled substances. O’Brien, a doctor of osteopathic medicine, is also charged with 26 counts of illegally distributing oxycodone, a Schedule II controlled substance, and Xanax, a Schedule IV controlled substance, outside the usual course of professional practice and for no legitimate medical purpose.
According to the indictment, between January 2014 and December 2014, O’Brien’s so-called Apatients@ could obtain prescriptions for addictive and dangerous controlled substances for a fee and without a physical examination or any other medical care or treatment. O’Brien typically charged customers $250 cash for the first appointment to buy prescriptions and $200 for each appointment to obtain refills. O’Brien allegedly falsified “medical” records to make it look as though customers had received physical examinations and medical treatment from him when they had not. It is further alleged that O’Brien was willing to exchange favors for higher doses of narcotics. For example, on or about October 2, 2014, O’Brien allegedly offered to trade a prescription for a sex act.
If convicted, defendant O’Brien faces 20 years in prison for the conspiracy charge and five years for each of the distribution counts and substantial fines and criminal forfeiture. Defendant Rongione faces 20 years in prison for the conspiracy charge.
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 M. Beth Leahy.
Allentown Man Sentenced to 10 Years for Drug Trafficking SchemeRead the Press Release
ALLENTOWN – Melvin Aviles, 34, of Allentown, PA, was sentenced today to 10 years in prison for running a cocaine trafficking operation. Aviles pleaded guilty on April 8, 2014 to conspiracy to distribute 500 grams or more of cocaine, four counts of distributing and aiding and abetting the distribution of cocaine, one count of distributing and aiding and abetting the distribution of cocaine within 1,000 feet of a public school, five counts of distribution of cocaine, and one count of attempted possession with intent to distribute.
Between October 2012 and April 2013, Aviles operated a cocaine trafficking business, obtaining cocaine from sources in Puerto Rico and other locations for resale in the Allentown area. Aviles arranged to have parcels shipped via the United States Postal Service from Puerto Rico to various addresses in Allentown. Once the cocaine was delivered, Aviles would transport the cocaine to his Allentown residence, weigh it, and repackage it for further distribution in and around the Allentown area. Some of the cocaine sales were conducted within 1,000 feet of schools.
In addition to the prison term, U.S. District Court Judge James Knoll Gardner ordered 12 years of supervised release and a $1,100 special assessment.
“The successful result of this prosecution is due, in large part, to the outstanding collaboration of local, state, and federal law enforcement,” said Memeger. “The tireless efforts and diligent work of the officers and agents investigating this case, made it possible to get this drug trafficker off the streets of Allentown.”
“This case represents just the most recent success derived from the close working relationship that exists between the Pennsylvania State Police and our federal and local law enforcement partners,” said Pennsylvania State Police Captain Brian Tobin. “We will continue to put forth our combined resources in order to protect the citizens of this Commonwealth and ensure those who choose to commit crimes are brought to justice.”
The case was investigated by the Federal Bureau of Investigation, the Pennsylvania State Police, and the Allentown Police Department with assistance by the Office of the Lehigh County District Attorney. It was prosecuted by Assistant United States Attorney Sherri A. Stephan.
Former DEA Employee Pleads Guilty to EmbezzlementRead the Press Release
PHILADELPHIA - Kim M. Costello, 55, of Harrisburg, PA, pleaded guilty on January 22, 2015, to one count of embezzlement of government funds, announced United States Attorney Zane David Memeger. In September 2012, Costello was the impress funds manager for the Drug Enforcement Administration’s Harrisburg Resident Office when she embezzled $2,079 in government funds.
U.S. District Court Judge Sylvia H. Rambo will schedule a sentencing hearing at a future date. Costello faces a maximum possible sentence of 10 years in prison, three years of supervised release, a $100 special assessment, and a fine of up to $250,000.
The case was investigated by the Department of Justice Office of Inspector General New Jersey Area Office, and is being prosecuted in the Middle District of Pennsylvania by Assistant United States Attorney Kishan Nair, from the Eastern District of Pennsylvania.
Nifty Fifty's Accountant Pleads Guilty to Tax Fraud SchemeRead the Press Release
William J. Frio, 58, of Springfield Township, pleaded guilty today to his role in a tax evasion scheme involving the Nifty Fifty’s restaurant chain. Frio pleaded guilty to conspiracy to commit tax evasion. Frio is the sixth defendant to plead guilty in the long-running scheme to avoid paying millions of dollars in personal and employment taxes, by failing to properly account for more than $15 million in gross receipts, thereby evading federal taxes of over $2.28 million. Frio also pleaded guilty to filing his own false tax returns, aggravated structuring of financial transactions, and loan fraud. U.S. District Court Judge Mary McLaughlin scheduled a sentencing hearing for April 29, 2015.
Frio, an accountant and income tax preparer who provided services to the Nifty Fifty’s organization since 1986, conspired with the owners and principals of Nifty Fifty’s. The defendants skimmed cash to pay themselves, their employees, 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. The 2006 and 2007 tax returns that he had actually submitted to the IRS showed far less income than the false returns supplied to Sovereign Bank, and Frio had not been employed by Tanfasia, Inc. in 2006 or 2007.
Frio also used his position as the Nifty Fifty’s accountant to embezzle over $4 million of funds that belonged to the organization. As part of that scheme, between 2006 and 2009, Frio knowingly structured cash transactions totaling over $2.6 million out of Nifty Fifty’s accounts at Sovereign Bank.
Frio faces a maximum possible sentence of 57 years in prison, full restitution to the IRS, a fine of up to $2.75 million, and criminal forfeiture.
The case was investigated by the Internal Revenue Service Criminal Investigations and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Paul G. Shapiro and Nancy E. Potts.
Reading Man Charged with Identity TheftRead the Press Release
Brandon Jones, 33, of Reading, Pennsylvania was charged today by indictment with one count of conspiracy, one count of wire fraud, and one count of bank fraud, announced United States Attorney Zane David Memeger.
The indictment alleges that Jones participated into two related identify theft schemes. According to the indictment, Jones and his co-conspirators created and used false identities to make fraudulent credit card purchases and to purchase vehicles with fraudulent bank loans. The leader of the conspiracy, Damian Gasdaska, provided Jones and other co-conspirators with fraudulent credit cards, which Jones and the others used to purchase various items, including small, expensive electronic equipment. After the purchases, Jones and the co-conspirators provided these items to Gasdaska, who then sold them and paid the co-conspirators for their illegal services.
Among other things, the indictment also alleges that Jones, Gasdaska, and their co-conspirators used false identities to obtain fraudulent car loans in order to purchase vehicles. Specifically, the indictment alleges that in August 2012, Jones, with Gasdaska’s help, obtained a fraudulent loan in the name of J.O. from a credit union and then used this loan to purchase a 2007 BMW in this false name. As part of this fraudulent purchase, Jones used false personal identifying information in J.O.’s name, a false driver’s license with J.O.’s name and Jones’ photograph, and false employment information.
Several of members of this conspiracy have previously pleaded guilty in connection with the identify theft schemes. On April 28, 2014, John Cordero pleaded guilty to one count of conspiracy and one count of bank fraud. On November 6, 2014, both Damian Gasdaska and Johnnie Rhines pleaded guilty. Gasdaska pleaded guilty to one count of conspiracy, six counts of wire fraud, seven counts of bank fraud, and one count of aggravated identity theft. Rhines pleaded guilty to one count of conspiracy and one count of bank fraud.
INFORMATION REGARDING THE DEFENDANTS
NAME
ADDRESS
YEAR OF BIRTH
Brandon Jones
Reading, PA
1981
Damian Gasdaska
Phillipsburg, NJ
1976
John Cordero
Breiningsville, PA
1978
Johnnie Rhines
Lindenwold, NJ
1954
If convicted, Jones faces a maximum possible sentence of 55 years imprisonment, a five-year period of supervised release, a $1,500,000 fine, a $300 special assessment, and the imposition of full restitution.
The case was investigated by United States Secret Service, the United States Postal Inspection Service, Homeland Security Investigations, and the Lehigh County Auto Theft and Insurance Fraud Task Force and is being prosecuted by Assistant United States Attorney Patrick J. Murray.
Former Municipal Court Judge Sentenced in Fraud CaseRead the Press Release
PHILADELPHIA – Joseph C. Waters, Jr., 61, of Philadelphia, was sentenced today to 24 months in prison for using his judicial position to influence the outcome of two cases in the Philadelphia Municipal Court. Waters, a former Philadelphia Municipal Court Judge, pleaded guilty on September 14, 2014 to mail fraud and honest services wire fraud. In addition to the prison term, U.S. District Court Judge Juan R. Sanchez ordered 3 years of supervised release and ordered Waters to pay a fine of $5500, and a special assessment of $200.
According to documents filed in the case, on September 30, 2011, Waters was asked by Person #1 – a politically active business owner – to use his judicial office to achieve a favorable outcome in a small claims case filed in Philadelphia Municipal Court against Person #1’s real estate management company. To that end, Waters called two other Municipal Court judges, assigned to the case on different dates, and asked them to rule in Person #1’s favor. A Municipal Court Judge identified in the information as Judge #2 ultimately adjudicated the case in favor of Person #1 after Waters told Judge #2 “he’s a friend of mine.” Judge #2’s ruling in favor of Person #1’s company prevented the plaintiff in the small claims case, Company B, from collecting $2733 in unpaid fees owed to it for security services it delivered to Person #1’s company.
Waters gave Person #1 a secret advantage through a series of secret ex parte communications with other Municipal Court judges scheduled to hear the small claims case and used his position to cause favorable rulings for Person #1.
In a second scheme, Waters used his position as a judge to facilitate a favorable outcome in a criminal firearms case. In that matter, Person #1 urged a witness cooperating with the government, “CW#1,” to contribute money to help pay down debts Waters had incurred while campaigning for a position on the Municipal Court. In January 2010, CW#1, gave Waters $1,000 in cash. In accepting the money, Waters told CW#1 that he would help CW#1 with future problems that CW#1 or CW#1’s friends may encounter in the court system. Between 2010 and 2012, CW#1 provided gifts and cash contributions to Waters that were not reported on Waters’ campaign finance reporting forms.
In May 2012, CW#1 asked Waters for his assistance with a firearms prosecution pending in the Municipal Court. CW#1 introduced Waters to an undercover agent (“UC#1”) as a business associate. CW#1 and UC#1 asked Waters to help UC #1’s “cousin” who had been arrested for felony possession of a firearm. On July 23, 2012, Waters called Judge #1 alerting Judge #1 to the preliminary hearing of a “friend” for the firearms charge and asked Judge #1 to “help him.” At a July 24, 2012 preliminary hearing, Judge #1, without proper legal basis, reduced the felony firearms charge to a misdemeanor.
The case was investigated by the FBI and is being prosecuted by Chief of the Public Corruption Unit Richard P. Barrett and Assistant United States Attorney Michelle L. Morgan.
Allentown Man Pleads Guilty to Tax Refund SchemeRead the Press Release
PHILADELPHIA - Andys O. Rodriguez, 26, of Allentown, PA, was sentenced today to 30 months imprisonment and 3 years supervised release. U.S. District Court Judge Lawrence F. Stengel also ordered restitution of $2,904,783.64. Rodriguez admitted at his guilty plea that between August 17, 2010 and January 31, 2012, he knowingly filed false tax returns with the IRS claiming refunds in the names of other individuals. The returns included W-2 forms falsely claiming that taxes were withheld by various employers. The IRS identified more than 600 false returns that were associated with this scheme. These returns, which were filed electronically, claimed refunds totaling $2,904,783.64.
The case was investigated by the Internal Revenue Service Criminal Investigations and is being prosecuted by Assistant United States David J. Ignall.
New York Man Sentenced for Sex Trafficking FemalesRead the Press Release
PHILADELPHIA - Justin Williams, a/k/a ANew York Ice, a/k/a APimp Juice, 40, of New York, NY, was sentenced today to 30 years in prison for sex trafficking young women. A federal jury found Williams guilty in September 2013 of two counts of sex trafficking by force and one count of tampering with a witness. In addition to the prison term, U.S. District Court Judge J. Curtis Joyner ordered 10 years of supervised release.
Between November 2011 and January 2012, Williams recruited young females to work as prostitutes in his business who were advertised on the Internet for purchase, using locations such as “Backpage,” for purposes of prostitution. Williams engaged in acts of physical violence to force the victims to remain in his business. The advertisements featured pictures of the victims, scantily clad, the price, and a phone number to call to arrange a meeting with a female. Williams forced the victims to engage in sex acts with clients.
Williams exploited at least three females, ranging in age from 18 to 27. He moved them between Philadelphia, New York, Atlantic City, NJ, and Washington, DC, for purposes of prostitution. He was convicted of two counts of sex trafficking by force and one count of witness tampering for writing a letter to victim #2 to retract her statement prior to trial.
This case was investigated by the Federal Bureau of Investigation, Arlington County Police Department (Arlington, VA), with assistance from the Philadelphia First Judicial Court Warrant Unit, and the New York City Police Department. It was prosecuted by Assistant United States Attorney Michelle Morgan.
Ironworkers Business Manager Convicted in Racketeering ConspiracyRead the Press Release
PHILADELPHIA – Joseph Dougherty, 73, of Philadelphia, former Secretary/Business Manager of Local 401, was found guilty today, by a federal jury, of racketeering conspiracy and other charges connected to a dozen members of Ironworkers Local 401. The jury returned guilty verdicts on the counts 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. The 11 co-defendants in the case pleaded guilty. U.S. District Court Judge Michael Baylson scheduled a sentencing hearing for April 29, 2015.
The indictment details incidents in which the defendants threatened or assaulted contractors or their employees, and damaged construction equipment and job sites as part of a concerted effort to force contractors to hire and pay Local 401 workers, even when those workers performed no function.
The defendants had a network of individuals, friendly to the Ironworkers Local 401, to help identify construction projects and job sites where work was being performed without using Local 401 members. The 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.”
At sentencing, Dougherty faces a mandatory minimum term of 15 years in prison up to a statutory maximum of 110 years.
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.
Delaware County Defense Contractor Sentenced to 37 Months in Prison for Fraud and ObstructionRead the Press Release
PHILADELPHIA – Kenneth Narzikul, 60, of Media, PA, was sentenced today to 37 months in prison for committing major fraud against the United States, obstructing a federal audit, and making false claims to the government, in connection with defense contracts to manufacture components for military helicopters. U.S. District Court Judge L. Felipe Restrepo also ordered restitution in the amount of $1.2 million, a fine of $7,500, and three years of supervised release to follow the prison term.
The defendant was President and 85% owner of NP Precision, Inc. (NP), a machine tool business located in Folcroft, PA, which is now defunct. NP contracted with Department of Defense component agencies to produce critical hardware components used in military helicopters and other aircraft. At his guilty plea hearing on August 25, 2014, Narzikul admitted that he schemed to fraudulently divert and steal approximately $1.2 million in progress payments that the United States paid NP under two contracts to produce drive shaft couplings for a U.S. Army helicopter Model CH-47, commonly known as the Chinook helicopter. Narzikul further admitted that he made false claims to the government so that NP could continue to receive progress payments on those contracts, when he knew that NP had not earned the progress payments. In addition, Narzikul admitted that he tried to cover up his fraud by lying to government auditors and submitting false documents to them, and directing employees at NP to do the same. Narzikul admitted further that he used the diverted progress payments to pay outstanding obligations on other contracts and pay other personal and business expenses for himself and his family.
The case was investigated by the Major Procurement Fraud Unit (MPFU) of the United States Army Criminal Investigative Command (Army CID), the Defense Criminal Investigative Service (DCIS), and the United States Air Force Office of Special Inspection (Air Force OSI). It was prosecuted by Assistant United States Attorney Mary E. Crawley.
Alleged Fraud Scheme Aimed to Secure Bailout FundsRead the Press Release
PHILADELPHIA - An indictment was unsealedFriday charging Brian Hartline, 50, of Collegeville, Pennsylvania, and Barry Bekkedam, 47, of Hobe Sound, Florida, in a fraud conspiracy involving NOVA Bank,where Hartline served as President and Chief Executive Officer and Bekkedam had served as Board Chairman. The alleged scheme involved the Troubled Asset Relief Program (TARP) and was devised in an attempt to defraud the government of more than $13 million. The defendants are each charged with conspiracy to defraud the United States, TARP fraud, two counts of false statements to the federal government, and bank fraud. Bekkedam is additionally charged with two counts of wire fraud.
The charges were announced today by United States Attorney Zane David Memeger, FBI Special Agent-in-Charge Edward J. Hanko, Special Inspector General for the Troubled Asset Relief Program Christy Romero, and Pennsylvania Department of Banking Secretary of Banking and Securities Glenn E. Moyer.
Bekkedam and Hartline, with others, formed NOVA Bank in 2002. Bekkedam also owned and operated a financial advisory company, Ballamor Capital Management, and allegedly advised Ballamor clients to invest in NOVA. But in 2008, NOVA faced risk of failure because of bad loans and investments. Its investors were at risk of losing their investments. In October 2008, NOVA Financial Holdings, Inc., of Berwyn, Penn., the parent company of NOVA Bank, applied for approximately $13.5 million in taxpayer bank bailout funds through the U.S. Department of the Treasury TARP. In June 2009, NOVA Bank was approved to receive the TARP funds on the condition that the bank raise $15 million in additional, private capital. The bank was ultimately unable to raiseprivate capital, did not receive TARP funds, and in October 2012, the bank failed and was closed by state and federal banking regulators.
According to the indictment, Bekkedam and Hartline devised a scheme in which NOVA would loan money to G.L., a Florida businessman, for G.L. to transfer to NOVA’s parent company so it would appear as though the bank had new capital from an outside investor. On June 30, 2009, NOVA wired $5 million to G.L.’s bank account in Florida and, approximately two hours later, G.L. wired $5 million to an account used for investments in NOVA Financial Holdings, Inc. It is further alleged that in October and December 2009, Bekkedam and Hartline convinced two others to make similar “investments” using loans from NOVA, in efforts to make NOVA appear more financially sound than it actually was. The defendants also allegedlytold and directed employees to tell the U.S. Department of Treasury that NOVA had raised new capital when it had not. According to the indictment, the defendants concealed the true purpose of the loan to G.L. and falsely stated the purposes of the other two loans.
If convicted, defendant Bekkedam faces a statutory maximum sentence of 115 years imprisonment, a $4,750,000 fine, five years supervised release, and a $700 special assessment. Hartline faces a statutory maximum sentence of 55 years imprisonment, a $2,750,000 fine, five years supervised release, and a $500 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), Internal Revenue Service Criminal Inestigaton, the Federal Deposit Insurance Corporation Office of Inspector General, the Office of Inspector General of the Board of Governors of the Federal Reserve System and Consumer Financial Protection Bureau. It is being prosecuted by Assistant United States Attorney David Ignall.
In October 2008, NOVA Financial Holdings, Inc., of Berwyn, Penn., the parent company of NOVA Bank, applied for approximately $13.5 million in taxpayer bank bailout funds through the U.S. Department of the Treasury Troubled Asset Relief Program (TARP). In June 2009, NOVA Bank was approved to receive the TARP funds on the condition that the bank raise $15 million in additional, private capital. The bank was ultimately unable to raise private capital, did not receive TARP funds, and in October 2012, the bank failed and was closed by state and federal banking regulators.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
United States Settles with Lehigh County Landlord over Section 8 Rent Subsidy PaymentsRead the Press Release
PHILADELPHIA - The United States Attorney's Office announced today that Bellante Properties, of Lehigh County, PA, and its owners Vincent Fantozzi and Bernard Fantozzi, will pay the government $19,120 to resolve allegations surrounding federally-funded rental assistance payments it received. According to a civil complaint, Bellante Properties received rent subsidy payments from the Lehigh County Housing Authority while unlawfully requiring a tenant to pay supplemental rental payments disguised as trash removal fees.
The lawsuit was filed by Karen Schware, in the United States District Court for the Eastern District of Pennsylvania, under the whistleblower provisions of the False Claims Act. The False Claims Act allows private citizens to bring civil actions on behalf of the United States and to share in any recovery.
The Section 8 housing assistance program is designed to provide affordable housing to low-income families. According to the government’s complaint, between July 2007 and September 2013, Bellante Properties received payments from the Lehigh County Housing Authority under the Section 8 rent assistance program. In addition to receiving federally-funded Section 8 rent assistance payments, and approved rent payments from the tenant, the government alleges that Bellante Properties also unlawfully required the tenant to provide supplemental rent payments that had not been approved by the Lehigh County Housing Authority. The unlawful supplemental payments were disguised as trash removal fees. The parties have agreed to settle the dispute for a payment by the defendants of $19,120 to the United States. Bellante Properties and its principals, Vincent Fantozzi and Bernard Fantozzi, are also barred for three years from participation in HUD’s Section 8 program. As a whistleblower, Schware will receive a share of the settlement proceeds. Bellante Properties will also pay Schware’s legal fees.
The settlement was the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Department of Housing and Urban Development Office of Inspector General. The case was handled by Assistant U.S. Attorney Joel M. Sweet.
Former Philadelphia Traffic Court Judge Sentenced to 20 Month Prison TermRead the Press Release
PHILADELPHIA – Michael Lowry, 59, of Philadelphia, PA, was sentenced today to 20 months in prison for lying to a grand jury in connection with a ticket fixing scheme at the former Philadelphia Traffic Court. Lowry was a sitting traffic court judge at the time. In addition to the prison term, U.S. District Court Judge Lawrence Stengel ordered one year of supervised release and ordered Lowry to perform 100 hours of community service.
Lowry and co-defendants Robert Mulgrew and Thomasine Tynes were convicted at trial, on July 23, 2014, of committing perjury before a federal grand jury.
This case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Denise Wolf and Anthony Wzorek.
Tax Preparer Sentenced for Fraud SchemeRead the Press Release
PHILADELPHIA - Crystal Graham, 42, of Philadelphia, PA, was sentenced today to 12 months in prison and was ordered to pay restitution of $266,243 to the IRS for filing false claims with the United States through federal income tax returns she prepared. Graham pleaded guilty on September 22, 2014, to 11 counts of filing false claims.
Graham created bogus wage statements and other false financial information which she placed on tax returns that she prepared for individuals for the purpose of obtaining tax refunds in the names of the filers. The fraudulent returns sought refunds of $354,000 based on bogus expense deductions and refundable credits, such as a filer=s entitlement to the First Time Home Buyer=s Credit and the Earned Income Tax Credit when the filer had little, if any, taxes withheld from income in that year. Graham also had her clients sign statements giving her the authority to deposit the clients= refund checks into her savings account, or to have the refund checks placed on prepaid access devices. This gave Graham the ability to take a substantial portion of the fraudulent refunds before giving her clients the remainder.
In addition to the prison term, U.S. District Court Judge Cynthia Rufe ordered Graham to pay a $1,100 special assessment. She is also prohibited from preparing tax returns. The case was investigated by the Internal Revenue Service Criminal Investigation. It was prosecuted by Assistant United States Attorney Floyd J. Miller.
Former Prison Doctor Pleads Guilty to Schemes to Defraud the GovernmentRead the Press Release
PHILADELPHIA - Dennis Erik Fluck Von Kiel, 58, of New Tripoli, PA, pleaded guilty today to 17 counts stemming from his schemes to: defraud the IRS and the Department of Health and Human Services out of hundreds of thousands of dollars, get financial aid grants for his four eldest children, file false claims for social security disability insurance, and lie at a bankruptcy proceeding. Von Kiel is the former medical director of Lehigh County Prison. He pleaded guilty to conspiracy to defraud the United States, five counts of attempting to defeat or evade a federal tax, one count of attempting to obstruct the due administration of the internal revenue code, five counts of failure to file tax returns, one count of wire fraud and aiding and abetting wire fraud, one count of perjury in a bankruptcy proceeding, one count of financial aid fraud and aiding and abetting financial aid fraud, and two counts of mail fraud and attempted mail fraud. The plea agreement recommends a 41-month prison term. U.S. District Court Judge Jeffrey L. Schmehl will make the final determination on sentencing at a hearing scheduled for April 20, 2015.
Since 2001, Von Kiel has engaged in a series of illegal schemes which were designed to help him evade creditors, including the Department of Health and Human Services to whom Von Kiel owed hundreds of thousands of dollars in outstanding medical school loans. He tried to defraud the IRS in order to avoid paying more than $200,000 in duly-owed personal income taxes. Von Kiel also lied on applications to the Department of Education for financial student aid for four of his children, which enabled them to receive more than $36,000 in federal Pell Grants for their college educations. Von Kiel tried to file a fraudulent claim for social security disability benefits by falsely claiming that he suffered from post-traumatic stress disorder. He also intentional made a false statement under oath in a bankruptcy proceeding.
Von Kiel is a doctor of osteopathy whose medical practice included treating inmates at LCP from approximately March 1989 until approximately August 2013. Most of Von Kiel’s schemes involved him pretending to become a minister of a “church” called the International Academy of Lymphology (which later changed its name to the International Academy of Life and then the Christian Forum Assembly), purporting to take a “vow of poverty,” and then claiming that he had no taxable income because his earnings belonged to “church.” Von Kiel convinced his employer that he was exempt from federal tax withholdings and directed his employer to deposit his bi-weekly paychecks into bank accounts for his “church.” Once the money arrived in those accounts, co-conspirators would transfer nearly the same amount of money into Pennsylvania bank accounts controlled by Von Kiel. Von Kiel then used the money to pay for all of his family’s day-to-day living expenses and to buy some luxury items.
Von Kiel has been held without bail at the Federal Detention Center since his arrest on February 28, 2014. Von Kiel also faces up to three years of supervised release, restitution to the IRS in the amount of $256,920, $262,303.11 to the Department of Health and Human Services and $36,314 to the Department of Education, forfeiture of $165,988.29, a fine of up to $2,895,000, and a $1,700 special assessment.
The case was investigated by the Internal Revenue Service Criminal Investigations, the FBI, and the Department of Education’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Villanova Man Charged with Money LaunderingRead the Press Release
PHILADELPHIA - Nathan Isen, 61, of Villanova, PA, was charged today by information with one count of money laundering, announced United States Attorney Zane David Memeger. According to the information, Isen sold 12 pieces of art work in exchange for $20,000 in cash, for the purpose of laundering the $20,000 which he understood to be proceeds from the sale of marijuana.
If convicted the defendant faces a maximum possible sentence of 20 years imprisonment, three years of supervised release, a $250,000 fine and a $100 special assessment.
The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations (“HSI”), and is being prosecuted by Assistant United States Attorneys Andrew J. Schell and Judy Goldstein Smith.
An information is an accusation. A defendant is presumed innocent unless and until proven guilty.
Former Owner of Bucks County Financial Consulting Firm Charged with Bribing Foreign OfficialRead the Press Release
PHILADELPHIA - Dmitrij Harder, 42, of Huntingdon Valley, PA, was charged today by indictment with violating the Foreign Corrupt Practices Act and money laundering. Harder is the former owner and President of Chestnut Consulting Group, Inc. (“Chestnut”), a financial consulting firm that was located in Southampton, Pennsylvania.
The charges were announced today by United States Attorney Zane David Memeger, FBI Special Agent-in-Charge Edward J. Hanko, and Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division.
The indictment alleges that Harder participated in a scheme to pay bribes to a foreign government official and then laundered the proceeds of those crimes. Between 2007 and 2009, Harder allegedly paid approximately $3.5 million in bribes to corruptly influence a foreign official’s actions on applications submitted by clients of his and of the Chestnut Group, and to corruptly influence the foreign official to direct business to him, the Chestnut Group, and others.
The European Bank for Reconstruction and Development (“EBRD”) was a multilateral development bank headquartered in London, England, and was owned by over 60 sovereign nations. Among other things, the EBRD provided debt and equity financing for development projects in emerging economies, primarily in Eastern Europe. According to the indictment, Harder knew a senior banker at the EBRD from prior business dealings. The senior banker was responsible for leading the review of the applications for loans and equity investments, and also set the terms and conditions for that financing. Harder allegedly paid bribes to the senior banker in order to gain a favorable outcome in the review of applications for financing submitted by his clients. According to the indictment, the EBRD ultimately approved applications for financing from two of Chestnut’s corporate clients: an $85 million equity investment with a 90 million Euro loan; and a $40 million equity investment with a $60 million convertible loan. Chestnut allegedly earned approximately $8 million in “success fees” as a result of the EBRD’s approval of these two applications.
It is further alleged that the defendant made five payments, totaling more than $3.5 million, to the sister of the official at the EBRD in an effort to conceal the bribes. These alleged payments were made purportedly for consulting and other services provided to Chestnut by the official’s sister, when, in fact, she did not provide such services. According to the indictment, the defendant also participated in the creation of fake documents in an attempt to justify these payments to the official’s sister.
“We will aggressively investigate and prosecute individuals in our district who use corrupt means like bribery to influence foreign officials,” said Memeger. “Our criminal statutes in this arena must be enforced to ensure fair dealing in a competitive global marketplace where foreign officials often hold significant decision-making authority. The alleged conduct here was particularly reprehensible because it undermined the legitimacy of a process designed to support businesses for the citizens of developing nations.”
“This is a great example of the FBI’s ability to successfully coordinate with our international law enforcement partners to tackle corruption,” said Special Agent-in-Charge Hanko. “Bribery – foreign or domestic – cripples the notion of fair competition in the marketplace.”
“We are committed to combating foreign corruption, across the globe and across all industries, through enforcement actions and prosecutions of companies and the individuals who run those companies,” said Assistant Attorney General Caldwell. “As alleged, in this case, the owner and chief executive of a Pennsylvania financial consulting firm secured hundreds of millions of dollars in business by bribing a European banking official. He now faces an indictment for corruption in federal court. Bribery of foreign officials undermines the public trust in government and fair competition in business. The charges returned today reflect the clear message that we will root out corruption and prosecute individuals who violate the Foreign Corrupt Practices Act.”
Harder is charged with one count of conspiracy to violate the Foreign Corrupt Practices Act and Travel Act, five counts of violating the Foreign Corrupt Practices Act, five counts of violating the Travel Act, one count of conspiracy to commit international money laundering, and two counts of international money laundering. He faces a maximum possible statutory sentence of 190 years in prison, fines of up to $1.75 million, twice the value of the property involved in the transaction, or twice the value gained or lost.
The case is being investigated by the FBI’s Philadelphia Division. Significant assistance was also provided by the Criminal Division’s Office of International Affairs. The case is being prosecuted by Assistant U.S. Attorney Michelle Morgan of the Eastern District of Pennsylvania and Assistant Chief Leo R. Tsao of the Criminal Division’s Fraud Section.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106
COPIES OF NEWS MEMOS AND RELATED DOCUMENTS CAN ALSO BE FOUND AT
HTTP://www.justice.gov/usao/pae
U.S. Attorney's Office Collects More Than $2.3 Billion in Civil and Criminal Actions in Fiscal Year 2014Read the Press Release
(PHILADELPHIA) - U.S. Attorney Zane David Memeger announced today that the Eastern District of Pennsylvania collected $2,373,688,153 in criminal and civil actions in Fiscal Year (FY) 2014.
The Department of Justice collected $24.7 billion in civil and criminal actions in FY 2014. The more than $24 billion in collections in FY 2014 represents nearly eight and a half times the appropriated $2.91 billion budget for the 94 U.S. Attorney’s offices and the main litigating divisions in that same period.
“Recouping federal funds that were misspent due to fraud, including substantial health care and mortgage insurance funds, is a critical part of our mission,” said Memeger. “Our nation’s taxpayers deserve our most aggressive efforts to recover their hard-earned tax dollars that have been misappropriated. During fiscal year 2014, we continued to honor this mission with these tremendous resolutions and collections.”
The recoveries in the Eastern District of Pennsylvania include more than $1.6 billion in civil and criminal penalties paid by healthcare giant Johnson & Johnson (J&J) to resolve misbranding and unapproved use allegations. J&J paid a $1.273 billion civil settlement to resolve allegations of off-label marketing for Risperdal and Invega, as well as the alleged payment of kickbacks to physicians involving Risperdal. Janssen Pharmaceuticals, Inc. (Janssen), a subsidiary of J&J, paid $400 million in a criminal fine and forfeiture for promoting Risperdal to health care providers for unapproved uses.
The collections also include: a $56.5 million civil settlement with Shire Pharmaceuticals LLC to resolve False Claims Act allegations; a $150 million civil settlement with Amedisys Inc. and its affiliates to resolve False Claims Act allegations; a $7.3 million civil settlement with pharmaceutical company Astellas Pharma US, Inc., to resolve False Claims Act allegations; and a $172.9 million civil settlement with specialty pharmaceuticals company Endo Health Solutions, Inc. and its subsidiary Endo Pharmaceuticals Inc. (Endo), to resolve allegations of off-label marketing.
Additionally, the U.S. Attorney’s office in the Eastern District of Pennsylvania, working with partner agencies and divisions, collected approximately $15 billion in asset forfeiture actions in FY 2014, which includes a $13 billion settlement with JP Morgan - the largest settlement with a single entity in American history - to resolve federal and state civil claims arising out of the packaging, marketing, sale and issuance of residential mortgage-backed securities (RMBS).
The U.S. Attorneys’ Offices, along with the department’s litigating divisions, are responsible for enforcing and collecting civil and criminal debts owed to the U.S. and criminal debts owed to federal crime victims. The law requires defendants to pay restitution to victims of certain federal crimes who have suffered a physical injury or financial loss. While restitution is paid to the victim, criminal fines and felony assessments are paid to the department’s Crime Victims’ Fund, which distributes the funds to state victim compensation and victim assistance programs.
The largest civil collections were from affirmative civil enforcement cases, in which the United States recovered government money lost to fraud and other misconduct and collected fines imposed on individuals and corporations for violations of federal health, safety, civil rights, and environmental laws. In addition, civil debts were collected on behalf of several federal agencies, including the U.S. Department of Housing and Urban Development, Health and Human Services, Internal Revenue Service, Small Business Administration, and Department of Education.
Forfeited assets deposited into the Department of Justice Assets Forfeiture Fund are used to restore funds to crime victims and for a variety of law enforcement purposes.
Pennsylvania Realtor Sentenced for Defrauding ClientsRead the Press Release
PHILADELPHIA - Joseph N. Reilly, 69, of Philadelphia, PA, was sentenced today to 26 months in prison for with mail fraud in connection with a million dollar fraud scheme. According to the information, Reilly, who owned Joseph N. Reilly Real Estate, Inc., diverted more than $1 million in client funds to himself, between January 2009 and April 2011, defrauding approximately 50 clients. He pleaded guilty on May 29, 2014.
Reilly, through his company, acted as a property manager for his clients, collecting rent and utilities payments for owners. He also paid utility and real estate tax bills. Reilly mailed monthly statements to tenants and property owners. Reilly sent at least one statement to a property owner indicating that the balance in the owner’s account was $490,565.58 when, in fact, the balance was $86.80.
In addition to the prison term, U.S. District Court Judge L. Felipe Restrepo ordered restitution of $668,856, two years of supervised release, and a $100 special assessment.
The case was investigated by the U.S. Postal Inspection Service and is being prosecuted by Assistant United States Attorney Judy G. Smith.
Easton Hospital Agrees to Pay the Government $662,000 to Resolve False Claims Act AllegationsRead the Press Release
PHILADELPHIA - Northampton Hospital Company, LLC and Northampton Hospital Corporation, doing business as Easton Hospital (“Easton Hospital”), have agreed to a $662,000 settlement with the government to resolve allegations of health care fraud arising under the False Claims Act. The United States contends Easton Hospital billed Medicare for procedures performed by Dr. Thomas Walden, including extracorporeal shock wave lithotripsy, cystometrogram, green light laser, and transurethral resection of the prostate. According to the United States, some of these procedures were not performed, were only partially completed, or were medically unnecessary. The settlement was announced today by United States Attorney Zane David Memeger. Easton Hospital denies the allegations.
Easton Hospital provides inpatient and outpatient healthcare services in Easton, Pennsylvania. The hospital’s services include cardiovascular, orthopedic, oncology, maternal, child health, pediatric, physical therapy rehabilitation, and mental health services. In addition, it offers surgical care, emergency care, occupational and speech therapy, wound healing management, imaging, radiology, home health, hospice, and laboratory services. While employed at Easton Hospital, two former employees discovered a Medicare fraud scheme perpetrated at Easton Hospital. In specific, these employees observed urologic procedures and tests performed by Dr. Walden for which the government should not have been billed by Easton Hospital.
The two employees filed a complaint in the Eastern District of Pennsylvania captioned U.S. ex rel. David Kasprzak and David Heaton v. Defendant Northampton Hospital Company LLC d/b/a Easton Hospital and Northampton Hospital Corporation d/b/a Easton Hospital, Civil Action Number 10-6264. This complaint was filed under the qui tam, or whistleblower, provisions of the False Claims Act. The qui tam provisions permit private citizens to bring civil actions on behalf of the United States.
“The United States Attorney’s Office for the Eastern District of Pennsylvania places a high priority on criminal and civil enforcement in cases involving health care fraud,” said Memeger. “Health care fraud wastes tax dollars, harms patients, and drives up medical costs for everyone. We encourage our citizens to report potential health care fraud so that we can effectively investigate and prosecute this type of wrongdoing.”
Under the parties’ settlement agreement, Easton Hospital will pay $662,000 to the United States. The two whistleblowing employees will receive a share of the settlement payment.
The case was investigated by the United States Attorney’s Office for the Eastern District of Pennsylvania, the United States Department of Health and Human Services- Office of Inspector General, and the United States Office of Personnel Management-Office of Inspector General. Within the United States Attorney’s Office, the case was handled by Assistant U.S. Attorneys Veronica J. Finkelstein and Joel M. Sweet.
Individuals with information regarding fraud, waste, or abuse related to Medicare or other federal programs are encouraged to file a complaint with the United States Attorney’s Office by calling 215-861-8200.
UNITED STATES ATTORNEY'S OFFICE Contact: PATTY HARTMAN
EASTERN DISTRICT, PENNSYLVANIA Media Contact
Suite 1250, 615 Chestnut Street 215-861-8525
Philadelphia, PA 19106
Nine Charged in Scheme to Defraud BanksRead the Press Release
A second superseding indictment was returned today against nine people charged in a bank fraud conspiracy that also stole the identifying information of at least two people, announced United States Attorney Zane David Memeger and Burlington County (NJ) Prosecutor Robert D. Bernardi. The defendants allegedly obtained or attempted to obtain $279,875.93 through fraudulent means. Charged in the superseding indictment are: Adolphus William Cato, 33, Michael Ross, 49, both of Sicklerville, NJ; Jared Hayes, 37, Quanda Anthony, 43, both of Willingboro, NJ; Sean Finn, 31, of Mount Holly, NJ; Rushawn Woodall, 38, of Trenton, NJ; Leonard Herrington, 41, Zabrina Jobe, 39, both of Philadelphia, PA; and Warren Moore, 41, of Bordentown, NJ.
According to the indictment, the defendants defrauded and attempted to defraud Third Fed Bank, TD Bank, Santander Bank, PNC Bank, M&T Bank, and Andrews Credit Union. Cato allegedly manufactured and obtained fraudulent drivers licenses utilizing the personal identifying information of victims without their knowledge or consent. Hayes allegedly obtained valid checks from businesses and personal bank accounts from individuals known and unknown to the grand jury then used the information to produce counterfeit checks. The victims’ personal identifying information was used in applying for loans online, to obtain money from various financial institutions by cashing counterfeit checks, and to obtain the proceeds of fraudulent loans using counterfeit identifications and checks. Defendants Woodall and Moore also allegedly used unauthorized and counterfeit access devices and fraudulent identification, allegedly provided by defendants Cato and Hayes, to obtain automobiles from car rental businesses and hotel lodging.
If convicted, the defendants face the following statutory maximum possible sentences: Cato, 157 years in prison; Hayes, 127 years in prison; Ross, 125 years in prison; Anthony, 95 years in prison; Moore, 87 years in prison; Jobe, 67 years in prison; Woodall, 57 years in prison; Herrington, 37 years in prison; and Finn, 35 years in prison, plus possible fines and restitution.
This case was investigated by Immigration and Customs Enforcement Homeland Security Investigations (HSI), the United States Secret Service, the Burlington County (NJ) Prosecutor’s Office, the Bucks County District Attorney’s Office, the Bordentown Township (NJ) Police Department, the Burlington City (NJ) Police Department, the Burlington County (NJ) Sheriff’s Department, the Camden County (NJ) Prosecutor’s Office High Tech Crimes Unit, the Camden County (NJ) Sheriff’s Department, the Cherry Hill (NJ) Police Department, the Lehigh County Auto Theft Task Force, the Mount Holly (NJ) Police Department, the Pennsauken Township (NJ) Police Department, the Plumstead Township Police Department, Willingboro Township (NJ) Police Department, and the Winslow Township (NJ) Police Department. It is being prosecuted by Assistant United States Attorney Melanie Babb Wilmoth.
Judge Fashions Long Prison Term for Sex TraffickerRead the Press Release
PHILADELPHIA – Christian Dior Womack, a/k/a “Gucci Prada,” 30, of Chester, PA, was sentenced today to life in prison for sex trafficking females, including a minor, for prostitution. Womack pleaded guilty, on July 23, 2014, during jury selection for his federal trial. He operated a prostitution venture, in Philadelphia and elsewhere, recruiting young females, one of whom was a minor, to work as prostitutes. He also engaged in acts of physical violence, coercion, and threats of physical harm to maintain the participation of the females.
U.S. District Court Judge Mitchell Goldberg sentenced Womack to life for sex trafficking of a minor, and for sex trafficking by force.
Charged with Womack was Rashidah Brice, a/k/a “Camille,” a/k/a “Milly,” 24, also of Chester, PA. As part of their venture, Womack and Brice allegedly created internet advertisements in which they advertised these females as available for purchase for purposes of prostitution. The advertisements featured pictures of the females scantily clad, and provided a phone number to call to arrange a meeting with the females. Brice previously pleaded guilty. She was sentenced in October to 185 months in prison.
The case was investigated by the FBI, the Philadelphia Police Department Special Victims Unit, and the Tinicum Township Police Department. It was prosecuted by Assistant United States Attorneys Michelle Morgan and Melanie Babb Wilmoth.
Indictment Alleges Philadelphia Man Stole IdentitiesRead the Press Release
Peter Fields, also known as Charles Smith, 48, of Philadelphia, PA, was charged today by indictment with mail fraud, bank fraud, access device fraud and aggravated identity theft, announced United States Attorney Zane David Memeger. Fields obtained the personal and financial information of victims and used that information to obtain credit accounts in the victims’ names, add himself as an authorized user to victims’ credit accounts, manufacture fraudulent checks using victims’ account numbers, and fraudulently obtain utility services in the names of victims for others.
If convicted, Peter Fields faces a maximum possible sentence of 73 years in prison and a fine of $2 million.
The case was investigated by United States Postal Inspection Service, with the assistance of the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney K.T. Newton.
Group of Four Philadelphians Charged with Counterfeiting Gift CardsRead the Press Release
Robert Durandis, 24, Donald Charles, 25, Gilbert Pierre-Charles, 22 and Manuel Reyes-Gonzalez, 21, all of Philadelphia, Pennsylvania were charged today by superseding indictment with conspiracy, access device fraud and aggravated identity theft, announced United States Attorney Zane David Memeger. The defendants traveled throughout Pennsylvania and other locations and used counterfeit credit, debit and gift cards, encoded with stolen account numbers, to purchase numerous cartons of cigarettes, gift cards and other items.
If convicted, Robert Durandis faces a maximum possible sentence of 84 years in prison and a fine of $3.25 million; Donald Charles faces a maximum possible sentence of 42 years in prison and a fine of $2.25 million; Gilbert Pierre-Charles faces a maximum possible sentence of 69 years in prison and a fine of $3.25 million; and Manuel Reyes-Gonzalez faces a maximum possible sentence of 67 years in prison and a fine of $3 million.
The case was investigated by United States Secret Service and is being prosecuted by Assistant United States Attorney K.T. Newton
Armed Robber Gets Lengthy Prison TermRead the Press Release
PHILADELPHIA – Derrick Godfrey, 45, of Philadelphia, was sentenced today to 509 months in prison, for an armed robbery spree over two days in June 2012, involving three communities. Godfrey was convicted June 27, 2014 of three counts of Hobbs Act Robbery and one count of brandishing a handgun during the second robbery. In addition to the prison term, U.S. District Court Judge J. Curtis Joyner ordered five years of supervised release, a $500 special assessment and restitution of $860.
On June 1, 2012, shortly before 5:00 p.m., Godfrey robbed the Pennsylvania Wine & Spirits Shoppe, at 7146 Ridge Ave, in Philadelphia. He ordered the employees to turn over the cash contained in the store’s three registers. He stole $1,074 from the store which he placed in a multi-colored bag he was carrying. The next day, shortly before noon, Godfrey robbed the Pennsylvania Wine & Spirits Store at 504 West Marshall Street, Norristown, Pennsylvania. The store manager reported that the robber, wearing a black hooded sweatshirt and brandishing a gun, entered the office area of the store and ordered the store clerk to empty the contents of the store safe into a multi-colored bag that he was carrying. That robbery netted Godfrey approximately $400 from the safe and another $200 from the cash registers. About 20 minutes later, Godfrey robbed the Dunkin’ Donuts store at 1941 West Main Street, West Norriton, Pennsylvania. He walked into the store and ordered employees to empty contents of the cash registers into a multi-colored bag that he was carrying. Godfrey stole approximately $318 in that robbery.A short time later, East Norriton Township Police officers stopped the getaway car several miles from the Dunkin’ Donuts. Eyewitnesses identified Godfrey as the gunman and the car in which he was a passenger as the getaway car. Police searched the car and found the handgun which bore Godfrey’s DNA, several changes of clothing, a multi-colored shopping bag as described by the victims of the three armed robberies, and a black plastic bag with more cash.
The case was investigated by the FBI, the East Norriton Township Police Department, the Norristown Police Department, the Philadelphia Police Department, the West Norriton Township Police Department, the Montgomery County District Attorney’s Office, and the Montgomery County Detective Bureau. It was prosecuted by Special Assistant United States Attorneys Rebecca Strubel and Matthew Quigg.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525More Guilty Pleas in RICO Case Involving IronworkersRead the Press Release
PHILADELPHIA - Richard Ritchie, 45, of Philadelphia, William O’Donnell, 62, of Cherry Hill, NJ, and Christopher Prophet, 43, of Richboro, PA, pleaded guilty today to RICO conspiracy and other charges in connection with an extortion case in which Ironworkers Local 401 used violence and intimidation to get union members assigned to jobs on non-union worksites. In addition to the RICO conspiracy count, Ritchie and Prophet each pleaded guilty to attempted extortion which interferes with interstate commerce; and Ritchie also pleaded guilty to violent crime in aid of racketeering. United States District Court Judge Michael Baylson scheduled sentencing hearings as follows: Ritchie, April 28, 2015; O’Donnell, April 27, 2015; Prophet, April 17, 2015. The defendants are among 12 defendants charged in the case. All but one have pleaded guilty. Trial for the remaining defendant, Joseph Dougherty, is scheduled to begin January 5, 2015.
The 12 defendants charged had a network of individuals, friendly to the Ironworkers Local 401, to help identify construction projects and job sites where work was being performed without using Local 401 members. The business agents for the union would approach contractors 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.”
Ritchie faces a statutory maximum 60 years in prison; Prophet faces a statutory maximum sentence of 40 years in prison; and O’Donnell faces a statutory maximum sentence of 20 years in prison.
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 Upper Merion 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 provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Malvern Man Charged with Bank FraudRead the Press Release
Vincent Craven, Jr., 48, of Malvern, Pennsylvania was charged today by Information with one count of bank fraud, announced United States Attorney Zane David Memeger. According to the Information, Craven submitted false mortgage applications to Washington Mutual Bank and Wachovia Bank (now Wells Fargo) and defrauded Washington Mutual of approximately $490,391 and Wells Fargo of approximately $103,651.
If convicted the defendant faces a maximum possible sentence of 20 years in prison, three years of supervised release, a $1 million fine, a $100 special assessment, and restitution.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Terri A. Marinari.
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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525California Man Sentenced for Interfering with Flight CrewRead the Press Release
PHILADELPHIA - Robert Coppack, 41, of LaVerne, California, was ordered today to spend five months in community confinement and to pay $53, 354 in restitution for interfering with a flight crew. On May 13, 2014, Coppack intimidated and assaulted flight crew members and flight attendants on a US Airways flight traveling from Philadelphia to London, and interfered with their duties and performance. He pleaded guilty September 17, 2014. In addition to the confinement, U.S. District Court Judge John R. Padova ordered the defendant to refrain from alcohol and illegal controlled substances, submit to testing for alcohol and drug testing, and participate in alcohol and mental health treatment while on supervised release.
The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations, the Federal Bureau of Investigation, and the Joint Terrorism Task Force, and is being prosecuted by Assistant United States Attorney Sarah L. Grieb.
Accountant Sentenced for Million Dollar Fraud SchemeRead the Press Release
PHILADELPHIA - Andrew B. Zelenkofske, 54, an accountant, of Chagrin Falls, Ohio, was sentenced today to 36 months in prison for defrauding former clients of over $1 million. Between January 2009 and May 2012, he defrauded three of his victims by soliciting funds from them to invest in a start-up biotechnology company. Instead of investing the victims’ money as he represented, Zelenkofske used the funds to pay his own business expenses in connection with a failing restaurant he owned.
Between April 2011 and July 2012, Zelenkofske defrauded another victim, also a former client, of $237,000 by falsely representing that she owed income taxes when she did not and soliciting from her a loan amount which he knew he could not repay. He also spent this victim’s money to pay expenses related to his restaurant. In 2010 and 2011, Zelenkofske defrauded a group of business associates of at least $137,254 by concealing the payment of a dividend and using the funds belonging to these investors to pay his own business expenditures.
Finally, in November 2013, Zelenkofske attempted to obstruct the administration of the internal revenue laws by falsifying a Release of Levy form which he transmitted to the IRS in connection with the representation of a client.
In addition to the prison term, U.S. District Court Judge Stewart Dalzell ordered $987,050 in restitution, three years of supervised release and a $500 special assessment.
The case was investigated by the Federal Bureau of Investigations, the Internal Revenue Service Criminal Investigations and the Treasury Inspector General for Tax Administration. It was prosecuted by Assistant United States Attorney Terri A. Marinari.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Third Defendant Sentenced in Traffic Court CaseRead the Press Release
PHILADELPHIA – William Hird, 69, of Philadelphia, PA, was sentenced today to 24 months in prison for his role in a fraud scheme involving judges at the former Philadelphia Traffic Court. Hird, who was Director of Records at the time, pleaded guilty in January to 18 counts, including conspiracy, wire fraud, mail fraud and lying to the FBI when questioned about ticket fixing at Traffic Court. Hird is the third defendant sentenced in the fraud conspiracy that involved frequent and pervasive “ticket-fixing” at the Philadelphia Traffic Court. In addition to the prison term, U.S. District Court Judge Robert F. Kelly ordered Hird to pay a $5,000 fine and ordered one year of supervised release.
Former traffic court judge Fortunato Perri, Sr., who pleaded guilty on March 13, 2013, would receive traffic citation numbers, the names of offenders, or the actual citations to arrange "fixing" the ticket and would convey the information to William Hird. Hird, in turn, allegedly conveyed the request to the assigned judge or the judge’s staff. Hird was extremely loyal to Perri given that Perri helped Hird move up the ladder to a high-level administrator at Traffic Court. Recorded conversations demonstrate that Hird acceded to Perri's requests to "fix" certain tickets. Given Hird's position at Traffic Court and access to the judges, Hird was able to facilitate requests for ticket fixing for Perri.
As part of the scheme, tickets were "fixed" by either being dismissed, finding the ticket holder "not guilty," or finding the ticket holder guilty of a lesser offense. In many cases, the ticket holder did not even appear in Traffic Court, yet their ticket was "fixed." As a result, the ticketholders paid lesser or no fines and costs, and evaded the assessment of "points" on their driving record.
The case was investigated by the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorneys Denise S. Wolf and Anthony J. Wzorek.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Jury Returns Guilty Verdicts Against Members of Violent Loan Sharking and Illegal Gambling RingRead the Press Release
PHILADELPHIA – A federal jury today returned guilty verdicts against four defendants charged in a loan sharking and illegal gambling ring that was run out of several Philadelphia businesses. Ylli Gjeli, 49, Fatimir Mustafaraj, 42, Gezim Asllani, 35, Rezart Rahmi Telushi, 41, all of Philadelphia, were found guilty of racketeering conspiracy, racketeering collection of unlawful debt, and collections of extensions of credit by extortionate means. Gjeli, Mustafaraj, and Asllani were also convicted of making extortionate extensions of credit; and Gjeli and Mustafaraj were also convicted of operating an illegal gambling business. U.S. District Court Judge William Yohn scheduled sentencing hearings as follows: Gjeli, March 18, 2015; Mustafaraj, March 19, 2015; Asllani, March 25, 2015; and Telushi, March 26, 2015.
Gjeli was a leader and “boss” of the organization; Mustafaraj, a/k/a “Tony,” was a leader and “muscle.” Both directed other members in the loan sharking activities and illegal gambling business, approved loans, used intimidation and threats of violence against customers, collected weekly loan payments, physically assaulted subordinate members and associates, supervised the illegal gambling business, provided cash to pay customer’s gambling wins and otherwise financed the gambling business, collected gambling debts, and made loans to customers whose debts were incurred through the illegal gambling business. Defendants Asllani, a/k/a “Sam,” and Telushi, a/k/a “Luigi,” were “collectors” who assisted Gjeli and Mustafaraj in making loans and regularly collected weekly loan payments from customers. The defendants generated money by making and collecting on loans with usurious rates of interest; using intimidation, threats, and violence to make and collect on loans; and making loans to betting customers whose debts were incurred through the enterprise’s illegal gambling business. The enterprise used businesses in Philadelphia - including the Lion Bar & Grill, Blackbird Café, “Ylli’s 2 Brothers,” and First England Pizza - to conduct the criminal activities.
Members and associates of the enterprise cultivated their reputation for violence by threatening customers with dangerous weapons such as a firearm and hatchet; using implied threats and intimidation; telling customers that if they did not pay their debts someone would kill them, “break your legs,” or physically harm them or their family members in some other way; and physically assaulting subordinate members and associates.
The defendants attempted to conceal the existence and operations of the enterprise from law enforcement by: limiting their discussions of criminal activities when on the phone using cryptic and coded language to describe criminal activities; conducting pat-downs and body searches of customers to check for weapons and recording devices; and conducting the enterprise’s transactions primarily in cash.
Defendant Gjeli faces a maximum possible sentence of 185 years in prison; Mustafaraj faces a maximum possible sentence of 205 years in prison; Asllani faces a maximum possible sentence of 140 years in prison; Telushi faces a maximum possible sentence of 80 years in prison.
The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, Pennsylvania State Police, Montgomery County Detectives, and the New Jersey State Police. It is being prosecuted by Assistant United States Attorney Salvatore L. Astolfi and Trial Attorney Margaret Vierbuchen from the Department of Justice Organized Crime & Gang Section.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Gets 46 Month Prison Sentence for Tax FraudRead the Press Release
PHILADELPHIA – Victor Thach, 47, of Philadelphia, was sentenced today to 46 months in prison and ordered to pay $1,337,000 in restitution to the IRS, arising out of his scheme to evade payroll and other taxes. Between 2007 and 2009, Thach operated a 250-person labor leasing agency that supplied temporary workers (including many illegal aliens) to local mail-sorting facilities. During this time period Thach’s clients paid him more than $9.8 million for the labor he provided. Thach, in turn, paid his employees in cash and “under the table,” that is, without issuing IRS Forms W-2 or deducting any payroll taxes. Despite having a multi-million dollar payroll, and despite that two accountants separately counseled him about his tax and reporting obligations during the years in question, Thach did not file a single tax return (corporate or individual).
Thach pleaded guilty to 16 tax-related offenses, including conspiracy to defraud the United States and failure to collect, account for, and pay over taxes.
By withholding federal income taxes and Social Security and Medicare taxes from the “under the table” wages, Thach caused a tax loss of at least $1,049,763. Thach also never accounted for or paid over to the IRS his employers’ matching share of the Social Security and Medicare taxes, totaling $454,996. Instead of paying the government, Thach spent tens of thousands of dollars gambling at high-end casinos in Atlantic City (including losing $100,460 at the Borgata Casino in 2007), purchased a $59,000 Mercedes Benz SUV, made regular payments toward a $60,000 Hummer, traveled repeatedly to Cambodia, and wired more than $180,000 to accounts he controlled in Cambodia.
In addition to the prison term and restitution, U.S. District Court Judge Anita Brody ordered three years of supervised release and a $1,600 special assessment.
The case was investigated by the Internal Revenue Service Criminal Investigations and the Department of Labor Office of Inspector General. It is being prosecuted by Assistant United States Attorney Kevin Brenner.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Trio Charged with Drug CrimesRead the Press Release
Alex DelValle, 37, Justelyn Lopez, 32, and Johnny Solivan, 18, all of Philadelphia, PA, were charged today by indictment with conspiracy to possess with intent to distribute, and attempt to possess with intent to distribute, approximately one kilogram of cocaine, announced United States Attorney Zane David Memeger.
If convicted, each defendant faces a mandatory minimum sentence of five years in prison with a maximum sentence of 40 years, at least four years of supervised release up to a lifetime of supervised release, and a fine of not more than $10 million.
The case was investigated by the United States Postal Inspection Service and is being prosecuted by Assistant United States Attorney Karen L. Grigsby.
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.
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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Malvern Company Sentenced for Defrauding the City of Philadelphia and Debarred from City BusinessRead the Press Release
PHILADELPHIA - Airmatic, Inc., a company located at 284 Three Tun Road, Malvern, PA, was sentenced today to three years of probation and a $350,000 fine for a mail fraud scheme involving a city contract. In addition, U.S. District Court Judge Paul S. Diamond ordered the company to pay $556,633.03 in restitution to the City of Philadelphia. As part of its plea agreement, Airmatic agreed to a debarment by the City of Philadelphia for three years, and all of its contracts with the City were cancelled effective October 31, 2014.
The company pleaded guilty on July 22, 2014 to one count of mail fraud. Between January 2007 and August 2012, Airmatic supplied unapproved, off-contract products to various City departments in violation of its agreements with the City. The company submitted false and fraudulent invoices to the City’s accounts payable department in order to conceal that it was providing off-contract products. Instead of reflecting the unapproved, off-contract products that were actually being provided, the invoices billed for items that were approved pursuant to the City’s agreements with defendant Airmatic. Airmatic inflated the cost of the unapproved, off-contract items and products it provided to the City by an average of approximately 87% and profited from this scheme in the amount of approximately $556,633.03. For example, in one instance Airmatic falsely invoiced the City for a bearing assembly (an expensive industrial product and approved contract item), when, in fact, Airmatic delivered 12 asphalt rakes, items for which the defendant had no contract. To disguise the transaction, Airmatic manipulated the invoice and billed the City for the price of the bearing assembly, which the City never received, resulting in an extravagant profit margin on the sale of the rakes. Hundreds of similar transactions took place.
The case was investigated by the City of Philadelphia Office of Inspector General and the FBI. It was prosecuted by Assistant United States Attorney Jennifer Chun Barry.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Allentown Man Charged with Sex TraffickingRead the Press Release
PHILADELPHIA - Corderro Cody, 27, of Allentown, Pennsylvania, was charged by indictment, unsealed today, with conspiracy to commit sex trafficking by force, fraud, or coercion, four counts of sex trafficking by force, fraud, or coercion, and conspiracy to transport individuals both intrastate and interstate for the purpose of prostitution, announced United States Attorney Zane David Memeger.
The indictment alleges that Cody recruited women to work as prostitutes, referred to his prostitution business as the “program,” and advertised the women on Backpage.com. The women were sometimes driven to other states and forced to perform sexual acts. Cody recovered and kept most, if not all, of the money generated by the sexual acts, and used physical force in the form of beatings when the women did not adhere to the “program,” and to maintain the women performing commercial sexual acts. In one instance, the indictment alleges that Cody physically assaulted one of the women when she requested permission to go home to see her children for the Thanksgiving holiday.
If convicted the defendant faces a maximum possible sentence of lifetime imprisonment, a mandatory minimum 15 years in prison, a $1.5 million fine, a mandatory minimum five years of supervised release up to lifetime supervised release, and a $600 special assessment.
The case was investigated by Department of Homeland Security, Homeland Security Investigations and the Allentown Police Department, and is being prosecuted by Assistant United States Attorney Sherri A. Stephan.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Montgomery County Pair Charged in EBay ScamRead the Press Release
PHILADELPHIA - Kareem Cameron, a/k/a “Shareef Ali,” 49, and Alecia Susan Brown, 38, both of Wyncote, PA, were charged by indictment, unsealed today, in an internet scam involving an online auction site. The defendants, who were arrested today, are each charged with conspiracy to commit mail and wire fraud, one count of mail fraud, and four counts of wire fraud, announced United States Attorney Zane David Memeger.
The indictment alleges that Cameron and Brown conspired to operate an internet scam in which Cameron, through various eBay user names and aliases, offered luxury items, including BMWs and Rolex watches, for sale on the internet auction site. It is further alleged that Cameron did not possess or did not intend to deliver the goods he offered for sale, or the goods were not in the condition he advertised. According to the indictment, Cameron instructed victim buyers to send a payment, via wire transfer, to his bank account or to the account of co-defendant Alecia Brown. After Cameron received payment, he either shipped goods that did not match the description or were inferior in quality to those he advertised for sale, or he shipped nothing at all. The indictment charges that the pair defrauded their victims of approximately $186,439.
If convicted of all charges, the defendants each face a maximum possible sentence of 125 years in prison, a fine of up to $1.75 million, three years of supervised release, and a $700 special assessment.
The case was investigated by the U.S. Postal Inspection Service and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Karen M. Klotz.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
Click here to view the indictment.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Former IRS Employee Convicted of Tax FraudRead the Press Release
PHILADELPHIA – A federal jury, today, found Sherelle Pratt, 41, of Philadelphia, PA, guilty of filing false tax returns, aiding and assisting other individuals in preparing and filing false tax returns, theft of government property. Pratt was an IRS employee at the time of her crimes. She prepared federal income tax returns for a number of individuals during tax years through 2006 through 2008. She caused the refunds, and stimulus payments that the filers were supposed to receive, to be deposited into her personal bank account. In some cases, Pratt gave the filers a portion of the refunds and stimulus payments. In other instances, she kept the refund and stimulus payments.
Pratt faces a maximum possible sentence of 28 years in prison, a fine of up to $1.75 million dollars, a special assessment of $700, and two years of supervised release. U.S. District Court Judge Cynthia Rufe will schedule a sentencing hearing at a later date.
The case was investigated by the Treasury Inspector General for Tax Administration, Philadelphia Field Office and the Internal Revenue Service’s Criminal Investigations and is being prosecuted by Assistant United States Attorney Floyd J. Miller.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525Defense Contractor Pleads Guilty to Major Fraud in the Provision of Supplies to U.S. Troops in AfghanistanRead the Press Release
Supreme Foodservice Agrees To Pay $389 Million In Fines, Damages and Penalties
PHILADELPHIA – The United States announced today the resolution of criminal fraud and civil False Claims Act cases against Supreme Foodservice GmbH, a privately-held Swiss company, and Supreme Foodservice FZE, a privately-held United Arab Emirates (“UAE”) company, in connection with a contract to provide food and water to the U.S. troops serving in Afghanistan. The companies pleaded guilty to major fraud against the United States and paid $288.36 million in the criminal case, a sum which includes the maximum criminal fines allowed. In addition, Supreme Group B.V., a privately held Dutch corporation, and its subsidiaries, Supreme Foodservice GmbH and Supreme Foodservice FZE, have agreed to pay $101 million to resolve allegations in a whistleblower lawsuit that Supreme violated the False Claims Act. The plea and settlement were announced by United States Attorney Zane David Memeger.
The Criminal Fraud
In 2005, Supreme Foodservice AG (which is now called Supreme Foodservice GmbH) entered into a contract with the Defense Supply Center of Philadelphia (“DSCP,” now called Defense Logistics Agency – Troop Support), to provide food and water for the U.S. forces serving in Afghanistan. According to court documents, between July 2005 and April 2009, Supreme Foodservice AG together with Supreme Foodservice KG (which is now called Supreme Foodservice FZE) devised and implemented a scheme to overcharge the United States in order to make profits over and above those provided in the $8.8 billion Subsistence Prime Vendor Contract (“the SPV contract”). The companies fraudulently inflated the price charged for Local Market Ready goods (or LMR) and bottled water sold to the United States under the SPV contract. Supreme did this by using a UAE company it controlled, called Jamal Ahli Foods Co., LLC (“JAFCO”), as a middleman to mark up prices for fresh fruits and vegetables and other locally-produced products sold to the U.S. government, and to obscure the inflated price Supreme was charging for bottled water. The fraud resulted in a loss to the government of $48 million. In addition, as a result of the criminal investigation, Supreme paid $38.3 million directly to the DSCP as a refund for separate overpayments on bottled water.
Supreme AG, Supreme FZE, and Supreme’s owners (referred to in court documents as Supreme Owners #1 and #2) made concerted efforts to conceal Supreme’s true relationship with JAFCO, and to make JAFCO appear to be an independent company. They also took steps to make JAFCO’s mark-up on LMR look legitimate, and persisted in the fraudulent mark-ups even in the face of questions from DSCP about the pricing of LMR.
Even though the SPV contract stated that Supreme should charge the government the supplier’s price for the goods, emails between executives at Supreme (referred to as Supreme Executive #1, #2, etc) reveal Supreme’s deliberate decision to inflate the prices. For example, on or about August 22, 2005, a Supreme Executive sent an email to Supreme Owner#1 saying that the prices he proposed for certain items already included margins of “approximately 57-60%” over the price from the supplier. Another Supreme Executive sent a reply email recommending that Supreme not raise the prices further because “we would like to stay credible with the customer,” and would not want to invite a “challenge” from the DSCP. In September of 2005, Supreme Owner#1 specifically instructed other top management within Supreme that he would personally “review the LMR mark-up before [JAFCO] makes its first shipment.” Among other things, Supreme Owner#1 increased the markup that JAFCO would impose on non-alcoholic beer from 25 percent to 125 percent. On or about February 16, 2006, during a discussion about supplying a new product to the U.S. government, one Supreme Executive wrote to another: “I am very sure the best option is to buy it from Germany and Mark up via [JAFCO], like [non-alcoholic] beer.”
On or about March 18, 2006, in discussing whether they could inflate the price for ice cubes to be sold to the DSCP, a Supreme Executive wrote to Supreme Owner#1, among others: “I don’t think we can mark up through [JAFCO] since DSCP knows price from [the supplier].” That same day, Supreme Owner#1 forwarded that March 18, 2006 email to Supreme Owner#2, commenting “There are dozens of emails like that one.”
In early March 2006, after a DSCP contracting officer told Supreme that she wanted to see a manufacturer’s invoice for specific frozen products, Supreme lowered its prices for those products to prices that did not include a JAFCO mark-up. On March 14, 2006, instead of disclosing that the initial pricing had included a mark-up, a Supreme Executive misled the DSCP representative by explaining the change in pricing as follows: “Based on more realistic quantities, we have been able to negotiate a better price.”
In June 2006, when a DSCP contracting officer raised questions about pricing, focusing on four specific items, Supreme Executives again misled the DSCP, claiming that the high prices were for a high quality of product, and offering to sell lower quality products for lower prices. Supreme did this even after analyzing its JAFCO margin on the four items in question and finding its profit margins were between 41 and 56 percent.
In September 2007, after a fired Supreme Executive threatened to tell the DSCP about the fraud, Supreme entered into negotiation of a “Separation Agreement” with that executive to induce that executive not to disclose the ways in which Supreme was overcharging the DSCP. That agreement stated that the executive would receive, among other things, a payment of EUR 400,000 in September of 2010, provided that the executive did not cause: a deterioration in the economic situation linked to the SPV Contract; the termination of the SPV Contract; or a decrease in the price levels for products, specifically including both LMR and bottled water provided to the U.S. government.
Supreme’s overcharging was exposed in early March 2009, when a former Supreme employee notified the DSCP that Supreme owned and controlled JAFCO, and that JAFCO was adding a mark-up to the Delivered Price of goods. The DSCP contacted Supreme and ordered the mark-ups stopped. The mark-ups ceased as of April 1, 2009.
Defendant Supreme GmbH pleaded guilty to Major Fraud Against the United States, Conspiracy to Commit Major Fraud, and Wire Fraud. Defendant Supreme FZE, which owns JAFCO, pleaded guilty to Major Fraud Against the United States. The Supreme companies agreed to jointly pay $48 million in restitution, and $10 million in criminal forfeiture. Each company also agreed to pay $96 million in criminal fines. In addition, U.S. District Court Judge Gene E.K. Pratter ordered Supreme AG, as a condition of the five years’ probation she imposed, to hold an annual service event to honor or assist veterans and/or the families of veteran.The Civil Settlement
In a separate civil settlement agreement, Supreme agreed to pay another $101 million to settle a whistleblower lawsuit filed in the U.S. District Court for the Eastern District of Pennsylvania, before U.S. District Court Judge Mary McLaughlin. The suit was filed by a former executive alleging that Supreme violated the False Claims Act by knowingly overcharging for supplying food and water under the SPV contract. The payment also resolves claims that, from June 2005 to December 2010, Supreme failed to disclose and pass through to the government rebates and discounts it obtained from its suppliers, as required by its SPV contract with the United States.
“These companies chose to commit their fraud in connection with a contract to supply food and water to our Nation’s fighting men and women serving in the desert,” said Memeger. “That kind of conduct is repugnant, and we will use every available resource to punish such illegal war profiteering.”
“These cases demonstrate the continued commitment of the Defense Criminal Investigative Service (DCIS) and our partner agencies to protect the integrity of the Department of Defense's acquisition process from personal and corporate greed,” said Craig W. Rupert, Special Agent in Charge, DCIS Northeast Field Office. “Each dollar lost to fraud is a taxpayer dollar unavailable to protect our warfighters. Ensuring the proper use of U.S. taxpayers' dollars and preventing contract fraud is in our nations' security interest and remains a DCIS priority.”
“We are very pleased with this resolution, and are gratified that the public can now see what we've been aggressively investigating,” said Frank Robey, the Director of the U.S. Army Criminal Investigation Command's Major Procurement Fraud Unit. “Companies that do business with the government must comply with all of their obligations, and if they overcharge for supplying our men and women in uniform who are bravely serving this nation, they must be held accountable for their actions.”
The criminal and civil matters were the result of a coordinated effort by the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the Civil Division of the United States Department of Justice, the Department of Defense Office of Inspector General’s Defense Criminal Investigative Service, U.S. Army’s Criminal Investigative Command’s Major Procurement Fraud Unit, and the Federal Bureau of Investigation.
The criminal matter is being handled by Assistant United States Attorney Bea L. Witzleben. The civil matter is being handled by Assistant United States Attorneys Colin M. Cherico and Joel Sweet, along with Art Coulter, Trial Attorney for the Civil Frauds Section of the Department of Justice.
The company's owners and assets are outside the reach of the United States.Click here to view the information.
Click here to view the settlement agreement.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525