Eastern District of Pennsylvania
Press releases recorded for this federal judicial district.
Woman Admits to Smuggling Drugs in Wedge HeelsRead the Press Release
PHILADELPHIA – Iveliza Perez, 25, of Camden, NJ, pleaded guilty today to attempting to smuggle approximately two kilograms of cocaine into the United States from Jamaica using wedge heels. Perez was charged with conspiracy to possess with intent to distribute 500 or more grams of cocaine. A sentencing hearing is scheduled for May 23, 2014. Perez faces a mandatory minimum sentence of five years in prison with a maximum possible sentence of 40 years.
In early to mid-May 2013, Perez was approached by two individuals about participating in an operation to smuggle cocaine from Jamaica into the United States. The two individuals offered to pay her $500 before traveling to Jamaica and stated that they would pay her another $3,000 to $4,000 upon returning with the drugs which were to be hidden in shoes. Perez met with other co-conspirators on several occasions before the trip. The co-conspirators paid for her flight and took care of all of the arrangements for her to stay at a villa in Montego Bay, Jamaica. While Perez was at the villa, one of her co-conspirators arranged to have her bags packed with the cocaine, hidden in three pairs of wedge heels. The defendant and the co-conspirator returned from Jamaica together and were supposed to be picked up from the airport by the other co-conspirator. Upon her return to the U.S., the defendant was caught at the airport with 1.992 kilograms of cocaine concealed in her luggage.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations and U.S. Customs and Border Protection with assistance from the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Matthew J.D. Hogan.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Phoenixville Man Charged with Distributing Child PornographyRead the Press Release
Jeffrey Stephen Horn, 43, of Phoenixville, PA, is charged by information, filed today, with distribution of child pornography, announced United States Attorney Zane David Memeger. The indictment charges Russell with one count of distributing child pornography between June 13 and June 17, 2012.
If convicted the defendant faces a maximum possible sentence of 20 years imprisonment.
The case was investigated by the Federal Bureau of Investigation (including members of the FBI Child Exploitation Task Force) and the New Britain Township Police Department and is being prosecuted by Assistant United States Attorney Albert S. Glenn.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys= Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Judge Sends Armed Robber to Prison for 30 YearsRead the Press Release
PHILADELPHIA - Hakeem Paris, 23, of Philadelphia, was sentenced today to 30 years and one month in prison for two armed robberies which he committed in 2010. A federal jury convicted Paris, on December 12, 2012, of one count of conspiracy to commit robbery which interfered with interstate commerce, one count of robbery which interfered with interstate commerce, one count of attempted robbery which interfered with interstate commerce, two counts of using and carrying a firearm during a crime of violence, and one count of being a convicted felon in possession of a firearm.
On May 10, 2010, Paris conspired with another person to commit a gun-point robbery of Bridesburg Pizza, located at 4776 Richmond Street, in Philadelphia, where he ordered the employees of the pizza shop to move to the back of the store while holding them at gunpoint. One of the victims later stated “I thought we were dead. I truly believed he was going to kill all of us because he kept saying he was going to shoot us.” Less than two weeks later, on May 23, 2010, he attempted to rob the Wawa convenience store located at 4371 Richmond Street, in Philadelphia.
In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered three years of supervised release, and a $600 special assessment.
This case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department. It was prosecuted by Assistant U.S. Attorney Thomas M. Zaleski.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Charges Lodged in Aggravated Identity Theft CaseRead the Press Release
Liberado Peralta, 69, of Allentown, Pennsylvania, was charged today by indictment with one count of conspiracy to defraud the United States with respect to claims and three counts of aggravated identity theft, announced United States Attorney Zane David Memeger.
In a related case, Florentina Peralta, a/k/a “Cindy Peralta,” Jose Peralta, a/k/a “Tony Peralta,” and Fayez Antonios were each charged today by information with the same offenses, and Jose Peralta was also charged with one count of making false statements to obtain a loan insured by the Department of Housing and Urban Development.
If convicted, each defendant other than Jose Peralta faces a maximum possible sentence of 16 years’ imprisonment, three years’ supervised release, a $1 million fine, and a $400 special assessment. Jose Peralta’s maximum sentence is 18 years’ imprisonment, 3 years’ supervised release, a $1.25 million fine, and a $500 special assessment.
The cases were investigated by the Internal Revenue Service and the Office of the Inspector General for the Department of Housing and Urban Development. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Brotherly Love Amblance EMT Pleads Guilty to Health Care Fraud SchemeRead the Press Release
PHILADELPHIA - Neel Jackson, 35, of Philadelphia, PA, pleaded guilty today to health care fraud in connection with a scheme involving Brotherly Love Ambulance, Inc. A sentencing hearing is scheduled for April 17, 2014.
In July 2010, Feda Kuran, charged elsewhere, began operating Brotherly Love Ambulance, Inc. with a co-schemer. Jackson, an Emergency Medical Technician (EMT) employed by Brotherly Love, transported patients by ambulance when those patients could have been transported safely by other means and were, therefore, not eligible for ambulance service under Medicare and Medicaid requirements. Jackson and others completed paperwork including “run sheets” representing that patients needed ambulance services, when he knew that they were able to walk or to be transported by public transportation or para-transit van. In addition, Jackson gave envelopes he understood to contain cash or other payments to induce patients to allow Brotherly Love to transport them and/or to induce them to remain with Brotherly Love. Finally, Jackson received payments for referring patients to Feda Kuran and/or Brotherly Love. As a result of Jackson’s actions, the Medicare program paid more than $200,000 in inappropriate bills. As a result of the overall scheme at Brotherly Love, the Medicare program paid more than $2 million in inappropriate bills.
The defendant faces a maximum possible sentence of 10 years of in prison, three years of supervised release, a $250,000 fine, a $100 special assessment, and an order of restitution and forfeiture.
The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Matthew J.D. Hogan and Paul W. Kaufman.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Charged with Theft of Social Security BenefitsRead the Press Release
An indictment was unsealed today charging Bernard Lopez, 57, of Philadelphia, with theft of government funds for allegedly taking, for his own benefit, the Social Security Administration benefits check issued to another person, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a statutory maximum sentence of 10 years in prison, a fine of up to $250,000, a $100 special assessment, and up to three years of supervised release.
The case was investigated by the Social Security Administration Office of Inspector General and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Richard Barrett.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Brotherly Love Ambulance EMT Charged in Health Care Fraud SchemeRead the Press Release
PHILADELPHIA - Neel Jackson, 35, of Philadelphia, PA, was charged today by Information with Health Care Fraud and aiding and abetting health care fraud, announced United States Attorney Zane David Memeger.
In July 2010, Feda Kuran, who is charged elsewhere and has pleaded guilty, began operating Brotherly Love Ambulance, Inc. with a co-schemer. According to the Information, Jackson, an Emergency Medical Technician (EMT) employed by Brotherly Love, transported patients by ambulance when those patients could have been transported safely by other means and were, therefore, not eligible for ambulance service under Medicare and Medicaid requirements. It is further alleged that Jackson and others completed paperwork, including “run sheets,” representing that patients needed ambulance services, when he knew that they were able to walk or to be transported by public transportation or para-transit van. In addition, it is alleged that Jackson gave envelopes he understood to contain cash or other payments to induce patients to allow Brotherly Love to transport them and/or to induce them to remain with Brotherly Love. Finally, it is alleged that Jackson received payments for referring patients to Feda Kuran and/or Brotherly Love. According to the Information, as a result of Jackson’s actions, the Medicare program paid more than $200,000 in inappropriate bills. As a result of the overall scheme at Brotherly Love, it is alleged that the Medicare program paid more than $2 million in inappropriate bills.
If convicted, the defendant faces a maximum possible sentence of 10 years of in prison, three years of supervised release, a $250,000 fine, a $100 special assessment, and an order of restitution and forfeiture.
The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General. It is being prosecuted by Assistant United States Attorneys Matthew J.D. Hogan and Paul W. Kaufman.
Click here to view the indictment
An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Colorado Woman Sentenced for Conspiracy to Provide Material Support to TerroristsRead the Press Release
PHILADELPHIA - Jamie Paulin-Ramirez, 35, a U.S. citizen and former resident of Colorado, was sentenced today to eight years in prison for one count of conspiracy to provide material support to terrorists. Ramirez, a co-defendant of Colleen LaRose, a/k/a “Jihad Jane,” pleaded guilty to the charge on March 8, 2011. In addition to the prison term, U.S. District Court Judge Petrese B. Tucker ordered three years of supervised release and ordered Ramirez to pay a fine of $2,500 and a $100 special assessment.
The sentence was announced by United States Attorney Zane David Memeger, Acting Assistant Attorney General for National Security John Carlin, and FBI Special Agent-in-Charge Ed Hanko.
According to documents filed with the court, Ramirez, LaRose and others conspired to obtain military-style training in South Asia and then traveled to and around Europe to participate in, and in support of, violent jihad. In a series of electronic communications dated July 19, 2009, one co-conspirator (identified as CC#2 in the superseding indictment) directed another to recruit online "some brothers that can travel freely . . . with eu passports . . . [A]nd I also need some sisters too." The co-conspirator further explained that "sister fatima will be in charge of other sister care. . . .[W]e have already organized everything for her. . . . [W]e are will[ing] to die in order to protect her no matter what the risk is."
Ramirez exchanged email messages with LaRose during the summer of 2009, in which LaRose invited Ramirez to join her in Europe to attend a training camp. For example, on Aug. 1, 2009, LaRose sent electronic communications to Ramirez stating that "soon i will be moving to Europe to be with other brothers & sisters . . . . when i get to europe, i will send for you to come be with me there . . . . [T]his place will be like a training camp as well as a home." In electronic communications dated on or about August 7, 2009, CC #2 recruited another individual to find brothers and sisters to go to a "camp for [military-style] training . . . and th[e]n come back to europe to do the job . . . . [T]he job is to [k]nock down some individual[s] that are harming islam." CC#2 goes on to explain that he is structuring "an ORGANIZATION" divided into a "plan[n]ing team . . . research team . . . action team . . . recruitment team . . . finance team."
Ramirez accepted LaRose's invitation to travel to Europe and asked to bring along her minor male child. On Sept, 12, 2009, Ramirez traveled to Ireland with her child with the intent to live and train with jihadists. The day after she arrived in Ireland, Ramirez married CC#2, whom she had never before met in person, in an Islamic ceremony, knowing and intending that her presence in Europe, her marriage to CC#2, and her future actions would provide support for the conspiracy.
This case was investigated by the FBI Field Division in New York, the FBI's Joint Terrorism Task Force in Philadelphia, the FBI Field Division in Denver, and the FBI Field Office in Washington, D.C. Authorities in Ireland also provided assistance in this matter.
The case is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams, and Matthew F. Blue, a Trial Attorney from the Counterterrorism Section in the Justice Department's National Security Division. The Office of International Affairs in the Justice Department's Criminal Division also provided assistance.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Medical Center Agrees to $2 Million Settlement of Voluntary DisclosureRead the Press Release
The United States announces that it has settled claims under the False Claims Act with St. Mary Medical Center (SMMC) for improperly administering certain physician income guarantee agreements. SMMC voluntarily disclosed the allegations and has agreed to pay $2,339,224.70 to resolve the matter.
According to the self-disclosure and the investigation that followed, between January 2005 and August 2010, SMMC had 15 physician income guarantee agreements for recruited physicians and failed to properly administer the terms of certain recruitment contracts. This resulted in net overpayments to certain recruited physicians. Because those physicians and their practices referred patients to SMMC for medical treatment that was billed to federally funded programs, the United States alleges that false claims were submitted to the government. After it discovered the problem, SMMC took corrective action to resolve the improper payments, and disclosed the matter to the United States Attorney’s Office.
This matter was handled by Department Health and Human Services Office of the Inspector General, including Attorney Sandra Sands and AATS Audit Manager Bernard Siegel with the Office of Audit Services, and Assistant United States Attorney Susan Dein Bricklin.
Settlement Agreement, Part 1.pdf | Settlement Agreement, Part 2.pdf
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Federal Judge Sentences "Jihad Jane" to 10 Years in Prison for Role in Plot to Commit Murder OverseasRead the Press Release
PHILADELPHIA - Colleen R. LaRose, aka "Jihad Jane," 50, was sentenced today to 10 years in prison for conspiracy to provide material support to terrorists, conspiracy to kill in a foreign country, making false statements and attempted identity theft. LaRose, a former resident of Montgomery County, Pennsylvania, pleaded guilty to the charges on February 1, 2011. The sentence was handed down by U.S. District Court Judge Petrese B. Tucker. In addition to the prison term, LaRose was ordered to pay $2,500 fine, $400 special assessment, and must complete five years of supervised release.
The sentencing result was announced by Acting Assistant Attorney General for National Security John Carlin, United States Attorney for the Eastern District of Pennsylvania Zane David Memeger, and Special Agent‑in‑Charge Ed Hanko of the Federal Bureau of Investigation's Philadelphia Division.
“This case clearly underscores the evolving nature of the terrorist threat we now face in this country,” said Memeger. “The Internet has made it easier for those who want to attack the American way of life to identify like-minded individuals to carry out their terroristic plans. While today's significant sentence will help protect the community from any future threat posed by the defendant, we as a nation must remain vigilant in identifying and stopping others who are susceptible to engaging in acts of homegrown violent extremism.”
“Today’s sentence sends a strong message to those attracted to a terrorist ideology,” said Special Agent in Charge Edward J. Hanko. “Our Joint Terrorism Task Forces and partners in the law enforcement and intelligence communities remain committed to tracking terrorists at every level, whomever and wherever they are.”
“Today, Colleen LaRose is being held accountable for her efforts to provide support to terrorists and encourage violence against individuals overseas,” said Acting Assistant Attorney General Carlin. “I want to thank the many agents, analysts and prosecutors who helped bring about today’s result.”
LaRose was charged by indictment in March 2010. A superseding indictment was filed in April 2010, adding co‑defendant Jamie Paulin Ramirez, a U.S. citizen and former resident of Colorado. Ramirez pleaded guilty and will be sentenced on January 8, 2014.According to documents filed with the court, LaRose and her co‑conspirators recruited men on the Internet to wage violent jihad in South Asia and Europe, and recruited women on the Internet who had passports and the ability to travel to and around Europe in support of violent jihad.
LaRose and her co‑conspirators used the Internet to establish relationships with one another and to communicate regarding their plans, which included martyring themselves, soliciting funds for terrorists, soliciting passports and avoiding travel restrictions (through the collection of passports and through marriage) in order to wage violent jihad. LaRose also stole another individual's U.S. passport and transferred it in an effort to facilitate an act of international terrorism.
In addition, LaRose received a direct order to kill a citizen and resident of Sweden, and to do so in a way that would frighten Athe whole Kufar [non‑believer] world.@ LaRose agreed to carry out her murder assignment, and she and her co‑conspirators discussed that her appearance and American citizenship would help her blend in while carrying out their plans. LaRose later traveled to Europe and tracked the intended target online in an effort to complete her task.
This case was investigated by the FBI's Joint Terrorism Task Force in Philadelphia, the FBI Field Division in New York, the FBI Field Division in Denver, and the FBI Field Office in Washington, DC. Authorities in Ireland and Sweden provided assistance in this matter. The Office of International Affairs in the Justice Department=s Criminal Division also provided assistance. The case is being prosecuted by Assistant U.S. Attorney Jennifer Arbittier Williams, in the Eastern District of Pennsylvania, and Matthew F. Blue, Trial Attorney from the Counterterrorism Section in the Justice Department's National Security Division.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Woman Charged with Theft of Government FundsRead the Press Release
PHILADELPHIA - Mary Joyner, 25, of Philadelphia, PA, was charged today by Information with theft of public funds from the Department of Veterans Affairs (“VA”), announced United States Attorney Zane David Memeger. It is alleged that the defendant submitted fraudulent time sheets while she was assigned to the VA Medical Center in Philadelphia, Pennsylvania, and took compensation for nursing aide services that she had not rendered. The VA paid approximately $87,000 for such services that it never received.
If convicted, the defendant faces 10 years of imprisonment, a term of supervised release after imprisonment of three years, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Veteran’s Affairs Office of Inspector General and is being prosecuted by Assistant United States Attorney M. Beth Leahy.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Mortgage Company Employee Charged in Fraud SchemeRead the Press Release
Princess Rosario, 37, a former employee of Mortgage IT in Allentown, was charged today by Information with one count of conspiracy to commit bank fraud, wire fraud affecting financial institutions, and the making of false statements to obtain loans insured by the Department of Housing and Urban Development, announced United States Attorney Zane David Memeger.
According to the Information, Rosario conspired with eight former employees of Madison Funding, a loan origination company, to defraud Mortgage IT into providing mortgage loans to people seeking to purchase real estate who were not creditworthy. Rosario allegedly helped loan officers and loan processors at Madison Funding falsify information on loan applications to Mortgage IT in order to get the loans approved.
The Information alleges that Rosario was paid for the business she generated for Mortgage IT, and that Mortgage IT wound up selling its interest in the loans to secondary investors, such as Citibank, Bank of America, and Wells Fargo, so that it would lose money if the borrowers ultimately defaulted on the loans, which many did.
If convicted, Rosario faces a maximum possible sentence of five years’ imprisonment, a $250,000 fine, three years of supervised release, and a $100 special assessment.
Her co-conspirators at Madison Funding included Joel Tillett, Jason Boggs, Claribel Gonzalez, Seemon Georges, Denise Peralta, Florentina Peralta, Ghovanna Gonzalez, and Angela Diaz, all of whom have already been charged and have pleaded guilty to mortgage fraud-based charges.
The case was investigated by the Offices of the Inspector General for the Department of Housing and Urban Development, the FDIC, and the Federal Housing Finance Agency. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former Allentown Realtors Charged in Fraud SchemeRead the Press Release
Former Allentown-based real estate agents, Jose Antigua, 36, and Melquisidec Caraballo, 42, were charged today by Information with one count of conspiracy to commit bank fraud and wire fraud affecting financial institutions, announced United States Attorney Zane David Memeger.
According to the Information, from at least October 2006 until at least August 11, 2008, Antigua and Caraballo conspired with each other and two former employees of Madison Funding, a loan origination company, to defraud lenders into loaning money to their real estate clients who were not creditworthy. The Information alleges that Antigua and Caraballo helped numerous clients, who were unemployed or under-employed, buy real estate by referring them to Madison Funding employees Claribel Gonzalez and Florentia Peralta, knowing that Gonzalez and Peralta would submit fraudulent loan applications to lenders such as Mortgage IT, Countrywide, and Bank of America, on behalf of those clients.
In total, Antigua and Caraballo helped their clients obtain more than $1.7 million in fraudulent loans, many of which have since gone into default, costing the lenders, secondary investors, and insurers hundreds of thousands of dollars.
If convicted, each defendant faces a maximum possible sentence of five years in prison, a fine of up to $250,000, three years of supervised release, and a $100 special assessment.
Gonzalez and Peralta were charged with multiple mortgage fraud-based crimes in a separate indictment and have pleaded guilty to those charges. Six other former Madison Funding employees also have pleaded guilty to mortgage fraud-based charges. Gonzalez and Peralta are scheduled to be sentenced on February 11, 2014.
The case was investigated by the Offices of the Inspector General for the Department of Housing and Urban Development, the FDIC, and the Federal Housing Finance Agency. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Seed Company Owner Charged with Stealing Employee Pension FundsRead the Press Release
Andrew Sweeney, 66, of Wayne, Pennsylvania, was charged today by indictment with theft from an employee retirement fund, announced United States Attorney Zane David Memeger. According to the indictment, Sweeney, the President of Sweeney Seed Company, failed to pay monies, withheld from employees’ paychecks, to the employees’ IRA accounts and, instead, used the funds for unauthorized purposes. Sweeney allegedly embezzled $41,165.18 intended for the Sweeney Seed Company employee retirement account.
If convicted, Sweeney faces a maximum possible sentence of five years in prison, restitution, a $250,000 fine, and three years of supervised release.
The case was investigated by Department of Labor and the United States Secret Service and is being prosecuted by Assistant United States Attorney Karen L. Grigsby.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Additional Defendants Charged in Bank Fraud SchemeRead the Press Release
A superseding indictment was filed today adding four people to a multi-year bank fraud and identity theft scheme, announced United States Attorney Zane David Memeger. Benjamin Easley, 36, of Darby, PA, Jonathan Weeks, 42, of Upper Marlboro, NJ, Roderic Grady, 23, and Martina Grady, 25, both of New Castle, DE, were added to an indictment charging Derrick Floyd, 36, of Philadelphia, and Cynthia Nowicki, 47, of Eagleville, PA. The defendants are charged with conspiracy, bank fraud and aggravated identity theft in a scheme involving numerous individuals, to defraud banks such as PNC Bank, Wells Fargo Bank, TD Bank, Republic Bank and Wachovia Bank.
Using the stolen account information of a PNC Bank customer, the indictment alleges that the defendants made fraudulent withdraws from the victim bank account and transferred the money to a TD Bank account set up by Derrick Floyd. Floyd then visited multiple TD Bank branches between October 4, 2011 and October 7, 2011, making large withdrawals. It is further alleged that these defendants conspired with Shaun Mays, Laddis Taylor, and Norman Ross, all charged elsewhere, in obtaining or attempting to obtain more than $400,000 through fraudulent withdrawals and wire transfers involving at least seven victim bank accounts.
If convicted, Easley faces a maximum possible sentence of 175 years in prison and a fine of up to $7.75 million; Nowicki faces a maximum possible sentence of 67 years in prison and a fine of up to $1.5 million; Weeks, R. Grady and M. Grady each face a maximum possible sentence of 37 years in prison and a fine of up to $1.5 million; and Derrick Floyd faces a maximum possible sentence of 35 years in prison and a fine of up to $1.25 million.
The case was investigated by Federal Bureau of Investigation and United States Secret Service. It is being prosecuted by Assistant United States Attorney K.T. Newton.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Unsealed Indictment Charges Pair with ExtortionRead the Press Release
Mohammad Hamdan, a/k/a "Alex Hamdan," 36, of Raleigh, North Carolina and Mohammad Sabbar, a/k/a "Ali," 31, of Schnecksville, Pennsylvania, are charged by indictment , unsealed today, with conspiracy to commit extortion, extortion, and aiding abetting have been arrested, announced United States Attorney Zane David Memeger. The defendants were arrested today.
If convicted, the defendants face a maximum possible sentence of 40 years imprisonment, three years of supervised release, a $500,000 fine and a $200 special assessment.
The case was investigated by the U.S. Department of Transportation's Office of Inspector General and is being prosecuted by Assistant United States Attorney Linwood C. Wright, Jr.
Click here to view the indictment
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Doctor Sentenced to 30 Years for Running Pill MillRead the Press Release
PHILADELPHIA - Kermit Gosnell, 72, of Philadelphia, was sentenced today to 360 months in prison for running a pill mill out of his clinic located at 3801-3805 Lancaster Avenue in Philadelphia. Gosnell pleaded guilty on July 9, 2013 to 12 counts including conspiracy to distribute controlled substances (oxycodone, alprazolam, and codeine), distribution and aiding and abetting the distribution of oxycodone, and maintaining a place for the illegal distribution of controlled substances. In addition to the prison term, U.S. District Court Judge Cynthia M. Rufe ordered a fine in the amount of $50,000, a $1200 special assessment, and $200,000 in forfeiture.
Gosnell, with the assistance of several of his former office staff at Family Medical Society, A Division of Women’s Medical Society, Inc. (“WMS”), ran a prescription pill mill from June of 2008 through February 18, 2010. Gosnell wrote fraudulent prescriptions for hundreds of thousands of prescription pills and the frequently-abused syrups Phenergan and Promethazine with Codeine, to drug “seekers,” who met with Gosnell briefly for a cursory exam or no exam. Gosnell wrote and sold prescriptions from his medical office for over 600,000 pills containing oxycodone (a Schedule II controlled substance, brand names Percocet, Endocet and OxyContin) including over 100,000 pills of the highly addictive OxyContin 80mg; over 800,000 pills containing alprazolam (a Schedule IV controlled substance, brand name Xanax); and over 27,000 ounces of cough syrup containing codeine (a Schedule V controlled substance, brand name Phenergan with Codeine cough syrup) to cash-paying customers without there being any medical necessity for these prescriptions. Gosnell and his staff allowed customers to purchase multiple prescriptions under multiple names; customers could place orders for refills in person, over the phone, or by leaving a message on a WMS office answering machine; the WMS office staff would give the refill orders to Gosnell, who, without seeing the customer, would write the requested prescription and give it to WMS staff who would then collect cash and “tips” from customers. Gosnell went from writing several hundred prescriptions for controlled substances per month filled at pharmacies in 2008 to over 2,300 filled at pharmacies in January of 2010. Gosnell charged from $115.00 to $150.00, with a follow up visit fee of $50.00 and a $20 fee for refills of controlled substances for cash paying customers.
The case was investigated by the Federal Bureau of Investigation, the Drug Enforcement Administration, the U.S. Department of Health and Human Services Office of Inspector General, the Philadelphia Police Department, and the Philadelphia District Attorney’s Office. It was prosecuted by Assistant United States Attorneys Joan E. Burnes and Jessica Natali.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Indicted on Charges Involving Child PornographyRead the Press Release
Brian Welsh, 22, of Philadelphia, Pennsylvania, is charged by Indictment , unsealed today, with one count of receipt of child pornography, one count of distribution of child pornography, and one count of possession of child pornography announced United States Attorney Zane David Memeger. The indictment alleges that on April 30th, Welsh was in possession of child pornography; that on May 23, 2012, Welsh received visual images of child pornography; and that on June 24, 2012, Welsh distributed child pornography. Welsh was arrested Decemeber 3, 2013 and is awaiting a detention hearing.
If convicted the defendant faces a maximum possible sentence of 50 years in prison.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations and is being prosecuted by Special Assistant United States Attorney Karen A. Fox.
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An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525New Jersey Man Charged in Fraud on Family TrustRead the Press Release
Gregory Fresta, 45, of Cherry Hill, NJ, was charged today by Indictment with mail fraud in connection with a scheme to defraud a family trust, announced United States Attorney Zane David Memeger. A $1 million testamentary trust was established in a Will created by Fresta’s father for the benefit of Fresta’s younger brother who was a minor at the time of the father’s death. According to the indictment, Fresta used the United States mail in furtherance of the fraud scheme to send multiple requests for funds from the trust under the guise that the funds were going to be used for the benefit of the trust beneficiary. Upon receiving the money, the defendant used the funds for his own personal use.
If convicted, Fresta faces a maximum possible sentence of 280 years of imprisonment, a fine of $3.5 million, a special assessment of $1,400 and 3 years of supervised release.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Floyd J. Miller.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Indictment Charges New York Man with Threatening Former Business PartnerRead the Press Release
PHILADELPHIA - Roger Eichenholtz, 70, of Westchester County, New York, was charged today by Indictment with one count of threats, announced United States Attorney Zane David Memeger. After losing civil litigation over a business, Eichenholtz sent a numbering of harassing emails to his opponents threatening further litigation. On September 24, 2013, Eichenholtz sent another email threatening civil and criminal litigation. He concluded the email with the following:
PLAN B- if for some unforeseen miracle, you escape justice, I have access to a “Side Bolt 45.cal with 6 silver bullets that have your name on them.”
If convicted, the defendant faces a maximum possible sentence of five years in prison, three years of supervised release, a $250,000 fine, and a $100 special assessment.
The case was investigated by Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael L. Levy.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Felon Convicted of Gun Possession, Facing 15 Year Mandatory TermRead the Press Release
PHILADELPHIA – A federal jury, yesterday, convicted Francis Aponte, 47, of Philadelphia, of possession of a firearm by a convicted felon. On June 17, 2012, Aponte was standing on the sidewalk near Indiana Avenue and 4th Street when two Philadelphia Police Officers spotted him shooting a gun into the air. The officers approached and saw Aponte throw the handgun – a .380 caliber Indian Arms semi-automatic – to the ground. Aponte was arrested and charged as a convicted felon in possession of a firearm. A sentencing hearing is scheduled for March 4, 2014. Aponte faces a mandatory minimum term of 15 years in prison with a maximum sentence of life, up to five-years of supervised release, a maximum fine of $250,000, and a $100 special assessment.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Jose R. Arteaga.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Indictment Charges Theft of Government FraudsRead the Press Release
Arvita Phillips-Henderson, 68, of Philadelphia, PA, was charged yesterday by Information with one count of theft of government funds, announced United States Attorney Zane David Memeger. According to the Information, the defendant applied for Supplemental Security Income from the Social Security Administration, and Housing Benefits from the Department of Housing and Urban Development, under her true Social Security Number while working. She, later, collected retirement benefits under a second Social Security Number. The defendant’s alleged actions resulted in a loss to the government of more than $87,000.
If convicted, the defendant faces a maximum possible sentence of 10 years in prison, a three year period of supervised release, restitution to the government of $87,827.25, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Social Security Administration Office of Inspector General, the U.S. Department of Housing and Urban Development Office of Inspector General, and the Philadelphia Housing Authority Office of Audit and Compliance. It is being prosecuted by Special Assistant United States Attorney Amanda R. Reinitz.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former Philadelphia Police Officer Convicted of CorruptionRead the Press Release
PHILADELPHIA – A federal jury, yesterday, found 52-year old Rafael Cordero, a 23-year veteran of the Philadelphia Police force, guilty of interfering with the federal drug investigation of the Christian Serrano/Edwin Medina Drug Trafficking Organizations (“DTOs”). Cordero provided sensitive law enforcement information about drug investigations to his half-brother, David Garcia, a member of the Serrano/Medina DTOs. Cordero told his half-brother about a surveillance camera put up by the DEA to monitor activities occurring at a garage, located at 538 East Indiana Street in Philadelphia, used by the Medina DTO. When the FBI and DEA executed search warrants at several locations associated with the Serrano/Medina DTOs, including the garage, Cordero, after being informed about the searches by his half-brother and without having any official reason to do so, went to the search location on East Indiana Street and began looking in the windows of the garage. When confronted by law enforcement and brought inside the location, Cordero misrepresented his reason for being at the location and offered to assist with the search. At no time did Cordero provide his name to law enforcement.
Immediately after leaving the search location, Cordero placed a call to David Garcia and shared with him, among other things, how many law enforcement officers were conducting the search and what areas of the garage they were searching. Garcia removed a DVR tape that law enforcement had inadvertently failed to seize during the search and viewed it to see if Cordero was recorded at the garage at the time of the search, which he was. At no time did Cordero inform law enforcement that David Garcia had possession of the video tape.
When questioned by federal agents, Cordero denied giving information to Garcia regarding the surveillance camera, denied knowing of anyone associated with the Indiana Street garage, denied having spoken to David Garcia about the search at the garage, and denied passing on information regarding cooperating witnesses to Garcia, all of which were false statements.
Cordero faces a maximum possible sentence of 20 years imprisonment. A sentencing date has not yet been set.
The case was investigated by the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorneys Maureen McCartney and Kevin Brenner.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Berks County Man Charged with Distribution of Child PornographyRead the Press Release
Edward Hill, 27, of Robesonia, PA, was charged today by information with distribution of child pornography and possession of child pornography, announced United States Attorney Zane David Memeger. According to the information, between May 3, 2013 and July 10, 2013, Hill distributed over the Internet pictures that depicted children being sexually abused, and he possessed in excess of 600 images of child pornography.
If convicted, Hill faces a maximum possible sentence of 30 years’ imprisonment, which includes a mandatory minimum 5 year term of imprisonment, a mandatory minimum 5 years up to a lifetime of supervised release, a $500,000 fine and a $200 special assessment.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Jeffery W. Whitt.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division=s Child Exploitation and Obscenity Section, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals, who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525DC Man Charged with Assaulting Prison GuardRead the Press Release
Elijah Francis, 43, of the District of Columbia was charged today by Indictment with assaulting a federal corrections officer at the Federal Detention Center in Philadelphia, on May 21, 2013, announced United States Attorney Zane David Memeger.
If convicted the defendant faces a maximum possible sentence of 20 years in prison, five years supervised release, a $250,000 fine, and a $100 special assessment.
The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Yvonne Osirim.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Judge Hands Down Prison Term for Fraud Scheme Involving Former Traffic Court JudgeRead the Press Release
PHILADELPHIA - Lorraine Dispaldo, 58, of Philadelphia, was sentenced today to 18 months in prison for her role in a fraud conspiracy with then-Philadelphia Traffic Court Judge Robert Mulgrew. Dispaldo pleaded guilty to a total of 36 counts including conspiracy to commit mail and wire fraud, mail fraud, wire fraud, filing false personal income tax returns, and bankruptcy fraud. Dispaldo and Mulgrew, who is awaiting sentencing, carried out a scheme to defraud the Pennsylvania Department of Community and Economic Development (“DCED”). U.S. District Court Judge C. Darnell Jones, II also ordered restitution of $120,865, a $3,600 special assessment and three years of supervised release.
Dispaldo helped orchestrate the scheme to fraudulently receive and misuse Pennsylvania state grant funds awarded to non-profit groups. Between 1996 and 2008, the DCED awarded hundreds of thousands of dollars in grants to two community groups with which Mulgrew and Dispaldo were associated. DCED awarded approximately $397,000 in grants to the Community to Police Communications (“CPC”) to be used to purchase communications equipment for the police and to purchase materials to secure vacant lots and buildings for the protection of the police. Dispaldo signed the CPC grant contracts with DCED. Between 1997 and 2007 DCED also awarded approximately $460,000 in grants to the Friends of Dickinson Square (FDS”) to be used for the maintenance of Dickinson Square, at 4th and Tasker Streets, and the surrounding neighborhood. Dispaldo’s codefendant, Mulgrew, signed the FDS grant contracts with DCED.Dispaldo admitted that the grant contracts she submitted misrepresented how the funds would be used. She admitted that, instead of using grant funds exclusively for materials and equipment, as agreed, she instead paid tens of thousands of dollars in CPC and FDS grant funds to Mulgrew’s relatives and associates, including the teenage sons of his friends, and to the State Representative’s life-long friends. Dispaldo wrote over $104,000 of the almost $180,000 in impermissible payments made to persons for neighborhood revitalization “work.” While there were several decent gardens built, some trees planted and much landscaping material purchased, for the most part the activities undertaken primarily served as a “constituent service” clean-up-the-neighborhood-arm for the Representative’s benefit, easy money for favored friends and relatives, a summer make-work program to benefit the teenage sons of Mulgrew’s neighborhood and childhood friends, and some work on private property.
To mask the fact that grant funds were being used improperly, Dispaldo falsified her five
CPC “close out” reports sent to DCED by concealing most of the $104,000 in payments she made to persons from CPC funds and FDS funds during 2005 through September 2010. At times, Dispaldo submitted to DCED inaccurate IRS forms 1099, which document payments to persons, and at other times failed to prepare the forms, as required by law. Dispaldo also improperly paid almost $13,000 in CPC funds to the Representative’s office cleaner and improperly used $4,600 in CPC grant funds over the years to pay for her personal cell phone.To conceal the improper payments Dispaldo made to persons, she also submitted to DCED staggering numbers of duplicate phone invoices. For example, she sent in $91,500 worth of receipts in the close-out report for the third grant in the amount of $90,000, but $41,640 of those receipts were already sent in with either the first or second grant close-out reports. In the fourth close-out report, Dispaldo sent in $87,394 in receipts to satisfy the $50,000 grant, but $46,156 of those were previously sent to the state.
Dispaldo filed false personal income tax returns for tax years 2006 through 2009, and concealed her true income for 2008 and 2009 in a 2010 bankruptcy filing.
The case was investigated by the Internal Revenue Service Criminal Investigation and the Federal Bureau of Investigation. It is being prosecuted by Assistant United States Attorney Paul L. Gray.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Robbery and Gun Charges Filed Against Philadelphia MenRead the Press Release
Jeron Cartwright, 31, and Tyree Scott, 31, of Philadelphia, Pennsylvania, were charged November 20, 2013, by Indictment, with conspiracy to commit a Hobbs Act robbery, drug, gun, and other offenses, announced United States Attorney Zane David Memeger. According to the indictment, between mid-August 2013 and October 24, 2013, Cartwright and Scott sought the help of another person in arranging the home invasion robbery of drug dealers. The defendants allegedly planned to steal, at gunpoint, approximately ten kilograms of cocaine. It is further alleged that on October 24, 2013, the defendants attempted, unsuccessfully, to carry out the armed home invasion robbery. The plan was interrupted by law enforcement.
In addition to the conspiracy, the indictment charges Cartwright and Scott with attempted commission of a Hobbs Act robbery, aiding and abetting the attempted commission of a Hobbs Act robbery, conspiracy to possess with the intent to distribute five kilograms or more of cocaine, attempted possession with intent to distribute five kilograms or more of cocaine, carrying a firearm during and in relation to a crime of violence and to a drug trafficking crime, and being convicted felons in possession of a firearm.
If convicted, the defendants face a maximum possible sentence of life imprisonment. Cartwright faces a 25 year mandatory minimum sentence and Scott, a15 year mandatory minimum sentence.
This case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.
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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Souderton Man Charged in Child Pornography IndictmentRead the Press Release
Ian H. Ranberg, 47, of Souderton, PA, was charged today by Indictment1 with receipt, distribution and possession of child pornography, announced United States Attorney Zane David Memeger. According to the indictment, Ranberg received images of child pornography between May 23, 2012 and May 29, 2012, and between August 19, 2012 and September 19, 2012. It is further alleged that on February 2, 2013, Ranberg distributed a video containing child pornography. The indictment also alleges that on August 21, 2013, Ranberg was in possession child pornography on his computers and external hard drives.
If convicted of all charges, Ranberg faces a maximum possible sentence of 70 years in prison, including a five year mandatory minimum, a minimum of five years but up to a lifetime of supervised release, fines of up to $1 million, and $400 in special assessments.
This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States Attorneys’ Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.
This case was investigated by Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Jessica Natali.
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1An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Last of Five "Nifty Fifty's" Owners Sentenced for Tax Evasion SchemeRead the Press Release
PHILADELPHIA – Elena Ruiz, 48, of Drexel Hill, PA, was sentenced today to 12 months and a day in prison and Brian Welsh, 50, of Springfield, PA, was sentenced to 20 months in prison for their roles in the tax evasion scheme carried out by the owners of the ANifty Fifty=s@ restaurant chain. Joseph Donnelly, 50, of Springfield, PA, was sentenced yesterday to 28 months in prison for his role.
Restaurant owners Robert Mattei and Leo McGlynn, along with the above defendants, constructed a long-running scheme to avoid paying millions of dollars in personal and employment taxes as related to their restaurant chain. They cheated the Internal Revenue Service by failing to properly account for more than $15 million in gross receipts. They also filed income tax returns claiming they were due refunds based on the erroneous reporting of their incomes.
Mattei, was sentenced Monday to 15 months in prison. McGlynn was sentenced Tuesday to 36 months in prison. All five defendants pleaded guilty to the charges. The restaurant owners paid employees a portion of their wages with unreported cash in order to evade payroll taxes; paid suppliers with unreported cash; and had false tax returns prepared that under-reported income and falsely inflated expenses and deductions. Just between the years 2006 and 2010, the defendants deliberately failed to properly account for $15.6 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes. In the course of their conspiracy, Mattei, McGlynn, Donnelly, and Welsh committed bank fraud by submitting to the bank bogus income tax returns in order to secure several business loans.In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered the defendants to pay restitution to the IRS. To date, the IRS has received $4,336,871 in tax payments and an additional $205,300 in forfeiture payments.
This case was investigated by the Internal Revenue Service Criminal Investigations and the FBI. It was prosecuted by Assistant United States Attorneys Nancy E. Potts and Paul G. Shapiro.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Charged for Role in Multi-Million Dollar Mortgage Fraud SchemeRead the Press Release
PHILADELPHIA - David Anthony Holman, 46, of Philadelphia, was charged today by Information with one count of conspiracy to commit loan and wire fraud and one count of loan fraud for his participation in an alleged mortgage fraud ring, announced United States Attorney Zane David Memeger. Holman is the 13th defendant charged in the alleged scheme involving a real estate company known as “KREW” in Philadelphia. The information also seeks the criminal forfeiture of over $225,000 from Holman.
According to the information, between May 2004 and February 2009, primarily in the West Philadelphia section of the city of Philadelphia, the defendants and KREW Settlement Services handled more than 100 fraudulent mortgage loans, obtaining more than $20 million in fraudulent loan proceeds. Holman is alleged to have directly participated in helping to secure a $225,250 mortgage loan from First Tennessee Bank (via its subsidiary, First Horizon Home Loan Corporation) on 29 W. Pomona Street in Philadelphia by recruiting another person to serve as the “straw buyer” for that property. It is further alleged that Holman directed the straw buyer to make false statements in the loan application and in verbal statements to the lender.
The other 12 co-conspirators charged in this district with participating in the same mortgage fraud ring include: Kevin Joseph Franklin, Roderick L. Foxworth, Sr., Eric Sijohn Brown, and Walter Alston Brown, Jr., who owned and operated KREW; Cynthia Evette Brown, Francine Shanique Cross, Willie G. Manley Jr., Eric Ponder, Rashika J. Moon, Dontaya S. Devore, Mark Murphy, and Gregory Christopher Thornton, who worked with or for KREW.
If convicted, Holman faces a maximum possible sentence of 35 years in prison, five years of supervised release, a fine of $1.25 million or twice the value of the property involved in the transactions, and a $200 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigation Division, and the Department of Housing and Urban Development’s Office of Inspector General. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.KREW is an acronym of the first names of these four owner/operators.
A 14th co-conspirator, John William Polosky, a mortgage broker who is alleged to have knowingly brokered fraudulent loan packages for the KREW co-conspirators, has been charged in the Western District of Pennsylvania.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Easton Man Charged with FraudRead the Press Release
Randall McMahon, 27, of Easton, PA, was charged today by Information with one count of wire fraud and one count of bank fraud, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a maximum possible sentence of 50 years imprisonment, a five-year period of supervised release, a $1.25 million fine, a $200 special assessment, and the imposition of full restitution.
The case was investigated by the United States Secret Service, the United States Postal Inspection Service, Homeland Security Investigations, and the Lehigh County Auto Theft and Insurance Fraud Task Force. It is being prosecuted by Assistant United States Attorney Patrick J. Murray.
Click here to view the indictment
1An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Record $13 Billion Global Settlement Reached with JPMorgan over Misleading InvestorsRead the Press Release
WASHINGTON – The Justice Department, along with federal and state partners, today announced a $13 billion settlement with JPMorgan - 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) by JPMorgan, Bear Stearns and Washington Mutual prior to Jan. 1, 2009. As part of the settlement, JPMorgan acknowledged it made serious misrepresentations to the public - including the investing public - about numerous RMBS transactions. The resolution also requires JPMorgan to provide much needed relief to underwater homeowners and potential homebuyers, including those in distressed areas of the country. The settlement does not absolve JPMorgan or its employees from facing any possible criminal charges.
This settlement is part of the ongoing efforts of President Obama’s Financial Fraud Enforcement Task Force’s RMBS Working Group.
“Without a doubt, the conduct uncovered in this investigation helped sow the seeds of the mortgage meltdown,” said Attorney General Eric Holder. “JPMorgan was not the only financial institution during this period to knowingly bundle toxic loans and sell them to unsuspecting investors, but that is no excuse for the firm’s behavior. The size and scope of this resolution should send a clear signal that the Justice Department’s financial fraud investigations are far from over. No firm, no matter how profitable, is above the law, and the passage of time is no shield from accountability. I want to personally thank the RMBS Working Group for its tireless work not only in this case, but also in the investigations that remain ongoing.”
The settlement includes a statement of facts, in which JPMorgan acknowledges that it regularly represented to RMBS investors that the mortgage loans in various securities complied with underwriting guidelines. Contrary to those representations, as the statement of facts explains, on a number of different occasions, JPMorgan employees knew that the loans in question did not comply with those guidelines and were not otherwise appropriate for securitization, but they allowed the loans to be securitized – and those securities to be sold – without disclosing this information to investors. This conduct, along with similar conduct by other banks that bundled toxic loans into securities and misled investors who purchased those securities, contributed to the financial crisis.
“Through this $13 billion resolution, we are demanding accountability and requiring remediation from those who helped create a financial storm that devastated millions of Americans,” said Associate Attorney General Tony West. “The conduct JPMorgan has acknowledged - packaging risky home loans into securities, then selling them without disclosing their low quality to investors - contributed to the wreckage of the financial crisis. By requiring JPMorgan both to pay the largest FIRREA penalty in history and provide needed consumer relief to areas hardest hit by the financial crisis, we rectify some of that harm today.”
Of the record-breaking $13 billion resolution, $9 billion will be paid to settle federal and state civil claims by various entities related to RMBS. Of that $9 billion, JPMorgan will pay $2 billion as a civil penalty to settle the Justice Department claims under the Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA), $1.4 billion to settle federal and state securities claims by the National Credit Union Administration (NCUA), $515.4 million to settle federal and state securities claims by the Federal Deposit Insurance Corporation (FDIC), $4 billion to settle federal and state claims by the Federal Housing Finance Agency (FHFA), $298.9 million to settle claims by the State of California, $19.7 million to settle claims by the State of Delaware, $100 million to settle claims by the State of Illinois, $34.4 million to settle claims by the Commonwealth of Massachusetts, and $613.8 million to settle claims by the State of New York.
JPMorgan will pay out the remaining $4 billion in the form of relief to aid consumers harmed by the unlawful conduct of JPMorgan, Bear Stearns and Washington Mutual. That relief will take various forms, including principal forgiveness, loan modification, targeted originations and efforts to reduce blight. An independent monitor will be appointed to determine whether JPMorgan is satisfying its obligations. If JPMorgan fails to live up to its agreement by Dec. 31, 2017, it must pay liquidated damages in the amount of the shortfall to NeighborWorks America, a non-profit organization and leader in providing affordable housing and facilitating community development.
The U.S. Attorney’s Offices for the Eastern District of California and Eastern District of Pennsylvania and the Justice Department’s Civil Division, along with the U.S. Attorney’s Office for the Northern District of Texas, conducted investigations into JPMorgan’s, Washington Mutual’s and Bear Stearns’ practices related to the sale and issuance of RMBS between 2005 and 2008.
“Today’s global settlement underscores the power of FIRREA and other civil enforcement tools for combatting financial fraud,” said Assistant Attorney General for the Civil Division Stuart F. Delery, co-chair of the RMBS Working Group. “The Civil Division, working with the U.S. Attorney’s Offices and our state and agency partners, will continue to use every available resource to aggressively pursue those responsible for the financial crisis.”
“Abuses in the mortgage-backed securities industry helped turn a crisis in the housing market into an international financial crisis,” said U.S. Attorney for the Eastern District of California Benjamin Wagner. “The impacts were staggering. JPMorgan sold securities knowing that many of the loans backing those certificates were toxic. Credit unions, banks and other investor victims across the country, including many in the Eastern District of California, continue to struggle with losses they suffered as a result. In the Eastern District of California, we have worked hard to prosecute fraud in the mortgage industry. We are equally committed to holding accountable those in the securities industry who profited through the sale of defective mortgages.”
“Today's settlement represents another significant step towards holding accountable those banks which exploited the residential mortgage-backed securities market and harmed numerous individuals and entities in the process,” said U.S. Attorney for the Eastern District of Pennsylvania Zane David Memeger. “These banks packaged and sold toxic mortgage-backed securities, which violated the law and contributed to the financial crisis. It is particularly important that JPMorgan, after assuming the significant assets of Washington Mutual Bank, is now also held responsible for the unscrupulous and deceptive conduct of Washington Mutual, one of the biggest players in the mortgage-backed securities market.”
This settlement resolves only civil claims arising out of the RMBS packaged, marketed, sold and issued by JPMorgan, Bear Stearns and Washington Mutual. The agreement does not release individuals from civil charges, nor does it release JPMorgan or any individuals from potential criminal prosecution. In addition, as part of the settlement, JPMorgan has pledged to fully cooperate in investigations related to the conduct covered by the agreement.
To keep JPMorgan from seeking reimbursement from the federal government for any money it pays pursuant to this resolution, the Justice Department required language in the settlement agreement which prohibits JPMorgan from demanding indemnification from the FDIC, both in its capacity as a corporate entity and as the receiver for Washington Mutual.
“The settlement announced today will provide a significant recovery for six FDIC receiverships. It also fully protects the FDIC from indemnification claims out of this settlement,” said FDIC Chairman Martin J. Gruenberg. “The FDIC will continue to pursue litigation where necessary in order to recover as much as possible for FDIC receiverships, money that is ultimately returned to the Deposit Insurance Fund, uninsured depositors and creditors of failed banks.”
“NCUA’s Board extends our thanks and appreciation to our attorneys and to the Department of Justice, who have worked closely together for more than three years to bring this matter to a successful resolution,” said NCUA Board Chairman Debbie Matz. “The faulty mortgage-backed securities created and packaged by JPMorgan and other institutions created a crisis in the credit union industry, and we’re pleased a measure of accountability has been reached.”
“JPMorgan and the banks it bought securitized billions of dollars of defective mortgages,” said Acting FHFA Inspector General Michael P. Stephens. “Investors, including Fannie Mae and Freddie Mac, suffered enormous losses by purchasing RMBS from JPMorgan, Washington Mutual and Bear Stearns not knowing about those defects. Today’s settlement is a significant, but by no means final step by FHFA-OIG and its law enforcement partners to hold accountable those who committed acts of fraud and deceit. We are proud to have worked with the Department of Justice, the U.S. attorneys in Sacramento and Philadelphia and the New York and California state attorneys general; they have been great partners and we look forward to our continued work together.”
The attorneys general of New York, California, Delaware, Illinois and Massachusetts also conducted related investigations that were critical to bringing about this settlement.
“Since my first day in office, I have insisted that there must be accountability for the misconduct that led to the crash of the housing market and the collapse of the American economy,” said New York Attorney General Eric Schneiderman, Co-Chair of the RMBS Working Group. “This historic deal, which will bring long overdue relief to homeowners around the country and across New York, is exactly what our working group was created to do. We refused to allow systemic frauds that harmed so many New York homeowners and investors to simply be forgotten, and as a result we’ve won a major victory today in the fight to hold those who caused the financial crisis accountable.”
“JP Morgan Chase profited by giving California’s pension funds incomplete information about mortgage investments,” California Attorney General Kamala D. Harris said. “This settlement returns the money to California’s pension funds that JP Morgan wrongfully took from them.”
“Our financial system only works when everyone plays by the rules,” said Delaware Attorney General Beau Biden. “Today, as a result of our coordinated investigations, we are holding accountable one of the financial institutions that, by breaking those rules, helped cause the economic crisis that brought our nation to its knees. Even as the American people recover from this crisis, we will continue to seek accountability on their behalf.”
“We are still cleaning up the mess that Wall Street made with its reckless investment schemes and fraudulent conduct,” said Illinois Attorney General Lisa Madigan. “Today’s settlement with JPMorgan will assist Illinois in recovering its losses from the dangerous and deceptive securities that put our economy on the path to destruction.”
“This is a historic settlement that will help us to hold accountable those investment banks that played a role in creating and exacerbating the housing crisis,” said Massachusetts Attorney General Martha Coakley. “We appreciate the work of the Department of Justice and the other enforcement agencies in bringing about this resolution and look forward to continuing to work together in other securitization cases.”
The RMBS Working Group is a federal and state law enforcement effort focused on investigating fraud and abuse in the RMBS market that helped lead to the 2008 financial crisis. The RMBS Working Group brings together more than 200 attorneys, investigators, analysts and staff from dozens of state and federal agencies including the Department of Justice, 10 U.S. attorney’s offices, the FBI, the Securities and Exchange Commission (SEC), the Department of Housing and Urban Development (HUD), HUD’s Office of Inspector General, the FHFA-OIG, the Office of the Special Inspector General for the Troubled Asset Relief Program, the Federal Reserve Board’s Office of Inspector General, the Recovery Accountability and Transparency Board, the Financial Crimes Enforcement Network, and more than 10 state attorneys general offices around the country.
The RMBS Working Group is led by five co-chairs: Assistant Attorney General for the Civil Division Stuart Delery, Acting Assistant Attorney General for the Criminal Division Mythili Raman, Co-Director of the SEC’s Division of Enforcement George Canellos, U.S. Attorney for the District of Colorado John Walsh and New York Attorney General Eric Schneiderman.
Learn more about the RMBS Working Group and the Financial Fraud Enforcement Task Force at: www.stopfraud.gov.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Lumberton Man Sentenced for Violation of Clean Air ActRead the Press Release
Gene Cornell Smith, 46, of Lumberton, New Jersey, was sentenced today to 42 months in prison for violating the Clean Air Act. Smith bought a warehouse, in the Logan section of Philadelphia, and got a quote for the cost of removing asbestos from the site. Instead of paying to remove or stabilize the asbestos-containing material, Smith enlisted his co-conspirator, Clarence Cole, to hire unqualified day laborers, who ripped out the asbestos illegally, without taking the precautions, required by federal regulations, to keep asbestos out of the air. Smith and Cole did not provide any safety equipment to the workers. When a conscientious citizen tipped off the Asbestos Control Unit of the City Public Health Department's Air Management Services, city inspectors ordered all work to stop. Instead of closing up the site, however, and hiring a qualified contractor to remediate the building as he was ordered to do, Smith continued to dispose of asbestos-containing material illegally, and to allow emission of asbestos to the outside air. Eventually, Superfund money had to be used to clean the contamination caused by the illegal work Smith and Cole had ordered.
"These defendants knowingly removed asbestos-containing materials illegally, putting workers and the general public at great risk," said David G. McLeod, Jr., Special Agent in Charge of EPA's criminal enforcement program for the Middle Atlantic States. "The real victims in this case are neighboring residents who have no way to protect themselves against this type of environmental crime. EPA continues to work with our local, state and federal partners to vigorously prosecute those who place personal gain ahead of public health."
A representative from Philadelphia Air Management Services stated, "The convictions of Gene Cornell Smith and Clarence Cole arose from their decision, made knowingly, to abate and remove dangerous asbestos material in clear violation of the law. This matter was first investigated and reported to the EPA by the City of Philadelphia Air Management Services. We are grateful that with the assistance of the Philadelphia U.S. Attorney's Office and EPA Region 3, this matter has been brought to a satisfactory conclusion."
Smith was convicted of conspiracy, and five counts of violating the Clean Air Act after a jury trial, in January 2013. Cole pled guilty in January 2013, and was sentenced to 24 months in prison in June.
In addition to the prison term, Judge Cynthia M. Rufe also ordered the defendants to serve three years of supervised release, and to pay restitution of $451,936.80
The case was investigated by the Criminal Investigation Division of the Environmental Protection Agency, and was prosecuted by Assistant United States Attorney Elizabeth Abrams and Special Assistant United States Attorney Thomas Moshang III.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525First of Five "NifyFifty's" Owners Sentenced for Tax Evasion SchemeRead the Press Release
PHILADELPHIA - Robert Mattei, (75), of Del Ray Beach, Florida, a co-owner of the ANifty Fifty=s@ restaurant chain, was sentenced today to 15 months in prison for his role in a tax evasion conspiracy that cheated the Internal Revenue Service by failing to properly account for more than $15 million in gross receipts. Mattei pleaded guilty in May of 2012 to conspiracy, tax evasion, and bank fraud. Mattei, along with co-defendants Leo McGlynn, Brian Welsh, Joseph Donnelly, and Elena Ruiz, all of whom also pleaded guilty, constructed a long-running scheme to avoid paying millions of dollars in personal and employment taxes as related to their restaurant chain. The defendants not only evaded paying the taxes they owed, they filed income tax returns claiming they were due refunds based on the erroneous reporting of their incomes.
The restaurant owners evaded paying taxes since the restaurant was established in 1986 by, among other things, paying employees a portion of their wages with unreported cash in order to evade payroll taxes; paying suppliers with unreported cash; and having false tax returns prepared that under-reported income and falsely inflated expenses and deductions. Just between the years 2006 and 2010, the defendants deliberately failed to properly account for $15.6 million in gross receipts, thereby evading $2.2 million in federal employment and personal taxes. In the course of their conspiracy, Mattei, McGlynn, Donnelly, and Welsh committed bank fraud by submitting to the bank bogus income tax returns in order to secure several business loans.
In addition to the prison term, U.S. District Court Judge Mary McLaughlin ordered restitution. To date, the IRS has received $4,336,871 in tax payments and an additional $205,300 in forfeiture payments.
Co-defendant Leo McGlynn will be sentenced on November 19, 2013; co-defendant Joseph Donnelly will be sentenced November 20, 2013; co-defendants Elena Ruiz and Brian Welsh will be sentenced November 21, 2013.
This case was investigated by the Internal Revenue Service Criminal Investigation Division and the FBI. It is being prosecuted by Assistant United States Attorneys Nancy E. Potts and Paul G. Shapiro.
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Philadelphia Man Charged with Sex Trafficking A MinorRead the Press Release
Jerel Jackson, 28, of Philadelphia, PA was charged today by Indictment with three counts of sex trafficking of a minor or of adults by force, announced United States Attorney Zane David Memeger.
If convicted, the defendant faces a mandatory minimum sentence of fifteen years in prison with a maximum sentence of life on each count, a $750,000 fine, a minimum of five years up to a lifetime period of supervised release, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation, with assistance from the Philadelphia Police Department Special Victims Unit, the Tinicum Township Police Department, and the Dover (Delaware) Police Department, and is being prosecuted by Assistant United States Attorney Michelle L. Morgan.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Judge Sentences Bucks County Investment Advisor to Four Years for Embezzlement SchemeRead the Press Release
PHILADELPHIA - David Rothman, 50, of Richboro, Pennsylvania, was sentenced yesterday to 48 months in prison for wire fraud and money laundering. Rothman was the Vice-President of Rothman Securities, Inc. (“RSI”), an investment brokerage firm in Southampton, Pennsylvania. Between January 2007 and February 2012, Rothman embezzled from a 92 year-old RSI client and several beneficial trusts for which he was a named trustee. He used the money for personal expenses and to pay his family, his friends, and other clients to whom he provided falsely inflated investment statements. Rothman created bogus documents and cover stories to mask his fraud and lull victims and clients into a false sense of security. Rothman, a graduate of Penn State University whose annual salary was $600,000 in 2011, pleaded guilty to the two counts on March 26, 2013.
In addition to the prison term, U.S. District Court Judge Berle M. Schiller ordered three years of supervised release and restitution of $505,831.09.
The case was investigated by the Federal Bureau of Investigation and the Securities and Exchange Commission. It was prosecuted by Assistant United States Attorney Vineet Gauri.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Immigration Charges Filed Against Another Bucks County Landscaping Company ExecutiveRead the Press Release
Charles Zeiser, 68, of North Carolina, was charged today by Information with five counts of wire fraud, announced United States Attorney Zane David Memeger. Zeiser was the controller for Land Tech, Enterprises, a landscaping company in Bucks County. He aided and abetted a fraud scheme in which company employees applied for and fraudulently collected Pennsylvania unemployment compensation while continuing to work full-time for the company. The Commonwealth of Pennsylvania was defrauded of at least $43,589 from late 2010 to the spring of 2011.
If convicted, the defendant faces a maximum possible sentence of 100 years of imprisonment, three years of supervised release, a $1,250,000 fine, and a $500 special assessment.
The case was investigated by United States Department of Labor – Office of Inspector General, the Department of State, and U.S. Immigration and Customs Enforcement Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Laurie Magid.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Florida Pair Charged as "Felony Lane" Crew Members in Check Cashing SchemeRead the Press Release
PHILADELPHIA - Brandon James, 23, and Lenardo Nicolas, 25, both of Florida, were charged today by Indictment with participating in an illegal check cashing scheme that involved cashing fraudulent checks using the drive-through teller lane at victim banks. It is alleged that the defendants and other co-conspirators from Florida, known and unknown to the grand jury (“crew members”), stole identifications, checks, bank cards, and credit cards from women’s wallets and purses usually left inside the victims’ cars in unattended parking lots. In order to carry out the scheme, the defendants and other crew members recruited female co-conspirators (“workers”) who could impersonate the victims’ identifications. The defendants and other crew members specifically instructed the workers to use the drive-through teller lane, known to law enforcement as the “felony lane”, to cash the fraudulent checks. The defendants carried out the alleged scheme between December 2012 and September 2013. The indictment charges each defendant with one count of conspiracy, two counts of bank fraud and one count of aggravated identity theft, announced United States Attorney Zane David Memeger.
According to the indictment, James, Nicolas and other crew members rented cars for the female workers to use during the course of the scheme. It is alleged that the defendants and other crew members covered the rental car’s license plate usually with a stolen license plate to conceal the identity of the car as it was in the bank drive-through lane. After a fraudulent check was successfully cashed, the workers would meet the defendants and other crew members, who waited close by to the bank in another rental vehicle, and then give them the money from the illegally cashed check. The workers would then receive another fraudulent, stolen check or checks and stolen identification to use at the next victim bank. The indictment alleges that the defendants and other crew members perpetrated this scheme in different states around the country. The victim bank locations in Pennsylvania included Montgomery and Chester Counties.
If convicted, James and Nicolas each face a maximum possible sentence of 67 years in prison, a $2.5 million fine, a five year period of supervised release and a $400 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Hatfield Township Police Department, the Willistown Township Police Department, and the Upper Uwchlan Township Police Department and is being prosecuted by Assistant United States Attorney Jennifer Chun Barry and Special Assistant United States Attorney Peter Hobart.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Judge Sentenced Philadelphia Man for Sex Trafficking ChildrenRead the Press Release
PHILADELPHIA - Craig Johnson, 42, a/k/a AGeez,@ of Philadelphia, PA, was sentenced today to 288 months (24 years) in prison for two counts of sex trafficking of minors. Johnson operated a prostitution venture in Philadelphia, Pennsylvania. As part of that venture, in June 2012, Johnson recruited young females, ages 15 and 16, respectively, to work as prostitutes. He also created Internet advertisements in which he advertised various females as available for purchase for purposes of prostitution. These advertisements featured pictures of the prostitutes, either scantily clad or partially nude, the price for an encounter, and a phone number to call to arrange a meeting with a prostitute. Johnson pleaded guilty to the charges on June 13, 2013.
In addition to the prison term, U.S. District Court Judge C. Darnell Jones, II, ordered 10 years of supervised release and ordered Johnson to pay $10,400, per victim, in restitution.
The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department Special Victims Unit, with assistance from the Philadelphia District Attorney=s Office and the Bucks County District Attorney=s Office. It was prosecuted by Assistant United States Attorney Michelle L. Morgan.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Hungarian National Charged in Internet Car Sales ScamRead the Press Release
Istvan Zoltan Foris, 44, of Szarvas, Hungary, was charged on November 8, 2013, by Information, with conspiracy to commit wire fraud and possession of a fraudulent passport, announced United States Attorney Zane David Memeger. Foris conspired with others to defraud persons who sought to purchase used vehicles on the internet. Foris used false passports supplied by other conspirators to open bank accounts in the United States for the purpose of receiving funds obtained by fraud from the prospective buyers. These buyers would wire money to the bank accounts opened by Foris and Foris would immediately withdraw the funds and then wire most of the money to conspirators outside the United States. The buyers were not able to recover the funds they sent after they discovered that the offers to sell the vehicles were fraudulent.
If convicted the defendant faces a maximum possible sentence of 30 years in prison, three years of supervised release, possible fines, restitution, and forfeiture, and a $200 special assessment.
The case was investigated by Federal Bureau of Investigation and U.S. Immigration and Customs Enforcement Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Albert S. Glenn.
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former Bucks County Company VP Charged in Immigration FraudRead the Press Release
Steven A. Cohen, 53, of Virginia, was charged today by Information with one count of visa fraud, announced United States Attorney Zane David Memeger. Cohen had been the Vice-President of Operations at Land Tech, Enterprises, a landscaping company in Bucks County. He made a material misstatement on immigration documents so that the company could improperly obtain visas for workers from Mexico to do landscaping work for the company.
If convicted, the defendant faces a maximum possible sentence of 10 years of imprisonment, three years of supervised release, a $250,000 fine, and a $100 special assessment.
The case was investigated by United States Department of Labor Office of Inspector General, the Department of State, and Homeland Security Investigations. It is being prosecuted by Assistant United States Attorney Laurie Magid.
Click here to view the indictment
An Indictment or Information is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former Banker Pleads Guilty to Fraud SchemeRead the Press Release
Daniel Mumbower, 35, a former banker, of Glassboro, NJ, pleaded guilty today to two counts of bank fraud and one count of receiving bribes by a bank employee for his role in a scheme that defrauded lenders of nearly $3 million. A sentencing hearing is scheduled for February 11, 2014. Mumbower worked as a financial specialist at Wachovia Bank in Sicklerville, New Jersey, from April 2005 through April 2008. In mid-2006, Mumbower met a corrupt loan broker, Gerald Cathie (charged elsewhere), who began bringing clients’ applications for lines of credit to Mumbower for submission to Wachovia. Through Cathie, Mumbower met Simon Aouad (charged elsewhere). Aouad also brought others’ loan applications to Mumbower. Mumbower realized that the applications Cathie and Aouad brought him contained false income and employment information and were supported by false documentation, such as false tax returns, but he processed the applications anyway. Mumbower earned a commission from Wachovia Bank for each loan that closed. Mumbower paid Cathie and Aouad a commission out of the proceeds of the loan, which was against bank policy, and Cathie paid Mumbower a cash kickback of approximately $200 per approved loan. Aouad, also, paid Mumbower kickbacks totaling approximately $10,000. The defendant processed a regular, weekly stream of fraudulent loan applications brought to him by Cathie and Aouad. Most applications were for lines of credit totaling between $50,000 and $100,000.
Mumbower received several thousand dollars in kickbacks from both Cathie and Aouad for assisting them in obtaining lines of credit for others. Most of the loans were unsecured business lines of credit. The borrowers defaulted. The total intended loss for the fraudulent lines of credit was approximately $765,000. During the same time frame, Mumbower met John Lucidi, charged elsewhere, a corrupt mortgage broker working in West Chester and Newtown Square. Lucidi was orchestrating a mortgage fraud scheme in which he and others, including Aouad, found buyers to apply for mortgages to purchase real estate located mostly in North Wildwood, New Jersey. With the knowledge of Lucidi, Aouad, and others, but unbeknownst to the lenders, the buyers applied for the mortgages using false and fraudulent income and asset information and received tens of thousands of dollars in undisclosed kickback payments for purchasing the properties. At the request of Aouad and Lucidi, Mumbower provided false verifications of deposit (VODs) purporting to show that the mortgage applicants had tens of thousands of dollars in Wachovia Bank accounts. These false VODs were provided to the mortgage lenders, including Wells Fargo Bank, PNC Bank, and others, in support of mortgage applications to purchase real estate located in West Chester, Pennsylvania; North Wildwood, New Jersey; and Boston, Massachusetts. In exchange for providing the false VODs, Aouad paid Mumbower $5,000 cash. Many of the properties purchased using the false verifications of deposits supplied by Mumbower went into default, and the lenders lost approximately $2 million.
The defendant faces a maximum possible sentence of 90 years of imprisonment, five years of supervised release, a $3 million fine, and a $300 special assessment.
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, and the United States Secret Service. It is being prosecuted by Assistant United States Attorney Nancy E. Potts.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Bryn Mawr Realtor Pleads Guilty to Tax ChargesRead the Press Release
Randall Stein, 55, of Bryn Mawr, PA pleaded guilty today to three counts of filing a false tax return for the years 2006, 2007, and 2008. Stein is the co-founder and former President of WP Realty, Inc. Stein founded WP Realty (formerly known as Weingarten Properties) with Bryan Weingarten in 1995. WP Realty is a Bryn Mawr, PA based commercial real estate company that specializes in the acquisition, development, leasing and management of grocery store-anchored shopping centers. Weingarten, 53, of Ardmore, PA, is the co-founder and CEO of WP Realty.
According to the informations filed separately against Stein and Weingarten, the defendants established the partnership entities of Stein Realty Capital, LP and Weingarten Capital, LP, as repositories for fee income earned through their employment with WP Realty. These partnerships had no business relationship to the fees earned, no operating expenses, and no employees. Both men used these partnerships as a means to deduct personal expenses, thereby reducing their taxable income on their personal income tax returns.
For the years 2006 through 2008, Weingarten filed tax returns with the Internal Revenue Service claiming approximately $5.5 million in false business expenses for his company, Weingarten Captial, LP, in an attempt to reduce his federal income tax liability. Weingarten knew that these were in fact personal expenditures. Weingarten pleaded guilty on April 10, 2013 to three counts of filing false tax returns for the tax years 2006, 2007, and 2008.
For the years 2006 through 2008, Stein filed tax returns with the Internal Revenue Service claiming approximately $334,499 in false business expenses for his company, Stein Realty Capital, LP, in an attempt to reduce his federal income tax liability. Stein knew that these expenses were personal in nature.
Stein will be sentenced on February 18, 2014, before the Honorable Legrome D. Davis, Jr., United States District Court for the Eastern District of Pennsylvania. He faces a maximum sentence of nine years imprisonment. A sentencing date has not yet been set for Weingarten. He also faces a maximum sentence of nine years imprisonment.
This case was investigated by IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorney A. Nicole Phillips and Special Assistant United States Attorney Tiwana Fleming of United States Department of Justice, Tax Division.Click here to view the indictment
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Armed Career Criminal Sentenced to 15 Years in PrisonRead the Press Release
PHILADELPHIA - Curtis Crawford, 40, of Philadelphia, was sentenced today to 15 years in prison for illegally possessing a firearm. Due to his extensive criminal record of drug trafficking, Crawford qualified under the law as an Armed Career Criminal at sentencing which requires a mandatory minimum 15 years in prison. Crawford was convicted at trial on July 11, 2013. In addition to the prison term, U.S. District Court Judge Timothy J. Savage ordered a $1,000 fine, a $100 special assessment, and five years of supervised release.
On August 22, 2012, shortly after midnight, Philadelphia police officers approached Crawford near the intersection of 9th and Butler Streets to ask him some questions about criminal activity which had occurred in that neighborhood. When the officers approached, Crawford ran and discarded a loaded Walther P22 firearm with a laser sight into a nearby sewer inlet. The police officers apprehended Crawford after a short chase and, with the assistance of the Philadelphia Streets Department, fished the firearm out of the sewer inlet.
The case was investigated by the FBI and Philadelphia Police and was prosecuted by Assistant United States Attorney Robert J. Livermore.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Tax Credit Refund Conspirator Gets 51 Month SentenceRead the Press Release
PHILADELPHIA – Paul Rawls, 55 of Philadelphia, was sentenced today to 51 months in prison for his role in a tax fraud scheme that sought to bilk the government of over $600,000.
Rawls conspired with three others – including Jonathan Brownlee 29, a Philadelphia tax preparer. Rawls pleaded guilty to conspiracy and one count of filing a false claim on June 25, 2013. Brownlee, who also pleaded guilty, was sentenced on October 9th to 24 months in prison.Christopher Brownlee, 38, and Anthony Foster, 44, also of Philadelphia are the remaining conspirators. Both are awaiting sentencing. The scheme involved filing false tax claims by obtaining and using the personal identifying information of several individuals, including their Social Security numbers, sometimes under false pretenses. The defendants used the information to prepare and file bogus tax returns claiming fraudulent refunds and directed the refunds to be deposited into bank accounts that the conspirators controlled. The tax returns fraudulently reported that the individuals for whom the defendants had prepared the returns, were entitled to receive a $7,500 refundable tax credit under the Housing and Economic Recovery Act of 2008. The returns were false because those individuals had not purchased new homes and thus were not eligible to apply for the refundable tax credit. Some of the individuals---in whose name the returns had been prepared and filed---were not aware that the defendants had used their Social Security numbers for the purpose of filing the false returns. The indictment was the first in the Eastern District of Pennsylvania involving fraud effecting the Housing and Economic Recovery Act of 2008.
In addition to the prison terms, U.S. District Court Judge Berle M. Schiller ordered Rawls and Brownlee to pay restitution in the amount of $197,385.
The case was investigated by the Internal Revenue Service Criminal Investigations and the Office of Inspector General for the United States Social Security Administration. It is being prosecuted by Assistant United States Attorneys Floyd J. Miller and Patrick J. Murray.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Tax Charges Filed Against Bucks County BusinessmanRead the Press Release
Theodore Harris, 51, of Holland, PA, was charged today by information with willful failure to pay over employment taxes, announced United States Attorney Zane David Memeger. Harris owned and operated Clean Tech USA (“Clean Tech”), a janitorial business located in Huntingdon Valley, PA.
According to the information, between January 1, 2007 and January 31, 2008, willfully failed to collect and pay to the IRS approximately $93,000 in employment taxes owed for his employees.
If convicted, Harris faces a maximum possible sentence of five years in prison and restitution to the IRS.
The case was investigated by the Internal Revenue Service Criminal Investigation and is being prosecuted by Assistant United States Attorney David Axelrod.
Click here to view the indictment
An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Mexican National Charged with Stealing Identification DocumentsRead the Press Release
Enrique Torres, 43, of Philadelphia, Pennsylvania was charged today by Indictment with two counts of knowingly transferring identification documents of the United States, two counts of knowingly selling Social Security cards, and one count of unlawful reentry after deportation, announced United States Attorney Zane David Memeger.
The indictment alleges that the defendant, a Mexican national who previously was deported from the United States, sold identification documents, including two Social Security cards and one Legal Permanent Resident card.
If convicted the defendant faces a maximum possible sentence of 60 years in prison and a $1.25 million fine.
The case was investigated by Immigration and Customs Enforcement Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Karen M. Klotz.
Click here to view the indictment
An Indictment is an accusation. A defendant is presumed innocent unless and until proven guilty.UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Former School Principal Sentenced to Two Years in Prison for Possession of Child PornRead the Press Release
PHILADELPHIA - Troy Czukoski, 43, of Exton, PA, was sentenced today to 24 months in prison for possessing more than 150, but less than 300, images of children engaging in sexually explicit conduct. At the time of the investigation, Czukoski was serving as Principal of the Springton Lake Middle School in the Rose Tree Media School District in Delaware County. In addition to the prison term, U.S. District Court Judge Legrome D. Davis ordered 10 years of supervised release, a $10,000 fine and a $100 special assessment. Czukoski must report to prison on December 30, 2013.
Czukoski was identified through a website that sells child porn. Records from that website showed the Czukoski had made purchases from 2008 through 2011. A warrant was then executed on the defendant=s home, during which the defendant confessed that he had purchased the pornographic content over the internet. Agents with the U.S. Postal Inspection Service found numerous CDs and DVDs, as well as two flash drives that contained images and video of child porn. Czukoski pleaded guilty on May 10, 2013.
The case was investigated by the United States Postal Inspection Service and was prosecuted by Assistant United States Attorney Michelle Rotella.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525Johnson & Johnson to Pay More Than $2.2 Billion to Resolve Fraud and Misbranding AllegationsRead the Press Release
Settlement is largest amount paid over misbranding and unapproved use of single drugPHILADELPHIA – Health care giant Johnson & Johnson (J&J) will pay over $2.2 billion to resolve criminal and civil liability that included the promotion of the atypical anti-psychotic drugs Risperdal and Invega for uses not approved as safe and effective by the Food and Drug Administration (FDA). Of the $2.2 billion, J&J is paying $1.673 billion to resolve allegations of off-label marketing for Risperdal and Invega, as well as the alleged payment of kickbacks to physicians involving Risperdal. The resolution – the largest in U.S. history involving a single drug (Risperdal) and the third-largest health care fraud settlement involving one company – is the result of whistleblower lawsuits filed in the Eastern District of Pennsylvania. It was announced today by the Department of Justice and United States Attorney Zane David Memeger.
Criminal Information: Risperdal was originally approved only to treat the management of the manifestations of psychotic disorders. On March 3, 2002, the approved use was narrowed to treatment of schizophrenia only. According to a criminal information filed today, Janssen Pharmaceuticals, Inc., a J&J subsidiary, introduced Risperdal for a new, unapproved use, rendering the product misbranded. In a plea agreement resolving these charges, Janssen admits that between March 3, 2002, and December 31, 2003, it promoted Risperdal to health care providers for treatment of psychotic symptoms and associated disturbances exhibited by elderly, non-schizophrenic dementia patients. Under the terms of the plea agreement, Janssen will pay a total of $400 million, including a criminal fine of $334 million and forfeiture of $66 million. Janssen has agreed to plead guilty to introducing a misbranded drug into interstate commerce.
Civil Complaint: In its Complaint, the United States alleges that between January 1999 and December 2005, Janssen marketed Risperdal for unapproved uses to control and treat behavioral disturbances and conduct disorders in the nation’s most vulnerable patients: elderly nursing home residents, children, and individuals with mental disabilities. Between 2006 and 2009, the government alleges that Janssen marketed the sale and use of Invega – which was approved to treat schizophrenia – for conditions for which it was not approved. J&J and Janssen caused false claims to be submitted to federal healthcare programs by promoting these drugs for off-label uses that federal healthcare programs did not cover, making false and misleading statements about the safety and efficacy of Risperdal, and paying kickbacks to physicians to prescribe Risperdal. The government’s complaint also contains allegations that Janssen paid speaker fees to doctors to influence them to write more prescriptions for Risperdal. Sales representatives allegedly told the doctors that if they wanted to receive payments for speaking, they needed to increase their Risperdal prescriptions. For this conduct, J&J is paying $1.273 billion in civil penalties. J&J paid $118 million to the State of Texas in March 2012 to resolve similar allegations involving both state and federal dollars, bringing the total civil settlement to $1.391 billion.The Federal Food, Drug and Cosmetic Act (FDCA) requires a pharmaceutical company to specify the intended uses of a product in its new drug application to the FDA. Once approved, a drug may not be introduced into interstate commerce for unapproved or “off-label” uses. A manufacturer’s promotional activities of a drug for a use not approved by the FDA are evidence of its intent to distribute the drug for a new, unapproved use, also known as “misbranding.” In its complaint, the government alleges that the FDA repeatedly advised Janssen that marketing Risperdal as safe and effective for the elderly would be “misleading.”
“The conduct at issue in this case jeopardized the health and safety of patients and damaged the public trust,” said Attorney General Eric Holder. “This multibillion-dollar resolution demonstrates the Justice Department’s firm commitment to preventing and combating all forms of health care fraud. And it proves our determination to hold accountable any corporation that breaks the law and enriches its bottom line at the expense of the American people.”“J&J’s promotion of Risperdal for unapproved uses threatened the most vulnerable populations of our society – children, the elderly, and those with developmental disabilities,” said Memeger. “This historic settlement sends the message that drug manufacturers who place profits over patient care will face severe criminal and civil penalties.”
Off-Label Promotion to the Elderly
The civil complaint further alleges that from 1999 through 2005, despite the FDA warnings, Janssen aggressively marketed Risperdal to control behavioral disturbances in dementia patients through an “ElderCare sales force” designed to target nursing homes and doctors who treated the elderly. In business plans, Janssen’s goal was to “[m]aximize and grow RISPERDAL’s market leadership in geriatrics and long term care.” The company touted Risperdal as having “proven efficacy” and “an excellent safety and tolerability profile” in geriatric patients. The complaint further alleges that J&J and Janssen were aware that Risperdal posed serious health risks for the elderly, including an increased risk of strokes, but that the company downplayed these risks. For example, a J&J study showed a significant risk of strokes and other adverse events in elderly dementia patients taking Risperdal. Janssen pooled the study data with other studies resulting in a lower overall risk of adverse events.
Off-Label Promotion to Children
In addition to promoting Risperdal for elderly dementia patients, Janssen allegedly promoted the antipsychotic drug for use in children and individuals with mental disabilities from 1999 through 2005. J&J and Janssen knew that Risperdal posed certain health risks to children, including the risk of elevated levels of prolactin, a hormone that can stimulate breast development and milk production. Nonetheless, one of Janssen’s Key Base Business Goals was to grow and protect share in the child/adolescent market. Janssen instructed its sales representatives to call on child psychiatrists as well as mental health facilities that primarily treated children and to market Risperdal as safe and effective for symptoms of various childhood disorders, such as attention deficit hyperactivity disorder, obsessive-compulsive disorder, oppositional defiant disorder and autism. Until late 2006, Risperdal was not approved for use in children for any purpose, and the FDA repeatedly warned the company against promoting it for use in children.
The complaint also alleges that Janssen knew patients taking Risperdal had an increased risk of developing diabetes, but nonetheless promoted Risperdal as “uncompromised by safety concerns (does not cause diabetes).” When Janssen received the initial results of studies indicating that Risperdal posed the same diabetes risk as other antipsychotics, the company retained outside consultants to re-analyze the study results and ultimately published articles stating that Risperdal was actually associated with a lower risk of developing diabetes.
Non-monetary Provisions and Corporate Integrity Agreement
In addition to imposing substantial monetary sanctions, the resolution will subject J&J to stringent requirements under a corporate integrity agreement (CIA) with the Department of Health and Human Services Office of Inspector General (HHS‑OIG). The agreement is designed to increase accountability and transparency and prevent future fraud and abuse.
The CIA includes provisions requiring J&J to implement major changes to the way its pharmaceutical affiliates do business. Among other things, the CIA requires J&J to change its executive compensation program to permit the company to recoup annual bonuses and other long-term incentives from covered executives if they, or their subordinates, engage in significant misconduct. J&J may recoup monies from executives who are current employees and those who have left the company. The CIA also requires J&J’s pharmaceutical businesses to implement and maintain transparency regarding its research practices, publication policies, and payments to physicians. On an annual basis, management employees, including senior executives and certain members of J&J’s independent Board of Directors, must certify compliance with provisions of the CIA. J&J must submit detailed annual reports to HHS-OIG about its compliance program and its business operations.
“OIG will work aggressively with our law enforcement partners to hold companies accountable for marketing and promotion activities that violate laws intended to protect the public,” said Daniel R. Levinson, Inspector General of the U.S. Department of Health and Human Services. “Our compliance agreement with Johnson & Johnson increases individual accountability for board members, sales representatives, company executives and management. The agreement also contains strong monitoring and reporting provisions to help ensure that the public is protected from future unlawful and potentially harmful off-label marketing.”
“When pharmaceutical companies interfere with the FDA’s mission of ensuring that drugs are safe and effective for the American public, they undermine the doctor-patient relationship and put the health and safety of patients at risk. Today’s settlement demonstrates the government’s continued focus on pharmaceutical companies that put profits ahead of the public’s health,” said John Roth, director of the Food and Drug Administration’s Office of Criminal Investigations. “The FDA will continue to devote resources to criminal investigations targeting pharmaceutical companies that disregard the drug approval process and recklessly promote drugs for uses that have not been proven to be safe and effective.”“Any illegal healthcare scheme to increase profit over the protection of unsuspecting patients is shameful,” said Special Agent-in-Charge Craig W. Rupert, Defense Criminal Investigative Service. “This illegal activity harms patients and negatively affects the delivery of healthcare to more than nine million Department of Defense military members, retirees, and their families. This settlement demonstrates DCIS’s continuing commitment to investigate those who abuse government healthcare programs and who disregard appropriate corporate governance at the expense of patients.”
“Unfortunately, there are those who take advantage of the healthcare system by seeking reimbursement for services and products that they are not entitled to,” said Monica Weyler, Special Agent-in-Charge of the Eastern Area Field Office for U.S. Postal Service Office of Inspector General. “We want to thank our law enforcement partners for their efforts in preventing fraud, waste, and abuse within the Postal Service.”This civil settlement described above resolves four lawsuits pending in federal court in the Eastern District of Pennsylvania under the qui tam, or whistleblower, provisions of the False Claims Act, which allow private citizens to bring civil actions on behalf of the United States and share in any recovery. As part of today’s resolution, the whistleblowers in those cases will share $112 million from the federal share of the settlement amount.
This matter was investigated by the Health and Human Services-Office of Inspector General, the Food and Drug Administration’s Office of Criminal Investigations, the Defense Criminal Investigative Service of the Department of Defense, the Office of the Inspector General for the U.S. Postal Service. Assistance was provided by the National Association of Medicaid Fraud Control Units.
The criminal case is being prosecuted by Assistant U.S. Attorneys Albert Glenn and Scott Cullen; the civil case is being prosecuted by Assistant U.S. Attorneys Charlene Keller Fullmer and Mary Catherine Frye.
Court documents related to the entire global settlement can be viewed online at http://www.justice.gov/opa/jj-pc-docs.html.View the: Civil Complaint | Exhibits | Information
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PATTY HARTMAN, Media Contact, 215-861-8525Child Pornographer Sentenced to Five YearsRead the Press Release
Elijah Fogle, 22, of Charlotte, North Carolina, was sentenced today to 60 months in prison for distribution of child pornography, receipt of child pornography, and possession of child pornography. U.S. District Court Judge Petrese Tucker also ordered 10 years of supervised release and a $300 special assessment.
Fogle pleaded guilty on July 30, 2013 and admitted that he had amassed a collection of child pornography on his computer and a thumb-drive that included hundreds of images and videos of children being sexually abused. He also admitted that he had distributed and received child pornography images over the Internet by uploading them to a file sharing website.
A special agent with Homeland Security Investigations, acting in an undercover capacity, signed into a “covert” account on a private peer to peer network in February 2012 and engaged in an online chat with a user later identified as the defendant. During the chat, Fogle advised he had folders to share that were on a flash drive and needed to be online for viewing. That same day, the agent selected 19 video files and discovered child exploitation activity. The downloaded files depicted children engaged in sexually explicit conduct. A full forensic examination of the defendant’s laptop computer and thumb-drive was conducted during which 835 images and 362 videos of child pornography were recovered. The images and videos on the thumb drive were contained in a hidden folder, which was consistent with being created to avoid discovery. The majority of the collection depicts prepubescent and pubescent males, many of which are clearly under the age of 12 years. During an interrogation the defendant admitted that he had sexually abused a 12 year old boy from his neighborhood in North Carolina.
The case was investigated by the Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Tomika N. Stevens.
UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525