Eastern District of Pennsylvania

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Joseph Cammarata, 47, of Monmouth Beach, NJ; Erik Cohen, 40, of Manalapan, NJ; and David Punturieri, 41, of Staten Island, NY; were arrested and charged by Indictment on charges of conspiracy to commit multiple counts of fraud in connection with a securities fraud claims scheme.

The Indictment alleges that the three defendants were the principals of Alpha Plus Recovery, a claims aggregator firm based in Old Bridge, New Jersey. The Indictment further alleges that the defendants used Alpha Plus Recovery to make false and fraudulent claims, including claims made in the Eastern District of Pennsylvania, to the proceeds of securities fraud class action and SEC enforcement action settlements. The defendants falsely claimed that corporate clients of Alpha Plus Recovery had purchased shares of securities that were the subject of the lawsuits and enforcement actions. In reality, the clients, which were entities actually controlled by the defendants, had not purchased the subject securities. To substantiate the false claims, the defendants created fraudulent brokerage and other financial documents to provide to claims administrators. The defendants then allegedly transferred the fraudulently obtained funds into accounts they controlled. The Indictment alleges that between 2014 and 2021, the defendants received approximately $40 million from these false claims.

“As alleged, these defendants manipulated complicated financial transactions for years in order to steal roughly $40 million,” said Acting U.S. Attorney Williams. “Cammarata, Cohen and Punturieri committed fraud on top of fraud, filing claims on behalf of clients that didn’t actually exist and doctoring false financial documents to support those fraudulent claims. Their alleged scheme has now been uncovered and they will have to answer for their conduct.”

If convicted, each defendant faces a maximum possible sentence of 20 years in prison.

The case was investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, the Internal Revenue Service-Criminal Investigation, and the Securities and Exchange Commission, and is being prosecuted by Assistant United States Attorneys David J. Ignall and Paul G. Shapiro.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Joseph Whitbeck, 56, of Tamaqua, PA, pleaded guilty to multiple fraud charges before United States District Court Judge Edward G. Smith stemming from his operation of a scheme to defraud fellow union members out of rightfully earned overtime compensation.

In April 2021, the defendant was charged by Indictment with wire fraud and honest services wire fraud. According to the Indictment, while serving as the Vice President for the Local 274 branch of the National Association of Letter Carriers in the Lehigh Valley area, Whitbeck operated a kickback scheme involving certain letter carriers at the Allentown Post Office. As the Vice President, the defendant filed numerous grievances on behalf of groups of letter carriers, claiming that U.S. Postal Service managers violated overtime rules. The Indictment charges that Whitbeck then settled these class-action grievances for total lump sums, without designating the specific individuals to whom overtime grievance payments were owed, so that he could select the payees at a later time. Meanwhile, Whitbeck offered to secure extra overtime grievance payouts for some letter carriers who agreed to kick back a portion directly to him, generally in cash. This kickback scheme prevented non-participating letter carriers from receiving overtime grievance funds to which they were entitled. The Indictment also alleges that the defendant often made false and misleading statements to convince letter carriers to participate in his scheme; for example, the defendant frequently told letter carriers that he would use the kick-backed funds to assist other letter carriers who were out of work.

The defendant’s covert kickback scheme lasted more than a decade and was uncovered only when a concerned letter carrier raised the issue at a union Executive Board meeting in March 2018.

“Union representatives are supposed to act in the best interest of their members, not swindle them out of rightfully earned pay or urge them to participate in fraud,” said Acting U.S. Attorney Williams. “As Vice President of the local branch of Letter Carriers, this defendant had a duty to advocate on behalf of all members in the Allentown Post Office in connection with the equitable distribution of overtime grievance settlements. Whitbeck abused his position and for that he will now face the consequences in federal court.”

“Corruption of postal employees is a significant vulnerability and a serious breach of public trust,” said Imari L. Niles, USPS OIG Special Agent in Charge, Mid-Atlantic Area Field Office.  "With the coordinated efforts of the USPS OIG and our law enforcement partners, special agents will continue their vigilant watch against anyone receiving kickbacks involving US Postal Service employees.”

“Joseph Whitbeck, former Vice President of the National Association of Letter Carriers Branch 274, engaged in a kickback scheme involving the solicitation of cash payments from letter carriers for whom he assisted in obtaining sizeable monetary grievance settlements against the United States Postal Service.  We will continue to work with our law enforcement partners and the U.S. Department of Labor’s Office of Labor- Management and Standards to investigate those who exploit fellow union members and their benefits,” said Syreeta Scott, Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

The case was investigated by the U.S. Postal Service – Office of Inspector General, the U.S. Department of Labor – Office of Inspector General, and the U.S. Department of Labor – Office of Labor-Management Standards, and is being prosecuted by Assistant United States Attorney Patrick J. Murray

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Edward C. Kipp, 75, of Philadelphia, PA, was sentenced to 19 months in prison and ten years of supervised release by United States District Court Judge Jeffrey L. Schmehl for failing to register as a sex offender, as required by the Sex Offender Registration and Notification Act (SORNA), also known as “Megan’s Law.” Under Megan’s Law, sex offenders are required to register their home, work, and school addresses with state law enforcement, so that individuals can search a database and be aware of convicted sex offenders living, working, or attending school in their neighborhood.

In August 2021, the defendant was convicted at trial of the charge of failing to register as a sex offender. In 2013, Kipp was convicted of possessing child pornography. Because of that conviction, he is required to register as a sex offender with the Pennsylvania State Police, and to verify that registration on an annual basis for 10 years. The defendant must also notify the State Police within three business days if there is any change in his residence. In 2020, Kipp absconded from federal supervised release and moved to a new residence without updating his registration. For this offense, he was charged by Indictment in September 2020.

“The purpose of Megan’s Law is to provide the public with current information about the whereabouts of sex offenders in order to ensure public awareness and safety,” said Acting U.S. Attorney Williams. “Failure to comply with the Megan’s Law registration requirement is not simply an administrative hiccup; it is a federal crime. And if offenders do not fulfill their obligation to report, we will aggressively prosecute them to ensure compliance.”

“Non-compliance regarding sex offender registration is, quite simply, not an option,” said Eric Gartner, U.S. Marshal for the Eastern District of Pennsylvania. “We will continue to aggressively enforce these laws purposed to protect our children as part of a deterrence framework supporting Project Safe Childhood.”

“Parents want to know if there’s a sex offender living in the neighborhood, to better protect their children, and Megan’s Law gives them that right,” said Jacqueline Maguire, Special Agent in Charge of the FBI’s Philadelphia Division. “If registered offenders refuse to keep their information current, as required, the FBI and our partners will see that they’re held accountable. The community’s safety is paramount here.”

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 Attorney’s Offices and the Criminal Division's Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov.       

The case was investigated by the United States Marshals Service and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Jessica Rice and Nancy Rue.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that David Landis, 44, of Norristown, PA, has been sentenced to 15 years in prison, three years of supervised release, and was ordered to pay a special assessment of $6,300 by United States District Court Judge Gerald J. Pappert for numerous charges related to his participation in a global drug-trafficking conspiracy.

In October 2018, Landis pleaded guilty to conspiracy to import controlled substances, conspiracy to distribute those controlled substances, possession of controlled substances with intent to distribute, maintaining a drug-involved premises, distributing controlled substances which resulted in serious bodily injury, and 58 counts of distributing controlled substances. Of the distribution counts, one count involved the distribution of U-47700 to an individual which resulted in serious bodily injury. The remaining distribution counts relate to the defendant’s distribution of U-47700, furanyl fentanyl, and/or methoxyacetyl fentanyl to numerous individuals, some of whom received these illegal substances and later overdosed and died with the same kind of controlled substances in their systems that Landis sent to them.

The charges arose from an investigation into an international drug distribution operation, in which the defendant played a central role. From early 2016 until about March 2017, Landis conspired and agreed to distribute thousands of packages of narcotics with multiple co-conspirators in China. These co-conspirators – Deyao Chen, Guichun Chen, and Liangtu Pan, all using the alias “Alex” on the Internet – offered controlled substances for sale, including furanyl fentanyl, U-47700, and methoxyacetyl fentanyl. Customers accessed these websites and selected the controlled substances they wanted to purchase, and the co-conspirators directed the customers to different websites to pay for their orders.

Upon receipt of payment from the customers, the co-conspirators in China emailed the customers’ orders to Landis, who was a distributor residing in Montgomery County, PA and a former Montgomery County Deputy Sheriff. The co-conspirators mailed controlled substances from China to Landis in quantities sufficient to meet the orders from their Internet customers.  Landis would then mail the controlled substances via the United States Postal Service to customers located throughout the United States and in numerous other countries. In less than a year, Landis mailed approximately 2,900 packages of controlled substances to customers on behalf of the drug-trafficking operation.  

Defendants Deyao Chen, Guichun Chen, and Liangtu Pan have been charged separately and are currently believed to be at-large in China.

“This investigation uncovered illegal drug manufacturers in China who were flooding the United States with poison in the form of deadly opioids,” said Acting U.S. Attorney Williams. “The fact that this defendant – a former law enforcement officer – would help them do so is a travesty. Landis sent deadly drugs across this country and abroad, with no regard for the health or safety of others. The community will be a safer place with him behind bars for the foreseeable future.”

“David Landis was formerly in a position of public trust and turned to distributing deadly drugs throughout Montgomery county and beyond, which in some cases resulted in an overdose. Today’s sentencing sends a message to those narcotics traffickers who act with little regard for law or human life, that Homeland Security Investigations and our law enforcement partners will ensure that you are held accountable for your criminal acts,” said Brian A. Michael, Special Agent in Charge of Homeland Security Investigations, Philadelphia. 

This Organized Crime Drug Enforcement Task Force (OCDETF) designated case was supported by the Liberty Mid-Atlantic High Intensity Drug Trafficking Area (LMAHIDTA) and investigated by Homeland Security and the Pennsylvania State Police, with assistance from the following law enforcement agencies: Drug Enforcement Administration; U.S. Postal Inspection Service; United States Postal Service-Office of Inspector General; United States Secret Service; U.S. Customs and Border Protection; the Pennsylvania National Guard; Mentor-on-the-Lake Police Department, Ohio; La Vergne, Tennessee Police Department; Floyd County, Georgia Police Department; Hebron, Ohio Police Department; and the Tri-County, Illinois Drug Enforcement Task Force. It is being prosecuted by Assistant United States Attorney Clare Putnam Pozos.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Anthony Robinson, a/k/a Slick, 34, of Philadelphia, PA, was convicted at trial of conspiring with others to smuggle contraband into the Federal Detention Center (FDC) in Philadelphia.

In April 2021, Robinson was indicted for conspiracy and possession of contraband in prison stemming from a 2020 incident caught on tape in the prison. In April 2020, staff at the FDC observed a man outside the prison, attaching items to a line. Security camera footage showed a rope being pulled up the side of the building facing Arch Street. Upon searching the cell from which the rope emanated, officers found two cellmates along with quantities of Suboxone, cocaine, tobacco, methamphetamine tablets, marijuana, a SIM card, and an inoperable cell phone. Both men were charged and convicted for possessing contraband in prison. Meanwhile, investigation revealed that they did not act alone. Specifically, investigation revealed that another FDC inmate, defendant Robinson, had aided them in their smuggling operation from his own cell by arranging, using a contraband cell phone, for the drugs to be brought to the FDC.

“Maintaining the secure environment of federal correctional facilities is paramount to the safety of staff and inmates and the pursuit of justice,” said Acting U.S. Attorney Williams. “In this case, even though this defendant had already committed an unrelated federal offense for which he was in prison awaiting trial, he couldn’t help himself and committed another crime by smuggling contraband into the facility. He will now face even more time behind bars after this trial conviction.”

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

PHILADELPHIA – Acting U.S. Attorney Jennifer Arbittier Williams announced that Jeremi Michael Conaway, 46, of West Chester, PA, and James Bell, 69, of Glen Mills, PA, were both charged by separate Informations with one count of conspiracy to commit mail and wire fraud, three counts of mail fraud, and one count of wire fraud.

The Informations allege that Conaway and Bell each conspired with former United States Golf Association (“USGA”) employee Robert Fryer, who already pleaded guilty to similar charges, to operating a fraud scheme against the USGA whereby Fryer would steal U.S. Open tickets and provide them to Conaway and Bell in return for cash. The Informations further allege that Conaway and Bell sold these U.S. Open tickets through their companies for a profit. The filings also allege that the USGA had no knowledge that Fryer was stealing these tickets or providing them to the ticket brokers. In fact, the USGA had a strict 20 ticket cap on the number of tickets that it would sell to any one person, but Conaway and Bell were allegedly able to acquire thousands of tickets to U.S. Open tournaments by buying stolen tickets from Fryer, who delivered the stolen U.S. Open tickets to Conaway and Bell sometimes in person, and sometimes by sending them via Federal Express or UPS, either to the ticket brokers themselves or directly to their customers.

The Information filed against Conaway alleges that Conaway, who initially worked for another ticket broker, began purchasing from Fryer stolen U.S. Open tickets in 2013, when the U.S. Open was held at the Merion Golf Club in Ardmore, Pennsylvania. The Information alleges that in connection with the 2013 through 2015 U.S. Open tournaments, Conaway sold, through his then-employer, a total of 4,918 stolen U.S. Open tickets that he had obtained from Fryer, with a face value of $774,230. The Information further alleges that starting in 2015, Conaway began selling the stolen tickets through a new ticket broker company he owned and operated, Eagle Eye Ticketing Management, LLC (“Eagle Eye”). In connection with the 2015 through 2019 U.S. Open tournaments, Conaway purchased from Fryer and sold through Eagle Eye 10,586 stolen U.S. Open tournament tickets for $1,789,853, for which defendant Conaway paid Fryer $513,719, thus earning a profit of $1,276,134, which the Information seeks to have forfeited. The Information alleges that all told, whether through his employer or through his own company, Conaway obtained stolen U.S. Open tickets from Fryer that had a face value of $2,428,465, which should have been paid to the USGA for the tickets, thus causing to USGA to lose that amount of ticket revenue.

The Information filed against Bell alleges that Bell, who operated Sherry’s Theater Ticket Agency, Inc. (“Sherry’s”), began purchasing stolen U.S. Open tickets from Fryer in 2017, in advance of the U.S. Open that was held at Erin Hills in Erin, Wisconsin, and continued purchasing stolen tickets through the 2019 U.S. Open. The Information alleges that Bell paid Fryer $324,652 for at least 7,000 stolen U.S. Open tournament tickets, which Bell sold for $922,886, thus yielding a profit of $598,234, which the Information seeks to have forfeited. The Information alleges that all told, Bell obtained stolen U.S. Open tickets from Fryer that had a face value of $1,282,000, which should have been paid to the USGA for the tickets, thus causing to USGA to lose that amount of ticket revenue.

“These defendants allegedly stole revenue from an American insititution and legitimate business that pays taxes, employs many, supports a non-profit organization, and brings excitement and income to our district with U.S. Open events at courses like the Merion Golf Club,” said Acting U. S. Attorney Williams. “Criminals that conduct ticket schemes like this prey on the excitement surrounding big events; fans should remember that any item with a low price that seems ‘too good to be true’ should be cause for caution and concern.”

Conaway and Bell each face a maximum sentence of 100 years in prison, a three-year period of supervised release, a $1,250,000 fine, and a $500 special assessment. In addition, Conaway and Bell each will be required to pay restitution to the USGA and forfeit the proceeds each obtained as a result of their fraud.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced a partnership between the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Justice Department’s Civil Rights Division for the launch of DOJ’s new Combatting Redlining Initiative.

Redlining is an illegal practice in which lenders avoid providing services to individuals living in communities of color because of the race or national origin of the people who live in those communities. The new Initiative represents the Department’s most aggressive and coordinated enforcement effort to address redlining, which is prohibited by the Fair Housing Act and the Equal Credit Opportunity Act.

“Lending discrimination runs counter to fundamental promises of our economic system,” said Attorney General Merrick B. Garland. “When people are denied credit simply because of their race or national origin, their ability to share in our nation’s prosperity is all but eliminated. Today, we are committing ourselves to addressing modern-day redlining by making far more robust use of our fair lending authorities. We will spare no resource to ensure that federal fair lending laws are vigorously enforced and that financial institutions provide equal opportunity for every American to obtain credit.”

“The U.S. Attorney’s Office is proud to partner with the Attorney General and the Civil Rights Division on this important initiative,” said Acting U.S. Attorney Jennifer Arbittier Williams. “Homeownership is the American dream.  Lending institutions that make decisions based on the color of a person’s skin, rather than their creditworthiness, violate the fundamental principles on which our Constitution is based. These entities are now on notice that they will be fully prosecuted by the Department of Justice.”

Redlining, a practice institutionalized by the federal government during the New Deal era and implemented then and now by private lenders, has had a lasting negative impact. For American families, homeownership remains the principal means of building wealth, and the deprivation of investment in and access to mortgage lending services for communities of color have contributed to families of color persistently lagging behind in homeownership rates and net worth compared to white families. The gap in homeownership rates between white and Black families is larger today than it was in 1960, before the passage of the Fair Housing Act of 1968.

This Initiative, which will be led by the Civil Rights Division’s Housing and Civil Enforcement Section in partnership with U.S. Attorney’s Offices, will build on the longstanding work by the Division that seeks to make mortgage credit and homeownership accessible to all Americans on the same terms, regardless of race or national origin and regardless of the neighborhood where they live. The initiative will:

• Utilize U.S. Attorneys’ Offices as force multipliers to ensure that fair lending enforcement is informed by local expertise on housing markets and the credit needs of local communities of color.
• Expand the department’s analyses of potential redlining to both depository and non-depository institutions.  Non-depository lenders are not traditional banks and do not provide typical banking services, but engage in mortgage lending and now make the majority of mortgages in this country.
• Strengthen our partnership with financial regulatory agencies such as to ensure the identification and referrals of fair lending violations to the Department of Justice.
• Increase coordination with State Attorneys General on potential fair lending violations.

Individuals may report lending discrimination by calling the Justice Department’s Housing Discrimination Tip Line at 1-833-591-0291, or submitting a report online.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams and Philadelphia Police Commissioner Danielle Outlaw hosted a town hall meeting this week to discuss the Asian Community Safety Initiative, in partnership with the Federal Bureau of Investigation; Bureau of Alcohol, Tobacco, Firearms and Explosives; the Philadelphia Commission on Human Relations; and the Philadelphia Chinatown Development Corporation. The event was held in-person and virtually from the PCDC office in Center City, Philadelphia. The Executive Director of PCDC, John Chin, moderated the event.

Speakers at the meeting included Assistant United States Attorneys, FBI Agents, and ATF Agents who work together to investigate and prosecute at the federal level hate crimes and violent crimes directed at the Asian community. Representatives from the Philadelphia Police Department spoke about how the department works with federal law enforcement when investigations are pursued at the federal level, and officers of Asian descent introduced themselves and re-affirmed their commitment to serving the community of which they are a part. The audience was given examples of crimes that are prosecuted under local and federal statutes, information about how to report crimes to the appropriate authorities, and resources to get more information including contact information for the presenting agencies. Finally, a representative from PCHR discussed incidents which might not be criminal in nature, but are nevertheless upsetting to recipients and which may be addressed through services offered by the commission.

Following the presentations, speakers took questions from the audience (both virtual and in-person). Questions ranged from how to overcome language barriers, to how to ensure cultural competency, to how the Department could leverage future technologies to assist with crime reporting by the community.

“Our goal is to stop crimes before the occur, and tonight’s meeting is an important step toward achieving that goal,” said Acting U.S. Attorney Williams. “I want to thank the members of the community in attendance who have come here to engage with law enforcement and work together towards positive change and a safer city. It will require effort from everyone to achieve this goal.”

“Acts of violence and hate against our AAPI community members are entirely unacceptable, and our department remains committed to working with our law enforcement and community partners to address these serious concerns,” said Police Commissioner Danielle Outlaw. “Earlier this year, the PPD surveyed members of the Patrol and Detective Bureaus in order to identify Police Officers, Supervisors and Detectives that are interested in participating in a program of AAPI Community Outreach to be conducted jointly by the PPD and the U.S Attorney's Office. Numerous Police Officers, Sergeants, and investigators of AAPI descent are participating in this program that is being guided by our Deputy Commissioner of Investigations, Ben Naish. We look forward to this new partnership.”

“It’s crucial for us to listen to members of the community, to hear their fears and concerns about hate incidents and violent crime,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “We also want to answer people’s questions, and let them know how the FBI and our partners are working on their behalf. Everyone deserves to feel safe in their community.”

“ATF remains dedicated to investigating violent firearm-related crimes throughout the Philadelphia region,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “Together, with our law enforcement partners, we will continue to take measures to ensure the safety of our communities.”

“We have been working tirelessly since the beginning of the pandemic to address anti-Asian hate and bias, and we see this event as a critical step in educating our communities about the importance of reporting hate incidents. In addition, this event functions to build trust between law enforcement and the AAPI communities--trust that is crucial to build and maintain in order to keep our communities safe,” said Albert Randy Duque, Deputy Director, PCHR.

“The coming together of community and law enforcement is a critical tool to abating violence, especially against Asian American communities,” said John Chin, Executive Director, PCDC. “As a community-based organization, PCDC has been helping victims, leading advocacy, and championing equitable resources to overcome language and cultural barriers. This meeting was a step in the right direction, and we appreciate the Department of Justice and Philadelphia Police Department's commitment to addressing hate crimes and violence against Asian American communities.”

Video of the town hall meeting and slides from the presentation are available on PCDC’s website: https://chinatown-pcdc.org/asian-community-safety-initiative/.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that William Watts, Sr., 55, of Philadelphia, PA, was arrested and charged by Criminal Complaint for transportation and possession of child pornography, arising from his transmission over the internet of images of children being sexually abused.

According to the Complaint, the defendant downloaded multiple files of child pornography from the internet application ‘WhatsApp,’ including depictions of prepubescent children engaged in sexual acts, some with adults. The defendant was arrested this morning after the FBI executed a federal search warrant at his residence. He will make his initial appearance in federal court tomorrow, October 22, 2021, and a pretrial detention and probable cause hearing will be scheduled for next week. 

During the time of the charged offenses, Watts was employed as a Philadelphia Police Officer.

“As alleged in the Criminal Complaint, the defendant sought out videos of children being abused for his own gratification – thus adding to the demand for these types of images to be produced and more children to be victimized,” said Acting U.S. Attorney Williams. “The convenience and accessibility of digital images, coupled with the ease with which child sexual exploitation crimes can be concealed online, make these cases extremely difficult to investigate and prosecute. However, our Office and our law enforcement partners are committed to doing this difficult work in order to hold people like this defendant accountable, no matter their position in the community or occupation.”

“No one is above the law,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI's Philadelphia Division. “If you're seeking out images of children being sexually abused and exploited, you're perpetuating the victimization of innocents and the FBI is going to investigate and bring you to justice. Protecting children is the priority here.”

If convicted, the defendant faces a maximum possible sentence of 40 years in prison.

The case was investigated by the FBI and is being prosecuted by Assistant United States Attorney Kelly Harrell.

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

A federal grand jury in Philadelphia, Pennsylvania, returned an indictment in July, which was unsealed yesterday, charging a South Carolina man with tax evasion and attempting to obstruct an IRS civil audit and an IRS criminal investigation.

According to the indictment, Wayne M. Garvin, currently of Columbia, South Carolina, and previously of Philadelphia, allegedly filed individual income tax returns for the years 2012 through 2016 on which he claimed fraudulent deductions and expenses, including charitable contribution deductions and expenses associated with rental properties that he owned for some years. For the year 2013, Garvin also allegedly claimed he had expenses associated with service in the U.S. Army Reserves even though he did not perform any reservist duty that year. At the time Garvin filed his false tax returns, he was employed as a Supervisory Associate Advocate with the IRS’s Taxpayer Advocate Service in Philadelphia.

The indictment also alleges that after the IRS began an audit of Garvin’s 2013 and 2014 tax returns, Garvin submitted fraudulent documents to the IRS revenue agent conducting the audit. Among other fraudulent documents, Garvin allegedly created receipts from a church, invoices from a contractor and a letter from the Department of the Army in an attempt to convince the IRS he was entitled to claim the deductions and expenses on his returns. Garvin allegedly submitted the fraudulent documents to the IRS to prevent the IRS from assessing additional taxes against him for 2013 and 2014. Finally, the indictment alleges that after the IRS notified Garvin that he was under criminal investigation for filing false tax returns, Garvin provided the same fraudulent documents to IRS Criminal Investigation that Garvin previously provided to the IRS revenue agent.

Garvin is charged with three counts of tax evasion and two counts of corruptly endeavoring to impair and impede the due administration of the internal revenue laws. The defendant made his initial court appearance today. If convicted, he faces a maximum penalty of five years in prison on each count of tax evasion, and a maximum penalty of three years in prison on each count of endeavoring to impair the internal revenue laws. A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division and Acting U.S. Attorney Jennifer Arbittier Williams of the Eastern District of Pennsylvania made the announcement.

IRS Criminal Investigation is investigating the case.

Trial Attorney Melissa S. Siskind of the Justice Department’s Tax Division and Assistant U.S. Attorney Tiwana Wright of the U.S. Attorney’s Office for the Eastern District of Pennsylvania are prosecuting the case.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Richard Garland Jones, 24, of Reading, PA, was sentenced to five years in prison, five years of supervised release by United States District Court Judge Joseph F. Leeson, Jr., for committing an armed bank robbery in April 2019.

In March 2021, the defendant pleaded guilty to an Indictment charging him with the gunpoint robbery of a bank on Oregon Pike in Brownstown, PA, stealing approximately $117,000. Jones was the gunman during the robbery, and another defendant (who also pleaded guilty) was the getaway driver. Jones fled the bank and jumped into the getaway car.  The police pursued the robbers and apprehended them after they lost control and crashed the vehicle. Police officers found Jones in possession of the $117,000 in cash and other evidence, including the pellet gun that he used during the robbery.

“This may not be common knowledge so it bears repeating: robbing a bank – armed or not – is a serious federal crime which will result in a significant prison sentence for everyone involved,” said Acting U.S. Attorney Williams. “In this case, the defendants may have been after easy money, but Jones is now losing years of his life to a federal prison sentence.  It is not worth it.”

The case was investigated by the West Earl Township Police Department, the Akron Borough Police Department, the East Cocalico Township Police Department, the Pennsylvania State Police, the Lancaster County District Attorney’s Office, and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Scott Brooks, 40; Jeffrey McDonald, 22; and Jesse Brintley, 28; all of Philadelphia, PA, were sentenced by United States District Court Judge C. Darnell Jones II for their involvement in the armed robbery of a locally-owned Philadelphia pharmacy. Brooks was sentenced to fourteen years in prison, McDonald was sentenced to ten years in prison, and Brintley was sentenced to more than nine years in prison. The men have also been ordered to pay more than $18,000 total in restitution.

In January 2018, Brooks, McDonald, and Brintley were each charged by Indictment with one count of Hobbs Act robbery, one count of carrying and using a firearm in furtherance of a crime of violence, and one count of possession with intent to distribute a controlled substance. These charges stemmed from a September 2017 armed robbery of a pharmacy in the Roxborough neighborhood. During the robbery, the trio entered the pharmacy armed with a firearm in order to steal prescription opioids for illegal resale.

“These defendants brazenly robbed a neighborhood pharmacy for the purpose of selling controlled substances on the street, and for that they will now spend almost a decade or more in prison,” said Acting U.S. Attorney Williams. “Hopefully others will learn from the example set by these three -- if you rob a business in Philadelphia with a firearm, you are going to face serious federal prison time as a result. Our Office is committed to being ‘All Hands On Deck’ working with our law enforcement partners to bring criminals to justice.”

“The sentences in this case will remove violent criminals from our communities,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “We will remain dedicated, along with our local, state and federal partners to identify, investigate, apprehend, and prosecute individuals like these defendants.  “I want to thank the Philadelphia Police Department and the U.S. Attorney’s Office of the Eastern District of PA for their continued partnership and outstanding work in this successful prosecution.”

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.   The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorneys Amanda Reinitz and Jeanine Linehan, and Special Assistant United States Attorney Lauren Stram.   

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Leandro Rodriguez, 45, of Allentown, PA, entered a plea of guilty before United States District Court Judge Edward G. Smith to a charge of conspiracy in connection with a fraud scheme to smuggle mislabeled drugs and sell them as dietary supplements.

The June 2019 Indictment charged Rodriguez with a multi-object conspiracy: defrauding the United States by impeding and impairing the lawful functions of the Food and Drug Administration (FDA), and committing two offenses against the United States: smuggling, and receiving misbranded drugs and delivering those drugs in interstate commerce with intent to defraud. The charges arose from the defendant’s participation in a conspiracy from early 2011 until March 2017, to import from China and resell to consumers, substances falsely labelled as “all natural” dietary supplements, but which the defendant knew contained the undeclared ingredient Sibutramine, a dangerous controlled substance that could not legally be sold in the United States.

“The United States sets standards for controlled substances in order to keep American consumers and patients safe,” said Acting U.S. Attorney Williams. “The defendant knowingly skirted our country’s importation laws, and sold dangerous drugs under the guise of benign supplements. This scheme put many people’s health and safety at risk.”

The case was investigated by the Food and Drug Administration – Office of Criminal Investigations, the United States Postal Inspection Service, and Homeland Security Investigations, and is being prosecuted by Assistant United States Attorney Mary E. Crawley.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced three settlements and the filing of a complaint under the False Claims Act in the Eastern District of Pennsylvania. These are the latest actions in the national investigation into the scheme of improper billing involving P-Stim electro-acupuncture devices. P-Stim is also branded as, among other things, ANSiStim, Stivax, NeuroStim, and NSS-2 Bridge. Federal healthcare programs do not reimburse for P-Stim devices, whether they are characterized as an electro-acupuncture device or as an implantable neuro-stimulator. This District has helped lead the national Department of Justice effort to apply analytics to healthcare claims data to identify providers who have fraudulently billed federal healthcare programs for P-Stim services. As detailed below, this District and others have pursued and settled various False Claims Act cases against P-Stim providers, recovering millions.

The four enforcement actions announced today involve certain parties who sold P-Stim devices and/or promoted them as billable to Medicare and other federal healthcare programs, which then caused providers to submit fraudulent claims. The United States alleges that these promoters profited by conspiring together to make false representations to providers that P-Stim was reimbursable under billing codes that paid thousands of dollars per procedure. Those codes were meant for legitimate, surgically implanted neuro-stimulators to manage chronic pain. However, P-Stim devices can be applied in a few minutes in an office setting without anesthesia by someone with minimal training. The promoters allegedly had knowledge that the P-Stim devices were not reimbursable by federal healthcare programs but pushed the non-surgical devices anyway.  

The three settlements announced today are all pursuant to DOJ’s inability to pay policy:

1. Mark Kaiser of Bradenton, Florida, and his company, Doc Solutions, LLC, have paid        $1.15 million; and
2. James Carpenter of Rockledge, Florida, and his company, Solace Advancement Institute, have paid $150,000; and
3. Aaron Oxenrider of Carmel, Indiana, and his company Baron, Inc., doing business as Access 2 Integration (known commonly as A2I) have paid $54,150.

The parties involved in these settlements also agreed to exclusions from federal healthcare programs, with 20-year exclusions for the Kaiser and Carpenter parties and a 7-year exclusion for the Oxenrider parties.   

In a related case, today the United States filed a complaint in the Eastern District of Pennsylvania against Timothy Warren of Wichita, Kansas, and his company, Titan Medical Compliance, LLC, alleging violations of the False Claims Act. Warren is a chiropractor who promoted himself as a medical reimbursement consultant. Various marketers and distributors of P-Stim devices paid Warren a monthly fee, including Kaiser, to provide coding recommendations to customers. Certain providers also paid Warren directly for his coding guidance. Beginning in 2014, Warren promoted P-Stim devices as reimbursable by Medicare and other federal healthcare programs and provided instructions on what codes to bill. But, as detailed in the Complaint, the United States alleges that Warren had knowledge that he was providing incorrect advice: Warren knew that P-Stim was not reimbursable by federal healthcare programs because it was acupuncture, and not a surgically implanted neuro-stimulator. The United States alleges that Warren caused providers to submit to the federal Medicare and TRICARE programs thousands of fraudulent claims for P-Stim devices worth at least $20 million dollars.      

“Our office has led the national charge to hold alleged fraudsters accountable for this P-Stim scheme,” said Acting U.S. Attorney Williams.  Acting U.S. Attorney Williams continued: “Those who cause false claims by marketing alleged fraud schemes are also responsible for the tainted claims paid by federal health insurers.  Working with our partners and using innovative investigative tools like data analytics, we will find those who peddle and profit from alleged false healthcare schemes like P-Stim—and, as the complaint filed today shows, we will fight you in court if needed.” 

This ongoing national effort to identify and combat P-Stim fraud is a collaboration between this District, the Centers for Medicare & Medicaid Services’ (“CMS”) Center for Program Integrity, the Department of Health and Human Services Office of Inspector General (“HHS-OIG”), other federal healthcare programs, state partners, and sister U.S. Attorney’s Offices around the country.

Including the three settlements announced today, the national P-Stim initiative has so far produced over 15 False Claims Act settlements across the country worth approximately $15 million—of which, 8 settlements worth over $3 million have come from this District.  (Previous press releases are linked below.) Additionally, outside of DOJ litigation, there are administrative enforcement actions by other federal agencies as well. In particular, CMS, through its Unified Program Integrity Contractors, is auditing and recovering improperly paid P-Stim claims. HHS-OIG is also pursuing civil money penalties and exclusion remedies.          

“CMS is dedicated to removing fraudulent actors and protecting the people who rely on our programs,” said CMS Administrator Chiquita Brooks-LaSure. “We thank our partners at the Department of Justice and Department of Health and Human Services Office of Inspector General for collaborating with us to identify, investigate, and eliminate waste, fraud, and abuse in our federal health care programs.”

“Accurately billing for services provided to Medicare beneficiaries is required of all health care providers,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of the Inspector General, Region III. “HHS-OIG, CMS’s Center for Program Integrity, and the U.S. Attorney’s Office will continue to evaluate and pursue inaccurate billings of P-Stim and similar devices.”

All civil claims, including the settled claims, are allegations only.  There has been no determination of civil liability. The cases in this District have been investigated by the U.S. Department of Health and Human Services Office of the Inspector General. They have been handled by Assistant U.S. Attorneys Deborah W. Frey and Matthew E. K. Howatt, as well as former Assistant U.S. Attorney John T. Crutchlow, Civil Chief Gregory B. David, Auditor Dawn Wiggins, and Investigator Frank O’Connor.

Prior DOJ press releases related to the P-Stim Initiative:

• Eastern District of Pennsylvania
  • https://www.justice.gov/usao-edpa/pr/two-pa-chiropractic-practices-pay-over-800000-resolve-alleged-false-claims-act
  • https://www.justice.gov/usao-edpa/pr/neurosurgeon-medical-practice-director-pay-over-1-million-resolve-false-claims-act
  • https://www.justice.gov/usao-edpa/pr/chiropractor-and-related-practice-pay-nearly-100000-resolve-false-claims-act-liability
  • https://www.justice.gov/usao-edpa/pr/doctor-and-physician-practice-pay-178000-resolve-false-claims-act-liability-arising
• Southern District of Texas
  • https://www.justice.gov/usao-sdtx/pr/katy-anesthesiologist-pays-settle-allegations-arising-electro-acupuncture-device
  • https://www.justice.gov/usao-sdtx/pr/katy-anesthesiologist-pays-settle-allegations-arising-electro-acupuncture-device
• Eastern District of Texas
  • https://www.justice.gov/usao-edtx/pr/texas-company-agrees-reimburse-medicare-improper-billing-related-neurostimulators
• Western District of Texas
  • https://www.justice.gov/usao-wdtx/pr/healthcare-practitioners-pay-over-1-million-resolve-false-claims-act-liability-arising
• Middle District of Tennessee
  • https://www.justice.gov/usao-mdtn/pr/united-states-and-tennessee-resolve-claims-three-providers-false-claims-act-liability
  • https://www.justice.gov/usao-mdtn/pr/comprehensive-pain-specialists-and-former-owners-agree-pay-41-million-settle-fraud
• Southern District of Georgia
  • https://www.justice.gov/usao-sdga/pr/government-obtains-more-5-million-judgments-resolve-healthcare-fraud-allegations

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams, City of Philadelphia Mayor Jim Kenney, and Philadelphia Police Commissioner Danielle Outlaw announced that the City of Philadelphia was designated by the Justice Department as one of ten new National Public Safety Partnership (PSP) sites that will work with the Department, local agencies and community organizations to reduce violence in areas with elevated crime rates. PSP is a Justice Department-wide initiative that enables communities to receive coordinated training and technical assistance and an array of resources from the Department’s programmatic and law enforcement components.

After decades of falling crime rates, many cities across the county, including Philadelphia, have seen a dramatic increase in violent crime rates. To address the increase in violence, specifically gun violence, on May 26, 2021, the Attorney General announced the Department’s new Comprehensive Strategy for Reducing Violent Crime. The addition of ten new PSP sites is one facet of that strategy; the new sites are: Antioch, California; Aurora, Colorado; Chattanooga, Tennessee; Gary, Indiana; Louisville, Kentucky; North Charleston/Charleston, South Carolina; Philadelphia, Pennsylvania; Phoenix, Arizona; Richmond, Virginia; and Shreveport, Louisiana.

The PSP program began as a pilot in 2014 and was formally adopted by the Department as an intensive training and technical assistance protocol in June 2017. Sites must apply to participate. To be considered for selection, a site must have sustained levels of violence that far exceed the national average and demonstrate a commitment to reducing crime and enhancing community engagement.

“I am grateful to the Department of Justice for selecting Philadelphia to participate in the PSP program,” said Acting U.S. Attorney Jennifer Arbittier Williams. “PSP emphasizes the importance of law enforcement and community partnerships, essential factors to achieving comprehensive and sustainable approaches to Philadelphia’s violent crime epidemic and a theme we have repeated again and again this year.  PSP, with its vast support and resources, joins a growing list of initiatives through which the federal government seeks to assist the Philadelphia Police Department in its mission to reduce and combat violent crime, including the ‘All Hands On Deck’ effort and the ATF’s NIBIN Mobile Unit. Please take heart, Philadelphia; we are continuing to fight and will turn the tide of violence.”

“We are pleased to announce that the Philadelphia Police Department has been selected to participate in the Department of Justice’s Public Safety Partnership. Public Safety is the responsibility of everyone—not just law enforcement. The PSP will not only assist the PPD in ensuring that implementing the latest best practices, but it will also aid with collaboration between the department and other stakeholders,” said Mayor Jim Kenney. “This is a big win for our city, and it comes at no cost to our taxpayers.”

“I’m encouraged that Philadelphia was chosen to take part in the DOJ's Public Safety Partnership—a program that will ensure the Philadelphia Police Department’s remains a leader in modern policing and will help protect our city,” said Police Commissioner Danielle Outlaw. “As a learning organization, our department strives for best practices and equitable policing. PSP will help us improve our current practices, policies, and procedures so that our organization is in a better position to serve the community not just today, but far into the future.”

"Violence—gun violence in particular—has taken a heavy toll on communities across the country, and its impact has been felt most deeply in neighborhoods where resources have always been scarce and justice has historically been elusive,” said Amy L. Solomon, Acting Assistant Attorney General of the Justice Department’s Office of Justice Programs, whose Bureau of Justice Assistance administers the PSP initiative. “We are proud to join local leaders and our partners from across the Department of Justice as we work together to stem the tide of violent crime in these hard-hit communities.”

“From five to now 50 jurisdictions in seven years, PSP has taught the Department a new way to work with communities. We have learned that it is only by leveraging the power of community and using all our collective resources and dedicating all our efforts that we will reduce crime,” said BJA Acting Director Kristen Mahoney. “We look forward to partnering with the 10 new sites to achieve what we are all working toward—safe places to live and work.”

About the PSP Team

The PSP team supports local law enforcement and other key stakeholders in developing each site’s capacity to address its unique violent crime challenges to enhance public safety. Through a collaborative approach and data-driven decision making, the PSP approach ensures that local resources are maximized and federal assets are leveraged where they are most needed.  Implemented in 2014 as a pilot program, PSP has served more than 40 sites nationwide. The PSP team’s work is driven by local needs and priorities focused on increasing capacities to reduce violent crime and increase community engagement.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Andrew Wolf, 41, of Philadelphia, PA, and a teacher at Springside Chestnut Hill Academy in Philadelphia, was ordered detained pending trial at a hearing in U.S. Magistrate Court earlier today, following his arrest on October 7, 2021. The defendant was charged by Criminal Complaint with multiple child exploitation offenses including receiving child pornography and distribution of child pornography.

According to the Complaint, the charges stem from the defendant’s July 2021 electronic communication with a 13-year-old boy in order to purchase several sexually explicit videos of the child in exchange for a PlayStation card worth $100. He was arrested after the FBI executed a federal search warrant at his residence.

“As alleged in the Criminal Complaint, the defendant communicated with a child for the purpose of sexually exploiting the child’s naiveté – an abhorrent crime made even worse because of the defendant’s position as a teacher,” said Acting U.S. Attorney Williams. “The convenience and accessibility of digital communications, coupled with the ease with which child sexual exploitation crimes can be concealed online, make these cases extremely difficult to investigate and prosecute. However, our Office and our law enforcement partners are committed to doing this difficult work in order to hold child sexual predators accountable, especially people like this defendant who have selected careers working with children.”

“Any adult who manipulates a child into providing explicit images of themselves, as alleged here, needs to answer for it,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI's Philadelphia Division. “It's especially pressing when the adult in question works with kids every day. Our Crimes Against Children Task Force is driven to keep identifying and investigating online predators. It's critical we protect children from such disgusting sexual exploitation.”

If convicted, the defendant faces a maximum possible sentence of 40 years in prison.

The case was investigated by the FBI and is being prosecuted by the United States Attorney’s Office for the Eastern District of Pennsylvania.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Hans Gadson, 35, of Philadelphia, PA, was sentenced to sixteen years and four months in prison, and five years of supervised release by United States District Court Judge Michael M. Baylson for his role in the Original Block Hustlaz, or “OBH,” a violent drug trafficking organization that doubled as a group of aspiring rap artists in Philadelphia whose lyrics boasted about their drug dealing and willingness to resort to violence. Three of Gadson’s co-defendants, Jamaal Blanding, 39, and Jameel Hickson, 43, both of Philadelphia, PA, and Abdul West, 38, of Brookhaven, PA, were also recently sentenced and received 25, 20, and 40 years in prison, respectively.

In November 2019, all four defendants were convicted after a two-and-a-half-week trial on charges that included conspiracy to distribute controlled substances, and distribution of or possession with intent to distribute cocaine, crack, and methamphetamine. Several other co-defendants pled guilty prior to trial. In total, nine defendants connected to OBH were charged in a 16-count Second Superseding Indictment in August 2019. All nine were convicted or pled guilty.

Between at least March 2017 through June of 2018, OBH poisoned the Philadelphia community by importing dangerous narcotics, including large quantities of methamphetamine and cocaine, from California to Philadelphia and then selling those drugs in the Philadelphia area. To further their drug business, OBH employed fear, intimidation, and violence. In September 2017 and May 2018, FBI agents and Philadelphia Police Department officers executed search warrants at residences on North Sydenham Street and Columbus Boulevard, which were properties used by members of OBH to store and sell drugs. During the execution of the search warrant, numerous drugs were seized, including cocaine base (“crack”), heroin, and methamphetamine mixture, as well as tens of thousands of dollars in cash.

In a related case, defendant Charles Salley, 39, of Clayton, Delaware, was sentenced in August 2021 to seven and a half years in prison for witness tampering in connection with the above-referenced trial. During the trial, a cooperating witness received a threatening letter from Salley under the pen name “Ron Harvey,” threatening physical violence if the witness testified at trial against his OBH associates. Salley was present in the courtroom during the course of the trial, including on the day of the witness’ scheduled testimony. The threatening letter was investigated by the FBI and the witness ultimately testified during the trial.

“Gadson and his OBH co-defendants pumped huge quantities of deadly drugs into our community,” said Acting U.S. Attorney Williams. “As the evidence presented at trial showed, OBH wreaked havoc on the streets of Philadelphia to further their violent drug trafficking operation; their rap lyrics weren’t just about artistic expression or creating an image to sell records, but were about their reality. Our Office is determined to continue doing everything we can by being ‘All Hands On Deck’ to get violent criminals like OBH off the streets.”

This case is part of the FBI’s Violent Gang Safe Streets Task Force, a program through which federal, state, and local law enforcement agencies collaboratively address the violent crime plaguing communities. It was investigated by the Federal Bureau of Investigation, the Drug Enforcement Administration, and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorneys Everett Witherell and Timothy M. Stengel. The Salley case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Justin Ashenfelter.

PHILADELPHIA – Acting U.S. Attorney Jennifer Arbittier Williams announced that three generic pharmaceutical manufacturers, Taro Pharmaceuticals U.S.A., Inc., Sandoz Inc., and Apotex Corporation, have agreed to pay a total of $447.2 million to resolve alleged violations of the False Claims Act arising from conspiracies to fix the price of various generic drugs. These conspiracies allegedly resulted in higher drug prices for federal health care programs according to the Justice Department. These civil recoveries follow criminal deferred prosecution agreements, under which the three companies previously paid a total of $424.7 million.

The government further alleges that between 2013 and 2015, all three companies paid and received remuneration prohibited by the Anti-Kickback Statute through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers for certain generic drugs manufactured by the companies.

Taro Pharmaceuticals U.S.A., Inc., headquartered in New York, has agreed to pay $213.2 million. The Taro drugs allegedly implicated in this scheme address a wide variety of health conditions and include etodolac, a nonsteroidal anti-inflammatory drug used to treat pain and arthritis, and nystatin-triamcinolone cream and ointment, a combination of an antifungal medicine and steroid used to treat certain kinds of skin infections.

Sandoz Inc., headquartered in New Jersey, has agreed to pay $185 million. The Sandoz drugs at issue include benazepril HCTZ, used to treat hypertension, and clobetasol, a corticosteroid used to treat skin conditions.

Apotex Corporation, headquartered in Florida, has agreed to pay $49 million in connection with its sale of pravastatin, a drug used to treat high cholesterol and triglyceride levels.

“This series of civil settlements should serve as a wake-up call for the generic drug industry.  Generic drug companies must and will be held accountable for price-fixing schemes which not only cause massive financial harm to federal health care programs, but also may impact the care available to patients,” said Acting U.S. Attorney Williams. “We will continue to aggressively pursue these violations of the Anti-Kickback Statute and the False Claims Act and obtain significant recoveries.”

“Illegal collaboration on the price or supply of drugs increases costs both to federal health care programs and beneficiaries,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The Department will use every tool at its disposal to prevent such conduct and to protect these taxpayer-funded programs.” 

“Conspiring to raise prices on generic medications is illegal and could prevent patients from being able to afford their needed prescription drugs. Americans have the right to purchase generic drugs set by fair and open competition, not collusion,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “HHS-OIG along with our law enforcement partners will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”

In connection with its settlement agreement, each company also entered a five-year corporate integrity agreement (CIA) with OIG.  The CIAs include unique internal monitoring and price transparency provisions.  They also require the companies to implement compliance measures including risk assessment programs, executive recoupment provisions, and compliance-related certifications from company executives and Board members.

“These kickback schemes harm Medicare, Medicaid, and patients,” said Gregory E. Demske, Chief Counsel to the Inspector General at the U.S. Department of Health and Human Services.  “The CIAs promote transparency and accountability by requiring the companies to report price-related information to OIG and mandating individual certifications by key executives involved in pricing and contracting functions.”

“Protecting TRICARE, the healthcare system for U.S. military members and their dependents, is a top priority for the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS),” stated Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “When pharmaceutical corporations artificially inflate prices, they undermine the integrity of TRICARE and place an unnecessary financial burden on the program.  The settlement agreements announced today are the result of a joint effort and demonstrate the ongoing commitment of DCIS to work with our law enforcement partners, DOJ Civil Frauds and the USAO-EDPA, to investigate healthcare fraud.”

The Anti-Kickback Statute prohibits companies from receiving or paying remuneration in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program. These provisions are designed to ensure that the supply and price of health care items are not compromised by improper financial incentives. These settlements reflect the important role of the False Claims Act to ensure that the United States is fully compensated when it is the victim of kickbacks paid to further anticompetitive conduct.  

All three companies previously entered into deferred prosecution agreements with the Antitrust Division to resolve related criminal charges. Taro paid a criminal penalty of $205.6 million and admitted to conspiring with two other generic drug companies to fix prices on certain generic drugs. Sandoz paid a criminal penalty of $195 million and admitted to conspiring with four other generic drug companies to fix prices on certain generic drugs. Apotex paid a criminal penalty of $24.1 million and admitted to conspiring to increase and maintain the price on pravastatin. The civil settlement payments announced today are in addition to the criminal penalties paid by the companies.

Today’s civil settlements are the third, fourth, and fifth arising from this investigation and were handled by the U.S. Attorney’s Office for the Eastern District of Pennsylvania in conjunction with the Civil Division’s Commercial Litigation Branch (Fraud Section), with investigative support from the HHS-OIG, DCIS, the Defense Health Agency Program Integrity Office, and the Office of Inspector General for the Department of Veterans Affairs.  The matters were handled by Assistant U.S. Attorneys Landon Y. Jones III, Rebecca S. Melley and Anthony D. Scicchitano, in conjunction with Senior Trial Counsels Jennifer L. Cihon and Laurie A. Oberembt of the Civil Fraud Section.

Except for those facts admitted to in the deferred prosecution agreements, the claims resolved by the civil settlements are allegations only, and there has been no determination of liability.

Three generic pharmaceutical manufacturers, Taro Pharmaceuticals USA, Inc., Sandoz Inc. and Apotex Corporation, have agreed to pay a total of $447.2 million to resolve alleged violations of the False Claims Act arising from conspiracies to fix the price of various generic drugs. These conspiracies allegedly resulted in higher drug prices for federal health care programs and beneficiaries according to the Justice Department.

The government alleges that between 2013 and 2015, all three companies paid and received compensation prohibited by the Anti-Kickback Statute through arrangements on price, supply and allocation of customers with other pharmaceutical manufacturers for certain generic drugs manufactured by the companies.

Taro Pharmaceuticals USA, Inc., headquartered in New York, has agreed to pay $213.2 million. The Taro drugs allegedly implicated in this scheme address a wide variety of health conditions, and include etodolac, a nonsteroidal anti-inflammatory drug used to treat pain and arthritis, and nystatin-triamcinolone cream and ointment, a combination of an antifungal medicine and steroid used to treat certain kinds of skin infections.

Sandoz Inc., headquartered in New Jersey, has agreed to pay $185 million. The Sandoz drugs at issue include benazepril HCTZ, used to treat hypertension, and clobetasol, a corticosteroid used to treat skin conditions.

Apotex Corporation, headquartered in Florida, has agreed to pay $49 million in connection with its sale of pravastatin, a drug used to treat high cholesterol and triglyceride levels.

“Illegal collaboration on the price or supply of drugs increases costs both to federal health care programs and beneficiaries,” said Acting Assistant Attorney General Brian M. Boynton of the Justice Department’s Civil Division. “The department will use every tool at its disposal to prevent such conduct and to protect these taxpayer-funded programs.” 

“These civil settlements are another achievement in my office’s efforts to hold generic drug companies accountable for the consequences arising from price-fixing schemes, including the harm to federal health care programs,” said Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. “We will continue to aggressively pursue these violations of the Anti-Kickback Statute and the False Claims Act and obtain significant recoveries.”

“Conspiring to raise prices on generic medications is illegal and could prevent patients from being able to afford their needed prescription drugs. Americans have the right to purchase generic drugs set by fair and open competition, not collusion,” said Special Agent in Charge Maureen R. Dixon of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “HHS-OIG along with our law enforcement partners will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”   

In connection with its settlement agreement, each company also entered a five-year corporate integrity agreement (CIA) with OIG. The CIAs include unique internal monitoring and price transparency provisions. They also require the companies to implement compliance measures including risk assessment programs, executive recoupment provisions and compliance-related certifications from company executives and board members.

“These kickback schemes harm Medicare, Medicaid and patients,” said Chief Counsel Gregory E. Demske for the Inspector General at HHS. “The CIAs promote transparency and accountability by requiring the companies to report price-related information to OIG and mandating individual certifications by key executives involved in pricing and contracting functions.”

“Protecting TRICARE, the healthcare system for U.S. military members and their dependents, is a top priority for the Department of Defense, Office of Inspector General, Defense Criminal Investigative Service (DCIS),” said Special Agent in Charge Patrick J. Hegarty, DCIS Northeast Field Office. “When pharmaceutical corporations artificially inflate prices, they undermine the integrity of TRICARE and place an unnecessary financial burden on the program. The settlement agreements announced today are the result of a joint effort and demonstrate the ongoing commitment of DCIS to work with our law enforcement partners, DOJ Civil Frauds and the USAO-EDPA, to investigate healthcare fraud.”

The Anti-Kickback Statute prohibits companies from receiving or making payments in return for arranging the sale or purchase of items such as drugs for which payment may be made by a federal health care program. These provisions are designed to ensure that the supply and price of health care items are not compromised by improper financial incentives. These settlements reflect the important role of the False Claims Act to ensure that the United States is fully compensated when it is the victim of kickbacks paid to further anticompetitive conduct.       

All three companies previously entered into deferred prosecution agreements with the Antitrust Division to resolve related criminal charges. Taro paid a criminal penalty of $205.6 million and admitted to conspiring with two other generic drug companies to fix prices on certain generic drugs. Sandoz paid a criminal penalty of $195 million and admitted to conspiring with four other generic drug companies to fix prices on certain generic drugs. Apotex paid a criminal penalty of $24.1 million and admitted to conspiring to increase and maintain the price on pravastatin. The civil settlement payments announced today are in addition to the criminal penalties paid by the companies.   

Today’s civil settlements are the third, fourth and fifth arising from this investigation and were handled by the Civil Division’s Commercial Litigation Branch (Fraud Section) and the U.S. Attorney’s Office for the Eastern District of Pennsylvania with support from the Office of Inspector General for the Department of Health and Human Services, the Defense Health Agency Program Integrity Office, DCIS and the Office of Inspector General for the Department of Veterans Affairs.  

The investigation and resolution of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse and mismanagement can be reported to the Department of Health and Human Services at 800-HHS-TIPS (800-447-8477).

The matters were handled by Senior Trial Counsels Jennifer L. Cihon and Laurie A. Oberembt and Assistant U.S. Attorneys Landon Y. Jones III, Rebecca S. Melley and Anthony D. Scicchitano.

Except for those facts admitted to in the deferred prosecution agreements, the claims resolved by the civil settlements are allegations only, and there has been no determination of liability.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Kyle Paine, 27, of Langhorne, PA, was convicted by a federal jury at trial of multiple child exploitation offenses which arose from an undercover investigation into the defendant’s online communications.

In January 2020, the defendant was charged by Indictment with attempted enticement of a minor to engage in sexual conduct, attempted transfer of obscene material to a minor, and possession of child pornography. The charges stem from Paine’s online communication in March 2019 with an undercover FBI agent, whom the defendant believed to be an 11-year-old child who would meet him for sex. The defendant also requested that the girl self-produce child pornography and send it to him, and sent her a sexually explicit image in an attempt to entice her to do so.

“Paine’s child victimization is over,” said Acting U.S. Attorney Williams. “Child sexual exploitation is so pervasive and harmful, made even more so by the easy availability of digital media and communications. Further, the ability to hide this type of activity online can make these cases even more difficult to investigate. As always, we stand ready with our federal partners to identify and prosecute these criminals and protect children everywhere from predators like Paine.”

“Not only did Kyle Paine amass images of child sexual abuse, he sought out sex with a child,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “It’s imperative for the FBI and our law enforcement partners to intercept such predators when we find them, and we’re gratified to see Mr. Paine brought to justice in this case. Protecting children is the priority here.”

“This kind of teamwork between the U.S Attorney’s office and the Bensalem Township Police Department allows us the opportunity to investigate these horrific crimes especially against our most vulnerable victims,” said Frederick A. Harran, Director of Public Safety for Bensalem Township. “Taking the worse kind of criminals off of our streets remains our priority. The internet continues to remain a threat to our community and must educate our children on the dangers it poses”    

This case is part of Project Safe Childhood (PSC), a program bringing together all levels of law enforcement and the communities they serve to reduce the sexual exploitation and abuse of children.

The case was investigated by the Federal Bureau of Investigation and the Bensalem Police Department, and is being prosecuted by Assistant United States Attorney Kelly Harrell.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Mark Ramsey, 31, of San Francisco, CA, was convicted today at trial of insider trading charges arising from his use of non-public information provided to him and former Philadelphia Eagles linebacker Marvin Mychal Kendricks by a Goldman Sachs investment banker with respect to four separate stocks.

Evidence presented at trial showed that the defendant traded on inside information provided by Damilare Sonoiki, at the time a junior analyst at Goldman Sachs, who had offered Kendricks information regarding upcoming mergers involving four Goldman Sachs clients.  Ramsey and Kendricks purchased call options in the target companies between July 2014 and November 2014. When the proposed merger was announced in each case, the value of the options purchased by Ramsey and Kendricks increased significantly. During the period of the conspiracy, the trading conducted by Ramsey and Kendricks from Kendricks’ account resulted in profits of nearly $1.2 million on the four securities listed in the Superseding Indictment:

• The trading began when Sonoiki and Kendricks purchased call options for Compuware based on pending acquisition of Compuware that was known to Sonoiki. When Compuware announced on September 2, 2014, that it had been acquired by a private company, Kendricks made $78,423 in profits. 
   
• Sonoiki provided Kendricks and Ramsey inside information on a second deal in which Goldman represented News Corporation, which was in talks to acquire Move, Inc.  Ramsey and Kendricks purchased call options in Move during the month of September. When the News Corporation acquisition of Move was announced on September 30, 2014, Ramsey and Kendricks sold the open options contracts at profit of $278,701.  
   
• In early October 2014, Sonoiki provided Kendricks and Ramsey with inside information about a pending acquisition of Sapient, another company represented by Goldman.  Sapient was in discussions with Publicis Corporation regarding a merger deal. Ramsey began trading in Sapient on October 6, 2014. On November 3, the merger was announced, and Ramsey and Kendricks made a profit of $489,079. 
   
• In October 2014, Oplink was in discussions with Molex, a subsidiary of Koch Industries, regarding a merger deal. Goldman represented Molex and Koch Industries. Ramsey purchased call options in Kendricks’s account between October 31 and November 17, 2014. Ramsey’s trading occupied so much of the open call option market that there was a Reuters article on November 19, 2014, suggesting that someone must have had insider information. The deal was announced on November 19, 2014, at which time Ramsey and Kendricks made a profit of $351,872.

Defendants Sonoiki and Kendricks previously pled guilty to insider trading and conspiracy charges based on these same events.

“Insider trading undermines faith in our financial markets and harms ordinary investors who play by the rules,” said Acting U.S. Attorney Williams. “Mark Ramsey placed himself above the law by cheating in the market and cheating other investors, and for that crime, a jury found him guilty. Our Office will continue to work with our law enforcement partners to maintain the integrity of the financial markets.”

“Mark Ramsey was given material, non-public information that he used to score an investment windfall. Exploiting such knowledge is illegal and today a jury has held him accountable,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Insider trading undermines the trust necessary for our financial markets to function properly. The FBI is working hard to derail dishonest profiteers who cheat the system in this way.”

The case was investigated by the Federal Bureau of Investigation and the Securities and Exchange Commission, and is being prosecuted by Assistant United States Attorneys David Ignall and Eileen Zelek.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that the Berks County Coalition to End Homelessness (“BCEH”) will pay $121,655 to resolve False Claims Act allegations that the public-private partnership organization illegally double-billed the U.S. Department of Housing and Urban Development (“HUD”) for renovations performed on a property located in Reading, Pennsylvania.

The settlement resolves allegations that BCEH knowingly submitted duplicate requests for payment for the framing, electrical, and plumbing renovations performed on a single project. In the settlement agreement, the United States alleges that on September 14, 2017, BCEH knowingly submitted a request to draw approximately $40,000 from HUD’s Continuum of Care Program to be used towards renovation costs on the project. Then, on December 14, 2017, BCEH is alleged to have knowingly submitted to the City of Reading’s HOME Program a request for reimbursement of the same renovation costs that were to have been paid by the earlier draw request. The United States alleges that by submitting for the same renovation costs twice, BCEH received approximately $40,000 to which it was not entitled.

“Our office will pursue anyone that that abuses federal programs for their personal gain,” said Acting U.S. Attorney Williams, “Those entrusted with properly administering HUD funds must do so honestly or face the consequences.”

“Duplicate billing will not be tolerated and will be investigated by the U.S. Department of Housing and Urban Development, Office of Inspector General. HUD-OIG is committed to working with the Department of Justice to ensure that HUD funds are used for their intended purpose. In this case, HUD program funds were misappropriated by BCEH when they double billed the City of Reading, PA to obtain unauthorized HUD funding desperately needed in the fight against homelessness,” said Special Agent in Charge Shawn Rice. “Today’s settlement underscores the government’s commitment to protecting HUD’s programs and holding organizations like BCEH accountable for their actions.”

This case was investigated by the U.S. Department of Housing and Urban Development, Office of Inspector General and the United States Attorney’s Office’s fraud investigator Frank O’Connor. Assistant United States Attorney Paul J. Koob handled the settlement.

The claims resolved by the settlement are allegations only; there has been no determination of liability.

PHILADELPHIA, PA – Acting United States Attorney Jennifer Arbittier Williams announced that Stephen Padnes, M.D., 79, of Glenside, Pennsylvania, a physician formerly licensed in Pennsylvania, entered a guilty plea before United States District Court Judge Gene E.K. Pratter on criminal charges of illegally distributing controlled substances and filing false tax returns.

Williams also announced that Padnes has agreed to pay $2 million to settle a civil lawsuit brought by the United States seeking penalties and damages against him. The settlement resolves allegations that Padnes prescribed opioids without a legitimate medical purpose in violation of the Controlled Substances Act and False Claims Act (the “Civil Action”). The resolution of the Civil Action also excludes Padnes from participating in the Medicare program for at least ten years.

Padnes has also entered into a settlement agreement with the United States whereby he has agreed to the civil forfeiture of over $1.8 million in cash seized from his home as proceeds of unlawful prescribing (the “Forfeiture Action”).

The Drug Enforcement Agency has also rescinded Padnes’s licenses to prescribe controlled substances.

Criminal Guilty Plea

Earlier today, Padnes pled guilty to the criminal indictment, which charged him with illegally prescribing Schedule II controlled substances, oxycodone and methadone, on seven occasions between December 21, 2015 and June 29, 2016, without any medical necessity and outside the usual course of medical practice. It also charged that Padnes underreported the income earned by his medical practice, the Psychosomatic Medicine and Pain Rehabilitation Center, Inc., to the Internal Revenue Service by more than $700,000 for calendar years 2012, 2013, and 2014. Padnes faces a maximum possible sentence of 149 years’ imprisonment and has agreed to pay $301,219 in restitution to the IRS.

$2 Million Settlement of the Civil Action and Exclusion from Medicare

Padnes has agreed to pay an additional $2 million to settle the government’s allegations against him in the Civil Action brought pursuant to the Controlled Substances Act and the False Claims Act. Padnes has also agreed to be excluded from participating as a provider in the Medicare program for at least ten (10) years.

The Civil Action alleges that Padnes violated the Controlled Substances Act by issuing prescriptions on hundreds of occasions for Schedule II opioids in 2014, 2015, and 2016 without a legitimate medical purpose. The government alleges numerous instances where Padnes accepted cash payments, hundreds of dollars each, in exchange for prescriptions for high doses of opioids without maintaining medical records in the normal course of medical practice, physical exams, reevaluations, and/or monitoring of the effectiveness of the opioids he prescribed.

The government alleges numerous examples where Padnes regularly prescribed the equivalent of over 1,000 milligrams of morphine per day to certain purported patients in exchange for cash. In one example, the government alleges that Padnes issued prescriptions for so many opioids to a patient that the patient would have needed to consume nearly 70 pills, the equivalent of 4,000 milligrams of morphine, every day. For reference, the Centers for Disease Control and Prevention’s guidance on opioid prescribing for chronic pain patients urges caution when patients are prescribed more than the equivalent of 50 milligrams of morphine per day and should usually not be prescribed greater than the equivalent of 90 milligrams of morphine every day. https://www.cdc.gov/mmwr/volumes/65/rr/rr6501e1.htm?CDC_AA_refVal=https%3A%2F%2Fwww.cdc.gov%2Fmmwr%2Fvolumes%2F65%2Frr%2Frr6501e1er.htm#recommendations

The government also alleges that Padnes violated the False Claims Act because Medicare and Medicaid paid to fill thousands of prescriptions that Padnes issued without a legitimate medical purpose, causing a loss to these programs exceeding $1 million.

The Controlled Substances Act provides for penalties for each prescription issued without a legitimate medical purpose up to $25,000 for violations on or before November 2, 2015 and up to $64,820 per violation after November 2, 2015. The False Claims Act allows for damages treble the government’s loss and civil penalties between $5,500 and $11,000 for each false claim presented on or before November 2, 2015 and between $11,181 and $22,363 for each false claim presented after November 2, 2015.

Civil Forfeiture of $1,864,545

On August 12, 2019, the United States filed a civil forfeiture complaint seeking the forfeiture of $1,864,545 cash seized from the defendant’s home during the execution of a search warrant in 2016. The government alleges that cash was the proceeds from Padnes’s unlawful medical practice from at least 2010 to 2016. The government alleges that, during that time, the vast majority of the defendant’s “patients” paid up to approximately $500 in cash for prescriptions for controlled substances, including Schedule II opioids such as oxycodone and methadone, that he wrote outside the usual course of medical practice and without a legitimate medical purpose. The cash was discovered in suitcases and a dresser located in a bedroom in the defendant’s home.

* * *

“Our community continues to cope with the tragic and deadly consequences of the opioid epidemic,” said Acting United States Attorney Williams. “A small number of corrupt doctors put greed before their oath, abused their positions of trust, and fanned the flames of the epidemic by pumping untold millions of illicit opioid pills onto our streets without a legitimate medical purpose simply to enrich themselves. As this case demonstrates, we will bring the full force of the federal government to find, investigate, and prosecute such wrongdoing criminally and civilly,” said Williams. “To any prescriber who may be tempted to sell opioid prescriptions without a legitimate medical purpose, be warned: it is not worth it. We will find you, we will prosecute you, and we will make you pay,” said Williams.

Williams continued, “This parallel criminal and civil prosecution represents exceptional professionalism and teamwork of the Criminal, Civil, and Forfeiture units of this Office and our dedicated law enforcement partners over the course of this complex case. I wish to specifically commend the FBI, DEA, the Department of Health and Human Services, and the Internal Revenue Service for their investigative work,” said Williams.

“Dr. Padnes routinely prescribed dangerous amounts of opioids without any medical necessity in exchange for cash, making him no different than a drug dealer on the street,” said Thomas Hodnett, Acting Special Agent in Charge of the DEA’s Philadelphia Field Division. “I want to thank our partners at HHS, IRS, and the FBI; working together we were able to pursue criminal charges and civil violations against rogue doctors like Padnes that have contributed to the opioid epidemic.”

“As a consequence, for prescribing opioids without medical necessity, Mr. Padnes will be excluded from participating in the Medicare program for at least ten years,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services. “Working closely with our law enforcement partners and the criminal and civil divisions of the U.S. Attorney’s Office, HHS-OIG will continue to protect the integrity of government health care programs.”

“Today’s guilty plea sends a message to all professionals that no one is above their responsibility to pay taxes,” said Yury Kruty, Acting Special Agent in Charge, Philadelphia Field Office. “All income, legally or illegally earned, is taxable. IRS-Criminal Investigation will always work with our law enforcement partners and provide our financial expertise to stop individuals from illegally distributing controlled substances to the American public.”

“Stephen Padnes admits abusing his prescribing privileges for profit,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Doctors willing to illegally distribute and prescribe opioids to enrich themselves only deepen the drug epidemic that continues to ravage our area. That’s why the FBI is so determined to shut down unscrupulous medical professionals engaged in drug diversion. I encourage the public to report any information about prescription abuse to us or our law enforcement partners.”

The investigation was conducted by the Philadelphia Field Division of the Drug Enforcement Administration, the U.S. Department of Health and Human Services, Office of Inspector General, Internal Revenue Service Criminal Investigation, and the Federal Bureau of Investigation Health Care Fraud Task Force, which includes agents from the FBI, Pennsylvania Attorney General’s Office, and HHS-OIG.

For the United States Attorney’s Office, the criminal case is being prosecuted by Assistant United States Attorney Jerome Maiatico, the civil Controlled Substances Act and False Claims Act matter was prosecuted by Assistant United States Attorney Charlene Keller Fullmer and former Assistant United States Attorney John T. Crutchlow, and the civil forfeiture matter is being prosecuted by Assistant United States Attorney Maria M. Carrillo.

Except for those facts admitted to in the guilty plea, the claims resolved by the civil settlements are allegations only, and there has been no determination of liability.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Israel Faber, 34, of Nottingham, PA, was sentenced to 28 years in prison, and lifetime of supervised release, by United States District Court Judge Mark A. Kearney for multiple child exploitation charges including producing, possessing and distributing child pornography.

In April 2021, the defendant pleaded guilty to three counts of manufacturing child pornography, one count of distribution of child pornography and one count of possession of child pornography. The charges stem from an investigation into an online forum known for being a place where users trade child pornography. For almost a year, the defendant hid his cell phone in a bathroom and secretly recorded child victims while they used the bathroom facilities. Law enforcement agents caught onto the defendant’s crimes in April 2020 during an undercover investigation into an online chat group in which users shared ‘homemade’ child pornography. Faber distributed his own ‘homemade’ child pornography showing a young child using the bathroom. The defendant even highlighted the child’s face to the undercover officer, saying, “that’s [the child’s] face.”

The defendant hid these recordings on his phone and in secret online accounts that federal agents were able to identify using numerous search warrants. These accounts contained thousands of additional child pornography videos and images depicting children as young as infants being sexually abused and raped. Hundreds of child victims have been identified.

“This is an incredibly disturbing case – sexually exploiting children by secretly recording them in the bathroom is horrific,” said Acting U.S. Attorney Williams. “Strong law enforcement collaboration between our Office, the FBI, the Pennsylvania State Police and local police forces, has ensured that this dangerous defendant will be behind bars and unable to hurt children anymore.”

“Israel Faber repeatedly violated children’s privacy, exploiting them for his own sexual gratification,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “He further victimized them by sharing the material with other predators. The FBI and our law enforcement partners are working every day to find and bring to justice anyone actively harming children like this.”

"Producing, possessing, and distributing child pornography is an exploitive crime that should never occur," said Major Jeremy Richard, director of the Pennsylvania State Police Bureau of Criminal Investigation. “I would like to extend my gratitude to the partner law enforcement agencies involved in investigating Mr. Faber's heinous online behavior. This sentence serves as a lesson to others who wish to secretly record children in private locations: Your actions are criminal and carry consequences." 

The case was investigated by the Federal Bureau of Investigation, York Area Regional Police, Lancaster City Bureau of Police and the Pennsylvania State Police, and is being prosecuted by Assistant United States Attorney J. Jeanette Kang.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Ricardo Carrion, a.k.a. “PR,” age 41, of Philadelphia, PA, was convicted at trial of all counts with which he was charged, including conspiracy to distribute controlled substances and possession with intent to distribute crack and heroin, arising from his leadership role in supplying a drug trafficking organization operating on the 3100 block of Weymouth Street, steps from McPherson Square and just two blocks from the notorious intersection of Kensington & Allegheny Avenues in the Kensington section of Philadelphia.

This case originated from a joint investigation into the scourge of drug trafficking and overdoses in the Kensington area conducted by the U.S. Drug Enforcement Administration and the Philadelphia Police Department. During the investigation, the agencies utilized covert surveillance to observe thousands of drug customers purchasing narcotics on the 3100 block of Weymouth Street, in effect, an open-air drug market. Street dealers were observed utilizing stash houses on the block to store narcotics, including the target drug crew’s signature stamped heroin called “Funeral” so named to advertise its potency and lethalness to addicted consumers.

After a series of search warrants were executed in 2019, the DEA developed information that the defendant was the supplier of narcotics in this organization. Covert surveillance showed him repeatedly carrying large bags into stash houses. In June of that same year, the DEA and PPD initiated a traffic stop of a cab in which Carrion was the sole passenger. At his feet, law enforcement recovered a bag containing over 3,300 flip top containers of crack cocaine.  Evidence presented at trial showed that Carrion used code words including “lenta,” which translates to “slow” in English, and “hard cola” to discuss the heroin he ordered for the street dealers. Prosecutors also presented evidence that the defendant supplied thousands and thousands of servings of heroin and crack cocaine to this city block from 2018 until the DEA and PPD dismantled his drug operation.

“This years-long drug trafficking enterprise impacted more than just this one block; it left a path of destruction across Kensington and throughout Philadelphia,” said Acting U.S. Attorney Williams. “This trial conviction is one more example of this Office’s dedicated effort to take down prolific drug dealers pedaling poison to those suffering from addiction, and we remain committed to cutting off the supply of deadly drugs into our communities.”

“No area in Pennsylvania has been more disproportionately affected by the ravages of the opioid epidemic than Kensington, particularly the area around McPherson Square where Carrion supplied and distributed heroin and crack cocaine,” said Thomas Hodnett, Acting Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “Carrion’s criminal activities ruined the quality of life for the residents who live in Kensington and destroyed the lives of those struggling with substance use disorder. His federal drug conviction will ensure that he serves a lengthy prison sentence for his drug-trafficking activities.” 

The case was investigated by Drug Enforcement Administration and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorneys Jason D. Grenell and Derek E. Hines.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that brothers Zumar Dubose, age 32, of Atlantic City, NJ; Abdush Dubose, age 34, of Boynton Beach, FL; and Kariem Dubose, age 40, of Philadelphia, PA; were charged by Superseding Indictment on charges of mail fraud, wire fraud, bank fraud, and conspiracy to commit money laundering. The charges arose out of a scheme to defraud the United States Postal Service, United Parcel Service, and Citizens Bank of hundreds of thousands of dollars.

The Superseding Indictment alleges that between October 2018 and April 2020, the defendants submitted over 1,200 fraudulent insured-parcel claims with USPS and UPS, and received almost $300,000 in ill-gotten gains. As part of the scheme, the Dubose brothers sent parcels to themselves using insured USPS postage and UPS tracking labels. They then filed fraudulent claims with USPS and UPS, claiming that these parcels were lost or damaged in transit, and attached sham proofs of value. The defendants used numerous e-mails, addresses and postboxes, bank accounts and bank cards, fake individual names, and fictitious corporations, including “Urmajesty Banktruckfit Solutions,” “Miworld Three Incorporated,” and “4 Entertainment Corporation,” which were incorporated in the State of New Jersey, and “Seeds of Beauty Incorporated,” which was incorporated in the State of Florida. The claim checks that the brothers received as part of this fraud scheme were deposited into Citizens Bank accounts opened in the names of these fake companies through ATMs in Philadelphia, Pennsylvania, and elsewhere.

The brothers also used the court system to perpetrate their fraud by filing false lawsuits against the victims. When USPS and UPS refused to issue or deliver some of the fraudulently-obtained claim checks, and when Citizens Bank placed a hold on a bank account that was used to deposit the fraud proceeds, the Dubose brothers were undeterred. The brothers repeatedly contacted USPS and UPS using fake names; defendant Zumar Dubose even filed lawsuits against UPS in various counties in New Jersey, using fake plaintiff names and falsely claiming that UPS did not pay him funds that he was owed. The defendants also filed a lawsuit against Citizens Bank, again pretending to be a different individual, in an effort to obtain the funds from their fraud scheme.

“These three brothers were allegedly brazen in their efforts to defraud businesses and the United States government via the postal services,” said Acting U.S. Attorney Williams. “According to the Superseding Indictment, it wasn’t enough simply to perpetrate a direct fraud by lying about insured parcels – when the companies suspected something wasn’t right, the defendants turned around and had the nerve to file lawsuits against the victim companies. We will vigorously investigate and prosecute this type of unabashed fraud.”

“Many people might be surprised to learn that the Post Office and United Parcel Service often work together moving millions of parcels and mail. Today however, I have the unfortunate role of announcing that they were victimized together,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division of the Postal Inspection Service. “The brothers Dubose devised an elaborate scheme to take advantage of the Post Office’s and UPS’s parcel insurance. Setting up fake email addresses, sending empty parcels, and filing bogus lawsuits, were among the tactics that demonstrate the lengths to which these brothers went to steel money from a private company and a government agency. A company and an agency, I might add, who have both worked tirelessly over the last 18 months to support our community and nation through the pandemic. Thanks to the detailed investigation of Inspectors from the Postal Inspection Service and by agents of Post Office Inspector General, this theft was stopped and the brothers behind it have been charged.”

“The United States Postal Service, Office of Inspector General is committed to protecting the sanctity of the United States Mail,” said Kenneth Cleevely, Special Agent in Charge, U.S. Postal Service Office of Inspector General. “I wish to commend our partners at the United States Postal Inspection Service and the United States Attorney’s Office for the Eastern District of Pennsylvania for their teamwork in bringing these subjects to justice”.

If convicted, defendant Zumar Dubose faces a maximum possible sentence of 340 years in prison, five years of supervised release, and a $5 million fine. Defendant Abdush Dubose faces a maximum sentence of 310 years of in prison, three years of supervised release, and a $3.75 million fine. Defendant Kariem Dubose faces a maximum possible sentence of 130 years of in prison, three years of supervised release, and a $2.25 million fine.

The case was investigated by the United States Postal Service Office of the Inspector General and United States Postal Inspection Service, and is being prosecuted by Deputy United States Attorney Louis D. Lappen and Assistant United States Attorney J. Jeanette Kang.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams and Assistant Attorney General Kenneth A. Polite, Jr. announced that Bill Omar Carrasquillo, 35, of Swedesboro, NJ; Jesse Gonzales, 42, of Pico Rivera, CA; and Michael Barone, 36, of Richmond Hill, NY, were charged by Indictment with crimes arising out of a wide-ranging and lucrative copyright infringement scheme.

According to the Indictment, from about March 2016 until at least November 2019, the defendants operated a large-scale internet protocol television (IPTV) theft scheme in which they fraudulently obtained cable television accounts and then resold copyrighted content to thousands of their own subscribers, who could then stream or playback content. The defendants also allegedly made fraudulent misrepresentations to banks and merchant processors in an effort to obtain merchant processing accounts. During the period of their scheme, the defendants earned more than $30 million. Carrasquillo, in particular, allegedly converted a large portion of his profits into homes and dozens of vehicles, including high-end sports cars. When agents attempted to seize those items pursuant to judicially-authorized warrants, Carrasquillo made false statements about and attempted to hide some of those vehicles, including a Freightliner recreational vehicle and a McLaren sports vehicle.

A detailed listing of charges against individual defendants is as follows:

Bill Omar Carrasquillo is charged with: one count of conspiracy; one count of violating the Digital Millenium Copyright Act; one count of reproduction of a protected work; 19 counts of public performance of a protected work; four counts of access device fraud; six counts of wire fraud; three counts of making false statements to a bank; nineteen counts of money laundering; two counts of making false statements to law enforcement officers; two counts of removal of property to prevent seizure; and four counts of tax evasion.

In total and if convicted, Mr. Carrasquillo faces a maximum possible sentence of  514 years in prison, as well as supervised release, fines, restitution, and asset forfeiture.

Jesse Gonzales is charged with: one count of conspiracy; one count of violating the Digital Millenium Copyright Act; one count of reproduction of a protected work; 19 counts of public performance of a protected work; four counts of access device fraud; five counts of wire fraud; two counts of making false statements to a bank; and one count of money laundering.

In total and if convicted, Mr. Gonzales faces a maximum possible sentence of 244 years in prisonm, as well as supervised release, fines, restitution, and and asset forfeiture.

Michael Barone is charged with: one count of conspiracy; one count of violating the Digital Millenium Copyright Act; two counts of access device fraud; and five counts of wire fraud.

In total and if convicted, Mr. Barone faces a maximum possible sentence of 130 years in prison, as well as supervised release, fines, restitution, and asset forefeiture.

“These defendants are charged with engaging in a massive, years-long scheme to steal copyrighted content, which is a very serious federal crime” said Acting U.S. Attorney Williams. “As this prosecution shows, protecting intellectual property rights is an important priority of our Office and the entire Department of Justice.”

“We will investigate and take seriously schemes for profit that infringe upon copyrights,”  said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The charges announced today should leave no doubt about the department’s continuing commitment to protect copyright holders from theft.”

“You can’t just go and monetize someone else’s copyrighted content with impunity,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “That’s the whole point of securing a copyright. Theft is theft, and if you’re going to willfully steal another party’s intellectual property, the FBI stands ready to step in and shut you down.”

“All income is taxable, including income derived from illegal means,” said Yury Kruty, Acting Special Agent in Charge of the Philadelphia Field Office for IRS-Criminal Investigation. “In addition, it is a crime to knowingly engage in monetary transactions involving criminally derived property of a value greater than $10,000 that is derived from a specified unlawful activity, such as wire fraud.  IRS-CI will continue to work with our law enforcement partners to bring charges against individuals who choose to participate in illegal schemes such as this.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service-Criminal Investigation, and is being prosecuted by Assistant United States Attorneys Christopher J. Mannion and Matthew T. Newcomer, and DOJ CCIPS Trial Attorney Jeff Pearlman.

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

An indictment was unsealed yesterday in the Eastern District of Pennsylvania charging a New Jersey man, a California man, and a New York man with federal crimes arising out of a wide-ranging and lucrative copyright infringement scheme.

According to court documents, Bill Omar Carrasquillo, 35, of Swedesboro, New Jersey; Jesse Gonzales, 42, of Pico Rivera, California; and Michael Barone, 36, of Richmond Hill, New York, operated a large-scale cable theft scheme between at least March 2016 and at least November 2019, in which they fraudulently obtained cable television accounts and then resold copyrighted content to thousands of their own subscribers. According to the indictment, the defendants also made fraudulent misrepresentations to banks and merchant processors in an effort to obtain merchant processing accounts. The defendants allegedly earned more than $30 million from the scheme.

As alleged, Carrasquillo converted a large portion of his profits into homes and dozens of vehicles, including high-end sports cars. When agents attempted to seize those items pursuant to judicially-authorized warrants, Carrasquillo made false statements about and attempted to hide some of those vehicles, including a Freightliner recreational vehicle and a McLaren sports vehicle.

“We take seriously schemes for profit that infringe upon copyrights,” said Assistant Attorney General Kenneth A. Polite Jr. of the Justice Department’s Criminal Division. “The charges announced today demonstrate the department’s continuing commitment to protect copyright holders from theft.”

“These defendants are charged with engaging in a massive, years-long scheme to steal copyrighted content, which is a serious federal crime,” said Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania. “As this prosecution shows, protecting intellectual property rights is an important priority of our office and the entire Department of Justice.”

“You can’t just go and monetize someone else’s copyrighted content with impunity,” said Acting Special Agent in Charge Bradley S. Benavides of the FBI’s Philadelphia Division. “That’s the whole point of securing a copyright. Theft is theft, and if you’re going to willfully steal another party’s intellectual property, the FBI stands ready to step in and shut you down.”

“All income is taxable, including income derived from illegal means,” said Acting Special Agent in Charge Yury Kruty of the Philadelphia Field Office for IRS-Criminal Investigation (IRS-CI). “In addition, it is a crime to knowingly engage in monetary transactions involving criminally derived property of a value greater than $10,000 that is derived from a specified unlawful activity, such as wire fraud. IRS-CI will continue to work with our law enforcement partners to bring charges against individuals who choose to participate in illegal schemes such as that alleged here.”

Carrasquillo was arrested on Sept. 21. He is charged with one count of conspiracy to commit copyright infringement and related offenses; one count of violating the Digital Millennium Copyright Act; one count of reproduction of a protected work; 19 counts of public performance of a protected work; four counts of access device fraud; six counts of wire fraud; three counts of making false statements to a bank; 19 counts of money laundering; two counts of making false statements to law enforcement officers; two counts of removal of property to prevent seizure; and four counts of tax evasion. In total, if convicted of all counts, Carrasquillo faces up to 514 years’ imprisonment.

Gonzalez was arrested on Sept. 21. He is charged with one count of conspiracy to commit copyright infringement and related offenses; one count of violating the Digital Millennium Copyright Act; one count of reproduction of a protected work; 19 counts of public performance of a protected work; four counts of access device fraud; five counts of wire fraud; two counts of making false statements to a bank; and one count of money laundering. In total, if convicted of all counts, Gonzales faces up to 244 years’ imprisonment.

A summons to appear in court was issued to Barone, and he is scheduled to make his initial appearance today in the Eastern District of Pennsylvania. He is charged with one count of conspiracy to commit copyright infringement and related offenses; one count of violating the Digital Millennium Copyright Act; two counts of access device fraud; and five counts of wire fraud. In total, if convicted of all counts, Barone faces up to 130 years’ imprisonment.

A federal district court judge will determine any sentence after considering the U.S. Sentencing Guidelines and other statutory factors.

The FBI and IRS-CI are investigating the case.

Trial Attorney Jeff Pearlman of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorneys Christopher J. Mannion and Matthew T. Newcomer of the Eastern District of Pennsylvania are prosecuting the case.

An indictment is merely an allegation, and all defendants are presumed innocent until proven guilty beyond a reasonable doubt in a court of law.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Heng Han, 49, of Bensalem, PA, owner of HBH Global Resources, Ltd., was charged by Indictment on charges related to his alleged failure to pay over the trust fund portion of HBH’s employment taxes for quarters in 2015 to the Internal Revenue Service, and filing false individual and corporate tax returns with the IRS for tax years 2012 through 2015. The defendant made his initial appearance in federal court on these charges this afternoon.

According to the Indictment, as the proprietor of HBH, the defendant provided temporary employees to work for client companies in various industries, including light and heavy manufacturing and construction work. Han was legally obligated to withhold payroll taxes from wages paid to his employees and was responsible to pay over these taxes to the IRS. He was also required to file, following the end of each calendar quarter, an Employer’s Quarterly Federal Income Tax Return (Form 941), setting forth the total amount of wages and other compensation subject to withholding, the total amount of income tax withheld, and the total amount of social security and Medicare taxes due to the IRS. Although Han late-filed the Forms 941, he has allegedly never paid over a combined total of approximately $1,739,560. in withholding taxes due to the IRS for the years 2012 through 2015.

The Indictment further alleges that from 2012 through 2015, Han also never filed corporate or individual tax returns. In 2016, Han is alleged to have filed corporate and individual tax returns, but they were false in that he underreported HBH’s gross receipts for each of the calendar years from 2012 through 2015 by approximately $5,184,450. His alleged criminal conduct resulted in a tax loss of approximately $1,771,550.

“Heng Han’s alleged scheme to enrich himself victimized honest American taxpayers and business owners who pay their tax obligations,” U.S. Attorney Williams said. “Over years, he caused the IRS to lose millions of dollars in tax revenue. This type of fraud will be aggressively investigated and prosecuted by this Office.”

“Employment tax fraud is a serious crime that hurts honest employees as well as the United States Treasury,” said Yury Kruty, Acting Special Agent in Charge of the Philadelphia field Office for IRS-Criminal Investigation. “Because of the detrimental impact this type of misconduct has on the American taxpayers, investigating employment tax fraud will continue to be a priority for the special agents of IRS-CI.”

If convicted, the defendant faces a maximum possible sentence of 22 years in prison and a $420,000 fine. The defendant may also be responsible for the full amount of the taxes due, in addition to the payment of penalties and interest to the Internal Revenue Service.

The case was investigated by the Internal Revenue Service and is being prosecuted by Assistant United States Attorney Anita Eve.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Salim Davis, a/k/a “Leem,” 36, of Philadelphia, PA was sentenced eight years and four months in prison and five years of supervised release by United States District Court Judge Gene E.K. Pratter for illegally possessing a firearm and shooting it into a residential neighborhood.

Nearly two years ago in September 2019, the defendant was convicted at trial of being a felon in possession of a firearm, possession of a firearm in connection with a drug trafficking offense, possession with intent to distribute a controlled substance, and aiding and abetting the making of a false statement to a federal firearms licensee. The jury heard evidence that a Philadelphia Police Inspector was off-duty driving his unmarked police car in the area of 2500 Island Avenue when he heard gunshots. Minutes later, he observed Davis, who was wearing a black jacket, and another man, walking in an alleyway near the officer’s car, both carrying firearms. The Inspector followed the suspects and commanded that they stop and put their hands up. Davis failed to comply, walked away, and discarded his black jacket. Police eventually caught up with Davis, placed him in custody, and conducted a pat down. They found over $1,000 cash and a bottle containing 70+ Xanax pills. After picking up the discarded black jacket, officers recovered a Smith & Wesson, .40 caliber, semi-automatic handgun loaded with 10 live rounds. They also recovered four bullet cartridge cases from the scene which were found to be from the defendant’s weapon.

“If you commit a federal firearms offense, our Office, together with our law enforcement partners, will hold you accountable,” said Acting U.S. Attorney Williams. “We are nearly six months into our ‘All Hands On Deck’ initiative; six months of working with our law enforcement partners nearly around the clock to put criminals like Davis behind bars where they can no longer contribute to the violence on the streets of our city.”

“ATF, along with our law enforcement partners, will continue to do everything in our power to take guns out of the hands of violent felons and disrupt violent gun crime in our community,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “Today’s sentence is a small victory in the perpetual battle against gun violence and should send a clear message to those criminals who endanger our citizens.” 

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.   The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Philadelphia Police Department. It was tried by Assistant United States Attorney Katherine Driscoll, and was handled post-trial by Assistant United States Attorney Michael Miller.  

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Hassan Griffin, 25, a/k/a “Glizzy,” “Frizzy,” “ODOG,” and “GlizzytheHitta,” of Philadelphia, PA, was sentenced to 12 years in prison, 10 years supervised release and a $2,000 special assessment by United States District Judge Mitchell S. Goldberg for conspiracy to distribute and distribution of phencyclidine (“PCP”), and cocaine base (“crack”) through the Drug Trafficking Group (DTG) he led in the Kensington neighborhood of Philadelphia.

Griffin and eight other individuals, James Grimes, 30, a/k/a “Speedy,” “Dink,” “HM;” Andrew Gault, 29, a/k/a “Fly,” “Butterknife King,” “BKK;” Katina Grimes, 32, a/k/a “Snoop,” “SnoopdaHitta;” Tyreeq Lenair, 29, a/k/a “Bear;” Quran Justice, 24, a/k/a “Skee;” Wayne Brunson, 27, a/k/a “Weez;” Unterrio Parris, 27, a/k/a “Dudda,” “Didda;” and Anthony Hill, 30, a/k/a “Turk,” “Turt;” were charged by Indictment in April 2018 with numerous counts of drug trafficking offenses arising from their participation in the “TruHittaz” DTG that controlled the 700 and 800 blocks of East Madison and East Willard Streets in Philadelphia. To anyone driving by, this was a residential neighborhood, lined with rowhomes, trees and parked cars. But to the TruHittaz and their customers, it was - as they called it - “the block” and “the jungle.” It was a place where some of the very row homes, alleys and vacant lots that lined those streets became stash locations (hiding spots) for the drugs supplied by these defendants and sold by their workers, and for the guns supplied by James Grimes to protect their block, their drugs, and their profits from being robbed. Witnesses recounted driving these streets in the summer months and smelling the distinct odor of PCP in the air while the bottles and caps used to package and sell this dangerous drug littered the road and alleyways.

Led by Grimes and Griffin, the TruHittaz obtained quantities of phencyclidine, cocaine base, heroin, marijuana, and other controlled substances from suppliers, both outside and within the Eastern District of Pennsylvania. They then sold these drugs twenty-four hours a day, seven days a week, by employing a network of bosses, caseworkers, trappers and lookouts, such that when one member was unavailable for any reason, another took his or her place. When a member returned from arrest, prison, or even after being shot, s/he immediately resumed his/her criminal activity. This allowed the TruHittaz to sell at least five ounces of PCP and 10 bundles of crack every twelve hours – meaning that it took just over seven days (not including the night shift) to sell a kilogram of PCP and 280 grams of crack.

The TruHittaz DTG made large sums of money and protected its operations by selling drugs, carrying and using firearms, engaging in acts of intimidation and threats, and by recruiting individuals in their own community who were financially or otherwise vulnerable. The group operated in an open-air market undeterred by the presence of law enforcement, local arrests, or shootings in the area. Their main stash house (where over a kilogram of PCP, hundreds of vials and other packaging paraphernalia and numerous rounds of ammunition were seized) was located directly next to an operating daycare center. Their drug territory and many “offsite” sales took place in direct proximity to several area schools including: Philip Sheridan School, 800 East Ontario Street; the People for People Charter School, 800 North Broad Street; the Woodrow Wilson Middle School, 1800 Cottman Avenue; the Russell H. Conwell Middle School, 1849 East Clearfield Street; and the Resurrection Regional Catholic School, 2020 Shelmire Avenue.

Griffin’s sentencing yesterday brings to a close a more than five-year effort by federal and local law enforcement to disrupt and dismantle the TruHittaz DTG. The above-named defendants were sentenced to a total of 73 years in prison followed by lengthy periods of federal supervision.

“This vast and sophisticated drug trafficking enterprise left a path of destruction across Kensington and throughout Philadelphia,” said Acting U.S. Attorney Williams. “Today’s sentence brings to a close our dedicated effort to take down the nefarious TruHittaz criminal organization, and we remain committed to cutting off the supply of deadly drugs into our communities.”

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and is being prosecuted by Assistant United States Attorneys MaryTeresa Soltis and Christopher E. Parisi.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Justyn Perez-Colon, 27, of Philadelphia, PA, was sentenced today to 55 years in prison, and lifetime supervised release by United States District Judge E.K. Pratter for his sexual abuse and exploitation of two young toddlers in his care, his production and distribution of child pornography involving those same toddlers, and his collection of hundreds of images of child pornography that he obtained from the internet. At the time he committed these federal crimes, the defendant was a recidivist child sex offender, having previously sexually abused a young family member for more than eight years, beginning when the child was just seven years of age.  

In September 2019, the defendant pleaded guilty to a federal Indictment, which charged him with two counts of production of child pornography, distribution of child pornography, five counts of attempted distribution of child pornography, and possession of child pornography.

This federal investigation began in February 2018, when Perez-Colon posted an advertisement on Craigslist seeking to connect with other child sex offenders to trade stories and child pornography. An undercover FBI agent responded to his posting. During their communications over the next few days, the defendant admitted to sexually abusing a young family member for years, and also confessed that he was currently sexually abusing a young girl in his care. The defendant sent photographs and video of him sexually abusing the one-year old girl, including images of his horrific abuse of this child was she was sleeping.

On February 14, 2018, within 24-hours of receiving the pornographic images of Perez-Colon’s abuse of the child, the Federal Bureau of Investigation identified and arrested him. His cell phone was also seized and examined, and found to contain additional videos of Perez-Colon sexually abusing the 1-year-old girl, in addition to evidence that he was also sexually exploiting a different toddler with whom the defendant had a personal relationship.

The subsequent investigation by the FBI revealed that the defendant not only sexually abused and exploited the two toddler victims, but he also distributed their images and videos out over the Internet to other child sex offenders for their sexual gratification. The FBI identified Timothy O’Connell, a Villanova University Campus Minister, and Michael Meacham, a West Chester University student, both of whom communicated online with the defendant, and requested and received sexually explicit images from him. Both of these child sex offenders were prosecuted and pleaded guilty to federal charges of receipt of child pornography. O’Connell was sentenced in November 2019 to 6 ½ years in prison. Meacham is awaiting the imposition of his sentence.

In September 2019, defendant Perez-Colon pleaded guilty to the federal Indictment, which charged him with two counts of production of child pornography, distribution of child pornography, five counts of attempted distribution of child pornography, and possession of child pornography.

“Child pornography and exploitation offenses are among the most horrific crimes prosecuted by this Office,” said Acting U.S. Attorney Williams. “But this case is particularly disturbing due to Perez-Colon’s history as a previously convicted sex offender and the very young ages of his victims. I have no doubt that our community is safer with Perez-Colon and his criminal associates behind bars, and my heartfelt thanks goes out to the fast-acting agents at the FBI who worked quickly to identify and arrest the defendant so he could no longer hurt anyone else.”

“The criminal acts to which Justyn Perez-Colon admitted are stomach-churning,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “He sexually abused two toddlers, documenting and sharing images of that exploitation. It was imperative that the FBI swiftly take him off the street. Unequivocally, our community is safer with Perez-Colon behind bars, locked away where he can’t victimize anyone else’s child.”

The case was investigated by the Federal Bureau of Investigation, with assistance from the Horsham Police Department and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Priya T. De Souza.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Ayende Alvarado, 40, of Philadelphia, PA, was sentenced today to 6 years and 6 months in prison without the possibility of parole, and three years of supervised release by United States District Court Judge Juan R. Sánchez for multiple firearms offenses including possession of a machinegun.

In May 2021, Alvarado pleaded guilty to a Superseding Indictment charging offenses including possession of a machinegun, possession of a firearm by a felon, and possession of a firearm not registered in the National Firearms Registration and Transfer Record. The charges stem from an incident in July 2019, during which Customs and Border Protection (CBP) officers at JFK International Airport intercepted a package from China containing 20 counterfeit Glock auto-switches addressed to defendant’s home in Pennsylvania. The auto-switches are essentially conversion devices designed and created for the sole purpose of converting semi-automatic Glock pistols into fully automatic machineguns. When properly installed on a semi-automatic Glock pistol, these devices allow the firearm to expel more than one projectile by a single pull of the trigger, at a staggering rate of approximately 1,200 rounds per minute.

Following that discovery, agents with the Department of Homeland Security, Philadelphia Police detectives and members of the Philadelphia Police Department S.W.A.T Unit, executed a federal search and seizure warrant on the 3000 block of North 7th Street in Philadelphia. A search of a residence there revealed the presence of numerous firearms and ammunition, including the 20 counterfeit Glock auto-switches manufactured in China.

“The defendant had the supplies to put large-capacity, automatic weapons on the streets of Philadelphia, significantly contributing to the violent crime problem in our city,” said Acting U.S. Attorney Williams. “We are nearly six months into our ‘All Hands On Deck’ initiative; six months of working with our law enforcement partners nearly around the clock to put criminals like Alvarado behind bars where they can no longer contribute to the violence on the streets of our city.”

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

The case was investigated by the Department of Homeland Security, United States Customs and Border Protection, United States Postal Inspection Service, the Bureau of Alcohol Tobacco, Firearms and Explosives, and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney José R. Arteaga.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that that Peter Fratus, 39, of West Dennis, MA, was convicted today at trial of sending threatening email messages to City of Philadelphia Police Commissioner Danielle Outlaw.

In August 2020, Fratus was charged by Indictment with transmitting threatening communications in interstate commerce. According to the Indictment, on June 6, 2020, the defendant sent two emails to the Philadelphia Police Commissioner’s City of Philadelphia email address. Both emails allegedly contained racist, offensive, and threatening language, with one communication asking about where the Commissioner lives.

“It is a federal felony to threaten another person online, whether the victim is a private citizen or a public figure,” said Acting U.S. Attorney Williams. “The public can rest assured that our Office, together with our law enforcement partners, will work tirelessly to identify anyone who does this and ensure they’re held accountable for their actions.”

“The perceived anonymity offered by the internet has emboldened many people into thinking they can post or send anything they want,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Today, a jury proved that’s not the case, holding Peter Fratus accountable for his violent threats. This was not free speech. This was a crime. Know that the FBI will continue to investigate and bring to justice people like Fratus who clearly cross that line.”

The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Police Department and the Dennis Police Department, and is being prosecuted by Assistant United States Attorneys Robert J. Livermore and Sarah M. Wolfe.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Romel Bolger, 41, of Drexel Hill, PA, was sentenced to ten years and four months in prison, and five years of supervised release by United States District Court Judge Mark A. Kearney for his illegal attempt to traffic approximately 20 kilograms of cocaine, which he was prepared to purchase with hundreds of thousands of dollars in cash at a hotel in Delaware County.

In May 2021, the defendant pleaded guilty to a Superseding Indictment charging him with attempting to possess with intent to distribute a controlled substance. According to court documents, in August 2020, just five years after his release from a nearly ten-year prison sentence for drug trafficking, Bolger negotiated the purchase of 20 kilograms of cocaine from an undercover Pennsylvania State Police Trooper in exchange for $700,000. On the date of the purported transaction, Bolger met with the undercover officer and inspected a kilogram of cocaine. After expressing his satisfaction with the drugs, he and his co-defendant, Kasib Parham, each carried a duffel bag full of cash to the scene of the purported transaction, a hotel in Delaware County. As they were about to make the deal, Bolger and Parham were arrested. In addition to the $700,000 contained in the two duffel bags, Parham had a bag containing various items of drug trafficking paraphernalia, and Bolger had an additional $10,440 in cash on his person. At Bolger’s residence, law enforcement recovered an additional $181,073 in cash. A search of Parham’s residence revealed additional cash, a money counter, and various items of drug trafficking paraphernalia with cocaine base (“crack”) residue.

“Drug trafficking is inherently dangerous for all touched by it, from those struggling with addiction, to residents of the neighborhoods where this behavior occurs, and of course for the distributors themselves,” said Acting U.S. Attorney Williams. “The federal government is aggressively prosecuting recidivist drug dealers like Bolger to ensure that those seeking to make a profit off the vulnerable face the consequences of their criminal acts. We want to thank our law enforcement partners in this case, the DEA and the PA State Police, for their hard work and dedication.”

“Bolger negotiated with an undercover officer for the purchase of twenty kilograms of cocaine and put together over $700,000 in cash, which demonstrated his intent in completing this deal,” said Thomas Hodnett, Acting Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “The fact that Bolger was previously convicted of drug trafficking and had an additional $181,000 in drug proceeds at his residence is indicative of the threat he posed to our community. I want to thank our partners at the Pennsylvania State Police for our collaboration in this investigation.” 

The case was investigated by the Drug Enforcement Administration and the Pennsylvania State Police, and is being prosecuted by Assistant United States Attorney Erica Kivitz.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Shahidul Gaffar, 40, and Nabila Khan, 35, both residents of Pennsylvania, were sentenced to 18 months and two years in prison, respectively, by United States District Court Judge Joshua D. Wolson for conspiracy to provide material support and resources to ISIS, a designated Foreign Terrorist Organization. Judge Wolson also sentenced both defendants to three years of supervised release.

According to court documents, in 2015, Gaffar and Khan, a married couple originally from Bangladesh, provided and attempted to provide financial support to two of Khan’s brothers who traveled to Syria to join ISIS fighters. Gaffar and Khan discussed the brothers’ travel plans in detail with each other, as well as with the brothers and other family members, as early as September 2014. In January 2015, Khan asked her sister living in Bangladesh to sell some of Khan’s gold and provide the money to their oldest brother, J.K., in order to assist him in travelling to Syria. Khan then flew to Bangladesh to wish J.K. farewell before his departure in February 2015. Gaffar, who remained in Pennsylvania, sent supportive messages to Khan’s mother, stating: “Be [p]roud mother for the noble cause and for the sake of Allah!!!” 

Further, Khan’s second brother, I.K., had come to the United States on a student visa and resided with Khan and Gaffar in Pennsylvania from June 2014 until February 2015, when he returned to Bangladesh. Over the next few months, Khan, who was still in Bangladesh, observed I.K. watching terrorist propaganda videos featuring Anwar al-Awlaki, a designated global terrorist who is now deceased. Around the same time, Gaffar began sending international money transfers to I.K. in Bangladesh. These funds had multiple purposes, but one was to support I.K.’s travel to Syria to join ISIS. In June 2015, Gaffar sent a message to Khan, stating: “Let [I.K.] know that I will manage and send 3000 dollars if Allah wills. Let's help him, my love, for the good cause who knows that might be enough to get forgiveness from Allah and accept[ance] [in]to heaven.” In July 2015, Gaffar continued to communicate with Kahn regarding the conspiracy, saying in part: “I feel bad for mom and dad, at the same time, I feel very proud. [W]hat a lucky mom and dad.”

In early July 2015, I.K. traveled to Syria to join ISIS. The next day, Gaffar and Khan discussed via electronic messages how Khan had tried to give I.K. more money right before he left, and days later, Kahn exchanged multiple electronic messages with a family member discussing I.K.’s arrival in Syria and reunion there with J.K. Gaffar sent reassuring messages to Khan, stating that it was “cool” that she had been able to observe I.K.’s radical Islamist “changes” from “beginning to end.”

According to court documents, in May 2016, Khan received an electronic message that I.K. had been wounded in the fighting in Syria, and in August 2016, Khan’s mother sent a message to Kahn with photographs of I.K.’s wounds sustained while in Syria. In September 2016, I.K. changed his online social media account profile picture to an image depicting himself, his brother and another male sitting in front of the black ISIS flag with firearms on a table in front of them, overtly identifying himself and his brother as members of ISIS. I.K. was ultimately killed in the fighting in Syria in March 2019.

“This case draws into sharp focus the first priority of the Department of Justice and the U.S. Attorney’s Office: protecting our Nation from all security threats,” said Acting United States Attorney Williams. “The defendants encouraged and financially supported the efforts of Nabila Kahn’s brothers to join the murderous terrorist group ISIS, which is a direct threat to the United States. The public can rest assured that our Office is working tirelessly every day to protect all Americans from the threat of terrorism.”

“Money and manpower are the lifeblood of terror groups like ISIS,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Gaffar and Khan, while enjoying all the rights and privileges of living in America, conspired to support violent extremists who consider our country their sworn enemy. Know that FBI Philadelphia’s Joint Terrorism Task Force is working diligently around the clock to detect and disrupt anyone whose beliefs have crossed the line into terrorist activity.”  

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Sarah Wolfe and Robert Livermore.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that James Chandler, 55, of Philadelphia, PA entered a plea of guilty before United States District Court Judge R. Barclay Surrick to two counts of robbery of a postal employee and one count of kidnapping.

In February 2021, the defendant was charged by Indictment in connection with two incidents that occurred on January 11 and February 4, 2021, during which Chandler robbed postal workers using a replica handgun, forcing them into their postal trucks and stealing packages from inside. During the incident in February, Chandler also forced the postal worker to drive him for several blocks in her postal truck before he fled on foot.

“Targeting and violently assaulting employees of the United States Postal Service is a serious federal crime,” said Acting U.S. Attorney Williams. “Mail carriers provide an essential service to nearly every citizen and business, oftentimes going above and beyond to execute their duties in challenging circumstances such as the COVID-19 pandemic. Mr. Chandler terrorized two postal workers using a replica handgun, and he will now face the serious consequences of his crimes.”

“Yesterday, James Chandler pled guilty to terrorizing several Postal Carriers who were just doing their jobs, delivering mail in neighborhoods of West Philadelphia,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division of the Postal Inspection Service.  “Postal employees are essential workers and have worked hard, sometimes under trying circumstances, to keep the mail flowing over the last 18 months of the pandemic.  When Mr. Chandler interrupted those efforts last winter he didn’t count on investigators from the  Postal Inspection Service working and the Philadelphia Police Department working tirelessly to identify and arrest him.  Protecting U.S. Postal Service employees and customers is a responsibility we prioritize above most else.  Because of the quick and diligent work of the Inspectors from the Inspection Service and officers from the Philadelphia Police Department, Mr. Chandler didn’t get a chance to terrorize anyone else.” 

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.  The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

The case was investigated by the United States Postal Inspection Service and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Justin Oshana.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Richard Meleski, 58, of Chalfont, PA, was sentenced to three years and four months in prison, three years of supervised release, and ordered to pay $302,121 in restitution for a particularly disgraceful fraud scheme to steal Veterans Administration (VA) benefits by pretending to be a veteran who had been captured by the enemy during combat.

In July 2020, the defendant pleaded guilty to one count of healthcare fraud, two counts of mail fraud, one count of stolen valor, two counts of fraudulent military papers, as well as two counts of aiding and abetting straw purchases, and one count of making false statements in connection with receiving Social Security Administration disability benefits.

The charges stemmed from Meleski fraudulently claiming to have served as an elite Navy SEAL and falsely representing that he had been a Prisoner of War in order to secure healthcare benefits from the VA worth over $300,000. Due to his false representation as a Prisoner of War, the defendant received healthcare from the VA in Priority Group 3, effectively receiving healthcare before other deserving military service members. In reality, Meleski never served one day in the United States military.

The defendant also filed for monetary compensation from the VA for PTSD suffered during an armed conflict in Beirut in which he rescued injured teammates. In his application for disability benefits for PTSD, Meleski falsely represented that he had been awarded the Silver Star for his heroic actions during his time as a Navy SEAL. Again, Meleski never served a single day in the United States military and was never awarded such commendation. Meleski also submitted another application to the VA for monetary compensation in which he included obituaries of actual Navy SEALs alongside whom he falsely said he had served. He traded on the actions of these true service members in an attempt to bolster his application for monetary benefits.

The defendant also filed for disability benefits from The United States Social Security Administration (SSA) for injuries he claimed to have received during his time in the military.  Meleski falsely testified under oath in connection with an SSA Disability proceeding.

“The defendant faked a record as a decorated U.S. Navy SEAL in order to collect numerous forms of taxpayer-funded compensation,” said Acting U.S. Attorney Williams. “The fact that Meleski chose to put himself ahead of true war heroes in order to take advantage of benefits designed specifically for those serving in the U.S. military is profoundly offensive. Our veterans fought for the freedoms we hold dear, and as we approach the twentieth anniversary of the attacks of 9/11 this Saturday, their sacrifices are even more meaningful. The defendant’s actions dishonor all of their legacies.”

“We are grateful to our federal partners for their work in pursuing and prosecuting those who impersonate our nation’s hero’s and unlawfully obtain benefits meant for those who served,” said RADM Karen Flaherty-Oxler (RET), Medical Center Director for the Corporal Michael J. Crescenz (Philadelphia) VA Medical Center. “It is disheartening to see someone who benefited from the service of our Veterans, dishonor them in this manner. Nonetheless, our day-to-day mission of caring for our Veterans continues uninterrupted and with the same vigor and commitment.”

“Today’s sentence sends a clear message that those who benefit from falsely claiming to have served in the United States military will be held accountable,” said Special Agent in Charge Christopher Algieri, Department of Veterans Affairs Office of Inspector General, Northeast Field Office. “The VA OIG appreciates the support of the United States Attorney’s Office and our law enforcement partners in securing justice for our nation’s true heroes.”

“This defendant defrauded the government in many different ways for several years,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “The outcome of this investigation is the result of several law enforcement agencies working together for a common goal – to keep our communities safe from criminals like Meleski. I want to thank our law enforcement partners at the VA OIG, SSA OIG and the U.S Attorney’s Office for this successful prosecution.”

The case was investigated by Department of Veterans Affairs Office of the Inspector General, Social Security Administration Office of the Inspector General, and the Bureau of Alcohol, Tobacco and Firearms, and it is being prosecuted by Special Assistant United States Attorney Megan Curran.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Anton Perevoznikov, 34, of Brooklyn, NY, was sentenced to 4 years in prison, and 3 years of supervised release. by United States District Court Judge Joel H. Slomsky for his participation in a conspiracy to unlawfully export night-vision goggles and thermal-imaging devices to buyers in Russia.

In October 2018, the defendant pleaded guilty to one count of a federal Indictment charging him with conspiracy to unlawfully export defense articles. Between February 2011 and November 2013, the defendant conspired with three Russian co-conspirators to export technologically sensitive imaging devices from the United States without first obtaining from the Department of State the required license or written authorization for such exports. Perevoznikov also purchased night vision equipment from a United States vendor while acknowledging formally, in writing, that he understood that the items he was purchasing were legally precluded from export and by falsely affirming that he did not intend to export those items. The defendant’s Russian co-conspirators sent him wire transfers so that he could, in turn, purchase more than 30 pieces of night-vision and thermal-imaging devices worth over $100,000. On shipping documents, the defendant provided false descriptions of these regulated articles, including “case box,” “case for camera,” “camera and soft case,” “photo camera,” “camcorder,” and “jacket”.

“Individuals who seek to profit by unlawfully obtaining and exporting items designated by the United States as articles important to our national defense will be prosecuted with the full weight of the federal justice system,” said Acting U.S. Attorney Williams. “It is important that we take all necessary steps to prevent our military technology from being exported and possibly used against our service members and our allies overseas.”

"Perevoznikov admitted to a conspiracy to export night-vision goggles and thermal imaging devices to buyers in Russia, all of which can pose a threat to national security," said Brian Michael, Special Agent in Charge of HSI Philadelphia. "HSI Philadelphia's resolve to keep Americans safe is present in each arrest of those criminals seeking to make a profit while threatening the safety of our country."

The case was investigated by Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Thomas R. Perricone.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Sharon Jones, 44, of Philadelphia, PA, was arrested and charged by Indictment with one count of dealing in firearms without a license and six counts of making false statements to a Federal Firearms Licensee (FFL) during the purchase of firearms.

The Indictment alleges that between July and September 2020, during six separate transactions, the defendant purchased a total of 19 firearms from a FFL on York Road in Warminster, PA, and that she made false statements during each of the purchases. Specifically, she allegedly certified on an official Firearm Transaction Record that she was the actual buyer, and that she lived at an address on Hartville Street in Philadelphia. According to the Indictment, Jones purchased firearms from manufacturers including Smith & Wesson, Ruger, Sig Sauer, and two .40 caliber Glocks, all for the purpose of reselling them for profit. The defendant was taken into custody and made her initial appearance in federal magistrate court on Friday, August 27.

“The purpose of our ‘All Hands On Deck’ initiative is, first and foremost, to prevent violent crime, which includes targeting for prosecution prolific straw firearms purchasers,” said Acting U.S. Attorney Williams. “This defendant’s alleged actions certainly fit that description. By charging crimes like straw purchasing of firearms, where firearms are purchased in order to turn them over to people who are prohibited from legally buying or possessing them, we can cut off the supply of illegal weapons at the source.”

“ATF remains dedicated to investigating violent crime and disrupting straw purchasing schemes as this indictment alleges,” said Matthew Varisco, Special Agent in Charge of ATF’s Philadelphia Field Division. “Together, with our law enforcement partners, we will continue to take measures to ensure the safety of our communities and stop the flow of guns to individuals who cannot legally purchase them.”

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

If convicted, the defendant faces a maximum possible sentence of 35 years in prison.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, and is being prosecuted by Assistant United States Attorney Justin Oshana.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Jesse Golden, 30, of Philadelphia, PA, was sentenced to fifteen years in prison and three years of supervised release by United States District Court Judge Gerald J. Pappert. The defendant was convicted of illegally possessing a firearm and ammunition as a convicted felon after a three-day trial in May 2021.

In May 2019, a Philadelphia Police officer saw a video on the social media platform Instagram in which the defendant was sitting in a car with another individual and brandishing a distinctive painted-black revolver. Investigators determined that Golden had multiple prior felony convictions, so they obtained a search warrant for the defendant’s residence. During the execution of that warrant, investigators found an unloaded revolver and 100 rounds of ammunition the same caliber as the firearm. The revolver they found matched the look (including the paint job) of the firearm in the Instagram video. Evidence presented at trial showed that testing performed on the gun found DNA that matched the defendant’s DNA.

“The crime of being a felon in possession of a firearm is a serious offense, particularly in a city like Philadelphia, where gun violence is prevalent,” said Acting U.S. Attorney Williams. “The sentence handed down by the Court today reflects the seriousness of Golden’s crimes, and should serve as a deterrent to others engaged in the same conduct. Our Office is determined to continue doing everything we can to reduce gun violence in Philadelphia by being ‘All Hands On Deck’ to get criminals like Golden off the streets for a long, long time.”

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone.   The Department of Justice reinvigorated PSN in 2017 as part of the Department’s renewed focus on targeting violent criminals, directing all U.S. Attorney’s Offices to work in partnership with federal, state, local, and tribal law enforcement and the local community to develop effective, locally-based strategies to reduce violent crime.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney David Ignall.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Ronald DeWitt Vines, 47, of Philadelphia, PA, pleaded guilty before United States District Court Judge Paul S. Diamond to attempted armed bank robbery and using, carrying, and brandishing a firearm during a crime of violence, in connection with an armed robbery he and his accomplices, who were two of his sons, attempted to carry out in Bucks County in late 2017.

In January 2018, the defendant was charged by Indictment for attempting to commit the armed robbery of the PNC Bank branch on Buck Road in Holland, PA, in November 2017. To execute the robbery, Vine placed a handgun against the side of a bank employee’s head, forcing her to open the bank door as she arrived for work that morning, and then forcing her inside the bank. A second bank employee screamed when she realized the bank was being robbed. Vines and his accomplices, sons Elijah and Solomon Vines, quickly fled the bank in a getaway vehicle before being stopped by Northampton Township Police Officers responding to a 911 call. A search by patrol officers of the getaway vehicle produced one loaded semi-automatic handgun, one loaded rifle, and two body armor vests.

“This defendant terrified and threatened the lives of bank employees who were just attempting to do their jobs, and he convinced his sons – young men with their whole lives ahead of them – to help him pull it off,” said Acting U.S. Attorney Williams. “The simple fact is that this family is a danger to the community. This case demonstrates why our All Hands On Deck initiative is so important: we are investigating and prosecuting the most violent criminals to get them off the streets and behind bars.”

“The terror of being forced into her bank at gunpoint is something that employee will likely never forget,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Ronald Vines and his accomplice planned to rob a bank. It’s incredibly fortunate no one was hurt before the robbers opted to flee, and that police officers quickly spotted and stopped their getaway vehicle. Bank robbery isn’t an easy payday, it’s a federal crime, and the FBI and our partners will ensure perpetrators like Vines are held fully accountable.”     

The case was investigated by Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives, and the Northampton Township Police Department, and is being prosecuted by Assistant United States Attorney José R. Arteaga.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Delgardo Frazer, 52, of Phoenix, AZ, was sentenced to eleven years and three months prison, and four years of supervised release by United States District Judge Chad F. Kenney for organizing and leading an international cocaine trafficking operation which was discovered and dismantled in 2018.

In April 2021, the defendant pleaded guilty to all counts in a Superseding Indictment charging him with intent to distribute fentanyl, conspiracy to distribute cocaine, possession of a firearm in furtherance of drug trafficking, and possession of a firearm by a convicted felon. The charges stemmed from an incident during which Frazer was arrested near Philadelphia International Airport (PHL) in connection with drug smuggling.

For his illicit trafficking organization, the defendant recruited and paid several young women from Arizona to serve as “drug mules,” who would travel at his behest to various Caribbean locations and then deliver suitcases containing kilos of cocaine to him in Philadelphia, PA, and to his conspirators in Orlando, FL. As part of the trafficking conspiracy, Frazer also distributed fake oxycodone pills which, in fact, contained fentanyl. The operation came to an end in July 2018, when one of the “drug mules,” after traveling a circuitous route through the Caribbean, was stopped by federal agents at PHL with two suitcases containing over 4 kilograms of cocaine. Frazer was waiting at a nearby hotel in Essington, PA, to pick her up at the airport. When he learned that she was stopped by law enforcement, he told her on a phone call to take a cab to the nearest cheap hotel, and at the same time he packed up and abandoned the hotel room five days ahead of schedule. The defendant was unaware that the woman was with federal agents who overheard that call.

The defendant drove out of the hotel parking lot quickly, and a Tinicum Township police officer on routine patrol observe him commit multiple traffic violations. The officer stopped Frazer and searched his vehicle at an on-ramp to Interstate-95, at which point approximately 485 fake oxycodone pills containing fentanyl were found in the gas cap, and a semi-automatic 9 mm Luger handgun loaded with 12 live rounds was found in the trunk. Frazer had a prior felony drug conviction in Arizona and was therefore not permitted to possess a firearm.

“Drug distribution and gun violence are an epidemic in Philadelphia, and the federal government is aggressively prosecuting both in order to be ‘All Hands On Deck’ to get dangerous criminals like this defendant off the streets,” said Acting U.S. Attorney Williams. “Delgado Frazer was a large-scale drug trafficker who exploited women to do the ‘heavy lifting’ of bringing illegal narcotics into our country through Philadelphia and other airports, which puts those communities in grave danger. We want to thank our law enforcement partners in this case, HSI and DEA, for their hard work and dedication.”

“Frazer admitted to organizing an international drug trafficking ring, putting deadly drugs in the hands of those struggling with addictions.  HSI is committed to working with its law enforcement partners to ensure that those seeking to make a profit off the vulnerable are arrested to face the consequences of their criminal acts,” said HSI Philadelphia Special Agent in Charge, Brian Michael.

The case was investigated by the Homeland Security Investigations and the Drug Enforcement Administration, and is being prosecuted by Assistant United States Attorney Andrea G. Foulkes.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Robert Fryer, 39, of Perkasie, PA, was charged by Information with one count of conspiracy to commit mail and wire fraud, four counts of mail fraud, and 10 counts of wire fraud related to a scheme to embezzle and pocket fraudulent proceeds from the unauthorized sale of United States Open Championship (“U.S. Open”) tickets, one of four major championships for golf.

The filed Information alleges that the defendant was employed by the United States Golf Association (“USGA”) in its Admissions Office. Beginning in advance of the 2013 U.S. Open held at the Merion Golf Club in Ardmore, PA, and continuing through the 2019 U.S. Open held at the Pebble Beach Golf Links in Pebble Beach, CA, Fryer abused his position in the USGA Admissions Office in order to steal more than 23,000 U.S. Open admission tickets, all without the knowledge and consent of the USGA. The defendant then sold those stolen tickets to third-party ticket brokers in return for payments totaling more than $1 million, which was paid to Fryer mostly in the form of cash and PayPal transfers. According to the Information, the face value of the tickets that the defendant stole was more the $3 million.

The Information further alleges that the ticket brokers to whom Fryer sold the tickets bought them in bulk to then turn around and resell them to their customers. In fact, the Information alleges that the USGA had a strict 20-ticket cap on the number of tickets that it would sell to any one person, but these ticket brokers were able to acquire thousands of tickets to each U.S. Open by buying stolen tickets from Fryer.

According to the Information, Fryer delivered the stolen U.S. Open tickets to the ticket brokers in a variety of ways: sometimes in person, and sometimes by sending them via Federal Express or UPS, either to the ticket brokers themselves or directly to the customers of the ticket brokers. The Information alleges that one of the ticket brokers regularly emailed the defendant prepaid UPS shipping labels that he then used to send the tickets to that broker and that broker’s customers.

“The defendant allegedly stole revenue from a legitimate business that pays taxes, employs many, supports a non-profit organization, and brings excitement and income to our district with U.S. Open events at courses like the Merion Golf Club,” said Acting U. S. Attorney Williams. “Criminals that conduct ticket schemes like this prey on the excitement surrounding big events; fans should remember that any item with a low price that seems ‘too good to be true’ should be cause for caution and concern.”

“Robert Fryer allegedly engaged in a years-long scheme to steal and sell thousands of U.S. Open tickets,” said Bradley S. Benavides, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Fraud is simply not the answer, if you feel your paycheck isn’t up to par. The FBI takes seriously allegations of embezzlement and fraud and will investigate anyone engaged in this sort of criminal behavior.”

Fryer faces a maximum sentence 300 years in prison, three years of supervised release, a $3,750,000 fine, and a $1,500 special assessment. In addition, Fryer will be required to pay restitution to the USGA and forfeit the proceeds he obtained as a result of his fraud.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe. Investigators appreciate the cooperation of the USGA in connection with this investigation.

An Information is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Daniel King, 25, of Philadelphia, PA, was charged by Superseding Indictment with three counts of bank robbery; four counts of armed robbery of commercial businesses; one count of using and carrying a firearm during and in relation to a crime of violence; and one count of possessing a firearm after having been convicted of a felony. 

The Indictment alleges that the defendant robbed the following banks and commercial businesses: the Rite Aid on Windrim Avenue in Philadelphia on June 10, 2018; the PNC Bank on North Broad Street in Philadelphia on June 18, 2018; the Santander Bank on Easton Road in Wyncote on June 20, 2018; the Citizens Bank on South Easton Road in Glenside on June 16, 2018; the Family Financial Check Cashing on West Girard Avenue in Philadelphia on August  28, 2018; the Rite Aid on Rising Sun Avenue in Philadelphia on September 10, 2018; and the Walgreens in Yorktown Plaza in Elkins Park on September 17, 2018.

King allegedly robbed the pharmacies and the check cashing business while armed with a handgun. The Superseding Indictment further charges the defendant with knowingly possessing a firearm loaded with 18 live rounds of ammunition, while also knowing he had previously been convicted of a felony offense which precluded him from possessing firearms.

“As alleged, this defendant went on a prolific armed robbery spree in the summer of 2018, wreaking havoc on businesses and their employees,” said Acting U.S. Attorney Williams. “Law enforcement experts have said that the majority of violent crimes committed in and around Philadelphia are perpetrated by a small number of brazen criminals.  The charges in this Indictment are a perfect case-in-point and exactly why our All Hands On Deck initiative is committed to investigating and prosecuting the most violent criminals; by focusing on the most violent among us, we will have a big impact.”

“The FBI is committed to keeping the Philadelphia area and its citizens safe from predators like Daniel King. Today’s indictment sends a message to violent criminals that if you terrorize our community, we will find you and bring you to justice,” said Acting Special Agent in Charge Brian T. Herrick.

If convicted, the defendant faces a maximum possible sentence of life in prison, with a mandatory seven-year sentence, five years supervised release, and a $2,250,000 fine.

The case was investigated by the Federal Bureau of Investigation, the Philadelphia Police Department, and the Cheltenham Township Police Department, and is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Dominic Luis Escalera, 37, of Allentown, PA, was charged by Indictment on charges of murder-for-hire and being a felon in possession of a firearm related to a plot to kill two individuals in the Allentown area earlier this year.

The Indictment alleges that from about January 28, 2021 to about February 17, 2021, the defendant used a cell phone and traveled from Newark, NJ to Allentown to arrange for the murders of two individuals, M.R. and A.R., and made an agreement to pay someone to commit the murders using controlled substances and cash. The Indictment further alleges that the defendant, knowing he had previously been convicted of a felony offense, illegally possessed a firearm loaded with four live rounds of ammunition. The previous felony conviction precludes the defendant from possessing a firearm.

“This is the second murder-for-hire case our office has announced in the last three weeks,” said Acting U.S. Attorney Williams. “These charges are a warning to anyone thinking that solicitation of homicide is a solution to your problems: This is not a game. If you try to hire someone to commit murder, you will face an aggressive federal investigation and very serious charges. Our office is committed to working with our law enforcement partners across the District to do all we can do prevent senseless violence.”

“This indictment illustrates the power of the combined efforts of ATF and our law enforcement partners,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division. “The vigilant work of our law enforcement partners enabled them to prevent a murder and hold the defendant responsible for his alleged crimes. I want to thank the Allentown Police Department, the Pennsylvania State Police, and the U.S. Attorney’s Office for their continued effort in combatting violent crime.”

“The Pennsylvania State Police worked in collaboration with local, state, and federal law enforcement partners to ensure a thorough and prompt investigation,” said Major Jeremy Richard, director of the Pennsylvania State Police Bureau of Criminal Investigation. “I would like to extend my gratitude to these joint forces whose teamwork spoiled Mr. Escalera’s efforts. Plots to potentially harm or kill another person are serious crimes that carry severe consequences. The Pennsylvania State Police is committed to ensuring the safety of Commonwealth residents.”

If convicted, the defendant faces a maximum possible sentence of 30 years in prison, three years of supervised release, and a $750,000 fine.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Pennsylvania State Police, and the Allentown Police Department, and is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Tri-County Hospitalists, LLC (“TCH”) has agreed to pay a total of $200,000 plus interest to resolve alleged violations of the False Claims Act by overbilling Medicare for advanced care planning (“ACP”) and tobacco cessation counseling (“TCC”) services. In many instances, TCH sought Medicare reimbursement for ACP and TCC services regardless of whether the counseling was necessary, voluntary, or performed with patient consent.

The settlement resolves allegations that, between January and September 2019, TCH engaged in a coordinated effort to defraud the United States by pressuring TCH personnel to seek Medicare reimbursement for ACP and TCC services for patients TCH treated, regardless of medical need. In most cases, the prerequisites for ACP and TCC services were not met and not every patient required the services that were billed. In some instances, TCH allegedly billed Medicare four or more times where ACP services were provided to a single patient over a short time frame with no evidence of any documented changes in patient condition to justify its billing activities. TCH also allegedly unnecessarily sought and received Medicare reimbursement for tobacco cessation counseling where patients did not use tobacco.

TCH is a physician-owned medical group that employs over 75 health care providers, also referred to as hospitalists, who specialize in internal medicine, family practice, pulmonary medicine, hospital medicine, emergency medicine and cardiology. TCH has offices in Philadelphia, Montgomery, and Chester Counties and provides its services in hospitals, skilled rehabilitation facilities, outpatient practices, and urgent care centers.

“Receiving payments from Medicare while providing medically unnecessary services to patients who rely on their doctors for their professional judgment cheats patients and defrauds the federal government,” said Acting United States Attorney Williams.  “This resolution represents our commitment to holding accountable those who engage in fraud that affects the residents of this city and this district.”

The allegations were brought by a former TCH hospitalist under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator was represented by Christopher J. DelGaizo, Esquire of the Derek Smith Law Group, PLLC.

The government’s pursuit of these matters illustrates its emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act.  Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 1-800‑HHS‑TIPS (1-800-447-8477). 

This case was investigated by the U.S. Attorney’s Office for the Eastern District of Pennsylvania with assistance by Auditor Dawn Wiggins. The lawsuit is captioned United States ex rel. Zeth Holbert v. Tri-County Hospitalists, LLC (“TCH”) et al., Civil Action No. 19-4099.

The claims resolved by this settlement are allegations only and there has been no determination of liability.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Mark Irvello, 56, of Broomall, PA; Stanley Woloff, 58, of Philadelphia, PA; David Abell, 72, of Chincoteague Island, VA; Stephen Kish, 65, of Philadelphia, PA; Rodney Martinez, 50, of Blackwood, NJ; Jesse Fleck, 43, of Philadelphia, PA; Peter Brauner, 58, of Kintersville, PA; James Turner, 59, of Horsham, PA; and John Brady, 60, of Blue Bell, PA; were charged in separate Criminal Informations with bribery and fraud offenses.

The Informations allege that at various times from 2013 through 2019, management-level employees working in SEPTA’s Bridges and Buildings Department (“BBD”) engaged in bribery and theft schemes with two SEPTA vendors, defendants Mark Irvello of MSI Tool Repair and Supply (“MSI”), located in Upper Darby, PA; and Stanley Woloff of Advantage Industrial Supply (“AIS”), located in Philadelphia, PA. The SEPTA managers alleged to have engaged in the scheme are David Abell, Stephen Kish, Rodney Martinez, Jesse Fleck, Peter Brauner, James Turner, and John Brady.

According to the Informations, the BBD is responsible for maintaining, repairing, and renovating SEPTA facilities throughout the southeastern Pennsylvania region. To facilitate this work, SEPTA issues “procurement cards” (also known as P-Cards) to management-level employees working in the BBD. The P-Cards, which operate as SEPTA credit cards, are to be used for purchasing items needed for the legitimate work of the BBD.

In about 2013, defendant Abell, who was a Senior Director of Maintenance at SEPTA, agreed with defendant Irvello of MSI, and separately, with defendant Woloff of AIS (collectively “the vendors”), to exploit the P-Card system for their mutual benefit. Abell solicited the vendors to provide him with regular cash payments of approximately $1,000 to $2,000 per month. In exchange for those payments, the vendors falsely billed SEPTA through the P-Card system for items that the vendor was not providing to SEPTA. The false charges to SEPTA covered the cash payments to Abell, plus a substantial additional amount to generate fraud proceeds for the vendor. As part of the corrupt deals with the vendors, Abell encouraged other BBD managers to use and continue to use MSI and AIS for SEPTA purchases, growing the vendors’ business with SEPTA. To conceal the scheme, Irvello and Woloff billed SEPTA for items that SEPTA might use, but in fact, did not need at that time, or billed SEPTA for substantially more of certain products than they were actually providing to the agency. The vendors thus combined legitimate with fraudulent billing, making the scheme difficult to detect.

At various times, beginning around 2014, several other SEPTA BBD managers began engaging in similar fraud activity with defendants Irvello and Woloff. Those managers included defendant Martinez, who in 2016 replaced Abell as Senior Director of Maintenance and took over Abell’s legitimate role in SEPTA’s BBD, as well as his role in the fraud and bribery scheme. Martinez regularly solicited cash payments from the vendors under the same arrangement that the vendors had with Abell. The cash payments to Martinez totaled over $144,000.

Other BBD managers, including defendants Kish, Fleck, Brauner, Turner, and Brady, individually solicited the vendors for cash and personal items. The vendors agreed to provide the cash and personal items to the managers, and then fraudulently billed SEPTA to cover the cost of those payments and products and to generate additional fraud proceeds for themselves.

The most prolific participant in this fraud scheme was defendant Kish. Kish had Irvello make over $225,000 in purchases to benefit Kish. In most of these cases, Kish directed Irvello to purchase specific precious metals, particularly gold coins, each worth thousands of dollars. The purchases included several American Gold Eagle Coins, Gold American Buffalo Coins, South African Gold Krugerrand Coins, Canadian Gold Maple Leaf Coins, Royal Canadian Mint Gold Bars, and PAMP Suisse Gold Bars. Defendant Kish is also alleged to have engaged in money laundering for using the proceeds of the scheme to purchase real estate. The other participants in the scheme also obtained numerous personal items, including a $5,000 backhoe attachment for defendant Brauner, ATV equipment for defendant Fleck, and numerous electronics, tools, articles of clothing, and automobile repairs for defendants Turner and Brady.

In connection with this scheme, the vendor companies owned by defendants Irvello and Woloff each became one of SEPTA’s largest billers through the P-Card system. In doing so, Irvello defrauded SEPTA of more than $540,000, and Woloff defrauded SEPTA of more than $330,000.

“Philadelphians deserve public employees who do their jobs honestly, without gaming the system to line their own pockets,” said Acting U.S. Attorney Williams. “At a time when SEPTA is facing significant challenges to continue faithfully serving its riders, many of whom have no other reliable, cost-effective transportation options, the defendants’ alleged actions perpetrating this fraud scheme are the definition of selfish greed.”

“The FBI is committed to tracking down public officials and servants who abuse their positions of trust for personal gain,” said Brian T. Herrick, Acting Special Agent in Charge of the FBI’s Philadelphia Division. “Public corruption erodes citizens' faith in their community servants, and it will continue to be the FBI’s top criminal investigative priority. Today’s indictment sends the message that the FBI will work tirelessly to protect government entities and services from fraud, waste and abuse.”

“SEPTA is a public trust. Employees who engage in fraud violate that trust and will face serious consequences,” said D. James Bannan, the Authority’s Inspector General. “The vast majority of SEPTA’s workforce are honest, hard-working individuals who are dedicated to providing critical public transportation service to our region. We will continue to do right by them, the taxpayers, and the riding public by holding those who engage in illegal activity accountable for their actions.”

If convicted, each defendant faces maximum sentences of at least 20 and as much as 40 years in prison.

The case was investigated by the Federal Bureau of Investigation with the assistance of SEPTA Office of Inspector General, and is being prosecuted by Deputy United States Attorney Louis D. Lappen. SEPTA’s Internal Audit Division launched an investigation after receiving tips from employees, and the Authority’s Inspector General shared the findings with the FBI.

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

In our constitutional democracy, the court is the focal point of the entire criminal justice system; its mission is to serve the public by administering justice in a fair and impartial manner, by preserving each citizen’s constitutional rights, and by faithfully applying the rule of law in each individual case. The court’s ability to fulfill this mission – one that the Department of Justice shares with the court – depends on the public’s confidence in our judiciary as an institution. 

A recent paper by an organization called the Institute for the Quantitative Study of Inclusion, Diversity, and Equity claims that two judges in our District – Judges C. Darnell Jones II and Timothy J. Savage – have engaged in discriminatory sentencing practices. Our Office is the most frequent litigant before the U.S. District Court for the Eastern District of Pennsylvania. We can report that Judges Jones and Savage treat defendants fairly and even handedly, balancing the complexities presented in each case without regard to race or ethnicity. 

Putting aside questions about the paper’s methodology and underlying data set, what we have seen over many years is wholly inconsistent with the paper’s assertions. Simply put, it’s conclusion is belied by our experience appearing before these judges.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Wayde McKelvy, 59, of Aurora, Colorado, was sentenced to 18 years in prison, five years of supervised release, and ordered to pay $37 million restitution today by United States District Judge Joel Slomsky for operating a $54 million Ponzi scheme in one of the largest green energy frauds in U.S. history.

In October 2018, the defendant was convicted after trial of seven counts of wire fraud, conspiracy to commit wire fraud, securities fraud, and conspiracy to engage in securities fraud. The government established at trial that McKelvy and his co-conspirators ran an elaborate Ponzi scheme operating as Mantria Corporation, which received more than $54 million in fraudulently obtained new investor funds. The group promised investors huge returns, as high as 484%, for securities investments in supposedly profitable business ventures in real estate and green energy.  In reality, Mantria, based in Bala Cynwyd, PA, was a classic Ponzi scheme in which new investor money was used to pay “returns” to early investors, and the business generated meager revenues and no actual profits.

To induce investors to invest money, the defendant and his co-conspirators repeatedly made fraudulent representations and material omissions about the economic state of Mantria.   McKelvy also promoted himself as a financial wizard through aggressive marketing tactics, even though he had little financial acumen and was an unlicensed securities salesman. McKelvy operated what he called “Speed of Wealth” clubs, which advertised on television, radio and the Internet, held seminars for prospective investors, and promised to make them rich. During those seminars and other programs, McKelvy lied to prospective investors to dupe them into investing in Mantria. When the SEC shut down Mantria in November 2009, the pyramid scheme collapsed and was exposed. 

McKelvy’s co-conspirators, Troy Wragg and Amanda Knorr, who met as Temple University students, were previously sentenced for their involvement in this scheme to 22 years and two and a half years in prison, respectively.

“This case is a classic example of the warning: if it seems too good to be true, it probably is,” said Acting U.S. Attorney Williams. “McKelvy is nothing more than a twenty-first century snake oil salesman, with all of the trappings to make him appear to be a legitimate businessman. The defendant is clearly a danger to the investing public and deserves to be in prison for a very long time, as the government demonstrated at trial.”

“Wayde McKelvy didn’t care about green energy. The only ‘green’ on his mind was money,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “At his bogus financial seminars, he actively and enthusiastically duped people into investing in Mantria, even urging them to liquidate retirement funds and other assets to do so. When the teetering Ponzi scheme finally collapsed, many victims were left financially devastated. It’s the FBI’s duty to hold scammers like McKelvy and his co-conspirators accountable for the serious damage they’ve done.”

This case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorneys Robert Livermore and Sarah Wolfe. Additionally, the U.S. Attorney’s Office appreciates the assistance of Securities and Exchange Commission.