Eastern District of Pennsylvania

PHILADELPHIA – Deputy United States Attorney Louis D. Lappen announced that SAP Public Services, Inc. has agreed to pay the United States more than $2.2 Million to resolve allegations that it violated the False Claims Act by failing to pay required fees on contracts it signed pursuant to agreements with the United States General Services Administration (GSA). 

SAP Public Services is a subsidiary of SAP SE, a multinational software engineering and support company, and its U.S. subsidiary, SAP America, Inc., headquartered in Newtown Square, Pennsylvania.

In 1998 and 2009, GSA awarded SAP Public Services contracts under the Multiple Award Schedule (MAS). The MAS program provides an efficient, streamlined process for federal, state, and local government buyers to purchase goods and services from commercial firms at discounted prices. SAP Public Services sold software engineering and support to government customers under specified conditions. SAP Public Services cancelled these contracts in 2014. Under the terms of their MAS contracts, SAP Public Services was required to pay an Industrial Funding Fee (IFF) to GSA. This fee covers the cost of GSA’s administration of its contracting and purchasing programs, which save federal, state, and local government agencies the time and expense of awarding individual procurements and provide volume purchase prices, greater purchasing flexibility, and other benefits to those agencies.

In addition, when staffing these projects, SAP Public Services was required to provide certain discounts and to meet certain educational or experiential qualifications in its staffing assignments. The United States’ investigation – conducted in conjunction with a robust internal investigation by SAP Public Services – determined that SAP Public Services failed to account for the IFF it owed on several contracts, and that it did not always provide the appropriate contractual discounts and staffing.

“When a company contracts with the government,” said Deputy U.S. Attorney Lappen, “it must establish and implement systems sufficient to meet its contractual obligations. When a company fails to do that, the taxpayer is left holding the bag. The United States Attorney’s Office is committed to recovering these funds.”

GSA Inspector General Carol Ochoa, agreed: “This settlement is due to the persistent and dedicated work of the Office of Inspector General and U.S. Attorney’s Office personnel to pursue and recover money owed to the U.S. taxpayer.”

Deputy U.S. Attorney Lappen also praised SAP Public Services’ investigation and cooperation: “From the time that this matter was brought to its attention, SAP has committed itself to setting things right, despite considerable time and expense. We appreciate its cooperative approach and its intensive investigative efforts to get to the bottom of what happened here.” 

The settlement was the result of a coordinated effort between the U.S. Attorney’s Office for the Eastern District of Pennsylvania and GSA Office of Inspector General (GSA-OIG).  Assistant United States Attorneys Paul W. Kaufman and Mark J. Sherer and U.S. Attorney’s Office auditor Dawn Wiggins handled the investigation and settlement.

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

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Derrick Weatherbe, 29, of Philadelphia, PA, was charged by Indictment with arson related to an incident which occurred during the violent civil unrest in late May of last year. The defendant made his initial appearance in federal court this afternoon.

Following peaceful protests in Philadelphia in the early afternoon of May 30, 2020 in response to the killing of George Floyd in Minneapolis, MN, civil unrest began to unfold later that afternoon and into the following day that resulted in widespread looting, burglary, arson, destruction of property, and other violent acts. The Indictment alleges that on May 31, 2020, the defendant maliciously damaged and destroyed the Lowe’s Home Improvement store located at 1500 North 50th Street in West Philadelphia by setting it on fire. He is charged with one count of malicious damage by means of fire of a building used in interstate commerce.

According to court documents, store surveillance cameras allegedly showed a man with distinct clothing and tattoos, later identified as the defendant, make his way through the entry vestibule and pick up what appears to be a utility lighter and containers of lighter fluid. Weatherbe is then allegedly seen on surveillance video carrying these items into the middle of the store, where the fire is set less than two minutes later as indicated by a flash of light.  He is then allegedly seen fleeing from the store.

“The U.S. Attorney’s Office and the entire Department of Justice will always support peaceful protest – we are sworn to protect the rights guaranteed by the First Amendment,” said Acting U.S. Attorney Williams. “But that does not cover destructive rioting, looting, committing arson and other violent acts. Here, the defendant allegedly set a fire in the middle of a business, potentially endangering many lives including those of police officers and firefighters who responded to the scene, and as a result he is now being prosecuted for a federal crime.”

“The alleged acts of the defendant are extremely careless and dangerous, which could have caused serious injury or loss of life to first responders and others in the community,” said Matthew Varisco, Special Agent in charge of Philadelphia’s Field Division. “ATF, along with our partners at the Philadelphia Fire Department and the Philadelphia Fire Marshal’s Office will continue our efforts to ensure public safety. Our investigators will pursue and apprehend anyone who uses fire to damage property or endanger lives in our city.”

If convicted, the defendant faces a maximum possible sentence of 20 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 Priya T. De Souza.

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 James Chandler, 54, of Philadelphia, PA, was arrested and charged by Indictment with two counts of robbery of a United States Postal Service employee, and one count of kidnapping. The defendant made his initial appearance in federal court this afternoon and was detained pending trial.

The Indictment alleges that on January 11, 2021 and February 4, 2021, Chandler robbed uniformed postal workers during the execution of their official duties delivering parcels in West Philadelphia, using a replica handgun, forcing them into their postal trucks, and stealing packages from inside. During the incident on February 4, the defendant is also alleged to have forced the postal worker at gunpoint to drive him for several blocks in her postal truck before fleeing on foot.

“Targeting and violently assaulting employees of the United States Postal Service is a federal crime that will be investigated and prosecuted swiftly by this office,” said Acting U.S. Attorney Williams. “Mail carriers provide an essential service to nearly every citizen, oftentimes going above and beyond to execute their duties in challenging circumstances. If you choose to kidnap or rob a mail carrier, I guarantee you will feel the full force of the federal government come down on you in the form of intense investigation and aggressive prosecution.”

“Today, the United States Attorney’s Office charged James Chandler for assaulting two postal carriers while they delivered mail in the City of Philadelphia,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division. “While the carriers went about their job, delivering the many items that residents of the city depend upon, including medications, bills, benefits, and all the other items that help folks manage through this cold snowy winter and the pandemic a little easier, Mr. Chandler kidnaped them with what looked like a gun, and ransacked their postal trucks, looking for items he thought he could sell for a few dollars. Working closely with Detectives from the Philadelphia Police Department, Postal Inspectors developed enough evidence to identify and arrest Mr. Chandler before he could assault another carrier or another citizen of Philadelphia. I want to thank the United States Attorney’s Office for supporting the United States Postal Inspection Service and the United States Postal Service with this arrest. The United States Postal Inspection Service has many priorities, but it should surprise no one, that pursuing those who rob or assault Postal Service employees are at the top of the list.”

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

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.

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 the United States filed a civil lawsuit against Lancaster County-based McElroy Pharmacy, Inc. and Jeffrey Eshelman alleging a years-long practice of illegally dispensing opioids and other controlled substances, and billing Medicare for drugs that were not actually dispensed to beneficiaries. At the same time the civil suit was filed, the United States also filed a proposed consent judgment that, subject to the court’s approval, would resolve the lawsuit. The consent judgment would require McElroy Pharmacy and Eshelman to pay $2.9 million in civil penalties and damages under the Controlled Substances Act and False Claims Act, and would permanently prohibit them from dispensing controlled substances or obtaining another controlled substance registration in the future.

The civil lawsuit alleges that McElroy Pharmacy, which operated as a retail pharmacy in Lititz, PA, and its co-owner and pharmacist, Jeffrey Eshelman, on many occasions illegally dispensed hydrocodone and other controlled substances without requiring any prescription. As alleged in the complaint, McElroy and Eshelman did so with the knowledge that the individual to whom they dispensed hydrocodone, in one particular case, had a substance use disorder. Nonetheless, for years, they allegedly continued to dispense the opioids without any prescription. Eshelman was charged by state authorities and pled guilty to state charges in the Lancaster County Court of Common Pleas earlier this year relating to some of the conduct alleged in the federal complaint.

In addition to dispensing controlled substances without a prescription, the complaint alleges that McElroy Pharmacy and Jeffrey Eshelman submitted false billings to Medicare by billing for more expensive, brand-name medications, while dispensing the less expensive generic versions to patients. The complaint also alleges that McElroy was unable to account for tens of thousands of pills of controlled substances in an audit conducted by the Drug Enforcement Administration (DEA).

McElroy has already surrendered its pharmacy registration to the DEA. McElroy Pharmacy and Eshelman further agreed to resolve their civil liability under terms outlined in the proposed consent judgment, if accepted by the court. Among other things, McElroy and Eshelman would pay $2.9 million in civil penalties and damages under the Controlled Substances Act and False Claims Act. The proposed resolution would also permanently prevent Eshelman from distributing or dispensing any controlled substances in the future and prevent McElroy Pharmacy from ever applying for a new controlled substance registration from the DEA. Eshelman also agreed to be excluded from Medicare, Medicaid, and all other Federal healthcare programs for nine years.

“The opioid epidemic has devastated the lives of so many families and individuals across our country and this District. When healthcare providers such as pharmacists engage in illegal conduct that feeds the epidemic, our office will act,” said Acting U.S. Attorney Williams. “This civil suit and consent judgment make clear that pharmacists who engage in illegal dispensing of opioids and healthcare fraud will be held accountable.”

“Eshelman and McElroy Pharmacy are accused of gross violations of the Controlled Substances Act through their alleged distribution of powerful opioid painkillers without requiring any prescription at all,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “In addition to the consent judgment, the permanent surrender of their DEA registration will ensure that Eshelman and McElroy Pharmacy can no longer handle or dispense controlled substances in the future.” 

“Pharmacies are expected to submit claims to the Medicare program for the actual products they provide to patients,” said Maureen R. Dixon, Special Agent in Charge for the U.S. Department of Health and Human Services, Office of the Inspector General. “These civil actions demonstrate HHS-OIG and our law enforcement partners’ long-standing commitment to ensuring the integrity of the Medicare program by holding those who choose to engage in healthcare fraud and drug diversion accountable.”

The case was investigated by the Philadelphia Field Division of the Drug Enforcement Administration and the U.S. Department of Health and Human Services, Office of Inspector General. The civil investigation, litigation, and resolution are being handled by Assistant United States Attorney Anthony D. Scicchitano.

The complaint contains allegations only and does not contain any admissions, other than those made in the state criminal case. The proposed consent judgment would resolve any alleged civil liability.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Imad Dawara, 40, of Swathmore, PA, and Bahaa Dawara, 32, of Woodlyn, PA, both entered pleas of guilty today before United States District Court Chief Judge Juan R. Sanchez to charges of conspiracy to commit arson and conspiracy to defraud the United States. 

In pleading guilty, the defendants admitted to planning and causing the arson of their business, RCL Management LLC, at 239-241 Chestnut Street in Philadelphia a little more than three years ago on February 18, 2018, and to evading the assessment of their income tax liabilities from 2015-2017. Imad Dawara also admitted to fraud in connection with his receipt of health care and other government benefits including Medicaid, SNAP and TANF.

From around December 2012 until February 18, 2018, the defendants owned and operated various restaurants and entertainment establishments in Philadelphia, including a restaurant and hookah lounge at 239-241 Chestnut Street. As detailed in the Indictment, the Dawara brothers were struggling in their Chestnut Street business and had a years-long history of fighting with their landlord. By October 2017, the Dawara brothers had ceased all business operations at the Chestnut Street location and attempted to sell the business, but as they had failed to renew their lease or pay rent, no one would buy it.

On January 31, 2018, their landlord directed the defendants to vacate the premises by February 2, 2018 and advised them that they owed over $64,000 in overdue payments.  Nonetheless, the Dawaras failed to vacate the premises, and on February 2, 2018, RCL Management purchased a $750,000 insurance policy providing coverage in the event of an accidental fire at 239-41 Chestnut Street.  

On February 18, 2018, a fire was intentionally started with gasoline in the basement of 239 Chestnut Street, which destroyed the entire building, displaced approximately 160 people, closed the 200 block of Chestnut Street for months, and closed numerous businesses. With today’s guilty plea, both Dawara brothers admitted to planning and causing this fire.

“Just over three years ago, the fire on Chestnut Street permanently altered many people’s lives, some losing their homes and livelihoods,” said U.S. Attorney Williams. “If not for the heroism of the Philadelphia Fire Department, the devastation from that night would have been unthinkable and much more extensive. Even though many victims of this fire can never be made completely whole, I hope that today’s admission of guilt by the defendants gives these individuals and the City of Philadelphia at large some sense of relief and justice.”

“Arson for profit or any other reason is a serious crime of violence that will not be tolerated,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “ATF’s partnership with the Philadelphia Fire Marshal’s Office and the Philadelphia Police Department, whose work was instrumental in the success of this investigation, will continue to ensure the safety of our communities.  I would like to thank the United States Attorney’s Office for their diligent work in prosecuting this case.”

“Schemes designed to evade income tax, such as those perpetrated by the Dawara brothers, are unfair to every taxpayer who obeys the law and pays his or her fair share,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “The Dawara brothers set out to cheat and steal from the American public and the government. Their admission of guilt today is a victory for all Americans who play by the rules.” 

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Philadelphia, the Philadelphia Fire Marshal, the Philadelphia Police Department, the Internal Revenue Service – Criminal Investigation, the U.S. Department of Health & Human Services - Office of the Inspector General, with assistance from the Philadelphia Parking Authority Taxi and Limousine Division, and is being prosecuted by Assistant United States Attorneys Jeanine Linehan and Katherine E. Driscoll.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that the United States filed a civil lawsuit against Source One Pharmacy Services, LLC, a West Chester, PA-based closed-door pharmacy, alleging that the pharmacy improperly dispensed and distributed controlled substances and failed properly to inventory and document its controlled substances. At the same time the civil suit was filed, the United States also filed a proposed consent judgment that, subject to the court’s approval, would resolve the lawsuit. The consent judgment would require Source One to pay $225,000 in civil penalties under the Controlled Substances Act and would impose several accountability and monitoring conditions on the pharmacy.

The civil lawsuit alleges that Source One Pharmacy, which operates as a closed-door pharmacy (meaning that it is not open for business to the general public), had received warnings from the Drug Enforcement Administration (DEA) in prior investigations, but nevertheless went on to dispense controlled substances illegally, including opioids. The complaint further alleges that Source One distributed some controlled substances to locations where the recipients were not authorized to receive them, and that a DEA audit revealed pills were missing from Source One’s records for seven different controlled substances.

Source One agreed to resolve its civil liability under terms outlined in the proposed consent judgment, if accepted by the court. Among other items, Source One would pay $225,000 in civil penalties under the Controlled Substances Act and would be subject to several heightened accountability and monitoring measures for three years, including the requirement that Source One report its dispensing to the DEA.

“Pharmacies that handle dangerous controlled substances like opioids must be held to the highest standards in order to ensure that the drugs are properly monitored and do not end up in the wrong hands,” said Acting U.S. Attorney Williams. “This civil suit and consent judgment send a strong message to the community that, if a pharmacy violates these important standards, laws, and regulations, it will face serious consequences.”

“Source One Pharmacy is alleged to have improperly dispensed opioids and failing to maintain an accurate inventory of their controlled substances,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division.  “Civil penalties such as these are an effective means to insure the proper safeguarding of controlled substances and compliance with the Controlled Substances Act.”

The case was investigated by the Philadelphia Field Division of the Drug Enforcement Administration. The civil investigation, litigation, and resolution are being handled by Assistant United States Attorneys Scott W. Reid and Anthony D. Scicchitano.

The complaint contains allegations only and does not contain any admissions. The proposed consent judgment would resolve any alleged civil liability.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Thomas Traumann, 53, of Wilmington, DE, was sentenced to eight years and three months in prison, ten years of supervised release, and a $25,000 find by United States District Court Judge Gene E.K. Pratter for traveling across state lines to have sex with a person whom he believed to be a minor child.

In October 2020, the defendant pleaded guilty to one count of interstate travel with intent to engage in illicit sexual conduct. The charges stem from Traumann’s attempt in late-2018 to entice a minor into having a sexual relationship with him.

On November 3, 2018, Traumann began an online chat on a social media website with a person whom he thought was a 14-year-old girl. In reality, the defendant was exchanging online messages with a Special Agent from the Pennsylvania Office of Attorney General working in an undercover capacity. In his communications, Traumann repeatedly acknowledged that the “girl” was 14-years-old and made his intentions quite clear that he wanted to have a sexual encounter with her days later. He also knew what he was proposing was against the law, stating in part, “…I am a little concerned … I will go to jail because of your age…” When Traumann traveled by vehicle to meet up with this purported girl near ‘her’ house in Pennsylvania on November 5, 2018, he was taken into custody by law enforcement.

“This defendant traveled here from out-of-state and was prepared to sexually assault a young, vulnerable child,” said First Assistant U.S. Attorney Williams. “I shudder to think what would have happened had Traumann connected online with an actual child rather than an undercover agent. We are grateful to our federal, state and local partners who work relentlessly to identify and stop all those who would prey upon minor children.”

“Homeland Security Investigations special agents are committed to the fight to defend our children from online perpetrators,” said Brian A. Michael, Special Agent in Charge for Homeland Security Investigations Philadelphia. “Traumann’s attempts to exploit an innocent child is unconscionable.  Today’s sentencing, is yet another example of how Homeland Security Investigations and our partners with  the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the Pennsylvania Office of Attorney General will relentlessly pursue child predators who commit these atrocious crimes.

The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

The case was investigated by Homeland Security Investigations and the Pennsylvania Office of Attorney General, and is being prosecuted by Assistant United States Attorney Josh A. Davison.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced today that Donnie Smith, 41, of Philadelphia, PA was sentenced to 12 years and three months in prison, and five years of supervised release, by United States District Court Judge Jan E. DuBois for Hobbs Act robbery, carrying and using a firearm during the commission of a violent crime, and illegally possessing a weapon as a convicted felon. The charges stem from an armed robbery of a corner grocery store in the East Mount Airy section of Philadelphia in March 2019.

In February 2020, the defendant and two co-defendants, Abid Stevens and Maurice Quinn, were convicted on all charges after trial. During the incident, Quinn entered RD Grocery and complained to a store employee that the store’s ATM had given him fake money. Quinn then attempted to grab both money from the register and a firearm kept by the owner behind the counter. Unable to grab the money or firearm, Quinn left and returned with Smith and Stevens, both of whom were armed with black semi-automatic handguns. Smith brandished his firearm in the store employee’s face and took the firearm from behind the counter. Quinn then again attempted to take cash from the register but failed. He demanded that the store employee open the register for him; the employee withdrew $100 in cash and the defendants left.

“The defendants were so determined to rob this store, that the first would-be robber brazenly returned with armed reinforcements after failing to accomplish his goal on his own,” said Acting U.S. Attorney Williams. “His complete disregard for others and for the law is shocking. Hopefully others will learn from Smith’s example -- if you rob a store in Philadelphia with a firearm, you are going to face serious federal prison time as a result. Our Office is committed to working with our law enforcement partners to bring criminals like Smith to justice.”

“The imposition of this sentence by the court sends an important message that there are significant consequences for committing acts of violence within our community. The dedicated law enforcement personnel responsible for investigating and prosecuting this defendant should be commended for bringing closure to those personally affected by the crime, as well as protecting the entire community,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “The robust partnership between ATF and the Philadelphia Police Department led to a quick arrest, undoubtedly preventing additional violence and harm to the community. I would like to thank the United States Attorney’s Office for their work in prosecuting this case.”

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 Robert Eckert and Special Assistant United States Attorney Ashley N. Martin.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Gerald Griffith, also known as “Jerry Porecca,” 47, of Philadelphia, PA, was sentenced to nine years and two months in prison and three years of supervised release by United States District Court Judge Nitza I. Quinones Alejandro for a nearly six-month-long crime spree during which he robbed eight banks and businesses.

In December 2019, the defendant pleaded guilty to two counts of bank robbery, two counts of armed bank robbery, and four counts of Hobbs Act robbery. The charges arose from a drug-fueled crime spree between July and December 2018, during which Griffith robbed or attempted to rob four separate banks, as well as four convenience or grocery stores, all in Philadelphia. 

The defendant’s series of robberies began on July 9, 2018, when he attempted to rob the BB&T Bank on Roosevelt Boulevard by threatening to blow up the bank, and then robbed the Firstrust Bank on Krewstown Road approximately ten minutes later, again by verbal threat. In August, Griffith moved on to armed bank robbery, holding up the BB&T Bank on East York Street on August 21, and then the BB&T Bank on Orthodox Street the very next day. During these last two bank robberies, Griffith brandished what the bank tellers described as a long, shiny silver handgun, threatening them not to press “any buttons” and demanding that they give him “hundreds.”  In addition, Griffith robbed the ShopRite grocery store on Oxford Avenue earlier that summer, and between December 5 and December 8, he robbed the Wawa convenience store on Richmond Street, and attempted to rob the Sonoco-A-Plus gas station also on Richmond Street and the Dollar General store on Cedar Street.

“The complete disregard that this defendant displayed for the safety of others over such a sustained period of time is chilling,” said Acting U.S. Attorney Williams. “He terrorized a large swath of this city for months, affecting dozens of people who are now living with the repercussions of having been in the wrong place at the wrong time: working in or patronizing businesses that Griffith decided to target. The streets of Philadelphia are safer now that the defendant will be in prison for nearly a decade.”

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 Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Sara Solow and Matthew T. Newcomer.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that John Joseph Krasley, 52, of Kutztown, PA, was sentenced to 20 years in prison, 10 years of supervised release, and ordered to pay $30,000 total in restitution to certain victims by United States District Court Judge Edward G. Smith for receiving, accessing, transporting, and distributing child pornography.

For more than five years, between March 2013 and June 2018, Krasley trafficked in child pornography. He communicated online at all times of the day and night with other child sex offenders, distributing horrific images of children being sexually abused, and maintaining an extensive collection of videos and images. Krasley also communicated with an undercover agent and distributed graphic images mostly depicting infants, but also toddlers and pre-pubescent boys, all of whom were being sexually abused. After an extended investigation by Homeland Security Investigations, the defendant was arrested and charged by Indictment with 14 counts of child exploitation offenses. In October 2019, the defendant was convicted after trial of all charges against him.

“Child sexual exploitation is appallingly pervasive, exacerbated by the easy availability of digital media and communications,” said Acting U.S. Attorney Williams. “Every video, every image, depicts a real victim, an innocent child who will feel the scars for a lifetime. These investigations are therefore so important, and every conviction makes the community safer for children everywhere. Thanks to the tireless efforts of the investigators on this case, Krasley’s years of exploiting the victimization of children online are over.”

“We stand ready to protect our community’s most valuable asset, our children,” said Brian A. Michael, Special Agent in Charge for Homeland Security Investigations Philadelphia. “Predators who possess and distribute child sexual abuse material re-victimize innocent and vulnerable children every time a photo or video is shared. Homeland Security Investigations special agents and our law enforcement partners will relentlessly pursue child predators, in every form, and ensure those who commit these atrocious crimes are brought to justice.”

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. Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The case was investigated by Homeland Security Investigations, and is being prosecuted by Assistant United States Attorney Albert S. Glenn.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Robert McCabe, 76, of Bangor, PA, was sentenced by United States District Court Judge Jeffrey L. Schmehl to four and a half years in prison, three years of supervised release, and ordered to pay $1,111,582 in restitution to more than 50 victims for defrauding them through an extensive fraudulent investment scheme.

In September 2020, the defendant was charged by Information with 21counts of various frauds, including securities fraud, wire fraud and mail fraud. McCabe, a former stockbroker who went to prison in the 1980s for securities-related fraud, pleaded guilty to these charges in November.

As part of his guilty plea, and in connection with his sentencing, the defendant admitted that for almost ten years, from September 2010 until June 2020, he defrauded life-long friends, fraternity brothers from Phi Kappa Psi fraternity at Lafayette College, and even his wife by promising to sell them “founders shares” of Esperion Therapeutics, Inc. McCabe claimed to have acquired shares of Esperion through a corporation he owned, McCabe Properties, Inc., at a very low price – approximately $2.67 per share. Over the course of nearly a decade, the defendant took in more than $1 million from more than 50 investors who thought they were getting in on the ‘ground floor’ of Esperion, by selling to them almost 387,000 phony “founders shares.” If McCabe had possessed these “founders shares” in reality, his investors would have made a fortune, as shares of Esperion peaked at more than $38 per share recently. McCabe’s investors believed they were soon going to be able to cash out their fortunes, but they were stalled at every opportunity by various misrepresentations the defendant made regarding a purported inability to liquidate their holdings. Ultimately, the defendant’s victims uncovered his fraud in June 2020, at which point he admitted to them that he had been lying all along.

“McCabe is a life-long, recidivist fraudster who preyed upon his own family and friends for nearly a decade,” said Acting U.S. Attorney Williams. “Even after being convicted of fraud previously, the defendant chose to orchestrate this scheme to defraud his victims out of more than $1 million. This type of financial fraud has devastating consequences for the victims and must be aggressively prosecuted at every turn.”

“McCabe brutally exploited the trust his lifelong friends and even his spouse placed in him,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The FBI is committed to bringing justice to those, like McCabe, that dare to rob individuals of their hard-earned life savings. Today’s sentence cannot erase the harm McCabe caused his friends and loved ones, but we are pleased that the sentence included full restitution to McCabe’s victims.  The FBI will continue to work with its law enforcement and private sector partners to investigate those who engage in similar greed-based schemes.”

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

A Pennsylvania man made his initial appearance today after being charged in an indictment with multiple child pornography offenses.

Acting Assistant Attorney General Nicholas M. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Jennifer Arbittier Williams for the Eastern District of Pennsylvania, and Special Agent in Charge Brian A. Michael of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) in Philadelphia, made the announcement.

Robert Costello, 53, of Bethlehem, who was employed by the New York City Department of Probation as an Assistant Commissioner at the time of the offenses in 2020, was charged with three counts of receiving child pornography, one count of accessing with intent to view child pornography, and one count of possessing child pornography depicting prepubescent minors and minors under twelve years of age. He was arrested on related state child pornography charges in Pennsylvania on Oct. 15, 2020, and has been in custody since that time.

Jessica Urban of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorneys Francis Weber and Kelly Harrell of the Eastern District of Pennsylvania are prosecuting the case. HSI-Philadelphia is investigating the case with assistance from the Bethlehem Township Police Department.

The case is brought as part of Project Safe Childhood. In 2006, the Department of Justice created Project Safe Childhood, a nationwide initiative designed to protect children from exploitation and abuse. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state, and local resources to locate, apprehend, and prosecute individuals who exploit children, as well as identify and rescue victims. For more information about Project Safe Childhood, please visit www.projectsafechildhood.gov/.

The details contained in the indictment are allegations. The defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law. 

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Robert Costello, 53, of Bethlehem, PA, was arrested and charged by Indictment with three counts of receipt of child pornography, one count of access with intent to view child pornography, and one count of possession of child pornography. The defendant made his initial appearance in federal court this afternoon and will remain in custody until a detention hearing on February 17, 2021.

As alleged in the Indictment, Costello received sexually explicit images of children over the Internet and possessed thousands of sexually explicit images and videos of children on several electronic devices that he kept and stored at his residence. During the time he is charged to have committed these crimes, Costello was employed as Assistant Commissioner of the New York City Department of Probation.

“The defendant allegedly possessed and viewed visual depictions of the sexual exploitation of children,” said Acting U.S. Attorney Williams. “He is charged with doing this while employed as an Assistant Commissioner with the City of New York, a position of public trust paid by taxpayer dollars. Our Office will continue to work with our law enforcement partners in all jurisdictions to investigate and prosecute child sexual exploitation offenses.”

“The defendant, an Assistant Commissioner of New York City’s probation department, violated his position of trust by allegedly possessing images of children being sexually exploited,” said Brian A. Michael, Special Agent in Charge for Homeland Security Investigations Philadelphia. “Safeguarding children from being victimized by predators is a top priority for Homeland Security Investigations. The indictment of the defendant should serve as notice that HSI and our law enforcement partners will use every resource at our disposal to investigate and arrest depraved individuals who commit sexual offenses against children.”

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. Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

If convicted, the defendant faces a maximum possible sentence of 90 years’ incarceration with a five year mandatory minimum sentence of imprisonment, five years up to a lifetime of supervised release, and up to a $1,250,000 fine.

The case was investigated by the Department of Homeland Security Investigations and Bethlehem Township Police Department, and is being prosecuted by Assistant United States Attorneys Francis A. Weber and Kelly Harrell, and Department of Justice Trial Attorney Jessica Urban of the Child Exploitation and Obscenity Section (CEOS).

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 William Johnson, 35, of Philadelphia, PA, was sentenced to fifteen years in prison and five years of supervised release by United States District Judge Harvey Bartle III for his conviction of being a felon illegally in possession of a firearm.

In September 2020, the defendant was convicted after trial of one count of being a felon in possession of a firearm. The charge stemmed from an incident that occurred a year earlier in September 2019. Philadelphia Police Department Highway Patrol Officers responded to reports of a person with a gun at 15th Street and West Allegheny Avenue in North Philadelphia. Upon arrival, the officers observed Johnson walking with a person that matched the description in the report. When the officers got out of their car to investigate, Johnson took off in a full sprint while holding onto his waistband. He then cut through an empty lot and climbed a fence in an attempt to flee. An officer drove around to where Johnson would be expected to emerge on the other side of the lot. When Johnson climbed the fence that led away from the lot, he spotted yet another police officer. The defendant then jumped down from the fence and an officer observed him toss a firearm a few feet away. The officers took Johnson into custody and secured the firearm.

“The U.S. Attorney’s Office takes very seriously the staggering homicide and violent crime rates in Philadelphia, and we’re doing all we can to get guns off the streets and out of the hands of convicted felons,” said Acting U.S. Attorney Williams. “If you are convicted of being a felon in possession of a firearm, you will go to prison for a very long time. As punishment for his illegal gun possession, William Johnson will now lose fifteen years of freedom. He went to prison in his mid-thirties, and he won’t get out until he is nearly fifty. Don’t take that risk: don’t carry illegally.”

“The disturbing level of gun violence in Philadelphia is undeniably exacerbated by the abundance of the illegal firearms on the street,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The FBI and the Philadelphia Police Department are working together to battle that tide, and whether it’s through takedowns of violent gun-toting gangs or, one by one, arresting felons like Mr. Johnson in criminal possession of a firearm, we will continue to do all we can to make this city safer.”

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 Federal Bureau of Investigation and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Robert E. Eckert.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Tyshaun Williams, 29, of Lancaster, PA, was sentenced to 115 months in prison and three years of supervised release by United States District Court Judge Joseph F. Leeson, Jr., for firearms and drug trafficking offenses.

In September 2020, the defendant pleaded guilty to two counts of illegally possessing firearms as a convicted felon, one count of possessing firearms not registered under the National Firearms Act, one count of distributing cocaine, and one count of possessing a controlled substance with intent to distribute. The charges stemmed from an incident in which Williams sold cocaine to a confidential informant and was subsequently caught illegally possessing an arsenal of 27 firearms and more than 900 rounds of ammunition.

“The U.S. Attorney’s Office is committed to working with our law enforcement partners to keep illegal weapons out of the hands of people who are not permitted to possess them,” said Acting U.S. Attorney Williams. “Tyshaun Williams presented a danger to the community in Lancaster, and for his crimes he will now spend nearly a decade in prison.”

“Keeping dangerous felons who illegally possess firearms off the streets is a core belief of ATF,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division. “Today’s sentencing reflects our long-lasting partnership with our local, state and federal colleagues to pursue violent criminals.  I truly appreciate the United States Attorney’s office for their continued efforts in prosecuting these types of crimes, which undoubtedly makes our communities safer.” 

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, the Lancaster County District Attorney’s Office, and the Lancaster City Bureau of Police, and is being prosecuted by Assistant United States Attorneys Kathryn Deal and Kishan Nair.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Steven G. Dubin, 66, of Holland, PA, was sentenced to 18 months in prison, three years of supervised release, and ordered to pay $74,800 restitution by United States District Court Judge Gene E.K. Pratter for fraud stemming from a scheme to steal his clients’ retainer fees and use them for other expenses.

In June 2018, the defendant pleaded guilty to wire fraud. Dubin was an attorney licensed to practice in Pennsylvania who offered services to prospective adoptive parents. From December 2010 to February 2013, Dubin stole clients’ retainer fees which he falsely represented would be held in an escrow account, to be spent on those clients’ future expenses in the adoption process. In addition, Dubin began operating his own “Ponzi scheme,” using retainer fees from new clients to pay himself for legal fees or expenses related to other clients. Even after he was disbarred in 2012, Dubin continued to accept new retainer fees from clients. In some cases, he still represented himself to be an attorney licensed to practice law.

“The process of adopting a child can be long, complicated, and emotionally draining, and prospective parents often rely on professionals like adoption attorneys to navigate the bureaucratic hurdles,” said Acting U.S. Attorneys Williams. “Here, Steven Dubin took advantage of this position of trust to steal money from unsuspecting clients who thought he was going to help them adopt a child, even after being disbarred. His behavior is a despicable violation of professional ethics.”

“Steven Dubin had no compunction about lying to his clients, doing so deliberately and repeatedly,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “These people were depending on him to shepherd them through the adoption process and hopefully bring a child into their lives. Instead, he spent their money as his own and hid his eventual disbarment, abandoning all pretense of professional ethics and personal morality. Finally, he’s being held accountable for those years of clear-cut fraud.”

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Vineet Gauri.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that John P. Gonzales, 61 of Milford, DE, was sentenced today to 20 months in prison and one year of supervised release by United States District Court Judge R. Barclay Surrick for his involvement in a bribery scheme to provide an Amtrak official with cash and vacations in exchange for lucrative federal contracts.

In February 2019, the defendant pleaded guilty to one count of federal program bribery. For a roughly two-year period from 2015 through 2017, Gonzales, an Executive Vice President and Chief Financial Officer for a small Delaware-based manufacturing firm, bribed Timothy Miller, a Lead Contract Administrator working in procurement for the National Railroad Passenger Corporation (a/k/a “Amtrak”). Miller awarded more than $7.6 million in contracts to the defendant’s firm in exchange for bribes of approximately $20,000 and other things of value, including trips to Rehoboth Beach arranged by Gonzales and another executive at the firm.

“When businesses and public officials conspire to bypass the competitive bidding process, they not only harm other businesses seeking to compete, but they also undermine public confidence in the integrity of public works,” said Acting U.S. Attorney Williams. “John Gonzales purchased influence with a government agency, Amtrak, and for that he must now face serious consequences. Our Office will continue to investigate and prosecute public corruption wherever it exists at all levels of government.”

“We hope the results of this case send a clear message about the consequences of bribery and bid rigging—our office will vigorously investigate and help bring to justice those who threaten Amtrak’s and the taxpayers’ funds,” said Kevin Winters, Amtrak’s Inspector General. “Throughout this case, we have been proud of the professionalism and mutual support displayed by our agents, the U.S. Attorney’s office, the FBI, IRS, and the U.S. Department of Transportation Office of Inspector General.”

“John Gonzales resorted to bribery to generate business for his firm, greasing the palm of an Amtrak employee,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “His corruption seemed to pay off for a time, yielding millions in government contracts. Ultimately, of course, those actions have cost him dearly. If you’re going after taxpayer dollars dishonestly, if you’re trampling all over what’s intended to be a level playing field, you too can earn yourself a stay in federal prison.”

The case was investigated by the Amtrak Office of Inspector General, the Federal Bureau of Investigation, U. S. Department of Transportation Office of Inspector General, and the Internal Revenue Service. The case is being prosecuted by Assistant United States Attorney Eric L. Gibson.

A Pennsylvania man was sentenced today to over 15 years in prison plus a lifetime of supervised release, and ordered to pay $16,000 in restitution for engaging in illicit sexual conduct in a foreign place.

Acting Assistant Attorney General Nicholas L. McQuaid of the Justice Department’s Criminal Division, Acting U.S. Attorney Jennifer Arbittier Williams of the Eastern District of Pennsylvania, and Special Agent in Charge Michael Driscoll of the FBI’s Philadelphia Field Office made the announcement.

According to information provided to the court, the investigation of this case revealed that Gregory Dow, 61, of Lancaster County, traveled to the Republic of Kenya in 2008 to start an orphanage which came to be known as the Dow Family Children’s Home. While running the orphanage with his wife, Dow sexually abused, on multiple occasions, four minor girls between October 2013 and September 2017. During this time period, he maintained ties to the United States.

The FBI’s Philadelphia Field Office conducted the investigation with assistance from Kenyan authorities and local law enforcement in Lancaster County.

Trial Attorneys Lauren S. Kupersmith and Lauren E. Britsch of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Timothy M. Stengel of the Eastern District of Pennsylvania prosecuted the case.

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by U.S. Attorneys’ Offices and CEOS, Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Gregory Dow, 61, of Lancaster County, PA, was sentenced to 15 years, eight months in prison, a lifetime of supervised release, and ordered to pay $16,000 in restitution by United States District Judge Edward G. Smith for sexually abusing four minor children in an orphanage which the defendant and his wife operated in the Republic of Kenya.

In 2008, the defendant and his family traveled from Lancaster County, PA to the Republic of Kenya to start an orphanage. The orphanage, which came to be known as the Dow Family Children’s Home, was established near Boito, Kenya, and remained in operation for nearly a decade with financial support from donors in the United States, including churches and other faith-based organizations.

In September 2017, Kenyan authorities learned that Dow had sexually abused children in his care. Dow fled Kenya when the allegations came to light, returning to Lancaster County.  Acting on information provided by Kenyan women living in the United States, the FBI investigated the allegations and determined that Dow had sexually abused at least four teenage girls between October 2013 and September 2017. Two of the girls were as young as 11 years old when the abuse began. The defendant’s wife even transported the victims to a medical clinic to have birth control devices implanted into their arms, which allowed Dow to perpetrate his crimes without fear of impregnating his victims. The defendant purported to be a Christian missionary who cared for these children and asked them to call him “Dad.”  But instead of being a father figure, he preyed on their youth and vulnerability. In July 2019, Dow was charged in a four count Indictment; he pleaded guilty to all four counts in June 2020.

“Under the guise of faith-based charity work benefiting orphaned children, Gregory Dow traveled halfway around the world to prey on incredibly vulnerable victims,” said Acting U.S. Attorney Williams. “His crimes are nearly incomprehensible in their depravity. We thank the witnesses in this case for coming forward to report him, and our law enforcement partners in the United States and in Kenya for working diligently to bring him to justice. It is no exaggeration to say that the world’s children are safer with Dow behind bars.”

“Gregory Dow was the proverbial wolf in sheep’s clothing,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He presented himself as this big-hearted man who was living according to his faith, when all the while, he was sexually abusing girls placed in his care. These horrific crimes were a betrayal of an entire community’s trust. If Dow thought he could get away with it because he was in a different country, if he thought no one would care because these were underprivileged Black children he victimized, this investigation and today’s sentence have most emphatically proved him wrong. The FBI and our partners will never stop working to protect children from sexual predators, whomever and wherever they are.”

The Dow 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. Project Safe Childhood marshals federal, state, and local resources to better locate, apprehend, and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims. For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The investigation was conducted by the FBI, with assistance from the U.S. Embassy in Nairobi, the Kenyan Office of Director of Public Prosecutions and Directorate of Criminal Investigations Anti-Human Trafficking & Child Protection Unit, and the Investigative Division of the Office of the District Attorney of Lancaster County. The case is being prosecuted by Assistant United States Attorney Timothy Stengel and Department of Justice Trial Attorneys Lauren Britsch and Lauren Kupersmith of the Child Exploitation and Obscenity Section (CEOS).

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Judith Avilez, 60, of Elizabethtown, PA, was sentenced to three years in prison, five years of supervised release, and ordered to pay $15 million in restitution ­by Judge Jeffrey L. Schmehl for participating in a massive bank fraud scheme over many years.

In September 2020, Avilez, the former Controller of Worley & Obetz, pleaded guilty to her role in a scheme that defrauded Fulton Bank of over $65 million. Avilez admitted that from 2016 through May 2018, she helped Worley & Obetz’s CEO, Jeffrey Lyons, defraud Fulton Bank by creating fraudulent financial statements that grossly inflated accounts receivable for Worley & Obetz’s largest customer, Giant Food. Worley & Obetz was an oil and gas company in Manheim, PA, that provided home heating oil, gasoline, diesel, and propane to its customers. 

Lyons initiated the fraud shortly after he became CEO in 1999. In order to make Worley & Obetz appear more profitable and himself appear successful as the CEO, Lyons asked the previous Worley & Obetz Controller, Karen Connelly, to falsify the company’s financial statements to make it appear to have millions more in revenue and accounts receivable than it did. Lyons and Connelly continued the fraud scheme from 2003 until 2016, when Connelly retired and Avilez became the Controller and joined the fraud. Avilez and Lyons continued the scheme in the same manner that Lyons and Connelly had. Each month, Avilez created false Worley & Obetz financial statements that Lyons presented to Fulton Bank in support of his request for additional loans or extensions on existing lines of credit.  In total, Lyons, Connelly, and Avilez defrauded Fulton Bank out of $65,000,000 in loans.

After the scheme was discovered, Worley & Obetz and its related companies did not have the assets to repay the massive amount of Fulton loans Lyons had accumulated. In June 2018, Worley & Obetz declared bankruptcy and notified its approximately 275 employees that they no longer had jobs. After 72 years, the Obetz’s family-owned company closed its doors forever.  The fraud Lyons committed with the help of Avilez and Connelly caused many families in the Manheim community to suffer financially and emotionally. Fulton Bank received some repayments from the bankruptcy proceedings but is still owed over $50,000,000.

Last year, for their roles in the scheme, Lyons was sentenced to 14 years in prison and Connelly was sentenced to four years in prison.

“Judith Avilez walked in on the tail end of this scheme, and she had the opportunity to report it and stop the fraud,” said Acting U.S. Attorney Williams. “But instead of doing the right thing, she chose the greedy path. Instead of performing her job honestly, she chose to help her new boss steal tens of millions of dollars from bank lenders. And as a result, a company was destroyed and its employees were devastated. Our Office will continue to work with our law enforcement partners to protect innocent individuals and businesses from being victimized by financial fraud.”

The case was investigated by the Federal Bureau of Investigation, IRS Criminal Investigations, and Northern Lancaster County Regional Police Department and is being prosecuted by Assistant United States Attorney Tiwana Wright.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Sarah Norton, 41, of Jewett City, Connecticut, was sentenced to 14 years in prison, followed by 20 years of supervised release by United States District Court Judge Joseph P. Leeson for child exploitation offenses stemming from her sexually explicit interactions with a 14-year-old boy.

In December 2019, Norton was found guilty after a three-day trial of one count of attempted enticement of a minor to engage in illegal sexual activity, and one count of traveling to engage in illicit sexual conduct with a minor.

The defendant, a mother of three, met the victim while “gaming” online. She then used online and cell phone communications to attempt to seduce the victim into engaging in sexually explicit contact. In late 2017, Norton traveled from her home in Connecticut to Pennsylvania to meet with the boy for sex in a hotel room that she had rented in the vicinity of Allentown, PA. Norton’s plan was foiled after the victim’s father became suspicious of the messages the victim had on his cell phone and interrupted the plan.

“Sarah Norton deliberately and aggressively manipulated a 14-year-old boy, a child that was around the same age as her own children, for her own sexually deviant motives,” said Acting U.S. Attorney Williams. “Her predatory behavior is difficult to comprehend; as a mother herself, she knew the damage she was causing and simply did not care. Our Office will continue to investigate and prosecute sexual predators like the defendant so that they can no longer harm innocent children.”

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 Federal Bureau of Investigation and the Upper Macungie Police Department, and is being prosecuted by Assistant United States Attorney Sherri A. Stephan.

PHILADELPHIA – Acting United States Attorney Jennifer Arbittier Williams announced that Jacob Montague, 35, of Wilson, North Carolina, was charged by Indictment for the attempted kidnapping of one woman, and the kidnapping of a second woman in Center City Philadelphia in late 2020. The defendant is currently in custody and will have his initial appearance in federal court on Friday, January 29; the government will be moving for detention pending trial.

According to the Indictment, the first incident occurred on the night of November 1, 2020. Montague allegedly wielded a knife near the intersection of 20th and Spruce Streets in an attempt to abduct the victim. Then the following day, on November 2, 2020, Montague allegedly parked his vehicle near the intersection of 24th and Spruce Streets and abducted a young woman at knifepoint, dragging her into his vehicle.

“Kidnapping is a terrifying experience for the victims,” said Acting U.S. Attorney Williams. “As alleged in the Indictment, the defendant was relentless in his pursuit, trying two days in a row to kidnap someone at knifepoint. We hope everyone can rest easier knowing that he is now facing federal charges.”

“Anyone trying to forcibly kidnap strangers off the street is a clear menace to society,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Violent criminals like that need to be locked up, for everyone’s safety. The FBI thanks our partners at the Philadelphia Police Department and Pennsylvania State Police for their assistance with the investigation that’s led to these federal charges against Jacob Montague.”

If convicted, the defendant faces a maximum possible sentence of life in prison, followed by five years of supervised release, and a fine of up to $250,000.

The case was investigated by the Federal Bureau of Investigation, with the assistance of the Pennsylvania State Police and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorneys Michael R. Miller and Priya T. DeSouza.                                                         

An Indictment, Information or Criminal Complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Donald Dougherty, 54, of Philadelphia, PA, entered a plea of guilty today before United States District Court Judge Michael M. Baylson. Dougherty, the owner of Dougherty Electric, Inc., (“DEI”), a well-established Philadelphia-based electrical contractor, pleaded guilty to one count of filing a false federal income tax return and one count of theft of employee benefit funds.

On November 25, 2020, Dougherty was charged by Indictment with multiple charges of bank fraud, tax fraud and theft from employee benefit plans. Also charged with tax fraud was Michael McKale, an accountant who worked for Dougherty. Under the plea agreement between Dougherty and the government announced today, in addition to pleading guilty to tax fraud and theft of union benefit funds, the defendant has agreed to pay $92,913 in taxes due to the Internal Revenue Service, arising from false business deductions for what were actually expenditures for Dougherty’s personal benefit. The defendant also agreed to pay $266,000 in restitution to the International Brotherhood of Electrical Workers (“IBEW”) Local Union 5 in Pittsburgh, arising from his failure to make $266,000 in contributions to Local 5’s employee benefit funds in violation of the collective bargaining agreement between DEI and Local 5 in Pittsburgh.

In 2007, Dougherty was charged, pleaded guilty, and imprisoned for filing false income tax returns, tax evasion, making an unlawful payment to a union official, theft of employee benefit funds, and related offenses. During today’s plea hearing, Dougherty agreed to pay all restitution still owed in this previous case. 

“Donald Dougherty has a track record of trying to skirt the law and defraud hard-working individuals,” said First Assistant U.S. Attorney Williams. “But the government also has a track record of convicting Dougherty for his crimes.  And we will continue to do just that with every criminal who attempts this kind of scheme.”

“Engaging in an elaborate scheme to willfully underreport taxable income is a felony,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Today, Donald Dougherty admitted he broke the law by cheating on his taxes. As we approach tax filing season, those who might consider filing false tax returns should be aware of the negative consequences; which could include being branded a felon for life and a lengthy prison sentence.”

The case was investigated by the Internal Revenue Service Criminal Investigation Division, the Federal Bureau of Investigation, and the Employee Benefits Security Administration branch of the Department of Labor, and is being prosecuted by Assistant U.S. Attorneys Paul L. Gray and Frank R. Costello, Jr.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Nasir Joseph Outlaw, 22, of King of Prussia, PA, was sentenced to 44 months in prison and five years of supervised release, and ordered to pay $47,575 in restitution by United States District Judge Joseph F. Leeson, Jr., for his role as one of the leaders of a large scale bank fraud and identity theft ring that operated primarily in the Reading, PA area.

In December 2019, the defendant pleaded guilty to two counts of bank fraud and two counts of aggravated identity theft. In addition to the conviction of Outlaw, the investigation in this matter led to separate federal charges against 31 other members of the same fraud ring – 30 of whom have since pleaded guilty, while charges remain pending against one member of the fraud ring. One leader of this fraud ring, Steven Ronald Randal of Philadelphia, was previously sentenced on in June 2018 by Judge Leeson to 111 months in prison.

As part of his guilty plea, Outlaw admitted that between June and December 2017, he knowingly executed separate schemes to defraud First National Bank and Fulton Bank through the deposit of fraudulent checks and the withdrawal of cash before the banks discovered that the checks were fraudulent. The defendant admitted that he recruited at least six other co-schemers to participate as account holders and additional recruiters. Outlaw also admitted that he used the account holders’ ATM debit cards and PINs to personally deposit fraudulent checks and make cash withdrawals, he supervised other co-schemers and instructed them to make deposits and withdrawals from the accounts, and he personally obtained checks from inactive or closed accounts that he knew were closed. In total, the defendant was directly responsible for defrauding the two banks out of $47,575.12, and he admitted that he intended to defraud the banks out of more than $64,000.

“This was a sophisticated scheme involving dozens of defendants that took excellent investigative work to unravel,” said First Assistant U.S. Attorney Williams. “Financial fraud and identity theft harm hard-working individuals every day. Our office will continue to aggressively prosecute the perpetrators and seek justice for victims.”

“Nasir Outlaw helped lead this sprawling fraud ring, which left a trail of bad checks across the Reading area,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He figured it was an easy way to score some fast cash for all involved. With today’s sentencing, he’s learned the hard way how wrong he was. To anyone else committing bank fraud: get ready to learn the same lesson, courtesy of the FBI and our law enforcement partners.”

“Nasir Outlaw helped lead this sprawling fraud ring, which left a trail of bad checks across the Reading area,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He figured it was an easy way to score some fast cash for all involved. With today’s sentencing, he’s learned the hard way how wrong he was. To anyone else committing bank fraud: get ready to learn the same lesson, courtesy of the FBI and our law enforcement partners.”

“The thirty-first individual, in a sprawling conspiracy to defraud local banks that stretched across most of Southeastern Pennsylvania, has been sentenced to nearly four years in jail,” said Damon Wood, Postal Inspector in Charge of the Philadelphia Division.  “This conspiracy relied on the mail to obtain the debit cards needed to discreetly deposit stolen and counterfeit checks into controlled accounts at ATM machines. When criminals use the mail to commit a crime, they shouldn’t be surprised when Postal Inspectors knock on their door along with their law enforcement partners. I want to congratulate the investigators and prosecutors from the FBI, Cumru Township, and the United States Attorney’s Office, who worked alongside Inspectors on this long investigation, who identified and prosecuted nearly three dozen co-conspirators, and who worked to hold those who led the conspiracy accountable with significant sentences.”

The case was investigated by the Federal Bureau of Investigation, the United States Postal Inspection Service, and the Cumru Township Police Department, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

PHILADELPHIA, PA – United States Attorney William M. McSwain, who has served as the chief federal law enforcement officer in the Eastern District of Pennsylvania (EDPA) since April 6, 2018, will step down on January 22, 2021.  The U.S. Attorney’s Office for the EDPA is one of the largest U.S. Attorney’s Offices in the country, serving a population of nearly six million in Philadelphia and its eight surrounding counties.  U.S. Attorneys are Presidentially appointed and Senate confirmed officers; this resignation is a normal part of the transition from the Trump to the Biden Administrations.  Mr. McSwain will be returning to private law practice in Philadelphia.  Jennifer Arbittier Williams, who has served as the First Assistant U.S. Attorney during Mr. McSwain’s tenure, will become the Acting U.S. Attorney upon his departure. 

***

“I want to thank President Trump for appointing me as U.S. Attorney, Senators Toomey and Casey for recommending me for the position, and Attorneys General Barr and Sessions for leading the Department of Justice during my service.  I will always be grateful to have had the opportunity to serve as U.S. Attorney in the District in which I have lived most of my life, in the City in which I was born, and in the Office where I learned to be a trial lawyer as an Assistant U.S. Attorney,” said U.S. Attorney McSwain.  “My overriding focus as U.S. Attorney was on pursuing justice in order to protect the community.  I gave this job all that I had – all day, every day.  While we’ve had many significant accomplishments during my tenure, the credit for these successes belongs to the hardworking, dedicated professionals at the U.S. Attorney’s Office and our law enforcement partners.  For an attorney, there is no greater professional privilege than to represent the United States of America.  I will miss it dearly.”

Below is a brief synopsis of some of the achievements of the U.S. Attorney’s Office during Mr. McSwain’s period of service.

Office Productivity and New Initiatives

In 2019, the first full fiscal year of U.S. Attorney McSwain’s tenure, the Criminal Division indicted 669 cases, a 40% increase from the previous year and the highest number of cases charged by the Office in a decade.  Similarly, the number of defendants indicted in 2019 – another measure of Office productivity and case complexity – saw a dramatic increase.  The Office charged 894 defendants in 2019, up from 599 in 2018, a 49% increase.  These effects were felt across the board in all of the Office’s criminal units:  the violent crime, narcotics, economic crime, government fraud, corruption, and national security units all logged significant increases in the number of cases and defendants charged.

Similarly, the Civil Division in 2019 opened a record number of False Claims Act investigations, which are designed to recover money on behalf of the U.S. government and taxpayers when they have been victims of fraud, and Controlled Substances Act investigations.  The same year, the Civil Division achieved a record number of affirmative civil enforcement resolutions, recovering approximately $125 million from companies and individuals that were under investigation for allegedly committing fraud against the United States or violating the Controlled Substances Act.

In 2020, the Office continued an aggressive pace in both criminal and civil matters, although year-to-year comparisons to 2019 are difficult to make in light of the pandemic, which caused at various times the temporary suspension of criminal grand juries and jury trials.  Still, in the past year, the Civil Division achieved nearly as many affirmative civil enforcement resolutions as it did in 2019, recovering over $200 million.  It also led a successful review under the Americans with Disabilities Act of all EDPA polling places in order to ensure equal access to voting, among other civil rights initiatives.

U.S. Attorney McSwain spearheaded the creation of several new units in the Office during his tenure.  First, the Office established a regional Health Care Fraud Strike Force, in conjunction with the Fraud Section at the U.S. Department of Justice in Washington, D.C., in order to pursue criminal penalties against fraudsters who steal from U.S. government health care programs.  Second, the Office established an Affirmative Civil Enforcement (ACE) Strike Force to focus on and expedite complex affirmative civil enforcement cases.  Third, the Office stood up a General Crimes unit in the Criminal Division, staffed with more junior criminal prosecutors, in order to maximize their training and development.  And fourth, U.S. Attorney McSwain established the Office of Public Affairs and External Engagement (OPAEE) in order to increase transparency and engagement with the community. 

While all areas of the Office have enjoyed increased productivity since 2018, U.S. Attorney McSwain prioritized two areas in particular – violent crime and public corruption.  Both are described more fully below.

Violent Crime

For the past three years, the Office has prioritized violent crime prosecutions throughout the entire Eastern District of Pennsylvania.  However, the deteriorating public safety conditions in Philadelphia necessitated that much of the prosecutions focused on the City, as a counterweight to the irresponsible criminal justice policies of the District Attorney’s Office that have fueled the violent crime and homicide crises in Philadelphia since early 2018.  

In 2019, the violent crime unit charged more cases than any other unit in the Office.  It charged 208 cases as compared to 136 in 2018, which is a 53% increase.  And in Philadelphia’s most dangerous neighborhoods, the prosecutions skyrocketed.  The Office focused its efforts on Project Safe Neighborhood (PSN) target districts – areas that police statistics identify as “hot spots” for violent crime and narcotics trafficking in Philadelphia.  In 2019, the violent crime unit charged 143 cases (and 195 defendants) in PSN districts as compared to 82 cases (and 92 defendants) in 2018.  That is a 72% increase in the number of cases that the Office charged federally, and a 112% increase in the number of defendants prosecuted.

Many of these cases in 2019 (and in 2020) involved situations in which the U.S. Attorney’s Office stepped in to supplant the District Attorney’s Office after the DA’s Office had mishandled the matter.  For example:

• The Office secured a conviction and sentence of over 14 years against Jovaun Patterson, after he shot Mike Poeng, a West Philadelphia deli owner, confining him to a wheelchair.  The DA’s Office had given Patterson a plea deal that involved as little as 3 ½ years in prison.
• The Office charged Khalif Tuggle with the brutal carjacking murder of Thomas Pedersen, which carries a potential life sentence.  The DA’s Office had agreed not to prosecute Tuggle for either first- or second-degree murder, thus eliminating the possibility of a life sentence and making him eligible for parole in only 10 years.
• The Office charged John Kane, who had previously been convicted of two homicides, with possession of a firearm by a convicted felon after a firearm was allegedly found on him during a traffic stop.  The DA’s Office had voluntarily dismissed all charges against Kane stemming from the traffic stop.
• The Office charged Hassan Elliott, Bilal Mitchell, Khalif Sears and Sherman Easterling with the murder of Philadelphia Police Sergeant James O’Connor, who was killed while serving a warrant with his SWAT unit.  The federal charges make Elliott eligible for the death penalty.  The irresponsible charging and bail policies of the DA’s Office had put Elliott on the street in the first place, enabling him allegedly to shoot Sergeant O’Connor.

Furthermore, as part of its anti-violence efforts, the Office also aggressively prosecuted narcotics cases – as drug trafficking and drug gangs are often the root of violence in the community.  In June 2019, the Office executed one of the largest drug busts in U.S. history, seizing the massive cargo vessel MSC Gayane, which had over 20 tons of cocaine hidden on it.  And in February 2019, in response to Philadelphia’s plans to open the nation’s first ever supervised heroin injection site, the Office filed a civil lawsuit to prevent its opening.  The lawsuit asked the court to declare that the site would violate federal drug laws and argued that such sites would normalize heroin use, thereby exacerbating Philadelphia’s drug and opioid crisis.  U.S. Attorney McSwain personally argued the case in November 2020 in front of a three-Judge panel of the U.S. Court of Appeals for the Third Circuit.  Earlier this week, the Third Circuit ruled in the Government’s favor, holding that it is a federal crime to open a supervised injection site for illegal drug use.

Public Corruption

U.S. Attorney McSwain has prioritized the fight against public corruption, which erodes the public’s trust in its elected officials and government.  During the past three years, the Office has brought charges for corruption and/or fraud and embezzlement against dozens of elected officials, public office holders and public employees. 

Examples include: John Dougherty, the Business Manager of Local 98 of the International Brotherhood of Electrical Workers; Robert Henon, Philadelphia City Council Member; Kenyatta Johnson, Philadelphia City Council Member, and his wife, Dawn Chavous; Christian Dunbar, Philadelphia City Treasurer; Leo Dignam, Assistant Philadelphia Managing Director; Jeffrey Blackwell, an employee in the Philadelphia City Controller’s Office; and Jarredd McQueen, Demarys Natal and Nicole Mixon, employees in the Philadelphia Revenue Department.  The Office also brought corruption charges against Philadelphia-area political consultant Kenneth Smukler; and election fraud charges against former U.S. Congressman Ozzie Myers of South Philadelphia.

Additionally, the Office obtained significant prison sentences for corruption offenses committed by Allentown Mayor Ed Pawlowski (15 years); Reading Mayor Vaughn Spencer (8 years); Bucks County Magisterial District Judge John Waltman (6 ½ years); Philadelphia Sheriff John Green (5 years); Philadelphia-area educational consultant David Shulick (5 years); and Allentown-area political consultant Michael Fleck (5 years).  The Office obtained a re-sentencing of 10 years in prison for corruption offenses committed by U.S. Congressman Chaka Fattah.  Finally, the Office secured the conviction and/or sentencing of several law enforcement officers, including Philadelphia Police Officers Stanley Davis, Brian O’Neill and Brian Smith.  

In a precedential opinion, the Third Circuit ruled yesterday that it is a federal crime to open a supervised injection site or “consumption room” for illegal drug use.  Local nonprofit Safehouse planned to open the nation’s first such consumption room in the City of Philadelphia, where individuals would be invited to inject heroin and use other drugs under supervision.  But the Third Circuit ruled that doing so “will break the law” because Safehouse knows and intends that visitors to its consumption room will have a significant purpose of using illegal drugs.  In agreeing with the government’s interpretation of the Controlled Substances Act, the Court explained that, “[t]hough the opioid crisis may call for innovative solutions, local innovations may not break federal law.”

“The Court’s decision re-affirms that ‘safe’ injection sites are a violation of federal law,” said Acting Attorney General Jeffrey A. Rosen.  “The Department supports efforts to curb the opioid crisis ravaging this country, but injection sites are not the solution.  There are more productive ways to address drug abuse, and today’s ruling by the Third Circuit has confirmed that these sites are illegal and therefore not the answer.”

“The rule of law is still alive and well in Philadelphia – having been re-affirmed by the U.S. Court of Appeals for the Third Circuit, which held that it is a federal crime to open a heroin injection site or ‘consumption room’ for illegal drug use,” said U.S. Attorney for the Eastern District of Pennsylvania William M. McSwain.  “The Third Circuit’s opinion is a faithful reading of the statute’s plain language and is consistent with Congress’s intent to protect American neighborhoods from the scourge of concentrated drug use.”

The Controlled Substances Act prohibits any person from knowingly and intentionally maintaining a place for the purpose of illegal drug use. In this appeal, the Government argued that if Safehouse opens a consumption room, knowing and intending that drug users will inject heroin there, Safehouse will break the law. The Court agreed with the Government, holding that Safehouse will violate the law because people will visit its facility with the purpose of using drugs. As the Court explained, though Safehouse will provide other services, “Safehouse’s main attraction is its consumption room.”  The Court also held that Safehouse itself has the purpose that visitors use drugs within its “consumption room.” As the Government has argued throughout this suit, it defied logic to suggest that a so-called “consumption room” is not intended to be a place where people consume drugs.

PHILADELPHIA, PA – United States Attorney William M. McSwain issued the following statement regarding the opinion issued by the U.S. Court of Appeals for the Third Circuit this morning:

“I’m pleased to report that the rule of law is still alive and well in Philadelphia – having been re-affirmed by the U.S. Court of Appeals for the Third Circuit, which held that it is a federal crime to open a heroin injection site or “consumption room” for illegal drug use. The Third Circuit’s opinion is a faithful reading of the statute’s plain language and is consistent with Congress’s intent to protect American neighborhoods from the scourge of concentrated drug use. Philadelphia is known around the world as the birthplace of our wonderful nation and of liberty itself. Due to the dedicated work of those at the U.S. Attorney’s Office, it will not be known as the birthplace of heroin injection sites.”

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Linda Paolini, 45, of Philadelphia, Pennsylvania, was sentenced to 35 years in prison, a lifetime  of supervised release, and ordered to pay more than $15,000 in fines by United States District Court Judge Nitza I. Quiñones Alejandro for child pornography and enticement offenses.

In October 2019, the defendant pleaded guilty to two counts of manufacturing child pornography and one count of online enticement of a minor. The defendant used social media to engage in sexually explicit communications with a 16-year-old Florida boy and coerce him to produce and send her videos of him masturbating. She did this by assuming the persona of a 16-year-old girl, sending the boy provocative images of her own daughter in order to manipulate him into thinking that an attractive, same-aged girl was in love with him. Ultimately, during an online video chat, Paolini faked a suicide attempt in order to induce the boy to attempt suicide himself in solidarity with her. Further, the defendant’s crimes were not limited to just this child; she also admitted to similar criminal communications with at least two other minor boys.

“This defendant’s criminal conduct was so heinous and cold-hearted that it almost defies description,” said First Assistant U.S. Attorney Williams.  “She maliciously manipulated a child into making and sending her pornography of himself. But that was not enough for this defendant.  She then manipulated the vulnerable child into attempting suicide. As a result of this prosecution and today’s sentencing, she will be behind bars for decades and will no longer pose a danger to other children.”

“Linda Paolini sexually exploited a boy the same age as her teen daughter. She even used pictures of her daughter to do it,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “These were predatory, premeditated acts, solely for her own gratification. Today’s sentence ensures she is held accountable for the considerable damage done, and keeps her from victimizing anyone else’s child.”

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

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a civil lawsuit on behalf of the U.S. Secretary of Labor (the “Secretary”) against the International Brotherhood of Electrical Workers Local 98 union (“Local 98”) for violating Title IV of the Labor-Management Reporting and Disclosure Act of 1959, 29 U.S.C. §§ 481–483 (“LMRDA”).

The United States alleges that Local 98, through its incumbent officers and their supporting members, intimidated and threatened other members who sought to challenge incumbent union leadership in the union’s June 2020 officer elections, causing these members to withdraw from nominations. As a result, incumbent union leadership ran unopposed and all officers – including the president and five executive board members – were declared reelected without opposition. The United States alleges that Local 98’s interference, threats, and retaliation against the intended challengers violated its members’ rights under the LMRDA to nominate, be nominated, and vote for candidates of their choice without improper interference or threat of reprisal.

The United States alleges that the Local 98 officers and members who subjected the intended challengers and their supporters to intimidation, harassment, and retaliation include Business Manager John Dougherty, Business Representative Robert Bark, and Business Representative Rodney Walker, among others. Based on the allegations outlined in the Complaint, the United States asks the Court to declare the results of Local 98’s June 2020 officer election void, and order Local 98 to conduct a new election with new nominations under the Secretary’s supervision as provided by the LMRDA.

“As alleged in the Complaint, entrenched union leadership engaged in a pattern of illegal interference, including threats and intimidation, to ensure it faced no opposition in Local 98’s June 2020 election,” said First Assistant U.S. Attorney Williams. “Not only were members in good standing allegedly intimidated out of exercising their right to seek union office, but the entire Local 98 membership was allegedly denied its right to nominate and vote for candidates of its choosing.”

According to the Complaint, on the evening of June 9, 2020, when nominations for the election were to be held, at least 150 people, primarily supporters of Dougherty and his longstanding slate of incumbents, gathered as a crowd on the grounds of the union hall. They refused to speak to one intended challenger or his supporters. Further, to get inside the union hall for the meeting, nominees and nominators allegedly had to walk through the crowd of Dougherty’s supporters gathered in the parking lot and down the steps to the basement, which one intended candidate and other witnesses described as like “walking the gauntlet.” The Complaint states that the intended candidate and his supporters found the atmosphere imposing and felt intimidated.

The Complaint further alleges that Local 98, controlled by a slate of officers that has not changed in years, has had a pattern of interfering with the efforts of rank-and-file members to run for local union office since at least 2014.

“Every union member has a federally-protected right to have his or her voice heard in a free and fair union election. It is protected by law. If union leadership interferes with anyone’s right to vote or seek office within the union, the United States will hold them accountable,” Williams said.

“Ensuring fairness and integrity in labor organizations is a major priority for the U.S. Department of Labor’s Office of Labor-Management Standards. We will continue to work with our investigative partners to ensure that those who are affiliated with labor organizations adhere to the highest standards of conduct to protect the civil rights of union members,” said OLMS Northeastern Regional Director Andriana Vamvakas.

Separate from and unrelated to this civil litigation against Local 98, the U.S. Attorney’s Office for the Eastern District of Pennsylvania is prosecuting a 116-count criminal Indictment that charges Dougherty and several other union employees with federal crimes, including embezzlement of union funds, wire fraud, and public corruption offenses. (Cr. No. 19-64 EDPA). The criminal matter is being prosecuted by Assistant United States Attorneys Richard Barrett, Bea Witzleben, Frank Costello, and Paul Gray. The trial date in the criminal matter is currently set for March 1, 2021.

The civil complaint contains allegations only, and not findings of liability.

The civil investigation was conducted by the U.S. Department of Labor’s Office of Labor-Management Standards. The civil litigation is being handled by Assistant United States Attorney Lauren DeBruicker.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Christopher Lamont Stimpson, Jr., 22, and Wilbert Curtis Trey Artis, III, 29, both of Greensboro, North Carolina, were arrested and charged by Indictment with robbery which interferes with interstate commerce, interstate transportation of stolen goods, and aiding and abetting, as a result of their alleged October 29, 2020 gunpoint robbery of a Lancaster County puppy breeder and theft of five French Bulldog puppies [see attached photo] valued at more than $23,000.

Stimpson and Artis are charged with posing as customers seeking to purchase five French Bulldog puppies allegedly in order to steal the puppies at gunpoint. One of the victims recorded the registration of the defendants’ getaway vehicle, which was traced back to a rental company in Greensboro, North Carolina. According to court documents, a customer of the breeder who had also been interested in purchasing one of the puppies later discovered an Instagram posting which featured a video and a photograph of the puppies, as well as photographs of Stimpson and Artis.

On December 8, 2020, both defendants were arrested by the Greensboro (North Carolina) Police Department on the bench warrants which had been issued in the Eastern District of Pennsylvania. On January 4, 2021, during a virtual initial appearance in the Eastern District of Pennsylvania before the United States Magistrate Judge Henry S. Perkin, Stimpson was ordered to home confinement pending trial. Artis made a virtual initial appearance before Judge Perkin today and was ordered to home detention pending trial.

“Robbery at gunpoint is always a severe crime, and in this case the defendants are charged with stealing living creatures at gunpoint – puppies - and transporting them across state lines,” said First Assistant U.S. Attorney Williams.  “These are serious federal offenses which will be strenuously prosecuted by this office. We are thankful to our partners here in Pennsylvania and in North Carolina for their swift investigation and apprehension of these defendants.”

“This wasn't just some dognapping caper, it was a violent armed robbery that saw the victim menaced at gunpoint,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “We're glad the FBI and our partners could help safely recover the pups, and determined to see the perpetrators held accountable.”

“The quick apprehension of these individuals is a prime example of how well interagency cooperation between municipal and federal law enforcement agencies work,” said Ephrata Police Department Chief John E. Petrick. “The Project Safe Neighborhoods program allows for a law enforcement agency to coordinate an investigation with other law enforcement partners hundreds of miles away without delay.”

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, each defendant faces a maximum possible sentence of 30 years’ in prison and a $500,000 fine.

The case was investigated by the Federal Bureau of Investigation, the Ephrata Police Department, and the Greensboro (NC) Police Department, and is being prosecuted by Assistant United States Attorney Mark S. Miller.

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

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that James Strohm, 49, of Philadelphia, PA, a 20-year veteran of the Philadelphia Police Department, was sentenced to 172 months in prison, 20 years of supervised release, and ordered to pay $79,000 in restitution and more than $27,000 in special assessments by United States District Court Judge Gerald A. McHugh for possession and distribution of child pornography.

In July 2019, the defendant pleaded guilty to one count of possession of child pornography and one count of distribution of child pornography. The charges against Strohm stemmed from a tip submitted to the National Center for Missing and Exploited Children from a gaming and social networking application about a user account, “fungirl12321,” containing thousands of images depicting child pornography. A phone number and IP address connected to the account were associated with the defendant. Investigators then determined that Strohm was viewing, downloading and distributing child pornography, including during hours when he was officially working as a Philadelphia Police Officer.

“The defendant abused his position of power and trust by distributing images involving the sexual exploitation of children, some as young as infants,” said First Assistant U.S. Attorney Williams. “James Strohm not only committed these crimes from his home, but also, abhorrently, while on duty as a police officer. He will now spend years behind bars where he will be unable to exploit the suffering of children any longer.”

“James Strohm was viewing child sexual abuse material while employed as a police officer, at times even from police workspace,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “He violated his sworn oath and broke the law in a particularly disturbing way. Today's sentencing sends a message that, no matter who you are, if you're perpetuating the exploitation of children by seeking and trading this horrific content, the FBI will step in, put a stop to it, and see you brought to justice.”

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 is being prosecuted by Assistant United States Attorney Meaghan A. Flannery.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced today that Jason Gusoff, 45 years old, of Richboro, PA was sentenced today by United States District Court Judge C. Darnell Jones, II, to 60 months in prison followed by three years of supervised release, and ordered to pay $105,486 in restitution for conspiring to destroy his business by arson in order to collect insurance proceeds.

In 2008, Gusoff enlisted a co-conspirator to set fire to Gusoff’s business, California Tanning Salon, located on Roosevelt Boulevard in Philadelphia.  Once the damage was caused, Gusoff submitted requests for payment to the business’ insurance company while making materially false representations that he was not responsible for the loss caused by the fire. These false representations resulted in Gusoff receiving $105,486 from the insurance company.

The defendant was indicted for the crime in February 2011 but then fled the United States prior to trial. In February 2019, thanks to the coordinated efforts of the Cambodian Police, the United States Marshal Service (USMS), the Diplomatic Security Service (DSS), and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF), the defendant was captured in Cambodia and promptly returned to the Eastern District of Pennsylvania to answer to his crimes.

“If you are charged with a federal crime in the Eastern District of Pennsylvania, you will not be able to evade justice by fleeing to another country,” said First Assistant U.S. Attorney Williams. “We will find you and hold you accountable for your actions.  In this case, the defendant was captured, convicted, and will spend five years behind bars.”

“Arson is a violent crime which ATF takes very seriously,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division.  “The capture and subsequent sentencing of Gusoff exemplifies the dedication of ATF and the United States Attorney’s office to fully prosecute those individuals who commit acts of arson.”

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

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Matthew Stephens, 52, of Philadelphia, PA, was sentenced to 151 months in prison and ten years of supervised release by United States District Judge Harvey Bartle III for his role in a scheme to traffic pounds of methamphetamine, several dozen firearms, machine gun conversion devices, and hundreds of rounds of ammunition between 2017 and 2019.

The defendant pleaded guilty in November 2019 to seven counts of drug trafficking and firearms charges, and then pleaded guilty again in August 2020 to nine additional firearms offenses charged in two Superseding Indictments. The specific charges included conspiracy to distribute methamphetamine, distribution of methamphetamine within 1,000 feet of a school, possession of a machine gun, possession of a non-registered machine gun, possession of a firearm by a felon, and dealing in firearms without a license.

The charges against Stephens stemmed from a long-term investigation conducted by the ATF into methamphetamine and firearms trafficking in the area of two public schools in the Kensington neighborhood of Philadelphia. In 2018 and 2019, during the course of this investigation, the defendant sold dozens of firearms to the ATF through a confidential informant. Many of these firearms had serial numbers that were obliterated, and still others were homemade, un-serialized, AR-15 style assault rifles, commonly referred to as “ghost guns” or “PMFs” (Privately Made Firearms) due to the complete absence of traceable manufacturer markings. Stephens also sold to the ATF during dozens of transactions parts designed to convert a semiautomatic firearm into a fully automatic firearm (“auto sears”), Glock machine gun conversion “kits,” two rifles and more than one hundred rounds of ammunition.

On March 27, 2019, Stephens was arrested during an ATF sting operation in the parking lot of a Wawa convenience store on Bustleton Avenue in North Philadelphia. At the time of his arrest, the defendant was in possession of over three kilograms of methamphetamine. For his criminal conduct, which included his role in three different conspiracies between 2017 and 2019, Stephens was later charged in three separate Indictments.

In total, Stephens sold 52 firearms, 44 machinegun conversion devices, and hundreds of rounds of ammunition, as well as more than $50,000 worth of methamphetamine. Many of the transactions occurred within one block of a public elementary school in Philadelphia. Two of the transactions involving methamphetamine occurred at a rest stop on the New Jersey Turnpike.

“This defendant personally threatened the safety of our communities,” said First Assistant United States Attorney Williams. “He sold drugs and firearms, including homemade untraceable firearms, immediately adjacent to two public schools, directly endangering the lives of children. Thanks to the steady, determined efforts of investigators at the ATF, Stephens’ revolving door of criminal contraband has been cut off.”

“Trafficked firearms represent a danger to our community, because they can end up in the hands of convicted felons, violent criminals, and many other kinds of people who are prohibited from having firearms,” said Matthew Varisco, Special Agent in charge of ATF’s Philadelphia Field Division. “This successful investigation and prosecution is a testament to our terrific partnership with the U.S. Attorney’s Office, and a reflection of our commitment to aggressively pursuing firearms traffickers in our communities.”

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and is being prosecuted by Assistant United States Attorneys Justin Ashenfelter and Priya T. De Souza.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Arleny Reyes Nunez, 42, of Philadelphia, PA and the Dominican Republic, was sentenced to 30 months in prison and three years of supervised release, and ordered to pay $154,528 in restitution by United States District Judge Harvey Bartle III, for using the personal identification information of others to file fraudulent tax returns, resulting in more than $150,000 in losses to the federal government.

In August 2020, the defendant pleaded guilty to charges of criminal conspiracy to defraud the federal government, theft of government funds, and the unlawful possession and use of a means of identification. The charges were the result of the defendant and her co-conspirators acting together to defraud the United States by filing fraudulent tax returns using the identities of others.

From 2010 through May 2014, Reyes Nunez prepared and filed approximately 29 false tax returns, retrieved the refund checks (sometimes paying a minor child to retrieve paper checks from mailboxes at vacant Philadelphia properties), and deposited the checks into bank accounts associated with fake businesses she created in furtherance of this scheme. Later, in order to avoid apprehension, the defendant fled to her home country of the Dominican Republic, where she was ultimately arrested by local authorities for using a false passport and extradited back to the United States in January 2020.

“The defendant played a key role in a scheme to exploit others’ personal information in order to steal from the federal government,” said First Assistant U.S. Attorney Williams. “Further, when Reyes Nunez became aware that authorities had a warrant for her arrest, she abandoned her family and fled the United States in order to avoid facing criminal consequences. But she could not outrun justice, and now she will pay her debt to society.”

“Ms. Reyes Nunez thought she could flee the country to evade prosecution,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “What she failed to count on is that IRS Criminal Investigation special agents work diligently to identify and bring to prosecution those who engage in tax fraud. Her extradition and sentencing should serve as a reminder that we are committed to vigorously pursuing those who undermine the integrity of the U.S. tax system.”

The case was investigated by the Internal Revenue Service - Criminal Investigation and the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Priya T. De Souza.

PHILADELPHIA, PA – On Wednesday, December 23, 2020, U.S. District Court Judge Nitza I. Quinones Alejandro issued a Memorandum Opinion on Plaintiff’s Motion for a Preliminary Injunction.  Plaintiff alleged that the City had an unconstitutional policy of treating protests more favorably than other First Amendment-protected activity, such as parades.  While the Opinion denied the Plaintiff’s Motion, it did so on the basis that the City has abandoned its policy.

I want to congratulate the Philadelphia Vietnam Veterans Memorial Society for successfully protecting the First Amendment rights of all Philadelphians.  Its lawsuit has achieved its purpose: the court has now confirmed that the City has abandoned its policy of favoring protests over other constitutionally protected speech, like parades. 

The U.S. Attorney’s Office first objected to the City’s policy back on July 22, 2020, when I wrote a letter to City Solicitor Marcel Pratt.  In that letter, I outlined the various unconstitutional aspects of the City’s July 14, 2020 Special Events Moratorium and explained how the City could not “pick and choose” by banning parades or other First Amendment-protected activity while simultaneously allowing and supporting protests.  Unlike the City’s July 14, 2020 policy, the First Amendment does not discriminate.

Soon thereafter, the Vietnam Veterans Memorial Society also objected to the City’s policy.  In response, the City “expressly rescinded the restrictions” in the July 14, 2020 policy, as the court explained.  Significantly, organizations may now “hold a parade without a permit, on equal footing with all other events, and without threat of being dispersed,” according to the court.

Thus, any organization that wants to express a message via an outdoor parade in Philadelphia can have at it – the City cannot and will not stop you.  And if the City attempts to return to the days of discriminating against certain types of speech, it will find itself right back in court.

PHILADELPHIA – United States Attorney William M. McSwain announced that Jeffrey Blackwell, 47, of Philadelphia, PA, was sentenced today to 22 months in prison, three years of supervised release, and ordered to pay $25,612 in restitution by United States District Court Judge Chad F. Kenney for misusing his official position with the Philadelphia City Controller’s Office to enrich himself by soliciting and accepting bribes, and for committing additional tax crimes.

Blackwell pleaded guilty in August 2020 to charges of honest services wire fraud, filing a false tax return, and two counts of failure to file a tax return. A former City of Philadelphia employee in the Investigations Division of the Office of the City Controller, the defendant committed a series of frauds between 2013 and 2015, accepting more than $20,000 in bribes for city services.

Blackwell solicited bribes from at least five individuals who were seeking permits or contracts from the City. One of the individuals owned a furniture store and paid Blackwell for permits to park a storage container on the street. The second person was renovating a house and paid Blackwell for permits to allow that renovation. The third person owned a construction business and paid Blackwell to obtain a plumbing permit. The fourth person owned an auto body shop and paid Blackwell in the hope of getting a license to buy and sell cars, as well as a City contract to install decals on police vehicles. The fifth person, who was cooperating with the FBI at the time, told Blackwell that he needed permits from the City to renovate a house. The defendant also filed a fraudulent 2012 federal income tax return that falsely deducted travel expenses and falsely claimed a dependent; finally, he failed to file a return as required by law for tax years 2013 and 2014.

“During my tenure as U.S. Attorney, we have made it a top priority to uncover and prosecute public corruption in Philadelphia wherever it exists,” said U.S. Attorney McSwain. “Jeffrey Blackwell used his public position to enrich himself to the detriment of all Philadelphians who expect and deserve honest services from the City’s employees. Today’s sentence puts Mr. Blackwell where he belongs – in prison.”

“Jeffrey Blackwell figured he’d boost his city salary by taking bribes and kickbacks on the side,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “In doing so, he undermined the mission and integrity of the controller’s office where he worked and deprived Philadelphians of the honest government services they deserve. Public corruption does so much damage to people’s trust in the system, at every level. That’s why the FBI is committed to holding crooked public employees like Blackwell accountable.”

“Mr. Blackwell ignored his duties to provide honest services to the citizens of Philadelphia and to file accurate tax returns; instead he solicited bribes, lied, and cheated on his taxes,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Today, his greed landed him in prison. Those contemplating similar behavior have been put on notice about the consequences of such criminal conduct.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service, with assistance from the Philadelphia Office of Inspector General. It is being prosecuted by Assistant United States Attorney David J. Ignall.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Terrell Ashby, 22, of Williamsburg, VA, was arrested and charged by Complaint for cyberstalking a young woman residing in Delaware County, PA in connection with a “sextortion” scheme.

According to the Complaint, in August 2020, Terrell Ashby used a social-media platform to contact a 20 year-old woman (the victim). Ashby, using the online moniker “Jason Brandon,” sent a message to the victim offering her a large sum of money and enticing her to communicate with him on another electronic messaging application. The victim agreed and subsequently engaged in a nude video chat with the defendant.

Unbeknownst to the victim, Ashby recorded portions of their video chat, and subsequently sent her multiple messages demanding $40 in exchange for deleting a nude photo he had captured of her. Specifically, he wrote, in part, “When you send the $40 I will delete your nudes offline” and “Just send the $40 and you’re good lol[.] We aren’t good until you send the $40[,] simply send the $40 and I’ll delete it[.]” The victim then paid the $40 by transferring money via an online payment platform to an account provided by Ashby.

However, that was not the end of Ashby’s alleged abuse of the victim. The defendant then sent the victim multiple messages demanding all of the money in her bank account. In these messages, Ashby threatened to disseminate the nude photos of the victim to her college and other social media friends and followers if she did not pay him more money. For example, Ashby wrote, in part: “Your expose page is being created right now and I’m also going to tag your college[.] I’ll end you[.] I’m not someone you want to [expletive] with[,] go tell your father that… Just [sent] your nudes to [name redacted][.] Already exposed you whore[.] Your life is over[.] You’re dumb if you thought this was over its not over until my $134 is sent[.] I’ll make sure our whole school sees your nudes[.]”

As a result of the defendant’s alleged conduct, the victim became distraught and ingested a number of prescription pills in an attempt to calm her emotional distress. She was rushed to an emergency room in an ambulance and ultimately recovered. While she was hospitalized, Ashby began advertising the nude photos of the victim using various online accounts. For example, the defendaNt posted a photo of the victim on a social-media platform, using an account named “[name redacted]sextape” with the following caption: “Everyone [message] me to see [the victim] nudes … she [video chatted] me naked I have the full [video chat] call saved [message] me to see everyone.”

Ashby was arrested at his residence in Williamsburg, Virginia this morning and is expected to appear before a magistrate judge in the Eastern District of Virginia later this afternoon.

“As detailed in the Complaint, Ashby’s alleged exploitation and manipulation of this victim are abhorrent,” said First Assistant U.S. Attorney Williams. “Protect yourself and avoid falling victim to this type of scheme.  And if you have been victimized, know that you are not alone and should not be shamed into silence.  Please come forward so that we can investigate and prosecute the offenders. These criminals are counting on your silence to get away with it; don’t let them.”

“Terrorizing someone with threats to release their explicit images is unconscionable,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Imagine the emotional toll it takes on a victim, living in fear of being so personally exposed. Unfortunately, the FBI is seeing more and more sextortion cases, with people of all ages targeted. It’s not some sick game, it’s a crime, and the FBI will continue to unmask these cyber predators and hold them firmly accountable.” 

If convicted, the defendant faces a maximum possible sentence of 5 years’ imprisonment, 3 years’ supervised release, and a $250,000 fine.

The case was investigated by the Philadelphia FBI, and is being prosecuted by Assistant United States Attorney Sarah Wolfe. The FBI and U.S. Attorney’s Office in the Eastern District of Virginia also provided assistance in the investigation.

A criminal complaint is an accusation. A defendant is presumed innocent unless and until proven guilty.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Michael Edmondson, 53, of Philadelphia, PA, was sentenced to 78 months in prison, three years of supervised release, and ordered to pay more than $6,700 in restitution by United States District Judge Mitchell S. Goldberg for robbing four banks in a spree across the Southeastern Pennsylvania counties of Delaware, Montgomery, Bucks, and Philadelphia.

In September 2019, the defendant pleaded guilty to a four-count Indictment charging him with four counts of bank robbery. The charges arose from Edmondson’s early 2019 crime spree, targeting the Wells Fargo Bank in Trevose on February 19; the Citizens Bank in Havertown’s Giant Foods on February 24; the Wells Fargo Bank in King of Prussia on February 27; and the Santander Bank on Market Street in Philadelphia on March 6. The defendant stole a total of $7,958 from the four banks, committing the offenses shortly after absconding from a halfway house where he was living while on state parole. In all four cases, Edmondson threatened to shoot himself and other people if the bank employees did not hand him cash.

“The defendant, now in his fifties, has a decades-long history of run-ins with the law,” said First Assistant United States Attorney Williams. “The simple fact is that Edmondson is a danger to the community. He has proven that, when given the opportunity, he will revert to threatening the safety of others and himself. The streets of Philadelphia and the surrounding counties are safer with the defendant behind bars once again.”

“At each stop on Michael Edmondson’s bank robbery spree, he told tellers he had a gun and was about to start shooting,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Taking those who terrorize the community off the street is a priority for the FBI and our law enforcement partners, as we work together to crack down on violent crime and keep the public safe.”   

The case was investigated by the Bensalem Township Police Department, the Haverford Township Police Department, the Philadelphia Police Department, the Upper Merion Township Police Department, and the Federal Bureau of Investigation. The case is being prosecuted by Assistant United States Attorney Kevin Jayne.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Harris Roy Rosen, 65, of Sag Harbor, NY, was sentenced to 90 months in prison and one year of supervised release by United States District Court Judge Wendy Beetlestone for perpetrating a scheme to steal over $796,000 from clients who had entrusted him with their insurance settlement and estate funds.

The defendant pleaded guilty in March 2020 to charges of wire fraud, aggravated identity theft, and tax evasion. From approximately 2013 through 2017, he perpetrated a complex fraud scheme through which he stole from clients of his Philadelphia law firm, Rosen and Rosen PC, to support his lavish lifestyle, including multiple homes and a luxury vehicle. The defendant routinely lied to clients about the status of their funds; forged clients’ names on settlement checks to deposit them into his personal bank accounts; forged checks to steal money from a client; and created fake bank statements to lull clients into believing that their settlement or estate funds were in appropriate bank accounts waiting to be disbursed. Ultimately, many clients did not get any of the settlement or estate funds to which they were entitled. To conceal these crimes and the resulting illicit income, Rosen also intentionally failed to file tax returns resulting in a tax loss of over $260,000.

“The defendant committed serious criminal offenses for years, stealing funds from twenty clients – I repeat, twenty clients - who trusted him with their money,” said First Assistant U.S. Attorney Williams. “As a lawyer, Rosen was required to abide by the highest ethical standards with regard to his clients, but instead he greedily took advantage of them.  This office will continue to protect the public against fraudsters like Rosen who abuse their positions of trust.”

“It seems like Harris Rosen worked harder to steal his clients’ settlement and estate money than he did in securing those funds,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “For years, he told lies upon lies, forging checks and bank statements, all to support an extravagant lifestyle to which he apparently felt entitled. The greed and abuse of trust here are stunning. Today’s sentencing means Rosen is finally being held accountable for his actions. The FBI will continue to work to find justice for the victims of financial fraud.”

“Mr. Rosen violated the trust placed in him by his clients when he deceived and stole from them; all to enrich himself,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “While we enforce the nation's tax laws, we also take particular interest in cases where someone, for their own personal benefit, has taken what belonged to others. Today, justice is served and Mr. Rosen has been held fully accountable for his crime.”

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigative Division, and is being prosecuted by Assistant United States Attorney Lesley S. Bonney.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Geoffrey Hines, 34, of Upper Darby, PA, was arrested and charged by Indictment with 29 counts of child pornography offenses. The defendant made his initial appearance in federal court this afternoon in front of United States Magistrate Court Judge Richard Lloret, who ordered him detained pending trial.

The Indictment charges Hines with multiple counts each of enticing a minor to engage in sexually explicit conduct, manufacturing and attempting to manufacture child pornography, and possession of child pornography. According to court documents, for at least five years, the defendant preyed on young boys over their online games like Fortnite and Minecraft using X-box and PlayStation systems, communicating with them for days at a time and ultimately convincing them to live-stream sexually explicit images of themselves. In most instances Hines disguised his true identity so that the children were unaware that the person they were communicating with was actually an adult man in his thirties who was secretly recording them as they exposed themselves. In some cases, if a child was reluctant to remove his clothes, Hines allegedly made donations to the child’s gaming account or sent the child a code to redeem a gift card if the child complied with his demands. Dozens of young boys ranging in age from 8 to 13 years old were allegedly victimized by this defendant, who was also found to be in possession of more than 47,000 images and videos of child pornography at the time of his arrest.

“The defendant’s alleged conduct in this case is nightmare scenario for parents of children who like to play games online,” said First Assistant U. S. Attorney Williams. “Here, Hines is charged not only with sexually exploiting his many victims online, but also surreptitiously recording these children, forever preserving their exploitation and trauma.  To parents out there whose children interact with third parties during online gaming, please speak with them frequently about the dangers and pay very close attention to their online activities and communications.  And to anyone out there who is considering using online gaming platforms to prey on children in this disgusting manner, you can be confident that we will find you, we will prosecute you, and we will convict you.”

“The internet connects our homes and families to the world — and vice versa,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “In doing so, unfortunately, it offers a potential way in for those despicable individuals looking to prey on children. Geoffrey Hines allegedly victimized boys as young as eight, plying them with gifts in exchange for sexually explicit images. It’s a disturbingly common scenario, one the FBI and our partners are working each and every day to combat. We’d urge parents to talk directly with their children about cybersafety and the risk of online predators. If you need some support in doing so, you can find more information and resources at fbi.gov/sextortion.”   

If convicted, the defendant faces a maximum possible sentence of life imprisonment.

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, the Delaware County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Michelle Rotella.

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

PHILADELPHIA, PA – On December 10, 2020, U.S. Attorney McSwain convened a press conference to announce federal charges against four defendants for the murder of Philadelphia Police Sergeant James O’Connor on March 13, 2020 and related drug and weapons charges.  Below are his remarks from the press conference.

Good afternoon, everyone.  We are here to announce that the U.S. Attorney’s Office has unsealed an Indictment against four individuals – Hassan Elliott, Bilal Mitchell, Khalif Sears and Sherman Easterling – for the murder of Philadelphia Police Sergeant James O’Connor, as well as related drug and weapons charges.  As we all know, Sergeant O’Connor was tragically killed in the line of duty in the early morning hours of March 13, 2020 in the City’s Frankford section, while attempting to serve a murder warrant with his SWAT unit on Mr. Elliott, who was suspected of committing a murder in 2019.

Before I get into more details about the Indictment, I want to thank the members of the prosecution team who have worked tirelessly on this case literally from the moment that we learned of the murder.  Specifically, I want to thank Sal Astolfi, the Deputy Chief of our Criminal Division; Jeanine Linehan, the Chief of our Violent Crime Unit; and Jonathan Ortiz, the Deputy Chief of our Violent Crime Unit.  And standing with me today, I want to thank Ashley Martin and Lauren Stram, both Special Assistant U.S. Attorneys cross-designated to our Office from the Pennsylvania Attorney General’s Office; and Assistant U.S. Attorney Christopher Diviny.  I also want to thank the Bureau of Alcohol, Tobacco, Firearms and Explosives, which is the federal agency partner on this case, and the Philadelphia Police Department, for their support.  Standing with me today are Matt Varisco, the Special Agent in Charge of ATF’s Philadelphia Field Division; Melvin Singleton, the First Deputy Philadelphia Police Commissioner; and John McNesby, the President of the Fraternal Order of Police, Lodge 5.  I want to thank Sergeant O’Connor’s family for being here today for this announcement.  And I want to thank his extended family of fellow officers who loved him for being here, as well.

The four defendants in this case are alleged members of a drug trafficking group known by several names, including “1700 Scattergood,” operating within the Frankford section of Northeast Philadelphia and surrounding areas, that obtained and distributed crack cocaine and other controlled substances.  According to the Indictment, all four defendants are responsible for the murder of Sergeant O’Connor, which occurred as he was climbing the stairs at 1688 Bridge Street, an alleged stash house for the drug gang.  Significantly, the Indictment also contains a Notice of Special Findings against Mr. Elliott.  These Special Findings make him eligible for the federal death penalty.

Sergeant O’Connor was a 23-year veteran of the Philadelphia Police Department.  He was a married father of two whose family has deep roots in the Department.  His father was a Philadelphia Police Officer; his son and his daughter-in-law are both Philadelphia Police Officers, as well.  His daughter serves in the U.S. Air Force.  Sergeant O’Connor was a loving son, husband, father and grandfather.  He leaves behind a legacy of public service, honor, integrity – and bravery.  He literally gave his life to protect our community.

Sergeant O’Connor’s murder was entirely preventable.  As I have already explained in detail in previous public statements on March 16 and March 19, Hassan Elliott never should have been on the street in the first place – he should have been in jail.  The only reason he was out of jail was because of the pro-violent defendant policies of the Philadelphia District Attorney, Larry Krasner.  These policies prioritize “decarceration” of violent offenders over public safety.    

Krasner’s policies coddle and embolden violent criminals, create a culture of lawlessness, and have inevitable consequences – one of which is a murder rate in Philadelphia that is the highest it has been in several decades.  In 2020, we have already seen more shootings in Philadelphia than in any other year – ever.  As I explained in my public statements on September 14, many of these shootings and murders were possible only because of District Attorney’s willingness – indeed, his eagerness – to return violent offenders to the streets, where they can continue to threaten, assault, shoot and kill.

In order to address this epidemic of violence in our city, we must have the courage to tell the truth.  The truth is that, as a practical matter, Krasner’s pro-violent defendant policies are what put Elliott on the street; they put this horrible chain of events in motion; and in that sense, these policies are every bit as responsible for Sergeant O’Connor’s alleged murder as the defendants. 

Given these facts, it would be absurd, even grotesque, to leave it up to Krasner to direct the prosecution of Sergeant O’Connor’s alleged killers.  And it would be cruel to ask Sergeant O’Connor’s family to simply cross their fingers and hope that Krasner’s pro-defendant agenda does not victimize them yet again.  That absurdity ends today.

No family should ever have to go through what the O’Connors have experienced over the past nine months, or what they will have to experience for the rest of their lives.  We cannot bring their loved one back, but we can honor him by seeking justice and by doing all that we can to prevent this type of tragedy from occurring again.  We promise the O’Connor family, we promise the Philadelphia Police Department, and we promise the community, that we will do exactly that.  Thank you.

PHILADELPHIA – United States Attorney William M. McSwain announced that an Indictment was unsealed today charging four defendants with the murder of Philadelphia Police Corporal James “Jimmy” O’Connor, posthumously promoted to Sergeant, and related drug trafficking and firearms offenses. The defendants charged in the Indictment are Hassan Elliott, a/k/a “Haz,” age 22; Bilal Mitchell, a/k/a “Omar,” a/k/a “Walkdown,” age 20; Khalif Sears, a/k/a “Leaf,” a/k/a “Lil Leaf,” age 19; and Sherman Easterling, a/k/a “Foot,” a/k/a “Foot on da gas,” age 25, all of Philadelphia, PA.

During a news conference outside the federal courthouse, U.S. Attorney McSwain discussed the charges in the seven-count Indictment. All four defendants are charged with: murder in the course of using or carrying a firearm during and in relation to a drug trafficking crime; using or carrying a firearm during and in relation to a drug trafficking crime; possession of a firearm in furtherance of drug trafficking; conspiracy to distribute “crack” cocaine and marijuana; possession with the intent to distribute “crack” cocaine and marijuana; and maintaining a drug involved premises. Additionally, the Indictment charges defendants Elliott and Easterling with possession of a firearm by a felon.

The Indictment alleges that the defendants are members of a violent drug trafficking group known as “1700 Scattergood,” which operates in the Frankford section of Northeast Philadelphia. The defendants allegedly sold narcotics from a stash house they maintained where they kept an arsenal of weaponry, drugs and drug paraphernalia. On March 13, 2020, the defendants were inside the stash house property in the 1600 block of Bridge Street when Sergeant O’Connor and other members of the Philadelphia Police Department’s SWAT team arrived with arrest and search warrants. As Sergeant O’Connor and his fellow officers ascended the staircase to the second floor of the residence and announced their presence multiple times, Elliott allegedly fired a semi-automatic assault rifle 16 times, striking and killing Sergeant O’Connor.

A subsequent search of the property revealed the scope of the defendants’ alleged drug trafficking conspiracy: ten firearms, bulk and packaged “crack” cocaine, bulk and packaged marijuana, and items commonly used to package and sell narcotics, such as a scale and packaging materials.

“The murder of a police officer is one of the most agonizing things that a community can experience, and my heart goes out to the O’Connor family. Sadly, this year has already seen more shootings in Philadelphia than in any other year – ever,” said U.S. Attorney McSwain. “In order to address this epidemic of violence in our city, we must have the courage to tell the truth. The truth is that, as a practical matter, District Attorney Larry Krasner’s pro-violent defendant policies are what kept Hassan Elliott on the street; they put this horrible chain of events in motion; and in that sense, they are every bit as responsible for Sergeant O’Connor’s alleged murder as the defendants. While we cannot bring Sergeant O’Connor back, we can honor him by seeking justice and doing all that we can to prevent this type of tragedy from occurring again.” 

“This indictment shows ATF’s commitment to working with our local, state and federal partners to help diminish the violent crime that continues to plague Philadelphia,” said Matthew Varisco, Special Agent in charge of ATF Philadelphia’s Filed Division. “I commend the hard work of the investigators and detectives of the Philadelphia Police Department that made these charges possible and that hopefully will prevent another potential crime or death. I also thank the U.S. Attorney's Office for their guidance and work prosecuting this case.”

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 defendants face a maximum possible penalty of lifetime imprisonment. However, contained within the Indictment is a Notice of Special Findings for defendant Elliott with regard to the charge of murder while using or carrying a firearm. This Notice makes Elliott eligible for the death penalty.

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 Christopher Diviny and Special Assistant United States Attorneys Ashley Martin and Lauren Stram.

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

A Bryn Mawr resident pleaded guilty today to filing false tax returns, announced Principal Deputy Assistant Attorney General Richard E. Zuckerman of the Justice Department’s Tax Division and U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania.

According to court documents and statements made in court, Jordan Richter sold marketing services and products, including email lists, to stock promoters. From 2012 to 2014, Richter did business through Diamond Spot Media LLC, a partnership in which he was a 99.5 percent owner. Richter inflated business expenses on Diamond Spot’s tax returns to reduce the partnership’s reported income. These falsities also resulted in Richter underreporting income on his personal returns for the years 2012 through 2014. In total, Richter caused a tax loss to the IRS of over $100,000.

U.S. District Judge C. Darnell Jones II, scheduled sentencing for March 8, 2021. At sentencing, Richter faces a maximum sentence of three years for each count. Richter also faces a period of supervised release, restitution, and monetary penalties.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney William M. McSwain commended special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Chingos of the Tax Division and Assistant U.S. Attorneys Murray and Smith, who are prosecuting the case.

Additional information about the Tax Division and its enforcement efforts may be found on the division’s website.

A former DeSales University priest was charged by indictment with three counts of child pornography offenses.

Acting Assistant Attorney General Brian C. Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania, and Special Agent in Charge Brian A. Michael of U.S. Immigration and Customs Enforcement’s Homeland Security Investigations (HSI) Philadelphia made the announcement.

William McCandless, 56, of Wilmington, Delaware, was charged with possessing child pornography for importation into the Unites States, transporting child pornography in interstate and foreign commerce, and attempting to access with intent to view child pornography.

During his initial appearance before U.S. Magistrate Judge Henry S. Perkin, the defendant was arraigned on the pending charges and ordered to be placed on home confinement, to submit to electronic monitoring and to surrender his passport because he frequently traveled overseas and has numerous contacts abroad.

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the Criminal Division’s Child Exploitation and Obscenity Section (CEOS), Project Safe Childhood marshals federal, state and local resources to better locate, apprehend and prosecute individuals who exploit children via the Internet, as well as to identify and rescue victims.  For more information about Project Safe Childhood, please visit www.justice.gov/psc.

The case was investigated by HSI and is being prosecuted by CEOS Trial Attorney Ralph Paradiso and Assistant U.S. Attorney Sherri A. Stephan.

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

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.

PHILADELPHIA – United States Attorney William M. McSwain announced today that William McCandless, 56, of Wilmington, Delaware, a former DeSales University priest, was charged by Indictment with three counts of child pornography offenses.

Specifically, McCandless was charged with possessing child pornography for importation into the United States, transporting child pornography in interstate and foreign commerce, and attempting to access with intent to view child pornography.

During his initial appearance today in front of United States Magistrate Court Judge Henry S. Perkin, the defendant was arraigned on the pending charges. He was also ordered to be placed on home incarceration with electronic monitoring and to surrender his passport because he has frequently traveled overseas and has numerous contacts abroad. In fact, from 2010 until January 2017, as a member of the Catholic order of Oblates of St. Francis DeSales, McCandless was assigned to St. Charles Parish in the European Principality of Monaco.

While he was working overseas in Monaco, McCandless allegedly amassed a collection of thousands of images of child pornography, including what can be described as the torture of very young children, which he brought back with him to the United States when he returned in January 2017. Further, once back in the United States, the defendant allegedly attempted to access similar images, and also conducted Internet searches for things like how to get “off the grid,” how to “disappear” and how to erase items from “the cloud.”

“McCandless’ alleged conduct here is extremely disturbing. It occurred not just overseas but continued while he crossed international borders, purporting to do the work of the Church,” said U.S. Attorney McSwain. “The innocent children in these images will have to deal with the impact of this alleged abuse for the rest of their lives. We can never make them fully whole again, but we can bring them some measure of justice by investigating and prosecuting the people who drive the demand for this abuse, no matter their affiliations.”

“For a priest and university faculty member to violate his position of trust by allegedly engaging in the depraved activity for which he has been indicted is reprehensible,” said Brian A. Michael, Special Agent in Charge for HSI Philadelphia. “Homeland Security Investigations and our law enforcement partners around the world will continue to coordinate closely to ensure our communities are protected from child predators who seek to exploit vulnerable victims.”

This case was brought as part of Project Safe Childhood, a nationwide initiative launched in May 2006 by the Department of Justice to combat the growing epidemic of child sexual exploitation and abuse. Led by U.S. Attorneys’ Offices and the 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.justice.gov/psc.

If convicted, the defendant faces a maximum possible sentence of 60 years in prison.

The case was investigated by Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Sherri A. Stephan and Trial Attorney Ralph Paradiso of the Child Exploitation and Obscenity Section of the Department of Justice.

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

An Allentown, Pennsylvania, attorney was sentenced today to 78 months in prison followed by three years of supervised release for his role in a $2.7 million investment fraud scheme that victimized his law clients.  

Acting Assistant Attorney General Brian Rabbitt of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania and Special Agent in Charge Michael J. Driscoll of the FBI’s Philadelphia Field Office made the announcement.

Todd H. Lahr, 60, of Nazareth, Pennsylvania, was sentenced by U.S. District Judge Edward G. Smith of the Eastern District of Pennsylvania who also ordered Lahr to pay $2,106,918.60 in restitution and $273,091 in forfeiture.

Lahr, an attorney licensed to practice law in Pennsylvania and the District of Columbia, and with offices in Allentown, pleaded guilty in April 2020 to one count of conspiracy to commit securities fraud and wire fraud, two counts of securities fraud, and four counts of wire fraud.

According to Lahr’s admissions at the plea hearing and sentencing, from 2012 through 2019, Lahr conspired with others to perpetrate a securities fraud scheme targeting his own law clients, which involved the fraudulent sale of the securities of two entities, THL Holdings LLC and Ferran Global Holdings Inc.

Lahr initially sold THL Holdings investments, promising that the money raised would be used to pursue specific business opportunities, including mining operations in Papua New Guinea and the acquisition of the shares of a penny stock.  In reality, the money was used for Lahr’s personal expenses and to make Ponzi scheme payments to prior investors, among other things. Once Lahr realized that he was running out of investor money to pay the THL Holdings investors, he sought investors for a second entity, Ferran.  He told the Ferran investors that their money would be used for business opportunities, including even more mining in Papua New Guinea and residential property leases in Spain and England—but, in fact, these funds were used to repay the prior THL Holdings investors and, again, for Lahr’s personal expenses to fund his lifestyle.  Among these personal expenses were his home mortgage, his child’s school tuition, utility bills, and other personal debt. Total investor losses are estimated to be over $2.7 million.

Even after he was caught, Lahr continued his deception by lying in sworn testimony before the U.S. Securities and Exchange Commission (SEC). In this testimony, Lahr denied writing checks to his personal accounts from the THL Holdings accounts, when, in fact, he had written at least 25 separate checks to himself over a three-year period.

The FBI investigated this case.  Trial Attorney Philip Trout of the Criminal Division’s Fraud Section and Assistant U.S. Attorney Michael J. Rinaldi of the Eastern District of Pennsylvania are prosecuting the case.

The department appreciates the substantial assistance provided by the SEC.

The year 2020 marks the 150th anniversary of the Department of Justice.  Learn more about the history of our agency at www.Justice.gov/Celebrating150Years.  

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Todd H. Lahr, 60, of Nazareth, PA, was sentenced to six and one half years in prison, three years of supervised release, and ordered to pay $2,106,918 in restitution by United States District Court Judge Edward G. Smith for orchestrating a $2.7 million Ponzi scheme and securities fraud that targeted his own law clients, and involved the fraudulent sale of the securities of two entities, THL Holdings, LLC and Ferran Global Holdings, Inc.

Lahr, an attorney licensed to practice law in Pennsylvania and the District of Columbia, and with offices in Allentown, pleaded guilty in April 2020 to one count of conspiracy to commit securities fraud and wire fraud, two counts of securities fraud, and four counts of wire fraud. In furtherance of his fraudulent schemes, the defendant solicited investments from his clients, telling them that their money would be used for a variety of business opportunities which were, in fact, nonexistent (like mining operations in Papua New Guinea, the acquisition of the shares of a penny stock, and property leases in Spain and England).  In reality, the money was used for Lahr’s personal expenses and to make Ponzi-scheme payments to prior investors. Among these personal expenses were his home mortgage, his child’s school tuition, utility bills, and other personal debt. Total investor losses are estimated to be over $2.7 million.

Even after he was caught, Lahr continued his deception by lying in sworn testimony before the U.S. Securities and Exchange Commission (SEC). In this testimony, Lahr denied writing checks to his personal accounts when, in fact, he had written at least 25 separate checks to himself over a three-year period.

Last month, the SEC filed a parallel civil enforcement action to the criminal charges listed above, in the Eastern District of Pennsylvania, based on the same course of conduct. In this SEC civil case, the court has entered judgment against Lahr, ordering injunctive relief and disgorgement and prejudgment interest.

“Lahr took advantage of the very people he had an obligation to represent in good faith: his own clients,” said First Assistant U.S. Attorney Williams. “Stealing millions of dollars from people paying him for a professional services, legal counsel and expert judgment is reprehensible. My Office will continue to aggressively pursue securities and other financial frauds, particularly when perpetrated by lawyers and other professionals who are obligated to respect the law and protect their clients.”

“Todd Lahr’s clients trusted him,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Lahr knew that and used it to his devious advantage, selling them on bogus investment opportunities and pocketing those funds. After years of living off of other people’s money, he’s finally being held accountable. The FBI will continue to shut down crooks like this, to help find justice for their victims and prevent anyone else from being harmed.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Michael J. Rinaldi and Trial Attorney Philip B. Trout of the U.S. Department of Justice, Criminal Division, Fraud Section. The U.S. Attorney’s Office appreciates the substantial assistance of the U.S. Securities and Exchange Commission in this matter.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Malik Martin a/k/a “Leek”, 37, of Philadelphia, PA was sentenced to 12 years in prison and five years of supervised release by United States Senior District Court Judge R. Barclay Surrick for his role in an extensive, national drug trafficking conspiracy.

Martin was convicted after a four week trial in October 2018 of conspiracy to distribute 1,000 kilograms of more of marijuana and conspiracy to commit money laundering. Martin and his co-conspirators were part of a long-running drug-trafficking organization which distributed thousands of kilograms of marijuana, and then laundered the drug proceeds. The organization used tractor-trailer drivers to transport bulk quantities of marijuana from Arizona, California, and Texas to the East Coast, for distribution in the greater Philadelphia area. Martin worked closely with the head of the organization to bring money out to the West Coast, coordinate the purchase of the marijuana while there, and load the delivery of marijuana to the East Coast.

“Martin and his co-conspirators shipped tons of drugs from one end of this country to the other for decades,” said First Assistant U.S. Attorney Williams. “The sentence handed down today demonstrates our office’s commitment to taking down criminal organizations in order to keep our communities safe from the scourge of drug trafficking.”

“Malik Martin took part in a cross-country conspiracy that saw thousands of pounds of marijuana trucked here to Philadelphia,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The FBI will continue to investigate and disrupt sprawling drug trafficking operations like this, as we work to take illegal drugs off the street and make this city safer.”

The case was investigated by the FBI, and is being prosecuted by Assistant United States Attorney Justin Ashenfelter.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced that Donald Dougherty, 54, of Philadelphia, PA, the owner of Dougherty Electric, Inc., (DEI) an electrical contracting business based in Philadelphia, PA, was charged by Indictment with multiple charges of bank fraud, tax fraud and theft from employee benefit plans. Also charged in the Indictment is Michael McKale, 47, of Warrington, PA, an accountant who worked for Dougherty, with counts related to tax fraud.

Specifically, Dougherty was charged with conspiracy to defraud the IRS, six counts of filing false tax returns, bank fraud, making a false statement to a bank, ten counts of filing false reports with unions, and 18 counts of failing to make contributions to union employee benefit funds on behalf of employees. McKale was charged with conspiracy to defraud the IRS and three counts of aiding and abetting the preparation and filing of false income tax returns.

According to the Indictment, Dougherty and his accountant, McKale, worked together to falsify corporate records so that Dougherty could pay less federal income tax than he was legally required to pay. The Indictment also charges that Dougherty gave his wife a no-show job at DEI, which paid $166,400 annually, mere weeks before she purchased a Jersey shore condominium for more than $900,000, and that he caused the falsification of corporate records in order to disguise her no-show salary as a legitimate business expense. In total, the defendant is charged with claiming a total of approximately $1.16 million in improper business expense deductions, causing a tax loss of approximately $416,300.

The Indictment further charges that in November 2015, Dougherty learned that the IRS had received an anonymous letter which reported that his wife had been given a no-show job and that DEI labor had renovated her condominium. Allegedly, after receiving that information, Dougherty filed amended income tax returns which removed certain improper business deductions but which still claimed false business deductions for his wife’s salary and car expenses. The Indictment alleges that McKale helped him commit this fraud while working remotely on DEI’s internal bookkeeping records by secretly changing properly recorded personal expenditures to make them appear to be business expenses in order to suppress Dougherty’s tax liability through fraud.

The Indictment also charges that Dougherty fraudulently represented to Wells Fargo Bank that he and his wife could not pay the mortgages on their $1.7 million South Philadelphia home, ultimately causing the bank to accept a one-time payment of $900,000 to settle the mortgages. However, according to the Indictment, Dougherty’s claims of financial distress were false and, in reality, DEI’s gross income increased from roughly $3 million in 2010 to about $23 million in 2013, causing the defendant’s personal income to surpass $2 million.

In addition to the above, the Indictment alleges that Dougherty committed multiple thefts from employee benefit plans. Specifically, the Indictment charges that Dougherty employed nonunion labor in Pittsburgh and paid them through a pass-through company created by his brother, all in order to avoid more than $500,000 in required contributions to the employee benefit fund of International Brotherhood of Electrical Workers Union Local 5 in Pittsburgh. The Indictment also alleges that Dougherty hired nonunion labor in Philadelphia and failed to pay $26,000 in contributions to IBEW Local 98’s employee benefit fund on their behalf.

“Donald Dougherty’s alleged schemes to enrich himself had multiple victims: hard-working union employees, bank stakeholders, and honest American taxpayers who pay their tax obligations,” said First Assistant U.S. Attorney Williams. “Further, he found an accountant to help him defraud the IRS by secretly changing properly recorded expenses into fraudulent ones. And when the defendants thought their scheme might be uncovered, they allegedly cooked the books even further to cover their tracks. The wide-ranging fraud alleged in this Indictment displays greed compounded by more greed, and it will be met with criminal consequences befitting such audacious conduct.”

“Donald Dougherty and Michael McKale are suspected of falsifying financial records to hide Donald Dougherty’s use of his business as a personal piggy bank,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Criminal behavior like this is a slap in the face to all hardworking Americans who pay their tax obligations. Rest assured that protecting the integrity of the tax system continues to be a top priority for IRS-CI, as we strive to ensure that everyone pays their fair share.” 

“Donald Dougherty allegedly cheated the government, his bank, and his employees,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Simply put, anyone seeking to evade their legitimate financial obligations through blatant and willful deception needs to answer for that fraud.”

 “Employers may not, by scheme or subterfuge, deprive their employees of the hard–earned contributions due their employee benefit plans. The U.S. Department of Labor, Employee Benefits Security Administration, and its law enforcement partners will vigorously investigate this activity and pursue criminal charges as warranted,” said Michael Schloss, Regional Director of EBSA’s Philadelphia Regional Office.

If convicted, Dougherty faces in excess of 200 years in prison, 5 years of supervised release, and a $9,250,000 fine, and McKale faces a maximum sentence of 14 years in prison, 3 years of supervised release, and a $1,000,000 fine.

The case was investigated by the FBI, the IRS Criminal Investigation Division, and the Department of Labor, Employee Benefits Security Administration, and is being prosecuted by Assistant U.S. Attorneys Paul L. Gray and Frank R. Costello.

PHILADELPHIA – United States Attorney William M. McSwain announced that a Superseding Indictment was unsealed today against 15 defendants, including alleged members and associates of the South Philadelphia and Southern New Jersey-based criminal organization La Cosa Nostra (LCN), known as the “mafia” or the “mob.” The Superseding Indictment charges various crimes including racketeering conspiracy, illegal gambling, loansharking, extortion, and drug trafficking.

The defendants charged in the seven-count Superseding Indictment are Steven Mazzone, aka “Stevie,” age 56; Domenic Grande, aka “Dom,” aka “Mr. Hopkins,” aka “Mr. Brown,” aka “Dom14,” age 41; Joseph Servidio, aka “Joey Electric,” age 60; Salvatore Mazzone, aka “Sonny,” age 55; Joseph Malone, age 70; Louis Barretta, aka “Louie Sheep,” age 56; Victor DeLuca, aka “Big Vic,” age 56; Kenneth Arabia, aka “Kenny,” age 67; Daniel Castelli, aka “Danny,” aka “Cozzy,” aka “Butch,” aka “Harry,” age 67; Carl Chianese, age 81; Anthony Gifoli, aka “Tony Meatballs,” age 73; John Romeo, age 58; Daniel Malatesta, age 75; Daniel Bucceroni, age 66; and John Michael Payne, age 34.

According to court documents, the Philadelphia LCN is one of a number of LCN organized crime families based in various cities throughout the United States. The purpose of the LCN in Philadelphia and elsewhere is to make money through the commission of various crimes, including illegal gambling, loansharking, drug trafficking, and extortion.

Like other LCN families, the Philadelphia LCN is operated through a defined hierarchical structure, including a Boss, an Underboss (defendant Steven Mazzone), and Captains (defendant Domenic Grande), who oversee “crews” consisting of “soldiers” and “associates.” As detailed in the Superseding Indictment, soldiers are members of the family who have been formally initiated through a ritual called a “making ceremony,” during which they swear allegiance to LCN above all else, take a vow of secrecy about the organization (the Code of Silence or “Omerta”), and agree to commit violence on behalf of the LCN, if necessary. After this ceremony, these men (who must be of 100% Italian ancestry) are then referred to as “made members” of the LCN. Associates are men who engage in criminal activity on behalf of LCN but who have not been formally “made,” either because they are up-and-coming and aspire to full membership, or because they are ineligible to be made because they lack fully Italian ancestry. Made members and associates who break Omerta may be targeted for death by other members of the group.

As described in the Superseding Indictment, the Philadelphia LCN sought to use its reputation and influence to exercise control over criminal rackets, like bookmaking and loansharking in Philadelphia and southern New Jersey, particularly Atlantic City. During a period beginning in August 2015, ten of the defendants allegedly conspired to conduct and participate in the affairs of the Philadelphia LCN through both a pattern of racketeering activity and through the collection of unlawful debts. The remaining five defendants are charged with allegedly committing a variety of other offenses, including conducting an illegal gambling business, conspiracy to make extortionate extensions of credit, and conspiracy to distribute controlled substances, in partnership with other members and associates of the Philadelphia LCN.

As alleged in the Superseding Indictment, on October 15, 2015, defendants Steven Mazzone, Domenic Grande and Salvatore Mazzone participated in a “making ceremony” (as detailed above) in a South Philadelphia residence, during which several new soldiers were inducted into the Philadelphia LCN. The Superseding Indictment goes on to describe the various acts allegedly committed by the defendants and others as members of the group, including the distribution of heroin, cocaine, fentanyl, methamphetamine and oxycodone pills; the disbursement and collection of tens of thousands of dollars of unlawful bookmaking and other debts “owed” to the group at interest rates as high as 400%; and even an alleged conspiracy to kidnap or murder a drug dealer in order to protect the reputation of the Philadelphia LCN after the dealer sold members of the group fake drugs.

“Thanks to the dedicated and courageous efforts of federal law enforcement over the past several decades, the Philadelphia mob isn’t what it used to be, and thank God for that,” said U.S. Attorney McSwain. “But it is still a problem and is still allegedly committing serious federal crimes, which is why we at the Department of Justice are focused on stamping it out. We will not rest until the mob is nothing but a bad memory.”

“The charges unsealed today against these 15 alleged members and associates of the Philadelphia La Cosa Nostra show that the mafia remains a criminal presence in our city and beyond,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “From loansharking and illegal gambling to drug trafficking and extortion, the mob continues to keep its fingers in many different pots, in its ceaseless quest for illegal profits. This group should’ve learned by now that the FBI is as committed to eradicating organized crime as wise guys are to embracing it.”

The case is being investigated by the FBI, including its Philadelphia Field Division and Atlantic City Resident Agency, as part of a long-running investigation, with the assistance of the Philadelphia Police Department, the Pennsylvania State Police and the Pennsylvania Office of the Attorney General. The case is being prosecuted by Assistant United States Attorney Jonathan Ortiz of the Eastern District of Pennsylvania and Trial Attorney Alexander Gottfried of the Department of Justice Criminal Division, Organized Crime and Gang Section.

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