Eastern District of Pennsylvania

PHILADELPHIA – United States Attorney William M. McSwain announced that Ralph Johnson, 54, of Kinzers, PA, former Chief of Environmental Management Services at the Corporal Michael J. Cresenz Veterans Affairs Medical Center (VAMC) in Philadelphia, PA, was charged by Indictment for soliciting and accepting bribes in connection with contracts and purchase orders at the medical center.

As the Chief of Environmental Management Services, Johnson was responsible for a range of sanitation, waste removal, linen and uniform services for the Philadelphia VAMC, and participated in the solicitation and award of contracts to vendors for those services. According to the Indictment, Johnson is charged with asking for, and receiving, thousands of dollars in cash from two Florida-based companies in return for steering purchase orders and contracts to those companies several times from about July 2018 until August 2019. He is also charged with seeking a $10,000 kickback on an $84,000 contract for tree trimming and removal awarded to one of those vendors, for which Johnson had fraudulently and grossly inflated the estimate of the work to be done and the price for that work under the contract.

“The allegations here are shameful. By giving us their best, we owe our veterans the same in return. As a senior official tasked with maintaining a healthy and safe environment for the care and treatment of our nation’s veterans, Ralph Johnson had a responsibility to do that job with honesty and integrity,” said U.S. Attorney McSwain. “Rather than being concerned about serving our veterans, Johnson was allegedly concerned with serving himself by lining his own pockets at taxpayers’ expense.”

David Spilker, Special Agent in Charge at the Veterans Affairs Office of Inspector General (OIG) stated, “VA OIG will vigorously investigate alleged instances when government employees solicit and accept bribes and kickbacks from vendors and contractors who seek to obtain business with the VA. As alleged in the indictment, Johnson’s actions breached the public’s trust, undermined the integrity of VA’s operations, and besmirched the vital work that honest hardworking VA employees do every day in support of our nation’s veterans.” 

If convicted, the defendant faces a possible sentence of 45 years imprisonment, 3 years supervised release, and up to a $750,000 fine.

The case was investigated by the United States Department of Veteran Affairs, Office of Inspector General, and is being prosecuted by Assistant United States Attorney K.T. Newton.

PHILADELPHIA, PA – On September 14, 2020, United States Attorney William M. McSwain convened a press conference to announce charges against Khalif Tuggle and John Allen Kane, both of Philadelphia.  The United States Attorney’s Office stepped in to bring federal charges in both cases after the Philadelphia District Attorney’s Office failed to handle the local criminal cases appropriately.  U.S. Attorney McSwain also spoke about the ongoing escalation of violent crime in Philadelphia and its causes.  He highlighted several local cases in which the defendants received shockingly lenient plea deals from the Philadelphia District Attorney’s Office, returned to the streets and then allegedly committed murder.  These cases highlight an undeniable pattern of cause and effect in which the application of the District Attorney’s Office’s misguided policies produce violence and tragedy.

Remarks as Prepared for Delivery

Good morning.  I am here today to announce that my Office has unsealed two criminal indictments charging two individuals, Khalif Tuggle and John Allen Kane, with committing serious federal crimes on the streets of Philadelphia.  Both cases are part of my Office’s continuing efforts to fight the tidal wave of violent crime in the City that is the unfortunate result of local criminal justice policies that coddle violent criminals.  These policies create a culture of lawlessness; they leave criminals emboldened; and they have inevitable consequences – one of which is a murder rate in Philadelphia that is the highest it has been in nearly 15 years.

The two indictments announced today are the latest efforts by my Office to serve as a counterweight to this chaos.  First, Khalif Tuggle, age 28, has been charged in a three-count indictment with carjacking, use of a firearm in furtherance of a crime of violence, and murder in the course of using a firearm, all stemming from his alleged robbery, carjacking, and brutal murder of Thomas Petersen on January 24, 2017.  Tuggle allegedly fired a shot into Mr. Petersen’s chest, dragged him out of the car, threw him on the road, robbed him, and left him for dead while Mr. Petersen was screaming in pain.  Tuggle fled the scene in Mr. Petersen’s car, and Mr. Petersen died at Temple University Hospital after two Philadelphia Police Officers rushed him there from the crime scene.  If convicted on each count, Tuggle faces a statutory maximum sentence of life imprisonment.

Second, John Allen Kane, age 53, has been charged in a one-count Indictment with possession of a firearm by a convicted felon on January 17, 2018.  Kane allegedly possessed this firearm while on probation for committing his second homicide in Philadelphia.  If convicted, Kane faces a statutory maximum term of imprisonment of 10 years.

I would like to thank our law enforcement partners whose investigative work made these indictments possible.  From the Bureau of Alcohol, Tobacco, Firearms and Explosives, which investigated both cases, I want to thank John Schmidt, Special Agent in Charge of ATF’s Philadelphia Field Division, and the law enforcement agents who investigated the cases. I also want to thank the Philadelphia Police Department for its assistance in both cases.  And thank you to Sal Astolfi, the Chief of the Violent Crime unit in my Office, and Assistant United States Attorneys Joseph Labar, Michael Miller, and Tom Zaleski, who are prosecuting these important cases. 

Both the Tuggle and the Kane cases are prime examples of how local criminal justice policies benefit violent criminals and harm crime victims.  After Mr. Petersen was murdered in cold blood on January 24, 2017, the Philadelphia Police charged Tuggle with first degree murder, firearms offenses, theft, and receipt of stolen property, and he was held without bail until trial.  As Tuggle sat in jail awaiting trial for first degree murder, he caught a big break – in January 2018, there was a change in leadership in the District Attorney’s Office in Philadelphia: the Krasner administration took over.  This new administration subsequently agreed not to prosecute Tuggle for either first or second degree murder, thus eliminating the possibility that he would serve a life sentence for killing Mr. Petersen.  Instead, the District Attorney’s Office permitted Tuggle to plead guilty to third degree murder, ostensibly because he agreed to cooperate with investigators to identify and prosecute his accomplice.

But the plea negotiations were a farce.  For one thing, the District Attorney’s Office agreed to drop the most serious charges without bothering to negotiate a “floor” for the sentence -- a minimum term of years that Tuggle would be required to serve for murdering Mr. Petersen.  And incredibly, the District Attorney’s Office agreed to the deal without knowing whether the information Tuggle supposedly would provide would prove helpful, and without ensuring that Tuggle would actually identify his accomplice as promised.

In the end, he didn’t – and his accomplice remains on the loose.  In other words, Tuggle got a huge break for nothing.  The judge sentenced Tuggle to 13.5-27 years for third degree murder, and he will be eligible for parole in the state system in approximately ten years.  That sentence is a miscarriage of justice.  It is a cruel slap in the face to Mr. Petersen’s family – including his mother, Linda, and his sister, Heather, who are with us today for this announcement.  It is something that I am determined to fix.

If convicted on the federal charges, Tuggle faces the very real possibility of life in prison with no possibility of parole.

As for John Kane, as noted in publicly filed documents, the Philadelphia Police recovered a firearm in his possession after a traffic stop and placed him under arrest.  As a convicted felon, Kane was prohibited from possessing any firearms.  But he was not just any convicted felon – at the time of the traffic stop, he was on probation for committing his second homicide in Philadelphia.  But the District Attorney’s Office saw fit to voluntarily dismiss the charges against Kane on a technicality, and he walked free.  That is, until now: Kane has been arrested on the federal charge and is in federal custody.     

Armed murderers cannot be permitted to walk the streets of Philadelphia in the name of criminal justice reform.  The staggering homicide and shooting rates in Philadelphia are proof that the District Attorney’s radical experiment has failed.  Homicides, shootings, and serious violent crime have all skyrocketed in 2020 – from already intolerable levels that existed in 2019 and 2018.  There have been 316 homicides since the beginning of the year – a 32% increase as compared to this time last year.  The violence has been pervasive and it is destroying the soul of the City.  In the last month alone, 48 people have been killed and hundreds have been shot.  And the average age of the shooting victims is getting younger.  Tragically, the vast majority of the victims are racial minorities.  I can’t say it any clearer: the District Attorney’s policies come at the expense of minority communities. 

We can draw a straight line from these policies to the carnage on the streets.  My Office has examined the circumstances underlying many of the recent murder cases in the City and the inescapable conclusion is that a great number of these murders were made possible by the District Attorney’s Office’s willingness – indeed, its eagerness – to offer sweetheart plea deals to violent defendants.  Deals that allowed those defendants to quickly get back out on the street and kill.

On this adjacent chart are 10 examples of this sad state of affairs:

• In October 2018, Michael Banks was arrested and charged with multiple counts, including a felony gun charge for possessing an unlicensed firearm.  Banks also had prior convictions, and yet in February 2019, the Philadelphia District Attorney’s Office gave him a plea deal in which the felony gun charge was dismissed, and he received only 3-9 months of incarceration for a misdemeanor gun charge and immediately went back out on the street.  Banks now stands accused of murdering a seven year-old boy in West Philadelphia last month, who was playing with a toy on his family’s porch when two groups of men began firing upon one another and shot the boy in the head.

• In November 2017, Francisco Reyes was arrested and charged with multiple drug offenses.  Despite his prior convictions – which include aggravated assault, robbery, and multiple other prior drug offenses – Reyes was given a plea deal in July 2018 in which the felony drug charge was dismissed and he received probation.  Only two days after he pleaded guilty and received probation, on July 5, 2018, Reyes allegedly murdered a 25 year-old man in Kensington.

• In September 2018, Jerome Martin was arrested and charged with possession of a firearm by a felon, which is a felony.  He had previously been convicted of felony drug dealing and possessing drug paraphernalia.  Somehow, Martin was given a plea deal in June 2019 in which he was sentenced to house arrest.  While on house arrest, in August 2019, he allegedly broke into a house and murdered a 23 year-old man, who is survived by many, including his newborn baby.

• In February 2018, Keith Garner was arrested and charged with simple assault.  Despite having multiple prior felony convictions, Garner was given a plea deal in March 2018 to probation.  In November 2018, Garner executed four people in a West Philadelphia basement, and has been convicted of all four murders.

• In March 2017, Timothy Sherfield was arrested and charged with numerous violent crimes, including two counts of aggravated assault, two counts of robbery, burglary, possession of an unlicensed firearm, and many additional misdemeanors.  In February 2018, he was given a plea deal in which the vast majority of these charges were dropped. Sherfield received a minimum sentence of less than one year.  This enabled him to be out on the streets and murder a 23 year-old man in April 2019.  The victim was inside a mini market at the time that he was gunned down in cold blood.

• In May 2017, Tariq Gant was arrested and charged with a variety of violent crimes, including aggravated assault and firearm offenses.  But in February 2018, he was given a plea deal in which the vast majority of the charges were dropped.  Gant pleaded guilty to simple assault and resisting arrest, and received probation.  In September 2018, he allegedly murdered a 19 year-old young man in Germantown.  The victim is survived by his mother, who in addition to losing this son, also tragically lost another son who was gunned down earlier this year.

• In October 2017, Jose Lugo was arrested and charged with felony drug offenses.  Despite having previously been convicted of numerous felony drug crimes and carrying a firearm without a license, he was given a plea deal in September 2018 in which he was immediately released.  Just months later, in February 2019, Lugo allegedly murdered a 24 year-old man.

• In March 2018, Byron Taylor was arrested and charged with multiple offenses, including felony possession of an unlicensed firearm.  Despite his prior convictions, he was given a plea deal in May 2019 in which the felony gun charge was dismissed and he received probation.  Almost immediately, in July 2019, Taylor allegedly shot and killed a 35 year-old man in Germantown.

• In January 2018, Rasheed Malcolm was arrested and charged with multiple offenses, including aggravated assault, simple assault, and recklessly endangering another person.  Despite his prior felony drug distribution convictions, he was given a plea deal in which all of these charges were dropped, and he was permitted to plead guilty to the summary offense of disorderly conduct.  By the end of the year, in December 2018, Malcolm allegedly murdered a 27 year-old man in the 6200 block of Market Street.

• In June 2018, Maalik Jackson-Wallace was arrested and charged with multiple offenses, including felony possession of a firearm without a license.  The District Attorney’s Office then selected him to participate in its Accelerated Rehabilitative Disposition program (ARD) – a diversion program in which defendants can avoid a conviction if they comply with certain conditions.  This diversion allowed Jackson-Wallace to walk away free.  He was then arrested with a second illegal firearm while in the program, but the District Attorney’s Office did not move for him to be taken out of ARD at that time.  In June 2019, Jackson-Wallace allegedly murdered a 26 year-old man in the Frankford section of Philadelphia.    

Each of these cases is its own separate tragedy, with terrible ramifications that extend in many directions.  And these ten cases only scratch the surface of the devastation that is being wrought by the District Attorney’s policies.  The cases are merely examples – there are many others like these, in which violent defendants who should not be on the street are committing murder or other violent crimes.  Furthermore, these are cases that have led to murder arrests.  Most homicides in the City do not even result in an arrest, so it is chilling to think of the number of unsolved murders that have likely been committed by violent criminals who do not belong on the street – and are only there because the District Attorney put them there.

As I have said before, everybody in Philadelphia deserves to live in a safe neighborhood – regardless of race or income level.  We won’t get there by treating violent criminals like they are victims, or by undermining law enforcement.  We must have the courage and the will to enforce the law – and to hold criminals accountable.  The future of our City depends upon it.  We must put the law-abiding residents of this City first.  Thank you.

PHILADELPHIA – United States Attorney William M. McSwain announced that Khalif Tuggle, 28, and John Allen Kane, 53, both of Philadelphia, PA, were arrested and charged by federal Indictment after their local cases were mishandled by the District Attorney’s Office. In a press conference outside the federal courthouse, U.S. Attorney McSwain discussed the charges against Tuggle and Kane in the context of efforts by his Office to fight the tidal wave of violent crime that has engulfed Philadelphia in 2020.

Tuggle has been charged in a three-count Indictment with carjacking, use of a firearm in furtherance of a crime of violence, and murder in the course of using a firearm, all stemming from his alleged robbery, carjacking, and brutal murder of Thomas Petersen on January 24, 2017. Tuggle allegedly fired a shot into Mr. Petersen’s chest, dragged him out of the car, threw him on the road, robbed him, and left him for dead while Mr. Petersen was screaming in pain. Tuggle fled the scene in Mr. Petersen’s car, and Mr. Petersen died at Temple University Hospital after two Philadelphia Police Officers rushed him there from the crime scene.

Kane has been charged in a one-count Indictment with possession of a firearm by a convicted felon on January 17, 2018. Kane allegedly possessed this firearm while on probation for committing his second homicide in Philadelphia.

U.S. Attorney McSwain explained thatthese cases are prime examples of how local criminal justice policies benefit violent criminals and harm crime victims. In the Tuggle case, the District Attorney’s Office agreed not to prosecute the defendant for either first or second degree murder in exchange for information on Tuggle’s accomplice that never materialized – thus eliminating the possibility that Tuggle would serve a life sentence for killing Petersen. Under his current sentence, Tuggle would be eligible for parole in approximately only ten years. If convicted of the federal charges, he faces the possibility of life imprisonment.

In the Kane case, the Philadelphia Police recovered a firearm in the defendant’s possession after a traffic stop and placed him under arrest. As a convicted felon, Kane was prohibited from possessing any firearms. But he was not just any convicted felon – at the time of the traffic stop, he was on probation for committing his second homicide in Philadelphia. But the District Attorney’s Office saw fit to voluntarily dismiss the charges against Kane on a technicality and he walked free. That is, until now: Kane has been arrested on the federal charge and is in federal custody.

“The federal cases against defendants Tuggle and Kane are the latest efforts by my Office to serve as a counterweight to the chaos in Philadelphia created by local criminal justice policies that coddle violent criminals,” said U.S. Attorney McSwain. “These policies create a culture of lawlessness; they leave criminals emboldened; and they have inevitable consequences – one of which is a murder rate in Philadelphia that is the highest it has been in nearly 15 years.”

U.S. Attorney McSwain went on to detail ten additional cases that are examples of shockingly lenient plea deals given out by the Philadelphia District Attorney’s Office where the defendant was subsequently arrested for murder.

• In October 2018, Michael Banks was arrested and charged with multiple counts, including a felony gun charge for possessing an unlicensed firearm. Banks also had prior convictions, and yet in February 2019, the Philadelphia District Attorney’s Office gave him a plea deal in which the felony gun charge was dismissed, and he received only 3-9 months of incarceration for a misdemeanor gun charge and immediately went back out on the street. Banks now stands accused of murdering a seven year-old boy in West Philadelphia last month, who was playing with a toy on his family’s porch when two groups of men began firing upon one another and shot the boy in the head.

• In November 2017, Francisco Reyes was arrested and charged with multiple drug offenses. Despite his prior convictions – which include aggravated assault, robbery, and multiple other prior drug offenses – Reyes was given a plea deal in July 2018 in which the felony drug charge was dismissed and he received probation. Only two days after he pleaded guilty and received probation, on July 5, 2018, Reyes allegedly murdered a 25 year-old man in Kensington.

• In September 2018, Jerome Martin was arrested and charged with possession of a firearm by a felon, which is a felony. He had previously been convicted of felony drug dealing and possessing drug paraphernalia. Somehow, Martin was given a plea deal in June 2019 in which he was sentenced to house arrest. While on house arrest, in August 2019, he allegedly broke into a house and murdered a 23 year-old man, who is survived by many, including his newborn baby.

• In February 2018, Keith Garner was arrested and charged with simple assault. Despite having multiple prior felony convictions, Garner was given a plea deal in March 2018 to probation. In November 2018, Garner executed four people in a West Philadelphia basement, and has been convicted of all four murders.

• In March 2017, Timothy Sherfield was arrested and charged with numerous violent crimes, including two counts of aggravated assault, two counts of robbery, burglary, possession of an unlicensed firearm, and many additional misdemeanors. In February 2018, he was given a plea deal in which the vast majority of these charges were dropped. Sherfield received a minimum sentence of less than one year. This enabled him to be out on the streets and murder a 23 year-old man in April 2019. The victim was inside a mini market at the time that he was gunned down in cold blood.

• In May 2017, Tariq Gant was arrested and charged with a variety of violent crimes, including aggravated assault and firearm offenses. But in February 2018, he was given a plea deal in which the vast majority of the charges were dropped. Gant pleaded guilty to simple assault and resisting arrest, and received probation. In September 2018, he allegedly murdered a 19 year-old young man in Germantown. The victim is survived by his mother, who in addition to losing this son, also tragically lost another son who was gunned down earlier this year.

• In October 2017, Jose Lugo was arrested and charged with felony drug offenses. Despite having previously been convicted of numerous felony drug crimes and carrying a firearm without a license, he was given a plea deal in September 2018 in which he was immediately released. Just months later, in February 2019, Lugo allegedly murdered a 24 year-old man.

• In March 2018, Byron Taylor was arrested and charged with multiple offenses, including felony possession of an unlicensed firearm. Despite his prior convictions, he was given a plea deal in May 2019 in which the felony gun charge was dismissed and he received probation. Almost immediately, in July 2019, Taylor allegedly shot and killed a 35 year-old man in Germantown.

• In January 2018, Rasheed Malcolm was arrested and charged with multiple offenses, including aggravated assault, simple assault, and recklessly endangering another person.  Despite his prior felony drug distribution convictions, he was given a plea deal in which all of these charges were dropped, and he was permitted to plead guilty to the summary offense of disorderly conduct. By the end of the year, in December 2018, Malcolm allegedly murdered a 27 year-old man in the 6200 block of Market Street.

• In June 2018, Maalik Jackson-Wallace was arrested and charged with multiple offenses, including felony possession of a firearm without a license. The District Attorney’s Office then selected him to participate in its Accelerated Rehabilitative Disposition program (ARD) – a diversion program in which defendants can avoid a conviction if they comply with certain conditions. This diversion allowed Jackson-Wallace to walk away free. He was then arrested with a second illegal firearm while in the program, but the District Attorney’s Office did not move for him to be taken out of ARD at that time. In June 2019, Jackson-Wallace allegedly murdered a 26 year-old man in the Frankford section of Philadelphia.

“Convicted felons who carry firearms pose a serious risk to public safety,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division. “ATF will continue to aggressively pursue these investigations and strive to be ‘no better partner’ to our local, state and federal colleagues. Thanks to the diligent work of the investigators and detectives of the Philadelphia Police Department, these individuals will be brought to justice preventing another potential violent crime or death. I would like to thank the U.S. Attorney's Office for their guidance and work prosecuting these cases.”

If convicted on each count, Tuggle faces a total maximum sentence of life imprisonment, five years of supervised release, a $750,000 fine, and a $300 special assessment; Kane faces a statutory maximum term of imprisonment of 10 years, three years of supervised release, a $250,000 fine, and a $100 special assessment.

Both cases were investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives. The case against Tuggle is being prosecuted by Assistant United States Attorneys Joseph LaBar and Michael Miller, and the case against Kane is being prosecuted by Assistant United States Attorney Thomas Zaleski.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that three men, Andre Michael Felts, 32, Kevin Michael Francis, 60, and Ryan Keel, 39, all of Philadelphia, PA, were charged by Indictment for their roles in a sex trafficking operation that exploited numerous minor children from 2016 through 2017. Felts was detained pending trial this afternoon, joining his co-defendants, who are also in federal custody. All three defendants were charged with one count of conspiracy to sex traffic a minor, while Felts and Francis were also each charged with four counts of sex trafficking a minor.

The Indictment alleges that Felts ran a prostitution ring that recruited and enticed young girls, including one who was only fifteen years old, to engage in commercial sex acts; harbored the victims at various residences for that purpose; transported and provided the victims to males who purchased the commercial sex acts; and collected a portion of the proceeds. Further, Keel and Felts allegedly had explicit discussions via Facebook Messenger about the commercial sex acts occurring at the residences. At least one of the victims was also a victim of physical violence during the operation of the trafficking ring: according to public filings, Felts pulled her from a vehicle and repeatedly stomped on her.

“The allegations against these three men are vile and disturbing. I am gratified that the defendants are all now off the streets and in custody pending trial on these charges,” said U.S. Attorney McSwain. “Working with our federal partners, we will do all that we can to keep criminals who sell the bodies of children for their own profit securely behind bars so they can do no more harm.”

“To advertise underage girls for sex, to willfully pimp them out for profit, is heinous,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “Those who so victimize vulnerable kids do untold physical and emotional harm. Make no mistake, the Philadelphia Child Exploitation Task Force is working each and every day to lock up sex traffickers and other predators preying on innocent children.”

This investigation is a 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

If convicted, each defendant faces a maximum possible sentence of lifetime imprisonment.

The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Sara Solow and Trial Attorney Jessica Urban of the Department of Justice Criminal Division’s 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 – United States Attorney William M. McSwain announced that Aleksandar Kavaja, 27, of the Balkan country Montenegro, pleaded guilty before United States District Court Judge Harvey Bartle III to charges of conspiracy to possess with intent to distribute 5 kilograms or more of cocaine on a vessel subject to the jurisdiction of the United States.

In 2019, Kavaja, a crew member who worked on board the shipping vessel MSC Gayane as the ship’s electrician, conspired with others to engage in bulk cocaine smuggling. On multiple occasions during the MSC Gayane’s voyage at sea, crew members, including Kavaja, helped load huge quantities of cocaine onto the ship from speedboats that approached under cover of darkness, traveling at high speeds. Crew members used the Gayane’s crane to hoist cargo nets full of packaged cocaine onto the vessel and then stashed the drugs in various shipping containers.

On June 17, 2019, federal, state, and local law enforcement agents boarded the MSC Gayane when it arrived at Packer Marine Terminal in the Port of Philadelphia and seized approximately 20 tons of cocaine on the ship -- with a street value of over $1 billion. This was one of the largest drug seizures in U.S. history.

“This momentous drug bust sent a clear message to criminals around the world that our city is not a safe harbor for their deadly drug trafficking,” said U.S. Attorney McSwain. “Prosecutors in my Office, in conjunction with our partner agencies, have been working non-stop for over a year to pursue justice in this case. And now another member of the conspiracy has been convicted and held accountable.”

“Protecting the Homeland against transnational crime is a top priority of Homeland Security Investigations,” said Brian A. Michael, Special Agent in Charge of Homeland Security Investigations Philadelphia. “Mr. Kavaja’s guilty plea is yet another example of HSI, our law enforcement partners, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania working hand in hand to safeguard our community against transnational drug smuggling.”

“Mr. Kavaja’s guilty plea is the logical result from his participation in what remains a record cocaine seizure for CBP,” said Casey Durst, CBP’s Director of Field Operations in Baltimore. “Successful prosecutions reinforce the notion that suspects caught smuggling illegal drugs through our communities face severe, life-changing consequences.”

The defendant faces a maximum possible sentence of lifetime imprisonment.

The case is being investigated by United States Homeland Security Investigations and the United States Customs and Border Protection, together with a multi-agency team of federal, state, and local partners.

PHILADELPHIA – United States Attorney William M. McSwain announced that Vanessa O’Rourke, 32, formerly of Harleysville, PA, and last known to be residing in Queensland, Australia, was charged by Indictment with wire fraud in connection with falsely stating that she had cancer in order to solicit donations, including on gofundme.com. The Indictment was previously under seal and was unsealed earlier today.

The Indictment alleges that from approximately October 2015 through July 2016, O’Rourke falsely represented to others that she had a terminal form of brain cancer known as “Glioblastoma.” The defendant also allegedly lied about needing to raise money to travel to Australia to receive experimental cancer treatments. Based on these and other allegedly false representations, more than 140 people donated a total of $11,740 to O’Rourke’s fundraising campaign through gofundme.com, a legitimate online fundraising platform. The Indictment also alleges that while O’Rourke did travel to Australia, she did not receive any cancer treatment while she was there and instead used the donated money for personal expenses, including a variety of leisure activities.

“The allegations in this case are nauseating,” said U.S. Attorney McSwain. “O’Rourke is charged with preying upon the kindness and generosity of good people who wished to help those in need. As alleged, there was no need here – only lies, greed and callous manipulation.”

“Misleading people about a significant medical diagnosis in order to take advantage of their kind hearts and open wallets is reprehensible,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “As alleged, Vanessa O’Rourke scammed friends and family alike, convincing them to donate money toward her supposed medical care. Instead, those funds supported her lifestyle and leisure. When someone commits such financial fraud, the FBI and our law enforcement partners will work to hold them accountable.”

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

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

Three Philadelphia men were charged, by a federal grand jury, in an indictment unsealed today in the Eastern District of Pennsylvania for their roles in a sex trafficking operation that exploited numerous minors from 2016 through 2017.

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 Michel J. Driscoll of the FBI’s Philadelphia Field Division made the announcement.

Andre Michael Felts, aka “Dre” and “Plug,” 32, and Kevin Michael Francis, aka “Kev,” 60, were each charged with one count of conspiracy to sex traffic a minor and four counts of sex trafficking a minor.  Ryan Keel, 39, was charged with conspiracy to sex traffic a minor.

The indictment alleges that Felts ran a prostitution ring that recruited and enticed young females, including minors, to engage in commercial sex acts; harbored the victims at various residences for that purpose; transported and provided the victims to males who purchased the commercial sex acts; and collected a portion of the proceeds.

The charges and allegations contained in an indictment are merely accusations.  The defendants are presumed innocent unless and until proven guilty beyond a reasonable doubt in a court of law.

Trial Attorney Jessica Urban of the Criminal Division’s Child Exploitation and Obscenity Section (CEOS) and Assistant U.S. Attorney Sara Solow of the Eastern District of Pennsylvania are prosecuting the case.  The FBI’s Philadelphia Field Division is investigating the case and received significant assistance from the Philadelphia Police Department. 

This investigation was a 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.

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 that Specialty Disposal Services, Inc., a controlled substance disposal company with its principal place of business in New Jersey, will pay $137,500 and enter into an administrative memorandum of agreement with the Drug Enforcement Administration to resolve allegations that the company negligently failed to complete required records regarding the disposal of certain controlled substances.

Specialty Disposal Services (SDS) is registered with the DEA as a reverse distributor. The settlement announced today resolves allegations that SDS negligently failed to make and keep records required by the Controlled Substances Act for reverse distributors arising from SDS’s transportation of controlled substances to a third-party facility in Morrisville, PA. In particular, the settlement resolves allegations that SDS negligently failed to properly complete the DEA form requiring verification that SDS’s employees witnessed the destruction of the controlled substances, which ultimately led to some of those controlled substances being subject to diversion by employees of the third-party facility. There are no allegations, however, that SDS was aware of or involved in the diversion. The settlement resolves liability for SDS’s record-keeping from January 9, 2017 through September 30, 2018.

In addition to the $137,500 civil penalty, SDS entered into an administrative agreement with the DEA, in which it agreed to various compliance and monitoring measures such as ensuring its compliance with these regulatory obligations. SDS and the third-party facility cooperated with the government’s investigation.

“The accountability and record-keeping requirements imposed by the DEA for companies that handle controlled substances are critical in preventing diversion,” said U.S. Attorney McSwain. “This civil settlement acknowledges the important responsibilities that all controlled substance disposal companies have to comply with those requirements and to do their part to prevent controlled substances from falling into the wrong hands.”

“Reverse distributors like Specialty Disposal Services play an important role in the closed distribution system of pharmaceutical controlled substances,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division. “As such, their observation and documentation of the proper disposal of these same substances are essential to their responsibilities under the Controlled Substances Act.”

The civil investigation was conducted by the Philadelphia Field Division of the Drug Enforcement Administration. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano handled the investigation and settlement.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Melissa Madera, 27, of Reading, PA pleaded guilty before United States District Court Judge Joseph F. Leeson, Jr. to multiple child exploitation and pornography offenses.

In August 2019, the defendant was charged by Indictment with two counts of sex trafficking minors, and one count each of distribution, receipt, and possession of child pornography. The charges stem from Madera’s trafficking of two children, 15-year-old and 17-year-old girls, from about August until October 2017. Madera forced the girls to engage in commercial sex for her own financial gain, and also plied the minors with drugs like Ecstasy and cocaine to ensure their compliance. Sometimes the girls would not make it to school the following day because they had been given so many drugs the previous night.

Madera also obtained a sexually explicit image of one of the girls and used it in a commercial sex trafficking website, advertising the minor for commercial sex acts using locations like the Quality Inn in Wyomissing, PA, and the Days Inn, Kleins’ Motel and Roadway Inn, all in Reading, PA. The defendant would rent two rooms at the hotel: one room was for the commercial sex acts and Madera would stay in the other after meeting the sex buyers and charging a fee of $200 per hour. After the 15-year-old’s mother reported her missing to the Reading Police Department in October 2017, Madera confronted the girl and assaulted her, stating “This is what you get for being a rat.”

“Sex trafficking is a serious problem in the Eastern District of Pennsylvania and we are committed to rooting it out,” said U.S. Attorney McSwain. “Here, Madera advertised children like objects to be sold online and gave them drugs so that they weren’t in their right minds. This is a parent’s worst nightmare.”

“Predators come in many different forms,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Make no mistake, Melissa Madera fits that bill. She has now admitted to selling minors for sex, drugging them to maintain control of their minds and bodies. Such despicable treatment does serious lasting harm. The FBI is committed to finding and freeing trafficking victims and holding their tormentors accountable.”

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Sherri A. Stephan.

PHILADELPHIA – United States Attorney William M. McSwain announced that Keystone Health Plan East, Inc. and QCC Insurance Company, Inc. (collectively referred to as “KHPE/QCC”), on behalf of parent company Independence Blue Cross, LLC (“IBC”), operator of Medicare Advantage plans, have agreed to pay a total of $2,250,000 plus interest to resolve False Claims Act allegations of incorrectly calculating anticipated plan costs, resulting in inflated Medicare Advantage plan bids to the Centers for Medicare and Medicaid Services (“CMS”).

IBC operates a number of Medicare Advantage plans for Medicare beneficiaries, and is reimbursed by CMS, which pays IBC’s subsidiaries KHPE/QCC. Medicare Advantage plans are also sometimes called “Part C” or “MA Plans,” and include bundled coverage for Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance), and usually Medicare prescription drugs (Part D). KHPE/QCC submits annual bids that include anticipated costs for each Medicare Advantage plan to be offered the following year. The government alleges that KHPE/QCC incorrectly calculated its actual prior costs in the financial plan bids submitted to CMS for contract years 2009 and 2010. The incorrect and inflated prior cost data resulted in higher base amounts in KHPE/QCC’s Medicare Advantage plan bids, causing CMS to pay inflated reimbursement to KHPE/QCC. The United States contends that these claims were false in light of defendant’s conduct.

This settlement resolved a lawsuit filed under the False Claims Act in the U.S. District Court for the Eastern District of Pennsylvania by an employee of IBC. Under the qui tam (or whistleblower) provisions of the False Claims Act, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery. The False Claims Act also permits the government to intervene and take over the lawsuit, which occurred in this case. The whistleblower in this case, Mr. Eric Johnson, will receive $499,438.05 as his share of the recovery.

“Investigating credible allegations of fraud against federal healthcare programs saves taxpayer dollars, especially in complex Medicare Advantage Part C cases such as this, when the alleged conduct has potential implications for Medicare beneficiaries and drives up the cost of Medicare Advantage plans,” said U.S. Attorney McSwain. “Medicare Advantage plan operators must know the CMS contracting rules, and the proper presentation of claims costs required by those programs, and abide by them.”

“Today’s settlement represents significant teamwork and shows our commitment to investigating all potential allegations of fraud against the Medicare Part C Programs, no matter how complex,” said Maureen R. Dixon, Special Agent in Charge of the Office of the Inspector General, Department of Health and Human Services. “We will continue to partner with the United States Attorney’s Office to evaluate allegations brought under the False Claims Act to ensure the integrity of Medicare programs.”

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

This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Pennsylvania, in conjunction with the U.S. Department of Health and Human Services Office of Inspector General. The lawsuit is captioned United States ex rel. Eric Johnson v. Independence Blue Cross, Civ. Action No. 10-CV-1520 (E.D. Pa.). Assistant U.S. Attorneys Viveca D. Parker and Eric D. Gill handled the case in the Eastern District of Pennsylvania, with assistance from auditor Dawn Wiggins.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Justin O’Brien, 33, of Philadelphia, PA, was sentenced to 10 years and 10 months in prison, three years of supervised release, and ordered to pay $7,244 in restitution by United States District Court Judge Nitza I. Alejandro-Quinones for armed bank robbery.

In December 2019, O’Brien pleaded guilty to committing an armed bank robbery on March 12, 2019, taking $1,260 from an employee of Firstrust Bank on Lancaster Avenue in Bryn Mawr, PA. The defendant also admitted to committing an assault by the use of a dangerous weapon – namely, a facsimile firearm (pellet gun).

As part of the plea agreement, O’Brien also acknowledged his guilt for five other bank robberies, and agreed that the Court could sentence him as if he had been convicted of these crimes: 1) the October 29, 2018 bank robbery of the Tompkins VIST Bank on Verree Road in Philadelphia, resulting in a loss of approximately $1,880; 2) the November 9, 2018 bank robbery of the M&T Bank on Frankford Avenue in Philadelphia, resulting in a loss of approximately $451; 3) the March 1, 2019 armed bank robbery of the Firstrust Bank on Krewstown Road in Philadelphia, resulting in a loss of approximately $975; 4) the March 8, 2019 armed bank robbery of the Tompkins VIST Bank on West Lancaster Avenue in Radnor Township, resulting in a loss of approximately $600; and 5) the March 18, 2019 bank robbery of the PNC Bank on Market Street in Philadelphia, resulting in a loss of approximately $2,078.

“O’Brien’s bank robbery spree terrorized innocent employees and showed a contempt for the law,” U.S. Attorney McSwain. “But federal crime means federal time, and now O’Brien has earned a long stint behind bars. My Office’s anti-violence public awareness campaign warns against the serious consequences of committing violent crime in the Eastern District of Pennsylvania. You can learn more about this campaign on our District website.”

“Thanks to the hard work of the Philadelphia FBI and its local partners, Justin O’Brien will no longer be in a position to terrorize the community,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “While today’s sentence cannot undo the harm O’Brien caused his victims, it sends a message that if you commit a violent crime, the FBI and our law enforcement partners will work tirelessly to bring you to justice.”

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, the Lower Merion Township Police Department, the Philadelphia Police Department, and the Radnor Township Police Department. It is being prosecuted by Assistant United States Attorney Thomas M. Zaleski.

PHILADELPHIA – United States Attorney William M. McSwain announced that Antoine Clark, 31, of Philadelphia, PA, was sentenced to 25 years in prison, 10 years of supervised release, and ordered to pay a $1,700 fine by United States District Court Judge Gerald J. Pappert for multiple narcotics offenses related to his role in leading an almost around-the-clock drug delivery service for several years in South Philadelphia.

Clark and his codefendants, Gerald Spruell, 33, and Daniel Robinson, 37, were convicted after more than two weeks at trial of charges that included conspiracy to distribute controlled substances, and distribution or possession with intent to distribute crack cocaine and heroin.

Between 2014 and 2016, the defendant and his co-conspirators, including Spruell, Robinson, and several others who pleaded guilty to similar charges before trial, were known as the “Friends” and the “7th Street” drug trafficking group. Members of the group delivered crack cocaine and heroin to customers along the 7th Street corridor in South Philadelphia using a shared drug phone to take orders and communicate with customers; they would pass the phone off in shifts to keep their operation going almost 24 hours per day. During the course of the investigation, FBI agents intercepted phone calls and text messages from the phone, which documented the defendants’ illicit activities.

“Drug trafficking is an insidious, dangerous activity that ruins neighborhoods,” said U.S. Attorney McSwain. “Antoine Clark was an expert at it, and now he will pay the price -- to the tune of 25 years. That is the sort of just punishment that awaits drug dealers in federal court. My Office is determined to protect communities ravaged by the drug trade by investigating and destroying drug trafficking organizations like the 7th Street organization.”

“The FBI is committed to keeping communities safe from predators like Antoine Clark,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division.  “Today’s sentence sends the message to drug organizations and gang members that if you traffick in illegal drugs, we will hunt you down and bring you to justice.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Matthew Newcomer and Jason Grenell.

PHILADELPHIA – United States Attorney William M. McSwain announced that Lamar Tindall, 45, of Philadelphia, PA, was sentenced to 12 years in prison, three years of supervised release, and was ordered to pay $2,955 in restitution by United States District Court Judge Joshua D. Wolson for robbing three separate BB&T Banks over a period of ten days in May 2019.

In January 2020, Tindall pleaded guilty to three counts of bank robbery, arising from his robberies of BB&T Banks in Philadelphia on May 14, 2019; Feasterville on May 17, 2019; and King of Prussia on May 23, 2019. During each robbery, Tindall handed a threatening note to a teller in order to receive money. For example, during the robbery on May 14, Tindall handed the frightened teller a note that read, “all 50’s and 100’s or ill shoot.” Tindall made off with a total of $3,650 as a result of these robberies. Philadelphia Police Department officers later arrested Tindall, who confessed to his crimes.

Tindall has a long rap sheet, which includes convictions for drug distribution offenses in 1999 and 2010, and a conviction for robbery of property of the United States in 2002. Because of his criminal history, the Court found Tindall to be a “Career Offender” under the U.S. Sentencing Guidelines.

“Robbing any type of business – whether it’s a bank, a corner store, or anything in between – is a serious federal offense that can carry stiff penalties, as Tindall can now attest,” said U.S. Attorney McSwain. “And even the threat of having and using a firearm during a robbery, regardless of whether or not you actually have one, will multiply the penalty. I want people to know that committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the point of our anti-violence public awareness campaign. You can learn more about this campaign on our District website.”

“Serial bank robbers like Lamar Tindall terrorize our communities,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division.  “I would like to thank our law enforcement partners who assisted in bringing Mr. Tindall to justice and making our community safer.”

The case was investigated by the Federal Bureau of Investigation, with assistance from the Abington Township Police Department, the Conshohocken Police Department, the Lower Southampton Township Police Department, the Philadelphia Police Department, and the Upper Merion Township Police Department. The case is being prosecuted by Assistant United States Attorneys Lauren R. Baer and Kevin Jayne.

PHILADELPHIA – United States Attorney William M. McSwain announced that Jennifer D’Hulster, 37, of Coatesville, PA; Zachary Gathercole, 30, of Sadsburyville, PA; Ashley Harrington, 30, of West Chester, PA; and Anthony Schweitzer, 20, also of Coatesville, PA, were charged by Complaint with fraudulently obtaining and attempting to obtain unemployment benefits related to COVID-19 emergency relief funds to which they were not entitled. Defendant D’Hulster was arrested and taken into custody this morning; the other three defendants were already in custody. All four defendants made their initial appearances in federal court today.

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (CARES Act) was signed into law. The CARES Act created the Pandemic Unemployment Assistance  (PUA) program, which provides unemployment benefits to individuals not eligible for regular unemployment compensation or extended unemployment benefits, including individuals, families, and businesses affected by the COVID-19 pandemic. Eligibility to receive weekly PUA benefits was predicated on the applicant’s unemployment for reasons related to the pandemic; however, the applicant must also have been able to work each day and, if offered a job, the applicant must have been able to accept it. Once the applicant was approved to receive benefits, the applicant was required to submit weekly certifications that indicated that he or she: was ready, willing and able to work each day; was seeking full time employment; did not refuse any job offers or referrals; and, had reported any employment during the week and the gross pay or other payments received.

The Complaint alleges that D’Hulster and Harrington assisted individuals incarcerated at Chester County Prison and other correctional institutions in fraudulent efforts to obtain Pandemic Unemployment Assistance (PUA) benefits. Harrington enabled Gathercole, who was incarcerated at Chester County Prison prior to the onset of the pandemic, to receive approximately $12,865. D’Hulster and Gathercole enabled another unidentified inmate to receive approximately $11,410 and attempted to obtain PUA benefits for another inmate. Schweitzer did not actually receive any PUA benefits, but attempted to several times. The inmates were not eligible to receive PUA benefits because they did not meet the eligibility requirements -- namely, they were not able to report to a job each day because of their incarceration.

“Sadly, fraudsters consider a national public health crisis as an opportunity to cash in,” said U.S. Attorney McSwain. “That callous attitude rips off honest taxpayers who fund relief programs and also makes it much more difficult to provide funds to those who deserve and need them. My Office will do everything in its power to ensure that coronavirus fraud scams are stopped and punished.”

“Unemployment insurance fraud has risen sharply during the COVID-19 pandemic, and investigating these types of schemes remains a priority for the Office of Inspector General. We will continue to work with our law enforcement partners to aggressively pursue allegations of criminal conduct against the Unemployment Insurance program,” said Derek Pickle, Acting Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

“At the end of March, 2020, the United States Government invested billions of dollars in helping its citizens through the pandemic,” said Postal Inspector in Charge Damon Wood.  “From the beginning, Postal Inspectors in Philadelphia, and across the country, have worked to do our part in ensuring that those investments in the American public do not fall into the hands of fraudsters and con artists.  I hope that the charges announced today serve as a deterrence to those who think that stealing or obtaining funds fraudulently from the most vulnerable amongst us, pays; it doesn’t.  As always, I want to thank the other agencies that assisted in this investigation and the United States Attorney’s Office which supported the investigation and will see the prosecution through.”

If convicted of the conspiracy and fraud in connection with emergency benefits charges, D’Hulster, Gathercole, Harrington, and Schweitzer each face up to 60 years’ imprisonment, a $2,000,000 fine, and five years of supervised release following any imprisonment.­ 

This case was investigated by the United States Department of Labor – Office of Inspector General, the United States Postal Inspection Service, and the Pennsylvania Department of Labor and Industry, assisted by Chester County Prison. The case is being prosecuted by Assistant United States Attorney Anita Eve.

Anyone with information about allegations of attempted fraud involving COVID-19 can report it by calling the Department of Justice’s National Center for Disaster Fraud Hotline at 866-720-5721 or via the NCDF Web Complaint Form at: https://www.justice.gov/disaster-fraud/ncdf-disaster-complaint-form. 

Assistant Attorney General for National Security John C. Demers and U.S. Attorney for the Eastern District of Pennsylvania William M. McSwain announced that the following defendants were indicted on charges of conspiracy, violating the International Emergency Economic Powers Act (IEEPA), and money laundering conspiracy based on their attempt to transact in sanctioned Iranian petroleum:

• Nicholas Hovan, 34, of New York, NY;
• Zhenyu Wang, aka “Bill Wang,” 39, of Dallas, TX;
• Robert Thwaites, 30, of Dallas, TX; and
• Daniel Ray Lane, 39, of McKinney, TX.

“The defendants in this case allegedly conspired to sell Iranian petroleum to a Chinese refinery in order to enrich themselves at the expense of the US Iran sanctions regime,” said Assistant Attorney General Demers.  “The defendants devised a scheme to use front companies, bribes, and false contractual documents in order to conceal their brazenly illicit activity.  We will continue to leverage all of our tools to detect and prevent individuals such as these from engaging in actions that would have harmed the national security of this nation.”

“It doesn’t get much lower than attempting to get rich by flouting the United States’ national security interests,” said U.S. Attorney McSwain. “The defendants here allegedly jeopardized the safety and security of the United States by scheming to get in bed with Iran and China.  This type of conspiracy deserves the full condemnation of my office and it has it.”

The indictment alleges that from May 2019 to February 2020, the defendants conspired in Philadelphia and elsewhere to arrange for the purchase of petroleum from the Islamic Republic of Iran, in violation of United States economic sanctions imposed on Iran, for sale to a refinery in the People’s Republic of China.  They also allegedly conspired to launder the proceeds of the sale through shell entities and offshore financial accounts to disguise the nature of the transaction.  The defendants are charged with conspiring to purchase sanctioned Iranian petroleum, to sell the petroleum to a Chinese refinery, to conceal the origin of the petroleum (including by bribing a Chinese official), and to obtain Antigua passports to open Swiss bank accounts through which the proceeds would be laundered.

In February 2020, the defendants were arrested pursuant to a criminal complaint.  As previously reported, the defendants planned two shipments of oil per month going forward, all for an expected profit of roughly $28 million-per-month.

If convicted, the defendants face a maximum possible sentence of 45 years’ imprisonment, a $1.75 million fine, a three-year term of supervised release, and a $300 special assessment.

The case was investigated by the FBI and is being prosecuted by First Assistant U.S. Attorney Jennifer Arbittier Williams and Assistant U.S. Attorney Michael J. Rinaldi and in partnership with Trial Attorney David Recker of the Department of Justice’s National Security Division, Counterintelligence and Export Control Section.

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

PHILADELPHIA – United States Attorney William M. McSwain and Assistant Attorney General for National Security John C. Demers announced that the following defendants were indicted on charges of conspiracy, violating the International Emergency Economic Powers Act (“IEEPA”), and conspiracy to commit money laundering based on their attempt to transact in sanctioned Iranian petroleum:

• Nicholas Hovan, age 34, of New York, NY;
• Zhenyu Wang, a/k/a “Bill Wang,” age 39, of Dallas, TX;
• Robert Thwaites, age 30, of Dallas, TX; and
• Daniel Ray Lane, age 39, of McKinney, TX.

The Indictment alleges that from May 2019 to February 2020, the defendants conspired in Philadelphia and elsewhere to arrange for the purchase of petroleum from the Islamic Republic of Iran, in violation of United States economic sanctions imposed on Iran, for sale to a refinery in the People’s Republic of China. They also allegedly conspired to launder the proceeds of the sale through shell entities and offshore financial accounts to disguise the nature of the transaction. More specifically, the defendants are charged with conspiring to purchase sanctioned Iranian petroleum, to sell the petroleum to a Chinese refinery, to conceal the origin of the petroleum (including by bribing a Chinese official), and to obtain Antigua passports to open Swiss bank accounts through which the proceeds would be laundered.

In February 2020, the defendants were arrested pursuant to a criminal complaint. As previously reported, the defendants planned two shipments of oil per month going forward, all for an expected profit of roughly $28 million-per-month.

“It doesn’t get much lower than attempting to get rich by flouting the United States’ national security interests,” said U.S. Attorney McSwain. “The defendants here allegedly jeopardized the safety and security of the United States by scheming to get in bed with Iran and China. This type of conspiracy deserves the full condemnation of my Office -- and it has it.”

“The defendants in this case allegedly conspired to sell Iranian petroleum to a Chinese refinery in order to enrich themselves at the expense of the US Iran sanctions regime,” said Assistant Attorney General for National Security John C. Demers.  “The defendants devised a scheme to use front companies, bribes, and false contractual documents in order to conceal their brazenly illicit activity.  We will continue to leverage all of our tools to detect and prevent individuals such as these from engaging in actions that would have harmed the national security of this nation.”

If convicted, each defendant faces a maximum possible sentence of 45 years in prison, a $1.75 million fine, a three year term of supervised release, and a $300 special assessment.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by First Assistant U.S. Attorney Jennifer Arbittier Williams and Assistant U.S. Attorney Michael J. Rinaldi, in partnership with Trial Attorney David Recker of the Department of Justice’s National Security Division, Counterintelligence and Export Control Section.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Leonardo Dan Almonte-Fernandez, 39, of Philadelphia, PA, was charged by Indictment with one count of malicious damage of a building by means of fire affecting interstate commerce, one count of the use of fire to commit another felony, and three counts of wire fraud.

According to court documents, on April 25, 2020, Almonte-Fernandez allegedly set fire to his business, Chevere Mini Market, at 1443 E. Luzerne Street in Philadelphia. The defendant, who rented the basement, first, and second floors of the building, was behind on his lease payments and had recently been cited by the Philadelphia Department of Public Health for underage tobacco sales. Following the fire, he allegedly submitted fraudulent claims to State Farm Fire and Casualty Company seeking $200,000 in insurance proceeds for damages resulting from the fire, for which he claimed no involvement.

“As alleged in the Indictment, Almonte-Fernandez has a brazen disrespect for the law – and for the safety of his neighbors in this densely-populated residential area,” said U.S. Attorney McSwain. “He put other people’s homes and lives at risk, and then attempted to steal insurance money. Arson is a despicable crime. Together with our federal and local partners, we are committed to doing everything possible to punish and prevent it.”

“Arson is a dangerous crime and a very real threat to our community,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division. “We routinely work with our partners from the Philadelphia Police Department and Fire Marshal’s Office to build these complex and violent arson cases. Rest assured, ATF along with our law enforcement partners who round out our Arson and Explosives Task Force is dedicated to seeking justice against those who use fire as a weapon.”

“The Philadelphia Fire Marshals Office remains committed to investigating acts of arson throughout the City. We are grateful to the US Attorney’s Office and all of our partners for their ongoing help and support,” said Deputy Chief Fire Marshal Dennis J. Merrigan.

If convicted, the defendant faces a maximum possible sentence of 100 years’ imprisonment, a 10-year mandatory minimum term of imprisonment, up to three years’ supervised release, a $1.25 million fine, and a $500 special assessment.

The case was investigated by the Bureau of Alcohol, Tobacco, Fire Arms and Explosives Arson and Explosives Task Force, the Philadelphia Fire Marshal’s Office and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Sarah Damiani.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Kenneth Saunders, 34, of Philadelphia, PA, was sentenced to over six years in prison (80 months), and three years of supervised release by United States District Court Judge John M. Younge for illegally possessing a firearm as a felon. Saunders was also on Pennsylvania state parole at the time of the offense.

The defendant pleaded guilty in March 2020 to one count of possession of a firearm by a convicted felon. During his plea hearing, Saunders admitted that he carried a firearm with an obliterated serial number and fled from Philadelphia police officers while carrying the gun on July 18, 2019. During that foot chase in the Logan neighborhood, Saunders grabbed the firearm from his waistband and pointed it at the pursuing officers before falling to the ground, after which police recovered the weapon.

According to court documents, Saunders was previously convicted of numerous felony offenses in the Philadelphia County Court of Common Pleas, including violations of the Uniform Firearms Act in 2005 and 2011 and possession with intent to distribute a controlled substance in 2010. Further, in 2004, the defendant was arrested for carrying a firearm without a license and endangering the welfare of a child. In that case, Saunders not only illegally possessed a gun, but also shot his two-year-old daughter with it. After pleading guilty, the defendant was sentenced to two to five years in Pennsylvania state prison.

“The crime of being a felon in possession of a firearm is a serious offense, particularly in a city like Philadelphia, where gun violence is running rampant,” said U.S. Attorney McSwain. “Saunders has been living a life of crime for the better part of twenty years now, and has repeatedly demonstrated his disrespect for the law. The answer to Philadelphia’s violent crime crisis is to get criminals like Sanders off of the streets, which is exactly what the U.S. Attorney’s Office is focused on.”

“As a convicted felon in possession of a firearm, Kenneth Saunders presented a real danger to the community and to law enforcement officers alike,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division. “Despite being prohibited from possessing a firearm, he was armed when encountered by law enforcement. The federal prosecution of this crime demonstrates ATF’s dedication to working alongside our local, state and federal partners, in this case the Philadelphia Police Department and the U.S. Attorney’s Office, to ensure violent individuals like Saunders are deprived of the ability to terrorize our community.” 

“It is going to take an aligned and sustained collaborative effort with all of our law enforcement partners in order to combat the crisis of violence in our neighborhoods,” said Philadelphia Police Commissioner Danielle Outlaw. “Individuals like Mr. Saunders need to know that illegally carrying weapons on our streets will have serious and consistent consequences. I would like to thank our federal partners for helping us work towards our common goal of making our communities safer places to live and work.”

The case was investigated by the Bureau of Alcohol, Tobacco, Fire Arms and Explosives and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Kelly Harrell.

PHILADELPHIA – United States Attorney William M. McSwain announced that Dorothy Recarde, 68, of Kirkwood, PA, was sentenced to one year in prison, one year of supervised release and ordered to pay a $25,000 fine by United States District Judge Paul S. Diamond for filing false and fraudulent liens worth $15,000,000 against an employee of the Internal Revenue Service.

In December 2019, the defendant pleaded guilty to corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue Service. After an IRS revenue officer initiated levy actions to satisfy an outstanding federal tax obligation of approximately $24,000 incurred by Recarde’s company, Summerbeam Woodworking, Recarde retaliated by filing two fraudulent liens in Chester County against the officer.

According to court documents, Recarde initially responded to repeated attempts by the revenue officer to collect the outstanding tax obligation by mailing notarized letters to the IRS that espoused sovereign citizen ideology, an anti-government movement that, among other things, denies the government’s authority to impose taxes. She further claimed that correspondence she had mailed to IRS officials and the United States Treasury had gone unanswered, thus nullifying her outstanding debts. Bogus and illegal liens, such as those filed by the defendant, are a common tactic used by supporters of the sovereign citizen movement against perceived opponents or enemies.

“The sovereign citizen movement is nonsense and will be treated as such,” said U.S. Attorney McSwain. “And if you use it as an excuse to harass and retaliate against an IRS agent, you’re going to jail. Then you’ll have plenty of free time to think about the consequences of flouting the law.”

“TIGTA’s statutory mission includes investigating individuals who interfere with Federal tax administration,” said J. Russell George, Treasury Inspector General for Tax Administration.  “Attempts to intimidate or retaliate against Internal Revenue Service employees engaged in the performance of their official duties will not be tolerated.  We appreciate the efforts of the U.S. Attorney’s Office in this investigation.”

The case was investigated by the Treasury Inspector General for Tax Administration (TIGTA), and is being prosecuted by Assistant United States Attorney Frank R. Costello, Jr.

PHILADELPHIA – United States Attorney William M. McSwain announced that Sean Donald Premock, 47, of Ft. Lauderdale, Florida, was sentenced today to ten years in prison and three years of supervised release by United States District Judge Paul S. Diamond for numerous fraud offenses. The defendant was also ordered to forfeit $797,021 in proceeds and pay $1,061,532 in restitution.

The defendant, a former licensed stockbroker and investment adviser, pleaded guilty in May 2017 to nine counts of mail fraud, nine counts of wire fraud, one count of securities fraud, and one count of investment adviser fraud. As part of his guilty plea, Premock admitted that he had lost all of his professional licenses between March 2012 and August 2013, and had been permanently barred from serving as an investment advisor. The defendant’s fraud that led to his conviction in this case began while he was still licensed and continued even after he lost his licenses.

Premock began defrauding his clients in at least 2009, while still employed at a securities firm in Florida. When it became apparent that he was going to lose his licenses, Premock set up his own investing companies, including the aptly-named Mocktrading Investments, LLC and Mock Trading Group, which the defendant used to defraud his clients -- most of whom were elderly and inexperienced investors and some of whom were his own family members. Premock continued to hold himself out as a licensed stockbroker and investment adviser even after losing his licenses, and convinced many of his clients to trust him with their life savings. The defendant promised to manage his clients’ money and invest it in, among other things, stocks, bonds, “hedge funds,” “tractions,” and annuities. Premock told his clients that their funds would be safe, and promised to place them in low risk investments.

In reality, Premock invested only about half of the funds he received from clients and spent the rest on himself. Furthermore, the investments he did make were failures and he lost virtually all of his clients’ money. To hide his fraud, the defendant lied to his clients about their investments and mailed them false account statements. Later, Premock even began calling himself “Ethan” to make it harder for anyone to discover his true identity. In total, Premock’s clients lost more than $1,000,000 during the course of his fraud.

“Honesty, integrity, and trust all play a critical role in the relationship between a financial advisor and a client. Any advisor who deliberately betrays his clients’ trust for his own financial gain turns the system on its head,” said U.S. Attorney McSwain. “The damage done by such corrupt financial advisors can be catastrophic; here, some of Sean Premock’s victims lost their life savings. Today’s sentence reflects the gravity of that betrayal.”

“Getting fired for bad behavior and losing his professional licenses proved a mere career speedbump for Sean Premock,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “His next venture: flat-out fraud. He set about reeling in unsuspecting investors, lied about his plans for their money, and created a phony paper trail to cover up his crimes. Most of his victims were elderly. Maybe that’s why he thought he could get away with it. The FBI is proud to have proved him wrong.”

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

PHILADELPHIA – United States Attorney William M. McSwain and Principal Deputy Assistant Attorney General of the Tax Division Richard E. Zuckerman, announced that Nvahbulai “Kosh” Quisiah, 44, of Philadelphia, PA was sentenced to five years in prison, three years of supervised release and ordered to pay $215,941 in restitution by United States District Court Judge Nitza I. Quiñones Alejandro for multiple fraud and tax offenses.

In February 2020, the defendant was found guilty after a jury trial on charges of preparing false tax returns, aggravated identity theft, wire fraud and engaging in a conspiracy to defraud the United States.

According to evidence presented at trial, Quisiah was the owner and operator of First Premier Tax Service (also d/b/a Kosh & Associates), a Philadelphia-based tax preparation business on Woodland Avenue. From 2010 through 2017, the defendant prepared tax returns for clients that fraudulently inflated itemized deductions, claimed fictitious Schedule C businesses, and claimed false dependents for tax years 2009 through 2016. This resulted in inflated tax refunds for his clients to which the clients were not entitled. Quisiah also bought and sold the personal identifying information of children in order to falsely claim the children as dependents on tax returns.

“Today’s sentence is an appropriate reminder to tax preparers that attempting to defraud the federal government will result in serious consequences,” said U.S. Attorney McSwain. “And here, the defendant’s actions will have ramifications for years to come because he stole the identities of children as part of his fraud. My Office will continue to work with our federal partners here and in Washington D.C. to prioritize the investigation and prosecution of tax crimes.”

 “As today’s sentencing makes clear, corrupt tax preparers who falsify tax returns, and particularly those who exploit stolen minors’ identities to do so, will not go unpunished,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.

“When return preparers put honest taxpayers and unsuspecting individuals at risk for a quick dollar, they can count on IRS-CI being on their tail,” said Don Fort, Chief, IRS Criminal Investigation. “Our special agents use their investigative and financial expertise to detect and hold accountable abusive tax return preparers like Quisiah, who falsely told taxpayers they were eligible for inflated tax refunds that they were not entitled to receive.”

The case was investigated by the Internal Revenue Service’s Criminal Investigation Division and is being prosecuted by Assistant United States Attorney Anthony Wzorek and Department of Justice Tax Division Attorney Ann M. Cherry.

A Philadelphia, Pa, tax return preparer was sentenced to 60 months in prison today for conspiring to defraud the United States, preparing false client tax returns, wire fraud, and identity theft, 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.

“As today’s sentencing makes clear, corrupt tax preparers who falsify tax returns, and particularly those who exploit stolen minors’ identities to do so, will not go unpunished,” said Principal Deputy Assistant Attorney General Richard E. Zuckerman.

“Today’s sentence is an appropriate reminder to tax preparers that attempting to defraud the federal government will result in serious consequences,” said U.S. Attorney McSwain. “And here, the defendant’s actions will have ramifications for years to come because he stole the identities of children as part of his fraud. My office will continue to work with our federal partners here and in Washington D.C. to prioritize the investigation and prosecution of tax crimes.”

According to the evidence presented at trial, Nvahbulai Quisiah owned and operated First Premier Tax Service, a tax return preparation business in Philadelphia. From 2010 through 2017, Quisiah falsified clients’ tax returns by claiming false dependents based on stolen minors’ identities, as well as false itemized deductions and business losses in order to increase the refunds paid by the IRS.

In February 2020, a federal jury found Quisiah guilty on all counts.

In addition to the term of imprisonment, U.S. District Judge Nitza I. Quiñones Alejandro ordered Quisiah to serve three years of supervised release and to pay $215,941 in restitution to the United States.

Principal Deputy Assistant Attorney General Zuckerman and U.S. Attorney McSwain thanked special agents of IRS-Criminal Investigation, who conducted the investigation, and Trial Attorney Ann M. Cherry of the Tax Division and Assistant U.S. Attorney Anthony Wzorek, who prosecuted the case. 

PHILADELPHIA – United States Attorney William M. McSwain announced that Maurice Neal, 31, of Philadelphia, PA was sentenced to 25 years in prison and lifetime supervised release by United States District Court Judge Timothy J. Savage for producing child pornography.

In November 2019, the defendant pleaded guilty to one count of manufacturing child pornography, stemming from his sexual abuse of a 12-year-old child (Minor #1) as she slept, and recording the abuse on his cell phone. He covered the victim’s face with a cloth to avoid her eyes from looking at him, and stopped only because he thought another child sleeping nearby was stirring. The sexual assault of this child was the second in a series of assaults of children that Neal committed. At the time that he documented his sexual abuse of Minor #1, Neal already had an active arrest warrant issued by the Philadelphia Police Department for his sexual molestation of a different child (Minor #2), who was only six-years-old. And after sexually abusing Minor #1 and Minor #2, Neal then began molesting two additional young girls: another six-year-old (Minor #3) and a nine-year-old (Minor #4).

Neal was charged and pleaded guilty to these sexual offenses (assaulting Minors #1-4) in the Commonwealth of Pennsylvania, and was sentenced to 25 to 50 years in state prison for these crimes. While he was incarcerated, the video of his abuse of Minor #1 was discovered, and the defendant was then charged with the federal offense of manufacturing child pornography.

“Maurice Neal left a trail of young, vulnerable victims in his wake,” said U.S. Attorney McSwain. “In a few short months, he took advantage of every opportunity to prey upon children in homes in which he was staying, horrifically abusing four little girls within his grasp and causing incalculable damage. Working with our law enforcement partners, we will hold defendants like Maurice Neal accountable and pursue justice for the victims.”

“Put simply, Maurice Neal is a predator,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He sexually violated multiple children, documenting some of that abuse. It’s vital that he stay locked away where he can’t hurt any more kids. The FBI and our partners at the Philadelphia Police Department won’t ever stop fighting to protect children from being so horrifically exploited.”  

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 in partnership with the Philadelphia Police Department and Philadelphia District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Priya DeSouza and Special Assistant United States Attorney Megan Curran.

PHILADELPHIA – United States Attorney William M. McSwain announced that Phoenixville Hospital and Phoenixville Hospital Co., LLC (“Phoenixville Hospital”) has agreed to pay $100,000 to resolve alleged violations of the False Claims Act by causing the submission of altered forms to the Pennsylvania Department of Human Services, which administers Medicaid in Pennsylvania. Additionally, Firstsource Solutions, Ltd., Firstsource Solutions USA, LLC, and its predecessor Medassist, Inc. (collectively “Firstsource Solutions”), a revenue cycle management services provider operating in Pennsylvania, has agreed to pay $225,000 for processing the alleged false claims on Phoenixville Hospital’s behalf.

Phoenixville Hospital, a community healthcare provider, delivers comprehensive medical services, including emergency room care and inpatient admissions. Phoenixville Hospital accepts patients whose hospital stays are paid for by the Medicaid program. The United States contends that Phoenixville Hospital caused the submission of false claims to Medicaid for inpatient treatment and/or emergency room visits billed by Phoenixville Hospital. On certain occasions, Phoenixville Hospital allegedly caused to be altered one of the standard Pennsylvania Department of Public Welfare General Assistance Forms, the Employability Assessment Form (PA Form 1663), to exclude the option for the medical provider to certify that the self-pay patient was “Employable.” The United States contends that, in some cases, the patient was therefore not disabled and not entitled to Medicaid coverage for the treatment being billed by the hospital. The United States further contends that Phoenixville Hospital caused to be submitted such forms from January 2008 through February 2012 and that some of these claims for Medicaid beneficiaries were false in light of Phoenixville Hospital’s conduct.

Firstsource Solutions provides revenue cycle management services to hospitals, assisting with the submissions for determination of eligibility of self-pay (uninsured) patients to the Medicaid program. The government alleges that from August 2009 through February 2012, Firstsource Solutions knowingly submitted or caused the submission of false claims to Medicaid for inpatient treatment and/or emergency room visits billed by the client, Phoenixville Hospital.

The allegations that are the subject of today’s settlement were originally alleged in two cases filed under the whistleblower, or qui tam, provision of the False Claims Act. The Act permits private parties to sue for fraud on behalf of the United States and to share in any recovery. The Act also permits the government to intervene in such actions, as the government previously did in the two whistleblower cases. The whistleblowers in these cases will receive a total of approximately $60,000 of the settlement.

“My Office will continue to investigate credible allegations of fraud against federal healthcare programs, especially when the alleged conduct has potential implications for patient treatment,” said U.S. Attorney McSwain. “Hospitals that treat Medicaid patients and the entities that process Medicaid claims must know the billing and payment rules required by those programs, and abide by them. We would also like to thank the citizens and their lawyers who initially brought this case to our attention.”

“Investigating allegations of the False Claims Act is a top priority,” said Maureen R. Dixon, Special Agent in Charge for the Office of the Inspector General, U.S. Department of Health and Human Services. “We will continue to work with the U.S. Attorney’s Office to ensure the integrity of the Medicare and Medicaid Programs.”

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

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General. For the U.S. Attorney’s Office, the investigation and settlement were handled by Assistant U.S. Attorneys Viveca D. Parker and Scott W. Reid, with assistance from auditor George Niedzwicki. The lawsuits are captioned United States ex rel. Daniel Dimarzio v. Firstsource Solutions, LTD, Firstsource Solutions USA, LLC, and Medassist, Inc., Civil Action No. 12-1464 and United States ex rel. Susan Wilson v. Phoenixville Hospital, et al., Civil Action No. 15-596.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Gaafar Muhammed Ebrahim Al-Wazer, 25, of Altoona, PA, was charged by Indictment with three counts of making false statements to Task Force Officers with the Federal Bureau of Investigation’s Philadelphia Joint Terrorism Task Force. The defendant was previously arrested at his home in Altoona on November 7, 2019, pursuant to a Criminal Complaint, and has been detained since then, following a finding by U.S. Magistrate Judge Marilyn Heffley that he presented a risk of flight and danger to the community.

According to the Indictment and Criminal Complaint, FBI counterterrorism investigators questioned Al-Wazer, a Yemeni citizen, on May 17, 2016 about his affiliation with the Houthi movement, known formally as Ansar Allah. Ansar Allah is the armed rebel group that toppled Yemen’s government and has fought in an ongoing civil war there for years. Al-Wazer allegedly denied to the FBI that he was aligned with the Houthi movement, whose motto is “Allah is the greatest of all, Death to America, Death to Israel, Curse upon the Jews, Victory to Islam,” and further denied that he had ever fired a weapon or participated in military or militia training.

To the contrary, however, the court documents allege that a search of Al-Wazer’s Facebook account revealed numerous postings and photographs in which he extolled and praised Ansar Allah, its objectives and its fighters who were killed in battle against the Yemeni government and its Saudi and U.S.-backed forces. In these postings, Al-Wazer was armed with automatic weapons (including a rocket-propelled grenade launcher). Al-Wazer’s Facebook account allegedly included a posting of a photograph of him and others bearing automatic assault rifles and pledging that they would stay on the path of jihad and wishing death to the United States and Israel and victory to Islam. In another posting, Al-Wazer again bears a machine gun in a photograph, which is accompanied by a pledge to Ansar Allah to the death.

“Just as when Al-Wazer was arrested and detained in November 2019, today’s Indictment demonstrates that lying to counter-terrorism officers in the course of their official duties is a crime,” said U.S. Attorney McSwain. “Al-Wazer was welcomed into our country for the educational opportunities available here, and he is entitled to hold and express his political and religious beliefs as freely as anyone else in this country -- no matter how vile and disgusting they are. But what he cannot do is lie to federal officers when directly questioned about his activities and beliefs. I want to thank our partners in the FBI’s Joint Terrorism Task Force for their continued vigilance in this case.” 

“People have the right to their own beliefs — the FBI isn’t the ‘thought police,’ nor do we want to be,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “But lying to federal agents about your ideology and your actions is illegal, for good reason. If the people we interview feel they can deceive us with impunity, false information will hobble vital investigations. We can’t allow the mission of our Joint Terrorism Task Force to be derailed like that. The stakes are just too high.”

"Let the indictment of Al-Wazer serve as an example that lying to federal officers is a federal offense, and those who do so will be held accountable to the fullest extent of the law," said Brian A. Michael, Special Agent in Charge of Homeland Security Investigations (HSI) Philadelphia. “HSI and our law enforcement partners are committed to pursue justice against those who seek to harm our country and our citizens.”

If convicted, the defendant faces a maximum possible sentence of five years’ imprisonment, three years of supervised release, a $250,000 fine, a $100 special assessment, per count.

The case was investigated by the Federal Bureau of Investigation’s Philadelphia Joint Terrorism Task Force, and is being prosecuted by Assistant United States Attorney Nelson S.T. Thayer, Jr.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Jason C. Weigand, 50, of Denver, PA has been charged by Indictment with mail fraud, wire fraud, and interstate transportation of stolen securities, while on bail for separate, similar offenses.

The Indictment announced today alleges that Weigand helped a former client of his, identified in court documents as “AH,” recover on life insurance policies when her husband died. Weigand later convinced AH to provide him with at least $239,000, which he told her that he would invest on her behalf. However, according to the Indictment, Weigand did not invest the client’s money in appropriate investments as he promised, but instead used the money for his own personal and business purposes, including payments to his personal line of credit, his Visa credit card, and his Lincoln MKZ and Chevy Suburban car loans.

In October 2017, Weigand was charged in a separate federal Indictment with allegedly misusing funds belonging to his clients. He was arrested on those charges and released subject to conditions including that he not commit any “Federal, State, or local crime during the period of release.” He allegedly violated those conditions by committing some of the offenses alleged in the current Indictment. Further, during the relevant time period, Weigand did not even possess a license to act as an investment advisor.

According to the Indictment, Weigand was a registered investment advisor in Pennsylvania between 2009 and 2014, and in New Jersey between 2011 and 2014. He voluntarily surrendered his licenses as an investment advisor in both states in 2014. In the case of his Pennsylvania license, Weigand terminated it on April 10, 2014—the same day that he was questioned by investigators from the Pennsylvania Department of Banking and Securities about his investment advisor activities.

“Weigand is alleged to be a serial fraudster with no respect for the law,” said U.S. Attorney McSwain. “Rather than serving his clients, he served himself. Prosecuting financial and securities fraud -- and thereby safeguarding innocent investors -- has been and will continue to be a top priority of my Office.”  

“Jason Weigand was first arrested in 2017 by Postal Inspectors from the Philadelphia Division for stealing money from his investment advisory clients,” said Postal Inspector in Charge, Damon Wood. “Since 2017, while preparing to defend himself on those charges, Mr. Weigand went back to his old ways, stealing money from his investment clients. I applaud the diligence of the investigators and prosecutors in this case to not only prepare for trial but to follow up on allegations of new crimes. The Postal Inspection Service has long prided itself as being a leader in investigating investments frauds. From snake oil salesmen in the 19th century to modern day Wall Street frauds, if the United States Mail is used, Postal Inspectors will work tirelessly to bring the perpetrators to justice.”

If convicted, the defendant faces a maximum possible sentence of 120 years imprisonment, $1,500,000 fine, 3 years supervised release, $600 special assessment.

The case was investigated by the United States Postal Inspection Service, and is being prosecuted by Assistant United States Attorneys Katherine Driscoll and Paul Shapiro.

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

PHILADELPHIA and LAS VEGAS – United States Attorney for the Eastern District of Pennsylvania, William M. McSwain, and United States Attorney for the District of Nevada, Nicholas A. Trutanich, jointly announced that Catholic Charities of Southern Nevada (Catholic Charities) has agreed to pay $206,368.35 to resolve claims arising from its administration of community service grants funded through the Corporation for National and Community Service (CNCS).

From 2003 until 2018, Catholic Charities administered multiple grants in CNCS’s Senior Corps program. These grants included the Foster Grandparent Program, which places seniors in school and community settings to serve youth with exceptional needs, and the Senior Companion Program, which places seniors in community and residential settings to assist other seniors who have difficulty with tasks of daily living. These programs provide small hourly stipends to the volunteers performing these services.

The settlement resolves claims that in 2014 and 2015, Catholic Charities’ employees who oversaw the Foster Grandparent and Senior Companion programs falsified records for the stipend recipients. They also directed recipients to falsify records, leading to CNCS grant funds being used to pay stipends for hours that were never actually worked, were in violation of program requirements, or were inflated.

When Catholic Charities executive management discovered the fraudulent actions of its employees, it voluntarily disclosed them through the CNCS-OIG hotline. It terminated the employees who had perpetrated the fraud and cooperated fully in the United States’ investigation of its administration of these grants. In 2018, Catholic Charities relinquished the grants entirely.

“Every federal grantee, including community service organizations, is required to honestly and openly report the service that its volunteers perform. Every dollar spent on an hour that was not actually served is one that is not available to support other community service efforts,” said U.S. Attorney McSwain. “Strict compliance with grant requirements ensures that federal funds reach those who need it most.” 

“Each day, Catholic Charities of Southern Nevada feeds the hungry, provides shelter for the homeless, and supports families and seniors in need of assistance. The federal government relies on its non-profit partners to help ensure that federal grant funds are being used to assist their communities,” said U.S. Attorney Trutanich. “Today’s settlement is a reminder that everyone receiving federal grant funds must adhere to grant compliance requirements and self-report misuse of federal grant funds, as Catholic Charities of Southern Nevada did here. “

“Catholic Charities acted responsibly upon discovering fraud, promptly reported the misconduct, cooperated actively with the investigation and willingly made the taxpayers whole,” said CNCS’s Inspector General Deborah J. Jeffrey. “As a result, Catholic Charities was appropriately spared substantial penalties and fines. We thank our partners at the U.S. Attorney’s Offices in the Eastern District of Pennsylvania and Nevada for protecting the integrity of CNCS.”

United States Attorneys McSwain and Trutanich also praised Catholic Charities’ work in addressing the issues in these programs: “We commend Catholic Charities of Southern Nevada for promptly reporting these issues when they were discovered and for working with the Department of Justice and the Corporation for National and Community Service to make the government whole. We hope this settlement will serve as a message to other senior managers to be vigilant in overseeing government-funded programs and to ensure that their employees do not attempt to conceal any non-compliance. All organizations accepting federal funds should take their responsibility to the American taxpayers seriously to come forward promptly and cooperate fully if they discover that they have not lived up to their promises.”

This investigation was conducted jointly by the United States Attorney’s Offices for the Eastern District of Pennsylvania and District of Nevada with the Corporation for National and Community Service Office of Inspector General. Assistant United States Attorneys Paul W. Kaufman and Veronica Finkelstein of the Eastern District of Pennsylvania and Troy Flake of the District of Nevada handled the investigation and settlement. This case was initiated as a part of the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s Affirmative Civil Enforcement Strike Force focus on grant fraud.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Timothy Stanley Wilkins, 41, of Bethlehem, PA was arrested last night in Miami, Florida. Wilkins was a fugitive from justice on federal drug trafficking and firearms offenses. After being charged, Wilkins fled the country and was apprehended by federal agents at Miami International Airport, while attempting to re-enter the United States.

On March 11, 2020, Wilkins was charged in a three-count Indictment with possession with intent to distribute fentanyl and cocaine, possession of a firearm in furtherance of a drug trafficking crime, and being a felon in possession of a firearm. He is scheduled to have his initial appearance today in the Southern District of Florida and then will be extradited to the Eastern District of Pennsylvania.

“As alleged in the Indictment, charging him with firearms and drug offenses, Wilkins has a brazen disrespect for the law,” said U.S. Attorney McSwain. “In response to the charges, he fled the country, but all that did was postpone the inevitable. If you are charged in the Eastern District of Pennsylvania with a federal offense, there is no place to hide, here or abroad. We will not rest until we find you and hold you accountable.”

“I would like to take an opportunity to recognize the cooperation among our law enforcement agencies responsible for getting a dangerous drug dealer off the streets,” said Northampton County District Attorney Terence P. Houck. “It is important for people to know that together, we will investigate, arrest and convict these law breakers by exhausting all federal and state efforts in the pursuit of this cause.”

“Timothy Wilkins fled to evade prosecution on state charges brought against him,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Now he’s in the federal system, indicted on these drug and gun charges and safely in custody. The FBI and our partners at the Bethlehem Police Department will continue to work together to protect our community from those engaged in illegal and dangerous activity.”

If convicted, the defendant faces a maximum possible sentence of life imprisonment, a mandatory minimum 15 years imprisonment, 8 years supervised release, a $1,500,000 fine, and a $300 special assessment.

The case was investigated by the Federal Bureau of Investigation, Allentown Resident Agency, the City of Bethlehem Police Department, and the Northampton County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Kelly A. Lewis Fallenstein.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Marqueal Bonds, 22, of Chicago, Illinois, was sentenced today to 22 years in prison and lifetime supervised release by United States District Court Judge Harvey Bartle, III, for engaging in a child exploitation enterprise. Bonds was also ordered to pay a total of $33,221 in restitution to various victims.

In March 2020, Bonds pleaded guilty in the middle of trial to charges of engaging in a child exploitation enterprise and conspiracy to advertise child pornography. Using Discord, an online communications application that allows users to share files and communicate via chat messages, Bonds and his co-conspirators connected in private chat rooms to discuss how to find children and exploit them to produce child pornography. Bonds and his co-conspirators would also share child pornography on Discord, which included sexual depictions of children as young as toddlers. After discovering evidence of child pornography on Discord’s servers, federal agents executed a search warrant at Bonds’ house, and the defendant confessed to his involvement in this enterprise.

“Bonds and others like him will be held accountable by my Office no matter which dark corners of the Internet they are lurking in,” said U.S. Attorney McSwain. “Bonds and his co-conspirators trolled the Internet on legitimate sites like Snapchat, Periscope, and Live.me for vulnerable victims, tricked these children into believing they were chatting with boys or girls their own ages, and then obtained video and naked photos of them to share on Discord. Today’s lengthy sentence ensures that Bonds is out of business and serves as a warning to anybody who would consider exploiting children via the Internet.”

“Marqueal Bonds manipulated underage girls into providing explicit images of themselves,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He and his co-conspirators teamed up to sexually exploit children across the country and share the vile results. These are predators who harmed young girls without a second thought. Locking them up ensures they won’t be victimizing anyone else.”

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 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 is being prosecuted by Assistant U. S. Attorney Kevin Jayne and Trial Attorney Kaylynn Foulon, of the U.S. Department of Justice’s Child Exploitation and Obscenity Section.

PHILADELPHIA – United States Attorney William M. McSwain announced that Francisco Cruz-Pica, a/k/a “Javi,” 38, of Allentown, PA was sentenced to 10 years in prison, eight years of supervised release and ordered to pay a $1,200 fine by United States District Judge Jeffrey Schmehl for trafficking drugs and illegally possessing firearms, including a machine gun.

In January 2020, Cruz-Pica pleaded guilty to an 11-count Indictment charging drug trafficking and multiple firearms offenses, including distribution of heroin within 1,000 feet of a public school, maintaining a drug house, being a felon in possession of a firearm, possession of a machine gun, and possession of a firearm in furtherance of a drug trafficking crime. He committed these offenses while on supervised release for a previous felony firearms conviction in the District of Puerto Rico, and is a notorious drug dealer known to authorities operating in and around Allentown.

“This defendant clearly has no respect for the law or for the Allentown community,” said U.S. Attorney McSwain. “Not only did he illegally possess multiple firearms and deal drugs near a school – a place that is supposed to be a safe haven for children – but he did so while on supervised release for a previous felony conviction. My Office is committed to working with our local law enforcement partners, like District Attorney Martin and the Allentown Police Department, to protect the Allentown community by investigating and convicting criminals like Cruz-Pica, and put them behind bars.”

“I commend the Allentown Resident Office of the FBI and the Allentown Police Department on their investigation, which has enabled an effective prosecution by the U. S. Attorney and has resulted in a dangerous criminal being taken off the streets of our community,” said Lehigh County District Attorney Jim Martin.

“Cruz-Pica illegally armed himself to the teeth as he flooded the streets of Allentown with drugs,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “All while on supervised release imposed for an earlier gun crime. Today’s sentence, obtained through the efforts of the FBI and our partners on the Lehigh Valley Safe Streets Task Force, ensures this repeat offender and threat to public safety remains behind bars for some time.”

The case was investigated by the Federal Bureau of Investigation, Allentown Resident Agency, the City of Allentown Police Department, and the Lehigh County District Attorney’s Office. The case is being prosecuted by Assistant United States Attorney Kelly A. Lewis Fallenstein.

PHILADELPHIA – United States Attorney William M. McSwain announced that Jason Gerner, 46, of Shamung, New Jersey, was sentenced to 36 months imprisonment and three years of supervised release by United States District Court Judge Wendy Beetlestone for his role in multiple healthcare fraud schemes as a co-founder of the drug and alcohol rehabilitation facility Liberation Way, which had locations in Yardley, Bala Cynwyd and Fort Washington, Pennsylvania. As part of his sentence, he was also ordered to pay restitution in the amount of $9,338,607 and ordered to forfeit $444,983.

In August 2019, the defendant pleaded guilty to charges of conspiracy to commit health care fraud and conspiracy to commit money laundering for his role as a founder and operating partner of Liberation Way. An investigation into the operations and management of the facility exposed an array of schemes, including: fraudulently purchasing premium insurance policies on behalf of prospective patients so that Liberation Way could bill for expensive “treatments” that it never provided; using pre-signed medical orders for tests and treatments for patients who were not actually seen or examined by the only doctor employed by Liberation Way; paying a different doctor to sign urine-testing orders for patients who were never seen or examined; shipping those urine samples for testing to laboratories in Florida in order to submit claims that were excessive and medically unnecessary, in order to maximize billing to insurance companies; receiving kickbacks for the insurance payments made to the laboratories for these overly frequent and expensive tests; and conspiring to hide the proceeds of the illegal urine-testing kickback scheme through a series of financial transactions involving payments to various shell companies disguised as consulting payments.

“My Office will not tolerate health care fraud in any form, especially the kind that takes advantage of at-risk patients and exploits their addictions,” said U.S. Attorney McSwain. “Those who think that they can game our health care system -- which is already strained under the weight of an ongoing opioid epidemic -- and prey upon vulnerable people will face the consequences. Gerner will rightly spend years in prison and pay millions of dollars as the result of his criminal conduct.”

 “The employees of Liberation Way looked at the opioid epidemic devastating Pennsylvania and saw an opportunity to make a buck off the backs of vulnerable people. Pennsylvanians with substance abuse disorder, who deserved care from Liberation Way, were harmed instead,” said Attorney General Josh Shapiro. “I’m proud of the work we’ve done with our partners in the U.S. Attorney’s Office to hold these scam artists accountable and get justice for the people of Pennsylvania.”

“Gerner and his colleagues operated Liberation Way under the guise of helping addicts get healthy,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “In reality, the only things that benefitted were these fraudsters’ bank balances. Their elaborate, years-long swindle of the health care system victimized vulnerable patients for profit. The FBI is gratified all involved are being held accountable.”

“The U.S. Department of Labor, Employee Benefits Security Administration (EBSA), works closely with our federal and state law enforcement colleagues to bring to justice those who would, by their criminal activities, tamper with the hard–earned health benefits due the American worker,” said Employee Benefits Security Administration Philadelphia Regional Director Michael Schloss.

The case was investigated by the Federal Bureau of Investigation, the Department of Health and Human Services, the Office of Personnel Management, and the Department of Labor Employee Benefits Security Administration, in conjunction with the Pennsylvania Attorney General’s Office, and is being prosecuted by Assistant United States Attorney Nancy Beam Winter and Special Assistant United States Attorneys Robert Labar and Kristy Christ.

PHILADELPHIA – United States Attorney William M. McSwain announced that James Hardcastle, 42, of Bensalem, PA, was sentenced to 20 years in prison, 20 years of supervised release, and ordered to pay $75,000 in fines by United States District Judge Gerald J. Pappert for multiple child exploitation offenses stemming from his conduct at an over-night basketball tournament in Wildwood, New Jersey and at his home in Bensalem.

In June 2016, Hardcastle transported three minor boys, ages 15, 16 and 16, as their coach to Wildwood, New Jersey to participate in a basketball tournament, and shared a motel room with them in which there was no shower curtain. The defendant installed a USB drive containing a hidden camera in a power outlet in the bathroom and surreptitiously filmed each of the minors taking showers. Previously, in June and July 2015, the defendant also attempted to videotape two minors in a bathroom using a hidden camera while the minors were visiting his home in Bensalem. The defendant pleaded guilty in December 2019 to three counts of transporting minors with the intent to engage in criminal sexual activity and two counts of attempted production of child pornography.

“This defendant took advantage of his position of trust as a youth basketball coach to exploit children for his own satisfaction,” U.S. Attorney McSwain said. “This is heinous and reprehensible behavior that deserves the serious punishment that was meted out today. My Office will continue to prioritize the protection of children from such predation.”

“The boys James Hardcastle victimized will never forget their trusted coach’s betrayal,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He used his relationship with them for his own gratification, setting them up for his illicit secret recordings. The FBI will never stand by when we learn of the sexual exploitation of children. Such predators need to be taken off the street so they can’t harm anyone else.”

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.

The case was investigated by the Federal Bureau of Investigation with assistance from the Philadelphia Police Department Special Victims Unit and the Bensalem Police Department, and is being prosecuted by Assistant United States Attorney Michelle L. Morgan.

PHILADELPHIA – United States Attorney William M. McSwain convened a press conference today outside the Byrne United States Courthouse after the sentencing hearing for Jovaun Patterson, the man convicted of shooting a Philadelphia shop owner with a military-style assault rifle during an attempted robbery.  During his remarks, U.S. Attorney McSwain addressed the escalating violent crime crisis in Philadelphia, the anti-law enforcement bias pushed by certain groups, and the devastating impact that both continue to have on minority communities in the City. 

Remarks as Prepared for Delivery

Jovaun Patterson has been sentenced to over 14 years in federal prison for shooting and attempting to rob Philadelphia shop owner, Mike Poeng.  Mr. Patterson has been held accountable for his violent criminal behavior and will now serve an appropriate sentence.  This was only possible because the U.S. Attorney’s Office stepped in and charged Mr. Patterson after the local authorities had bent over backwards to give him a break, negotiating an overly lenient sentence that sent a message that violent crime has little consequences.

That sad state of affairs – where the mishandling of Mr. Patterson’s original case necessitated federal involvement – is symbolic of a larger catastrophe that is playing out before our eyes in Philadelphia.  Homicides, shootings, and serious violent crime have all skyrocketed in 2020 – from already intolerable levels that existed in 2019 and 2018.  Almost all the victims are racial minorities, the vast majority of whom are Black.  This past weekend alone, at least 25 people were shot.  So far this year, over 100 children have been shot, a 68% increase as compared to last year.  Again, almost all of these child victims are racial minorities, the vast majority of whom are Black.  And we all know about Zamar Jones, the 7 year-old boy who was murdered earlier this month while playing on his front porch in West Philadelphia.

This is . . . infuriating.  There is nothing more important than the safety of children.  But where is the sense of outrage, where is the anger, where is the sense of urgency among City leaders?  This slaughter in our streets has largely been met with indifference, a sense of inevitability, even a shrug of the shoulders.  Or as the District Attorney frequently puts it: “poverty equals bullets.”

“Poverty equals bullets.”  That condescending statement is a slap in the face to every law-abiding, low-income resident in the City.  There are scores of low-income people in the City who respect the law, never shoot anybody, love their neighbors, and work hard to improve their neighborhood.  Poverty is never an excuse for violent crime, and certainly not for murder.  There is no possible justification for walking up to somebody and shooting them.  Furthermore, poverty isn’t going away overnight.  As law enforcement leaders, we can’t put the violence problem at the doorstep of poverty and just leave it there.  That is the equivalent of abandoning the people we are sworn to protect and serve.

Instead, we must do something.  At the U.S. Attorney’s Office, we have and we are – unlike the District Attorney’s Office.  With our anti-violence public messaging campaign that we launched last month, the law-abiding citizens of Philadelphia know where the U.S. Attorney’s Office stands – with them and with our law enforcement partners.  The campaign also puts potential criminals on notice that if they commit a crime with a gun and we have federal jurisdiction, we will prosecute them to the fullest extent of the law.  We will come after them with everything that we have.  We are spreading that message of deterrence through billboards, bus shelter advertisements, posters, the Internet, social media, videos, radio, and TV.  It’s a message that is sorely needed in the City, and one that I believe will make neighborhoods safer and save lives.

And this is not just messaging.  It is backed up by federal resources and results.  The U.S. Attorney’s Office prosecuted 53% more violent crime cases in the Eastern District of Pennsylvania this past fiscal year than we prosecuted the year before.  In Philadelphia’s most dangerous neighborhoods – what are designated as Project Safe Neighborhood (or PSN) target districts – we charged 72% more violent crime and weapons cases than the year before.  And, where necessary, we have provided federal oversight in cases like today’s Patterson sentencing.  Still, we know that in order to meet today’s challenges, we must do even more.  

But the federal authorities cannot do it alone.  We need City leaders to speak with one voice in condemning violence – not making excuses for it and not treating violent defendants like they are somehow the victims in all of this.  And most importantly, the rhetoric should be backed up by aggressive local prosecution that holds criminals accountable and therefore makes neighborhoods safer.         

City leaders also should speak with one voice in rejecting the extreme anti-law enforcement bias that is currently being peddled by certain irresponsible fringe groups.  This bias – especially if it is not forcefully condemned by City leaders – puts the police on their heels and puts violent criminals on their toes, ready to stride forward confidently.  One year ago, I stood in this spot and decried the culture of disrespect for law enforcement in the City – a culture that celebrated chants like “F*** the police” and “No good cops in a racist system.”  Today, the bile and vitriol coming from some elements of the mob makes those chants sound quaint by comparison.   

The vast majority of Philadelphia police officers do their jobs faithfully and honorably – and by putting on the uniform and doing the dangerous work inherent in their mission, they show that they value the lives of others more than they value their own.  They, like all responsible citizens, abhor police brutality and are in favor of accountability for police.  We can and should work towards better relations between the police and the community without indulging infantile notions that the police as a whole make communities more dangerous.  Obviously, they do just the opposite.  So to those of you out there who say that we should “abolish the police,” or “defund the police,” or “abolish prisons,” or one of my favorites, that “communities should be left to police themselves,” I have a message for you: your ideas are absurd and deserve nothing but scorn.  Moreover, those ideas would cause great harm to the most vulnerable members of our society.  Victims of violent crime, like Mike Poeng, are the ones who suffer the consequences of these foolish notions.  As is often the case, the policies demanded by the self-righteous mob would come at the expense of minority communities.   

Everybody in our City deserves to live in a safe neighborhood – regardless of race or income level.  It is time for City leaders to step forward and do everything that they can to make that a reality.  We won’t get there by treating violent criminals like they are victims, or by undermining law enforcement, or by grasping for excuses – like conveniently blaming the pandemic.  It’s true that the virus isn’t making things any easier, but violence is contagious, too.  It can easily spread across a City or even beyond.  We must confront it and stop it and put the good people of this City first.  Thank you.      

PHILADELPHIA – United States Attorney William M. McSwain announced that Jovaun Patterson, 31, of Philadelphia, PA was sentenced to 171 months in prison (14 years and three months) and 5 years of supervised release by United States District Judge Mitchell S. Goldberg for the attempted robbery of a convenience store in West Philadelphia in 2018.

In December 2019, Patterson pleaded guilty to charges of attempted Hobbs Act robbery, and using, carrying and discharging a firearm during and in relation to a crime of violence. These charges stem from the defendant’s attempted armed robbery on May 5, 2018, of the KCJ, Inc. convenience store, during which Patterson shot the store owner, Li “Mike “ Poeng, with an assault rifle. Mr. Poeng is a refugee from Cambodia who became a U.S. citizen in 1998. As a result of the shooting, Mr. Poeng is confined to a wheelchair. The Philadelphia District Attorney’s Office originally charged Patterson with multiple crimes, including attempted murder and aggravated assault, but then dropped the attempted murder charges and agreed to an overly lenient plea deal of only 3 ½ to 10 years imprisonment. The U.S. Attorney’s Office then stepped in to correct this injustice. 

“Violent crime is a severe problem in Philadelphia, as shootings and homicides have sharply increased in 2020 from already intolerable levels. Confronting this crime wave is a top priority of my Office,” said U.S. Attorney McSwain. “It is important for potential criminals to know that committing a violent crime will result in grave consequences. It is also important for the general public to know that we are fighting hard to protect Philadelphia neighborhoods and to seek justice for victims. Taking Jovaun Patterson off the streets for an appropriate amount of time is part of that fight. I want to thank Mike Poeng for his courage throughout this case. Sadly, we can never make him completely whole, but today’s sentence is part of his healing process and will also help to deter future violence.”

“Today an extremely violent offender has been sentenced to a lengthy prison term,” said John Schmidt, acting Special Agent in Charge of ATF’s Philadelphia Field Division.  “The outcome is the result of ATF’s collaborative effort with the Philadelphia Police Department to combat gun violence.  Along with our other local, state and federal partners, we are committed to investigating gun crimes in Philadelphia and working with the US Attorney’s Office to prosecute those who violate the gun laws.”

Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of the Office’s new anti-violence public awareness campaign. You can learn more about this campaign on the District website.

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 (ATF) and the Philadelphia Police Department, and is being prosecuted by Assistant United States Attorney Salvatore L. Astolfi.

PHILADELPHIA – United States Attorney William M. McSwain announced that James Millette, 33, of Reading, PA, was sentenced to 235 months (over 19 years) in prison and lifetime supervised release by United States District Judge Joseph F. Leeson, Jr., for multiple child pornography charges. The defendant was also ordered to pay a total of $66,000 in restitution to the various victims depicted in these images.

In February 2020, Millette pleaded guilty to charges of possession and receipt of child pornography. The charges stem from the defendant’s February 7, 2019 arrest at his apartment, during which he was found to be in possession of an enormous collection of child pornography, including images depicting prepubescent minors. In total, more than 200,000 images and videos depicting child pornography were recovered from various electronic devices found in the defendant’s possession.

“The amount of child pornography seized in this case is stunning,” said U.S. Attorney McSwain. “Millette is a depraved hoarder of these illegal images – every one of which was made at the expense of an innocent child, whose life will never be the same. Protecting children by prosecuting criminals like Millette is a top priority of my Office.”

“James Millette couldn’t get enough of these abhorrent images of young children being sexually abused,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “Consumers of child pornography like him perpetuate the exploitation of child victims, something the FBI simply won’t abide. May this lengthy prison sentence be a warning to others involved with such repulsive material. Our Child Exploitation Task Force could soon be knocking at your door.”      

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.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Joseph LaForte, 49, of Haverford, PA, was arrested and charged by Indictment with possession of a firearm and ammunition by a convicted felon.

The Indictment alleges that on July 28, 2020, the defendant, a twice-convicted felon, knowingly possessed seven firearms in his home: two shotguns, four loaded handguns, and a loaded rifle.

After the defendant was arrested on August 7, 2020, the Government moved for his detention on the grounds that he was both a risk of flight and a danger to the community. The Government cited, among other things, death threats that LaForte had allegedly made to the customers of his business, Par Funding, a cash advance company based in Philadelphia. After his appearance in federal court yesterday, United States Magistrate Judge Marilyn Heffley detained the defendant until his trial.

“We’re pleased that the Court recognized that no conditions of release would be sufficient here,” said U.S. Attorney McSwain. “Joseph LaForte is where he belongs – in prison – and will now face the consequences of his alleged criminal behavior.”

“Joseph LaForte is a previously convicted felon who continues to demonstrate that he is a threat to the community,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. "This indictment is just another example of his disregard for the law.”

If convicted, the defendant faces a maximum possible sentence of ten years of imprisonment, a $250,000 fine, 3 years of supervised release, and a $100 special assessment.

The case is being investigated by the Federal Bureau of Investigation, the Federal Deposit Insurance Corporation – Office of Inspector General, and the Internal Revenue Service, with assistance from the Lower Merion Township Police and the Pennsylvania State Police Bureau of Criminal Investigations, and is being prosecuted by Assistant United States Attorneys Jonathan Ortiz and Patrick J. Murray.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Artavius Horne, a/k/a “Lo”, 36, of Philadelphia, PA was sentenced to 45 years in prison and 10 years of supervised release by United States District Court Judge Gerald J. Pappert for sex trafficking three children for years.

In September 2019, Horne was convicted at trial of three counts of sex trafficking minors by force, fraud or coercion. During the week-long trial, the government proved that the defendant organized, operated and led a sex trafficking venture based in and around Northeast Philadelphia between 2013 and 2015, and in 2018. As part of the scheme, the defendant recruited, enticed and maintained three minor children, one of whom was as young as 13 years old, to engage in commercial sexual encounters. Horne created Internet advertisements for each of the victims on the website Backpage.com, and he transported them across state lines to New Jersey, New York, Washington D.C., and Maryland for the purpose of engaging in commercial sex acts. He also kept the victims in apartments throughout Philadelphia, known as “trap houses,” where they were made to engage in commercial sex for the benefit of the defendant. In 2017, Horne was convicted of similar offenses in Bucks County, PA.

“Horne committed these heinous acts while on parole for doing the exact same thing,” said U.S. Attorney McSwain. “He has no regard for the law -- or even basic human decency -- as evidenced by his willingness to sell the bodies of children for sex to benefit himself. He deserves every minute of the 45 years that he received today.”

“Artavius Horne made his living by sexually exploiting children, advertising underage girls for sex with strangers,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He even transported them to other cities and states, determined to keep the money coming in at their expense. Know that the FBI and our law enforcement partners are working every day to put traffickers like Horne behind bars and ensure some justice for their victims. We ask anyone with knowledge of child or adult sex trafficking to let us know about it, so we can help. Call 1-800-CALL-FBI or go online to tips.fbi.gov. Tipsters can remain anonymous, if they like.” 

The case was investigated by the Federal Bureau of Investigation, and it is being prosecuted by Assistant United States Attorney Melanie Babb Wilmoth.

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Patrick Shaknitz, 29, of Croydon, PA, has been arrested and charged by Complaint with one count each of distribution and attempted distribution of child pornography. These charges arise out of the defendant’s alleged distribution of images and videos of child pornography to others, including undercover federal agents, over the Internet.

According to the Complaint, beginning in November 2019, undercover federal agents exchanged private messages with a user identified as “intoeverything1991,” who distributed images and videos containing child pornography. One such video depicts an adult female in a dark blue face mask molesting a minor child. During chats with the agents, the same user described in explicit detail how he abused other children. Subpoenas issued for “intoeverything1991” revealed an IP address and other identifying information allegedly belonging to Shaknitz.

“As alleged in the Complaint, Shaknitz is a depraved abuser of children who multiplied the impact of that abuse by sharing images of it over the Internet,” said U.S. Attorney McSwain. “These children will have to deal with the impact of this 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 responsible for stealing their innocence.”

“The distribution of child pornography results in the continued sexual exploitation of innocent children,” said Michael J. Driscoll, Special Agent in Charge of the FBI's Philadelphia Division. “That’s what pushes the FBI to keep investigating these disturbing but important cases. Protecting kids is paramount and we’ll never give up that fight.”

If convicted, Shaknitz faces a statutory maximum sentence of 20 years’ incarceration with a 5-year mandatory minimum sentence of imprisonment, a lifetime of supervised release, and a $250,000 fine.

The case is being investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Kathryn Deal.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Jerry Collins, 40, and Tyree Lamont Holmes, 28, both of Philadelphia, PA, were indicted for armed robbery of a Garda armored truck on the 3500 block of Market Street in the University City section of West Philadelphia just over one year ago.

According to the indictment, on August 1, 2019, at approximately 10:00 a.m., Holmes and a second unidentified suspect, both wearing masks and gloves, one armed with a loaded Glock 17 semi-automatic handgun and the other with a loaded assault rifle with an attached drum-style magazine, exited a Chevy Trailblazer that was parked behind a Garda armored truck. As one of the guards removed three black bags containing a total of $434,000 cash, Holmes and his accomplice approached the guard, pointed their firearms at him and announced a robbery while Collins waited in the driver’s seat of the getaway vehicle, the Trailblazer. Holmes allegedly grabbed the bags of money and attempted to get back into the vehicle when two guards drew their firearms and began shooting at the fleeing robbers, who fired back. During the shootout, Holmes dropped the bags of money on the ground and fled on foot while the second robber got into the Trailblazer with Collins and fled the scene.

Collins was arrested by the FBI on August 7, 2020; Holmes was arrested by the Philadelphia Police Department on February 18, 2020. Both defendants were indicted for conspiracy to commit Hobbs Act robbery, robbery which interfered with interstate commerce, and using, carrying and brandishing a firearm during and in relation to a crime of violence. Holmes is detained pending trial; the Government has moved to detain Collins, as well, who will appear in federal court for his detention hearing tomorrow, August 11, 2020.

“Robbing any type of business – especially a brazen armed robbery of an armored vehicle in broad daylight – is a serious federal offense that can carry stiff penalties,” said U.S. Attorney McSwain. “And here, the alleged robbery precipitated a shootout on a busy city block that endangered many innocent bystanders. It is remarkable that nobody was struck and killed. This type of criminal behavior is completely unacceptable and my Office is focused on rooting it out.”

“This was a risky armed robbery carried out on a dense and active block in University City,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “The robbery crew showed up armed to the teeth to accost Garda personnel, prompting a barrage of gunfire. Holmes, Collins, and their accomplices put countless innocent people in danger by allegedly planning and carrying out this daylight gunpoint heist. It’s imperative all involved are held accountable, both to keep them off the street and send a message to anyone else who may contemplate such a dangerous assault on our community.”

Each defendant faces a maximum term of life imprisonment with a mandatory minimum term of seven years’ imprisonment without the possibility of parole, up to five years of supervised release, and a $750,000 fine. Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of the Office’s new anti-violence public awareness campaign.

The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department, with assistance from the University of Pennsylvania Police Department, and is being prosecuted by Assistant United States Attorney José Arteaga.

PHILADELPHIA – United States Attorney William M. McSwain announced that Khaleef Huskey, 20, and Rasheen Mainor, 20, both of Philadelphia, PA were charged by Indictment with robbing a West Philadelphia convenience store while brandishing a firearm.

The Indictment alleges that early on the morning of January 14, 2020, the defendants robbed the Dollar & Smoker’s Point store, also known as the Chester Mini Market, at 5401 Chester Avenue, and took merchandise and approximately $500 cash. The defendants committed their alleged crime by brandishing a firearm and forcing their victim to leave the store at gunpoint.

“Robbing any type of business – whether it’s a bank, a corner store, or anything in between – is a serious federal offense that can carry stiff penalties,” said U.S. Attorney McSwain. “If convicted, Huskey and Mainor face many years behind bars. Committing a violent crime in the Eastern District of Pennsylvania carries a tremendous risk of a long prison sentence, which is the message of our new anti-violence public awareness campaign. You can learn more about this campaign on our District website.”

“In the early hours of the morning, Huskey, Mainor, and an accomplice allegedly stormed into a store, confronted an employee at gunpoint, and proceeded to take whatever they wanted,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Protecting the people of Philadelphia from violent crime is a priority for the FBI, and our Safe Streets Task Force will never cede this city to armed criminals willing to break the law without a second thought.”

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, both defendants face a maximum possible sentence of life imprisonment.

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

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Rafael Vega-Rodriguez, 38, of Reading, PA was charged by Indictment with three counts of attempted murder of a federal law enforcement officer, three counts of assault on a federal officer with a deadly weapon, and related firearms charges stemming from an incident earlier this year when he allegedly opened fire on three FBI Special Agents.

On March 1, 2020, FBI Special Agents were conducting surveillance in the area of Gordon Street in Reading, PA, looking for the defendant, who was the subject of an active state arrest warrant for a parole violation. At approximately 11:45 p.m., the agents saw the defendant walking in the area of West Greenwich Street with a second individual. When the agents attempted to stop him, Vega-Rodriguez drew a handgun from under his sweatshirt and shot in their direction, continuing to shoot as he and the second individual fled from the scene.

After an intense man-hunt, investigators discovered that Vega-Rodriguez had fled to Leola, PA, approximately 30 miles southwest of Reading. He was arrested there by FBI Special Agents and Pennsylvania State Police Troopers in the early morning hours of March 3, 2020.

“Shooting at FBI Agents is one of the absolute worst – and dumbest – things that an individual can do,” said U.S. Attorney McSwain. “Such alleged behavior is guaranteed to bring the full force of the federal government crashing down on your head. This case has my full attention and we will not rest until justice is served.”

“Anyone who tries to kill an FBI Agent, knowing the ramifications that would bring, is dangerous, desperate, and an extreme threat to public safety,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “That’s someone who needs to be taken off the street immediately, and we’ll bring all available resources to bear to do just that. As alleged, Rafael Vega-Rodriguez was determined not to be apprehended and had no compunction about opening fire on our agents. We’re now equally determined to see him brought to justice.”

If convicted the defendant faces a maximum possible sentence of 140 years imprisonment.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Mary A. Futcher.                                                        

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

PHILADELPHIA – United States Attorney William M. McSwain announced today that David Dunham, 40, of Bethlehem, PA was sentenced to serve 84 months in prison, followed by three years of supervised release, and ordered to pay over $10.2 million in restitution by United States District Court Judge Jeffrey L. Schmehl.

Following a four week trial in April 2019, a federal jury convicted Dunham, owner of Smarter Fuel LLC in Wind Gap, PA, and co-owner of Greenworks Holdings LLC in Allentown, PA, of conspiracy to commit wire fraud and to defraud the United States, wire fraud, filing false tax documents, and obstruction of justice. The conviction arose from Dunham’s planning and execution of a scheme to defraud the Environmental Protection Agency (EPA), the Internal Revenue Service (IRS), the United States Department of Agriculture (USDA), and his customers, to obtain renewable fuel credits in his “green energy” biofuel business.  

To carry out his green energy scam, from 2010 to 2015 Dunham fraudulently applied for, received, and sold EPA “credits” for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place. Dunham also sought and received millions of dollars from the IRS and the USDA based on the same falsehoods. In total, based on the repeated falsehoods he told the federal agencies, Dunham obtained nearly $50 million in fraudulent revenue. Dunham’s co-defendant, Ralph Tomasso, the co-owner of Greenworks, previously pleaded guilty to conspiracy to defraud federal programs.

The evidence at trial also showed that Dunham engaged in multiple cover-ups designed to hide his crimes from authorities. These included altering his accounting records the day before an IRS audit in 2010, and providing a USDA auditor with dozens of falsified records, which Dunham had ordered an employee to fabricate, during an audit in 2012.

“David Dunham is a thief, dressed up in ‘green energy’ clothing,” said U.S. Attorney McSwain. “He thought he could con not just one, but several federal agencies. Eventually, his lies caught up to him and now his reward is a long stint in federal prison.”

“This sentence sends a clear message that the Department of Justice will not tolerate fraud and will not hesitate to prosecute those who seek to undermine support for true American-made renewable fuel,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division.  “Mr. Dunham’s crimes were longstanding and elaborate, but this did not stop the Department from ensuring that such crimes are punished and justice is done.”

“David Dunham used false and fraudulent pretenses to steal millions of dollars from the Government,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His loss of liberty today is the price he must pay for scamming the Government and stealing from hard working American taxpayers.”

“Today’s sentencing demonstrates there are real consequences for those defrauding the Renewable Identification Numbers (RINs) program,” said Director Jessica Taylor of EPA’s Criminal Investigation Division. “EPA, together with our federal partners, uncovered criminal activities by the defendants, and in doing so levelled the playing field for those who legally participate in the RINs program.” 

The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, the Internal Revenue Service’s Criminal Investigation Division, and the United States Department of Agriculture’s Office of Inspector General. The case is being prosecuted by Assistant United States Attorney Mary E. Crawley and Trial Attorney Adam Cullman of the ENRD.

The owner of a biofuel company was sentenced to seven years in prison followed by a three-year term of supervised release and ordered to pay $10,207,000 in restitution for defrauding multiple federal agencies and customers.

Following a four-week trial before U.S. District Judge Jeffrey L. Schmehl, a federal jury in the Eastern District of Pennsylvania convicted David Dunham, owner of Smarter Fuel LLC in Wind Gap, Pennsylvania and co-owner of Greenworks Holdings LLC of Allentown, Pennsylvania, of conspiracy to commit wire fraud and defraud the United States; wire fraud; filing false tax documents and obstruction of justice. 

The conviction arose from Dunham’s planning and executing a scheme to defraud the Environmental Protection Agency (EPA), the IRS, the U.S. Department of Agriculture (USDA), and his customers, to obtain renewable fuel credits in his “green energy” business.  

“This sentence sends a clear message that the Department of Justice will not tolerate fraud and will not hesitate to prosecute those who seek to undermine support for true American-made renewable fuel,” said Assistant Attorney General Jeffrey Bossert Clark of the Justice Department’s Environment and Natural Resources Division.  “Mr. Dunham’s crimes were longstanding and elaborate, but this did not stop the Department from ensuring that such crimes are punished and justice is done.”

“David Dunham is a thief, dressed up in ‘green energy’ clothing,” said U.S. Attorney William M. McSwain for the Eastern District of Pennsylvania.  “He thought he could con not just one, but several federal agencies. Eventually, his lies caught up to him and now his reward is a long stint in federal prison.”

“David Dunham used false and fraudulent pretenses to steal millions of dollars from the Government,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “His loss of liberty today is the price he must pay for scamming the Government and stealing from hard working American taxpayers.”

To carry out his green energy scam, from 2010 to 2015 Dunham fraudulently applied for, received, and sold EPA “credits” for producing biofuels that he, in fact, did not produce and, in many instances, had never possessed in the first place.  Dunham also sought and received millions of dollars from the IRS and the USDA based on the same falsehoods.  All told, based on the repeated falsehoods he told the federal agencies, Dunham obtained nearly $50 million in fraudulent revenue.  In carrying out this massive fraud, Dunham used his businesses, Smarter Fuel, which he owned, and Greenworks Holdings, which he operated with his co-defendant, Ralph Tomasso, who previously pleaded guilty to conspiracy to defraud federal programs.

The evidence at trial also showed that Dunham engaged in multiple cover-ups designed to hide his crimes from authorities.  These included altering his accounting records the day before an IRS audit in 2010, and providing a USDA auditor with dozens of falsified records, which Dunham had ordered an employee to produce, during a 2012 audit.

The case was investigated by the EPA’s Criminal Investigation Division, the IRS Criminal Investigation, and the USDA’s Office of Inspector General.  The case is being prosecuted by Assistant U.S. Attorney Mary E. Crawley and Trial Attorney Adam Cullman of the Environment and Natural Resources Division.

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 that Stefan Tucker, 33, of Philadelphia, PA was sentenced to 200 months (over 16 years) in prison by United States District Judge Gerald J. Pappert for his involvement in an almost around-the-clock drug delivery service for several years in South Philadelphia. Two of Tucker’s co-defendants, Stephen Wilkerson, 30, and Jerome Tucker, 29, both of Philadelphia, PA, were also recently sentenced and received ten years and five years in prison, respectively. All three pleaded guilty to multiple drug offenses in January and February, 2020.

Between 2013 and 2016, the defendants and their co-conspirators, known as the “Friends” and the “7th Street” drug trafficking group, delivered crack cocaine and heroin to customers along the 7th Street corridor in South Philadelphia using a shared drug phone. The defendants used the phone to take orders and communicate with customers; they would pass the phone off in shifts to keep their operation going almost 24 hours per day. FBI agents conducted surveillance and controlled purchases of narcotics from the defendants using audio and video recording devices. During the course of the investigation, agents also intercepted phone calls and text messages from the shared drug phone, which documented the defendants’ illicit activities. Three co-defendants, Antoine Clark, Gerald Spruell, and Daniel Robinson, were convicted at trial in February 2020 of multiple drug offenses stemming from their involvement in the drug operation and await sentencing.

“Trafficking in heroin and crack cocaine destroys neighborhoods, it’s deadly, and it’s obviously illegal – for good reason,” said U.S. Attorney McSwain. “And it will land you in federal prison for many years. The 7th Street drug trafficking group is now gone, and we bid it good riddance.”

“This group’s constant churn of drug transactions kept the 7th Street corridor awash in heroin, crack, and other narcotics,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “Shutting them down makes the community safer and these sentences will put them out of business.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Matthew Newcomer and Jason Grenell.

PHILADELPHIA – United States Attorney William M. McSwain announced that Jeffrey Blackwell, 47, of Philadelphia, PA, pleaded guilty today to charges of honest services wire fraud, filing a false tax return, and two counts of failure to file a tax return. The defendant was charged by Superseding Indictment in September 2019.

Blackwell, a former City of Philadelphia employee in the Office of the City Controller, committed a series of frauds, accepting more than $20,000 in bribes and kickbacks. Between 2013 and 2015, while serving in the Investigations Division of the Controller’s Office, Blackwell misused his official position to enrich himself by soliciting money in exchange for official actions or the promise of official actions, but rarely provided the promised permits or contracts.

At his plea hearing, he admitted that he solicited bribes from at least five individuals who were seeking permits or contracts from the City. One of these 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 of Philadelphia to renovate a house.

Blackwell also admitted that he filed a false 2012 federal income tax return that falsely deducted travel expenses and falsely claimed a dependent, and he admitted that he failed to file a return as required by law for tax years 2013 and 2014.

“Philadelphians deserve public employees who do their jobs honestly and faithfully. Blackwell did not meet this standard – instead choosing to use his public position to extort money for himself,” said U.S. Attorney McSwain. “Now he will face the consequences. My Office will continue to attack and destroy the cancer of corruption wherever we find it in Philadelphia or elsewhere in the District.”

“Jeffrey Blackwell traded on his official position, seeking bribes in order to pad his pockets,” said Michael J. Driscoll, Special Agent in Charge of the FBI’s Philadelphia Division. “He put his own interests above those of the people he served, depriving Philadelphians of their right to honest services from city workers. The FBI is committed to protecting the integrity of government at all levels from the plunder of public corruption.”

“Mr. Blackwell had a duty to report all of his income to the IRS and to pay the correct tax on that income,” said IRS Criminal Investigation Special Agent in Charge Thomas Fattorusso. “Mr. Blackwell’s decision to shirk this duty undermines public confidence in our tax system. His admission of guilt and acceptance of responsibility is a reminder that no one is above the law.”

“This case is one of a bad actor who abused his position and took advantage of the system for his own personal gain. When offenders, like this one, are held accountable, we’re taking an important step toward restoring the public’s trust in government and committing to the idea that Philadelphia works for everyone, not just the connected,” said Philadelphia City Controller Rebecca Rhynhart. “But it is important to underscore that this case is not reflective of all city employees, most of whom are hardworking, do their job with integrity and want to make Philadelphia a better place.”

The defendant faces a maximum possible sentence of 24 years’ imprisonment, a three-year period of supervised release, $600,000 fine, and a $225 special assessment. United States District Judge Chad F. Kenney set sentencing for December 2020.

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

PHILADELPHIA – United States Attorney William M. McSwain announced that Vontez Scales, 29, of Philadelphia, PA was sentenced to 320 months in prison, ten years of supervised release, and ordered to pay a $4,000 fine by United States District Judge Mark A. Kearney for his leadership role in a large scale drug trafficking ring.

Following a lengthy investigation in 2018, including a series of court-ordered wiretaps, the defendant and his co-conspirators were charged by Indictment with multiple drug offenses, including conspiracy to distribute narcotics and possession with intent to distribute narcotics. Scales was a member of the “Skipworth” drug trafficking organization, which sold bulk quantities of crystal methamphetamine, fentanyl, heroin and cocaine worth millions of dollars in Philadelphia and its surrounding suburban counties. Scales’ co-conspirators, Damir Skipworth (the group’s ring leader), Jarrett Cobb, and Tyrone Smith all previously pleaded guilty to federal drug trafficking charges in this case and received significant prison sentences: Skipworth more than eight years, Cobb more than five years, and Smith more than three years.

In December 2019, Scales was convicted at trial of possession with intent to distribute and conspiracy to distribute methamphetamine and heroin, arising from his sales and purchases of large quantities of drugs to and from co-conspirators. The defendant bought crystal methamphetamine in pound quantities from a co-conspirator, with the intention to sell it, and in turn sold large quantities of heroin laced with fentanyl back to the co-conspirator to distribute to other members of the group. Scales used the cash proceeds from his illegal drug dealing for things like car rentals, hotels and luxury clothing, including purchases at Saks Fifth Avenue of over $28,000. Scales was previously convicted twice of drug trafficking, and each time received a lengthy prison term.

“Scales and his co-conspirators pumped huge quantities of deadly, addictive drugs into Philadelphia and its suburbs,” said U.S. Attorney McSwain. “Drug trafficking is an extremely dangerous business for those engaged in it and for everyone else around them. Our Office is determined to protect the communities impacted by drug trafficking by investigating and convicting criminals like those in the Skipworth organization.”

“By conducting millions of dollars of business in meth, heroin, cocaine and fentanyl, the Skipworth drug trafficking organization was a blight on all of southeastern Pennsylvania,” said Bucks County District Attorney Matthew D. Weintraub. “Thanks to the collaborative efforts of the DEA and the Bucks County Drug Strike Force, this criminal organization’s doors have been shut for good.”

The case was investigated by the Bucks County Detective Bureau and the Drug Enforcement Administration, and is being prosecuted by Assistant United States Attorneys Christopher Parisi and Andrea Foulkes.

PHILADELPHIA – On July 21, 2020, United States Attorney William M. McSwain delivered testimony at a hearing before the Presidential Commission on Law Enforcement and Administration of Justice. He spoke on a panel addressing Respect for Law Enforcement and the Rule of Law, and addressed the negative impact that certain policies, enacted by some local district attorneys, are having on public safety, especially in large cities where violent crime is on the rise. These self-proclaimed “progressive prosecutors” are promoting a culture of disrespect for law enforcement and the rule of law, which has had the predictable effect of jeopardizing public safety. U.S. Attorney McSwain concluded that, in order to restore the public’s trust in law enforcement and ensure equal justice under the law, U.S. Attorneys have a responsibility to serve as a counter-weight to radical “reform” policies that are causing far more harm than good.

Remarks as Prepared for Delivery

Introduction

Thank you, Chairman Keith and thank you to the Commission for the important work you are doing on behalf of the Department.  It is an honor to be here today to provide testimony on the importance of respect for law enforcement and the rule of law in our country.

I have served as the United States Attorney for the Eastern District of Pennsylvania since April 2018, and my Office is one of the nation’s largest U.S. Attorney’s Offices.  We serve a population of over five million citizens and cover a geographic area of roughly 4,700 miles across nine counties in southeastern Pennsylvania – Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton, and Philadelphia counties.  In addition to the suburban and rural areas within the District’s borders, we serve five of Pennsylvania’s eight major cities: Philadelphia, Allentown, Reading, Bethlehem, and Lancaster.  In our District, the criminal behavior that we encounter runs the gamut, with a mix of issues to confront: big-city problems, small-town problems, and everything in between.  

Despite these differences, every law-abiding citizen wants the same thing – to live in a community that is safe for themselves and their families.  This is why this Commission’s work is so critical: the study of crime, including its causal factors, is essential to reduce its prevalence. 

President Trump’s Executive Order establishing this Commission directed it to study “important current issues facing law enforcement and the criminal justice system.”[1]  One of the specific subjects identified for study was “refusals by the state and local prosecutors to enforce laws or prosecute categories of crime.”[2]

Which brings me to the topic of this hearing and my testimony today.  Though respect for law enforcement and the rule of law are broad concepts, my testimony today will primarily focus on one important and troubling recent development – that is, the undeniable fact that the rule of law and law enforcement officers are currently under attack in many parts of our nation.  In many cities and counties across the country, so-called progressive prosecutors have been elected on an agenda of sending fewer people to jail, by whatever means necessary, and with little regard for the public safety consequences.[3]

Philadelphia is, in many ways, ground zero for this experiment.  But there are many other cities across the United States where the top local prosecutors are pushing progressive policies.[4]  And in many of these cities, prosecutors are decriminalizing certain conduct, encouraging overly lenient plea bargaining, [5] firing career prosecutors who might not share their viewpoints,[6] and shifting significant resources away from prosecution and into conviction integrity units,[7] among other significant policy changes.  

My testimony today focuses on the work we have done in the Eastern District of Pennsylvania to serve as a counter-weight to some of the worst excesses of this movement.  In the two-plus years I have served as U.S. Attorney, I have worked to restore a culture of respect for law enforcement and to uphold the rule of law and ensure that it is enforced in a consistent, impartial manner.  I believe that the steps we have taken in the Eastern District of Pennsylvania can serve as a model for other federal districts that are facing the predictable rise in crime and chaos that results from radical “reform” policies.

The Public Safety Crisis in Philadelphia and Its Root Causes

There can be no doubt that there is a public safety crisis in Philadelphia; one need only look to the staggering rise in serious violent crime in the past two-plus years as proof.  The timing coincides with a decline in the number of local cases charged in several key categories and recently, a decline in the homicide clearance rate.[8]    

In 2019, Philadelphia recorded its highest number of homicides since 2007, and more people were shot in Philadelphia in 2019 than in any other year since 2010, according to Philadelphia Police statistics.  The 2020 numbers are on track to be even worse.  As of July 12, 2020, there have been 227 homicides, a 28% increase from the same date in 2019, and 1,578 shooting incidents, a 55% increase from the same date in 2019.  On Sunday, July 6, 2020, a staggering 23 people were shot across Philadelphia – the most in a single day in years.  Of these victims, six of them died, including a six-year old boy.

 These statistics undoubtedly establish the problem.  And in Philadelphia and other large cities where murders and shootings continue to rise at an alarming rate,[9] one of the root causes is that criminals believe that there will be no consequences for their actions. 

 There are two main reasons why criminals think there are no consequences.

First, the local criminal justice system does not hold them fully accountable.  Criminals bank on the fact that certain progressive policies – things like requiring assistant district attorneys to decline charges and to offer lenient plea deals in a broad swath of cases – will give them some breathing room to ply their trade.

Second, criminals believe they can commit crime without facing the consequences because the community is too often told that police are the enemy, which discourages witnesses from cooperating with the police and results in crimes remaining unsolved.  This has grave consequences for the community.  Such mistrust also results in deadly assaults on police officers – of which unfortunately, Philadelphia has had its fair share recently. 

The culture of disrespect for law enforcement was on full display in front of a national audience this past August when Maurice Hill, a convicted felon with a long rap sheet, opened fire on Philadelphia police officers as they attempted to execute a search warrant.  This confrontation left six officers wounded and a neighborhood in North Philadelphia traumatized.  It is a miracle that every officer survived this attack.[10]

In March of this year, the Philadelphia police were not as fortunate.  On March 13, 2020, Philadelphia Police Sergeant and SWAT member James O’Connor was gunned down while trying to arrest Hassan Elliot, a known affiliate of a dangerous drug gang who was wanted by local authorities for murder and multiple other offenses.[11]

And just last month, 27 Philadelphia Police Officers were injured after a period of violence, rioting, and looting that swept across several sections of Philadelphia.  What began on May 30, 2020 as peaceful protests concerning the death of George Floyd turned violent, and over the course of several days, officers sustained injuries ranging from chemical burns, head injuries, and broken bones.[12]  One officer was hospitalized after suffering severe damage to his upper body – a crushed shoulder and broken ribs – when a woman drove over him when protesters turned violent during a demonstration that look place at Seventh and Chestnut Streets – steps away from Independence Hall and my Office.

As tensions continue to mount between the police and the public, police officers remain on their heels, which gives violent criminals the room to operate that they seek.  Criminals literally think they can get away with murder, shootings, looting, and rioting. And in many cases, they are.

EDPA’s Response to the Rise in Violent Crime and Culture of Lawlessness

The U.S. Attorney’s Office for the Eastern District of Pennsylvania is committed to stemming the wave of violent crime that is occurring in parts of our District. This section highlights the ways in which my Office has worked to promote the rule of law and respect for law enforcement.

            1.  Increase Focus on Violent Crime Prosecutions

The first strategy my Office has employed is to increase our violent crime prosecutions District-wide.  For example, in Fiscal Year 2019, our Violent Crime Unit charged the largest number of cases in all of the Criminal Division Units in my Office.  We charged 208 violent crime cases, as compared to 136 the year before, which represents a 53% increase.

And in Philadelphia’s most dangerous neighborhoods – police districts that are designated as “Project Safe Neighborhood” hot spots – federal prosecutions continue to rise.  Project Safe Neighborhood (PSN) is a collaborative effort by federal, state, and local law enforcement agencies and prosecutors to deter and punish gang and gun violence.  The Department of Justice’s PSN Strategy requires each District to identify PSN “target areas” with the highest violent crime rates and adopt cases for federal prosecution in those areas.  In the Eastern District of Pennsylvania, our PSN target areas are all located in police districts in Philadelphia.  In Fiscal Year 2019, my Office charged 143 violent crime and illegal gun possession cases (against 195 defendants) in PSN target areas as compared to 82 cases (against 92 defendants) charged in the previous year.  That amounts to a 72% increase in the number of PSN cases this Office pursued and a 112% increase in the number of defendants prosecuted.

To manage the increase in caseload, the Office has dedicated additional resources to our Violent Crime Unit.  In addition to adding multiple Assistant U.S. Attorneys to the Unit, this past year, we earmarked our District’s PSN grant funds to hire two experienced prosecutors from the Criminal Law Division of the Pennsylvania Attorney General’s Office who are stationed full-time in our Violent Crime Unit, working solely on cases in the PSN target areas.  We are currently in the process of hiring a third full-time attorney.  These cross-designated Special Assistant United States Attorneys have served as a force multiplier in our fight against rising violent crime.

            2.  Seize Opportunities to Take on High Impact Cases that Serve Deterrence

My Office has also been involved in a variety of impactful criminal and civil cases and remains at the forefront of many important areas of federal law enforcement.  In the face of the uncertainty created by district attorneys and city leaders who advocate pro-violent defendant policies, it is important for federal prosecutors to show the public – law abiding citizens and would-be criminals alike – that federal law enforcement will step in to fill the law enforcement vacuum.  Doing so has an important deterrent effect.

For example, my Office charged a criminal case against Jouvan Patterson, who shot and nearly killed a Cambodian store owner in South Philadelphia with an AK-47 during a store robbery.  We charged Patterson federally after he received an overly lenient plea deal from local authorities.  Even though the victim is confined to a wheelchair, the plea deal he received on the state charge could have meant that Patterson would serve as little as 3 ½ years in prison.  He faces a much longer, more appropriate sentence in our case.

In the wake of statements by Philadelphia leaders that suggested plans of leniency toward the rioters and looters who turned peaceful protests over George Floyd’s death into mayhem, my Office has offered a swift response.  For example, we charged Lore-Elisabeth Blumenthal with two counts of arson after allegedly setting two Philadelphia police cars on fire in front of City Hall on May 30.  We have also brought charges against defendants accused of taking advantage of the unrest by, among other things, blowing up ATM machines and burglarizing banks, and we have many active, ongoing investigations that we expect will lead to many more arrests. 

In the civil context, my Office filed a civil lawsuit to prevent the opening in Philadelphia of the first-ever supervised heroin injection site in the United States.  Those who support such injection sites – including some city officials – are attempting an end-run around the federal Controlled Substance Act (CSA).  The case is currently on appeal before the U.S. Court of Appeals for the Third Circuit, and we expect a decision later this year.           

            3.  Communicate Support for the Police and Share Our Deterrent Message with the Public

The progressive prosecutor reform movement has garnered significant media attention across the country.  The best way to counter disrespect for law enforcement and the rule of law is to publicly challenge those who promote an anti-law enforcement culture.  It is important for federal prosecutors to speak out when public safety is at risk and to support our federal, state, and law enforcement officers whenever possible.

One of the first things I did when I began my tenure as U.S. Attorney was to form a new unit called the Office of Public Affairs and External Engagement (OPAEE).  OPAEE is designed to promote transparency with the community, foster relationships with law enforcement stakeholders and the public, and work with community groups on deterrence initiatives and crime prevention.

My Office has increased transparency in a number of ways.  For example, I appear and speak to civic, legal, and law enforcement groups whenever possible, and take every opportunity to publicly communicate my steadfast support of the police.  When significant local events occur that have a negative impact on law enforcement efforts, I share my views with the community we serve.  In addition, I recently launched an anti-violence campaign across the District to deter violent crime by raising public awareness about the types of federal criminal charges that can be brought when firearms are involved.  The campaign, #fedcrimegetsfedtime, features public service announcements encouraging would-be offenders to put the guns down and make the right choice for their future.

Conclusion

As senior Department of Justice officials, U.S. Attorneys have a platform and a voice to stand up for the rule of law and respect for law enforcement, which go hand-in-hand.  We should use that platform responsibly and forcefully and serve as a counter-weight to radical “reform” policies that threaten public safety.  As Attorney General Barr has put it, the first duty of the government is to protect the safety of our citizens.  The law is the foundation of our society, and we at the Department are the caretakers of the law.  By upholding the law, we make possible the common life of our nation and the freedom, safety, and equality under the law that define our country. 

[1] Exec. Order No. 13896, 84 Fed. Reg. 58595 (2019), www.federalregister.gov/documents/2019/11/01/2019-24040/commission-on-law-enforcement-and-the-administration-of-justice.

[2] Id.

[3] See Emily Bazelon & Miriam Krinsky, There’s a Wave of New Prosecutors. And They Mean Justice, N.Y. Times (Dec. 11, 2018), http://www.nytimes.com/2018/12/11/opinion/how-local-prosecutors-can-reform-their-justice-systems.html.

[4] See Mark Berman, These Prosecutors Won Office Vowing to Fight the System. Now, the System is Fighting Back, Wash. Post (Nov. 9, 2019), https://www.washingtonpost.com/national/these-prosecutors-won-office-vowing-to-fight-the-system-now-the-system-is-fighting-back/2019/11/05/20d863f6-afc1-11e9-a0c9-6d2d7818f3da_story.html. The nearly two dozen prosecutors who consider themselves in this category include Chesa Boudin (District Attorney of San Francisco, California); John Creuzot (District Attorney of Dallas County, Texas); Kim Foxx (State’s Attorney of Cook County, Illinois (Chicago)); Eric Gonzalez (District Attorney of Brooklyn, New York); and Rachael Rollins (District Attorney of Suffolk County, Massachusetts (Boston)).  

[5] See, e.g., The Rachel Rollins Policy Memo (Mar. 2019), http://files.suffolkdistrictattorney.com/The-Rachael-Rollins-Policy-Memo.pdf. (last visited July 19, 2020).

[6] See, e.g., Gabe Dreschler, Why Did San Francisco’s New District Attorney Fire Seven Prosecutors?, KQED News, (Jan. 12, 2020), https://www.kqed.org/news/11795676/why-did-san-franciscos-new-district-attorney-fire-seven-prosecutors.

[7] Chicago District Attorney Kim Foxx revamped Cook County’s Conviction Integrity Unit, which to date, has reversed convictions of over 20 defendants. https://www.law.upenn.edu/live/profiles/1248-kimberly-m-foxx/profiles/quattroneadvisory (last visited July 19, 2020).

[8]  The Philadelphia District Attorney’s Public Data Dashboard provides statistics relating to charges filed and outcomes across various types of criminal offenses.  Examining the Year-to-Date Count of Cases Charged by Offense Category, as of July 17, 2020, the Dashboard reports that the District Attorney’s Office charged 30% fewer cases overall as compared to the same time period in 2019.  It also reports 20% fewer violent crime cases charged, 48% fewer drug cases charged, and 31% fewer retail theft cases as compared to the same time period in 2019. https://data.philadao.com/Charge_Report.html (last visited July 19, 2020).  And in reporting case outcomes year-to-date (January 1, 2020 to July 17, 2020) as compared to the same time in 2019, the Dashboard reports a decrease in outcomes (defined as “the various ways a criminal case can end”) in several key categories of cases charged.  For example, in the category of violent offenses, case outcomes have decreased 53 percent. When broken down further, case outcomes in the category of robberies with a gun are down 65 percent; and homicide outcomes are down 62 percent.  https://data.philadao.com/Case_Outcomes_Report.html (last visited July 19, 2020).

[9]  Safia Samee Ali, Gun Violence Is Surging in Cities, and Hitting Communities of Color Hardest, NBC News (July 9, 2020) (discussing rise in shootings and homicides in Philadelphia, Chicago, and other major cities), https://www.nbcnews.com/news/us-news/gun-violence-surging-cities-hitting-communities-color-hardest-n1233269. 

[10]  Statement by United States Attorney William M. McSwain on the Shooting of Six Philadelphia Police Officers (Aug. 15, 2019), https://www.justice.gov/usao-edpa/pr/statement-united-states-attorney-william-m-mcswain-shooting-six-philadelphia-police. 

[11]  Statement of William M. McSwain Regarding the Murder of Philadelphia Police Corporal James O’Connor (Mar. 16, 2020), https://www.justice.gov/usao-edpa/pr/statement-us-attorney-william-m-mcswain-regarding-murder-philadelphia-police-corporal.

[12] See Fox29 News, Commissioner: 768 Arrests, 27 Officers Injured in Continued Violence in Philadelphia (June 7, 2020), https://www.fox29.com/news/commissioner-768-arrests-27-officers-injured-in-continued-violence-around-philadelphia.

PHILADELPHIA – United States Attorney William M. McSwain announced that Lehigh University in Bethlehem, Pennsylvania, has agreed to pay $200,000 and abide by compliance requirements in connection with any application seeking federal grant funds or cooperative agreements with any federal agency. The settlement agreement resolves allegations under the False Claims Act relating to Small Business Innovation Research (“SBIR”) grants awarded to ArkLight, a company owned by Dr. Yujie Ding, a former Lehigh University professor.

The Small Business Innovation Research program is a competitive program that encourages American small businesses to engage in research on behalf of the federal government that has the potential for commercialization. Although small businesses may subcontract a portion of the work to other entities, including universities, the small business itself must perform a majority of the work under the program.

Between 2004 and 2013, Lehigh University employed Dr. Yujie Ding, first as an Associate Professor and then as a Professor. During that time, Ding used a sole proprietorship he created called ArkLight to apply for SBIR program research grants funded by the National Aeronautics and Space Administration (“NASA”), the United States Department of the Army, the United States Air Force, and the National Science Foundation (“NSF”). ArkLight received grants totaling $2,740,000.

In each proposal, Yuliya Zotova, Ding’s wife, was listed as ArkLight’s principal investigator, the person designated to lead the scientific and technical effort. Under applicable program rules, Professor Ding was not eligible to serve as the principal investigator. The proposals represented that ArkLight would do a majority of the work under the leadership of Zotova. Lehigh University agreed to act as a subcontractor on some of ArkLight’s grants.

Under the applicant programs, ArkLight was to complete a majority of the research work. In reality, and unbeknownst to Lehigh University, none of the work was completed by ArkLight. Instead, all of the work was done by graduate students and others working in Ding’s university laboratory, under Ding’s supervision. The United States contends that, at the time, Lehigh University had an inadequate compliance program in place to detect and prevent Ding’s fraud. Although the work was done at Lehigh University, the University was ineligible for payment because there was no small business serving as the primary contractor. As the nominal subcontractor, Lehigh was paid over $1 million.

Ding and Zotova were criminally were charged by Indictment by the U.S. Attorney’s Office for the Eastern District of Pennsylvania. That indictment was unsealed on February 5, 2015, and on November 12, 2015, a jury returned guilty verdicts against Ding and Zotova on six counts of wire fraud. Ding was sentenced to a year and a day in prison for his role in the fraud. He was also ordered to pay a fine of $3,000 and restitution of $72,000. Zotova, was sentenced to 3 months in prison, along with a fine and restitution. Lehigh University cooperated in the criminal investigation and trial of Ding and Zotova by responding to subpoenas and making witnesses available for interviews.

“Institutions that receive research funding from the federal government must be rigorous in rooting out fraud.” said U.S. Attorney McSwain. “While it did not detect the problems itself, Lehigh University, to its credit, did take proactive steps to improve its existing compliance program once it learned that one of its employees had committed fraud. We value Lehigh University’s research contributions and hope that the enhanced compliance measures will have a positive impact in the future. We also appreciate the University’s cooperation in the criminal prosecutions of Ding and Zotova.”

“The success of SBIR programs often lies with small business awardees, and its subcontractors, being good stewards of taxpayers’ dollars when conducting Federal Research. The NASA Office of Inspector General (OIG), along with its law enforcement partners, will continue to aggressively investigate those individuals and entities that take advantage of the trust of the American taxpayers,” stated Special Agent-in-Charge, Mark. J. Zielinski, Eastern Field Office, NASA OIG.

“Ensuring the integrity of the Air and Space Forces’ research and development process is a top investigative priority of the Air Force Office of Special Investigations (OSI). Those who seek to conduct business with the Department of the Air Force must be candid and truthful. OSI will aggressively investigate those who attempt to defraud the Air Force and will work with our law enforcement partners to identify and prosecute those who would take advantage of the Air and Space force and their interests. I’d like to thank Lehigh University for their cooperation in the investigation,” said Special Agent in Charge Jason T. Hein, OSI, Office of Procurement Fraud Investigations Detachment 6.

“The settlement agreement announced today is the result of joint investigative effort to protect Small Business Innovative Research contracts from fraud and abuse," stated Special Agent in Charge Leigh-Alistair Barzey, Defense Criminal Investigative Service (DCIS), Northeast Field Office. “The DCIS is committed to working with its law enforcement partners and the U.S. Attorney’s Office to ensure the integrity of federal research and development procurement programs, such as SBIRs. Of note, in addition to entering into this civil settlement agreement, Lehigh University provided assistance in a related criminal investigation of a former Lehigh professor and his spouse who defrauded the SBIR program.”

Since its enactment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses compete for federal research and development awards, which have enhanced the nation’s defense. “The proactive efforts of agencies like NASA, the Air Force, the DCIS, and the NSF are critical to identifying potential fraud and safeguarding limited government resources,” said U.S. Attorney McSwain.

The investigation was conducted by NASA, the Air Force, the DCIS, and the NSF. The civil case is being handled by Assistant U.S. Attorney Veronica J. Finkelstein.

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

PHILADELPHIA, PA – United States Attorney William M. McSwain announced affirmative civil enforcement (ACE) achievements in 2019 by the Civil Division of the United States Attorney’s Office for the Eastern District of Pennsylvania, and its ongoing efforts in the first half of 2020 to stop fraud, waste, and abuse against the government. The number of affirmative civil enforcement settlements rose to an all-time high in 2019, solidifying the Office’s Civil Division as one of the busiest and most productive in the nation.

The Office’s Civil Division recovered over $260 million in settlements and judgments from civil cases involving fraud against the government in 2019 and the first half of 2020.  These matters originated from qui tam, or whistleblower, filings under the False Claims Act (FCA), referrals from agency partnerships, and proactive efforts including data analytics. In 2019, the Civil Division also opened a record-setting number of ACE investigations into alleged fraud against the government, Controlled Substances Act violations, and civil rights violations. Much of the Office’s affirmative success came from a renewed focus on generating and supporting investigations using data analytics, which helps to identify fraud trends.

“This past year’s results reflect creative and groundbreaking resolutions across a variety of programs that appropriately address violations by health care providers, government contractors, and federal grant recipients, while encouraging those same entities and their employees to come forward and self-disclose when they are aware of non-compliance with federal laws,” said U.S. Attorney McSwain. “In our District, we have one of the most sophisticated whistleblower bars in the country. We thank those whistleblowers and their counsel who have brought allegations of fraud to our attention. The willingness of whistleblowers, or relators, to come forward and shed light on claims of fraud resulted in the return of millions of dollars to the federal government programs that were defrauded.”

U.S. Attorney McSwain continued, “We also thank our federal enforcement partners for their dedication in the matters summarized below, including: the United States Department of Health and Human Services, Office of the Inspector General; the Defense Investigative Service, Office of the Inspector General; the Department of Veterans Affairs; the Drug Enforcement Administration; the United States Office of Personnel Management, Office of the Inspector General; and the United States Postal Inspection Service. My Office would not have achieved the level of success it did without the benefit of their dedication and expertise.”

“Our Civil Division’s affirmative achievements show that we will fight fraud and hold companies and individuals accountable, no matter the methods, schemes, or amounts at play,” U.S. Attorney McSwain said. “I look forward to ongoing ACE success and continued enforcement in the areas of health care fraud, grant fraud, Controlled Substances Act enforcement, and civil rights enforcement.”

Below are some of the case highlights from 2019 and thus far in 2020.

2019 ACE Achievements Spanned Multiple Enforcement Areas

FCA Healthcare Fraud Settlements

Pentec Health. Pentec Health, a provider of compounded infusion drugs and nutritional supplements for use by patients with end-stage renal disease, paid $17 million to resolve allegations that, from 2007 to 2018, it billed Medicare and other federal healthcare programs for excessive amounts of product wasted during the compounding of its nutritional supplement Proplete for dialysis patients, and routinely waived patient copayments and deductible obligations in order to induce prescriptions and use of Proplete. Along with this settlement, Pentec executed a Corporate Integrity Agreement with the Department of Health and Human Services, Office of Inspector General. https://www.justice.gov/usao-edpa/pr/pentec-health-inc-pay-17-million-settle-false-claims-act-allegations

Mallinckrodt/Questcor Pharmaceuticals.  Mallinckrodt ARD LLC (formerly known as Mallinckrodt ARD, Inc. and previously Questcor Pharmaceuticals, Inc.) paid $15.4 million to resolve claims that Questcor paid illegal kickbacks to doctors from 2009 through 2013 in the form of lavish dinners and entertainment, to induce prescriptions of the company’s drug, H.P. Acthar Gel, for the treatment of complications from multiple sclerosis. The company allegedly paid kickbacks to induce referrals from health care providers in violation of the Anti-Kickback Statute and to induce the submission of false claims to Medicare. https://www.justice.gov/usao-edpa/pr/drug-maker-mallinckrodt-agrees-pay-154-million-resolve-false-claims-act-allegations

Heritage Pharmaceuticals. Generic drug manufacturer Heritage Pharmaceuticals paid $7.1 million to resolve allegations that from 2012 to 2015, it engaged in a scheme to artificially inflate generic drug prices and other anti-competitive behavior, causing a loss to Medicare, Medicaid, and the Department of Defense’s Tricare program beneficiaries, as well as the Department of Veterans Affairs. Separately, Heritage entered into a three-year deferred prosecution agreement with the Antitrust Division with regard to a criminal charge that the company conspired to suppress and eliminate competition by allocating customers, rigging bids, and fixing and maintaining prices in violation of the Sherman Act. https://www.justice.gov/usao-edpa/pr/heritage-pharmaceuticals-pays-over-7-million-resolve-civil-false-claims-act-allegations

Controlled Substances Act Enforcement

Spiro Kassis, M.D. Dr. Kassis paid $1.4 million, committed to never obtaining a controlled substance registration, and consented to a 15-year exclusion from Medicare and Medicaid to resolve allegations that he improperly prescribed Schedule II controlled substances to patients between 2014 and 2017.

In a parallel criminal proceeding, Kassis pled guilty to 14 counts of illegal distribution of controlled substances. According to the criminal charges, Kassis, who claimed to be a specialist in psychiatry and addiction medicine, operated medical offices in East Norriton Township, PA and Scranton, PA and used his offices to operate a prescription “pill mill” where he sold medically unnecessary prescriptions for opioids such as oxycodone for approximately $200 cash each.

This opioid settlement, the first of its kind in this Office, simultaneously resolved all three aspects of liability – under the Controlled Substances Act, FCA, and forfeiture statutes – in a single civil settlement agreement. https://www.justice.gov/usao-edpa/pr/montgomery-county-doctor-agrees-pay-14-million-resolve-allegations-improper-opioid

FCA Procurement and Grant Fraud Settlements

Drexel University. Drexel agreed to pay the United States $189,062 to resolve potential FCA liability for a former professor’s use of grant funds to fund trips to “gentlemen’s clubs,” sports bars, and other improper purchases. The government’s investigation began in 2017 after Drexel voluntarily disclosed the improper charges to eight federal grants for energy and naval technology related research that it received from the Department of the Navy, the Department of Energy, and the National Science Foundation. https://www.justice.gov/usao-edpa/pr/drexel-university-pay-189062-resolve-potential-false-claims-liability

Ambu. Ambu, a provider of medical supplies, paid $3.3 million to resolve allegations that it submitted false claims for manufactured products in China and Malaysia for sale to United States government agencies in violation of the Trade Agreements Act (“TAA”). The TAA requires that products sold to government agencies must come only from countries with which the United States has a trade agreement. https://www.justice.gov/usao-edpa/pr/defense-contractor-pay-33m-resolve-false-claims-act-allegations

Our Lady of Lourdes. Our Lady of Lourdes Health Foundation and two related Our Lady of Lourdes companies paid $1,143,881 to resolve claims arising from Lourdes’ administration of community service grants funded through the Corporation for National and Community Service (CNCS)’s Senior Corps program. Specifically, the fraud affected the Foster Grandparent Program, which places seniors in school and community settings to serve alongside youth with exceptional needs, and the Senior Companion Program, which places seniors in community and residential settings to assist other seniors who have difficulty with tasks of daily living. These programs provide small hourly stipends to the volunteers performing these services, who must clear criminal history checks to ensure their suitability for service. Lourdes allegedly either failed to perform these criminal history checks or failed to keep records of doing so for 46 individuals. When a monitoring visit was scheduled in 2017, Lourdes employees cut-and-pasted other background checks in an attempt to conceal this failure from CNCS officials. https://www.justice.gov/usao-edpa/pr/our-lady-lourdes-agrees-pay-over-11m-resolve-claims-it-failed-perform-background-checks

Civil Rights Settlements

Thomas Jefferson University Hospital.  Thomas Jefferson University Hospitals, Inc., and Outpatient Imaging Affiliates, LLC, the owners and operators of Jefferson Outpatient Imaging and Radiology (“Jefferson Outpatient”), resolved allegations that Jefferson Outpatient violated the Americans with Disabilities Act (ADA) by denying full and equal access to services based on an individual’s disability and use of a wheelchair. Under the ADA, facilities like Jefferson Outpatient, as a place of public accommodation, must provide outpatient and radiology services to members of the general public. In response to allegations that it failed to provide access to DEXA bone density scans to individuals with disabilities at its facilities in the greater Philadelphia area, Jefferson Outpatient agreed to comply with its obligations under the ADA, provide employee training, pay compensatory damages to the complainant, adopt and incorporate a non-discrimination policy into its existing policies, and post the policy in conspicuous locations in all of its offices and on its website. https://www.justice.gov/usao-edpa/pr/eastern-district-pennsylvania-reaches-settlement-agreement-thomas-jefferson-university

ACE Achievements Continue in 2020, Despite Coronavirus Pandemic

The coronavirus pandemic has not impeded the Office’s continued work in the civil enforcement area, as resolutions of significant FCA matters have continued into 2020:

In February 2020, Guardian Elder Care Holdings, Inc., and its related companies, paid over $15 million to settle claims that the skilled nursing home chain provided medically unnecessary rehabilitation therapy to residents in order to meet revenue goals. Guardian Elder Care operates more than fifty facilities throughout Pennsylvania – including locations in the Lehigh Valley, the Poconos, and Bucks County – as well as in Ohio and West Virginia. https://www.justice.gov/usao-edpa/pr/pennsylvania-nursing-home-chain-pay-155-million-settle-false-claims-act-allegations

In April 2020, Logan Laboratories, Inc. and two former executives, Michael T. Doyle and Christopher Utz Toepke, agreed to pay $41 million to resolve alleged FCA violations for billing federal health care programs for medically unnecessary urine drug testing.  https://www.justice.gov/usao-edpa/pr/florida-based-laboratory-pain-clinic-and-two-former-executives-agree-pay-41-million

In July 2020, Universal Health Services, Inc. and UHS of Delaware, Inc. (UHS), headquartered in King of Prussia, PA, agreed to pay $117 million to resolve alleged FCA violations for billing for medically unnecessary inpatient behavioral health services and for failing to provide adequate and appropriate services for adults and children admitted to UHS psychiatric and behavioral treatment facilities nationwide. https://www.justice.gov/usao-edpa/pr/universal-health-services-inc-pay-117-million-settle-false-claims-act-allegations

As the year continues to unfold, the Office’s Civil Division is prepared to fight any coronavirus-related fraud through the enforcement of the FCA. The Coronavirus Aid, Relief, and Economic Security (CARES) Act provided $2 trillion in federal funds to fight the ongoing health and economic crisis caused by the coronavirus and was the largest economic stimulus package in U.S. history. It provided $349 billion in loans for small businesses, $130 billion in relief for hospitals and medical suppliers, and $500 billion in assistance to other businesses, states, and municipalities. Unfortunately, there are unscrupulous actors who are attempting to take advantage of these financial outlays by committing fraud, especially when there is so much money at stake.

Attorney General Barr has directed the Department of Justice to prioritize fraud schemes arising out of the coronavirus pandemic. If there are federal funds involved in any coronavirus-related fraud in the Eastern District of Pennsylvania, whether through Medicare, Medicaid, defense contracting, or other government contracts, this Office will dedicate resources to holding companies and individuals appropriately accountable. The FCA remains an extremely powerful tool to combat fraud on the government.

“During this difficult time, protecting our communities from fraudsters who prey on federal programs and federal taxpayers is paramount,” said U.S. Attorney McSwain. “Previous experience has shown that there are people who will seek to illegally profit from disasters. But my Office is committed to using all of the criminal and civil tools at our disposal to protect federal programs.”

PHILADELPHIA – United States Attorney William M. McSwain announced today that federal and state law enforcement, in collaboration with the Pennsylvania Department of Labor & Industry, and together with measures implemented by US Bank, have successfully prevented over $44 million from reaching criminals who attempted to steal Pandemic Unemployment Assistance (PUA) funds in Pennsylvania. The U.S. Department of Labor Office of Inspector General (DOL-OIG) utilized sophisticated data analytics to identify the fraudulent claims. The Department of Labor & Industry provided program assistance and data, and DOL-OIG was supported by the U.S. Attorney’s Office-led Coronavirus Working Group of federal and state law enforcement agencies in Southeastern Pennsylvania, including the U.S. Postal Inspection Service, the Federal Bureau of Investigation, the United States Secret Service, the Social Security Administration Office of Inspector General, and the Pennsylvania Office of Attorney General.

PUA is funded entirely by federal dollars under the CARES Act and the program is administered by the state. Data analytics enabled DOL-OIG and the other law enforcement agencies to trace clusters of fraudulent claims for PUA funds back to the same criminals. The Department of Labor & Industry then used the information to stop the payment of PUA funds to those criminals.

The outstanding work of law enforcement saved over $28 million in PUA funds that would have been paid to fraudsters by check or direct deposit. In addition, US Bank administers the Pennsylvania debit card program used to make some PUA payments. US Bank applied analytics to identify an additional $16 million in fraudulent claims, and those funds will be returned to the Pennsylvania Department of Treasury.

Many of the fraudsters stole identities of real Pennsylvanians to file their fraudulent claims. Law enforcement’s ability to track the fraud was greatly enhanced by Pennsylvanians who came forward and reported that they had received PUA funds but had never applied for them. Anyone who receives state unemployment compensation funds that they did not apply for, whether by check, direct deposit or debit card, are probably victims of identity theft. If you find yourself in that position, U.S. Attorney McSwain strongly encourages you to report it immediately to the Department of Labor & Industry and return the funds.

“Pandemic Unemployment Assistance funds are intended to help Pennsylvanians who lost their jobs because of the coronavirus,” said U.S. Attorney Bill McSwain. “Thieves who attempt to take these funds are taking advantage of others’ misfortune – ripping them off while also ripping off all taxpayers who fund the program. I want to commend the outstanding cooperation and coordination among federal and state agencies, and private banking institutions, that together achieved this remarkable success. The U.S. Attorney’s Office Coronavirus Working Group enables us to combine the tremendous resources and skill of federal and state law enforcement to do what it takes to bring these criminals to justice.” 

“The ongoing work of this joint task force has prevented criminals from stealing tens of millions of dollars meant for out-of-work Pennsylvanians,” Attorney General Josh Shapiro said. “If you receive unemployment compensation you did not apply for, notify state officials right away. With your help we will take down these sophisticated scammers who are trying to use the COVID-19 pandemic for their own selfish, illegal, gain.”

“Criminals continue to exploit the Unemployment Insurance program for personal gain, and with selfish disregard for their fellow citizens. Fraud against the UI program distracts state workforce agencies from serving individuals in need of assistance, and siphons taxpayer funds from those who are qualified and eligible to receive UI benefits. The Office of Inspector General will continue to work closely with the U.S. Attorney’s Office, the Pennsylvania Department of Labor & Industry, and our many law enforcement partners, to see to it that these criminals are sought out and held accountable,” said Derek Pickle, Acting Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

U.S. Attorney McSwain and Acting Special Agent-in-Charge Pickle identified the following potentially fraudulent activities for Pennsylvanians to be alert to:

• You have not applied for unemployment benefits but you receive a PA Treasury check or direct deposit or a debit card issued by US Bank that you did not know about or apply for.
• You receive correspondence from the PA Department of Labor & Industry or the PA Department of Treasury about receiving unemployment assistance that you did not apply for.
• Someone comes to your home that you do not know and tells you that their unemployment assistance check or debit card was mistakenly mailed to you.
• Someone asks you to use your bank account to deposit their unemployment assistance.
• Someone, in person or electronically, tells you that you are entitled to unemployment assistance and requests personal identifying information from you.
• Someone offers to help you file for unemployment benefits for a fee.
• Someone claims to be from the government and asks for a fee or personal information to complete your PUA application.

If any of these suspicious activities happen to you, you should not assist or confront the fraudster. End the interaction immediately and report the activity to the Department of Labor & Industry on their Benefits Fraud Form available at dlisecureweb.pa.gov/FRTS/BenefitsFraud.aspx or call the PA Fraud Hotline at 1-800-692-7469.