Eastern District of Pennsylvania

PHILADELPHIA – United States Attorney William M. McSwain announced today that Richard Ira Mintz, D.O., a Philadelphia-area doctor, has agreed to surrender his ability to practice medicine and pay a $107,584 penalty for prescribing OxyContin (oxycodone) and Xanax (benzodiazepine) to patients without a legitimate medical purpose. Dr. Mintz agreed to do so through a settlement agreement resolving the government’s civil claims against him under the Controlled Substances Act.

The settlement agreement arises from thirteen prescriptions that Dr. Mintz wrote between 2016 and 2018. Dr. Mintz allegedly sold these prescriptions for cash without any legitimate medical purpose and outside the usual course of his professional practice.

In March 2019, Dr. Mintz pleaded guilty to eight criminal counts of unlawfully distributing some of these prescriptions;this civil resolution encompasses additional prescriptions. The civil resolution also requires Dr. Mintz to pay the $107,584 monetary penalty, consent to a term of exclusion from federal health care programs, and give up his ability to practice medicine. To ensure that Dr. Mintz does not resume practicing medicine, he agreed to surrender his medical license and Drug Enforcement Administration Certificate of Registration and further agreed not to seek to renew or reinstate either one in the future.

The criminal case was prosecuted as part of a regional Medicare Fraud Strike Force that operates in the Eastern District of Pennsylvania and the District of New Jersey. The Strike Force is a joint initiative between the Department of Justice and Department of Health and Human Services to focus their efforts to prevent and deter fraud, and enforce current anti-fraud laws around the country.

“This dual civil and criminal resolution is the latest example of how we will use all appropriate tools, both civil and criminal, to hold accountable anyone who breaks the law,” said U.S. Attorney McSwain. “By working together on parallel tracks, as appropriate, we can ensure an efficient administration of justice and a complete remedy for the harm. The public deserves nothing less.”

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

Assistant United States Attorney Michael S. Macko handled the civil case, working in parallel with Trial Attorney Adam Yoffie of the Criminal Division’s Fraud Section who handled the criminal matter.

PHILADELPHIA and CAMDEN – United States Attorneys William M. McSwain for the Eastern District of Pennsylvania and Craig Carpenito for the District of New Jersey jointly announced that Our Lady of Lourdes Health Foundation and two related Our Lady of Lourdes companies have agreed to pay $1,143,881.19 to resolve claims arising from Lourdes’ administration of community service grants funded through the Corporation for National and Community Service (CNCS).

From 2012 until 2017, Lourdes administered multiple grants in CNCS’s Senior Corps program, including in the Foster Grandparent Program (FGP), which places seniors in school and community settings to serve alongside youth with exceptional needs, and the Senior Companion Program (SCP), 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 undergo training and must clear criminal history checks to ensure their suitability for service. 

From 2014 until 2017, Lourdes either failed to perform these criminal history checks or failed to keep records of doing so.  As a result, 46 individuals were permitted to serve in an FGP or SCP project without any documentation that they received one or more of the required criminal history checks.  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.

In addition, Lourdes employees – including two program supervisors – falsely completed time sheets showing program participants serving hours that were impossible, because the locations at which they were purportedly serving were closed. 

When the United States commenced its formal investigation in 2017 and brought these issues to the attention of senior Lourdes management, Lourdes voluntarily relinquished the grants immediately and terminated all of the employees who had participated in the grant administration.  Lourdes has actively cooperated with the United States since its senior management was advised of the issues in the grant programs.  As part of this cooperation, it performed appropriate criminal history checks on all program participants and determined that all 46 individuals would have been permitted to participate in the programs had those checks been performed in a timely manner originally.

“Criminal history checks are a critical protection for the vulnerable populations with whom Senior Companions and Foster Grandparents work,” said U.S. Attorney McSwain. “Strict compliance with the requirements for these essential safeguards is necessary to ensure that predators do not gain access to potential victims.  And 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.” 

“Just as important as the work these volunteers do is the system that has been set up to ensure that they have been thoroughly vetted,” U.S. Attorney Carpenito said. “Whether they failed to keep accurate records of the results of these criminal background checks – or just failed to do them – the results were the same. Our Lady of Lourdes potentially put their clients’ safety at risk. And billing for no-show employees cannot be tolerated, especially when taxpayer dollars are being spent.”

“This fraud deprived school children and senior citizens of promised services and jeopardized their safety with bogus criminal history checks for the volunteers who served them,” said CNCS’s Inspector General Deborah J. Jeffrey.  “We hope that the substantial penalties included in this settlement will deter other grantees from similar misconduct.  We commend our partners at the Department of Justice for their outstanding efforts in pursuing fraud against national service programs.”

United States Attorneys McSwain and Carpenito praised Lourdes’ work in addressing the issues in these programs: “We appreciate the seriousness with which Lourdes senior management has taken this issue and the prompt, aggressive remedial actions that they took to prevent further harm to CNCS programs and potential harm to vulnerable communities.  We hope this settlement will serve as a message to other managers to be vigilant in overseeing government-funded programs and to ensure that employees do not attempt to conceal any non-compliance.”

This investigation was conducted jointly by the United States Attorney’s Offices for the Eastern District of Pennsylvania and District of New Jersey 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 Jessica O’Neill of the District of New Jersey handled the investigation and settlement.  This case was initiated as part of the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s Affirmative Civil Enforcement (ACE) 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 Andrew M. Berkowitz, M.D., 60, of Huntington Valley, PA, was charged by Indictment with 19 counts of health care fraud, and 23 counts of distributing oxycodone outside the course of professional practice and without a legitimate medical purpose.

According to the Indictment, Berkowitz operated a medical practice in Philadelphia under the name ‘A+ Pain Management’, and through this practice Berkowitz fraudulently billed insurers for medically unnecessary physical therapy, acupuncture, chiropractic adjustments, and prescriptions drugs – and sometimes for treatments not provided at all.

Regardless of their individual  complaint, at every visit A+ patients received a “goodie bag” which was a tote bag filled with prescription drugs for which Berkowitz submitted pharmacy claims through his company, Bucks Philadelphia Medical Care Group. The “goodie bags” typically included a combination of drugs such as Topical Analgesics, such as Relyyt and/or Lidocaine; Muscle Relaxers, such as Chloroxazon and/or Cyclobenzaprine; Anti-Inflammatories, such as Celecoxib and/or Nalfon; and Schedule IV controlled substances, such as Tramadol for pain; and/or Eszopiclone and Quazepam for insomnia and anxiety. Berkowitz obtained payments from insurers of more than $4,000 for each bag by falsely asserting that the drugs were for the benefit of the patient when, in reality, Berkowitz was the real beneficiary.

The Indictment also alleges that Berkowitz would prescribe Oxycodone to “pill-seeking” patients in exchange for their tacit approval that he would submit excessive claims to the patients’ insurers for the “goodie bag” and other medically unnecessary services. For 2015 through 2018, Berkowitz obtained an estimated $3.2 million in fraudulent proceeds from his “goodie bag” scheme.  

In addition to the criminal charges, the Affirmative Civil Enforcement (ACE) Strike Force of the U.S. Attorney’s Office also filed a civil suit for an injunction to stop any future healthcare fraud and to freeze much of the defendant’s assets pending the criminal and civil investigations. The court granted the government’s request and entered a temporary restraining order against the defendants pending additional proceedings.

“The U.S. Attorney's Office is committed to bringing all of our enforcement tools to bear against healthcare fraud and drug diversion,” said U.S. Attorney McSwain.  “Today's case is the latest example of our Criminal Division working in tandem with our ACE Strike Force to pursue fraud and diversion that allegedly put dangerous and addictive pills onto the street in the midst of the ongoing opioid epidemic.” 

“Again and again, we're seeing these doctors with dollar signs in their eyes, willing to abandon all pretense of professional ethics,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “As alleged, Berkowitz made millions by diverting dangerous drugs to anyone who wanted them, with Medicare — and ultimately, American taxpayers — picking up the tab. The FBI, with the Philadelphia Police and our federal partners are doggedly working to put medical professionals engaged in this kind of fraud out of business.”

If convicted, the defendant faces a maximum possible sentence of 660 years in prison.

The case was investigated by the Federal Bureau of Investigation; the Philadelphia Police Department, Health and Human Services – Office of Inspector General, Office of Personnel Management – Office of Inspector General, and Department of Labor – Office of Inspector General, and is being prosecuted by Assistant United States Attorney M. Beth Leahy. The civil action is being handled by Assistant United States Attorney Anthony Scicchitano.

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 Johnny Straining, 23, and Lamar Black, 29, both of Harrisburg, PA were charged by Indictment with attempted robbery which interferes with interstate commerce, and brandishing a firearm during a crime of violence. Black was also charged with possession of a firearm by a felon. The charges against the defendants stem from the October 23, 2018 attempted robbery of Smithgall’s Pharmacy in Lancaster, Pennsylvania. Two additional men – Brandon Galette and Andrew Garrett – were charged in February with federal crimes related to the same attempted robbery.

“Stemming the tide of violent crime in our communities is a top priority for my Office,” said U.S. Attorney McSwain. “People looking to make a quick buck by robbing convenience stores, pharmacies, and other businesses beware: this conduct is a federal crime, and if you are convicted, you will face stiff penalties under federal law.”

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, Straining and Black face a maximum possible sentence of life imprisonment, with a seven-year mandatory minimum, which will be served consecutive to any other sentence imposed. Both are also subject to financial penalties, including fines and special assessments.

The case was investigated by the Federal Bureau of Investigation and the Lancaster City Bureau of Police, and is being prosecuted by Assistant United States Attorney Tim Stengel.

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 seven people were charged today by Indictment with conspiracy, bank fraud and aggravated identity theft. Those charged are Hamlet Tantushyan, 35, of Glendale, CA; Verzh Movsisyan, 41, of Glendale, CA; Armen Sahakyan, 41, of Burbank, CA; David Daldumyan, 29, of Van Nuys, CA; Hrchya Gyulumyan, 39, of Sun Valley, CA; Gevush Gabrielyan, 27, of North Hollywood, CA; and Roman Gridjusko, 30, of Philadelphia, PA.

The sevenc  defendants were charged for their alleged involvement in a scheme to steal money from victims’ bank accounts by making fraudulent ATM withdrawals and money order purchases in multiple states with stolen debit card numbers. The victims’ debit card numbers were obtained by members of the scheme through illegally installed devices on gas station pumps, known as ‘skimmers’, that captured the victims’ debit card numbers and Personal Identification Numbers when they used their debit cards at gas stations to purchase gas.

“As alleged in the Indictment, this was a devious fraud utilizing technology to take advantage of victims who didn’t even see it coming,” said U.S. Attorney McSwain. “I want to thank the many agents and investigators who worked tirelessly to uncover this scheme and assist my Office in bringing today’s Indictment.”

If convicted Hamlet Tantushyan faces a maximum possible sentence of 187 years imprisonment and a $7,250,000 fine, defendant Vrezh Movsisyam faces a possible maximum sentence of 177 years imprisonment and a $6,000,000 fine, defendant Roman Gridjuski faces a maximum possible sentence of 25 years imprisonment and a $750,000 fine, defendant Armen Sahakyan faces a maximum possible sentence of 155 years imprisonment and a $6,000,000 fine, defendant Davit Daldumyan faces a maximum possible sentence of 93 years imprisonment and a $4,250,000 fine, defendant Hrchyan Gyulumyan faces a maximum possible sentence of 79 years imprisonment and a $2,050,000 fine, and defendant Gevush Gabrielyan faces a possible maximum sentence of 71 years imprisonment and a $3,000,000 fine.

The case was investigated by the Federal Bureau of Investigation Philadelphia Organized Crime Task Force, the United States Postal Inspection Service, the United States Secret Service, the Newark, Delaware Police Department, the Borough of Wyomissing, Pennsylvania Police Department, and the Bensalem, Pennsylvania Township Police Department, and is being prosecuted by Assistant United States Attorney K.T. Newton.

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

PHILADELPHIA, PA – United States Attorney William McSwain announced that Olde Philly Pharmacy has agreed to pay $350,000 to resolve allegations that three of its pharmacy stores located in Philadelphia violated the Controlled Substances Act (CSA) by failing to maintain complete and accurate records of controlled substances, including nearly 100 missing oxycodone and hydrocodone prescriptions. James Cirillo, managing pharmacist and co-owner of Olde Philly Pharmacy, is also a party to the settlement agreement.

The United States’ investigation involved three Olde Philly Pharmacy locations – 2923 East Thompson Street, 1427 East Susquehanna Avenue, and 2036-38 South 3rd Street.  

As part of the settlement, Olde Philly Pharmacy has entered into a three-year Memorandum of Agreement (MOA) with the Drug Enforcement Administration, which includes additional responsibilities regarding the handling of controlled substances. The MOA imposes compliance obligations significantly more stringent than those in the applicable laws and regulations.

“Pharmacies that fail to maintain proper records of narcotics like oxycodone and hydrocodone contribute to the opioid crisis. At best, this poor record-keeping creates conditions ripe for diversion; at worst, it is a symptom of diversion itself,” said U.S. Attorney McSwain. “Pharmacies and pharmacists have a responsibility to ensure that all controlled substances are tracked through the distribution chain. For this reason, our Office is committed to ensuring total compliance with the Controlled Substances Act and we will vigorously enforce violations wherever we find them.”

Congress enacted the CSA to deter the illegal importation, manufacture, distribution, possession, and improper use of controlled substances, including prescription medications, and requires individuals and entities registered with the DEA to maintain complete and accurate records of all controlled substances and security systems so that controlled substances are not lost, stolen, or inappropriately dispensed.

The investigation was conducted by the Drug Enforcement Administration’s Philadelphia Field Division, Diversion Regulatory Group 2 (D72), and the investigation and settlement were handled by Assistant United States Attorney David A. Degnan.

PHILADELPHIA – United States Attorney William McSwain announced today that BARR Credit Services, Inc., a commercial debt collection company based in Tucson, Arizona, has agreed to pay $55,793 and start a compliance program to resolve the government’s claims against it under the False Claims Act. The agreement arises from BARR Credit’s attempts to collect debts from the Federal Bureau of Prisons on behalf of Scholars in Print, a telemarketing firm in Bucks County, Pennsylvania.

In 2018, the government filed a complaint against Scholars in Print alleging that it operated a telemarketing scheme. According to the federal court complaint, the telemarketing company submitted false claims to the Bureau of Prisons for textbooks that nobody ordered or wanted. Scholars in Print allegedly hired debt collectors to collect unpaid invoices. The parties resolved that case through a consent judgment. Today’s settlement agreement follows that consent judgment.

In the agreement announced today, the United States contends that BARR Credit, one of Scholars in Print’s debt collectors, knew or should have known that the textbook invoices were fraudulent. Teachers, librarians, non-profit organizations, and public officials told BARR Credit that Scholars in Print operated a fraud scheme and explained how it worked, according to the government’s allegations in the agreement. The United States contends that BARR Credit created records describing these fraud reports, and therefore BARR Credit acted recklessly when it tried to collect similar debts from the Bureau of Prisons.

As part of the resolution, BARR Credit admitted that its quality control procedures did not adequately identify the suspect nature of Scholars in Print’s invoices. To resolve the allegations, BARR Credit will pay $55,793 and will not resume collection efforts for Scholars in Print or its operators, John Paul Ryan and Mary Motz Ryan.

BARR Credit will also start a compliance program designed to protect the public from similar harm. As part of that program, BARR Credit will implement quality control procedures, adopt policies, and monitor customer accounts to identify patterns of fraud reports or suspicious debts. BARR Credit will supervise its debt collectors to prevent them from demanding payment from public or private schools, libraries, non-profit organizations, and federal, state, or local public agencies or officials without first possessing documentary proof that the entity incurred the debt legitimately.

In addition to taking these measures, BARR Credit will train its employees annually about state and federal procurement procedures and government purchasing in order to identify fraudulent debts. BARR Credit will certify its compliance annually during the agreement’s five-year term.

While not admitting liability, BARR Credit acknowledged that any attempt to demand payment from federal agencies for alleged debts can result in False Claims Act liability if the debts are not bona fide debts that comply with federal procurement procedures.

“Debt collectors should do their homework before trying to collect payment from federal agencies,” said U.S. Attorney McSwain when announcing the resolution. “The False Claims Act governs their conduct, so they should not try to collect taxpayer money unless they have a legitimate, documented debt to back it up. My Office stands ready with our federal partners to investigate these claims to protect consumers and taxpayers.”

“The OIG is committed to investigating companies whose reckless attempts at debt collection cause them to make false claims to the Bureau of Prisons. We will work tirelessly with our law enforcement partners to ensure those who do not conduct their due diligence under the law are held accountable,” stated Lewe F. Sessions, Special Agent-in-Charge of the U.S. Department of Justice Office of the Inspector General’s Fraud Detection Office.

Assistant United States Attorney Michael S. Macko handled the case with investigative assistance from the United States Department of Justice Office of Inspector General.

PHILADELPHIA, PA – United States Attorney William McSwain announced today that the Trustees of the University of Pennsylvania Health System (“Penn Medicine”) agreed to settle allegations under the False Claims Act that the Lancaster General Hospital’s division of Maternal Fetal Medicine (LGH-MFM), a component of Penn Medicine, submitted false claims to Medicaid for obstetric ultrasounds.

The government alleges that, from approximately May 1, 2017 through December 31, 2017, LGH-MFM had insufficient physician staff to properly handle its patient volume. As a consequence, the government alleges that during this period, LGH-MFM physicians failed to timely complete professional reports interpreting many of the ultrasound studies that they ordered for their obstetric patients. Such a timely report is required for Medicaid to reimburse a physician for professional interpretation of an ultrasound. Further, extreme delays in completing such a report can render the report and interpretation worthless.

Specifically, the government alleges that in many instances, LGH-MFM physicians did not finalize professional reports of ultrasound studies until more than thirty days after the ultrasound was performed. In over 10% of cases during this time period, the report was not completed until more than 90 days after the ultrasound was performed, and in some cases not until after the patient delivered. The government alleges that LGH-MFM violated the False Claims Act by nevertheless submitting claims for reimbursement to Medicaid for ultrasound interpretations when it knew or should have known the claims were not reimbursable due to the extreme delays in completing the physician’s reports.

“Maternal-fetal medicine physicians manage the most high risk and complex pregnancies,” said U.S. Attorney McSwain. “This alleged conduct not only demonstrated an abuse of the Medicaid program, but had troubling potential implications for patient care. Medicaid beneficiaries, especially expectant mothers carrying high risk pregnancies, deserve better. We thank the citizens who brought this concerning situation to our attention.”

“Timely report writing is important for patient care and the proper billing of Medicaid,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. “HHS-OIG is committed to working with the U.S. Attorney’s Office, our law enforcement partners, and the public to ensure the integrity of federal health care dollars.”

The U.S. Attorney’s Office opened this investigation in response to a tip from citizens. This case was not brought pursuant to the qui tam provisions of the False Claims Act

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. Attorney John T. Crutchlow and Auditor Dawn Wiggins.

PHILADELPHIA – United States Attorney William M. McSwain announced that Hasan Chaney, 30, of Philadelphia, PA was sentenced to 312 months’ imprisonment (26 years), and Braheim Ballard, 39 of Philadelphia, PA was sentenced to 155 months’ imprisonment (12 years, 9 months), both by U.S. District Judge Mitchell Goldberg.  Both defendants were members of an extremely violent criminal organization led by Khalil Smith, who was sentenced to life plus 207 years’ imprisonment in November 2018.

As part of the group’s conspiracy, they planned to commit armed robberies and kidnappings of people who they believed were selling drugs.  Their goal was to steal drugs, drug proceeds, and other items of value, or obtain ransom for the release of their kidnapping victims.  Members of the conspiracy conducted surveillance of their victims and tracked their victims using GPS devices.  They also used police scanners to monitor police radio during the commission of their crimes to evade detection and apprehension by law enforcement. In October 2017, Chaney was found guilty at trial for his participation in one incident with this gang, the Mayfair Street kidnapping, and Ballard was found guilty at trial for his participation in one incident, the Leas Way home invasion robbery in Hatfield, PA.

Members of the organization, including Chaney and Ballard, also used firearms and/or brute physical force to facilitate the commission of the robberies, kidnappings and carjackings, specifically to threaten, intimidate, and subdue the victims.  They also occasionally dressed as police officers as a means to fool their victims.  They shot and threatened to shoot their victims and physically restrained them with handcuffs, zip ties, electrical cords, and shoelaces and held them captive, at times, for several hours.  They even went so far as to “waterboard” and pour boiling water on the genitals of some of their victims, which is what occurred during the Mayfair Street kidnapping incident on the 700 block of Mayfair Street in Philadelphia.

“Motivated by their mutual desire for drugs, money, and power, Chaney and Ballard eagerly enlisted as members of this ruthless, violent gang,” said U.S. Attorney McSwain.  “This crew resorted to torture, extreme violence, intimidation, and even impersonation of law enforcement to dominate their victims and terrorize Philadelphia and the surrounding towns.  Because of the dedicated work of prosecutors and law enforcement working this case for many years now, these two defendants will join the rest of their co-conspirators spending a long time where they belong – in prison.  The facts of this case are an excellent example of why violent crime is an ever-present priority for my Office.”

“Key components of ATF’s mission are the reduction of violent crime and providing a positive, lasting impact on the community. The lengthy sentences that were handed down to all of these defendants are an enormous victory in the battle against violent crime for ATF.  This victory is shared with our law enforcement partners, and more importantly, with the citizens of Philadelphia,” said ATF Special Agent in Charge Donald Robinson. “These sentences serve as a very strong message to violent home invasion crews who would seek to prey on our communities - ATF will continue to pursue you and see that you are held accountable for the crimes you commit. We appreciate the cooperation of all of our federal, state and local partners, and are especially appreciative of the invaluable partnership and dedication of the United States Attorney’s Office.”

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.

This case was investigated by the ATF, the Philadelphia Police Department and various other local police departments throughout the Eastern District of Pennsylvania and the District of New Jersey.  It is being prosecuted by Assistant United States Attorneys Salvatore L. Astolfi and Jeanine Linehan.

PHILADELPHIA – United States Attorney William M. McSwain announced that Jason Muzzicato, 43, of Bangor, Pennsylvania was charged by Indictment with possession of firearms by a person subject to a court order restraining him from harassing, stalking and threatening an intimate partner (known as a domestic violence protective order, Protection From Abuse order or PFA), and possession of an unregistered destructive device (an improvised explosive device).

The charges against the defendant stem from his possession of homemade bombs and firearms, while subject to the terms of a PFA order issued by the Northampton County Court of Common Pleas. Under federal law, an individual who is subject to a PFA order is prohibited from possessing firearms.  As alleged in the Indictment, the defendant possessed seven improvised explosive devices and nine firearms, including multiple AR-15 rifles and semi-automatic pistols. 

“Protection From Abuse orders are meant to protect individuals before the situation escalates,” said U.S. Attorney McSwain.  “For good reasons, federal law prohibits subjects of PFA orders from possessing firearms.  Here the defendant’s alleged behavior violated the law and threatened public safety.”

If convicted, the defendant faces a maximum possible sentence of 20 years’ imprisonment, three years’ supervised release, a $260,000 fine, and a $200 special assessment.

The case was investigated by the Federal Bureau of Investigation, Allentown Resident Agency, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, Reading Field Office, the Washington Township Police Department, the Pennsylvania State Police, and the Bethlehem Fire Department, and is being prosecuted by Assistant United States Attorney John Gallagher.

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that John Brown, 28, of Norristown, Pennsylvania, was sentenced to 52 years imprisonment, lifetime supervised release, a $600 special assessment, and a $25,000 assessment under the Justice for Victims of Trafficking Act by the Honorable Gene E.K. Pratter.  The defendant was also ordered to have no contact with the victim or her family for the rest of his life. 

In September of 2017, the defendant pleaded guilty to three counts of manufacturing sexually explicit images of his sexual abuse and exploitation of an autistic girl for more than 18 months, one count of distribution of those pornographic images over the Internet to others, and one count of possession of child pornography for his collection of thousands of images and videos of children being sexually abused and assaulted that he downloaded from the Internet. 

Brown took part in a twisted plan with his codefendant to manipulate and sexually assault the child victim in this case, who had been diagnosed on the Autism spectrum and suffered from learning disabilities and mental health issues.  Brown cut his hair and shaved his face so that he could pose as a teenage boy to dupe the victim into believing he was her boyfriend and gain her trust.  As her “boyfriend,” Brown then engaged her in sexual activity, photographed and videotaped her, and distributed the videos and images back to his codefendant.  Brown also distributed this child’s images out to others over the Internet dozens of times.

In addition to the child victim in this case, the investigation revealed Brown also had a sexual relationship with two other minor girls, and had been making plans to meet up with the father of an 11-year old girl to have three-way sex with that man’s child. 

“Child exploitation is a pervasive problem – made more so by the accessibility of the Internet and digital media – that demands an aggressive response,” said U.S. Attorney McSwain.  “The allegations in this case are particularly disturbing because of the defendant’s abuse of a child with learning disabilities and the efforts he took to gain her trust so he could victimize her.  We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”

The case was investigated by the FBI, the Willistown Police Department, and the Chester County District Attorney’s Office.  It was prosecuted by Assistant United States Attorney Michelle Rotella.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Ricky Fountain, 41, of Philadelphia, Pennsylvania, was sentenced today to 144 months’ imprisonment and five years’ supervised release after pleading guilty to four counts of distribution of cocaine base, one count of distribution of cocaine, and one count of possession of a firearm by a convicted felon.  Senior United States District Judge R. Barclay Surrick imposed the sentence.

“Illegal firearms possession and drug trafficking is a deadly combination,” said U.S. Attorney McSwain.  “This case is an example of federal and local law enforcement working together to stop the flow of illegal narcotics onto the streets of Philadelphia.  My Office will continue to aggressively prosecute these crimes to keep our communities safe.”

The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department and is being prosecuted by Assistant United States Attorneys Mary E. Crawley and Alison Donahue Kehner.

This case was brought as part of Project Safe Neighborhoods (PSN), a program that has been historically successful in bringing together all levels of law enforcement to reduce violent crime and make our neighborhoods safer for everyone. 

PHILADELPHIA – United States Attorney William M. McSwain announced that Laurence Reinhard, 74, of Huntingdon Valley, Pennsylvania was convicted at trial of one count of making a false statement to a federal firearms licensee.

In 2014, the defendant pleaded guilty to providing malicious false information about an explosive and engaging in a hoax.  As part of that guilty plea, he acknowledged that he would not be permitted to possess a firearm as a result of his felony convictions.  

On March 10, 2018, he attempted to purchase a firearm, specifically a Smith and Wesson model 642 CT, .38 caliber from a federal firearms licensee.  The defendant falsely stated that he had never been convicted of a felony on his application for the weapon.

“For good reasons, the United States regulates who is permitted to purchase and carry firearms -- it is a matter of maintaining public safety,” said U.S. Attorney McSwain.  “In this case, the defendant – a previously convicted felon – lied in order to illegally obtain a weapon.  I want to thank our law enforcement partners for their quick work in investigating this case and the jury for holding the defendant accountable for his crime.”

The case was investigated by the Federal Bureau of Investigation, the Pennsylvania State Police, the Montgomery County Sheriff’s Office and is being prosecuted by Assistant United States Attorney Priya De Souza.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Donnie Smith, 40, Abid Stevens, 39, and Maurice Quinn, 41, all of Philadelphia, Pennsylvania were charged by indictment with committing a Hobbs Act Robbery and carrying and using a firearm during the commission of a federal crime.  Smith was also separately charged with being a felon in possession of a firearm. 

According to the indictment, on March 22, 2019, Smith, Stevens, and Quinn entered the RD Grocery, a corner store in the East Mount Airy section of Philadelphia, stole cash and a firearm from the store employee.  During the robbery, two of the defendants were armed with black semi-automatic handguns.   

“As alleged in the indictment, the complete disregard that these three defendants had for the safety of others is appalling,” said U.S. Attorney McSwain. “The employee of this store was simply doing their job.  No one should need to worry about having a semi-automatic weapon, or any weapon, pointed at them when they go to work.  This indictment is an example of how my Office is working to get dangerous criminals off the streets of Philadelphia.”

If convicted of each count in the indictment, each defendant faces a maximum possible sentence of life imprisonment, a $500,000 fine, five years of supervised release, and a $200 special assessment.

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 Robert Eckert.

 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 Support of Microcomputers Associates (“SOMA”) has agreed to a judgment against it in the amount of $300,000 for selling printers and other equipment to federal agencies that was manufactured in China and other non-compliant countries.

From 2009-2017, SOMA participated in the General Services Administration’s (GSA) Advantage program, which provides a web-based ordering system for federal agencies including the Department of Defense.  Companies that join GSA Advantage certify that the materials they provide are permitted for sale to the United States pursuant to the Trade Agreements Act, 19 U.S.C. § 2501, et seq., and its implementing regulations.  These rules provide for the United States and its agencies to purchase American-made materials or materials manufactured in specified allied countries.  Instead, SOMA ignored the Trade Agreements Act rules and offered for sale to government agencies printers and other materials manufactured in China, Vietnam, and other non-compliant countries.

SOMA cooperated in the government’s investigation.  The settlement is based in part on an evaluation of SOMA’s ability to pay.

“Americans have the right to know that their tax dollars are being spent in a way that Congress intended – here, to support American jobs and American policies,” said U.S. Attorney McSwain. “When United States agencies like the Department of Defense purchase printers or other computing equipment, they need assurance of the quality and security of their purchases.  The Trade Agreements Act represents Congress’s determination of how best to accomplish those goals, and the United States Attorney’s Office is ready to investigate and hold accountable GSA contractors who do not follow these clear rules.”

“Congress enacted the Trade Agreements Act with the intention of protecting the government supply chain, along with the American economy,” said GSA OIG Special Agent in Charge Gerald Garren. “GSA OIG will continue to work with its partner agencies to aggressively investigate those suppliers on the GSA Schedule who endeavor to skirt this important law through the sale of non-compliant products.”

“Companies that sell goods to the U.S. Department of Defense (DoD) and other U.S. Government agencies, while ignoring the rules and requirements of the Trade Agreements Act, undermine the federal contracting process,” stated Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service’s (DCIS) Northeast Field Office.  “The judgment in this case is the direct result of a joint investigative effort and demonstrates DCIS’ ongoing commitment to work with the U.S. Attorney’s Office and the GSA-OIG to ensure the integrity of the DoD procurement system.”

This settlement resolves allegations in a lawsuit filed in the Eastern District of Pennsylvania by a former SOMA executive, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive a portion of the funds recovered by the United States.

This investigation was conducted with the General Services Administration Office of Inspector General and the Defense Criminal Investigative Service. For the United States Attorney’s Office, Assistant United States Attorney Paul W. Kaufman handled the investigation and settlement.

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

PHILADELPHIA – United States Attorney William M. McSwain announced today that two defense supply companies, and a married couple who operated them, have agreed to resolve the government’s claims that they supplied non-conforming parts to the military in violation of the False Claims Act. The government described its claims in its federal court complaint filed today.

The government’s complaint alleges that in 2015 and 2016, the defense supply companies, Liberty Air Parts, Inc., and US Supply Corporation of Greenlawn, New York, and their operators, George Onorato and Ellen Onorato of Lamoine, Maine, agreed to supply bolts, rings, knobs, and rivets for $24,379.60 to the Defense Logistics Agency Troop Support-Philadelphia. The defendants allegedly agreed to supply these parts in non-surplus condition, meaning brand new—direct from the manufacturer or authorized dealer—and not left over from other government projects.

Instead of supplying them in non-surplus condition, the defendants allegedly substituted leftover, surplus parts in secret. According to the complaint, the defendants concealed this substitution by falsifying records and making false statements. The complaint alleges that the substitution gave the defendants an advantage during the competitive bidding process, allowing them to quote prices for supposedly new, non-surplus parts while swapping them for leftover surplus parts after winning the bids.

To resolve the allegations, the defendants agreed to the entry of a consent judgment against them in the amount of $159,390.80. As part of this proposed consent judgment, the defendants admitted that they supplied parts in surplus condition in violation of contract requirements and the False Claims Act. The defendants also admitted that their substitution harmed open competition and undermined the integrity of the government’s procurement process. In addition, the defendants admitted that they acted recklessly when they responded to the government’s requests for information about the parts.

The proposed consent judgment will protect the public from future harm by prohibiting the defendants from contracting with the federal government at any time.

“My Office will not tolerate government contractors who cut corners and certainly will not tolerate product substitutions like the ones alleged here,” said U.S. Attorney McSwain. “Supplying non-conforming parts to the military isn’t fair to American taxpayers, isn’t fair to competing contractors, and most importantly, isn’t fair to our service members in uniform who trust that they will receive the supplies promised to them.”

“Preventing product substitution in the U.S. Department of Defense’s procurement chain is a top priority for the Defense Criminal Investigative Service (DCIS),” stated Leigh-Alistair Barzey, Special Agent in Charge of the DCIS Northeast Field Office. “The civil settlement agreement announced today is the direct result of a joint effort and demonstrates DCIS’ ongoing commitment to partner with the U.S. Attorney’s Office to identify, investigate and prosecute companies and individuals who sell non-conforming parts to the U.S. military.”

Assistant United States Attorney Michael S. Macko handled the case with investigative assistance from the United States Department of Defense Office of Inspector General, Defense Criminal Investigative Service.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Derrick Parks, 47, of Philadelphia, was sentenced to 110 months’ imprisonment and three years’ supervised release by U.S. District Court Judge Joel H. Slomsky.  Parks has a prior criminal record, including illegal possession of a firearm.

From March to October 2012, the defendant was the ringleader of a group that conspired to illegally obtain oxycodone pills to sell on the street.  Parks secured blank prescription pads from a co-conspirator who worked in a medical office, wrote out false prescriptions for oxycodone, and paid various people to fill the prescriptions in Pennsylvania and Delaware. Parks would then collect all the pills for distribution. During the months that the illegal distribution ring was operating, Parks obtained over 9,500 oxycodone pills.

“My Office is focused on targeting the worst, most dangerous offenders and getting them off the streets,” said U.S. Attorney McSwain.  “In this case, a defendant who had previously been convicted of multiple offenses decided to continue to engage in illegal activity – and this time he concocted a scheme that put thousands of pills on the streets of Philadelphia in the midst of the ongoing opioid epidemic.  I’m grateful that the Judge imposed a sentence that will keep the defendant out of our community for many years.”

The case was investigated by the Federal Bureau of Investigation and the Drug Enforcement Administration, and is being prosecuted by Assistant United States Attorney Elizabeth Abrams.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Sergio Ruchtein, 51, a citizen of Argentina, pleaded guilty before U.S. District Court Judge Timothy J. Savage to the federal felony of attempting to export a defense article without a license.

At the plea hearing, the defendant admitted that in early 2019 he purchased online a Pulsar Trail XP 50 LRF Thermal Rifle Scope and attempted to smuggle the device back to his native Argentina.  The rifle scope is designed to be mounted to a weapon and is capable of human-size detection at night from several hundred meters.   This night vision scope is a defense article on the United States Munitions List and subject to the Department of State’s International Traffic in Arms Regulations.  Accordingly, an export license is required before it is shipped or transported out of the United States.

“For good reasons, the United States monitors and regulates specialized arms equipment being exported from this country,” said U.S. Attorney McSwain.  “In this case, a rifle scope designed to detect human beings under cover of darkness could pose a serious risk if it were to fall into the wrong hands.  I want to thank our federal law enforcement partners for their quick work in investigating this case.”

“HSI prioritizes investigations of smugglers who circumvent laws in place to guard against the export of sensitive technologies and licensable commodities from the United States,” said Marlon Miller, Special Agent in Charge, HSI Philadelphia. “While the defendant attempted to export a night vision rifle scope to South America, there is no telling where or to whom this sensitive technology was ultimately destined.”

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

PHILADELPHIA – United States Attorney William M. McSwain announced today that Yahaira Diaz, 33, of Pottsville, Pennsylvania, was charged by Information with aggravated identity theft, mail fraud, and access device fraud.  The charges against the defendant stem from her participation in what has been popularly dubbed the “Grandparents Scheme”, a type of elder financial abuse.  The charges come one day in advance of “World Elder Abuse Awareness Day” on June 15, 2019.

As alleged in the Information, the scheme operated as follows: an individual called an elderly victim posing as the grandchild of the victim, or posing as an attorney representing the grandchild. The caller claimed that the grandchild was in a vehicular accident and was arrested for driving under the influence (or some type of legal trouble). The caller then said that the grandchild needed money for bail or legal representation, and persuaded the victim to send thousands of dollars in cash via overnight delivery service to an address where the schemers retrieved the package. The schemers then continued to call the victim and demand more money until the victim realized that he or she had been defrauded and stopped sending money.

In those telephone calls, to further convince the grandparents to send cash, the co-schemers described the grandchild’s situation as increasingly serious: claiming that the grandchild had been arrested for driving under the influence; that a pregnant woman was involved in the accident; that the pregnant woman and her unborn child were injured or killed; that the grandchild would not be released from prison without additional funds; and that legal and other fees were mounting.

Diaz allegedly played a leadership role in this scheme, which she and her co-schemers perpetrated in Allentown and Bethlehem, Pennsylvania. For example, she identified and arranged for access to residential locations where her co-schemers instructed victims to send the fraud proceeds. Diaz recruited and controlled additional participants in the scheme who allowed her to use their residences for the receipt of proceeds, and who helped retrieve the packages and shared the proceeds with other co-schemers.

Diaz engaged in numerous incidents of the Grandparents Scheme as well as credit card fraud, which is also charged in the Information. In the Grandparents Scheme, Diaz and her co-schemers defrauded at least 10 elderly victims of at least $158,800 and attempted to defraud those victims of at least an additional $69,000. If convicted, the defendant faces a maximum possible sentence of 72 years in prison, including a mandatory minimum term of two years in prison.

“Crimes against the elderly target some of the most vulnerable people in our society, and schemes like the ‘Grandparent Scheme’ are particularly heinous because they prey on a senior’s love for their family,” said U.S. Attorney McSwain. “The Department of Justice is committed to protecting our seniors from fraud, and my Office will continue to prioritize prosecuting criminals who prey on our elderly residents.”

“Trying to scam strangers out of money is criminal,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Specifically targeting elderly victims because you figure they're easy marks is cruel. The FBI will never stop working to shut down elder fraud schemes like this to protect older folks and help them hang on to their hard-earned money.” 

“Crimes like these against our elderly citizens are taken very seriously by law enforcement. The Bethlehem Police Department, working with its Federal partners, will investigate, arrest and prosecute individuals involved in criminal scams like these ‘Grandparent Scams,” said Mark DiLuzio, Chief of Police, Bethlehem Police Department. “As Chief, I would like to personally thank U.S. Attorney McSwain and his Office, the FBI, U.S. Postal inspectors, the Northampton County District Attorney’s Office and Bethlehem Police Detectives who all worked collectively and brought this person and her partners to justice. On behalf of all elderly citizens in the City of Bethlehem, thank you!”  

The case was investigated by the Federal Bureau of Investigation, the United States Postal Service, the Bethlehem Police Department, and the Northampton County District Attorney’s Office, and is being prosecuted by Deputy United States Attorney Louis D. Lappen.

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

The Department of Justice is committed to combating elder fraud. The Department’s historic 2018 and 2019 Elder Fraud Sweeps collectively brought criminal and civil actions against more than 500 defendants responsible for defrauding more than $1.5 billion from at least 3 million victims.

The Department of Justice also provides a variety of resources relating to elder fraud victimization through its Office of Victims of Crime (OVC), which has announced a new competitive solicitation addressing enhanced multidisciplinary teams for older victims of abuse and financial exploitation (up to $375,000 each) and funding for a National Multidisciplinary Team Technical Assistance Center (for up to $3 million), which will help facilitate the expansion of elder abuse case review across the nation. The deadline is July 7, 2019.

More information about the Department’s efforts to help American seniors is available at its Elder Justice Initiative webpage. For more information about the Consumer Protection Branch and its enforcement efforts, visit its website. Elder fraud complaints may be filed with the FTC at www.ftccomplaintassistant.gov or at 877-FTC-HELP.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Malcolm Xavier Taylor, 26, of Philadelphia, Pennsylvania, was indicted by a grand jury with four counts of robbery which interferes with interstate commerce, and use and carrying of a firearm during and in relation to a crime of violence.

The defendant is alleged to have committed a string of robberies of cell phone stores in Philadelphia, robbing four different stores over a three-week time period in November and December 2017.  During all four incidents, he brandished a firearm and threatened to shoot store employees.  In total, the defendant stole over a hundred cell phones and cash.

“The complete disregard for others’ safety that Taylor is accused of is appalling,” said U.S. Attorney McSwain. “The employees of these stores were simply doing their jobs, while the defendant terrorized them so that he could make a buck off of stolen cell phones. The streets are safer now that Taylor will have to answer these charges.”

“ATF’s primary mission is to combat violent crime and this investigation is a clear statement of our resolve to accomplish this mission,” said Special Agent in Charge Donald Robinson. “This indictment of Malcolm Taylor sends a clear message that ATF and its law enforcement partners will not allow violent criminals to continue victimizing our communities and neighborhoods”

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

If convicted, the defendant faces a maximum possible sentence of life imprisonment and a mandatory minimum of five years’ imprisonment.

The case was investigated by the Bureau for Alcohol, Tobacco, Firearms and Explosives, and is being prosecuted by Assistant United States Attorney Priya T. De Souza.

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

PHILADELPHIA – United States Attorney William M. McSwain announced today that Justin O’Brien, 32, of Philadelphia, was indicted by a federal grand jury with armed bank robbery. The indictment charges that on March 12, 2019, O’Brien knowingly and unlawfully, by force, violence and intimidation, took approximately $1,260 from an employee of Firstrust Bank, located at 725 Lancaster Avenue, Bryn Mawr, Pennsylvania.  The indictment also charges that the defendant knowingly and unlawfully assaulted another person by the use of a dangerous weapon: a facsimile firearm (pellet gun).

“As alleged in the indictment, the defendant’s conduct in this case was reckless and stupid,” said U.S. Attorney McSwain. “Not only did O’Brien rob a bank, which is a serious offense, but he threatened bank employees with what looked like a real gun – causing them to fear for their lives.  He is now facing serious federal charges and prison time over a relatively small sum of money.  To all would-be robbers: let this serve as a deterrent – it’s not worth it.”

“Imagine looking down the barrel of a gun pointed at you by some stranger demanding money,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “It's not something armed robbery victims soon forget. As alleged, Justin O'Brien barged into a bank with a weapon, terrified employees, and fled with cash. Anyone willing to commit a violent crime like that needs to answer for it.”    

If convicted, the defendant faces a maximum possible sentence of 25 years’ imprisonment; up to five years’ supervised release; a $250,000 fine, and a $100 special assessment.

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

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

PHILADELPHIA – United States Attorney William M. McSwain announced today that Omar Faruq, 37, of Pennsauken, New Jersey, and co-conspirator Omar Ali, 36, also of Pennsauken, New Jersey, both entered pleas of guilty before United States District Court Judge Nitza I. Quiñones on one count each of conspiracy to defraud the Internal Revenue Service, aiding another in the filing of a false tax return, and filing a false tax return.

According to a criminal Information filed in April 2019, Faruq and Ali conspired to file false tax returns on behalf of their clients at Omar Consultancy Inc., a tax service operated by them with offices in Pennsylvania and New Jersey.

According to the plea memorandum filed for today’s court appearance, Faruq and Ali consistently used false filing status, false Schedule A deductions and expenses, false Schedule C business income and losses, and fictitious credits to decrease clients’ tax liabilities, all of which resulted in increased refunds for many of their clients. Faruq diverted portions of his clients’ returns to his own bank account as part of the conspiracy, totaling more than $300,000, and Ali diverted over $170,000 to his own bank accounts. 

Faruq and Ali both also pled guilty to filing a false income tax return for themselves and their respective spouses for tax year 2014. In filing the false returns, Faruq and Ali omitted gross receipts from their tax preparation business on the 2014 tax returns and failed to report diverted funds from taxpayer-clients as income on their personal returns.

“Our tax system depends on the honesty of all citizens to truthfully file their tax returns, many of whom rely on professionals to represent their interests and to do the work honestly,” said U.S. Attorney McSwain. “Tax preparers like Faruq and Ali undermine the tax system when they prepare and file false tax returns for their clients. My Office will aggressively investigate and prosecute tax preparers like the defendants who profit by turning their tax preparation services into fraud factories.”

“While most return preparers provide excellent service to their clients, a few unscrupulous tax preparers file false and fraudulent returns to defraud the government, the tax-paying public and their own clients,” stated John R. Tafur, Special Agent in Charge, IRS Criminal Investigation, Newark Field Office.  “Tax practitioners and return preparers have a duty to their clients to prepare tax returns that comply with the law and are complete and accurate.  IRS Criminal Investigation will investigate and hold accountable abusive tax preparers who attempt to defraud our nation’s tax system.”

The case was investigated by the Criminal Investigation Division of the Internal Revenue Service, and is being prosecuted by Assistant United States Attorney Richard P. Barrett.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Robert Hoopes, 72, of Doylestown, PA, and Bernard Rafferty, 64, of Langhorne, PA were sentenced to 54 months’ and 18 months’ incarceration, respectively, by United States District Judge Gene E.K. Pratter.  In September 2018, Hoopes pleaded guilty to conspiracy to commit money laundering and Hobbs Act Extortion Under Color of Official Right.  In March 2018, Rafferty pleaded guilty to conspiracy to commit money laundering and honest services mail fraud.

From February 2016 until December 2016, Hoopes was the Director of Public Safety in Lower Southampton Township, Pennsylvania.  In this position, Hoopes had authority over all police, fire, and emergency operations in the township.  From 1992 until December 2016, Rafferty was a Deputy Constable in Bucks County.

Together with their co-defendants, including former Magisterial District Judge John Waltman who was sentenced to 78 months’ incarceration earlier this week, Hoopes and Rafferty participated in a scheme to extort bribes and kickbacks from Bucks County businessmen. They also conspired to launder money for individuals they believed were engaged in narcotics trafficking and health care fraud.  

For example, in November 2016, Waltman, Hoopes, and Rafferty accepted a bribe of $1,000, as well as the promise of other fees, in exchange for Waltman, Hoopes, and Rafferty to use their positions as public officials to “fix” a traffic case before Waltman in Bucks County Magisterial District Court.

In addition, from June 2015 to November 2016, Waltman, Hoopes, and Rafferty conspired to launder funds represented to be proceeds from health care fraud, and illegal drug trafficking.  From June 2016 to August 2016, Waltman, Hoopes, and Rafferty specifically laundered $400,000 in cash and took money laundering fees totaling $80,000 in cash.

“The laws of the land apply to everyone – especially to public officials who hold office to serve the public good,” said U.S. Attorney McSwain.  “Hoopes and Rafferty, like their corrupt partner Waltman, chose to flout the rule of law.  In doing so, they disgraced themselves and the offices they held.  Every public official should be on notice after today’s sentence: federal law enforcement is watching and we will hold you accountable if you make the wrong choices.”

“Hoopes and Rafferty held positions of trust and were expected to protect and serve their community,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Abandoning all pretense of ethics, they instead used their public roles for personal gain. They were willing to engage in what was clearly criminal behavior, so long as it benefitted their bank accounts. Such blatant corruption is toxic to the public trust, and the FBI is gratified these defendants are being held accountable.”

“Honest and law abiding citizens are fed up with the likes of those who use fraud to line their pockets,” said Guy Ficco, IRS-Criminal Investigation Special Agent in Charge. “Robert Hoopes and Bernard Rafferty disregarded the trust placed in them by the public when they made conscious decisions to accept bribes and launder money. Let this serve as a reminder that we will continue to investigate and bring to justice those who commit similar crimes.”

“This week’s sentencings reflects Homeland Security Investigations’ commitment to, and focus on, the investigation of financial crimes,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “By using their official positions for personal gain, Mr. Hoopes, Mr. Rafferty, and Mr. Waltman violated the trust placed in them by the public.  HSI and our law enforcement partners will continue to vigorously investigate those who conspire to knowingly launder illicit funds derived from criminal activities.”

The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigations, Homeland Security Investigations, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorneys Louis Lappen and Richard Barrett.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Rodrigo Fuentes-Gomez, a/k/a “Ervin Yovany Cruz,” 52, of West Chester, PA, was sentenced to five months’ incarceration by United States District Judge Mark A. Kearney.  The defendant was convicted of re-entering the United States illegally after being deported on three previous occasions and after having committed other criminal offenses while in the country unlawfully.  After he serves his sentence, the defendant will be deported to Mexico.

On September 27, 2018, the defendant, an illegal alien, native and citizen of Mexico, was charged in an indictment with reentry into the United States on or about July 2, 2018, after previously being deported and removed from the country on or about April 4, 1999, August 14, 2007, and June 25, 2011. On May 9, 2019, the defendant pleaded guilty.

While illegally present in the United States, the defendant has engaged in repeated criminal behavior.  He has been convicted of driving under the influence, forgery and making false reports to law enforcement, as well as public intoxication. This conviction is the defendant’s second federal conviction for illegal reentry, as he was previously federally convicted of illegal entry into the United States on May 9, 2011, in the District of Arizona.

“The defendant in this case clearly has no respect for the laws of this country,” said U.S. Attorney McSwain.  “After being removed on three previous occasions, Fuentes-Gomez decided yet again to snub our immigration system by entering the United States illegally – and committing multiple criminal offenses while he was here. He is clearly a danger to the public and does not deserve the privilege of being in our country.  I am glad that the Judge agreed and has ordered a sentence that holds him responsible for his actions.”

“Mr. Fuentes-Gomez’s sentencing sends a clear message that criminal aliens who illegally re-enter the United States will face criminal prosecution for flagrantly disregarding our laws,” said Simona L. Flores-Lund, Field Office Director for U.S. Immigration and Customs Enforcement (ICE) Enforcement and Removal Operations (ERO) Philadelphia. “It should also serve as a warning to others contemplating re-entering this country illegally that ERO officers will seek to affect their removal and preserve the integrity of our immigration laws.”

The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations, and is being prosecuted by Assistant United States Attorney Melanie B. Wilmoth.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Timothy O’Connell, 52, of Drexel Hill, PA entered a plea of guilty before the Honorable Gerald J. Pappert on one count of receipt of child pornography. 

On February 10, 2018, the defendant received images depicting the sexual abuse and exploitation of pre-pubescent children.  The victims depicted in the child pornography included a two-year old child identified by the Federal Bureau of Investigation in another child abuse investigation.  At the time he committed the crime, the defendant was employed as Associate Director of Campus Ministry at Villanova University.  On January 3, 2019, the defendant was indicted for receipt of child pornography. 

“Child exploitation is a pervasive problem that demands a sustained, aggressive response,” said U.S. Attorney McSwain.  “The allegations in this case are particularly disturbing due to the defendant’s history as a spiritual leader in a position of community trust at Villanova. We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”

This case was brought as part of Project Safe Childhood, a nationwide initiative to combat the growing epidemic of child sexual exploitation and abuse launched in May 2006 by the Department of Justice. Led by United States 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 the Villanova University Department of Public Safety, and is being prosecuted by Assistant United States Attorney Priya T. De Souza.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Terron Mason Moore, 34, of Philadelphia, PA was sentenced to 45 months’ incarceration, three years supervised release and restitution of $171,895 by Judge Gerald J. Pappert.  In February 2019, defendant pled guilty to seventeen counts of mail fraud, conversion of government funds, and aggravated identity theft in connection with his scheme to defraud the Pennsylvania Unemployment Compensation Fund of $171,895. 

For over three years, the defendant operated a fraud and identity theft scheme, by stealing the personal identifiable information of approximately twenty-one individuals, including their social security numbers.  He used this information to file fraudulent unemployment compensation claims for the purpose of unlawfully obtaining government funds which are reserved for the purpose of assisting working people who have lost their jobs. 

The defendant chose targets known to him as they all worked at his same employer, the popular Philadelphia restaurant Tinto.  Many of the victims were students or at the start of their careers, who have suffered financial harm due to defendant’s crimes.  By taking advantage of his coworkers, the defendant funded a lifestyle which he otherwise would not have enjoyed including trips to Jamaica and Las Vegas.

“Instead of putting in an honest day’s work and being paid for those efforts, like his victims all did, the defendant resorted to fraud and theft,” said U.S. Attorney McSwain.  “He stole from his peers – people who were working hard to build their lives in an honest manner, which have now been compromised, and who have suffered great emotional distress as they try to reconstruct their credit and good names.  And ironically, he stole from the very same taxpayer funded program that assisted him when he previously filed his own unemployment claim to receive benefits after losing his restaurant job.”

“Terron Mason-Moore defrauded the Pennsylvania Department of Labor and Industry by misusing the stolen identities of his co-workers to obtain over $170,000 in unemployment compensation benefits to which he was not entitled.  We will continue to work with our law enforcement partners and state workforce agencies to protect the integrity of unemployment insurance benefit programs,” stated Richard Deer, Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

The case was investigated by U.S. Department of Labor, United States Postal Inspection – Office of Inspector General, Social Security Administration, and is being prosecuted by Special Assistant United States Attorney Megan Curran.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that John Waltman, 61, of Trevose, Pennsylvania was sentenced to 78 months’ incarceration by Judge Gene E.K. Pratter.  In January 2019, the defendant pleaded guilty to conspiracy to commit money laundering and Hobbs Act Extortion Under Color of Official Right.

From 2011 to December 2016, Waltman served as a Magisterial District Judge in Bucks County, Pennsylvania. Together with his co-defendants who will both be sentenced later this week, Bernard Rafferty and Robert Hoopes, Waltman participated in a scheme to extort bribes and kickbacks from Bucks County businessmen. They also conspired to launder money for individuals they believed were engaged in narcotics trafficking and health care fraud.  

For example, in November 2016, Waltman, Hoopes, and Rafferty accepted a bribe of $1,000, as well as the promise of other fees, in exchange for Waltman, Hoopes, and Rafferty to use their positions as public officials to “fix” a traffic case before Waltman in Bucks County Magisterial District Court.

In addition, from June 2015 to November 2016, Waltman, Hoopes, and Rafferty conspired to launder funds represented to be proceeds from health care fraud, illegal drug trafficking, and bank fraud. From June 2016 to August 2016, Waltman, Hoopes, and Rafferty laundered $400,000 in cash, represented to be proceeds from health care fraud and illegal drug trafficking, and took money laundering fees totaling $80,000 in cash.

“The laws of the land apply to everyone – especially to public officials who hold office to serve the public good,” said U.S. Attorney McSwain.  “When public servants choose to flout the rule of law, they disgrace themselves and the offices they hold.  Every public official should be on notice after today’s sentence: federal law enforcement is watching and we will hold you accountable if you make the wrong choices.”

“A crooked judge trading on his position of trust is beyond disheartening,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “It's offensive. At every level, the justice system must operate in a fair and impartial manner. This is exactly the sort of case that deepens the public's distrust of elected officials and government, which is why the FBI takes public corruption so seriously.” 

“It is unacceptable for anyone, let alone an elected public official, to engage in such conduct,” said IRS-Criminal Investigation Special Agent in Charge Guy Ficco. “John Waltman betrayed the public’s trust when he accepted bribes in exchange for official acts. The sentence he received shows that there is no tolerance for such criminal behavior.”

“Today’s sentencing reflects Homeland Security Investigations’ commitment to, and focus on, the investigation of financial crimes,” said Marlon V. Miller, Special Agent in Charge of HSI Philadelphia. “By using his official position for his personal gain, Mr. Waltman violated the trust placed in him by the public.  HSI and our law enforcement partners will continue to vigorously investigate those who conspire to knowingly launder illicit funds derived from criminal activities.”

The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigations, Homeland Security Investigations, and the Pennsylvania State Police. It is being prosecuted by Assistant United States Attorneys Louis Lappen and Richard Barrett.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that three men from across the Eastern District of Pennsylvania have been sentenced to prison this week by federal judges for child exploitation offenses in separate cases.  Arthur Schlegel, 48 of Roseto, PA was sentenced to fifteen years imprisonment, twenty years supervised release and $10,000 restitution by Judge Joseph Leeson on June 4, 2019; Kenneth Laporte, 43, of Philadelphia, PA was sentenced to fifteen years imprisonment and lifetime supervised release by Judge Harvey Bartle III on June 4, 2019; and Michael Seibert, 32, of Allentown, PA was sentenced to thirty years imprisonment and lifetime supervised release by Judge Joseph Leeson on June 6, 2019.

In the Schlegel case, the defendant pleaded guilty to multiple counts of possession and distribution of child pornography.  For years, Schlegel amassed a collection of over a thousand images and videos depicting the sexual abuse of children.  He also shared child sexual assault images and videos online.

In the Laporte case, the defendant pleaded guilty to multiple counts of receipt and possession of child pornography for events that occurred within months of the defendant being released from federal prison after serving a sentence for similar charges.

In the Seibert case, the defendant pleaded guilty to multiple counts of manufacturing and possession of child pornography.  Posing as a teenage boy, Seibert visited internet chat rooms to communicate with multiple minor girls between the ages of 10 and 14, and persuaded them to take pornographic images of themselves and send the images to him.  The defendant also downloaded hundreds of digital images and dozens of videos of child pornography from internet websites.

“The nature of these crimes is horrifying and the negative impact on the victims can never be fully understood or appreciated, which is why my Office is committed to working with our law enforcement partners to identify, investigate and prosecute these dangerous predators,” said U.S. Attorney William M. McSwain. “Child exploitation is a pervasive problem — made more so by the accessibility of the internet — that demands an aggressive response.  We thank the Judges in these cases for delivering justice to these defendants through lengthy sentences.”

“Laporte took advantage of the justice system by sexually exploiting children just months after being released from federal prison for similar offenses,” said Michael Harpster, Special Agent in Charge of the Philadelphia Division of the FBI.  “Not only did he blatantly disregard the court, but he continued exploiting innocent children. This lengthy sentence makes certain that Laporte will not be afforded any further opportunity to commit these heinous acts. Society is a safer place with Laporte behind bars.”

“Child sexual exploitation is one of the most despicable crimes committed,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “These substantial prison sentences serve as a reminder of the strong commitment by Homeland Security Investigations to collaborate with our law enforcement and community partners to bring online child predators to justice.”

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

The Schlegel case was investigated by the Department of Homeland Security Investigations and is being prosecuted by Assistant United States Attorney Sherri Stephan.  The Laporte case was investigated by the Federal Bureau of Investigation and the United States Probation Office, and is being prosecuted by Assistant United States Attorney Everett Witherell.  The Seibert case was investigated by Department of Homeland Security Investigations and the Delaware County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Frank Labor.

The United States filed a complaint under the False Claims Act against Mallinckrodt ARD LLC, formerly known as Mallinckrodt ARD Inc. and previously Questcor Pharmaceuticals Inc., in the U.S. District Court for the Eastern District of Pennsylvania, the Department of Justice announced today. The government alleges that Mallinckrodt and Questcor (collectively Mallinckrodt) engaged in conduct that violated the False Claims Act by using a foundation as a conduit to pay kickbacks in connection with its drug H.P. Acthar Gel (Acthar) from 2010 through 2014. 

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations. 

The government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies for Acthar so it could market the drug as “free” to doctors and patients while increasing its price. Mallinckrodt allegedly paid these illegal subsidies through three funds that Mallinckrodt had a foundation set up to pay Acthar Medicare copays to the exclusion of other drugs. The government alleges that Mallinckrodt then routed patients with Acthar prescriptions to these funds. Mallinckrodt allegedly made continuing payments as the sole “donor” to these funds, to keep subsidizing Acthar Medicare copays as it expanded its sales of the drug. The government alleges that the Company paid these subsidies to induce Medicare-reimbursed purchases of Acthar at its ever-increasing price, and used the subsidies to counteract doctor and patient concerns about the drug’s high cost and to market the drug as “free.” The government further alleges that since its acquisition of Acthar in 2001, Mallinckrodt had raised its price from approximately $50 to over $32,200 per 5 milliliter vial by the end of 2014.    

“Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices.” 

“Medicare Part D is an important program that our nation instituted to help seniors cover prescription drug costs, and Congress enacted safeguards to ensure Part D’s fiscal viability for those citizens,” said United States Attorney William M. McSwain. “In my office’s continued commitment to fighting health care fraud, we will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise cannot do – pay patients’ co-pays to circumvent these safeguards and increase their profits.”

"Medicare rules are designed to protect beneficiaries and taxpayer dollars," said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. "HHS-OIG and the U.S. Attorney's Office will continue to work together to fight health care fraud and investigate allegations of co-pay and kickback violations."

The allegations that are the subject of the government’s complaint were originally brought 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 here, which are captioned United States of America ex rel. Strunck et al. v. Mallinckrodt ARD, Inc., No. 12-CV-0175 (E.D. Pa.), and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The government’s pursuit of these matters illustrates the government’s emphasis on combating healthcare fraud. One of the most powerful tools in this effort is the False Claims Act. Tips and complaints from all sources about potential fraud, waste, abuse, and mismanagement can be reported to the Department of Health and Human Services, at 800‑HHS‑TIPS (800-447-8477).

This matter is being handled by the Civil Division’s Commercial Litigation Branch, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the U.S. Department of Health and Human Services Office of Inspector General. 

The claims asserted by the United States are allegations only and there has been no determination of liability.

PHILADELPHIA – United States Attorney William M. McSwain announced today that the United States filed a complaint under the False Claims Act against Mallinckrodt ARD LLC, formerly known as Questcor Pharmaceuticals, Inc. (“Mallinckrodt”), in the U.S. District Court for the Eastern District of Pennsylvania. The government alleges that Mallinckrodt violated the False Claims Act by using a foundation as a conduit to pay kickbacks in connection with its drug H.P. Acthar Gel (“Acthar”) from 2010 through 2014 in a scheme that was designed to enable Mallinckrodt to raise the price of a vial of Acthar from $50 to $32,000.  Acthar is a drug available to treat certain conditions including acute exacerbations in multiple sclerosis, lupus, and rheumatoid arthritis.

When a Medicare beneficiary obtains a prescription drug covered by Medicare, the beneficiary may be required to make a partial payment, which may take the form of a copayment, coinsurance, or a deductible (collectively, “copays”). Congress included copay requirements in the Medicare program, in part, to serve as a check on health care costs, including the prices that pharmaceutical manufacturers can demand for their drugs. The Federal Anti-Kickback Statute prohibits a pharmaceutical company from offering or paying, directly or indirectly, any remuneration—which includes money or any other thing of value—to induce Medicare patients to purchase the company’s drugs. This prohibition extends to the payment of patients’ copay obligations. 

The government alleges that Mallinckrodt used a foundation as a conduit to pay illegal kickbacks in the form of copay subsidies for Acthar, so it could market the drug as “free” to doctors and patients despite increasing Acthar’s price astronomically. Mallinckrodt allegedly paid these illegal subsidies through three funds that it established at the foundation to the exclusion of other drugs. The government alleges that Mallinckrodt was the sole “donor” to these funds and routed Acthar patients there to receive virtually guaranteed copay subsidies to counteract doctor and patient concerns about the drug’s high cost. By doing so, Mallinckrodt marketed Acthar as “free” to patients and caused the submission of millions of dollars in false Acthar claims to Medicare.  The subsidies it routed through these funds drove Acthar prescribing and was a proven method that negated concerns about the cost of the drug, allowing Mallincrkodt to continually raise its price.

From the time of Mallinckrodt’s acquisition of the drug Acthar in 2001, Mallinckrodt raised the price from approximately $50 per vial to over $32,000 per vial by the end of 2014.   

“Drug companies are not allowed to pay patients’ co-pays.  That rule is designed to prevent the very thing Mallinckrodt allegedly did here – outrageously jack up Acthar’s price and leave the government with the entire bill,” said U.S. Attorney McSwain.  “We will not allow drug companies to use so-called charitable patient assistance funds to do what they otherwise are not allowed to do.  That’s an illegal kickback and undermines the viability of Medicare Part D, which our nation instituted to help seniors cover prescription drug costs.”

“Illegal inducements increase the costs paid by the American taxpayer and distort the market forces that otherwise could control those costs,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division. “This lawsuit and prior enforcement actions make clear that the Department will hold accountable drug companies that pay illegal kickbacks to facilitate increased drug prices.” 

“Medicare rules are designed to protect beneficiaries and taxpayer dollars,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services. “HHS-OIG and the U.S. Attorney's Office will continue to work together to fight health care fraud and investigate allegations of co-pay and kickback violations.”

The allegations in this case were brought in two lawsuits filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private parties to sue on behalf of the government for false claims and to receive a share of any recovery.

“We sincerely thank the relators in this case. Together with their lawyers, these three citizens provided essential assistance to the government throughout its investigation. Without their willingness to shed light on allegations of fraud, preserving government program funds would be far more challenging,” said U.S. Attorney McSwain. 

This matter was investigated by the U.S. Attorney’s Office for the Eastern District of Pennsylvania in conjunction with Civil Division’s Commercial Litigation Branch, and the U.S. Department of Health and Human Services Office of Inspector General. For the U.S. Attorney’s Office, this case is handled by Assistant United States Attorney Colin Cherico and Auditor George Niedzwicki.

The cases are captioned United States of America ex rel. Charles Strunck et al. v. Questor Pharmaceuticals, Inc., No. 12-CV-0175 (E.D. Pa.) and United States of America ex rel. Clark v. Questor Pharmaceuticals, Inc., No. 13-CV-1776 (E.D. Pa.). The United States filed a notice of intervention in these two cases on March 6, 2019. 

The claims asserted against defendant are allegations only and there has been no determination of liability.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Langhorne podiatrist Dr. Ronald Klein will pay $75,000 and stop prescribing Schedule II opioids, a class of controlled substances with a high potential for abuse, for two years to resolve allegations that he improperly prescribed opioids to one of his patients from October 2014 to October 2016.

The settlement resolves allegations that over two years, Dr. Klein wrote prescriptions for one of his patients that had no legitimate medical purpose and were not issued in the usual course of professional practice. In particular, Klein allegedly wrote improper prescriptions, including for opioids, when multiple prescriptions were written for the same drug on the same day, were written too early based upon the previous prescription’s supply and directions for use, and were not supported by contemporaneous medical histories or physical examinations.

“Healthcare providers have an unwavering duty to their patients to ensure that opioid prescriptions are written for a legitimate medical purpose, and are consistent with the law and the accepted standard of care,” said U.S. Attorney McSwain. “This settlement is the latest example of my Office’s commitment to using all of our enforcement tools to ensure that providers are living up to that duty, and more broadly, of our commitment to taking a multi-pronged approach to combatting the opioid epidemic. We are grateful to our partners at the Drug Enforcement Administration for helping us investigate improper opioid prescriptions.”

This investigation was conducted with the Philadelphia Field Division of the Drug Enforcement Administration. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Denis Cooke handled the investigation and settlement.

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 John C. Dellarocco, Jr., 24, of Holmes, Pennsylvania was indicted today on four counts of use of an interstate commerce facility to entice and attempt to entice a minor to engage in sexual conduct, seven counts of manufacture and attempted manufacture of child pornography, and one count of possession of child pornography.

These charges arise from an investigation into the defendant’s communications with at least eleven minor female children on an Internet-based application in which the defendant persuaded the girls to engage in sexual activity and sexually explicit conduct by photographing themselves engaging in that conduct and transmitting the images to the defendant via the Internet.

“Child exploitation is a pervasive problem – made more so by the accessibility of the Internet and digital media – that demands an aggressive response,” said U.S. Attorney McSwain.  “The allegations in this case are particularly disturbing because of the number of children the defendant was able to target and communicate with on the Internet.  We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”

“Child predators who produce child pornography are among the worst offenders. The FBI and our law enforcement partners work tirelessly to protect children from predators like Dellarocco. Today's Indictment sends the message that the FBI remains committed to pursuing justice for these young victims,” said FBI Special Agent-in-Charge Michael Harpster.

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

The case was investigated by the Federal Bureau of Investigation (FBI) and the Delaware County District Attorney's Internet Crimes Against Children Taskforce, and is being prosecuted by Assistant United States Attorney Roberta Benjamin.

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

Heritage Pharmaceuticals Inc., a generic pharmaceutical company headquartered in Eatontown, New Jersey, was charged for conspiring with its competitors to fix prices, rig bids, and allocate customers, the Department of Justice announced today.  

According to a one-count felony charge filed yesterday in the United States District Court for the Eastern District of Pennsylvania in Philadelphia, from about April 2014 until at least December 2015, Heritage participated in a criminal antitrust conspiracy with other companies and individuals engaged in the production and sale of generic pharmaceuticals, a purpose of which was to fix prices, rig bids, and allocate customers for glyburide, a medicine used to treat diabetes.  This charge is the third in the Department of Justice’s Antitrust Division’s ongoing investigation; Heritage’s former CEO and its former president were previously charged.

The Antitrust Division also announced a deferred prosecution agreement resolving the charge, under which Heritage admits that it conspired to fix prices, rig bids, and allocate customers for glyburide.  Under the agreement’s terms, Heritage will pay a $225,000 criminal penalty and cooperate fully with the ongoing criminal investigation.  The United States will defer prosecuting Heritage for a period of three years to allow the company to comply with the agreement’s terms.  The agreement will not be final until accepted by the court.

“American consumers have the right to generic drugs sold at prices set by competition, not collusion,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division.  “It is particularly galling that, when healthcare prices in the United States are already high, certain generic pharmaceutical companies and executives engaged in collusive conduct at the expense of individuals who depend on critical medications.  Heritage and its co-conspirators cheated and exploited vulnerable American patients to pad their bottom line.”  Delrahim continued, “this resolution — requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation — sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated.  The Division and its law enforcement partners, including the FBI and the U.S. Postal Service Office of Inspector General, will continue to hold companies and individuals accountable for collusion that undermines the integrity of the market for drugs.”                  

The Antitrust Division entered into the deferred prosecution agreement with Heritage based on the individual facts and circumstances of this case.  Among those facts and circumstances, the agreement specifically identifies the company’s substantial and ongoing cooperation with the investigation to date, including its disclosure of information regarding criminal antitrust violations involving drugs other than those identified in the criminal charge and the agreement.  According to the agreement, this cooperation has allowed the United States to advance its investigation into criminal antitrust conspiracies among other manufacturers of generic pharmaceuticals.  Other facts and circumstances identified in the agreement include: Heritage has agreed to resolve all civil claims relating to federal health care programs arising from its conduct; and a conviction (including a guilty plea) would likely result in the Office of the Inspector General of the Department of Health and Human Services imposing mandatory exclusion of Heritage from all federal health care programs under 42 U.S.C. § 1320a-7 for a period of at least five years, which would result in substantial consequences, including to American consumers.  The agreement can ensure that integrity has been restored to Heritage’s operations and preserve its financial viability while preserving the United States’ ability to prosecute it should material breaches occur.

“Price fixing, bid rigging and market allocation promote an environment antithetical to free and open competition in the marketplace.  When this occurs, the consumer is not guaranteed the best products at the lowest prices,” said Special Agent in Charge Scott Pierce, U.S. Postal Service Office of Inspector General.  “The U.S. Postal Service spends hundreds of millions of dollars every year on health care associated costs, including expenses related to prescription drugs.  Along with the Department of Justice and our federal law enforcement partners, the USPS Office of Inspector General will aggressively investigate those who would engage in this type of harmful conduct.”

“The availability of generic medications should be a boon to the public, giving them access to proven drugs at lower prices,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division.  “When generic pharmaceutical firms engage in price fixing and bid rigging in order to pad their profits, they not only disrupt the free market but do so on the backs of the folks who depend on these drugs.  The FBI will continue to investigate and hold accountable companies engaged in such illegal and anticompetitive acts.”

In a separate civil resolution, Heritage has agreed to pay $7.1 million to resolve allegations under the False Claims Act related to the price-fixing conspiracy.  The government alleged that between 2012 and 2015, Heritage paid and received remuneration through arrangements on price, supply, and allocation of customers with other pharmaceutical manufacturers for certain generic drugs in violation of the Anti-Kickback Statute, and that its sale of such drugs resulted in claims submitted to or purchases by federal healthcare programs.  The drugs allegedly implicated in this scheme address a wide variety of health conditions, and include hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide.

“Price fixing of generic drugs harms federal health care programs and the beneficiaries those programs serve,” said Assistant Attorney General Jody Hunt of the Department of Justice’s Civil Division.  “The Department of Justice will use every tool at its disposal to hold generic drug manufacturers accountable for wrongdoing.” 

“My Office is proud to announce both the civil healthcare fraud settlement with the Civil Division and the deferred prosecution agreement with the Antitrust Division,” said U.S. Attorney McSwain. “Price fixing and market allocation in generic drugs will not be tolerated, especially when such actions artificially inflate prices and negatively impact federal healthcare programs like Medicare and Medicaid. This resolution with Heritage is an important milestone, and my Office will continue to investigate and pursue illegal conduct regarding generic drugs.”

“Plotting to raise prices on generic medications is illegal and may result in patients’ inability to afford vital medicines,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services.  “Along with our law enforcement partners at the DOJ, FBI, and Postal-OIG, we will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”

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

The criminal charge is the result of an ongoing federal antitrust investigation into price fixing, bid rigging, and other anticompetitive conduct in the generic pharmaceutical industry, which is being conducted by the Antitrust Division with the assistance of the FBI’s Philadelphia Division, the FBI headquarters’ International Corruption Unit, the United States Postal Service Office of Inspector General, and the U.S. Attorney’s Office for the Eastern District of Pennsylvania.  Anyone with information on market allocation, price fixing, bid rigging and other anticompetitive conduct related to the generic pharmaceutical industry should contact the Antitrust Division’s Citizen Complaint Center at 1-888-647-3258, visit www.justice.gov/atr/contact/newcase.html or call the FBI’s Philadelphia Division at 215-418-4000. 

The civil settlement was handled by the Civil Division’s Commercial Litigation Branch and the U.S. Attorney’s Office for the Eastern District of Pennsylvania with support from the Department of Health and Human Services Office of the Inspector General, Defense Health Agency Program Integrity, and the Office of Inspector General for the Department of Veterans Affairs.  Except for those facts admitted to in the deferred prosecution agreement, the claims resolved by the civil settlement are allegations only, and there has been no determination of liability.

PHILADELPHIA, PA – United States Attorney William M. McSwain today announced that generic drug manufacturer Heritage Pharmaceuticals, Inc. will pay over $7 million in a civil settlement to resolve allegations of a scheme to fix prices and allocate customers for several of its drugs. The civil resolution of these allegations in the Eastern District is a component of the company’s larger resolution with the Department of Justice’s (DOJ) Antitrust Division and Civil Division.

This over $7 million civil healthcare fraud settlement resolves False Claims Act allegations that Heritage paid and received remuneration from other drug manufacturers between 2012 and 2015, and engaged in a scheme to artificially inflate and fix prices on certain generic drugs. These drugs were supplied to Medicare, Medicaid, and the Department of Defense’s TRICARE program beneficiaries, as well as the Department of Veterans Affairs. The drugs allegedly implicated in this scheme address a wide variety of health conditions, and include hydralazine, used to treat high blood pressure, theophylline, used to treat asthma and other respiratory problems, and glyburide, used to treat diabetes.

Separately, Heritage has entered into a three-year deferred prosecution agreement with the DOJ 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. The deferred prosecution agreement was also filed in the Eastern District of Pennsylvania. Under the terms of the deferred prosecution agreement, Heritage will pay a $250,000 monetary penalty and will avoid prosecution if it complies with the terms and conditions of the agreement.

“My Office is proud to announce this important civil healthcare fraud settlement with the Civil Division, and the deferred prosecution agreement with the Antitrust Division,” said U.S. Attorney McSwain. “Price-fixing and market allocation in generic drugs will not be tolerated, especially when such actions artificially inflate prices and negatively impact federal healthcare programs like Medicare and Medicaid. This resolution with Heritage is an important milestone, and my Office will continue to investigate and pursue illegal conduct regarding generic drugs.”

“Consumers have the right to generic drugs sold at prices set by competition, not collusion,” said Assistant Attorney General Makan Delrahim of the Department of Justice’s Antitrust Division. “Heritage and its co-conspirators cheated and exploited American patients to pad their bottom line. Today’s resolution—requiring an admission of guilt, a criminal penalty, and cooperation in the ongoing investigation—sends a clear message to generic pharmaceutical companies and their executives that this conduct will not be tolerated. The Division and its law enforcement partners, including the Federal Bureau of Investigation and United States Postal Service-Office of the Inspector General, will continue to hold companies and individuals accountable for collusion that undermines the integrity of the market for drugs that should be a less expensive alternative to brand name pharmaceuticals.”

“Plotting to raise prices on generic medications is illegal and may result in patients’ inability to afford vital medicines,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General, Department of Health and Human Services (HHS-OIG). “Along with our law enforcement partners at the Department of Justice, the Federal Bureau of Investigation, and United States Postal Service-Office of the Inspector General, we will continue to investigate allegations of companies engaging in actions that put the public and the Medicare program at risk.”

The civil settlement was handled by the United States Attorney’s Office for the Eastern District of Pennsylvania and the Civil Division’s Commercial Litigation Branch, with support from HHS-OIG, Defense Health Agency Program Integrity, and the Office of Inspector General for the Department of Veterans Affairs. The investigation and settlement for the U.S. Attorney’s Office for the Eastern District of Pennsylvania were handled by Assistant U.S. Attorneys Landon Jones and Anthony Scicchitano.

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

PHILADELPHIA — U.S. Attorney William McSwain announced today that Jerry Zweitzig, 71, of Hatboro, Pennsylvania was charged by Indictment with multiple counts of child exploitation offenses, including enticing a minor to engage in illicit sexual conduct and possession of child pornography, according to federal authorities.  The defendant is the former pastor of Horsham Bible Church on Upland Avenue in Horsham.

“Child exploitation is a pervasive problem – made more so by the accessibility of the internet and digital media – that demands an aggressive response,” said U.S. Attorney McSwain.  “The allegations in this case are particularly disturbing due to the defendant’s history as a spiritual leader in a position of community trust. We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children.”

“Crimes against children are disgraceful and unacceptable,” said Marlon V. Miller, special agent in charge of HSI Philadelphia. “HSI will continue working with our partners to aggressively investigate cases in which child predators use the internet to further exploit children within our community, and around the world.”

If convicted, the defendant faces a maximum possible sentence of 170 years imprisonment, a minimum mandatory term of 15 years, 5 years of supervised release, and a $1,500,000, fine.

The case was investigated by Homeland Security Investigations and the Horsham Police Department, and is being prosecuted by Assistant United States Attorney Eric L. Gibson.  

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that pharmaceutical company Almirall, LLC, formerly named Aqua Pharmaceuticals, LLC (“Aqua”), will pay $3.5 million to resolve allegations that it employed illegal kickbacks to incentivize physicians to prescribe Aqua’s dermatology pharmaceutical drugs. 

The settlement resolves allegations that, between 2012 and 2017, Aqua knowingly paid kickbacks to dermatology providers in order to induce prescriptions of their drugs. Aqua, through its sales representatives and other employees, allegedly provided physicians with improper in-office and out-of-office meals and food items, entertainment, trips, gift cards, and gifts.  It also engaged health care providers for speaking engagements, advisory boards, and consulting services where one purpose of the compensation was to induce providers to prescribe Aqua drugs.

“Federal law is designed to ensure that doctors and other providers are not improperly influenced by pharmaceutical companies in deciding which drugs to prescribe,” said U.S. Attorney McSwain.  “Our office will do everything in its power to ensure that pharmaceutical companies and prescribers are playing by the rules and that they are not enriching themselves at the expense of patients’ well-being, especially those covered by Medicare and Tricare, the insurance for members of the armed services. This settlement is just the latest example of our office’s strong partnership with HHS-OIG and the Defense Health Agency to protect the integrity of our health care programs.”

“Pharmaceutical companies that ignore rules designed to protect patients will be held accountable. Patients must be able to trust that decisions made by their doctors are based on unbiased professional judgment and not personal gain,” said Maureen R. Dixon, Special Agent in Charge of the Office of the Inspector General for the U.S. Department of Health and Human Services in Philadelphia. “We will continue to work with the U.S. Attorney’s Office in this District to root out all forms of waste, fraud and abuse in our federal health care programs.”

“I applaud the Department of Justice and the U.S. Attorney for their continued efforts to hold health care providers accountable to the American taxpayer,” said Vice Adm. Raquel Bono, director of the Defense Health Agency. “The efforts of the Department of Justice safeguard the health care benefits of our service members, veterans and their families. The Defense Health Agency continues to work closely with the Justice Department, and other state and federal agencies to investigate all those who participate in fraudulent practices.”

This settlement resolves allegations in a lawsuit filed in the Eastern District of Pennsylvania by a former Aqua sales representative, under the qui tam (or whistleblower) provisions of the False Claims Act. The qui tam provisions permit private parties to sue for false claims on behalf of the government and to receive a share of any recovery. The relator here will receive $735,000 as her share of the recovery in the case. The relator was represented by Brian J. McCormick, Jr., Esq. of Ross Feller Casey LLP, and Claudine Homolash, Esq., of the CQH Firm.

“We thank the whistleblower for coming forward and providing essential assistance to the government. This concerned citizen’s information and assistance were critical to our office’s discovery and investigative efforts in this matter, and we deeply appreciate her contribution,” said U.S. Attorney McSwain.

The federal investigation was conducted in cooperation with the California Department of Insurance, which conducted its own investigation. The Department of Insurance separately agreed to a resolution of $3.1 million with Aqua to resolve similar allegations.

This case was a cooperative effort among the U.S. Attorney’s Office for the Eastern District of Pennsylvania, the Office of the Inspector General of the Department of Health and Human Services, and the Defense Health Agency. For the United States Attorney’s Office, Assistant United States Attorney Anthony D. Scicchitano and Auditor Dawn Wiggins handled the investigation and settlement.

The lawsuit is captioned United States ex rel. John Doe v. Aqua Pharmaceuticals, LLC et al., Civil Action No. 15-5086 (E.D. Pa.). The claims resolved by the settlement are allegations only; there has been no determination of liability.

PHILADELPHIA – First Assistant U.S. Attorney Jennifer Arbittier Williams announced that Emma Semler, 23, of Collegeville, PA was sentenced today to 21 years’ incarceration, six years supervised release, and a $2,500 fine by the Honorable Gene E.K. Pratter.  The defendant was convicted by a jury in December 2018 of one count of distribution, and aiding and abetting the distribution, of heroin resulting in death, and one count of distribution, and aiding and abetting the distribution, of heroin resulting in death within 1,000 feet of a playground.

Semler and the victim first became friends when they met at a drug rehabilitation facility in November 2013. On May 9, 2014, the victim contacted Semler via Facebook Messenger about obtaining heroin. Semler told the victim that Semler knew a place where they could get heroin and said Semler would bring her younger sister along with them. Semler also agreed to provide the syringe for the victim to use to inject the heroin.

The three women then traveled to the Overbrook section of West Philadelphia to purchase drugs from someone known to Semler. Upon Semler purchasing the heroin, the women went to a nearby Kentucky Fried Chicken (KFC) restaurant, located at 61st Street and Lancaster Avenue in Philadelphia. All three women went into the women’s restroom, where Semler distributed a packet of heroin along with a syringe to the victim. The victim injected the heroin and began to display symptoms of overdosing. When she realized that the victim was overdosing, Semler did not help the victim or call 911. Instead, Semler and her sister cleaned the bathroom of the evidence of their drug use and fled the KFC without contacting anyone regarding the victim’s condition, leaving her alone and fighting for her life on the bathroom floor. The victim was later found by a KFC employee, who immediately called 911. Despite efforts by first responders and later a hospital, the victim was pronounced dead. The KFC was located within 1,000 feet of a playground.

“This defendant acted with complete disregard for another human life, the life of a supposed friend,” said First Assistant U.S. Attorney Williams. “The defendant continued to engage in criminal behavior and was arrested for possession of heroin again after the victim’s death. Aggressively prosecuting egregious drug crimes like this case is part of this Office’s multi-layered approach to confronting the opioid epidemic ravaging our neighborhoods.  The sentence handed down today is in the interest of justice.”

“Semler was convicted at trial of providing the victim with the heroin that lead to her fatal overdose,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division.  “The fact that Semler left the victim alone as she was overdosing is particularly disturbing, as she most likely could have been aided by first responders.” 

The case was investigated by the Drug Enforcement Administration, and the case is being prosecuted by Assistant United States Attorney A. Nicole Phillips.

PHILADELPHIA – U.S. Attorney William M. McSwain announced the unsealing of an indictment charging Richard Blong, age 28, of Horsham, PA with multiple counts of child exploitation offenses including enticing a minor to engage in illicit sexual conduct, manufacturing child pornography, and possession of child pornography.

These charges arise out of an investigation into the defendant’s online solicitation of three minor victims (all between the ages of 14 and 16 years old) to produce and send him sexually explicit photos of themselves, and his in-person meeting with one of the minor victims, during which he engaged in sexual contact with her and produced sexually explicit photos of her.  These offenses occurred throughout 2018.

“Child exploitation is a pervasive problem – made more so by the accessibility of the internet – that demands an aggressive response,” said U.S. Attorney McSwain.  “We stand ready with our federal and local partners to identify and prosecute those who would prey upon minor children using online resources.”

“Blong preyed on children and manufactured videos of minors being sexually abused,” said Marlon V. Miller, special agent in charge of HSI Philadelphia.  “The unsealing of today’s indictment is the first step in holding him accountable for his reprehensible actions.  Homeland Security Investigations will work with our law enforcement partners to utilize every resource available to investigate child exploitation cases in Pennsylvania and around the country.”

If convicted, the defendant faces a maximum possible sentence of life imprisonment, which includes a 15-year mandatory minimum sentence, and up to a lifetime of supervised release.

The case was investigated by Homeland Security Investigations, the Montgomery County District Attorney’s Office County Detective Bureau, and the Detective Bureau of the Union County, New Jersey Prosecutor’s Office and is being prosecuted by Assistant United States Attorney Kelly Harrell.

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that John Kelvin Conner, 63, of Elkins Park, Pennsylvania, was sentenced today to nearly four years (46 months) imprisonment, three years supervised release, ordered to forfeit $14,923 and pay an additional $14,923 in restitution by United States District Judge Gerald M. McHugh. Conner was convicted in February 2019 by a jury of 19 counts of wire fraud and one count of making a false statement to federal agents. The defendant, an attorney and former federal agent, devised and participated in a scheme to defraud an elderly woman out of more than $95,000 so that he could gamble with her money at casinos.

In July 2016, the 85-years old victim signed a Power of Attorney (“POA”) agreement with the defendant that granted him authority to manage the victim’s finances and pay her bills. At the time, the victim lived at home, but required the assistance of multiple caregivers, and her only source of income was a monthly pension. The evidence presented at trial showed that Conner used the POA agreement to liquidate a life annuity policy that the victim owned, deposit the proceeds into one of her bank accounts, and siphon nearly all of that money for his personal use at casinos.

From August 16, 2016 until April 22, 2017, the defendant used an ATM card to make at least 176 unauthorized withdrawals at Pennsylvania and New Jersey casinos totaling at least $95,688 from the victim’s bank account. During this time, the defendant neglected to pay the victim’s bills, which led to her temporarily losing basic utilities like heat, hot water, electricity, and telephone services. Additionally, many checks paid to the home caregivers were returned because of insufficient balances in the victim’s checking account. Ultimately, Conner left the elderly victim with just $15.07 in her bank accounts before he was caught. When questioned by FBI agents about the ATM withdrawals, the defendant falsely told the agents a ridiculous story that the victim had authorized him to use her money to gamble at casinos.

“The defendant’s conduct in this case was egregious,” said U.S. Attorney McSwain. “Stealing an elderly woman’s life-savings, gambling it away at casinos, and then lying about it to federal agents – all as an officer of the court, an attorney who took an oath to act in the best interest of his clients and with a high moral standard. This is the very definition of someone with power preying upon the most vulnerable. I am grateful that the Judge held him accountable for his despicable actions.”

“Ripping off an elderly and vulnerable woman, gambling away her money even as her utilities were being shut off — the callousness of John Conner's crimes is staggering,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “While we can't undo all of the stress and damage caused, the FBI takes great satisfaction in bringing crooks like Connor to justice and preventing them from doing any more harm. Elder fraud and abuse are utterly unacceptable. If you're being victimized or know of someone who is, please reach out to the FBI. As always, tipsters can remain anonymous.”

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Weixing Chen, 30, of Brookhaven, PA was sentenced today to 12 months imprisonment and three years supervised release by Judge Paul S. Diamond.  Chen pleaded guilty on December 5, 2018 to one count of procuring naturalization unlawfully and two counts of making a false statement in a naturalization proceeding.  The defendant will lose his United States citizenship and will be deported to China after he serves his term of imprisonment.

During the filing of his naturalization application and the interview process with United States Citizenship and Immigration Services (“USCIS”), the defendant deliberately concealed the fact that he was currently soliciting sex from minors and collecting child pornography.  He also falsely claimed that he had not committed any crimes prior to applying for naturalization. In reality, before being sworn in as a United States citizen, the defendant was electronically communicating with two individuals whom he believed to be minors in order to have sexual contact with them.  He was convicted of various child exploitation offenses in Delaware County in 2015 after becoming a citizen.

“An important purpose of federal immigration and naturalization laws is to ensure the safety and security of the United States,” said U.S. Attorney McSwain.  “This defendant flouted our laws, preyed upon children, and lied about all of it to gain entry into our country unlawfully.  This sentence confirms that my Office will continue to hold every person accountable who violates federal law – no matter who you are or where you come from.”

“Homeland Security Investigations will aggressively pursue cases where individuals unlawfully obtain immigration benefits, especially in a circumstance like this one, which involves a child predator,” said Marlon V. Miller, Special Agent in Charge of HSI Philadelphia. “We will continue to work tirelessly with our law enforcement counterparts to investigate criminals who manipulate and exploit the immigration system and see that they are brought to justice.”

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

PHILADELPHIA – United States Attorney William M. McSwain announced that an indictment was unsealed today against Mark Wayne Ramsey, 29, of San Francisco, California, charging him with conspiracy to commit securities fraud and four counts of securities fraud.

According to the indictment, Ramsey conspired with Damilare Sonoiki and Marvin Mychal Kendricks, both of whom have already pleaded guilty to similar charges. The indictment alleges that Sonoiki (then an analyst at a global investment bank in New York) provided material, non-public information to Kendricks (then a linebacker for the Philadelphia Eagles) and to Ramsey, who was Kendricks’ roommate.  The information that Sonoiki provided was about upcoming mergers involving four investment bank clients. Sonoiki obtained this information in violation of his duty of confidentiality that he owed to the investment bank.

The indictment alleges that Kendricks gave Ramsey access to his brokerage account. Relying on the material, non-public information they received from Sonoiki, Kendricks and Ramsey purchased call options between July 2014 and November 2014 in the target companies: Compuware Corporation, Move, Inc., Sapient Corporation, and Oplink Communications LLC.  When the proposed merger was announced in each case, the value of the options went up significantly.  During the period of the conspiracy, Kendricks made a profit of nearly $1.2 million. The indictment alleges that Kendricks provided, among other things, $15,000 to Ramsey for his participation in the scheme.

“When individuals engage in insider trading – buying and selling securities based on material, non-public information – it undermines faith in our financial markets and harms ordinary investors who play by the rules,” said U.S. Attorney McSwain.  “As alleged, Mr. Ramsey cheated the market, cheated other investors, and placed himself above the law.  My Office will continue to work with our law enforcement partners to maintain the integrity of the financial markets, which is one of our top priorities.”

“Those engaged in insider trading fundamentally undermine the trust necessary for our nation's financial markets to function,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “The FBI is committed to ensuring that those markets are a level playing field, not just profiting those with friends in the know.”

If convicted, Ramsey faces a maximum possible sentence of 85 years’ imprisonment, a three year period of supervised release, a $20,250,000 fine, and a $500 special assessment. Forfeiture of all proceeds from the offenses also may be ordered.

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

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Sean Fager, 54, of Reading, Pennsylvania was sentenced to 18 years imprisonment, followed by lifetime supervised release by Judge Jeffrey L. Schmehl.  In January 2019, Fager pleaded guilty to charges of production, transportation and possession of child pornography, including amassing a collection of more than 400 digital images and several videos found on his personal computer.

In March 2014, the National Center for Missing and Exploited Children shared a tip with law enforcement about suspected child pornography being uploaded from an IP address belonging to the defendant.  An investigation revealed hundreds of images of child pornography, some of which appeared to be homemade, and evidence that the defendant participated in bondage and diaper fetish behavior.  Most egregiously, Fager took photos of two children, a boy and a girl both around the age of 5, depicting these fetishes for his own sexual gratification.

“This defendant’s conduct was abhorrent.  He preyed on the most vulnerable of victims – two five-year-old children.  Fager, and others like him who participate in the world of child pornography, perpetuate the harm to the victims by creating demand and fueling this market,” said U.S. Attorney McSwain.  “These children are victimized every time their images are downloaded, purchased, or viewed by another person.  Their exploitation is ongoing and relentless.  This sentence demonstrates the seriousness of these crimes and the ferocity with which we will prosecute them.”

“Anyone willing to sexually exploit children deserves to feel the full force of the law,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Sean Fager eagerly victimized two young children. Society is unquestionably safer with predators like him behind bars, and the FBI will never stop working to bring such criminals to justice.”

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorneys Amanda Reinitz and Christine Sykes.

PHILADELPHIA – Earlier this week, United States Attorney William M. McSwain was honored to deliver opening remarks at the Eastern District of Pennsylvania’s annual Anti-Terrorism Advisory Council (ATAC) Conference in Philadelphia.  The conference drew attendees from a variety of fields, including medicine, public health, and law enforcement.  U.S. Attorney McSwain was introduced by Ronald Stanko, Deputy Director, Pennsylvania Department of Homeland Security.

Remarks as Prepared for Delivery

*****

Thank you, Ron, for that introduction, and thank you all for traveling to Philadelphia to be here today.  On behalf of my Office, we are honored to host today’s annual ATAC conference.  The Eastern District’s Anti-Terrorism Advisory Committee was created in the aftermath of 9/11, when the U.S. Department of Justice directed each United States Attorney’s Office to form an Anti-Terrorism Advisory Council whose charge was clear: to promote information sharing between federal, state, and local authorities; to serve as a coordinating body for carrying out the anti-terrorism plan; and to provide an organizational structure for responding to any future terrorist incidents in that district.

And we gather here today to continue to carry out that mission.

I would like to thank those who made this conference possible.  From my Office, thank you to Tom Perricone and Christine Sykes, Chief and Deputy Chief, respectively, of our National Security unit; Michele Mucellin, our Law Enforcement Coordinator; and Mickey Pease, our Intelligence Analyst.

From outside of the U.S. Attorney’s Office, thank you to Michael Harpster, Special Agent in Charge of the FBI’s Philadelphia Field Office and Kevin Bosch, Special Agent and Weapons of Mass Destruction Coordinator of the FBI’s Philadelphia Field Office; Nancy Baron Baer, Regional Director, and Jeremy Bannett, Associate Regional Director of the Anti-Defamation League; Stacy Irving, Senior Advisor for Homeland Security Planning Programs and Strategic Partnerships at the Delaware Valley Intelligence Center (or the DVIC); and last but certainly not least, everyone from the Pennsylvania Department of Homeland Security, especially Col. Marcus Brown, the Director, Ron Stanko, the Deputy Director, and Kristin Daniels, Outreach Coordinator, who have been a real driving force in organizing this conference.  This day would not have been possible without all of your dedication and hard work.  Please join me in giving the conference planners a big round of applause.

There is no question that we live in dangerous times.  Safeguarding our national security is – and always must be – the number one priority of the U.S. Department of Justice and every United States Attorney’s Office in the country.

Our law enforcement and intelligence communities have no greater responsibility than the safety and security of the American people.  Every citizen should both feel safe and be safe, whether at their place of work, traveling on an airplane, or gathering to worship.  We are blessed to live in the strongest, freest and most resilient country in the history of the world, and we thrive because of our shared values of freedom and liberty.  It is our solemn duty to protect those values and the American way of life by prevailing over our enemies.  We can only succeed in confronting and combatting terrorism with the collaboration and partnership of every person in this room.

As we will hear today, some of the most urgent threats to our safety and security involve biothreats.  Whether a natural outbreak, an accidental release, or a deliberate attack, biological threats can present grave health, economic, and national security impacts.  Therefore, promoting our health security must be a national security imperative.

            As biothreats continue to evolve in the 21st century, so must our biodefense capabilities.  Conceptually speaking, biodefense entails a range of coordinated actions to counter biothreats, reduce risks – and prepare for, respond to, and recover from incidents.  Today’s conference brings together thought-leaders in several key fields involved in this critical task.  Today you will hear from experts in the fields of public health, epidemiology, medicine, and law enforcement.  They all share the same goal:  to manage the risks to human life posed by biothreats that could cause catastrophic harm.  And, as you will see from the distinguished group of speakers gathered today, the knowledge and expertise drawn from each field plays a critical role in our continued health security.  

            First, we must understand the nature of the biothreats that presently exist.  Several of our speakers will touch on that topic, but it will be explored in detail in two presentations:  the morning presentation entitled “The Inevitable Threat of Bioterrorism and Pandemics,” by Dr. Ali Khan, Dean, College of Public Health at the University of Nebraska Medical Center; and in the afternoon presentation on Agroterrorism by Dr. Gary Smith, from the University of Pennsylvania’s School of Veterinary Medicine.

            Second, we must identify best practices for mobilizing and coordinating federal, state, and local law enforcement’s response to a bioterrorism attack or disease outbreak.  Several presentations will touch on that topic, but the panel discussion, “Elements of Emergency Response,” with Rhona Cooper, Clinical Coordinator from the Pennsylvania Department of Health; Kristin Faust, Countermeasures Coordinator from the Pennsylvania Department of Health, and John Wojtowicz, Senior Inspector, U.S. Marshals Service, will address that topic in depth. 

            Third, we must draw on past experiences so that we can develop a deeper understanding of how to respond to future health security crises from a public health point of view.  We will hear from Samuel Shartar and Sharon Vanairsdale, senior administrators from Emory University Hospital, who will discuss the lessons learned from the hospital’s remarkable handling of its treatment of four patients suffering from the Ebola virus.  Over the past year, Emory physicians, nurses, and scientists have worked with the Centers for Disease Control and other institutions to share lessons of preparedness, prevention, and treatment with groups (like ours) throughout the United States. 

            And finally, we will hear from several speakers that will bring the law enforcement perspective to bear on these threats, highlighting some of the investigatory tools we have to address bioterrorism and health safety preservation.  

• Supervisory Special Agent Edward You of the FBI’s Weapons of Mass Destruction Directorate will discuss “Safeguarding the Bioeconomy”;
• FBI Special Agent Kevin Bosch, Weapons of Mass Destruction Coordinator, and Elizabeth Negron, of the Bureau of Epidemiology, Pennsylvania Department of Health, will discuss “Principles of Joint Criminal and Epidemiological Investigation of Biological Agents and Toxins”;
• FBI Special Agent Thomas Stewart, Weapons of Mass Destruction Coordinator, will review the investigation and prosecution of U.S. v. Betty Jean Miller, a case in which a 70-year old woman was charged with possession of ricin in her home. 
• And finally, Paul Nardella, Assistant Area Port Director, Area Port of Philadelphia, and Douglas Wiegelt and Jennifer Torres, both from the Centers for Disease Control, will end the day with their presentation entitled “Enhancing Health Security at our US Borders and Beyond.”

While I’m on the topic of law enforcement, there is one group among us, in particular, that deserves special recognition today for working tirelessly to keep our communities safe.  Actually, this group deserves our thanks every day, but especially today – as we are in the midst of National Police Week. 

That group, of course, is our police officers.  If you are a police officer in attendance today, please stand up.  To you, I say this:  You are our mightiest counterterrorism tool.  You are the heroes – those among us who put your lives on the line, every day, to keep our communities safe.  Thank you for your service.

In conclusion, the goal of this year’s ATAC conference is to improve our District’s readiness and response capabilities to combat biologic and pathogenic threats.  The breadth of disciplines represented here today attests to the myriad ways our nation is fighting terrorism.  The fact that there are over 300 medical professionals attending this conference today, alongside an almost equivalent number of law enforcement officers in the audience, confirms the need for these kinds of opportunities to share insight and information.  I look forward to the exchange of ideas and opinions that today’s conference will bring.

            Again, I want to thank everyone for being here today.  May God bless you and the United States of America.  Thank you.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Matthew Chancler, 57, of Pottstown, Pennsylvania was charged by Information today with one count of wire fraud. The defendant was a Certified Public Accountant and the Director of Finance for an unnamed company located in Bristol, Pennsylvania. In this role, Chancler oversaw the financial operations of the company: accounts payable, accounts receivable, payroll, and auditing.

During an approximately two-year period, from August 2016 through July 2018, Chancler abused his position of trust by using company issued credit cards for over 1,800 personal purchases and over 400 cash withdrawals from ATMs, while disguising the true nature of these transactions in the company’s financial records in order to cover his tracks. Those personal purchases included clothing, electronics, food, travel, jewelry, sporting equipment, and other personal items and entertainment. In total, the defendant stole over $350,000 through his fraudulent use of the cards.

Chancler also manipulated the company’s payroll system to add additional funds to his own paycheck, citing them as “miscellaneous non-taxable income”. During the same time period, Chancler added several hundred dollars to each paycheck, totaling approximately $12,500.

“What’s most apparent here is the defendant’s alleged greed and willingness to abuse his position of authority,” said U.S. Attorney McSwain. “Businesses rely on professionals to maintain the financial health of their operations, as well as to abide by the law – not funnel money for their own personal use.”

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

The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Deputy United States Attorney Louis D. Lappen.

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Kevin Jamelle Archie, 37, of Philadelphia, Pennsylvania was convicted today at trial of one count of felon in possession of a firearm. 

On September 10, 2016, Philadelphia Police officers arrested the defendant after responding to a 911 call and finding him in possession of a firearm loaded with ten rounds of ammunition at the corner of Frankford Avenue and East Pacific Street in the Harrowgate section of lower Northeast Philadelphia.  The defendant had previously been convicted of a felony – possession with the intent to distribute controlled substances – which barred him from legally possessing a firearm.

“Reducing violent crime is a top priority of my Office and of the Department of Justice, and successful prosecutions of cases like this remain a key part of our deterrence strategy,” said U.S. Attorney McSwain.  “My Office is committed to working with the Philadelphia Police Department to clear the city streets of firearms in the hands of convicted felons, which undeniably pose a serious threat to the safety of all residents.”

“Public safety is the core responsibility of all who work in the field of law enforcement. Regardless of our specific agencies or titles, keeping our communities safe is at the heart of our primary mission,” said Philadelphia Police Commissioner Richard Ross.  “In order for us to accomplish our mission, collaboration between our law enforcement partners, the community, and initiatives like Project Safe Neighborhoods must remain a priority. The investigation, arrest, and successful prosecution of Mr. Archie serves as evidence of the effectiveness of strong and consistent collaboration between stakeholder agencies.”

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 is being prosecuted by Assistant United States Attorney Tom Zaleski.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that eight individuals were charged in an indictment unsealed today with one count each of conspiracy to commit kidnapping.  Seven of those individuals were also charged with the actual kidnapping, and five of the individuals were charged with firearms offenses.  The charges stem from an investigation into the kidnapping and murder of a business owner from North Philadelphia in June 2018, whose body was later found in Cecil County, Maryland.

The indictment alleges that on June 19, 2018, the victim was kidnapped in a home in Philadelphia by seven of the defendants.  During the kidnapping, the victim was restrained through the use of duct tape, hand cuffs, and zip ties.  He was transported to Chester County, Pennsylvania in the course of the kidnapping, and ransom calls demanding hundreds of thousands of dollars were made to the victim’s wife, and to an associate of the victim.  During the kidnapping, the victim was shot and killed, and his body was dumped in Maryland.     

“As alleged in the indictment, these ruthless individuals are a serious threat to the safety of our neighborhoods – not just in Philadelphia, but the entire mid-Atlantic region and beyond,” said U.S. Attorney William McSwain.  “This indictment reflects our Office’s steadfast commitment to rid the streets of people who resort to intimidation and extreme violence to try to get what they want.  This case is also an excellent example of why prosecuting violent crime is a priority for the Eastern District of Pennsylvania and the entire Department of Justice.  I want to thank our law enforcement partners in Pennsylvania and Maryland for their hard work investigating this heinous crime.”

“Anyone willing to abduct another human being and try to trade their life for money is a danger to society,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Just imagine the terror of being kidnapped, restrained, and at the total mercy of armed criminals. The FBI will never stop working to make our communities safer from violent thugs who care nothing for the lives of others.” 

Those charged with conspiracy to commit kidnapping are: Ivan Rangel Prieto, 34, of Asheboro, North Carolina; Jose Castillo, 44, of Albuquerque, New Mexico; Jose Bernal, 30, of Newark, Delaware; Jose Delgado, 40, of Warminster, Pennsylvania; Salvador Sanchez Guerrero, 47, of Philadelphia, Pennsylvania; Robert Favors, 39, of Philadelphia, Pennsylvania; John Perkins, 31, of Philadelphia, Pennsylvania; and Fermín Perez Mejia, 35, of Norristown, Pennsylvania.

Those charged with kidnapping are: Rangel Prieto, Castillo, Bernal, Delgado, Sanchez Guerrero, Favors, and Perkins.  Those charged with using a firearm in connection with a crime of violence are: Rangel Prieto, Castillo, Bernal, Delgado, and Sanchez Guerrero.

If convicted, Rangel Prieto, Castillo, Bernal, Delgado, Sanchez Guerrero, Favors, and Perkins face a mandatory sentence of life imprisonment.  The statute also provides for the possibility of the death penalty.  If convicted, Perez Mejia faces a maximum possible sentence of life imprisonment.

The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department, with assistance from the Cecil County, Maryland Sherriff’s Office, the Southern Chester County Regional Police Department, and the Plymouth Township Police Department, and is being prosecuted by Assistant United States Attorneys Amanda R. Reinitz and Everett Witherell.  U.S. Attorney McSwain and SAC Harpster would like to thank FBI Albuquerque, the New Mexico State Police, the Farmington (NM) Police Department, and FBI Charlotte - Greensboro Resident Agency, for their assistance with this matter.

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Philip Narducci, 56, of Philadelphia, and James Gallo, 44, of Philadelphia, entered pleas of guilty today before Judge Timothy Savage on several counts relating to making and collecting upon extortionate loans.  Narducci is a member of the Philadelphia organized crime family La Cosa Nostra (LCN), and Gallo is his associate.

At the hearing, the defendants both admitted that Narducci made usurious and extortionate loans involving tens of thousands of dollars to an unnamed borrower.  When the borrower failed to make weekly interest payments – sometimes with an interest rate above 80 percent - Narducci used threats of violence and actual physical assault to force the borrower to repay the loans.  One such incident occurred at Chick’s Philly, a bar and restaurant operated by Narducci, on Washington Avenue in South Philadelphia.  In one particularly disturbing exchange, Gallo told the borrower he should be scared of Narducci, saying, “He’s a killer you f***ing idiot.  He’s killed f***ing eight people.”

“Philadelphians deserve to be safe and live without the fear or threat of violence, especially from unscrupulous defendants like these,” said U.S. Attorney McSwain. “My Office takes organized crime in this District very seriously, and will investigate and prosecute it to the fullest extent of the law.”

“This organized crime network threatened the safety of our neighborhoods by extorting and assaulting Philadelphians,” said Attorney General Josh Shapiro. “Thanks to strong collaboration between our law enforcement partners, we were able to put an end to this criminal behavior and keep the people of Philadelphia safe. We will continue working together to investigate and prosecute organized crime wherever we find it.”

The case was investigated by the Federal Bureau of Investigation, the Pennsylvania State Police, and the Pennsylvania Office of the Attorney General, and is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section, and Assistant United States Attorney Jonathan B. Ortiz.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Robert Berger, 35, and Nathaniel Morris, 47,  both of Philadelphia, PA, were charged by Indictment with depriving an inmate at the Curran-Fromhold Correctional Facility of his constitutional right to be free from unreasonable force.  Berger and Morris, both arrested earlier today, were also charged with making false statements relating to the incident.

The defendants are City of Philadelphia correctional officers who are alleged to have beaten an inmate in their custody on September 10, 2018.  As outlined in the indictment, Berger and Morris allegedly repeatedly punched and kicked the inmate, even though the inmate was compliant and not posing a physical threat to anyone.

“The United States criminal justice system works because everyone, regardless of where they are in the system, is guaranteed constitutional rights along the way,” said U.S. Attorney McSwain.  “These two defendants, whose jobs it is to maintain the safety and security of inmates while in custody, allegedly violated the law in a brutal, violent manner.  The federal government will not tolerate this kind of lawless behavior.”

“Corrections officers have a difficult job,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “That doesn't give them impunity to lash out violently and treat inmates like punching bags. Incarcerated men and women lose their freedom, not their humanity — and not their civil rights. The FBI will always seek justice for victims of violence, no matter who or where they are.”

If convicted, each defendant faces a maximum possible sentence of twenty years imprisonment.  The case was investigated by the Federal Bureau of Investigation, and is being prosecuted by Assistant United States Attorney Faithe Moore Taylor.

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 today that CoreCare Behavioral Health Management, Inc., which does business as “Kirkbride Center,” a health care facility in Philadelphia, Pennsylvania, has agreed to pay the United States $160,200 in penalties to resolve allegations that it failed properly to account for highly addictive and frequently abused opioids, including methadone.

In addition to paying $160,200 in settlement to resolve the government’s allegations, Kirkbride Center has agreed to implement new practices and procedures to ensure accountability of its controlled substances, including the purchase of a new software system for secure and automated dispensing and tracking of methadone in clinical treatment settings.

This settlement arises from a Drug Enforcement Administration (DEA) investigation into Kirkbride Center’s opioid dispensing practices between 2014 and 2017. In response to the Department of Justice’s focus on combatting the opioid epidemic, the DEA has continued to conduct inspections and audits of pharmacies and narcotics treatment programs throughout the Eastern District of Pennsylvania, including Kirkbride Center.

The Controlled Substances Act (CSA) applies to all registered handlers of controlled substances, including pharmacies and narcotics treatment programs, and subjects them to strict requirements regarding inventory control and recordkeeping. These requirements ensure that DEA-licensed pharmacies and narcotics treatment programs account for controlled substances from the time they are purchased until they are dispensed to patients. The United States alleges that Kirkbride Center violated the CSA by negligently failing to keep accurate records and inventories associated with methadone liquid and tablets that Kirkbride Center purchased and dispensed for its narcotics treatment program between 2014 and 2017.

“This settlement demonstrates my office’s continued commitment to combating the opioid epidemic on all fronts,” said U.S. Attorney McSwain. “Part of our strategy is making sure that registered opioid handlers keep accurate records of these highly addictive and potentially dangerous drugs. All individuals and facilities, large or small, licensed to dispense controlled substances are responsible for maintaining accurate records, and all will be held accountable for any failures.”

The case was handled by Assistant United States Attorney Mark J. Sherer, with investigative assistance from auditor Denis Cooke and U.S. Drug Enforcement Administration Diversion Investigator Alexander Stross of the Philadelphia Field Division.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Dr. Domenick Braccia, 57, of Perkasie, PA entered a plea of guilty before Judge Wendy Beetlestone on one count of conspiracy to commit health care fraud.  The charges against the defendant stem from federal and state investigations into an elaborate insurance fraud scheme involving a Bucks County-based addiction treatment center, Liberation Way.

Dr. Braccia served as the Medical Director of Liberation Way, and, as the sole doctor, was the head of medical treatment at all three of its facilities.  As such, he was tasked with overseeing the care of all the patients seeking addiction treatment, ordering all medically necessary tests, evaluating the results of all medical tests and incorporating their results into any treatment plan, prescribing medications, and overseeing the staff who were tasked with other non-medical therapy and care of patients.  However, Braccia did not provide the amount of medical care that was billed to insurance companies in his name, and he never even stepped foot in one of the three treatment centers that billed in his name. 

Instead, Braccia signed blank forms and patient orders, averred to the medical necessity of testing for patients whom he never saw, prescribed for patients he did not see, and signed blank prescription forms.  As a consequence, insurance companies lost millions of dollars paying for care that was not provided by Braccia, and patients did not receive the individualized medical care they needed.

State and federal criminal charges were announced in March 2019 against eleven people and nine businesses in connection with this health care fraud case.  The investigation revealed an array of health care fraud schemes committed by individuals associated with Liberation Way, which is based in Yardley, Bucks County and has two other locations in Bala Cynwyd and Fort Washington, Montgomery County.  These schemes included Braccia’s over-billing scheme as well as an elaborate kick-back scheme involving thousands of medically-unnecessary urine tests which were sent to the Florida-based laboratories for analysis.

“This prosecution and today’s guilty plea should send a clear message to those seeking to build their fortunes on fraud and the despair of individuals battling addiction:  health care fraud and the opioid epidemic are major priorities for the United States Attorney’s Office, and your illegal actions will be uncovered and prosecuted,” said First Assistant United States Attorney Jennifer Arbittier Williams.  

“This doctor was responsible for overseeing the medical care of people suffering from opioid addiction, and instead he conspired to commit fraud by signing blank prescription forms and attesting to treatment for patients he did not see,” said Pennsylvania Attorney General Josh Shapiro. “He did these acts to help perpetrate a massive insurance fraud that lined the pockets of Liberation Way’s founders and co-conspirators with millions of dollars. I am grateful for our partners in the U.S. Attorney’s Office, the FBI, and other agencies in Pennsylvania and Florida for their hard work in bringing this defendant to justice.”

“At Liberation Way, medical practices were shoddy and substantive treatment minimal,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Dr. Braccia abrogated his professional ethics and responsibilities in order to line his pockets and is now being held accountable for his actions. The FBI will continue to make health care fraud investigations a priority, to the benefit of both patients and taxpayers.”

 “This case demonstrates the commitment of the OPM OIG, the Department of Justice, and our law enforcement partners to ensuring that federal health care programs, including the Federal Employees Health Benefits Program, are protected from fraud and abuse,” said Thomas W. South, Deputy Assistant Inspector General for Investigations, U.S. Office of Personnel Management.  “I am immensely proud of the work our office has done to not only safeguard taxpayer dollars, but also protect the health and wellbeing of federal employees, annuitants, and their families.”

The case was investigated by the Federal Bureau of Investigation, Department of Health and Human Services, the Office of Personnel Management, and the Department of Labor, and is being prosecuted by Assistant United States Attorney Nancy Beam Winter.