Eastern District of Pennsylvania

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that James Davis, the former vendor who operated Sheriff sales for the Philadelphia Sheriff’s Office, was sentenced today to 121 months’ imprisonment, and ordered to pay $872,395.00 in restitution to the Internal Revenue Service and $1.718,540.00 in forfeiture.  The sentence was imposed by United States District Judge Wendy Beetlestone.  

In April 2018, after a six-week trial, a federal jury convicted Davis of conspiracy, honest services wire fraud, filing false federal tax returns for 2007, and willful failure to file federal tax returns for 2008, 2009, and 2010.   The conspiracy and honest services fraud counts charged Davis with defrauding the citizens of Philadelphia of the honest services of the Sheriff of Philadelphia, John Green, from 2002 to 2011, by giving Green a hidden stream of personal benefits in exchange for Davis and his companies maintaining and receiving increased business and fees from the Sheriff’s Office. 

The indictment charged Davis with (1) purchasing, renovating and selling a home to Green at a loss to Davis in 2002 and 2003, which was not reported on Green’s financial disclosure forms; (2) hiring and paying Green’s wife over $89,000 as a subcontractor from 2004 through 2010, which was not reported to the City; (3) facilitating over $65,000 in hidden campaign contributions to Green’s 2007 reelection campaign, which was not reported in Green’s campaign reports; (4) paying $148,000 in advertising for Green’s 2007 reelection campaign, which was not reported in Green’s campaign reports; and (5) giving Green, in 2010, $320,000 as gifts and interest-free loans to help Green purchase a retirement home in Florida.  In exchange, Green helped Davis maintain and increase his business with the Sheriff’s Office.

“The citizens of Philadelphia are entitled to the honest services of their public servants, and James Davis’s actions deprived them of that from the Philadelphia Sheriff’s Office,” said U.S. Attorney McSwain.  “Davis received millions of dollars of business from the Philadelphia Sheriff’s Office, having obtained nearly exclusive control over the operation of the Sheriff sales and receiving over $7 million in advertising fees for those sales.  The sentence imposed today sends a powerful message to public servants and vendors who choose to do business by their own set of rules.”

“There's an old saying that you have to spend money to make money,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. “Certainly, this is not the way to do it.  James Davis brazenly bribed then-Sheriff Green in order to boost his businesses. This illicit quid pro quo deprived Philadelphians of the honest services they expect and deserve from those who hold elected office.  The FBI is committed to fighting such corruption, which does real and lasting damage to the public trust.”

“James Davis willfully and intentionally violated his legal duty to file his tax returns and pay the correct amount of tax,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. "The courts have overwhelmingly and consistently shown that people who engage in such criminal behavior will be held accountable; as evidenced by the sentence handed down today.”

The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service, Criminal Investigation, and Office of Inspector General, City of Philadelphia, and is being prosecuted by Assistant United States Attorneys Sarah L. Grieb and Christopher Diviny and Department of Justice Trial Attorney Jennifer A. Clarke.

A Wyncote, Pennsylvania man was sentenced to 121 months in prison for participating in a bribery conspiracy involving the former Sheriff of Philadelphia.

Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division, U.S. Attorney William M. McSwain of the Eastern District of Pennsylvania, Special Agent in Charge Michael T. Harpster of the FBI’s Philadelphia Division and Special Agent in Charge Guy Ficco of the IRS Criminal Investigation (IRS-CI) Philadelphia Field Office made the announcement.

James Davis, 68, the owner of multiple advertising and title firms, was sentenced by U.S. District Judge Wendy Beetlestone of the Eastern District of Pennsylvania, who also ordered Davis to pay $ 872,395.83 in restitution and to forfeit $1,718,540.  On April 3, 2018, after a six-week jury trial, Davis was convicted of conspiracy, honest services fraud, and tax offenses.

“James Davis used his wealth to line the pockets of the former Sheriff of Philadelphia in a corrupt exchange for contracts and business,” said Assistant Attorney General Benczkowski.  “Today’s sentence should deter both public officials and would-be bribe payers from engaging in corruption of any kind.”

“The citizens of Philadelphia are entitled to the honest services of their public servants, and James Davis’s actions deprived them of that from the Philadelphia Sheriff’s Office,” said U.S. Attorney McSwain.  “Davis received millions of dollars of business from the Philadelphia Sheriff’s Office, having obtained nearly exclusive control over the operation of the Sheriff sales and receiving over $7 million in advertising fees for those sales.  The sentence imposed today sends a powerful message to public servants and vendors who choose to do business by their own set of rules.”

“There’s an old saying that you have to spend money to make money,” said FBI Special Agent in Charge Harpster.  “Certainly, this is not the way to do it.  James Davis brazenly bought off then-Sheriff Green in order to boost his businesses. This illicit quid pro quo deprived Philadelphians of the honest services they expect and deserve from those who hold elected office. The FBI is committed to fighting such corruption, which does real and lasting damage to the public trust.”

“James Davis willfully and intentionally violated his legal duty to file his tax returns and pay the correct amount of tax,” said IRS-CI Special Agent in Charge Ficco.  “The courts have overwhelmingly and consistently shown that people who engage in such criminal behavior will be held accountable; as evidenced by the sentence handed down today.”

 According to the evidence presented at trial, Davis, in exchange for receiving, maintaining and increasing business with the Sheriff’s office, gave former Sheriff John Green bribes and personal benefits totaling over $675,000, including purchasing and renovating a home and selling the home at a loss to Green, hiring Green’s wife as a sub-contractor, facilitating over $65,000 in hidden campaign contributions to Green’s 2007 re-election campaign, paying $148,000 in campaign advertising for Green’s 2007 re-election campaign, and paying Green over $300,000 in gifts and interest-free loans.  In exchange, the evidence presented at trial showed that Green helped Davis maintain and increase his business with the Sheriff’s Office, specifically, business involving sheriff’s sales of foreclosed property.  From approximately 2002 through 2010, Davis’ companies received over $35 million from the Philadelphia Sheriff’s office from the sheriff’s sales business. 

Additionally, the evidence presented at trial revealed that Davis also filed false 2007 business and personal tax returns, and failed to file personal tax returns for 2008, 2009, and 2010. 

The FBI and IRS-CI investigated this case.  Trial Attorney Jennifer A. Clarke of the Criminal Division’s Public Integrity Section and Assistant U.S. Attorneys Sarah L. Grieb and Christopher Diviny of the Eastern District of Pennsylvania are prosecuting the case.

PHILADELPHIA, PA – On February 28, 2019, United States Attorney William M. McSwain convened a press conference to announce charges against Jovaun Patterson of Philadelphia, who is alleged to have shot Philadelphia shop owner, Li (“Mike”) Poeng, with an assault rifle during an attempted robbery of Mr. Poeng’s convenience store on May 5, 2018.  Mr. Poeng is a refugee from Cambodia who became a U.S. citizen in 1998.  As a result of the shooting, Mr. Poeng is confined to a wheelchair.  The Philadelphia District Attorney’s Office originally charged Patterson with multiple crimes, including attempted murder and aggravated assault, but then dropped the attempted murder charges and agreed to a lenient plea deal of 3 ½ to 10 years imprisonment.  The U.S. Attorney’s Office has now stepped in to bring federal charges.   

Remarks as Prepared for Delivery

Good afternoon, everybody.  I am here today to announce criminal charges against Jovaun Patterson of Philadelphia, who is alleged to have shot Philadelphia shop owner, Mike Poeng, with a military-style assault rifle on May 5, 2018, during an attempted robbery of Mr. Poeng’s convenience store located at 300 South 54th Street.  Mr. Poeng is a refugee from Cambodia who became a U.S. citizen in 1998, and is a married father of three young sons.  As a result of the shooting, Mr. Poeng had his right leg nearly blown off and is presently confined to a wheelchair.  Earlier today, a federal grand jury returned an indictment against Patterson, charging him with (a) one count of attempted robbery which interferes with interstate commerce and (b) one count of using, carrying and discharging a firearm during and in relation to a crime of violence.  On the gun charge alone, he faces a statutory maximum of life imprisonment and a statutory minimum of 10 years’ imprisonment, which must run consecutively to any other sentence imposed on the attempted robbery count.

I want to thank the Bureau of Alcohol, Tobacco, Firearms and Explosives, which investigated this case, and in particular, Acting Special Agent in Charge Brian Gallagher, Supervisory Special Agent John Bowman and Special Agent David Krueger, all of whom are with us today.  I want to thank the Philadelphia Police Department for its assistance in our investigation.  Thank you to Sal Astolfi, the Chief of the Violent Crime unit in my Office, who is prosecuting the case.  Thank you to Tom Malone, who is representing Mr. Poeng pro bono and helping him to navigate through the legal system.  And thank you, Mr. Poeng, for being here today.        

 Mr. Poeng’s story, and the circumstances surrounding this case, which was originally charged by the Philadelphia District Attorney’s Office, are well known and have been the subject of much public discussion and, understandably, much outrage.  After a struggle with an armed assailant in front of his store – all captured on videotape – Mr. Poeng was shot and rendered unconscious.  His wife, who had been inside the store with the couple’s three sons, raced from the store and found her husband face down on the sidewalk, bleeding profusely.  He was rushed to the hospital, where he went into cardiac arrest and remained in a coma for weeks.  Following a long hospital stay and a period in a rehabilitation facility, he returned home in August 2018.  Mr. Poeng is now confined to a wheelchair and does not know if he will ever walk again on his own.

In July 2018, Jovaun Patterson was arrested by the Philadelphia police.  He was charged with attempted murder, aggravated assault, robbery–threat of immediate serious injury, possession of a firearm by a prohibited person, possession of a firearm on a street in Philadelphia, possession of an instrument of crime, simple assault and recklessly endangering another person.  After a two-minute hearing in the Philadelphia Court of Common Pleas, the District Attorney’s Office dropped the attempted murder charge, both gun charges, the simple assault charge and the recklessly endangering charge, and Patterson was sentenced to 3 ½ to 10 years imprisonment as part of a plea deal that was negotiated by the District Attorney’s Office.  In violation of the Pennsylvania Crime Victims Act, the District Attorney’s Office told Mike Poeng nothing of the deal.

When the public learned of this deal and criticism of it mounted, a spokesman for the District Attorney’s Office defended it – saying that withdrawal of the attempted murder charge was “wholly appropriate as the video evidence depicted a struggle involving the gun prior to its discharge.”  I have carefully considered that statement and I still do not understand it.  I guess it’s supposed to mean that because Mike Poeng decided to fight for his life and to protect his wife and children, the person who shot him somehow deserves a break.  As for the sentence imposed, the District Attorney’s Office spokesman went on to state that it, too, was “wholly appropriate.”

When public criticism of the sentence continued, the District Attorney’s Office tried a different approach.  This time, the Office blamed the assistant district attorney working on the case.  The District Attorney’s Office spokesman claimed that “the assigned ADA made two mistakes. First, she did not contact the victim prior to the plea . . . and second, she did not get authorization from her supervisor to convey the plea offer.”

What does that explanation tell us?  It tells us that nobody in leadership at the District Attorney’s Office even knows what’s going on in plea negotiations or in the courtroom in significant violent crime matters.  In the absence of supervision, however, the assistant district attorneys certainly know that they are to pursue deals that will please the District Attorney or they risk losing their jobs, and there is no doubt that the assistant district attorney in the Patterson case did exactly that – offering a lenient 3 ½ to 10 year deal because she thought that reflected the new priorities of the District Attorney’s Office. 

Whether this plea deal was approved in advance or not, nobody in leadership at the District Attorney’s Office should be blaming the assistant district attorney.  The first principle of running a prosecutor’s office – or any office, for that matter – is that the leader of the office is responsible for everything that the office does or fails to do.  Running a large prosecutor’s office comes with public scrutiny and can come with public criticism.  Leaders take personal responsibility.  They don’t blame the people who work for them.

Mike Poeng deserves justice.  The “new” District Attorney’s Office was not able to provide it to him.  He will now have his chance to be heard in federal court.

And what has the “new” District Attorney’s Office meant for Philadelphia more broadly?  Potential criminals on the streets of our City are not stupid.  They pay attention to what is happening at the District Attorney’s Office.  When the District Attorney begins his tenure by summarily firing the Office’s most experienced prosecutors (and casually maligning them as they exited the building), when the Office is woefully understaffed, when the new hires at the Office share their boss’ anti-law enforcement philosophy, when the Philadelphia Police Department absorbs constant unfair criticism from the Office, when the Office routinely violates state law by not communicating with victims of violent crime, when the Office consistently undercharges violent crime cases, when it offers sweetheart deals to violent defendants, when its overall stated priority is “decarceration,” when it leads the charge for lenient bail conditions, when the Office issues a memorandum of “new policies” that reads like something written by a radical defense attorney, and when the District Attorney refers to himself as a “public defender with power” – violent criminals take notice of all of that.  And they become emboldened.  They think they can literally get away with murder.

Sadly, there are likely to be terrible consequences for public safety in Philadelphia as a result of all of this.  The only way to effectively deter homicide and other violent crime is to put fear into the hearts of those who would commit such crimes – fear of the law enforcement consequences.  The Philadelphia District Attorney’s Office isn’t putting fear into the hearts of anybody who is contemplating a life of violent crime.  Instead, what’s even worse, is that the District Attorney’s Office is putting fear into the hearts of law-abiding citizens who have to deal with the terror of homicide and other violent crime in their neighborhoods.         

Unfortunately, we are seeing the results already.  In 2018, the District Attorney’s first year in office, Philadelphia endured 351 homicides, the most in over a decade, and an 11% increase as compared to 2017.  There were 1,365 shooting victims in the City in 2018, the most since 2011, also an 11% increase as compared to 2017.  Thus far in 2019, this alarming pattern has continued, as there were more homicides in January 2019 than there were in January 2018.  Just last week, an 18-year old was fatally shot in North Philadelphia, the third teenager to be killed by gunfire in the City in a week.  The chart to my left depicts the number of homicides in the City on a yearly basis from 2013 to 2018.  [Display the chart].

These 2018 Philadelphia homicide numbers have occurred against the backdrop of a sharp decline in homicides nationwide.  According to preliminary reports, in 2018, homicides were down approximately 7% nationwide in cities with more than one million residents.  Nearby, Chester, PA saw a 38% decrease in homicides in 2018; both Camden, NJ and Newark, NJ also experienced a decrease.  It is not a coincidence that Philadelphia saw a double-digit percentage increase in homicides in 2018, while our nearby cities, and the nation as a whole, experienced a significant decrease.  The policies of the District Attorney’s Office are undoubtedly playing a large role in this tragedy – and nobody should be surprised by it.  I’m not.

And who is it that is dying as a result of this homicide epidemic?  By and large, it’s African-Americans, as well as Latinos.  In 2018, 276 of the 351 homicide victims were African-Americans, or 79%, while 44 of the 351 were Hispanic, or 13%.  Thus, a staggering 92% of the homicide victims in Philadelphia in 2018 were African-American or Hispanic.  The chart to my left depicts the number of homicides in the City on a yearly basis from 2013 to 2018, broken down by the race of the victim.  [Display the chart].  This chart tells a most unfortunate story.  And it’s one that the District Attorney’s Office should be working hard to fix – not, as it is doing with its current policies, making worse.

The policies of the District Attorney’s Office are harming minority communities all across the City.  And the people who have the right to be the most outraged by these policies are those in the African-American community and the Latino community.  Everyone in the City – and I mean everyone – deserves to live in a safe neighborhood.

The District Attorney calls himself “a public defender with power.”  That is not his job.  He’s not supposed to be a public defender, advocating for defendants.  He’s supposed to be a prosecutor, advocating for victims and protecting the community.  I can assure you this:  the prosecutors of my Office, working with our federal and state law enforcement partners, as well as with the Philadelphia police, will do everything in our power to keep the City safe.

Thank you, and at this time, I am happy to take your questions.

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that a federal grand jury returned a two-count indictment against Jovaun Patterson, 30, of Philadelphia. The indictment charges him with one count of attempted robbery which interferes with interstate commerce, 18 U.S.C. § 1951(a), and one count of using, carrying, and discharging a firearm during and in relation to a crime of violence, 18 U.S.C. § 924(c)(1)(A)(iii).  These charges stem from an alleged robbery on May 5, 2018, of the KCJ, Inc. convenience store, a business engaged in interstate commerce and located in Philadelphia.

If convicted of the attempted robbery, the defendant faces a maximum penalty of 20 years’ imprisonment; a $250,000 fine; 3 years’ supervised release; and a $100 special assessment.  If convicted of the firearms charge, the defendant faces a maximum penalty of lifetime imprisonment, a mandatory term of 10 years’ imprisonment, to be served consecutive to any other sentence imposed; up to 5 years’ supervised release; a $250,000 fine; and a $100 special assessment.

Prior to today’s federal indictment, Patterson was arrested for the May 5, 2018 incident and charged by the Philadelphia District Attorney’s Office with attempted murder, aggravated assault, robbery–threat of immediate serious injury, possession of a firearm by a prohibited person, possession of a firearm on a street in Philadelphia, possessing an instrument of crime, simple assault, and recklessly endangering another person.  On November 15, 2018, the Philadelphia District Attorney’s Office permitted Patterson to enter a negotiated guilty plea to aggravated assault, robbery–threat of immediate serious injury, and possessing an instrument of crime, with a sentence of only 3½ to 10 years’ imprisonment. 

“Violent crime is a top priority of the Department of Justice and my Office,” said U.S. Attorney McSwain.  “Prosecutors are supposed to advocate for victims, protect the community, and always seek justice.  I can assure the citizens of Philadelphia that the prosecutors in my Office, working with our federal and state law enforcement partners, as well as with the Philadelphia police, will do everything in our power to do that in each and every case, including this one.”

“ATF remains committed to removing violent offenders from our community,” said Acting Special Agent in Charge Brian Gallagher. “We look forward to continuing to work with our partners at all levels to make our citizens safer.”

This case is part of Project Safe Neighborhoods (PSN), a program bringing together all levels of law enforcement and the communities they serve to reduce violent crime and make our neighborhoods safer for everyone. October 3, 2018, marked one year since the Department of Justice reinvigorated PSN as part of its 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 Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Philadelphia Police Department and is being prosecuted by Assistant United States Attorney Salvatore Astolfi.

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 Bakary Camara, 32, of Philadelphia, was convicted today by a jury of one count of conspiracy to produce identification documents without lawful authority, one count of bribery of an agent from PennDOT, two counts of misuse of a Social Security number, and one count of aggravated identity theft.

The defendant bribed his co-conspirator Henry Gibbs (a former PennDOT agent) in order to unlawfully obtain Pennsylvania learner’s permits and non-commercial and commercial driver’s licenses for foreign nationals and others. Some of the individuals for whom the defendant assisted in getting a driver’s license did not speak English and could not pass the DMV knowledge tests. The defendant obtained and attempted to obtain licenses for at least one individual who entered the country illegally. In return for the bribes, Gibbs entered false information into the PennDOT system indicating the individuals passed the required tests, even though they had never taken them.

Moreover, the defendant falsified documents (including utility bills, cellular phone bills, tax notices, and insurance documents) to make it appear that some non-Pennsylvania residents lived in Pennsylvania. The defendant gave the individuals the falsified documents to provide to Gibbs, who accepted the falsified documents and uploaded them into the PennDOT system. The defendant unlawfully assisted at least 30 immigrants and foreign nationals in obtaining Pennsylvania learner’s permits and driver’s licenses through Gibbs. The defendant charged these individuals $300 to $7,000 to assist them with obtaining a Pennsylvania driver’s license and provided Gibbs at least $5,000 in bribes. 

“This kind of bribery and fraud will never be tolerated,” said U.S. Attorney McSwain. “It is incredibly dangerous to provide driver’s licenses to those who have not even passed a driving test. In his scheme, the defendant committed a fraud on the government and created a true danger to public safety. We are grateful that the jury held him accountable for his crimes.”

“Today’s guilty verdict highlights Homeland Security Investigations Philadelphia continued vigilance against corruption schemes that damage the trust the public places in our state institutions,” said Marlon V. Miller, Special Agent in Charge of HSI Philadelphia. “This case is another excellent example of federal, state and local cooperation to combat fraud in our community.”

The case was investigated by Homeland Security Investigations and the Social Security Administration, with special assistance from the Pennsylvania Department of Transportation. The case is being prosecuted by Assistant United States Attorney Tiwana Wright.

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Juan Ramon-Vasquez, a citizen of Honduras, was sentenced today to 21 months’ imprisonment, to be served consecutive to his state sentence, for his federal crime of illegal reentry to the United States after deportation.  The federal sentence was imposed by United States District Judge Nitza I. Quiñones Alejandro.  In May 2009, Ramon-Vasquez was deported from the United States to Honduras.  In March 2014, he was found back in the United States by U.S. Department of Homeland Security’s Immigration and Customs Enforcement (“ICE”) officers.  At that time, Ramon-Vasquez was in the custody of the Philadelphia Department of Prisons. 

The City of Philadelphia thereafter chose not to comply with a detainer lodged by ICE for Ramon-Vasquez, who was instead released from custody by the Philadelphia Department of Prisons.  After his release, Ramon-Vasquez proceeded to repeatedly rape a young child.  The defendant is currently serving a sentence of 8 to 20 years in state prison for the rapes. 

“The facts of this case illustrate all too well the direct threat to public safety caused by the City of Philadelphia’s sanctuary city policies,” said U.S. Attorney McSwain.  “After the City let this criminal loose on the streets of Philadelphia, Ramon-Vasquez repeatedly raped an innocent child.  If the ICE detainer had been honored by local law enforcement, this crime never would have happened, and the victim would have been spared horrendous physical and mental trauma.  Criminals like Ramon-Vasquez take note: my Office will do everything in its power to find you, to protect our community, and to seek justice for your victims.  Unlike the Philadelphia government, we are not on your side.”

“ICE attempted to remove Ramon-Vasquez once before in March 2014, but the City of Philadelphia refused to honor our detainer and he was released back into the community, said Simona L. Flores, field office director for ERO Philadelphia. “Today’s sentencing is a testament to ICE and the U.S. Attorney’s Office for the Eastern District of Pennsylvania’s resolve to seek out, arrest, charge and remove dangerous criminals like Ramon-Vasquez who pose a serious threat to our community.”

The case was investigated by ICE’s Enforcement and Removal Operations and is being prosecuted by Assistant United States Attorney Josh Davison.

PHILADELPHIA – United States Attorney William M. McSwain announced today that PhysioHealth Inc. and its wholly owned company Dynamic Therapy Services, LLC have agreed to pay $2 million to resolve allegations that it billed TRICARE for unallowable physical therapy services provided by non-authorized providers, including physical therapy assistants at clinics in Delaware, Pennsylvania, and Maryland.

The government launched an investigation after Dynamic Therapy voluntarily disclosed to the United States that between January 12, 2011, and January 23, 2017, Dynamic Therapy had provided professional services to TRICARE beneficiaries using physical therapy assistants, and then billed the services under the supervising physical therapist’s provider number. At the time the services were rendered, TRICARE did not cover physical therapy services rendered by physical therapy assistants, since they were not considered authorized providers under TRICARE rules then in effect.        

“Physical therapy providers have a responsibility to ensure that they are complying with billing regulations,” said U.S. Attorney McSwain.  “Dynamic Therapy and PhysioHealth discovered non-compliance problems internally.  To their credit, they took corrective action to ensure that TRICARE beneficiaries are provided with services from authorized providers, and they came forward to voluntarily disclose to the Government what had occurred.  Their proactive approach in this case sets a good example for other providers who might find themselves facing similar issues.”

“Ensuring the integrity of TRICARE, the Defense Department’s health care program, is a top priority for the Defense Criminal Investigative Service (DCIS),” stated Special Agent-in-Charge Leigh-Alistair Barzey, DCIS Northeast Field Office.  “DCIS will continue to work with the United States Attorney’s Office and other law enforcement partners to protect TRICARE and the uniformed service members, retirees, and their families who rely upon it.”

Assistant U.S. Attorney Judith Amorosa and Auditor Dawn Wiggins handled the case for the U.S. Attorney’s Office.  The matter was investigated by the Defense Criminal Investigative Services. The voluntary disclosure was made to the U.S. Department of Health and Human Services which assisted in the resolution of this matter. 

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Jong Young Choi, 46, of Chalfont, PA, was ordered to pay $81,217.00 in restitution for willful failure to pay employment taxes. He was also sentenced to 5 years' probation for his conduct.  Choi, as the president and sole shareholder of JUNS, Inc., doing business as Daisy Dry Cleaners, located in Philadelphia, was responsible for collecting, accounting for, and paying employment taxes due to the Internal Revenue Service from January 1, 2012 through January 31, 2016.  He failed to collect and pay approximately $67,931 in employment taxes for his employees.

“By ignoring his employment tax obligations for years, Choi lived by his own set of self-imposed rules, but his criminal conduct eventually caught up with him,” said U.S. Attorney McSwain.  “Failure to pay employment taxes is a federal crime – one that my Office takes seriously.  We will continue to hold people accountable when they willfully fail to pay taxes owed to the Internal Revenue Service.”

“When Jong Choi made the decision not to collect and turn over all IRS withholding taxes, he also made the decision to cheat his employees and other honest taxpayers,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. "The investigation of employment tax fraud is a priority for the special agents of IRS-CI as our system of taxation depends on everybody paying their fair share. Let today’s sentence serve as a warning to those contemplating similar actions."

The case was investigated by the Internal Revenue Service, Criminal Investigation Division and is being prosecuted by Assistant United States Attorney Terri A. Marinari.

 

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Lehigh Valley Technologies, Inc. (“LVT”) agreed to a $4 million settlement of allegations under the False Claims Act that it designed a scheme to avoid paying fees associated with new drug applications to the United States Food and Drug Administration (“FDA”).  LVT is a pharmaceutical company engaged in the development and commercialization of certain human drug products that is located in Allentown, Pennsylvania.

The FDA regulates the approval of new drugs.  A company seeking such approval must submit and receive FDA approval of a new drug application (“NDA”) before the drug may be marketed or sold in the United States.  The NDA application is the vehicle through which drug sponsors formally propose that the FDA approve a new drug for sale and marketing.

Congress created the Prescription Drug User Fee Act (“PDUFA”) in 1992 that authorizes and requires  the FDA to collect a “prescription drug user fee” or “application fee” from companies that submit an NDA.  PDUFA gives the FDA a revenue source to fund the new drug approval process.

Under 21 U.S.C. § 379h(d)(1)(C), the FDA will grant a waiver of the fee to a small business applicant submitting its first application.  In making that determination, the FDA must consider “any affiliate of the applicant,” including large businesses or businesses that have already received the fee waiver.  One significant purpose of the fee waiver is to incentivize and level the playing field for small businesses that submit an NDA.  Limiting the waiver to first-time applicants allows a new, small business to enter the industry without the significant costs to entry that the NDA fee would otherwise impose.

Here, LVT had previously received a fee waiver in 2010 for its Oxycodone Hydrochloride NDA. Because it received that fee waiver, LVT was ineligible to receive another such fee waiver.  LVT subsequently desired to submit two NDAs relating to potassium chloride for oral solution.  Had LVT submitted the NDAs in its own name, the FDA would have required it to pay fees totaling over $2 million.

Knowing that it was ineligible, LVT allegedly developed a scheme with two companies to avoid the fees.  Under the terms of the agreements, LVT paid the companies to submit NDAs for potassium chloride for oral solution in their own name.  LVT’s payment to the companies was contingent upon the FDA granting waivers from the prescription drug user fee.  LVT prepared and controlled all of the submissions that the companies made to the FDA relating to the NDA approval.  Neither LVT nor the companies disclosed to the government the agreements despite the government’s request for such information.  Not knowing of the agreements, the FDA granted fee waivers and approved both NDAs.

“As alleged, the sole purpose of the arrangement was for those companies to serve as a front and allow LVT to avoid the FDA fees that the FDA otherwise would have required it to pay,” said U.S. Attorney William M. McSwain.  “The arrangement was illegal.  Like we did today, we will hold companies accountable that scheme to avoid the fees that enable the FDA to carry out its vitally important drug approval process.”

“The FDA laws and accompanying regulations for funding drug approvals are designed, in part, to encourage companies, even small businesses, to create new drugs,” said Mark S. McCormack, Special Agent in Charge, FDA Office of Criminal Investigations’ Metro Washington Field Office.  “When companies attempt to game the system to avoid paying these critical fees, we will bring them to justice.”

This case was investigated by FDA’s Office of Criminal Investigations.  For the U.S. Attorney’s Office, the investigation and settlement were handled by Civil Chief Gregory B. David, Auditor Denis Cooke, and former extern Bianca A. Valcarce.

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Brandon Galette, 24, of Harrisburg, PA, and Andrew Garrett, 24, of Steelton, PA, were charged today by Indictment with one count of attempted robbery which interferes with interstate commerce and one count of using, carrying, and brandishing a firearm during and in relation to a crime of violence.  Galette is also charged with possession of a firearm by a convicted felon.  The Indictment charges Galette and Garrett for their alleged participation in the October 23, 2018 attempted robbery of Smithgall’s Pharmacy in Lancaster, PA, during which they allegedly attempted to steal prescription opioids. 

If convicted, the defendants each face a maximum penalty of lifetime imprisonment, with a mandatory minimum of seven years in prison, to be served consecutive to any other sentence imposed, plus five years of supervised release.  Additionally, Galette faces a $750,000 fine and a $300 special assessment, while Garrett faces a $500,000 fine and a $200 special assessment.

“Stemming the tide of violent crime in our communities is a top priority of the Department of Justice and 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.”

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

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

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that five members of this Office will be honored for their exemplary service in cases that have had a profound impact on the Eastern District of Pennsylvania.  Assistant United States Attorneys Margaret Hutchinson, Nelson S.T. Thayer, and Linwood C. Wright each were selected for a Director’s Award from the Executive Office of the United States Attorneys (“EOUSA”).  Assistant United States Attorneys Veronica Finkelstein and Charlene Keller Fullmer were selected for the Cooperative Achievement Award from the U.S. Department of Health and Human Services Inspector General.

“This talented group of public servants – comprised of AUSAs from our Civil and Criminal Divisions – exemplifies the depth and breadth of talent we have in this Office.  The contributions they have made reflect the hard work, dedication, and sacrifice it takes to serve so honorably in the law enforcement profession.  I am incredibly proud to serve with them every day,” said U.S. Attorney McSwain.  

EOUSA Director’s Awards

EOUSA Director’s Awards recognize employees of the United States Attorneys’ offices (USAOs) and EOUSA, as well as other individuals, who have supported the mission of these offices and who have distinguished themselves through extraordinary professional achievements and excellence.  The awards ceremony will take place in Washington, DC, later this year.  EOUSA provides oversight, general executive assistance, and direction to the 94 United States Attorneys’ offices around the country.  For more information on EOUSA and its mission, visit http://www.justice.gov/usao.

AUSAs Nelson Thayer and Linwood C. (“LC”) Wright.  Thayer and Wright have been named as recipients of the EOUSA Director’s Award for Superior Performance by a Litigative Team, for their successful prosecution in United States v. Mohammed Jabbateh.  They are receiving this award alongside colleagues from the Department of Homeland Security and the U.S. Embassy in Liberia.

While a commander of one of the warring factions during Liberia’s first civil war, Jabbateh committed acts of the deepest depravity, including sexual assault and enslavement, murder, mutilation, and ritual cannibalism.  As a result of the dedication and tireless efforts of Thayer, Wright, and their team, Jabbateh was convicted in October 2017 following a two-week jury trial on charges of immigration fraud and perjury, based on his multiple lies to U.S. immigration officials in which he concealed his horrendous wartime conduct.  In April 2018, Jabbateh was sentenced to the maximum possible sentence of 30 years’ imprisonment, the most severe sentence ever imposed in such a case. https://www.justice.gov/usao-edpa/pr/former-liberian-war-lord-known-jungle-jabbah-sentenced-30-years-prison-immigration.

Former AUSA and Civil Division Chief Margaret “Peg” Hutchinson.  Hutchinson will be awarded the EOUSA Director’s first-ever Lifetime Exceptional Service Award.  She is being recognized for her exceptional contributions to the USAO community over her nearly thirty years as a civil AUSA, including as the Civil Division Chief and as the leader of the national Civil Chiefs Working Group.  Hutchinson led impactful affirmative civil enforcement litigation against hospitals, pharmaceutical and device companies, elder care providers, polluters, and others in areas that were or would become DOJ priorities.  She also made significant, enduring contributions to DOJ’s efforts to implement programs, develop and deliver training, and shape policies and procedures to support affirmative civil enforcement and to ensure that USAOs have the necessary resources to carry out their missions.

U.S. Department of Health and Human Services Inspector General’s Cooperative Achievement Award

The HHS Inspector General’s Cooperative Achievement Award is given each year to reward exemplary collaboration on case work involving healthcare fraud matters.  The selected recipients have demonstrated extraordinary work on a national level in detecting and combating health care fraud, waste, and abuse.  The awards ceremony will take place later this year.

AUSAs Veronica Finkelstein and Charlene Keller Fullmer.  Finkelstein and Fullmer (as well as team members from the HHS Office of Inspector General, the Federal Bureau of Investigation, Department of Justice in Washington, DC, and other U.S. Attorney’s offices) are receiving this award for their work in the Health Management Associates (“HMA”) case.  The award recognizes their contribution to the $260 million multi-district resolution of several qui tam suits against HMA, its hospitals Lancaster Regional and Heart of Lancaster, and the physicians group Physicians Alliance Ltd. (“PAL”).  

Finkelstein and Fullmer directly handled a $55 million component of that settlement resolving allegations that the defendants paid kickbacks to physicians at HMA facilities, including PAL members, who solicited and/or received kickbacks.  The financial relationships between the HMA defendants, including subsidiaries and referring physicians, allegedly violated a host of laws, including the Anti-Kickback Statute.  There were numerous kickback methods involved in the scheme:  physicians participating in whole-hospital joint ventures of HMA facilities, physicians receiving excessive compensation, physicians receiving bogus co-management fees, and physicians receiving bogus medical directorship fees. https://www.justice.gov/usao-edpa/pr/national-hospital-chain-will-pay-over-260-million-resolve

The HMA multi-district resolution is one of the largest False Claims Act cases involving hospital systems in the Department’s history, in terms of the number of qui tam actions filed against a single healthcare provider across multiple districts.  The HMA case also is remarkable in its scope of collaboration because it involved both criminal prosecutions and parallel civil enforcement proceedings.

PHILADELPHIA – United States Attorney William M. McSwain announced that Bryant Calloway a/k/a “Bigs,” 32, of Philadelphia, was convicted today by a jury of one count of murder. He was also convicted of one count of conspiracy to distribute 280 grams or more of cocaine base; one count of using, carrying, brandishing and discharging a firearm during a drug trafficking crime; one count of maintaining a house for drug distribution (and doing so within 1,000 feet of a playground); and one count of being a felon in possession of a firearm.

The defendant and his co-conspirators were part of a single drug-trafficking organization (DTO) that distributed crack cocaine in and around an area known colloquially as “the Pit” – a playground located near the area of 5101 Reno Street in the Mill Creek section of West Philadelphia. The DTO operated to distribute crack cocaine from at least as early as 2009 and continued through 2015. During its duration, the conspiracy used several different locations to distribute crack cocaine, as well as several locations to store, manufacture, and package crack cocaine for distribution. In order to further their drug distribution, the members of the DTO routinely possessed and used firearms.

Beginning in summer 2013, the defendant began making attempts to take control of a portion of the crack sales being conducted in “the Grounds,” a nearby playground basketball court which was controlled by a competing crack distribution group. The defendant and others felt that they were not selling enough crack near “the Pit” and sought to sell crack at night in “the Grounds,” which had a higher volume of crack customers and presented an opportunity to make more money. “The Grounds” organization resisted “the Pit’s” requests to sell crack in “the Grounds.” As a result of the dispute, on August 5, 2013, the defendant and another individual entered into “the Grounds” and shot and killed a man who was a crack distributor for “the Grounds” organization.

In retaliation for the murder, members of “the Grounds” organization conspired to shoot Calloway. As a result of those efforts, Calloway was shot and injured. Calloway survived his injuries, but told officers that he did not see who shot him. Within twenty-four hours of the shooting of Calloway, one of the members of “the Pit” traveled to an area controlled by the “Grounds” and fired multiple rounds down a residential street. An innocent bystander (not associated with “the Grounds” organization) was shot and injured.

“The defendant shot and murdered another individual in a drug turf dispute,” U.S. Attorney McSwain said. “Drug trafficking begets violence. Violence only begets more violence. As a result of the murder, more people – including the defendant himself and an innocent bystander – were also shot. My Office is committed to keeping the streets of our community safe from these kinds of horrific acts.”

“The ATF is committed to working with our federal, state, and local law enforcement partners to target violent drug trafficking organizations that are responsible for drug trafficking and related gun violence in our communities,” said ATF Special Agent in Charge Donald Robinson. “This conviction is a perfect example of the collaborative effort between the ATF and the Philadelphia Police Department to target those violent offenders.”

"The investigation, arrest, and successful prosecution of Bryant Calloway serves as an example of the effectiveness of strong and consistent collaboration between law enforcement agencies," said Richard J. Ross Jr., Philadelphia Police Commissioner.  "We anticipate that this conviction will further disrupt narcotics trafficking and attendant criminal activity in the Mill Creek section of our city and have an appreciable impact on the quality of life of our residents.”

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Philadelphia Police Department, and the case is being prosecuted by Assistant United States Attorneys Jonathan Ortiz and Seth Schlessinger.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Cameron Carlucci, 27, of Philadelphia, PA, entered a guilty plea today to a federal indictment which charged him with two counts of distribution of child pornography, and one count of possession of child pornography.  The indictment stemmed from an investigation that determined Carlucci was trafficking in child pornography over the Internet for almost four years, from 2015 through his arrest in 2018.   During that time, he amassed more than 56,000 images and videos that depicted mostly prepubescent boys, infants, and toddlers being sexually abused and exploited. 

At the time that Carlucci distributed these images and videos over the Internet, he worked at Valley Pediatrics in Warminster, PA as a medical technician.  To obtain employment with Valley Pediatrics, Carlucci falsified his application by denying his criminal history, which included a 2011 Pennsylvania conviction for possession of obscene materials and other sexual materials.

As a result of his guilty plea, Carlucci faces a statutory maximum of 60 years’ imprisonment, a 5-year mandatory minimum sentence of imprisonment, 5 years up to a lifetime of supervised release, a $750,000 fine, and $15,300 special assessment. 

“Carlucci’s years of taking advantage of our community’s most vulnerable victims is reprehensible, but it is intensified by the fact that he had daily contact with children in a job he never should have had in the first place,” said U.S. Attorney McSwain.  “Child exploitation is a pervasive problem – one that demands an aggressive response. We stand ready with our federal partners to identify and dismantle online forums that perpetuate this abuse.”

“Child exploitation cases are among the most disturbing the FBI works,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division.  “They’re also some of the most impactful.  We’re gratified to help take Cameron Carlucci off the street.  Not only was he heavily involved with child pornography, but he purposely hid his criminal past to gain employment that allowed him daily interaction with children.  If child predators can’t or won’t keep themselves away from kids, the FBI stands ready to step in and shut them down.”

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Prime Healthcare Services, Inc. (“Prime”) and Prime’s Founder and Chief Executive Officer, Dr. Prem Reddy, have agreed to pay the United States $1.25 million to settle allegations that two Prime hospitals in Pennsylvania – Roxborough Memorial Hospital in Philadelphia and Lower Bucks Hospital in Bristol – knowingly submitted false claims to Medicare by engaging in the following conduct: (1) admitting patients to the hospital for overnight stays who required only less costly, outpatient care and (2) billing for more expensive patient diagnoses than the patients had (the latter practice known as “up-coding”).  

“We are committed to ensuring that hospitals, companies that own and operate them, and their executives appropriately bill Medicare,” said U.S. Attorney McSwain.  “Charging the government for more costly services than what the patient actually needs and billing the government for more serious diagnoses than what the patient actually has is a waste of taxpayer dollars.  Those who engage in these practices will be held accountable.”

Headquartered in Ontario, California, Prime is one of the largest hospital systems in the nation, with 45 acute-care hospitals located in 14 states.  Prime acquired Roxborough Memorial Hospital on February 22, 2012, and Lower Bucks Hospital on October 3, 2012.

The Settlement resolves allegations that Prime submitted or caused the submission of fraudulent claims to Medicare.  Specifically, from the date that Prime acquired Roxborough and Lower Bucks through September 30, 2013, under Prime management, Roxborough and Lower Bucks hospitals admitted emergency room Medicare patients for costly and medically unnecessary one- and two-day overnight hospital stays, instead of treating the patients in less costly outpatient service or keeping them under observation. In addition, from the dates of acquisition through December 31, 2014, the hospitals upcoded inpatient diagnoses (i.e., billed Medicare for more serious medical conditions than the patients actually had) to increase Medicare payments.   

As part of a separate lawsuit in the Central District of California, Prime and Dr. Reddy paid the United States $65 million dollars in August 2018 to settle similar Medicare fraud allegations arising out of 14 Prime hospitals in California.  

Also in August 2018, Prime, Roxborough Memorial Hospital, Lower Bucks Hospital, and Dr. Reddy entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services Office of Inspector General (HHS-OIG) requiring the company to engage in significant compliance efforts over the next five years.  Under the agreement, Prime is required to retain an independent review organization to review the accuracy of the company’s claims for services furnished to Medicare beneficiaries.

“We expect health care companies to accurately bill federal health care programs for services they provide, not pad profits by charging for more expensive services than were actually provided,” said Maureen Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services, Philadelphia Regional Office. “Our investigators will ensure those who launch such deceptive schemes are held accountable.”

This settlement resolves a lawsuit filed under the False Claims Act (FCA) in the U.S. District Court for the Eastern District of Pennsylvania by an employee and former employee of Roxborough Memorial Hospital.  Under the qui tam or whistleblower provisions of the FCA, private citizens are permitted to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.  The FCA also permits the government to intervene and take over the lawsuit.

“We thank the relators for their invaluable contribution in this case. Together with their lawyers, they provided vital assistance to the government throughout this case. Without information from citizens like the relators, detecting fraud and conserving government program funds would be far more difficult,” said U.S Attorney McSwain.

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

The case was investigated by the Office of the Inspector General of the U.S. Department of Health and Human Services, the U.S. Attorney’s Office for the Eastern District of Pennsylvania, Assistant U.S. Attorneys Jacqueline Romero and Judith Amorosa, and Health Care Fraud auditor Dawn Wiggins, in coordination with Senior Trial Counsel Marie Bonkowski of the Department of Justice’s Civil Division’s Commercial Litigation Branch

The case is captioned United States ex rel. Jane Doe v. Prime Healthcare Services, Inc., et al.,  No. 14-cv-1695 (E.D.Pa.).  The claims resolved by this settlement are allegations only and there has been no determination of liability.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Jose Anico 69, of Allentown, PA was indicted by a federal grand jury and charged with one count of false statements in connection with an application for a passport, one count of aggravated identity theft, five counts of wire fraud, and four counts of health care fraud.

The indictment charges the defendant with acquiring the identifying information of a United States Citizen who was a resident of New York City and who died on August 13, 1999. Anico used the victim’s name, date of birth, and Social Security number for various purposes, including applying for and receiving Social Security Administration benefits, Medicare benefits, a Pennsylvania driver’s license, and a United States passport.

From May 2002 through November 2018, Anico received more than $475,000 in government benefits that he was not entitled to receive under his assumed name.   

“Aggravated identity theft and fraud are serious crimes,” said U.S. Attorney McSwain. “My Office is committed to making sure that the personal identifying information of our citizens is protected and not stolen or abused. We are also committed to ensuring that no one steals money or services from the federal government.”

Robert Castro, Resident Agent In Charge of the DSS Philadelphia Resident Office said, “Today’s indictment demonstrates how our presence at more than 275 diplomatic missions worldwide positions us well to target passport fraud and other related crimes with a transnational nexus.”

If convicted, Anico faces a maximum penalty 152 years’ imprisonment, three years of supervised release, forfeiture and restitution, a $2,750,000 fine, and a $1,100 special assessment.

The case was investigated by the U.S. Department of State’s Diplomatic Security Service (DSS) Philadelphia Resident Office in partnership with the DSS Regional Security Office in Santo Domingo, the Social Security Administration, the U.S. Department of Health and Human Services, and the U.S. Department of Homeland Security. It is being prosecuted by Assistant United States Attorney Everett Witherell.

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 M. McSwain announced two indictments charging 14 people with a multitude of crimes, including conspiracy to dispense and distribute controlled substances outside the course of professional practice and without a legitimate medical purpose; distribution of oxycodone; health care fraud; and maintaining a drug-involved premises.  These charges are the result of coordinated law enforcement effort across multiple federal, state, and local agencies.  U.S. Attorney McSwain announced these charges as part of a press conference held today to highlight the Eastern District of Pennsylvania’s recent efforts to combat the opioid crisis in the District.

Criminal Indictment No. 18-CR-101: Advanced Urgent Care (AUC).  This superseding indictment charges 13 defendants with crimes in connection with their employment at AUC, a medical business with office locations at 5058 City Avenue in Philadelphia, PA; 9432 East Roosevelt Boulevard in Philadelphia, PA; 721 Bethlehem Pike in Montgomeryville, PA; and 126 Easton Road in Willow Grove, PA.

The 13 defendants charged in this indictment are Dr. Mehdi Nikparvar-Fard, 49, of Penn Valley, PA; Dr. Vincent Thompson, 70, of Elkins Park, PA; Dr. Loretta Brown, 65, of Landsowne, PA; Dr. Avrom Brown, 70, of Elkins Park, PA; Dr. Frederick Reichle, 83, of Warrington, PA; Dr. Marcus Rey Williams, 70, of Coatesville, PA; Dr. William Demedio, 58, of Springfield, PA; Dr. Neil Cutler, 77, of Warminster, PA; Physician’s Assistant Mitchell White, 33, of Philadelphia, PA; Physician’s Assistant Jason Dillinger, 40, of West Chester, PA; Physician’s Assistant Debra Cortez, 56, of Bristol, PA; Physician’s Assistant Samantha Hollis, 42, of Wilmington, DE, and Office Manager Joanne Rivera, 35, of Pennsauken, NJ.  Each defendant is charged with maintaining a drug-involved premises, and five defendants (Nikparvar-Fard, Rivera, Dillinger, Thompson, and White) are charged with conspiring to unlawfully distribute controlled substances.

AUC was owned and operated by Dr. Mehdi Nikparvar-Fard.  The indictment alleges that, in exchange for an $80 to $140 office fee, members of the public were offered “pain management” by AUC doctors and physician’s assistants.  Pain management typically involved obtaining a prescription for opioid painkillers.  The superseding indictment further alleges that AUC medical providers unlawfully prescribed controlled substances, such as opioid painkillers, on a daily basis from January of 2014 through August of 2017 and routinely ignored warning signs that patients were abusing and/or selling their prescription painkillers.  The warning signs included urine drug screens that were positive for illicit drugs like heroin, cocaine, and methamphetamine, urine drug screens that were positive for Suboxone (a drug used to treat opiate addiction), and urine drug screen that were negative for all drugs, suggesting the patients may have been selling their prescription pills.  In the face of these test results, AUC medical providers nonetheless prescribed enormous quantities of opioid painkillers.  According to the indictment, at least 3,678 illegal prescriptions were issued by AUC’s doctors and physician’s assistants.

Criminal Indictment No. 18-CR-591: Drs. Murray Soss and Frederick Reichle.  This indictment charges Dr. Murray Soss, 78, of Philadelphia, PA, and Dr. Frederick Reichle,[1] 83, of Warrington, PA, with conspiracy to distribute and dispense oxycodone, outside the usual course of practice and not for a legitimate medical purpose.  Dr. Soss is also charged with seven counts of distributing oxycodone and seven counts of health care fraud.

As alleged in the indictment, Soss hired Reichle to write oxycodone prescriptions for Soss’s pain management patients after Soss’s Pennsylvania medical license was suspended in April 2017.  Soss and Reichle charged the patients a fee to obtain oxycodone prescriptions, written by Reichle, that were not medically necessary.  At times, Soss allegedly collected $2,500 in exchange for accepting a new patient for the sole purpose of that patient obtaining Schedule II narcotics.  The indictment further states that Reichle provided oxycodone prescriptions to one of Soss’s patients without this patient being present, and claims Soss was engaged in a sexual relationship with this same patient.  It further states that Soss obtained oxycodone prescriptions in Soss’s name and then distributed the prescriptions to this patient in exchange for sexual favors.

If convicted, these 14 defendants face a range of penalties, including substantial prison time and fines, depending on each defendant’s degree of involvement in the alleged crimes.

“Our country is in the midst of a deadly drug epidemic, and our District is, in many ways, ground zero in combatting this crisis,” said U.S. Attorney McSwain.  “As alleged in these indictments, thousands of illegally prescribed pills flooded our streets because of the conduct of these defendants.  My Office will continue to do its part to enforce our nation’s drug laws and hold physicians, physician’s assistants, and their agents accountable.  As these indictments show, medical professionals who violate their oaths and exploit their patients’ addictions to make an easy buck will be prosecuted to the fullest extent of the law.”

“We're seeing it over and over again: medical professionals, deciding to cash in on our area’s opioid crisis,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “It seems ‘first, do no harm’ is a principle fast forgotten when money starts changing hands.  These doctors are just doling out piles of pills to anyone willing to pay for them.  It’s despicable, it’s criminal, and the FBI and our law enforcement partners will never stop working to put pill mills, and the people who run them, out of business.”

“The defendants arrested in this case are accused of setting up and operating a scheme in which the defendants sold opioid prescriptions to individuals without any legitimate medical need or purpose in exchange for cash.  The defendants issued 3,678 prescriptions which amount to hundreds of thousands of pills being used by addicted individuals,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division.  “When the DEA determines that a doctor is prescribing controlled substance medications without a legitimate medical purpose, the DEA will refer the investigation to the US Attorney’s Office for prosecution to the fullest extent of the law.”

 “Healthcare providers who ignore their Hippocratic oaths and put illegal prescription drugs on our streets are nothing more than drug dealers in white lab coats,” said Maureen R. Dixon, Special Agent in Charge of the Philadelphia Regional Office of the Inspector General for the Department of Health and Human Services (HHS-OIG).  “Medical providers who disregard the law and put greed in front of helping patients can expect criminal repercussions.”

“An important mission of the Office of Inspector General is to investigate allegations of health care fraud related to the U.S. Department of Labor's (DOL) Office of Workers’ Compensation Programs (OWCP).  We will continue to work with our law enforcement partners and OWCP to protect the integrity of DOL’s benefit programs,” stated Richard Deer, Special Agent in Charge, Philadelphia Region, U.S. Department of Labor, Office of Inspector General.

The AUC case was investigated by the following agencies: Drug Enforcement Administration; the Federal Bureau of Investigation; Health and Human Services, Office of Inspector General; the Department of Labor, Office of the Inspector General; and the Office of Personnel Management.  These agencies were assisted in their investigation by the Pennsylvania Department of State; Pennsylvania Office of Attorney General; Abington Police Department; Easttown Township Police Department; and Philadelphia Police Department.  The case is being prosecuted by Assistant United States Attorneys Jason P. Bologna and Seth Schlessinger.

The Soss/Reichle case was investigated by Health and Human Services, Office of Inspector General and Federal Bureau of Investigation, with assistance from Pennsylvania Office of Attorney General and the Philadelphia Police Department.  The case is being prosecuted by Assistant United States Attorney Karen Marston.

 

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[1] Dr. Reichle also is a named co-defendant in the AUC superseding indictment, though the charges alleged in the AUC case arise from conduct that is separate from that alleged in Soss/Reichle case.

PHILADELPHIA, PA – On February 6, 2019, United States Attorney William M. McSwain convened a press conference to highlight the Eastern District of Pennsylvania’s recent efforts to combat the opioid crisis.  U.S. Attorney McSwain announced two separate criminal indictments charging 14 individuals with a multitude of crimes, including conspiracy to dispense and distribute controlled substances outside the course of professional practice and without a legitimate medical purpose; distribution of oxycodone; health care fraud; and maintaining a drug-involved premises.  U.S. Attorney McSwain also announced details about a civil lawsuit his Office has filed to prevent the establishment of a facility in Philadelphia where drug users would go to inject themselves with illegal narcotics.  The suit, filed against the nonprofit corporation Safehouse and its Executive Director, Jeanette Bowles, seeks a judicial decree that Safehouse’s planned opening of one or more so-called “consumption rooms” would violate federal law.  This lawsuit is the first of its kind in the United States.

Remarks as Prepared for Delivery

Good morning.  I’m Bill McSwain, the U.S. Attorney, and I am here today to update the public on our ongoing efforts to combat the opioid epidemic in the Eastern District of Pennsylvania, and to make some specific announcements about several important cases in our District.

First, I want to recognize and thank the representatives from multiple federal, state, and local law enforcement partners that are here today as part of our announcement of two recent criminal indictments.  Thank you to the Federal Bureau of Investigation; the Drug Enforcement Administration; the Department of Health and Human Services, Office of Inspector General; the Department of Labor, Office of Inspector General; the Office of Personnel Management; Pennsylvania Department of State; the Pennsylvania Office of the Attorney General; the Abington Police Department; the Easttown Township Police Department, and the Philadelphia Police Department.

I also want to thank Greg David, the Chief of our Civil Division at the U.S. Attorney’s Office, who is here with me to announce developments on the civil enforcement front. 

Our collaborative approach to attacking the opioid epidemic includes aggressive criminal prosecutions and other initiatives to promote awareness, prevention, and addiction recovery.  On both the criminal and civil side, we continue to focus on stopping the illicit production, distribution, and use of opioids.  It is our duty to hold accountable those who have flooded our streets with heroin, synthetic opioids, and prescription opioids, and we will continue to indict and aggressively prosecute, including through civil penalty, everyone in that supply chain: manufacturers, importers, distributors, doctors, pharmacies, organized crime, and street dealers.  Those who make money by illegally exploiting addiction will be caught and prosecuted to the fullest extent of the law. 

Prosecuting doctors who run “pill mills” and commit Medicare fraud is a priority for the Department of Justice and this Office, and two recent cases in the Eastern District are excellent examples of our work in this area.  In one case, we charged physicians Murray Soss and Frederick Reichle with operating a pill mill medical practice out of Dr. Soss’s medical office in Philadelphia, and charged Dr. Soss with healthcare fraud for billing medically unnecessary charges to Medicare.  The indictment describes an elaborate scheme in which Dr. Soss paid others to recruit so-called “patients” seeking oxycodone and then paid Dr. Reichle to write prescriptions for those patients in Dr. Soss’s office, even though they had no medical need for the prescriptions.  According to the indictment, Dr. Soss recruited Dr. Reichle after his own medical license was suspended by the Drug Enforcement Administration (DEA).  And in one particularly heinous example, Dr. Soss even directed Dr. Reichle to write oxycodone prescriptions for a long-time patient with whom Dr. Soss had a sexual relationship, knowingly feeding this victim’s addiction in order to obtain sexual favors. 

In a second recent case, we have charged eight physicians, four physicians’ assistants, and an office manager in connection with the operation of a pill mill at Advanced Urgent Care (or AUC).  AUC is a provider of medical services, including pain management, with four locations throughout the Eastern District of Pennsylvania.  The superseding indictment charges Dr. Frederick Reichle (again) along with Dr. Mehdi Nikparvar-Fard, Dr. Vincent Thompson, Dr. Loretta Brown, Dr. Avrom Brown, Dr. Marcus Rey Williams, Dr. William Demedio, and Dr. Neil Cutler; Physician’s Assistants Mitchell White, Jason Dillinger, Debra Cortez, and Samantha Hollis; and Office Manager Joanne Rivera, with multiple drug crimes. 

Through a long-term, coordinated, multi-agency investigation, it became clear that AUC was functioning as a “pill mill” in its treatment of pain management patients.  Our law enforcement partners worked with our Office to uncover a whopping number of illegal prescriptions – at least 3,678 alleged illegal prescriptions that were medically unnecessary.  We uncovered a pattern of abuse where these doctors and physician’s assistants provided patient after patient with oxycodone – often despite clear evidence of overt illicit drug use and despite no diagnostic reason supporting the prescriptions. 

As we work to stem the tide of illegal, medically unnecessary prescriptions, we remain committed to taking out violent drug-traffickers who operate on the streets and suppliers who cause overdose deaths.  Recently, working again with the DEA, we secured a guilty verdict against Angel Luis Concepcion-Rosario, of Reading, Pennsylvania, for trafficking in fentanyl.  Fentanyl, of course, is the deadliest and most unpredictable opioid we see on the streets, and fentanyl is a major source of the spike in overdose deaths in Philadelphia.  

A federal jury also recently convicted Emma Semler of Collegeville, Pennsylvania, for distributing heroin and thereby killing her friend.  The jury at the Semler trial heard about how the defendant supplied the victim with heroin, watched as she injected it, and then fled the scene when she realized the victim was overdosing on the bathroom floor of a fast-food restaurant in West Philadelphia, leaving her to die.  Both defendants - Concepcion-Rosario and Semler - await sentencing, and we will do everything in our power to ensure they receive the punishment that they both deserve.

I’m grateful for the hard work of our agency partners and of those in my Office who prosecuted these cases, especially Assistant United States Attorneys Karen Marston, Jason Bologna, Seth Schlessinger, Kishan Nair, Randy Hsia, and Nicole Phillips.  By enforcing our drug laws in these cases and others, we prevent addiction and violence from spreading. 

Beyond our criminal prosecutions and civil enforcement work, our Office participates in many types of outreach programs that focus on prevention and addiction recovery.  One such program of particular note is Relapse Prevention Court, a program just launched in October 2018 in coordination with the U.S. District Court, the Federal Defenders’ Office, and U.S. Pretrial Services.  Relapse Prevention Court helps non-violent drug users who have entered the criminal justice system to maximize opportunities for long-term recovery from substance abuse while they complete their terms of supervised release.  The key attribute of this program is that it provides participants with a path forward to long-term addiction recovery while abiding by federal, state, and local laws.   

The work that we do in all these areas helps to keep drugs out of our communities and sends a powerful deterrent message.  And this work helps to save lives.

Today also marks a new chapter in the federal government’s fight against the opioid epidemic.  Philadelphia is, in many ways, ground zero in this crisis.  That is why my Office, and our dedicated federal, state, and local law enforcement partners, stand together today to reassure the community that we are aggressively fighting this epidemic by deploying all of the tools and resources at our disposal.

I am here to announce that the United States Attorney’s Office for the Eastern District of Pennsylvania has filed a federal civil lawsuit – the first of its kind in the United States – to ask the U.S. District Court to declare that so-called “supervised injection sites” violate federal law.  Because these deadly drug injection sites undoubtedly do violate the law.  And because it is the Department’s job to promote and enforce the rule of law, not to look the other way.  Normalizing the use of deadly drugs like heroin and fentanyl is not the answer to solving the opioid epidemic.

The civil lawsuit that we have filed names Safehouse, a private, non-profit corporation formed for the specific purpose of opening a deadly drug injection site in the Kensington neighborhood of Philadelphia.  Safehouse was incorporated in August 2018, after the Philadelphia Mayor’s Office publicly endorsed the idea of opening an injection site and Philadelphia District Attorney Larry Krasner pledged not to bring charges against those who fund, operate, or use such sites. 

Emboldened by the Mayor’s support and the District Attorney’s blessing, Safehouse ramped up its operations in the months that followed.  Its website described how the site would be operated: as drug users arrived at Safehouse, staff would direct them to a “consumption room,” provide them with drug paraphernalia, and observe the users as they prepare and inject themselves with illegal narcotics.  Safehouse’s staff would monitor the users for signs of overdose and, if necessary, step in and try to provide overdose reversal services.

Let’s step back for a moment, consider the big picture, and discuss what we really know about injections sites.  Safehouse claims that an injection site in Philadelphia would “save lives.”  But are we sure about that?  Consider the study the City of Philadelphia commissioned to evaluate this very issue.  The way the study qualified its recommendations is telling:

The vast majority of the available evidence in recent years comes from only one Supervised Consumption Facility, the [facility] in Vancouver, Canada.  The current models for harm-reduction estimates are sensitive to population-specific factors.  In turn, hyper-local population-level characteristics . . . and social and economic factors determine the need and potential utilization by [drug users] of Supervised Consumption Facilities.  The majority of the available literature with useful statistical methodology and analysis relies more commonly on the Vancouver Supervised Consumption Facility than on any other site.  It is uncertain how relevant or applicable the assumptions are to communities in other geographies. 

The study, by Main Line Health Center at Lankenau Institute for Medical Research, went on to caution that “[b]ecause it appears that existing Supervised Consumption Sites have not incorporated rigorous evaluation into their design and implementation, it has been difficult to disentangle the full impact of Supervised Consumption Sites on relevant harm-reduction outcomes.” 

Translation:  the study has no idea whether an injection site in Philadelphia would actually save lives.  So when Safehouse declares that an injection site would save lives, all they’re doing is speculating and trying to pass it off as fact.  They have no proof and no reliable data.  There is no expert consensus that this plan would do any good for anybody.       

But here is what we do know: setting up a drug house is illegal.  And on the legal issues in this case, our position has remained firm and our communications to Safehouse clear.  Safehouse’s operation would violate federal law, namely, section 856(a)(2) of the Controlled Substances Act.  That section makes it unlawful to “manage or control any place” that is “knowingly and intentionally . . . ma[d]e available for use . . . for the purpose of unlawfully  . . . using a controlled substance.”  On November 9, 2018, I sent a letter to Safehouse, advising that if it went forward with its plans as described, my Office would pursue appropriate remedies unless Safehouse provided me with assurances that it would comply with the law.  In response, Safehouse provided no such assurances, and its actions (most recently, its hiring of an Executive Director last month) point to the opposite conclusion.                  

The law is clear – and my job is to respect and enforce the rule of law.  If Safehouse wants to operate an injection site, it should work through the democratic process to try to change the law.  It should not expect prosecutors to turn a blind eye to wholesale illegal behavior and play politics by allowing political ideologies to determine their prosecutorial decisions.  That would be an abandonment of my oath to enforce the law.  While that may be a way of life for the Philadelphia District Attorney, it is something that I will never do.

And how much political support do injection sites really have among our law making bodies, anyway?  The answer is none.  Congress does not support the idea, the Pennsylvania legislature does not support it, nor does the Philadelphia City Council.  Councilwoman Maria Quinones Sanchez, whose district includes Kensington, does not support injection sites.  Governor Wolf does not support them, nor does Pennsylvania Attorney General Shapiro.

What is Safehouse’s response to this lack of support and to the fact that it is illegal under federal law to set up a drug house?  Their response is defiance.  Their response is that they are beholden to a supposedly higher power than our laws; they are beholden to saving lives.  While I do not doubt Safehouse’s good intentions, substituting its judgment in place of the law is not the way that democracy works.  It is not the way that a republic works.  If Safehouse doesn’t like the law, it should channel its efforts into changing it.  The bottom line is that when it comes to our justice system, there is no higher purpose than respecting the rule of law when our laws are consistent with our Constitution and enacted by our democratically elected representatives.  If you think that you’re above the law, you’ll soon find yourself in court to account for your actions.  That is exactly the situation here.

In closing, the lawsuit that we have filed is a necessary and important step in the Justice Department’s enforcement of our federal drug laws.  But it is just one part of my Office’s comprehensive approach to addressing the opioid crisis.  Again, I want to thank all of the law enforcement partners here today; we are proud to stand with you as we fight this crisis together.

Thank you, and at this time, I am happy to take your questions relating to these announcements.

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that his Office has filed a civil lawsuit to prevent the establishment of a facility in Philadelphia where drug users would go to inject themselves with illegal narcotics.  The suit, filed against the nonprofit corporation Safehouse and its Executive Director, Jeanette Bowles, seeks a judicial decree that Safehouse’s planned opening of one or more so-called “consumption rooms” would violate federal law.  This lawsuit is the first of its kind filed in the United States.

In response to the city’s opioid crisis, Safehouse announced last fall its intention to open a location for drug users to inject street-purchased heroin and fentanyl under medical supervision of Safehouse employees.  With tacit backing from city officials, including Philadelphia District Attorney Larry Krasner who promised not to prosecute those who established or used an injection site, Safehouse plans to open the nation’s first consumption room in Philadelphia imminently.

While U.S. Attorney McSwain emphasized that community organizations play an important role in combatting the opioid scourge, he cautioned that any response must be legal.  “I recognize that we are all on the same side in this fight,” he said.  “The proponents of the injection site share our goal of ending this terrible epidemic.  We all want solutions that save lives, but allowing private citizens to break long-established federal drug laws passed by Congress is not an acceptable path forward.”

Safehouse’s proposed consumption room would violate the federal Controlled Substances Act, a comprehensive regulatory scheme enacted in 1970.  The Act makes it a felony to maintain any place for the purpose of facilitating illicit drug use.  According to the government, that is exactly what Safehouse plans to do.

“So-called ‘supervised injection sites’ would break the law, plain and simple,” said U.S. Attorney McSwain.  “The law is clear – and it is my job to respect and enforce the rule of law.  If Safehouse wants to operate an injection site, it should work through the democratic process to try to change the law.  But normalizing the use of deadly drugs like heroin and fentanyl and ignoring the law is not the answer to solving the opioid epidemic.”

“The Department of Justice’s Civil Division is committed to using every tool at its disposal to combat the opioid crisis, and that includes stopping the establishment of centers where individuals can go to illegally use and abuse dangerous drugs,” said Assistant Attorney General Jody Hunt for the Department of Justice’s Civil Division. “Operating spaces for the purpose of allowing the use of illegal drugs like heroin and fentanyl violates federal law and creates serious public safety risks.  The Civil Division will not hesitate to bring actions like this against any state, city, municipality, or private entity that attempts to open a so-called ‘safe-injection site.’”

In partnership with federal, state, and local law enforcement, the United States Attorney’s Office prioritizes cutting off the supply of illegal opioids, prosecuting drug dealers and traffickers, and enforcing civil rights laws to ensure that people suffering from addiction have access to treatment.  Local government and community organizations play a critical role in providing effective treatment options, making overdose prevention medication more readily available, and leading prevention efforts.

According to U.S. Attorney McSwain, a partnership between federal, state, and local government, along with community leaders, is needed to implement a coordinated and effective response to the opioid crisis.  “I invite a dialogue with our community partners, including Safehouse, to discuss ways we can work together within the law to bring an end to this epidemic,” he said.  

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Eurofins Lancaster Laboratories Environmental LLC, of Lancaster, Pennsylvania, has agreed to pay the United States $135,742 to resolve allegations that it billed the U.S. Army for testing numerous water samples after a Eurofins employee had improperly manipulated or changed the results. Eurofins has terminated the employee, retested the affected samples, and implemented changes to prevent similar misconduct.

In 2017, an investigation was launched after Eurofins disclosed to the United States that between June 21, 2016 and September 14, 2017, an employee in its Lancaster, Pennsylvania laboratory had improperly manipulated quality control data and altered the test results of numerous water samples. Eurofins had contracted with the U.S. Army Public Health Command to test environmental samples, and Eurofins had billed the government $67,871 for testing of 1436 water samples, the results of which the employee had manipulated or altered. Eurofins disclosed information related to its former employee’s misconduct and cooperated with the government’s investigation.

“Government contractors are accountable for their employees’ conduct, especially when they are relied on to ensure the public health of personnel working and living on U.S. military facilities,” said U.S. Attorney McSwain. “This resolution should remind contractors of the high value we place on safeguarding our military service members and civilian employees. We commend Eurofins for coming forward to disclose the issues and for working with the federal government and other regulators to bring its practices into compliance with the law.”

“This settlement further demonstrates the resolve of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit and our law enforcement partners to protect and defend the assets of the United States Army,” stated Special Agent in Charge L. Scott Moreland, of the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit’s Mid‑Atlantic Fraud Field Office.

“The settlement agreement announced today is the result of a joint investigative effort,” stated Leigh-Alistair Barzey, Special Agent in Charge of the Defense Criminal Investigative Service (DCIS) Northeast Field Office. “DCIS will continue to work with the U.S. Attorney’s Office for the Eastern District of Pennsylvania and the U.S. Army Criminal Investigation Command to ensure the integrity of the Defense Department’s procurement system.”

The case was handled by Assistant United States Attorney Mark J. Sherer with investigative assistance from auditor Denis Cooke, the U.S. Army Criminal Investigation Command’s Major Procurement Fraud Unit, and the Defense Criminal Investigative Service.

PHILADELPHIA, PA – United States Attorney William M. McSwain today announced calendar year 2018 affirmative civil enforcement (ACE) achievements by the U.S. Attorney’s Office Civil Division.  As the 2018 achievements demonstrate, the Eastern District of Pennsylvania (EDPA) continues to have one of the busiest and most prolific Civil Divisions in the country.

For calendar year 2018, the EDPA Civil Division recovered over $115.5 million in settlements and judgments from civil cases involving fraud against the government.  These matters originated largely from qui tam, or whistleblower filings and agency referrals.  Of that amount, over $108 million resulted from False Claims Act (FCA) cases, largely from those alleging healthcare fraud violations.  Whistleblowers recovered over $18 million from these resolutions.  During the same calendar year, EDPA opened a record-setting number of ACE investigations into alleged fraud on the government, Controlled Substances Act violations, and civil rights violations.

“We sincerely thank the whistleblowers and their counsel who have brought these matters to the attention of the United States.  Without the willingness of relators to shed light on allegations of fraud, preserving government program funds would be far more challenging.  Their efforts played a vital role in the resolution of these cases,” said U.S. Attorney McSwain. 

“We also thank our federal law enforcement partners, including the U.S. Department of Health and Human Services Office of the Inspector General, the Defense Criminal Investigative Service, the Drug Enforcement Administration, the U.S. Office of Personnel Management Office of the Inspector General, the U.S. Postal Inspection Service, and the Railroad Retirement Board Office of the Inspector General.  The agency support and dedication in these matters is critical to the success of our civil enforcement.”   

“We plan to build on these achievements in 2019,” continued U.S. Attorney McSwain.  “I anticipate that the newly created ACE Strike Force will help us realize even greater success this year.”  In August 2018, the U.S. Attorney formed the ACE Strike Force.  It consists of five Assistant U.S. Attorneys within the Civil Division who focus their efforts on ACE work.  Its mission is to pursue complex fraud investigations, including FCA whistleblower cases, combat the opioid crisis through civil enforcement, and enforce federal civil rights statutes.  

 “The Civil Division will continue to build its robust pipeline of ACE cases, and we have every reason to expect to see a large number of complex whistleblower filings under the False Claims Act and agency referrals,” said U.S. Attorney McSwain.  “I expect ongoing ACE success, reflecting the identification and targeting of specific ACE areas including government fraud, Controlled Substances Act enforcement, and civil rights enforcement.”

            The following are significant calendar year 2018 achievements:[1]

FCA Healthcare Fraud Settlements

• HMA.  In this qui tam against Health Management Associates (HMA), its hospitals Lancaster Regional and Heart of Lancaster, and the physicians group Physicians Alliance Ltd. (PAL), EDPA and DOJ negotiated a large, multi-district $260 million settlement involving medically unnecessary hospital admissions and kickbacks to doctors.  The kickback methods included:  physicians participating in whole-hospital joint ventures of HMA facilities, physicians receiving excessive compensation, physicians receiving bogus co-management fees, and physicians receiving bogus medical directorship fees.  The settlement amount is $55 million for the joint venture piece of the litigation arising out of EDPA, with a global settlement of $260 million for eight qui tams filed in five districts.  https://www.justice.gov/usao-edpa/pr/national-hospital-chain-will-pay-over-260-million-resolve
   
• Abbott.  Abbott Laboratories and AbbVie Inc. (“Abbott”) agreed to pay $25 million to resolve allegations that it employed kickbacks and unlawful methods of off-label marketing and promotion to induce physicians to prescribe the drug TriCor,® a blockbuster cholesterol reducing drug that was promoted for use in conjunction with other cholesterol lowering medications.  https://www.justice.gov/usao-edpa/pr/abbott-laboratories-and-abbvie-inc-pay-25-million-resolve-false-claims-act-allegations
   
• Coordinated Health and Emil DiIorio, M.D.  Coordinated Health Holding Company, LLC (“Coordinated Health”) and its founder, principal owner, and Chief Executive Officer, Emil DiIorio, M.D., agreed to settle allegations that they abused billing modifiers to unbundle surgery codes resulting in false claims submitted to federal health care programs.  Coordinated Health agreed to pay $11.25 million and DiIorio agreed personally to pay $1.25 million, for total settlement of $12.5 million.  Coordinated Health has also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services that will require regular monitoring of its billing practices for five years.  https://www.justice.gov/usao-edpa/pr/coordinated-health-and-ceo-pay-125-million-resolve-false-claims-act-liability
   
• SouthernCare.  SouthernCare, Inc., a hospice care provider, agreed to pay $5,863,426 to the federal government to resolve allegations that the company submitted false claims to Medicare for hospice care that was medically unnecessary or lacked documentation.  In their qui tam complaints, the whistleblowers alleged that SouthernCare provided hospice care to patients who were not eligible under the Medicare program.  https://www.justice.gov/usao-edpa/pr/hospice-care-provider-pays-nearly-6-million-resolve-false-claims-act-allegations
   
• I&L Express Pharmacy.  I&L Express Pharmacy and its owners agreed to pay $3.2 million to the federal government to resolve allegations that they submitted false claims to Medicare for prescription medications that were not actually dispensed during a six-year period.  Significantly, they also agreed to enter into an integrity agreement that requires them to undertake substantial compliance obligations and to contract with an Independent Review Organization that will conduct quarterly audits of their Medicare and Medicaid claims and drug inventory.  https://www.justice.gov/usao-edpa/pr/pharmacy-owners-agree-pay-32-million-resolve-false-claims-case
   
• Community Health Clinics / Dr. Melchor Martinez. In this case, EDPA filed a complaint in intervention of a qui tam alleging that Martinez had been excluded from participating in all federally funded healthcare programs, but had nonetheless continued to own and operate community mental health clinics that billed Medicaid and Medicare.  The complaint also alleged widespread fraud in billing for mental health services, billing for services provided by unqualified individuals, and falsifying credentials.  https://www.justice.gov/usao-edpa/pr/civil-complaint-alleges-fraud-operators-community-mental-health-clinics  The district court entered a $3 million consent judgment on October 18, 2018, which required the defendants to shut down their remaining Medicare business and for significant periods of exclusion from participation in federally funded healthcare programs for the defendants. https://www.justice.gov/usao-edpa/pr/united-states-obtains-3-million-consent-judgment-and-federal-healthcare-exclusions-0
   
• Bromedicon. Marshfield Medical, Inc., formerly known as Bromedicon, Inc., agreed to pay $550,000 to resolve a qui tam lawsuit’s allegations that Bromedicon submitted false claims to Medicare and other federal healthcare programs for failing to provide a qualified interpreting physician to monitor each surgery for which it purportedly provided remote Intraoperative Neurophysiological Monitoring.  https://www.justice.gov/usao-edpa/pr/intra-operative-monitoring-company-agrees-pay-550000-settle-false-claims-act-claims
   
• Dr. Banka.  Vidya Banka, MD agreed to pay a civil penalty of $126,617 and to a five-year term of exclusion from all federal healthcare programs to settle allegations that he improperly submitted Medicare claims for unnecessary cardiac stent procedures.  The University of Pennsylvania Health System (“UPHS”), which owns Pennsylvania Hospital, brought the matter to the United States’ attention through a voluntary self-disclosure.  The United States then continued to investigate Dr. Banka. https://www.justice.gov/usao-edpa/pr/united-states-resolves-claims-philadelphia-cardiologist-billed-medicare-unnecessary
   
• Rosenbaum.  A personal injury law firm, Rosenbaum & Associates, and its principal, Jeffrey Rosenbaum, Esq., agreed to pay $28,000 to resolve allegations that they failed to reimburse the United States for certain Medicare payments the government had previously made to medical providers on behalf of firm clients who sought medical care.  The government’s investigation arose under the Medicare Secondary Payer provisions of the Social Security Act.  Rosenbaum also agreed to (1) designate a person at the firm responsible for paying Medicare secondary payer debts; (2) train the designated employee to ensure that the firm pays these debts on a timely basis; and (3) review any outstanding debts with the designated employee at least every six months to ensure compliance.  https://www.justice.gov/usao-edpa/pr/philadelphia-personal-injury-law-firm-agrees-start-compliance-program-and-reimburse  

Controlled Substances Act Enforcement

• Passavant/PDC.  Arising from a voluntary self-disclosure, Passavant Memorial Homes, and its subsidiaries Passavant Development Corporation, PDC Pharmacy Philadelphia, PDC Pharmacy Pittsburgh, and PDC Pharmacy Colorado, paid the United States $1,850,000 to resolve allegations that it dispensed controlled substances to patients without a valid prescription in violation of the Controlled Substances Act and FCA.  This matter also involved two additional disclosures in coordination with the District of Colorado and the Western District of Pennsylvania.  The U.S. Attorney’s Offices worked in close collaboration with each other, HHS, DEA, and Medicaid Fraud Control Units from all three districts to obtain the resolution in this case. https://www.justice.gov/usao-edpa/pr/passavant-memorial-homes-pay-185-million-resolve-allegations-improperly-dispensing
   
• Dr. Stephen Latman.  This civil complaint resulted in a first-of-its-kind consent decree against a physician who had been allegedly overprescribing opioids for years.  According to the complaint, Dr. Latman issued 343 opioid prescriptions to three of his patients that lacked a legitimate medical purpose and were issued outside of the usual course of his professional practice.  Dr. Latman entered into a Stipulated Order and Consent Judgment, requiring him to pay $400,000 to the United States, prohibiting him from ever seeking a future DEA controlled substance license, requiring him to voluntarily relinquish his license to practice medicine, and requiring him to execute an agreement with the U.S. Department of Health and Human Services to be excluded from Medicare, Medicaid, and all other federal health care programs. https://www.justice.gov/usao-edpa/pr/united-states-files-suit-against-reading-area-physician-opioid-prescribing
   
• Stephen Humbert, D.O. and Raymond Ferraro, P.A.  These medical providers agreed to pay $112,500 to resolve allegations for improperly prescribing opioids to one of their former patients.  Additional conditions of compliance with the DEA required regular reporting of their prescriptions for controlled substances and new policies for their opioid patients. https://www.justice.gov/usao-edpa/pr/two-healthcare-providers-agree-pay-over-100000-settle-civil-claims-improper-opioid

FCA Procurement/Grant Fraud Settlements

• Shubhada Industries.  EDPA filed a civil fraud lawsuit against Babu Metgud and Shubhada Kalyani, and four companies, Shubhada Industries, d/b/a Shubhada, Inc., Metcon Aerospace & Defense, d/b/a Metcon Industries, NRI Capital Corporation, and The Innovation Technology & Enterprise Development Center, Inc., for a scheme to overcharge the military for spare vehicle parts.  The United States, as the plaintiff, moved for summary judgment against Metgud and Kalyani.  In granting the United States’ motion, the district court entered judgment against the individual defendants, awarding damages and imposing the maximum penalty allowable under the FCA.  The couple has been ordered to pay $232,891.37 to the United States. https://www.justice.gov/usao-edpa/pr/lawsuit-filed-against-defense-contractors-over-alleged-false-claim. The press release for the judgment is here: https://www.justice.gov/usao-edpa/pr/court-enters-judgment-against-new-jersey-couple-overcharging-military-spare-vehicle
   
• Scholars in Print.  EDPA filed a civil complaint alleging that Scholars in Print and its owners, John Paul Ryan and Mary Motz Ryan, violated the FCA by shipping unordered textbooks to the Federal Bureau of Prisons and demanding payment, in conjunction with a motion asking the court to enter a stipulated order and consent judgment to resolve the matter.  The defendants will pay a civil penalty of $75,689 for submitting false claims.  They will also refrain from marketing products to any federal agency through unsolicited communications or telemarketing. https://www.justice.gov/usao-edpa/pr/bucks-county-couple-and-telemarketing-firm-agree-pay-penalty-resolve-false-claims-act

FCA Benefits Fraud Settlements

• Richard Cundari. A former Railroad Retirement Board employee resolved civil fraud claims under the FCA for $307,500 concerning allegations that he applied for and received occupational disability annuities that he was ineligible to receive due to income earnings in excess of the applicable limits. https://www.justice.gov/usao-edpa/pr/doylestown-man-pay-307500-resolve-civil-false-claims-allegations-he-illegally-received

 

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[1] The civil claims resolved by settlement are allegations only, and there has been no determination of liability.

 

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Pentec Health, Inc. (“Pentec”) has agreed to pay the United States $17 million to settle allegations that Pentec submitted false claims to Medicare and other government healthcare programs.    

Headquartered in Glen Mills, Pennsylvania, Pentec furnishes a range of renal and specialized pharmacy compounding services, including the compounding of its drug, Proplete, and the provision of intradialytic parenteral nutrition (“IDPN”) and intraperitoneal nutrition (“IPN”) to individuals with end stage renal disease.

The United States alleges that from 2007 to 2018, Pentec billed Medicare and other federal healthcare programs for excessive amounts of product wasted during the compounding of Proplete, and Pentec routinely waived patient copayments and deductible obligations in order to induce the prescription and use of Proplete.  Pentec also submitted duplicate and improperly coded claims to the Federal Employee Health Benefits Program. 

Along with this Settlement, Pentec has also signed a Corporate Integrity Agreement (“CIA”) with the Department of Health and Human Services, Office of Inspector General (“HHS-OIG”) that will require regular monitoring of its billing practices for a period of five years.

“We are committed to ensuring that compounding pharmacies appropriately bill Medicare,” said U.S. Attorney McSwain.  “Pentec allegedly padded its bottom line through several improper means, including by charging the government for quantities of medication that its patients did not actually need or receive.  Those who engage in these practices will be held accountable.”

“Compounding pharmacies play an integral role in the delivery of quality health care services and are required to follow rules designed to protect patients and prevent the waste of taxpayer funds,” said Maureen Dixon, Special Agent in Charge of HHS-OIG in Philadelphia.  “We will continue to work closely with the United States Attorney’s Office to ensure the integrity of taxpayer funds.”

This settlement resolves a lawsuit filed under the False Claims Act (FCA) in the U.S. District Court for the Eastern District of Pennsylvania by Jean Brasher, a former employee of Pentec, under the qui tam or whistleblower provisions of the FCA, which permit private citizens to bring lawsuits on behalf of the United States and obtain a portion of the government’s recovery.  The FCA also permits the government to intervene and take over the lawsuit.  Ms. Brasher was represented by David Bocian, Esq. of Kessler Topaz Melzter & Check, LLP.

“We thank the relator for her invaluable contribution in this case. Together with her lawyers, they provided vital assistance to the government throughout this case. Without information from citizens like the relator, detecting fraud and conserving government program funds would be far more difficult,” said U.S Attorney McSwain.

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

The case was investigated by Assistant U.S. Attorney Jacqueline C. Romero of the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from Health Care Fraud auditor George Niedzwicki, HHS-OIG, the United States Office of Personnel Management-Office of Inspector General, and the United States Department of Veterans Affairs-Office of Inspector General.

The case is captioned United States et al. ex rel. Jean Brasher v. Pentec Health, Inc.  No. 13-cv-05745 (E.D.Pa.).  The claims resolved by this settlement are allegations only and there has been no determination of liability

David Sommers pleaded guilty today in the U.S. District Court for the Eastern District of Pennsylvania to trafficking protected turtles.  

On July 10, 2018, a grand jury charged Sommers with smuggling a package containing diamondback terrapins to Canada and several Lacey Act offenses for mislabeling the package and trafficking turtles domestically. Sommers pleaded guilty to one felony count of violating the Lacey Act and agreed to forfeit nearly 3,500 diamondback terrapin hatchlings. The Lacey Act is the nation’s oldest wildlife trafficking statute and prohibits falsely labeling packages containing wildlife, fish, or plants.

Sommers acknowledged that he falsely labeled and trafficked turtles taken from their New Jersey marsh habitat from Aug. 7, 2014, through Oct. 24, 2017. According to the plea agreement, Sommers admitted to sending a package to Canada in 2014 containing 11 terrapin hatchlings. Sommers mislabeled the package as a book and underreported its value to avoid detection by customs authorities. Wildlife authorities from Environment and Climate Change Canada intercepted the package.

Sommers faces a maximum of five years’ imprisonment, three years of supervised release, a fine of up to $250,000, and restitution to New Jersey for the value of the turtles. The government agreed to dismiss the remaining charges against Sommers at sentencing, which is scheduled for May 15, 2019.

Diamondback terrapins (Malaclemys terrapin) are a semi-aquatic species of turtle native to brackish waters in eastern and southern United States. They are not found in the wild in Pennsylvania, where Sommers resided, but have a dwindling habitat range in neighboring New Jersey. The terrapins are prized in the reptile pet trade for their unique, diamond-shaped shell markings. The turtles are protected under New Jersey law and by an international treaty, the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES).

The United States, Canada, and approximately 181 other countries are signatories to CITES, which provides a mechanism for regulating international trade in species whose continued survival is threatened by such trade. Due to declining populations, CITES listed the diamondback terrapin as threatened in 2013, and New Jersey banned collecting, possessing, and transporting them in 2016. 

The U.S. Fish and Wildlife Service conducted the investigation with assistance from the New Jersey Division of Fish and Wildlife. The government is represented by Trial Attorney Ryan Connors of the Environmental Crimes Section and Assistant U.S. Attorney Joan Burnes of the U.S. Attorney’s Office for the Eastern District of Pennsylvania.

PHILADELPHIA – United States Attorney William M. McSwain announced that John Kelvin Conner, 62, was convicted today by a jury of 19 counts of wire fraud and one count of making a false statement to federal agents. The defendant, an attorney, 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 defendant 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 totaling at least $95,688 from the victim’s bank account at Pennsylvania and New Jersey casinos. During this time, the defendant neglected to pay the victim’s bills, which led to the victim 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. When questioned by FBI agents about the ATM withdrawals, the defendant falsely told the agents 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 by pretending that he had permission to throw away the victim’s savings so that she couldn’t even afford her necessities – it is hard to fathom that an individual would choose to commit these crimes. We are grateful that the jury saw through the defendant’s lies and held him accountable.”

“For anyone with elderly loved ones, this is the nightmare scenario,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “John Conner’s victim was utterly vulnerable, and he took full advantage – robbing her blind to hit the casinos, frittering away her money as her own bills went unpaid. It’s unconscionable. The FBI will never stop working to protect the public from criminals like this, and we’re gratified to see him brought to justice.”

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

ATLANTA, GEORGIA– On January 31, 2019, United States Attorney William M. McSwain spoke at the National Football League’s anti-counterfeiting and piracy press conference held in connection with Super Bowl LIII.  U.S. Attorney McSwain announced six separate indictments charging 13 individuals with a multitude of crimes, including conspiracy to traffic in counterfeit goods, trafficking in counterfeit goods, conspiracy to commit wire fraud, wire fraud, and aiding and abetting. 

Remarks as Prepared for Delivery

Each year, the Super Bowl unites Americans in a unique way.  It is a celebration of the game, its players, and of the competitive spirit that helps to define our country. 

Unfortunately, with all the good that comes along with events like the Super Bowl, there’s an opportunity for criminals to prey on unwitting fans.  These events attract people looking to make a quick buck through counterfeiting.

Criminal counterfeiting and piracy are serious crimes.  When fans spend their hard-earned money on NFL tickets and merchandise, they deserve the real deal.  And today, I am here to announce criminal counterfeiting charges that my Office has brought to help ensure that NFL fans – and all of us – get what we pay for when we attend a big event. 

The United States Attorney’s Office for the Eastern District of Pennsylvania has filed six criminal indictments against multiple defendants, alleging their involvement in a scheme to traffic in counterfeit ticket sales.  This widespread conspiracy spanned multiple states, involved 13 defendants, and covered numerous sporting and concert events. 

We know from our investigation that the defendants targeted events and their victims based on profitability – the bigger the event, the bigger the payoff.  The scheme involved several steps and multiple players:  after determining which events would draw the most profit, the schemers would use real tickets, or photographs of real tickets, to print counterfeit ones for the event, and then the sellers would travel to the host city to sell their phony tickets to unwitting fans.  This scheme involved sophisticated printing that mimicked the authentic tickets’ markings and hologram.  

Many of the individuals that we have charged allegedly defrauded NFL football fans by printing, distributing, and selling counterfeit tickets to Super Bowl LI (51) in Houston (between the Patriots and the Falcons) and Super Bowl LII (52) in Minneapolis (between the Eagles and the Patriots). 

In addition to these games, the criminal indictments allege that the schemers targeted other high-profile sporting events, including the Army-Navy football game played in Philadelphia in December 2017; two College Football National Championship games (one played in Tampa, in January 2017, and another played here in Atlanta in January 2018); and various big-ticket basketball games. They also trafficked in counterfeit concert tickets in various venues.  

The initial arrests in this case were of two individuals named Eugene Smith and Eric Ferguson, both from the Atlanta metropolitan area.  Ferguson is alleged to have printed the counterfeit tickets for Smith, who then supplied the tickets to several additional individuals who solicited buyers and sold them.  Both Smith and Ferguson have been charged with producing and distributing counterfeit Super Bowl tickets in 2017 and 2018.  Ferguson has pleaded not guilty and awaits trial.  Smith has pleaded guilty to four counts and awaits sentencing in custody in Philadelphia.  

The second wave of indictments targeted additional printers, distributors, and street-level counterfeit ticket sellers.  Multiple arrests occurred earlier this week through a coordinated federal, state, and local effort across multiple states.  As fate would have it, one of these individuals, Damon Daniels, was apprehended en route to Atlanta, thanks to the great police work by the Duluth, Georgia police department.  The arresting officer reported that Mr. Daniels’s car was filled with printing equipment and cardstock, presumably to resume counterfeit ticket sales at this year’s Super Bowl.

The individuals charged and arrested this week are the following: Rakee Russ, Mustafa Tucker, Malik Brown, Kevin Sadat, Edward Dunmore, Khiale Warren, and Rodney Higginbottom, all of Philadelphia; and Sean Williams, Damon Daniels, Rahiem Watts, and Jermaine Jones, all of New York.  These indictments, which are now publicly available and filed with the court, outline the charges and identify which of these individuals are charged with conduct related to counterfeit Super Bowl tickets.  We have also prepared a press release that provides additional details about the charges.

If convicted, the defendants face a range of penalties, determined primarily by the amount of the financial loss attributable to each.  And by bringing these charges federally, we have assured that many of these individuals will serve serious prison time if convicted. 

I want to extend my thanks to FBI Philadelphia for spearheading the investigation and to Special Agent in Charge Michael Harpster and Assistant Special Agent in Charge Joe Bushner for their leadership, and to our local partners who served as boots on the ground – always willing to step in and stop the counterfeit sales, where possible. They acted swiftly when we learned about events unfolding in real time, often as the individuals were meeting their victims.  Thank you to the Philadelphia Police Department and Commissioner Richard Ross; to the Pennsylvania Attorney General’s Office and Attorney General Josh Shapiro and his First Deputy Chief, Bureau of Investigations, John Kitzinger, who is with us today; to the New York Police Department; to the Manhattan District Attorney’s Office; to the FBI Field Office in Atlanta; and finally, to BJay Pak, the U.S. Attorney for the Northern District of Georgia and his Office.

This case serves as an important reminder to all of us who enjoy sporting and concert events with friends and family. 

Most importantly, when you are buying tickets, consider the source. The safest route is always to purchase from an approved source.  Many fans believe that if they are not purchasing tickets from scalpers on the street, they are safe, and that it’s OK to buy tickets on a third-party website because the sellers can be tracked and traced.  That is not always the case.  The majority of counterfeit sales happen not on the streets, but through the Internet.  

The FBI and the Department of Justice take counterfeiting and piracy very seriously.  Economic crimes like these will continue to be a focus of my Office and of the Department. 

At this time, I would like to introduce my colleague from the FBI Philadelphia Field Office, Assistant Special Agent in Charge Joe Bushner.

PHILADELPHIA – An indictment was unsealed today against a member of the Philadelphia organized crime family of La Cosa Nostra (LCN) and his alleged associate. The indictment charges various crimes involving the making of extortionate loans, conspiracy, and collections of loans by extortionate means. 

The charges were announced today by United States Attorney William M. McSwain; Assistant Attorney General Brian A. Benczkowski of the Justice Department’s Criminal Division; and Michael Harpster, Special Agent in Charge of the FBI’s Philadelphia Field Division.

The defendants charged in the 15-count indictment are Philadelphia LCN Family member Philip Narducci, 56, and his associate James Gallo, 44.

Both defendants were arrested today and will make initial court appearances in U.S. District Court in Philadelphia at 1:30 pm. EST. 

According to the indictment, Narducci allegedly made usurious and extortionate loans involving large amounts of money to a borrower.  As set forth in the indictment, when the borrower failed to make weekly interest payments, Narducci allegedly used physical violence through assault and threats of violence to force the borrower to repay the loans.  The indictment also alleges that, at Narducci’s direction, Gallo collected weekly interest payments on the usurious loans from the borrower and used threats of violence to facilitate the collections. 

“Our citizens deserve to be safe and live without the fear or threat of violence,” said U.S. Attorney McSwain. “My Office takes organized crime in this District very seriously and will prosecute it to the fullest extent of the law.”

Each charge of making extortionate extortions of credit, conspiracy to collect extensions of credit by extortionate means, and collections of extensions of credit by extortionate means making extortionate extensions of credit, carries a maximum penalty of 20 years in prison and a $250,000 fine. 

The case is being investigated by the FBI, the Pennsylvania State Police, and the Pennsylvania Office of the Attorney General. The case is being prosecuted by Trial Attorney John S. Han of the Criminal Division’s Organized Crime and Gang Section.           

An indictment is merely an accusation and each defendant is presumed innocent until and unless they are proven guilty. 

ATLANTA, GEORGIA – United States Attorney William M. McSwain announced six separate indictments charging 13 individuals with a multitude of crimes, including conspiracy to traffic in counterfeit goods, trafficking in counterfeit goods, conspiracy to commit wire fraud, wire fraud, and aiding and abetting.  U.S. Attorney McSwain announced the charges at the NFL’s annual anti-counterfeit merchandise press conference event held in connection with Super Bowl LIII.

The indictments filed in the Eastern District of Pennsylvania and announced today all relate to the production, distribution, and sale of counterfeit tickets to sporting and concert events.  This criminal behavior spanned several states and targeted multiple marquee sporting events, including Super Bowl LI, in Houston, Texas, and Super Bowl LII, in Minneapolis, Minnesota.  The details of each indictment, including the individuals charged and the sporting events that were targeted, are described more fully below.  The individual defendants face a range of penalties, largely depending on the amount of financial loss attributable to each.

Case No. 2:18-cr-00306 (RBS) (Smith) and Case No. 2:18-cr-00596 (RBS) (Ferguson) 

Eugene Smith, 45, of Lithonia, Georgia, and Eric Ferguson, 50, of Riverdale, Georgia, were both charged by indictment with conspiracy to commit wire fraud; wire fraud; conspiracy to traffic in counterfeit goods; and trafficking in counterfeit goods.  The indictments allege that Smith purchased real tickets to sporting events and concerts, provided them to his associate, Ferguson, who then printed counterfeit tickets for resale.  The indictments further allege that the counterfeit tickets were distributed to a network of individuals who would advertise and sell the counterfeit tickets to unsuspecting fans.  The indictments allege that from December 2016 to April 2018, the defendants conspired to traffic in counterfeit tickets for various sporting events, including Super Bowl LI; Super Bowl LII; a College Football Playoff game played in Tampa, Florida; and the Army-Navy Game played in Philadelphia.

Smith has pleaded guilty to all counts in the indictment and awaits sentencing.  Ferguson has pleaded not guilty and is awaiting trial, currently scheduled for February 11, 2019. 

Case No. 2:19-cr-00053 (RBS) (Williams et al.)

Sean Williams, 48, Damon Daniels, 48, Rahiem Watts, 30, Jermaine Jones, 41, all of New York, New York, and Rakee Russ, 40, of Philadelphia, are charged in a single indictment with conspiracy to commit wire fraud; wire fraud; conspiracy to traffic in counterfeit goods; and trafficking in counterfeit goods.  The indictment alleges a similar pattern of behavior: defendants Daniels and Watts created counterfeit tickets to various sporting events and worked with others, including their indicted co-defendants, to advertise and sell the tickets to unsuspecting victims.  It further alleges that that defendants conspired together to produce and sell counterfeit tickets to several sporting and concert events, including Super Bowl LI; an NCAA men’s college basketball game (Villanova University–University of Virginia) played in Philadelphia; an ACC men’s basketball tournament game played in New York City; and a FIFA World Cup qualifier soccer match between the United States and Costa Rica, played in Philadelphia.

Case No. 2:19-cr-0054 (RBS) (Warren and Higginbottom)

Khiale Warren, 52, and Rodney Higginbottom, 51, both of Philadelphia, are charged in a single indictment with trafficking in counterfeit tickets and wire fraud.  The indictment alleges that these defendants advertised through a third-party website and sold counterfeit tickets to several events, including the 1916-2016 Copa America Centenario soccer game played in Philadelphia; a Philadelphia Eagles–Minnesota Vikings NFL football game played in Philadelphia; an NCAA Football National Championship game played in Atlanta, Georgia; and a Phish concert in Philadelphia, in June 2018. 

Case No. 2:19-cr-0055 (RBS) (Tucker et al.)

Mustafa Tucker, 36, Malik Brown, 38, Kevin Sadat, 41, all of Philadelphia, are charged in a single indictment with conspiracy to commit wire fraud; wire fraud; conspiracy to traffic in counterfeit goods; and trafficking in counterfeit goods.  This indictment alleges that the defendants obtained copies of Ferguson-printed counterfeit tickets from Smith, advertised counterfeit tickets online, and sold tickets to unsuspecting victims. The indictment alleges the defendants conspired with Smith, Ferguson, and others to traffic in counterfeit tickets to Super Bowl LI and the NBA All-Star Game played in New Orleans, Louisiana.  It further alleges that Brown trafficked in counterfeit goods by selling tickets to the following events: a Phish concert  held in Philadelphia in June 2018, the 1916-2016 Copa America Centenario soccer game played in Philadelphia, and a Philadelphia Eagles-Atlanta Falcons game in Philadelphia, on September 8, 2018.

Case No. 2:19-cr-0056 (RBS) (Dunmore)

Edward Dunmore, 61, of Philadelphia, was charged with two counts of trafficking in counterfeit goods.  The indictment alleges that on two occasions, Dunmore sold tickets to a Phish concert in Philadelphia, in June 2018.

“Criminal counterfeiting and piracy are serious crimes,” said U.S. Attorney McSwain.  “When fans spend their hard-earned money on tickets and merchandise, they deserve the real deal.  These defendants repeatedly targeted events based on profitability and perpetrated a fraud on unsuspecting fans.  These indictments send a clear message that phony ticket sales are a federal case – one that we will pursue to the fullest extent of the law.”

“This case grew out of the public safety partnership between FBI Philadelphia's special events program, the NFL, and the Philadelphia Eagles,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division.  “But as the scope of the investigation expanded nationwide, it truly became a collaboration, and for that I'd like to thank all of our law enforcement partners.  There were no less than 30 local, state, and federal law enforcement agencies and 23 FBI field offices that directly contributed on this case, allowing us to achieve our ultimate goal of protecting the ticket-buying public.”

The case was investigated by the Federal Bureau of Investigation, the Philadelphia Police Department, New York Police Department, with assistance from the United States Attorney’s Office for the Northern District of Georgia, the Pennsylvania Attorney General’s Office, the New York District Attorney’s Office, and multiple local law enforcement authorities, including the Duluth, Georgia Police Department.  The case is being prosecuted by Assistant United States Attorneys Joan Burnes and Anita Eve.

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

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams announced today that a grand jury returned a 116-count Indictment, charging Local 98 of the International Brotherhood of Electrical Workers (“Local 98”) Business Manager John Dougherty, Philadelphia City Councilman Robert Henon, Local 98 employees Brian Burrows, Michael Neill, Marita Crawford, Niko Rodriguez, Brian Fiocca, and local business owner Anthony Massa with a multitude of federal crimes, including embezzlement, wire fraud, and public corruption offenses.

John Dougherty, 58, of Philadelphia, has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; 34 counts of embezzlement and theft of labor union assets; 23 counts of wire fraud thefts from Local 98; two counts of wire fraud thefts from a political action committee; two counts of falsification of annual financial reports filed by a labor union; two counts of falsification of financial records required to be kept by a labor union; five counts of filing false federal income tax returns; one count of conspiracy to accept unlawful payments from an employer; eight counts of accepting unlawful payments from a union contractor; one count of conspiracy to commit honest services fraud and federal program bribery; 11 counts of honest services wire fraud; and one count of honest services mail fraud.      

Philadelphia City Councilman Robert Henon, 50, of Philadelphia, has been charged with one count of conspiracy to commit honest services fraud and federal program bribery; 14 counts of honest services wire fraud; one count of honest services mail fraud; and four counts of federal program bribery.      

Brian Burrows, 58, of Mount Laurel, NJ, served as the President of Local 98. He has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; 14 counts of embezzlement and theft of labor union assets; two counts of falsification of annual financial reports filed by a labor union; two counts of falsification of financial records required to be kept by a labor union; and five counts of filing false federal income tax returns.

Michael Neill, 52, of Philadelphia, served as the Training Director of Local 98’s Apprentice Training Fund. He has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; four counts of embezzlement and theft of labor union assets; one count of theft from an employee benefit plan; and four counts of filing false federal income tax returns.

Marita Crawford, 49, of Philadelphia, served as a Local 98 business agent and Political Director. She has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; four counts of embezzlement and theft of labor union assets; three counts of wire fraud thefts from Local 98; two counts of wire fraud thefts from a political action committee; one count of falsification of an annual financial report filed by a labor union; and one count of falsification of financial records required to be kept by a labor union.

Niko Rodriguez, 27, of Philadelphia, was a Local 98 employee and Apprentice Training Fund employee. He has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; six counts of embezzlement and theft of labor union assets; and six counts of wire fraud thefts from Local 98.

Brian Fiocca, 27, of Philadelphia, was a Local 98 employee. He has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; five counts of embezzlement and theft of labor union assets; and five counts of wire fraud thefts from Local 98.

Anthony Massa, 65, of Philadelphia, was the owner and operator of Massa Construction. He has been charged with one count of conspiracy to embezzle from a labor union and employee benefit plan; 14 counts of embezzlement and theft of labor union assets; one count of theft from an employee benefit plan; and one count of making false statements to the FBI.

From April 2010 through August 2016, in Philadelphia, the Indictment alleges that Dougherty, Burrows, Neill, Crawford, Rodriguez, Fiocca, and Massa conspired and agreed to embezzle Local 98 funds for their own personal use and the use of their family members, friends, and commercial businesses.

The Indictment charges that the defendants used union funds for personal and other unauthorized expenses, contrary to the provisions of the IBEW constitution, the by-laws of Local 98, and the beneficial interests of the members of Local 98. They also used these funds in violation of federal law. The Indictment continues that they used funds and assets of the Apprentice Training Fund for personal and other unauthorized expenses, contrary to the provisions of the Apprentice Training Fund’s trust agreement and ERISA. Additionally, the Indictment states that the defendants concealed the unlawful use of the funds and assets of Local 98 and the Apprentice Training Fund by falsely representing that the funds were being used for legitimate, business-related expenses.

The Indictment further charges Dougherty and Henon with multiple public corruption charges. The Indictment alleges that Dougherty and Henon defrauded the City of Philadelphia and its citizens of the right to Henon’s honest services as a member of City Council. According to the Indictment, Henon received a salary and other things of value from Dougherty and, in exchange, Henon used his position as a member of City Council to serve Dougherty’s interests. 

“Union leaders and public officials have similar duties in our society,” said First Assistant U.S. Attorney Williams. “Whether it is a fiduciary duty to the union’s membership to spend union funds on union business, or a public official’s duty to provide honest services to his constituents, leaders in these kinds of roles must act in the best interests of others. They cannot use their public positions and influence to enrich themselves. If they do, it is a violation of their duties and of federal law.”

“When union leaders misdirect the organization’s money for personal gain, they’re breaching their obligation to members – and breaking the law,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Such corruption must not go unchecked. No matter how long it takes, the FBI and our partners will investigate and work to hold accountable unscrupulous union and public officials.” 

“Union officials who are elected to positions of trust have a responsibility to their members and organizations,” stated IRS Special Agent in Charge Guy Ficco. “That trust is broken when these officials serve to enrich themselves at the expense of their members. No public official gets a free pass to ignore the tax laws, and IRS CI will continue to ensure that everyone pays their fair share.”

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

“Protecting the security of retirement, health, and other workplace-related benefits for the American workforce and their families is the objective of the U.S. Department of Labor – Employee Benefits Security Administration (EBSA).  Our agency vigorously enforces the laws of the United States by using our criminal enforcement program to pursue violators of criminal laws protecting private employee benefit plans.  Our agency works closely with other law enforcement agencies as well as federal and state prosecutors to pursue criminal actors who victimize these plans.” said EBSA Philadelphia Regional Director Michael Schloss.

“An important mission of the Office of Inspector General is to investigate allegations relating to labor racketeering and corruption in employee benefit plans,” stated Richard Deer, Special Agent in Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General. “We will continue to work with our law enforcement partners and the U.S. Department of Labor’s Employee Benefits Security Administration to investigate these types of allegations.”

The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service – Criminal Investigation, the U.S. Department of Labor Employee Benefits Security Administration, the U.S. Department of Labor Office of Labor Management Standards, the U.S. Department of Labor Office of Inspector General, and the Pennsylvania State Police, with assistance from the Pennsylvania Attorney General’s Office. It is being prosecuted by Assistant United States Attorneys Richard P. Barrett, Chief of the Corruption, Tax and Labor Racketeering Unit, Frank Costello, John Gallagher, and Paul Gray.

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 a jury has convicted Edward Stinson and Debra Baylor of conspiracy to distribute 280 grams or more of cocaine base, in addition to several related drug charges, including one count of possession with intent to distribute cocaine (against Baylor); one count of possession with intent to distribute cocaine within a public housing project (against Baylor); two counts of possession with intent to distribute cocaine base (against Baylor); unlawful use of a communication facility in furtherance of a drug felony (multiple counts against both defendants); and one count of maintaining a drug house (against Baylor). 

The Stinson Drug Trafficking Group (DTG) sold crack cocaine in and around the Norman Blumberg Apartment Complex (Blumberg) in North Philadelphia from about 2010 through September 2015.  Blumberg was a public housing facility that provided housing to low income residents and contained two children’s playgrounds before it was torn down in 2016.  The DTG sold crack cocaine 24 hours a day, 7 days a week, employing a large network of supervisors, sellers, lookouts, and suppliers in and around Blumberg.  To protect their territory and drug trafficking activities, members of this DTG routinely carried, and sometimes used, loaded firearms.

Stinson was the leader of the DTG.  He was assisted in the daily operations of the DTG by multiple individuals, including Baylor.  Defendants and others obtained bulk quantities of cocaine from suppliers and arranged for it to be cooked into crack cocaine inside various apartments in Blumberg.  The crack cocaine was then distributed to other members of the DTG for further re-distribution by another group of persons in the DTG.  Debra Baylor, in addition to selling crack cocaine, permitted Edward Stinson and others acting on their behalf, to package, store, and distribute crack cocaine out of her apartment, which served as a “stash” house for the DTG.

“Today’s verdict ensures that Stinson and Baylor will be held accountable for the misery their drug trafficking activities caused,” said U.S. Attorney McSwain.  “Today’s victory demonstrates my Office’s steadfast commitment to taking down criminal organizations like the Stinson DTG and cutting off the supply of illegal drugs like crack cocaine into our communities.”

“For years, Edward Stinson controlled the crack trade around the Blumberg Apartments through violence and intimidation. His 24-7 operation hauled in millions of dollars, at great cost to that neighborhood and the folks who lived there. The FBI and our law enforcement partners are committed to dismantling drug trafficking organizations like this and bringing those involved to justice,” said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division.

“Stinson and his associates were responsible for rampant drug trafficking and acts of violence that terrorized the residents of the former Norman Blumberg Apartment complex,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration's (DEA) Philadelphia Field Division.  “Through their criminal activities, Stinson and Baylor preyed on some of the most vulnerable members of our society through fear, intimidation, and total disregard for the residents of this public housing facility.”

This case was investigated by the FBI Philadelphia Division, the Drug Enforcement Administration's Philadelphia Field Division, and the Philadelphia Police.  The case is being prosecuted by Assistant United States Attorneys Joseph Labrum and Josh Davison.

PHILADELPHIA – First Assistant United States Attorney Jennifer Arbittier Williams today announced that U-Haul Company of Pennsylvania and Miguel Rivera, the general manager of U-Haul’s Hunting Park location, pled guilty today to two felony counts of violating hazardous materials regulations.

In July 2014, a propane cylinder attached to a food truck exploded in Philadelphia, killing two people and injuring others. A subsequent investigation revealed that U-Haul Company of Pennsylvania had willfully and recklessly allowed untrained workers to handle propane, a hazardous material, in violation of its statutory obligations. Miguel Rivera aided and abetted the company's violations. As the manager, Rivera was fully trained and certified to handle propane, yet he requested or required the untrained employees to fill propane cylinders for customers, knowing that they had not completed (or even started) training. Over a three-week period seen in surveillance footage, untrained workers filled propane cylinders more than 60 times, in violation of the law and U-Haul Company of Pennsylvania's own policy.

“The hazardous materials regulations exist to protect public safety, and today’s guilty pleas are an important step towards ensuring compliance with those protocols,” said First Assistant U.S. Attorney Williams.  “We hope that these guilty pleas afford the victims in this tragedy some measure of closure to this long and difficult chapter in their lives.”

The case was investigated by the Department of Transportation Office of Inspector General, the Federal Bureau of Investigation, and the Bureau of Alcohol, Tobacco, Firearms and Explosives, with assistance from the Philadelphia Police and the Philadelphia Fire Department. It is being prosecuted by Assistant United States Attorney Elizabeth Abrams.                                                            

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Patrick Walker, 52, of Philadelphia, PA was convicted by a jury today of one count of bribery and one count of attempted possession with intent to distribute marijuana. 

In January 2016, the defendant met and began a corrupt relationship with a U.S. mail carrier who delivered packages in Philadelphia. Thereafter, the defendant bribed the mail carrier to agree to divert to the defendant certain packages that had been placed in the U.S. mail. Under their arrangement, the mail carrier would bring certain packages directly to the defendant at various locations, rather than delivering those packages to the address specified on the package. In return, the defendant paid the mail carrier $35 per package.

On or about August 31, 2016, federal law enforcement agents investigating the importation of marijuana to Philadelphia observed and videotaped the mail carrier as he diverted a package to the defendant. During the period between January 10 and February 13, 2017, federal agents seized five packages that contained large quantities of marijuana that were to be diverted by the mail carrier to the defendant, under their corrupt arrangement.     

“Bribing a government worker and drug trafficking are both serious crimes,” said U.S. Attorney McSwain. “Patrick Walker had no respect for the law and we are thankful to the jury for holding him accountable for his crimes.  He was stopped from further breaking the law by the excellent law enforcement work of the U.S. Postal Service Office of Inspector General, Homeland Security Investigations, and the Pennsylvania Office of the Attorney General.”

The sentencing hearing is scheduled on March 19, 2019, before United States District Judge Gerald I. Pappert.  The mail carrier has previously pleaded guilty to accepting bribes from the defendant and is awaiting sentencing.

The case was investigated by the U.S. Postal Service Office of Inspector General, Homeland Security Investigations, and the Pennsylvania Office of the Attorney General, and is being prosecuted by Assistant United States Attorneys Bea Witzleben and Timothy Stengel.

EASTON, PA – United States Attorney William M. McSwain announced today that Gavin Lee Casdorph, 30, of Anchorage, Alaska, has been charged by complaint and warrant with one count of willfully making false threats in violation of 18 U.S.C. § 844(e).  The complaint and warrant alleges that on May 5, 2018, Casdorph threatened to detonate multiple explosive devices he claimed to have planted on the campus of Lafayette College.  A joint press conference was held today at the College to announce the charges. U.S. Attorney McSwain, Assistant Special Agent in Charge Steven McQueen of the Federal Bureau of Investigation, Philadelphia Division, and Lafayette College President Alison Byerly provided details concerning the investigation and prosecution.

Casdorph was arrested on December 12, 2018, after agents from the Federal Bureau of Investigation questioned him at his home in Anchorage, Alaska.  Casdorph’s initial appearance took place on Thursday, December 13, 2018 in federal district court in the District of Alaska.  On Tuesday, December 18, 2018, Casdorph again appeared in district court in Alaska for a detention hearing; the court determined that he will be detained pending trial.  He will be transported to Philadelphia shortly to face the federal charges against him.

The complaint and warrant alleges that on May 5, 2018, a Twitter user operating the handle “BdanJafarSaleem” posted several false and threatening tweets, claiming to have placed explosive devices across the Lafayette College campus in order to “inflict the utmost damage possible.”  A letter purportedly authored by the user was posted on Twitter, stating that his grandfather had died, his girlfriend had broken up with him, and that he had found faith and healing in Allah.  The author also pledged allegiance to ISIS.  

Law enforcement agencies quickly determined that there were no bombs on campus, but the hoax caused a tremendous amount of disruption and anxiety on campus.  The threats also caused the College to move the location of its graduation ceremonies as a precaution.

If convicted, Casdorph will face a maximum penalty of 10 years’ imprisonment, three years’ supervised release, a fine of $250,000, and a $100 special assessment.

“This is a great example of law enforcement and school officials working together to keep the community safe, and there are important lessons to draw from it,” said U.S. Attorney McSwain.  “Casdorph’s arrest sends a clear message to anyone who pulls a stunt like the one alleged in this complaint and warrant:  this is not a game and threats like these are no joke.  If you engage in this kind of behavior, no matter who you are or where you are – even as far as Alaska – law enforcement will determine what you did, hunt you down, and hold you accountable.”

"When the FBI learned of the threats made against Lafayette College last May, we immediately mobilized," said FBI Assistant Special Agent in Charge McQueen. "Public safety is always our highest priority. Fortunately, we fairly quickly determined that there was no indication of an immediate threat to the college and community. But as this investigation, and the arrest of Gavin Casdorph show, the FBI takes all threats of violence extremely seriously. Making a hoax threat, also known as 'swatting,' is not a joke -- it's a crime. That's the message I want people taking away from this case. If the FBI catches you 'swatting,' you may soon be 'squatting' in federal prison."

“I want to express our immense gratitude to all of the federal, state, and local law enforcement agencies, including our own Department of Public Safety, for their diligence in pursuing this investigation and identifying a suspect,” said President Byerly.  “I also want to thank the Lafayette community – students, faculty, staff, parents, and alumni – for supporting one another during a difficult time last May, and for helping the College return to a sense of normalcy as quickly as possible once the FBI had determined that the threat was not credible.”

This case was investigated by the Lafayette College Department of Public Safety, Easton Police Department, and the Federal Bureau of Investigation, Philadelphia Division and Anchorage Division.  It is being prosecuted by Assistant United States Attorney Joseph LaBar.

PHILADELPHIA - U.S. Attorney William M. McSwain announced today that SouthernCare, Inc., a hospice care provider, has agreed to pay $5,863,426 to the federal government to resolve allegations that the company violated the False Claims Act by submitting claims to Medicare for hospice care that was medically unnecessary or lacked documentation.

The settlement resolves allegations in two separate complaints filed in federal court in the Eastern District of Pennsylvania by whistleblowers under the qui tam provisions of the False Claims Act.  These provisions allow private citizens to bring civil actions on behalf of the United States and share in any recovery.  The whistleblowers, Dawn Hamrock and Patricia Beegle, will share approximately $1.1 million of the recovery between them.  Both whistleblowers were former employees of SouthernCare.

In their qui tam complaints, the whistleblowers generally alleged that SouthernCare provided hospice care to patients who were not eligible under the Medicare program.  To be eligible, hospice care must be reasonable and necessary, a physician must certify that the patient’s life expectancy is six months or less, and the provider must satisfy other documentation requirements.  The whistleblowers alleged that SouthernCare admitted patients into hospice who were not terminally ill and lacked appropriate medical documentation showing such an illness.  The company allegedly treated some patients for many years. This settlement agreement resolves the allegations arising from SouthernCare’s facilities in Pennsylvania from January 2009 through December 2014.

“My office takes whistleblower allegations very seriously, and we will hold accountable anyone who defrauds taxpayers,” said U.S. Attorney McSwain. “The False Claims Act gives us a powerful tool to do that.  We thank Ms. Hamrock and Ms. Beegle for playing a vital role in the resolution of this case.  Together with their lawyers, these two citizens provided essential assistance to the government.  Without the willingness of relators to shed light on allegations of fraud, preserving government program funds would be far more challenging.”

“Unnecessarily admitting people into hospice is particularly dangerous, as it can cause patients who are not terminally ill to stop seeking treatments for recovery,” said Maureen R. Dixon, Special Agent in Charge for the Office of Inspector General of the U.S. Department of Health and Human Services.    “HHS-OIG will continue to work with the U.S. Attorney’s Office to ensure federally funded healthcare resources are used appropriately.”

There has been no determination of civil liability. The settled civil claims are allegations only.

This case was handled by Assistant United States Attorneys Michael S. Macko and Anthony D. Scicchitano, with investigative assistance from auditor George Niedzwicki and the U.S. Department of Health and Human Services Office of the Inspector General.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Michael Schamach, 32, of Warrington, PA, was detained today in federal custody on one charge of Enticement of a Minor to Engage in Sexual Activity and one charge of Attempted Manufacture of Child Pornography.

According to the criminal complaint filed against the defendant, Schamach asked an individual (who unbeknownst to him was an undercover FBI agent posing as a child’s mother) to provide her 11 year-old daughter to Schamach for sexual intercourse. Previously, the defendant had allegedly offered a finder’s fee that would depend on the age of the child: the younger the victim, the greater the finder’s fee. During a two-day period of text message negotiations between Schamach and the undercover agent, Schamach allegedly requested nude and sexually explicit photos of the child, and he agreed to pay to have sexual intercourse with the child. The complaint alleges that Schamach agreed to meet the child at a local hotel on Friday, December 7, 2018. At the agreed upon time and location, Schamach allegedly arrived, equipped with personal lubricant, payment for the “mother” of the child, and candy for the child. The defendant was immediately arrested by FBI agents. After appearing in U.S. Magistrate Court today, the Honorable Richard A. Lloret found that there was probable cause and detained the defendant until his trial, holding that the defendant was a danger to the community.

“This Office is committed to keeping our children safe from harm,” said U.S. Attorney McSwain. “And I want to thank the FBI, as well as the Bensalem and Warminster Police Departments, for their continued efforts to combat the attempted manufacture of child pornography and the enticement of minors.”

If convicted, the defendant faces a maximum possible sentence of life imprisonment, with a minimum mandatory 15 year term, a minimum five years up to lifetime supervised release, $500,000 in fines, a $200 special assessment, and, if found to be non-indigent, an additional mandatory $10,000 assessment must be imposed.         

The case was investigated by the Federal Bureau of Investigation, the Bensalem and Warminster Police Departments, and is being prosecuted by Assistant United States Attorney Joseph A. LaBar.                                                                           

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

PHILADELPHIA – First Assistant U.S. Attorney Jennifer Arbittier Williams announced that Emma Semler, 23, of Collegeville, PA was convicted today by a jury 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. The sentencing hearing is scheduled on March 29, 2019 before the Honorable Gene E.K. Pratter. Following her conviction, the defendant was detained.

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 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 then asked for another packet because it was her birthday. Semler distributed the second packet, and the victim injected the second packet and then began to display symptoms of overdosing. When they 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. 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.

“The total disregard that Emma Semler had for her friend’s life is appalling,” said First Assistant U.S. Attorney Williams. “Instead of calling for help that could have saved a life, Semler covered her tracks and fled as her friend lay dying on the floor. We are grateful that the jury held Semler accountable for her unconscionable crimes.”

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

PHILADELPHIA, PA – United States Attorney William M. McSwain announced today that Coordinated Health Holding Company, LLC (“Coordinated Health”) and its founder, principal owner, and Chief Executive Officer, Emil DiIorio, M.D., agreed to settle allegations under the False Claims Act that they submitted false claims to Medicare and other federal health care programs for orthopedic surgeries.  Coordinated Health agreed to pay $11.25 million and DiIorio agreed personally to pay $1.25 million, for total settlement of $12.5 million.  Coordinated Health has also entered into a Corporate Integrity Agreement with the U.S. Department of Health and Human Services that will require regular monitoring of its billing practices for five years.

Coordinated Health is a for-profit hospital and health system based in the Lehigh Valley region of Pennsylvania.  It employs approximately 100 physicians, approximately 30 of whom are board-certified orthopedic surgeons.  Dr. DiIorio is a board-certified orthopedic surgeon.

The government alleges that Coordinated Health and Dr. DiIorio engaged in a scheme to improperly unbundle claims for reimbursement for orthopedic surgeries in order to artificially inflate reimbursements from federal healthcare payers.  Medicare and other public healthcare insurers reimburse physicians and hospitals a global fee for many types of orthopedic surgeries.  The global fee is a single payment for all parts of a surgery.  Although electronic safeguards automatically block separate reimbursements for parts of the same surgery when the global fee is paid, those safeguards can sometimes be circumvented when billing codes are misused.  For example, a medical provider can circumvent the system by affixing a billing code, Modifier 59, to its request for payment.  That billing code informs the payer that a separately billed service was not part of the original surgery and is appropriate to separately pay.  It is improper “unbundling” when a provider submits a claim for a global reimbursement for a surgery and misuses Modifier 59 to separately bill for parts of the same surgery.

The government alleges that from 2007 through mid-2014, Coordinated Health routinely exploited Modifier 59 to improperly unbundle orthopedic surgery claims, including for many total joint replacement and arthroscopic surgeries.  As a consequence, federal healthcare payers, including Medicare and Medicaid, overpaid Coordinated Health by millions of dollars. 

The government further alleges that Dr. DiIorio should have stopped the illegal unbundling.  Instead, beginning in April of 2009, Dr. DiIorio changed how he wrote operative reports so that Coordinated Health billers could maximize improperly unbundled reimbursements for his knee, hip and shoulder surgeries using Modifier 59. 

For example, in his total knee replacement operative reports prior to April 2009, Dr. DiIorio rarely diagnosed any patient with poor patellar tracking and stated in almost every report that an incision sometimes necessary to improve patellar tracking, called a “lateral retinacular release,” was unnecessary.  A lateral retinacular release performed during a total knee replacement is part of the global surgery reimbursement for a knee replacement.  However, in almost every knee replacement operative report after April 1, 2009, Dr. DiIorio diagnosed the patient with poor patellar tracking and stated he performed a lateral retinacular release.  Each time, Coordinated Health used Modifier 59 to improperly bill for a lateral retinacular release as if one was performed separate from the knee replacement.

Top Coordinated Health executives were directly informed at least twice that Coordinated Health improperly unbundled many orthopedic surgeries by misusing Modifier 59.  Two separate outside coding consultants hired by Coordinated Health, one in 2011 and one in 2013, identified the improper unbundling during coding audits and warned Coordinated Health to stop.  The 2013 consultant specifically advised Coordinated Health to self-report and repay Medicare and other federal payers; the consultant also provided on-site training on the proper use of Modifier 59 to Coordinated Health coders in November 2013.  Motivated by its bottom line, Coordinated Health simply ignored the consultants’ recommendations and continued abusing Modifier 59 to improperly unbundle orthopedic surgery claims until mid-2014.

“The alleged corporate culture and leadership that promoted this conduct and allowed it to continue despite crystal clear warnings is shameful,” said U.S. Attorney William M. McSwain.  “If true, it amounts to theft of public funds and a fraud on Medicare, Medicaid, and federal employee health insurers.  We are unaware of any unbundling scheme that has had a bigger impact on federal funds.  My Office will continue to hold businesses and individuals accountable for this type of wrongdoing.” 

“We expect providers to play by the rules and to act responsibly,” said Maureen R. Dixon, Special Agent in Charge for U.S. Department of Health and Human Services’ Office of Inspector General (HHS-OIG) in Philadelphia. “Providers who fail to follow the rules should expect to be investigated by HHS-OIG and our fellow law enforcement partners.”

“I would like to express my gratitude for the dedication and professionalism exhibited by our staff, their law enforcement partners, and the U.S. Attorney’s Office in the investigation and prosecution of this matter,” said Thomas W. South, Deputy Assistant Inspector General for Investigations, U.S. Office of Personnel Management.  “Their efforts protect the Federal Employee Health Benefits Program from those who would seek to defraud the program through unscrupulous and illegal billing practices.”

Kenneth Cleevely, U.S. Postal Service Office of Inspector General Special Agent in Charge, Eastern Area Field Office, stated the following: “Benjamin Franklin stated ‘There is no kind of dishonesty into which otherwise good people more easily and frequently fall than that of defrauding the government.’ I believe that quote rings true in this case. When health care providers choose to take advantage of the federal workers compensation program, Special Agents with the U.S. Postal Service Office of Inspector General will work with our law enforcement partners to see that they are held accountable. To report health care fraud relating to the Postal Service, contact special agents at www.uspsoig.gov or 888-USPS-OIG.”

“Coordinated Health and Dr. Dilorio fraudulently billed federal health care programs, including the U.S. Department of Labor’s Office of Workers’ Compensation Programs (OWCP), for the reimbursement of false claims submitted for orthopedic surgery procedures.  We will continue to work with OWCP and our law enforcement partners to protect the integrity of the Federal Employees’ Compensation Act,” said Richard Deer, Special Agent-in-Charge, Philadelphia Region, U.S. Department of Labor Office of Inspector General.

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

This case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, U.S. Office of Personnel Management Office of the Inspector General, the United States Postal Service Office of Inspector General, and the Department of Labor Office of 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 George Niedzwicki.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Shamir Kane, 29, of Philadelphia, PA, was sentenced today to 34 years’ imprisonment after a jury convicted him previously at trial of conspiracy to commit Hobbs Act robbery, two armed Hobbs Act robberies, two counts of using and carrying a firearm during a crime of violence, and two counts of witness tampering. The Honorable Eduardo C. Robreno also sentenced the defendant to five years’ supervised release and ordered Kane to pay restitution in the amount of $15,384.62.

In August 2016, Kane committed two armed robberies of T-Mobile cell phone stores. On August 6, 2016, Kane and others committed a gun-point robbery of a T-Mobile store in Philadelphia. On August 22, 2016, Kane and others committed a second armed robbery of a T-Mobile cell phone store in Cheltenham, PA. During each of the armed robberies, Kane herded the T-Mobile employees to the back of the store at gunpoint. After committing these robberies, Kane encouraged the mothers of his children (one of whom had committed the August 6, 2016 armed robbery with Kane) to approach the victims of the armed robberies in an effort to scare, intimidate, and bribe them into not testifying. Both women then engaged in witness intimidation and are currently serving sentences in federal prison in connection with this illegal conduct.

“The complete disregard that Kane has for the safety of others is appalling,” said U.S. Attorney McSwain. “The employees of these stores were simply doing their jobs, while Kane terrorized them so that he and his friends could make a buck off of stolen cell phones. And then he caused his family members to commit additional crimes to cover up his conduct. The streets are safer now that Kane will be spending the next few decades behind bars.”

“This investigation and sentence is another example of ATF acting on its mission to fight violent crime along with our outstanding law enforcement partners.  We were able to apprehend and successfully prosecute a violent and dangerous individual who posed a significant threat to the public,” said ATF Philadelphia Field Division Special Agent in Charge, Donald Robinson.  “The hard working citizens of our communities deserve to feel safe and secure at their workplaces. The sentence should reassure the citizens of Philadelphia that we will find, prosecute, and ultimately remove those from the community who place others in danger through their violent acts.”

"Shamir Kane terrified the employees of the stores he robbed, making demands and marching them to back rooms at gunpoint," said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. "Those employees didn't know whether they'd make it out alive. On top of that, he later sought to intimidate victims out of testifying in the case. Our FBI Violent Crimes Task Force will continue to investigate and bring to justice those who find armed robbery a viable way to make money."

The case was investigated by the Federal Bureau of Investigation, the Bureau of Alcohol Tobacco, Firearms and Explosives, the Philadelphia Police Department, the Cheltenham Police Department, and the Plymouth Township Police Department, and the case is being prosecuted by Assistant United States Attorneys Salvatore L. Astolfi and Thomas Zaleski.

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. The Department of Justice has made turning the tide of rising violent crime in America a top priority. In October 2017, as part of a series of actions to address this crime trend, Attorney General Jeff Sessions announced the reinvigoration of PSN and directed all U.S. Attorney’s Offices to develop a district crime reduction strategy that incorporates the lessons learned since PSN launched in 2001.

 

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Angel Luis Concepcion-Rosario, 48, of Reading, PA was convicted today by a jury of one count of possession with intent to distribute, and aiding and abetting the possession with intent to distribute, 40 grams or more of fentanyl, a lethal synthetic opioid. The sentencing hearing is scheduled on April 4, 2019 before the Honorable Joseph F. Leeson, Jr.

 In December 2016, DEA initiated an investigation into a drug trafficking organization (DTO) operating in the Eastern District of Pennsylvania, and in April 2017, a federal district judge authorized the first of multiple wiretaps targeting certain individuals’ phones. On June 16, 2017, phone interceptions revealed that an individual was going to supply a quantity of drugs to the defendant. On June 17, 2017, DEA agents observed the drug transaction between the individual and the defendant. After a traffic stop, the defendant was found to have approximately 199 grams of fentanyl in his vehicle and was arrested.

“Fentanyl’s high potency and unpredictable effects continue to lead to victims overdosing and dying in record numbers in this country,” said U.S. Attorney McSwain. “A very small amount of fentanyl can be lethal. We are glad that the Drug Enforcement Administration and the Pennsylvania State Police acted swiftly in this matter to take this harmful drug off the street, and we are thankful that the jury held the defendant accountable for his crime.”

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

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Howard M. Appel, 57, of Wayne, Pennsylvania, was sentenced today by United States District Judge Paul S. Diamond to 60 months’ incarceration following Appel’s earlier conviction, upon his plea of guilty, to one count of conspiracy to commit securities fraud. The defendant’s sentence also includes three years of supervised release, a fine of $200,000, and a forfeiture payment of $3,868,699.46. The defendant has been detained in jail since his guilty plea in August 2018.

In 2010, approximately one year after his release from prison following two prior securities-fraud related convictions, Appel participated in a new securities fraud scheme involving publicly traded companies, including Virtual Piggy, Inc. (ticker symbol “VPIG”), and Red Mountain Resources, Inc. (ticker symbol “RDMP”). Appel acquired title to the shares in the names of nominees in order to hide his ownership block from investors and manipulated the share price of the stocks by engaging in a complicated series of actions, including coordinated buying and selling with co-conspirators. Appel also admitted that he traded on inside information that he obtained as a result of his “consulting” work for the companies, including the status of the companies’ efforts to get listed on NASDAQ.  In sentencing Appel, Judge Diamond found that Appel had obtained over $3,800,000 in illegal profits from his fraud in this case.

“Incredibly, this is Appel’s third securities-fraud related conviction,” said U.S. Attorney McSwain. “The defendant needs to understand that every time he commits a federal crime, he will be prosecuted. Hopefully, this will sink in over the next five years as he sits in jail. Prosecuting securities fraud and thereby safeguarding the integrity of the securities markets has been and will continue to be a top priority of my Office.”  

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Michael S. Lowe. The parallel civil enforcement proceeding was filed by the Securities and Exchange Commission’s New York Regional Office, under the direction of Mark P. Berger.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that David Fili, Jr., 48, of Drexel Hill, PA, was sentenced today by United States District Judge Joel H. Slomsky to one day in jail and five years of supervised release, with the first 18 months of supervised release to be served on home confinement. Significantly, the defendant was ordered to forfeit $1,969,312.02, and is jointly and severally liable to pay $9,567,074.56 in restitution.  Fili previously entered a guilty plea to ten counts of wire fraud and two counts of bank fraud.

Along with George Barnard, 47, of Newtown Square, PA, Fili owned Capital Financial Mortgage Corporation (“CFMC”), based in Delaware County, PA. Between 2005 and March 2013, Fili and Barnard issued refinance mortgage loans to customers of CFMC. Instead of using the money to pay off their customers’ outstanding first mortgages, however, they diverted $9,781,977 to themselves from bank accounts belonging to CFMC and several title companies owned by Barnard. Barnard was previously sentenced to five years in prison for his role in the scheme.

As part of his guilty plea, Fili admitted that he used much of the money he diverted to buy a vacation home and to support his gambling habit (while Barnard used the money he diverted to buy multi-million dollar beach homes in Avalon, New Jersey, several yachts, and to pay the salary of a yacht captain). At the time that the scheme fell apart in March 2013, Fili and Barnard left over two dozen CFMC customers stuck with two mortgages on their homes because CFMC had failed to pay off their customers’ existing first mortgages.

“For many years, Fili defrauded honest, hard-working individuals out of their money so that he could gamble it away and relax in his illegally-obtained vacation home, “ said U.S. Attorney McSwain. “The defendant’s vacation ends now. We are thankful that the Court ordered him to pay millions of dollars as a result of his crimes.”

The case was investigated by the Federal Bureau of Investigation and the Department of Housing and Urban Development, Office of Inspector General, and is being prosecuted by Assistant United States Attorney Michael S. Lowe.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that Miguel Gonzalez Segovia 33, of Mira Loma, California was charged today by indictment for trafficking illegal drugs in Northampton County, Pennsylvania on November 13, 2018.  Gonzalez Segovia is specifically charged with one count of possessing with the intent to distribute 5 kilograms or more of cocaine and 400 grams or more of fentanyl, the deadly synthetic opioid.

“We at the Department of Justice seek to reduce the supply of illegal drugs in the United States by aggressively investigating and prosecuting national and international drug trafficking organizations,” said U.S. Attorney McSwain. “This will continue to be a high priority for our Office.”

“Segovia is accused of possessing with the intent to distribute a substantial amount of cocaine and fentanyl, both of which are dangerous drugs, the latter of which is a deadly synthetic opioid that was identified in over 67% of the 5,456 overdose deaths in Pennsylvania in 2017,” said Jonathan A. Wilson, Special Agent in Charge of the Drug Enforcement Administration’s (DEA) Philadelphia Field Division.  “The primary mission of our office is to target significant drug traffickers that are operating in our area and the nation at large.” 

If convicted of all counts, Gonzalez Segovia faces a maximum sentence of life imprisonment, with a 10-year mandatory minimum term of imprisonment, a mandatory minimum of 5-years supervised release up to a lifetime of supervised release, a $10,000,000 fine, and a $100 special assessment. 

The case was investigated by the Drug Enforcement Administration and the Pennsylvania State Police. The case is being prosecuted by Assistant United States Attorney Kelly A. Lewis Fallenstein.

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

PHILADELPHIA – U.S. Attorney William M. McSwain was honored to speak on Saturday, December 1, 2018 at the Pennsylvania Manufacturers’ Association Annual Seminar in New York City as part of the annual gathering of the Pennsylvania Society. U.S. Attorney McSwain’s remarks as prepared for delivery are below.

*****

When David Taylor graciously asked me to speak here today, I said two things: first, I’m honored, and second, how much time do I have? He said to me: five minutes. I said, OK, well, what would you like me to cover? He said – how about what you believe and what your office stands for.  And I thought – wow, five minutes? Really? My wife says I can’t clear my throat in five minutes and I’m supposed to cover all of that?

Well, here’s my best shot, in five minutes or less. First of all, on the most practical of levels, I believe that my position and my office exist to keep the community safe. But anybody who leads a prosecutor’s office – especially one in a major urban area – would say that, right? I do believe, of course, in keeping the community safe . . . but I also believe in something bigger than that.

I believe in democracy. I believe in respecting the will of the people. In this country, the law is the will of the people. It is my job to enforce the law and to protect the rule of law. By doing so, I show my respect for the will of the people and I promote our nation’s representative democracy. Because the rule of law is the backbone of this incredible experiment in self-government that we call America.

I believe that if, for some reason, you don’t like some aspect of the law, every one of us is empowered to work to change it. That’s the beauty of representative democracy – it is the greatest force for political equality our world has ever seen. If you’re an elected official and you don’t like the law, then introduce a bill. If you’re a citizen and you don’t like the law, then raise your voice to your legislators. And at a bare minimum, make sure you vote. But don’t ask me to violate my oath by not enforcing the law. Don’t ask me to do an end-run around the democratic process. Because I’m not here to do that. I’m here to help protect democracy. I’m here to promote the will of the people, which is expressed through our laws.

So, for example, if you want to set up a drug house (or a euphemistically titled “safe” injection site) in Kensington for people to shoot up heroin, or if you want to declare your city or municipality a “sanctuary” from the enforcement of immigration law, or if you want to forcibly silence the free speech of those who disagree with you – I don’t doubt your good intentions, but you are disrespecting democracy because what you propose is illegal. And I will use every tool at my disposal and every power that I have to hold you accountable.

I believe that respect for the rule of law can be and should be a powerful unifying force in our country. There is much more that unites us as Americans than divides us. We all believe in democracy, and we all believe in respecting the will of the people. We all love our country. We can and should come together as Americans by remembering that. By remembering that we live in the greatest and the freest country in the history of the world. A country that is founded on respect for our democratically enacted laws. 

So that’s what I believe. And that’s what my office stands for. God Bless all of you, and God Bless the United States of America. Thank you.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Robert Hartley a/k/a “Dooman,” 47, of Philadelphia, was sentenced today to life imprisonment for his convictions in two separate jury trials.

Hartley was a core member of a criminal organization comprised of 20 individuals who conspired to commit armed robberies and kidnappings to steal drugs, drug proceeds, and other items of value, from approximately October 2012 to April 2014.  Hartley and his co-conspirators conducted surveillance of their victims, tracked their victims using GPS devices, and used police scanners to monitor police activity and avoid detection.  They also occasionally dressed as police officers as a means to fool their victims.  To control their victims, they used firearms and physical force, restrained them with handcuffs, zip ties, electrical cords, and shoelaces, and even went so far as to waterboard and pour boiling water on their victims’ genitals.

In May 2016, a jury found Hartley guilty of attempted armed robbery and carjacking when he robbed and shot a man delivering pharmaceutical products to a pharmacy on Ridge Avenue in 2012.  In that case, Hartley was sentenced to 270 months in prison. In April 2017, a second jury found Hartley guilty of an armed home invasion robbery, carjacking, kidnapping, and related firearms offenses. For those additional crimes, Hartley was sentenced to life imprisonment, plus an additional 75 years, which run consecutively to one another and consecutively to the sentence in the earlier case.

“Robert Hartley is a menace to society who richly deserves to spend the rest of his life in a jail cell,” said U.S. Attorney McSwain.  “The sentence handed down today reflects the seriousness of his crimes and our steadfast commitment to rid the streets of people who resort to extreme violence, intimidation, and even torture to make money.  This case is an excellent example of why violent crime is a priority for my Office and the Department of Justice.”

“A key component of ATF’s mission is to combat and reduce violent crime. The sentence that was handed down today is another victory in the battle against violent crime for ATF, our law enforcement partners, and more importantly, the citizens of Philadelphia,” said ATF Special Agent in Charge Donald Robinson.  “Justice was served for all of the victims who can now feel safe knowing Robert Hartley will spend the rest of his life behind bars.  We appreciate the cooperation of our federal, state, and local partners to bring this case to a successful conclusion.”

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 Bureau of Alcohol, Tobacco, and Firearms, 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 – U.S. Attorney William M. McSwain announced that Kenneth Smukler, 58, a long-time Philadelphia-area political consultant, was convicted today by a jury of multiple counts related to violating political campaign laws. Specifically, the jury found the defendant guilty of one count of conspiracy to defraud the United States; two counts of causing unlawful campaign contributions; one count of causing false campaign expenditure reports; two counts of causing false statements; two counts of making contributions in the name of another; and one count of obstruction. The sentencing hearing is scheduled on March 13, 2019 before the Honorable Jan E. DuBois.

In the 2012 Democratic primary election for Pennsylvania’s First Congressional District, Jimmie Moore, a former Philadelphia Municipal Court Judge, ran against the incumbent, Congressman Bob Brady. Moore struck a corrupt deal by which he agreed to withdraw from the race in exchange for funds from the Bob Brady for Congress campaign (the “Brady campaign”) to be used to pay off Moore’s campaign debts. Those debts included money that Jimmie Moore for Congress (the “Moore campaign”) owed to several vendors, to Moore himself, and to Moore’s campaign manager, Carolyn Cavaness.

On February 29, 2012, Moore withdrew from the race. Moore and Cavaness had prepared a list of debts owed by the Moore campaign which was subsequently provided to Smukler, a campaign consultant for the Brady campaign. Smukler arranged for the Moore campaign to receive $90,000 from the Brady campaign through false documents and a series of illegal pass-throughs, including the consulting firm of another Brady associate and co-conspirator, D.A. Jones. None of the payments, which exceeded the applicable contribution limits, was reported to the Federal Election Commission (“FEC”). Per the arrangement, the three installments were illegally disguised as payments for a poll and consulting services.

Marjorie Margolies, a former Member of the U.S. House of Representatives, ran in the 2014 Democratic primary election for Pennsylvania’s Thirteenth Congressional District. Smukler, a veteran of prior Margolies political campaigns, was running the Margolies campaign in 2014. By early April 2014, the primary race was close, and the Margolies campaign was running out of money that the campaign could legally spend in the primary. Smukler caused the Margolies campaign to illegally spend general election funds in his attempt to win the primary election for his candidate, then lied about it to the campaign’s lawyer. That lawyer, in turn, unwittingly reported the lies to the FEC in response to a complaint filed by one of Margolies’ opponents. Additionally, Smukler caused excessive campaign contributions and illegal conduit contributions, all of which were hidden in FEC filings.

“Smukler was the mastermind of multiple crooked political schemes,” said U.S. Attorney McSwain. “He showed a true pattern of deception by misusing funds and lying to corrupt the entire political process. The only way to guarantee open and fair elections is to have everyone play by the same rules. Smukler ignored those rules and broke the law so that his candidates could try to win at all costs. We are grateful that the jury saw through his lies and held him accountable for his widespread criminal conduct.”

"Smukler played fast and loose with the campaign laws that underpin our democratic system," said Michael T. Harpster, Special Agent in Charge of the FBI's Philadelphia Division. "He apparently felt that the ends justified the means. Well, the government—and this jury—disagree. When corruption weakens the public's trust in a fair electoral process, we all stand to lose."

The case was investigated by the Federal Bureau of Investigation, and the case is being prosecuted by Assistant United States Attorney Eric Gibson and Trial Attorneys Richard Pilger and Rebecca Moses of the Criminal Division’s Public Integrity Section.

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Daniel Sheehan, of Gloucester City, NJ, 44, was sentenced to 121 months’ imprisonment and ordered to forfeit $493,075 in criminal proceeds after pleading guilty to conspiracy, wire fraud, interstate transportation of stolen property, and smuggling narcotics into a federal prison.  Sheehan was also sentenced to a term of three years’ supervised release after his term of imprisonment. 

The convictions stem from Sheehan’s operation of a scheme to obtain payments from people who sought his assistance in refinancing their home mortgages.  Instead of providing the promised assistance, Sheehan stole his clients’ money.  As a result of his illegal scheme, 110 people were defrauded, several of whom lost their homes. While being held in a federal prison awaiting trial, Sheehan arranged to smuggle narcotics into the facility for further distribution.

Between September 2012 and February 2015, Sheehan, a mortgage modification professional, represented to clients that he could help them modify their mortgages through the Home Affordable Mortgage Program (“HAMP”) or the Home Affordable Refinance Program (“HARP”).  He found clients who wished to refinance the mortgages on their residences or other properties. Sheehan assured his victims that they would qualify for a modification that would substantially reduce both the principal and interest components of the victim’s monthly payment.  Sheehan collected a fee of between $700 and $1,500 from each victim for the service of preparing and submitting the paperwork necessary to obtain the promised loan modification. 

Despite collecting a fee, Sheehan often failed to submit mortgage refinance applications. In most cases, Sheehan falsely advised his clients that in order to qualify to have their mortgages refinanced, they would need to stop paying their mortgages.  These clients generally received correspondence from financial institutions demanding payment and threatening foreclosure.  Sheehan explained to his victims that these were scare tactics employed by the banks, and that if the client made any additional payments, the client would jeopardize the mortgage modification process.  He also told his clients that they should not communicate with the bank because the collections departments would not have any information about the pending modification.  As a direct result, some clients received court foreclosure complaints and told Sheehan; Sheehan assured them that he or his attorney would handle the situation.  Instead, Sheehan took no action, and some of his victims were evicted and lost their homes.

Additionally, Sheehan falsely told some clients that their modification had been approved.  The defendant often told his clients that their loan modification would not become “final” until they made “trial payments” of their new refinanced mortgage amount.  Sheehan told his victims to make these payments to Sheehan or a person designated by Sheehan.  Sheehan assured his victims that their “trial payments” would be held in escrow by Sheehan.  Although Sheehan sometimes gave his clients what purported to be escrow account statements, he converted his victims’ funds to his own personal use. 

Sheehan has been detained at the Federal Detention Center (“FDC”) since April 2016. While incarcerated, the defendant arranged for a friend to illegally send him sheets of the drug Suboxone. On about August 29, 2016, a letter addressed to Sheehan arrived at the FDC purportedly from an attorney in New Jersey. The letter contained eight sheets of Suboxone, which Sheehan intended to use to pay off gambling debts that he owed to other inmates at the FDC.

“This defendant has absolutely no shame,” said U.S. Attorney McSwain. “His victims were often looking to refinance mortgages on their homes due to tragic personal circumstances, such as the death of a spouse or the loss of employment. The defendant repeatedly lied and said he would help them, but instead preyed on their vulnerability and made many of them lose their homes. He is a menace to society who has no respect for the law.”

“What Daniel Sheehan did to his victims was despicable,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “In feigning assistance with refinancing their mortgages, he gave people hope that better days were ahead. Instead, he blithely pocketed their money despite knowing foreclosure loomed. The FBI takes great pride in bringing defendants like Mr. Sheehan to justice.”    

The case was investigated by the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorney Paul G. Shapiro.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Michael Fanelli, 36, of Woodbury, NJ, was indicted by a federal grand jury and charged with one count of armed bank robbery.

The federal indictment charges him with using a pellet gun to rob a PNC bank of approximately $7,000 dollars.  The PNC bank branch is located in Gladwyne, PA,

If convicted, Fanelli faces a maximum penalty of 25 years’ imprisonment, a $250,000 fine, a $100 special assessment, and three years’ supervised release. 

“Brandishing a weapon – whether real or not – puts bystanders at risk of grave injury because at any time, the situation could escalate based on a perceived threat of harm at the hands of an armed robber,” said U.S. Attorney McSwain.  “If the defendant committed the conduct alleged in the indictment, he should be held accountable for creating a dangerous and potentially deadly situation for all involved.”

The case was investigated by The Federal Bureau of Investigation, Lower Merion Police Department, and Pennsylvania State Troopers.  It is being prosecuted by Assistant United States Attorney Everett Witherell.

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

PHILADELPHIA – Deputy United States Attorney Louis D. Lappen announced that Dale Wiles, former Allentown Assistant City Solicitor, was sentenced today for his role in a pay-to-play bidding scheme involving former Allentown Mayor Edwin Pawlowski.  United States District Judge Juan Sanchez sentenced Wiles to one day in jail to be served on Friday, December 7, 2018.  He was also sentenced to serve three years of supervised release, of which the first three months will be served on home confinement with electronic monitoring; perform 100 hours of community service; and pay a $3,000 fine and a $100 special assessment.

Wiles was charged by information in November 2015 with conspiracy to commit mail and wire fraud for his involvement with Pawlowski.  Wiles played a role in steering the city’s delinquent real estate tax collection contract to Pawlowski’s preferred vendor, Northeast Revenue, in contravention of the standard process employed by the city to award contracts.  In return for the contract, Northeast made political contributions to Pawlowski’s failed campaigns for Pennsylvania Governor and United States Senate.  Wiles’s conduct included falsifying evaluation committee score sheets to make it appear as though the committee had originally selected Northeast when it had not, withholding certain city records subject to a grand jury subpoena, and lying to the FBI.

In addition to Pawlowski, who was convicted at trial and sentenced to 15 years’ imprisonment, Wiles’s co-conspirators included the following individuals: Michael Fleck, a campaign consultant; Francis Dougherty, the Allentown Managing Director; and Garret Strathearn, Allentown Finance Director.  These defendants all have pleaded guilty and similarly admitted to steering contracts to Pawlowski’s preferred vendors.

“In playing along with Pawlowski’s crooked business practices, Wiles ensured everyone got what they wanted:  Northeast Revenue received its coveted tax collection contract and Pawlowski received campaign contributions.  But Wiles was an attorney—he should have known better than to engage in the corrupt pay-to-play politics that permeated Allentown City Hall,” said Deputy U.S. Attorney Lappen.  “The citizens of Allentown deserve better from their public servants and our Office remains committed to holding corrupt politicians and their cronies accountable.”

“Ed Pawlowski couldn’t pull off his pay-to-play scheme by himself,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division. “Dale Wiles admitted to violating the city’s established contracting process in order to benefit his boss. When government officials break the law, it really damages the public trust. As such, public corruption remains the FBI’s highest criminal investigative priority.”

“Today's sentence reinforces our unwavering commitment to identify and prosecute those who participate in similar schemes,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco. “We will continue our collaborative effort to promote honest and ethical government at all levels.”

This case was investigated by the FBI and IRS Criminal Investigations.  The case was prosecuted by Assistant United States Attorneys Anthony J. Wzorek and Michelle L. Morgan.

PHILADELPHIA – Deputy United States Attorney Louis D. Lappen announced that Garret Strathearn, former Allentown Finance Director, was sentenced today for his role in a pay-to-play bidding scheme involving former Allentown Mayor Edwin Pawlowski.  United States District Judge Juan Sanchez sentenced Strathearn to 5 years’ probation, the first six months of which will be home confinement with electronic monitoring.  He was also ordered to pay a $5,000 fine and a $100 special assessment.

Strathearn pleaded guilty in December 2016 to conspiracy to commit mail and wire fraud and later testified at Pawlowski’s trial in January 2018.  Strathearn admitted to playing a critical role in steering the city’s delinquent real estate tax collection contract to Pawlowski’s preferred vendor, Northeast Revenue, in contravention of the standard process employed by the city to award contracts.  In return for the contract, Northeast Revenue made political contributions to Pawlowski’s failed campaigns for Pennsylvania Governor and United States Senate.

In addition to Pawlowski, who was convicted at trial and sentenced to 15 years’ imprisonment, Strathearn’s co-conspirators included the following individuals: Michael Fleck, a campaign consultant; James Hickey, a business consultant; Francis Dougherty, the Allentown Managing Director; and Dale Wiles; an Allentown Assistant City Solicitor.  These defendants all have pleaded guilty and similarly admitted to steering contracts to Pawlowski’s preferred vendors  

“Strathearn’s criminal conduct contributed to Ed Pawlowski’s pay-to-play business model, which Pawlowski brazenly operated out of the Allentown City Hall,” said Deputy U.S. Attorney Lappen.  “Taxpayers have a right to expect that public officials have the interests of the entire city in mind, not just the interests of their political cronies.  And businesses have a right to expect that when they submit contract proposals, they will be judged on the merits rather than on the size of their campaign contributions.”

“The pay-to-play culture took root at Allentown City Hall,” said Michael T. Harpster, Special Agent in Charge of the FBI’s Philadelphia Division.  “Garrett Strathearn admitted to subverting the city’s contracting process—put in place to ensure fairness—at Edwin Pawlowski’s direction. The FBI is determined to bring to justice corrupt officials willing to break the law to further their own interests.”

“The sentence handed down today underscores our collective efforts to enforce the law and ensure public trust,” said IRS Criminal Investigation Special Agent in Charge Guy Ficco.  “Those contemplating similar conduct should stop in their tracks and simply consider the consequences of taking the next step.” 

This case was investigated by the FBI and IRS Criminal Investigations.  The case was prosecuted by Assistant United States Attorneys Anthony J. Wzorek and Michelle L. Morgan.

PHILADELPHIA – United States Attorney William M. McSwain announced today that Giuseppe “Pino” DiMeo, 51, of Eagleville, Pennsylvania, was sentenced to 24 months’ imprisonment and ordered to pay $463,738 in restitution to the Internal Revenue Service (“IRS”), for conspiring to defraud the IRS and filing false tax returns.  In addition, DiMeo was also sentenced to serve three years of supervised release and ordered to pay a special assessment of $1,100.  

DiMeo and his business partners at restaurants defrauded the IRS of income taxes and payroll taxes.  From 2008 through 2014, DiMeo took cash from his restaurants and paid many of his employees in cash under the table, then hid his “cash skim” and the cash payroll payments from his accountant and from the IRS in order to evade payment of income and payroll taxes.  In total, DiMeo failed to report to the IRS approximately $2,000,000 in gross receipts from his stores.

DiMeo’s cash skim and cash payroll payments occurred at DiMeo’s Pizza of Lafayette Hill, Pennsylvania (closed); Pizzeria DiMeo’s of Philadelphia, Pennsylvania (now sold); Allegro Pizza of Philadelphia, Pennsylvania (closed); and DiMeo’s Pizzaiuoli Napulitani of Wilmington, Delaware. 

“For years, DiMeo maintained that his businesses were barely profitable, all the while living a lavish lifestyle bankrolled by the money he owed the IRS,” said U.S. Attorney McSwain.  “His actions reveal a deliberate disregard for the law.  Today’s sentence sends a powerful message to those who cheat the tax system: you will not get away with it.”

“Not only did Giuseppe DiMeo skirt his income tax obligations, he also failed to withhold and remit, to the IRS, income taxes for his employees,” said IRS Criminal Investigation Special Agent in Chart Guy Ficco.  “This sentence should serve as a reminder that IRS Criminal Investigation and the Department of Justice have no tolerance for such criminal behavior.”

The case was investigated by the Internal Revenue Service, Criminal Investigations, and was prosecuted by Assistant United States Attorneys Maria M. Carrillo and Tiwana L. Wright

PHILADELPHIA – U.S. Attorney William M. McSwain announced today that Intercept Corporation, d/b/a “Intercept EFT” (“Intercept”), was placed on two years’ probation and ordered to forfeit $5,928,893 in criminal proceeds after pleading guilty to one count of operating an illegal money transmitting business.  Intercept was also fined an additional $500,000 to be paid to the Court.  The conviction stems from Intercept’s processing of illegal short-term, high-interest consumer loans commonly known as “payday loans.”

Intercept is a North Dakota-based company that processes electronic funds transfers for its clients through the Automated Clearing House (“ACH”) system.  The ACH system is an electronic payments network that processes financial transactions without using paper checks. 

During Intercept’s guilty plea hearing, Intercept’s president, Bryan Smith, admitted that from May 2008 through August 2013, Intercept knowingly helped certain clients collect unlawful payday loans.  Smith later testified at the racketeering and fraud trials of former client Charles M. Hallinan and Hallinan’s attorney, Wheeler K. Neff.  Smith told the jury that Intercept helped Hallinan’s payday lending companies collect more than $490 million from borrowers living across the United States.  The jury eventually convicted Hallinan and Neff of all charges.

United States District Judge Eduardo C. Robreno sentenced Hallinan to 14 years’ imprisonment and Neff to 8 years’ imprisonment.  Another former Intercept client, Scott Tucker, was convicted of similar crimes in New York and sentenced to 200 months’ imprisonment.

Intercept’s role within the illegal payday lending networks was essential.  Without Intercept’s use of the ACH system, the payday lenders would not have been able to collect nearly as much money from their usurious loans.  Most of the loans involved in the scheme had annual interest rates exceeding 780 percent.

“Charles Hallinan, the so-called ‘Godfather of Payday Lending,’ made millions by preying on vulnerable victims, and Hallinan’s financial success was due, in large part, to Intercept’s willing participation in the scheme,” said U.S. Attorney McSwain.  “The substantial forfeiture order the Court entered today sends a powerful message to companies who profit from doing business with criminals like Hallinan and Neff: my Office will use every law enforcement tool we have to hold you accountable under federal law.”

“Today's sentencing is a direct result of the excellent partnership we have with our law enforcement partners and the U.S. Attorney’s office,” said IRS-Criminal Investigation Special Agent in Charge Guy Ficco.  “We will continue to be relentless in our mission to dismantle these types of illicit schemes and bring the criminals who run them to justice.”

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service, and the U.S. Postal Inspection Service.  It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.

PHILADELPHIA – U.S. Attorney William M. McSwain announced that An-Tso Sun, 18, also known as “Edward Sun,” a Taiwanese exchange student, was sentenced today before United States District Judge Nitza I. Quinones Alejandro.  Sun pleaded guilty to one count of being an alien in possession of ammunition in violation of 18 U.S.C. § 922(g).  Judge Quinones sentenced Sun to time served (approximately five and a half months) and required him to forfeit the ammunition in his possession.   Additionally, Judge Quinones ordered that Sun be transferred to the custody of Immigration and Customs Enforcement (ICE) and removed from the United States.  Under federal law, today’s conviction will operate as a permanent bar to re-entry to the United States.

Sun is a Taiwanese national who came to the United States in August 2017, on an F-1 visa to be a student at a high school in Upper Darby, Pennsylvania.  While attending school, he resided with a host family in Upper Darby.  Beginning in October 2017, Sun visited a Philadelphia shooting range on multiple occasions, where he fired a variety of firearms, including semiautomatic rifles and shotguns.  Over the next few months, Sun purchased hundreds of rounds of ammunition from online vendors and directed that they be shipped to his host family address.  In January 2018, Sun purchased pistol components from multiple online vendors and assembled them to create a functioning homemade pistol. 

On March 26, 2018, after the school bell rang at the end of the day, Sun made the following statement to a fellow student:  “Hey, don’t come to school on May 1st. . . . I’m going to come here armed and shoot up the school.  Just kidding.”  That student reported the incident to school officials, who then alerted law enforcement officials.  Upper Darby Police officers executed a search warrant at Sun’s residence and seized from Sun’s bedroom 20 rounds of 9mm Blazer Brass ammunition; a ballistic suit, including a vest, jacket and pants; a crossbow; seven arrows; and various firearm accessories and shooting equipment.  Sun’s host-mother, “V.H.,” was later interviewed and explained that, prior to the search, she had removed a number of items from Sun’s bedroom, including bullets and firearm-related items, and given the items to an attorney.  Law enforcement took possession of those items, which included, among other things, a homemade semiautomatic pistol, two AK-style 30-round magazines with ammunition, two AR-15-style 30-round magazines with ammunition, and numerous additional boxes of ammunition, totaling over 1,600 rounds. 

Sun was arrested by Upper Darby police and charged with making terroristic threats.  He pleaded guilty to that charge in early June 2018 and was sentenced to 4-23 months’ incarceration, with immediate parole and credit for time served.  Sun was released into ICE custody and charged federally pursuant to 18 U.S.C. § 922(g).  On August 28, 2018, Sun entered a guilty plea to the federal charge.     

“Federal, state, and local law enforcement authorities in the Eastern District of Pennsylvania will continue to work together to prevent tragedy and combat terrorism and threats of violence,” said U.S. Attorney McSwain.  “But it is parents and guardians who serve as the first line of defense in these kinds of situations involving children’s access to firearms.  No child should be stockpiling an arsenal – or have any access to firearms or other dangerous weapons – without their parents’ or guardians’ knowledge.  Every parent needs to be involved and actively aware of what is going on in their child’s life.  It is their duty and obligation, not only to the child, but also to the community at large.”

“Children in this country deserve to feel safe while at school,” said Special Agent in Charge Marlon V. Miller, Homeland Security Investigations, Philadelphia Field Office.  “Homeland Security Investigations will continue to work with our state and local law enforcement partners to ensure the safety and security of our communities.  Thanks to the quick response by law enforcement, a potential school tragedy was prevented.”

“Our region’s law enforcement community is uniquely strong with the ability to partner across jurisdictions and work together quickly and effectively when responding to crisis situations to protect our community.  This strength is exemplified in the case of An Tso Sun.  Armed with over a 1,000 rounds of ammunition, he threatened a mass shooting – an evil plot to cause mass harm and carnage that we believe he would have carried out, if not stopped,” said Delaware County District Attorney Katayoun M. Copeland.  “As the result of the swift response of his classmates, school officials, and the Upper Darby Police Department, no one was harmed.  Mr. Sun is now facing the severe consequences of his actions and deportation as a result of the efforts of United States Attorney McSwain and the United States Attorney’s Office in the Eastern District of Pennsylvania.”

This case was investigated by the Department of Homeland Security, Homeland Security Investigations, with the assistance of the Upper Darby Police Department and the Delaware County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Sarah M. Wolfe.