Eastern District of Pennsylvania

PHILADELPHIA - Patrick D’Ambrosio, 48, of Philadelphia, PA, was charged by information, filed yesterday, with one count of obstruction of mail, announced United States Attorney Zane David Memeger.  The information that D’Ambrosio was employed by the U.S. Postal Service between May 2014 and January 2015 when he obstructed the passage of approximately 22,500 pieces of mail.

If convicted the defendant faces a maximum statutory sentence of six months in prison, a fine, or both.

The case was investigated by the United States Postal Service Office of Inspector General and is being prosecuted by Assistant United States Attorney Marianne Cox.

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

PHILADELPHIA - Johnsie Boone-Brown, 47, of Philadelphia, PA, was charged by information with one count of theft of government funds, announced United States Attorney Zane David Memeger.  According to the information, the defendant received retirement benefits intended for her mother, after her mother’s death in May 2009 until her fraud was discovered in April 2014.  The defendant’s alleged actions resulted in a loss to the government of approximately $22,569.86.         

If convicted, the defendant faces a substantial period of incarceration, a 3‑year period of supervised release, restitution to the government of $22,569.86, a fine of up to $250,000, and a $100 special assessment.

The case was investigated by the Social Security Administration, Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Amanda R. Reinitz.

PHILADELPHIA – Rashion Michaels, 24, of Philadelphia, was charged today by indictment with possession of a firearm by a convicted felon, announced United States Attorney Zane David Memeger.  According to the indictment, on May 20, 2014, Michaels was in possession of a Lorcin, Model L32, .32 caliber semi-automatic pistol, with an obliterated serial number that was restored to read: 006347, and a magazine loaded with 6 live rounds of .32 caliber ammunition.

If convicted, Michaels faces a maximum term of ten-years in prison, up to three-years of supervised release, a maximum fine of $250,000, and a $100 special assessment.

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

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

PHILADELPHIA - Ronen Bakshi, 54, of Voorhees, New Jersey, was sentenced today to one year and one day in prison for falsifying records to obstruct a matter within the jurisdiction of the United States Environmental Protection Agency (EPA) and wire fraud.  Bakshi submitted false documents to the City of Philadelphia’s Air Management Services office in connection with a project for removal of asbestos-containing material from a former church located at 1133 Spring Garden Street in Philadelphia, and billed the non-profit owner of the property for work he did not perform. He pleaded guilty on March 18, 2015 to both counts of the indictment.  

United States District Court Judge Paul S. Diamond ordered that the defendant begin serving his sentence immediately.  In addition to the prison term, Judge Diamond imposed a $30,000 fine, a $200 special assessment, and a year of supervised release to follow imprisonment.

The case was investigated by the Environmental Protection Agency’s Criminal Investigation Division, with assistance from the City of Philadelphia’s Air Management Services office.  The case is being prosecuted by Special Assistant United States Attorneys Martin Harrell and Patricia C. Miller of EPA.

PHILADELPHIA – Kenneth Hampton, 54, an inmate of a federal prison, was charged by indictment, unsealed today, with masterminding a scheme under which he and his coconspirators defrauded the City of Philadelphia, the State of Pennsylvania, and innocent owners and purchasers of Philadelphia real estate.  The indictment charges one count of conspiracy, eleven counts of wire fraud, and two counts of aggravated identity theft.  Charged with Hampton are his son Terrell Hampton, 34, of Philadelphia, PA, and his brother Ellis, 56, of Darby, PA, and fiancée Roxanne Mason, 33, of Philadelphia, both of whom were arrested this morning.

According to the indictment, during the time he was a federal inmate, Hampton led a scheme to file false and fraudulent deeds for residential properties in Philadelphia. Using the prison telephones Hampton would direct other members of the scheme to locate houses, prepare and file false deeds, reside in the properties, and then eventually sell the properties for a profit.

If convicted, the defendants face mandatory minimum terms of two years in prison with a possible advisory sentencing guideline range of between 24 months and 102 months in prison. 

The case was investigated by the United States Secret Service and the Office of the Philadelphia Inspector General.  It is being prosecuted by Assistant United States Attorney Paul G. Shapiro.

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

PHILADELPHIA – Joseph Dougherty, 73, of Philadelphia, former Business Manager/Financial Secretary/Treasurer of Ironworkers Local 401, was sentenced today to 230 months in prison for his role in a racketeering conspiracy involving a dozen members of Ironworkers Local 401, announced United States Attorney Zane David Memeger.  Dougherty was found guilty, on January 20, 2015, of RICO conspiracy, malicious damage to property by means of fire, use of fire to commit a felony, attempted malicious damage to property by means of fire, and conspiracy to damage to property by means of fire. His 11 co-defendants in the case pleaded guilty.  In addition to the prison term, U.S. District Court Judge Michael Baylson ordered three years of supervised release, $558,041.66 in restitution, and a $600 special assessment.

Dougherty and his co-defendants engaged in a systemic pattern of extortions, arsons, and assaults in an attempt to force non-union companies to hire union ironworkers.  The union’s business agents would approach construction foremen at those work sites and imply or explicitly threaten violence, destruction of property, or other criminal acts unless union members were hired.  The defendants relied on a reputation for violence and sabotage, which had been built up in the community over many years, in order to force contractors to hire union members.  The defendants created “goon” squads, composed of union members and associates, to commit assaults, arsons, and destruction of property.  One such squad referred to itself as the “The Helpful Union Guys,” “T.H.U.G’s.”

The jury convicted Dougherty for his participation in the 25 charged acts of arson and extortion in the racketeering conspiracy.  Among the charged incidents included an arson at the Quaker Meetinghouse in Philadelphia, an arson at a warehouse under construction on Grays Avenue in Philadelphia, and an attempted arson of a commercial complex under construction in Malvern.  Dougherty personally handed co-defendant James Walsh an acetylene torch to commit the Grays Avenue arson.  On October 12, 2012, when co-defendants James Walsh and William Gillin arrived at the Malvern construction site with an acetylene torch which they intended to use to damage the site, FBI and local law enforcement officers arrested Walsh and Gillin before they could light the torch.  Prior to their arrest, on October 9, 2012, Dougherty gave the greenlight for Walsh and Gillin to proceed with the arson by stating “that’s good. Alright. He [Walsh] just got to be careful.”

“The sentence in this case serves as a reminder that corrupt union practices and bullying tactics, like those employed in this case, will be met with severe consequences,” said Memeger. “Fear, intimidation and violence should not be a part of any union’s operational handbook and will not be tolerated in this district.”

During the extortion of a contractor working on an apartment building near the intersection of 31st and Spring Garden in Philadelphia,  Dougherty told union business agent Edward Sweeeny that if the non-union contractor erected the building “and gets away with it, we’re tearing it the [expletive] down in broad, in broad daylight, broad [expletive] daylight.  I’ll rent the [expletive] crane from work reservations.  So, we’re not losing in center city, man. . . . We’ll take it right the [expletive] back down again.  And then we’ll load it out, rent the truck, and we’ll steal the iron.”

During a July 8, 2013 phone call, Dougherty summarized his motivation for committing these crimes by describing the financial condition of the union: “I look at the general fund, ah the health fund. It's (expletive) hurting. And we’re hurting it every hour that the carpenter steals from us hurts. Every hour non-union steals from us hurts it, and we keep pumping more money into it, and that keeps us from getting jobs.”

The case was investigated jointly by the Federal Bureau of Investigation and Department of Labor Office of Inspector General, with assistance provided by the Philadelphia Police Department Corruption Task Force, East Whiteland Township Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Employee Benefit Security Administration.  It is being prosecuted by Assistant United States Attorney Robert Livermore with legal assistance from Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

PHILADELPHIA - Nathaniel E. Robinson, 62, of Philadelphia, was sentenced today to 18 months in prison for stealing funds from SELF, Inc., a non-profit that helps the homeless.  Robinson was the Chief Program Officer at SELF, Inc.  He pleaded guilty on March 12, 2015 to theft from a program receiving federal funds.

Between 2006 and 2010, Robinson used his corporate American Express credit card at SELF to charge personal expenses in the amount of approximately $154,050.  He reimbursed a total of $2,594.30 before his employment was terminated.  Robinson used the corporate American Express card to pay for trips to Alabama, including airfare, lodging, and restaurants; lodging in Orlando, Florida, and the Philadelphia area; car rentals; car repairs; admission tickets to Six Flags Great Adventure and Clementon Amusement Park; Amtrak tickets; purchases at Walmart and Filene’s Basement; and restaurant charges in Washington, D.C. and Baltimore, MD.

In addition to the prison term, U.S. District Court Judge Berle M. Schiller ordered restitution in the amount of $151,455, three years of supervised release, and a $100 special assessment.

The case was investigated jointly by the FBI and the Philadelphia Office of the Inspector General, and was initiated by a tip to the Inspector General’s Office. It was prosecuted by Assistant United States Attorney Karen L. Grigsby.

PHILADELPHIA – On July 20, 2015, the U.S. Attorney’s Office for the Eastern District of Pennsylvania filed a civil health care fraud lawsuit under the False Claims Act against Melchor Martinez, Melissa Chlebowski, both of Allentown, PA, and their businesses Northeast Community Mental Health Centers (in Philadelphia), Lehigh Valley Community Mental Health Centers (in Allentown, Easton and Bethlehem), and North Carolina Community Mental Health Centers (in Raleigh, North Carolina).  The institutional defendants are community mental health clinics funded largely by Medicaid and Medicare. The lawsuit was announced by United States Attorney Zane David Memeger.

Martinez was convicted of Medicaid fraud in 2000 by the Commonwealth of Pennsylvania.  As a result, he was excluded from participating in all federally funded health care programs, including Medicaid and Medicare.  The exclusion prohibited Martinez from owning, managing or receiving payments from any federally funded health care provider.  The United States alleges that in spite of his exclusion, Martinez, assisted by his wife Chlebowski, continued to own and operate the Northeast and Lehigh Valley clinics, and that, in 2009, while his exclusion was ongoing, he started up the North Carolina clinic in Raleigh, North Carolina.

The United States alleges that during Martinez’s exclusion, the Northeast and Lehigh Valley clinics also billed Medicaid for psychiatrist visits of very brief duration, sometimes as little as two to three minutes, while fraudulently representing that patients were being seen for a 15 minute visit.  In addition, the Northeast and Lehigh Valley clinics billed Medicaid and Medicare for the services of “therapists” who were not qualified to provide mental health services.  The complaint also alleges that the Northeast and Lehigh Valley clinics fraudulently billed Medicare for therapy services allegedly provided without the requisite supervision.

“This civil complaint reflects our focus on pursuing individuals who defraud Medicaid and Medicare, especially after they have previously defrauded those programs and been barred from participating in them,” said Memeger.

The complaint was filed in a case brought under the qui tam provisions of the False Claims Act by a private citizen, called a “relator,” who may bring suit on behalf of the United States and share in any recovery. The United States may intervene in the case, as it has done here.  Under the False Claims Act, a person that causes the submission of false or fraudulent claims to the government is liable for three times the government’s damages, plus civil penalties for each false claim. The claims asserted against the defendants are allegations only, and there has been no determination of liability.

This matter was investigated by the U.S. Department of Health and Human Services’ Office of Inspector General and the U.S. Attorney’s Office for the Eastern District of Pennsylvania, with assistance from the Pennsylvania Office of Attorney General and the North Carolina Department of Justice. The case is assigned to Assistant U.S. Attorneys Judith A. Amorosa, Susan R. Becker, and Viveca D. Parker of the Civil Division, and health care fraud auditor George Niedzwicki.

The lawsuit is captioned United States v. Melchor Martinez, et al. (E.D. Pa.).

PHILADELPHIA - Edwin Fernandez, 37, of Philadelphia, was sentenced today to 300 months in prison for smuggling cocaine into the United States via Philadelphia International Airport.  Fernandez pleaded guilty on January 5, 2015 to all six counts of the indictment including conspiracy to import five kilograms or more of cocaine, importation of five kilograms or more of cocaine, attempted importation of five kilograms or more of cocaine, conspiracy to distribute five kilograms or more of cocaine, and two counts of attempted possession with the intent to distribute five kilograms or more of cocaine.  In addition to the prison term, U.S. District Court Judge Stewart Dalzell ordered a $5,000 fine, 10 years of supervised release, and a $600 special assessment.

Between December 2011 and July 2012, Fernandez, worked with a Santo Domingo, Dominican Republic drug trafficking organization ("Santo Domingo DTO") to smuggle approximately 150 kilograms of cocaine into the United States through the Philadelphia International Airport.  The Philadelphia organization recruited several individuals who worked at US Airways to assist in the operation.   

The Santo Domingo DTO employed several individuals, including airport employees in Santo Domingo, to ensure that bags filled with kilograms of cocaine were safely loaded aboard commercial airplanes destined for Philadelphia, PA.  After the bags were safely loaded onto the plane in Santo Domingo, members of the Santo Domingo DTO alerted Fernandez who then notified the recruits to assist in the offloading of the bags at the Philadelphia Airport.  Once the plane arrived in Philadelphia, the recruited US Airways employees would offload the baggage from the plane and divert the bags with the drugs onto domestic baggage claim belts, rather than the international baggage claim belts.  This avoided inspection by United States Customs and Border Protection officials.  Fernandez then arranged for those bags to be retrieved from domestic baggage claim belts for distribution to domestic drug organizations. 
 

The case was investigated by Homeland Security Investigations with assistance from U.S. Customs and Border Protection.  It was prosecuted by Assistant United States Attorneys Maureen McCartney and Kishan Nair.

PHILADELPHIA - Miguel Angel Castillo, 38, and Noel Alberto Manon, 29, both of Reading, PA, were charged by indictment, unsealed today, with dealing in firearms without a license, unlawful possession of firearms, and related offenses. Manon is additionally charged with distribution of methamphetamine, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.

If convicted the defendants each face a maximum statutory sentence of 110 years in prison, a fine of up to $6.52 million, three years supervised release, and a special assessment.

The case was investigated by the Federal Bureau of Investigation Allentown Office, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.

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

Distribution Resulting in Death also Added to Indictment

A superseding indictment was unsealed today charging William J. O’Brien III, a doctor of osteopathic medicine, with causing a death through the illegal distribution of a controlled substance and charges eight new defendants with O’Brien in a second conspiracy to distribute controlled substances.  The superseding indictment also charges O’Brien with 95 additional counts of distribution of controlled substances - oxycodone, methadone and amphetamines and charges O’Brien and his ex-wife, a ninth defendant, Elizabeth Hibbs, 54, with money laundering, bankruptcy fraud and making false statements under oath in a bankruptcy proceeding.

Charged in the conspiracy with O’Brien are: Michael Thompson, 49, Peter Marrandino, 48, Joseph Mehl, 48, Patrick Treacy, 47, Charles Johnson, 46, Frank Corazo, Jr, 52, Jennifer Lynn Chambers, 21, all of Philadelphia, and Joseph Mitchell, Sr, 39, of West Deptford, New Jersey, some of whom are members of the Pagans Motorcycle Club.  Thompson and Corazo are also charged with health care fraud for allegedly using Medicaid health insurance to pay for the medically unnecessary controlled substances prescribed by O’Brien.  Federal agents arrested six defendants this morning.  According to the indictment, between March 2012 and January 2015, O’Brien dispensed and his coconspirators unlawfully obtained for resale, approximately 378,914 pills which contained 10 mg, 15 mg or 30 mg of oxycodone and approximately 160,492 methadone pills.  The estimated street value of the controlled substances sold by the conspiracy was estimated at approximately $5 million.  O’Brien generated for himself an estimated $2 million in cash proceeds from the alleged drug trafficking conspiracy.

The Conspiracy

According to the indictment, defendants Thompson, Marrandino, Mehl, Mitchell and Treacy were members or associates of the Pagans and conspired with O’Brien to distribute large quantities of dangerous and addictive controlled substances for profit.  Through their connection to the Pagans, the defendants had access to illegal drug distributors.  O’Brien and the defendants allegedly developed a scheme whereby so-called “patients,” who were recruited by the defendants, would typically pay O’Brien a $200 “co-pay” in cash in exchange for medically unnecessary prescriptions for controlled substances.  With cash-paying “patients,” O’Brien could conceal money from creditors and the U.S. Bankruptcy Court where he had filed for Chapter 11 protection for his company WJO Inc., a group of medical practices which he owned.  The indictment further alleges that after filling the prescriptions they got from O’Brien, the “patients” would turn the pills over to the defendants who would sell the pills to drug dealers.  Certain controlled substances, such as oxycodone (30 mg), were in high demand. 

Distribution of Controlled Substances Resulting in Death

According to the indictment, in addition to medically unnecessary controlled substances, O’Brien prescribed other drugs for “patients” to create the appearance that he was operating a legitimate medical practice.  Among the other drugs he prescribed was cyclobenzaprine, a muscle relaxant aka Flexeril.  The indictment alleges that on or about Dec. 17, 2013, in Levittown, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone and cyclobenzaprine, to Person #21 and the death of Person #21 resulted from the combined use of these substances.

Health Care Fraud

Defendants Thompson and Frank Corazo were each Medicaid beneficiaries.  According to the indictment, Thompson and Corazo each used Keystone First benefits to pay for medically unnecessary prescriptions for oxycodone pills that they obtained from O’Brien for the purpose of resale to drug dealers.  It is further alleged that Thompson and Corazo falsely represented to Keystone First that the prescriptions were medically necessary. 

Money Laundering and Bankruptcy Fraud

Defendants O’Brien and Hibbs were also charged with conspiring to launder the proceeds of O’Brien’s drug distribution operation, and conspiring to commit fraud on the U.S. Bankruptcy Court by hiding income, including income from O’Brien’s drug distribution operation.  On or about Nov. 15, 2010, O’Brien filed for bankruptcy protection for WJO Inc.  Defendant Hibbs, who was married to O’Brien when the bankruptcy petition was filed, was, at various times, the Chief Operating Officer and the Chief Executive Officer for WJO Inc.  The indictment charges that on or about July 10, 2012, O’Brien and Hibbs were fired from WJO Inc., by the trustee appointed by the U.S. Bankruptcy Court.  O’Brien and Hibbs legally divorced in October 2012 but continued to reside and work together and continued to act as husband and wife.  The indictment charges that O’Brien and Hibbs diverted assets from WJO Inc. to their personal accounts and to accounts controlled by them.  In addition, it is alleged that O’Brien and Hibbs concealed other assets from the trustee and from creditors of WJO Inc.  Both were also charged with knowingly making a false statement under oath during the bankruptcy proceedings.

If convicted of all charges, O’Brien faces a mandatory minimum sentence of 20 years in prison and a maximum sentence of life.  The remaining defendants face substantial prison terms and fines and are subject to criminal forfeiture proceedings. 

The case was investigated by the FBI, the Food and Drug Administration Office of Criminal Investigations and the Department of Health and Human Services Office of the Inspector General.  It is being prosecuted by Assistant U.S. Attorney Mary Beth Leahy.

Distribution resulting in death also added to indictment

PHILADELPHIA – A superseding indictment was unsealed today charging William J. O’Brien III, a doctor of osteopathic medicine, with causing a death through the illegal distribution of a controlled substance, and charges eight new defendants with O’Brien in a second conspiracy to distribute controlled substances.  The superseding indictment also charges O’Brien with 95 additional counts of distribution of controlled substances - oxycodone, methadone, and amphetamines; and charges O’Brien and his ex-wife, a ninth defendant, Elizabeth Hibbs, 54, with money laundering, bankruptcy fraud, and making false statements under oath in a bankruptcy proceeding.

Charged in the conspiracy with O’Brien are: Michael Thompson, 49, Peter Marrandino, 48, Joseph Mehl, 48, Patrick Treacy, 47, Charles Johnson, 46, Frank Corazo, Jr., 52, Jennifer Lynn Chambers, 21, all of Philadelphia, and Joseph Mitchell, Sr., 39, of West Deptford, NJ, some of whom are members of the Pagans Motorcycle Club.  Thompson and Corazo are also charged with health care fraud for allegedly using Medicaid health insurance to pay for the medically unnecessary controlled substances prescribed by O’Brien.  Federal agents arrested six defendants this morning.  According to the indictment, between March 2012 and January 2015, O’Brien dispensed, and his coconspirators unlawfully obtained for resale, approximately 378,914 pills which contained 10 mg, 15 mg or 30 mg of oxycodone; and approximately 160,492 methadone pills.  The estimated street value of the controlled substances sold by the conspiracy was estimated at approximately $5 million.  O’Brien generated for himself an estimated $2 million in cash proceeds from the alleged drug trafficking conspiracy.

The Conspiracy

According to the indictment, defendants Thompson, Marrandino, Mehl, Mitchell, and Treacy were members or associates of the Pagans and conspired with O’Brien to distribute large quantities of dangerous and addictive controlled substances for profit.  Through their connection to the Pagans, the defendants had access to illegal drug distributors.  O’Brien and the defendants allegedly developed a scheme whereby so-called “patients,” who were recruited by the defendants, would typically pay O’Brien a $200 cash “co-pay” in exchange for medically unnecessary prescriptions for controlled substances.  With cash-paying “patients,” O’Brien could conceal money from creditors and the United States Bankruptcy Court where he had filed for Chapter 11 protection for his company WJO, Inc., a group of medical practices which he owned.  The indictment further alleges that after filling the prescriptions they got from O’Brien, the “patients” would turn the pills over to the defendants who would sell the pills to drug dealers.  Certain controlled substances, such as oxycodone (30 mg), were in high demand.

Distribution of Controlled Substances Resulting in Death

According to the indictment, in addition to medically unnecessary controlled substances, O’Brien prescribed other drugs for “patients” to create the appearance that he was operating a legitimate medical practice.  Among the other drugs he prescribed was cyclobenzaprine, a muscle relaxant also known as Flexeril®.  The indictment alleges that on or about December 17, 2013, in Levittown, O’Brien intentionally distributed, for no legitimate medical purpose, oxycodone, methadone, and cyclobenzaprine, to Person #21, and the death of Person #21 resulted from the combined use of these substances.

Health Care Fraud

Defendants Michael Thompson and Frank Corazo, Jr., were each Medicaid beneficiaries. According to the indictment, Thompson and Corazo each used Keystone First benefits to pay for medically unnecessary prescriptions for oxycodone pills that they obtained from William J. O’Brien III for the purpose of resale to drug dealers.  It is further alleged that Thompson and Corazo falsely represented to Keystone First that the prescriptions were medically necessary.

Money Laundering and Bankruptcy Fraud

Defendants O’Brien and Hibbs were also charged with conspiring to launder the proceeds of O’Brien’s drug distribution operation, and conspiring to commit fraud on the United States Bankruptcy Court by hiding income, including income from O’Brien’s drug distribution operation.  On or about November 15, 2010, O’Brien filed for bankruptcy protection for WJO, Inc.  Defendant Hibbs, who was married to O’Brien when the bankruptcy petition was filed, was, at various times, the Chief Operating Officer and the Chief Executive Officer for WJO, Inc.  The indictment charges that on or about July 10, 2012, O’Brien and Hibbs were fired from WJO, Inc., by the Trustee appointed by the United States Bankruptcy Court.  O’Brien and Hibbs legally divorced in October of 2012 but continued to reside and work together and continued to act as husband and wife.  The indictment charges that O’Brien and Hibbs diverted assets from WJO, Inc. to their personal accounts and to accounts controlled by them.  In addition, it is alleged that O’Brien and Hibbs concealed other assets from the Trustee and from creditors of WJO, Inc.  Both were also charged with knowingly making a false statement under oath during the bankruptcy proceedings.

If convicted of all charges, O’Brien faces a mandatory minimum sentence of 20 years in prison and a maximum sentence of life.  The remaining defendants face substantial prison terms and fines, and are subject to criminal forfeiture proceedings.

The case was investigated by the Federal Bureau of Investigation, the Food and Drug Administration Office of Criminal Investigations, and the Department of Health and Human Services Office of the Inspector General.  It is being prosecuted by Assistant United States Attorney Mary Beth Leahy.

PHILADELPHIA - Daiquan Davis, 21, of Philadelphia, PA, was charged today by indictment with two counts of sex trafficking of a minor or by force, announced United States Attorney Zane David Memeger.

If convicted, the defendant faces a mandatory minimum sentence of 15 years in prison with a maximum possible sentence of life imprisonment, lifetime supervised release, a $500,000 fine and a $200 special assessment.

The case was investigated by the Federal Bureau of Investigation with assistance from Bensalem Township Police and the Bucks County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Michelle Morgan.

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

PHILADELPHIA - Lars Jepsen, 36, of Deptford, NJ was charged today by indictment with one count of intentionally causing damage to a protected computer and one count of fraud in connection with authentication features, announced United States Attorney Zane David Memeger.

The indictment charges that after being terminated by his employer, Jepsen, using the username and password of another employee, logged into his former employer’s network and crippled their Voice Over Internet Protocol (VOIP) telephone network.

If convicted the defendant faces a maximum possible sentence of 13 years in prison, three years of supervised release, a fine of up to $500,000, and a $200 special assessment.

The case was investigated by the United States Secret Service, and is being prosecuted by Assistant United States Attorney Michael L. Levy.

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

PHILADELPHIA - Felix Mendez, 40 of Lancaster, PA, was charged by indictment, unsealed today, with three counts of distribution of methamphetamine, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.

If convicted the defendant faces a maximum statutory sentence of 120 years in prison with a mandatory minimum five years in prison, four years of supervised release, a fine of up to $15 million, and a $300 special assessment.

The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office with assistance from the Pennsylvania State Police, the U.S. Marshals Service, and the Lancaster Police Department. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.

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

PHILADELPHIA - Emilio Alvarez, 29, and Roberto Santiago, 33, both of Reading, Pennsylvania, were charged by Indictment, unsealed today, with conspiracy, dealing in firearms without a license, providing firearms to a convicted felon, and possession of stolen firearms, announced United States Attorney Zane David Memeger and Berks County district Attorney John T. Adams. 

If convicted, defendant Alvarez faces a maximum statutory sentence of 40 years in prison, three years of supervised release, a fine of up to $1.25 million, and $500 special assessment; defendant Santiago faces a maximum statutory sentence of 30 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.

The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service. It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.

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

PHILADELPHIA – Herbert Sudfeld, 64, of Doylestown, PA, was charged today by indictment with insider trading and making a false statement, announced United States Attorney Zane David Memeger.

Sudfeld was a partner in a Pennsylvania law firm that represented Harleysville Group, Inc., in its merger with Nationwide Mutual Insurance Company.  According to the indictment, Sudfeld knew the merger was imminent and knew he had a fiduciary duty to keep it confidential.  On September 28, 2011, prior to the public announcement of the merger agreement, Sudfeld allegedly contacted his stock broker to purchase Harleysville stock.  On September 29, 2011, Harleysville and Nationwide publicly announced the merger and Harleysville stock rose by approximately 85 percent over the prior day’s trading.   Sudfeld then sold the shares he had bought a day earlier, netting personal profits of approximately $75,530.

The indictment further alleges that Sudfeld falsely told FBI agents, who were investigating insider trading, that he was not aware of the Harleysville stock transactions until several days to a week later.  According to the indictment, Sudfeld also falsely told investigators that he had informed his broker that he could not be involved in trades of Harleysville stock due to his position at his law firm.  He further allegedly stated that he did not discuss Harleysville trades with his broker until after they were completed, which was also false.

If convicted, the defendant faces a maximum possible sentence of 25 years in prison, a three-year period of supervised release, and a $5.25 million fine.

The case was investigated by the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorney Denise S. Wolf.

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

PHILADELPHIA - Quinn Bowers, 34, of Temple, Pennsylvania, was charged by indictment, unsealed today, with providing a firearm to a convicted felon, announced United States Attorney Zane David Memeger and Berks County District Attorney John T. Adams.

If convicted, the defendant faces a maximum possible sentence of 10 years in prison, three years of supervised release, a fine of up to $250,000, and a $100 special assessment.

The case was investigated by the Federal Bureau of Investigation Allentown Resident Agency, the Reading Police Department, and the Berks County District Attorney’s Office, with assistance from the Pennsylvania State Police and the U.S. Marshals Service.  It is being prosecuted by Assistant United States Attorney Joseph A. LaBar and Special Assistant United States Attorney Jesse Leisawitz.

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

PHILADELPHIA - Marcos Cruz-Diaz, 34, of Philadelphia, PA, was charged today by indictment with obstruction of justice for allegedly tipping off the target of an Internal Revenue Investigation, announced United States Attorney Zane David Memeger.

According to the indictment, Cruz-Diaz was a paid informant for several federal government agencies. In his capacity as an informant, Cruz-Diaz became aware of the Internal Revenue Service’s ongoing investigation of tax return preparers and employees of a tax preparation business with offices located in Philadelphia, Pennsylvania, and their intent to execute search warrants at the offices of the tax preparation business and to engage in an undercover operation.Cruz-Diaz knew someone who was involved in an intimate relationship with a tax return preparer associated with the targeted business and allegedly informed that person of the Internal Revenue Service’s plans.Cruz-Diaz subsequently met with that tax return preparer and allegedly demanded $2,000 for providing the tip. He allegedly offered to provide the tax return preparer with a list of 25 client files that were in the tax return preparer’s possession, that contained incriminating information, and to prepare a video that the tax return preparer could use as a defense, in exchange for an additional $25,000.

If convicted, Cruz-Dias faces a maximum statutory sentence of 25 years in prison, five years of supervised release, a $500,000 fine, and a $200 special assessment.

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

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

PHILADELPHIA - Matthew Lowry, 33, of Upper Marlboro, Maryland, was sentenced today to 36 months in prison for various crimes arising from his stealing drug evidence while working as a Special Agent with the Federal Bureau of Investigation (“FBI”).  Lowry pleaded guilty, on March 31, 2015, to 20 counts of obstruction of justice, 18 counts of falsification of records, 13 counts of conversion of property, and 13 counts of possession of heroin.  U.S. District Court Judge Thomas F. Hogan, in the District of Columbia, also ordered two years of supervised release, a $15,000 fine, and a $5,425 special assessment. As a result of Lowry’s criminal activity, numerous federal investigations were compromised and convicted criminals were released from prison.

Lowry was assigned to a task force that investigated narcotics trafficking and violent gang activity, occurring in and around Washington D.C. and Prince George’s County, Maryland.   From approximately July of 2013 through September of 2014, the defendant stole, from FBI custody, at least 20 bags of heroin (some containing hundreds of grams) that he and other agents had seized during the course of five large-scale investigations.  The defendant kept the heroin in his government-issued car, in some instances for as long as several months, and he periodically ingested it, often while he was on duty.  Before returning the heroin into evidence, the defendant calculated the quantity he had used and replaced it with a different substance, either a weightlifting supplement, Creatine, or a laxative, Purelax.  To further conceal his misconduct, the defendant falsified evidence and chain of custody records, including by backdating them and forging his fellow agents’ signatures.

The matter was referred to the Department of Justice Office of the Inspector General, which conducted the investigation, with assistance from the Federal Bureau of Investigation as requested by the OIG.  It was prosecuted by Assistant United States Attorneys Kevin R. Brenner and Maureen McCartney.

Because Lowry’s investigations, as an agent, occurred within the District of Columbia and the districts surrounding it, those offices were recused by the Department of Justice.

PHILADELPHIA - Bogdan K. Stepien, 34, of Richboro, PA, was charged today by indictment with running a Ponzi scheme in which he claimed to be a successful “day trader” and recruited friends and family members to “invest” with him.  Stepien is charged with 19 counts of wire fraud, three counts of aggravated identity theft, and four counts of passing counterfeit and forged checks, announced United States Attorney Zane David Memeger.

According to the indictment, between 2011 and 2014, Stepien received funds from each of eight individuals and instead of engaging in high frequency trading with those funds, he used them to pay for his own personal expenses.  It is further alleged that to lull his victims into believing that he was successfully investing their funds, Stepien sent them bogus trading account statements and spreadsheets that purported to show their growing investment returns.  He allegedly used some of the investor funds to pay what he characterized as distributions or profits to some of his investors when, in fact, the funds were not profits but were merely some of the investors’ principal.  In connection with the scheme, Stepien allegedly used the name, address, and forged signature of one of his victims in performing several wire transfers of the victim’s funds to an account in Stepien’s name and for Stepien’s benefit.

The indictment further alleges that on four separate occasions, between August 2014 and April 2015, Stepien passed counterfeit and forged checks in order to purchase luxury automobiles and real estate.  Stepien allegedly used two checks, each for over $100,000, to purchase new, custom-ordered Mercedes-Benz automobiles.  He allegedly used another check, for more than $70,000, to purchase a new GMC Yukon Denali automobile.  He is also charged with purchasing real estate with a bogus $400,000 check.  Most of these checks were altered so that they appeared to be official checks, and none of the checks were legitimate.

If convicted, the defendant faces a mandatory minimum prison term of two years for aggravated identity theft with a maximum possible sentence of 20 years for each count of wire fraud, ten years for each count of passing counterfeit and forged checks, three years of supervised release, a fine of up to $6.5 million, a $2,600 special assessment, and full restitution.

The case was investigated by the Federal Bureau of Investigation and is being prosecuted by Assistant United States Attorney Nancy E. Potts.

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

PHILADELPHIA – Divine Garcia, 29, of New Rochelle, NY, pleaded guilty today to conspiracy and bank fraud. Garcia was a middleman in a fraud conspiracy that involved recruiting employees at various banks, between Pennsylvania and New York, to provide information about bank customers’ accounts.  A sentencing date is scheduled for October 19, 2015.

Garcia and his co-conspirators, charged elsewhere, formed an organization based out of New York which stole large sums of money from FDIC insured banks across the United States, including some in the Eastern District of Pennsylvania. The organization included numerous bank employees, three of whom were recruited by Garcia to provide confidential information about customers and their accounts. The organization used this information to take control of the customers’ account. Once they had sufficient control, an imposter working for the organization would enter a branch carrying: (a) a fake identification card, which Garcia had given them, with the biographical information of the customer but the photo of the imposter; and (b) a pre-printed and signed withdrawal slip with a signature which mimicked the customer’s actual signature. Using the forged withdrawal slip and fake identification card, the imposter would typically withdraw large sums of U.S. currency at various branches. The imposters were often accompanied by a handler from the organization, who would organize and supervise the fraudulent transactions. In total, Garcia provided the bank fraud organization with 65 confidential customer account profiles. From those accounts, the organization stole $481,856.00.

Garcia faces a maximum statutory sentence of 35 years in prison, a fine of up to $4 million, five years of supervised release, and a $200 special assessment.

The case was investigated by Homeland Security Investigations and U.S. Secret Service.  It is being prosecuted by Assistant United States Attorney Robert J. Livermore.

PHILADELPHIA - Adrian Rubin, 58, of Jenkintown, PA, pleaded guilty today to  conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), for the operation of a “payday lending” business that violated the usury laws of Pennsylvania and other states.  Rubin also admitted to conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud.  U.S. District Court Judge Eduardo C. Robreno scheduled a sentencing hearing for October 28, 2015. Rubin faces a possible advisory sentencing guideline range of at least 10 years in prison with a statutory maximum sentence of 65 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.

Between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.”  Rubin conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included: (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender; (b) relocating his operations to a state considered “usury friendly;” and (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.

Rubin and his co-conspirators also went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record.  Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents.  In total, Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.

Rubin also admitted helping his two sons with their own multi-million-dollar telemarketing scam that duped more than 70,000 people into buying a credit card http:/www.justice.gov/usao-edpa/pr/trio-charged-selling-worthless-credit-cards.  The Platinum Trust card was falsely marketed as a general-purpose credit card that customers could use to buy merchandise over the Internet and improve their credit.  Blake and Chase Rubin pleaded guilty and are awaiting sentencing.

This case was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations. It is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Joel M. Sweet.

PHILADELPHIA – AstraZeneca LP has agreed to pay the United States and participating states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today.  Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.

In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations.  Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.

Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs.  The quarterly rebates are based, in part, on the Average Manufacturer Prices (AMPs) that the manufacturers report to the government for each of their covered drugs.  Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug.  These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers.  As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.

The two settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The amounts to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, have not yet been determined.

“We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs,” said First Assistant U.S. Attorney Louis D. Lappen of the Eastern District of Pennsylvania. “As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process.”

“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Principal Deputy Assistant Attorney General Benjamin C. Mizer, the head of the Justice Department’s Civil Division.  “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”

The settlement with AstraZeneca LP and Cephalon Inc. was the result of a coordinated effort among the U.S. Attorney’s Office of the Eastern District of Pennsylvania, the Civil Division’s Commercial Litigation Branch, and Health and Human Services-Office of Inspector General.

These settlements illustrate the government’s emphasis on combating health care fraud and mark another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24.8 billion through False Claims Act cases, with more than $15.9 billion of that amount recovered in cases involving fraud against federal health care programs.

The lawsuit is captioned United States ex rel. Streck v. Allergan, Inc., et al., Case No. 08-cv-5135 (E.D. Pa.).  The claims settled by these agreements are allegations only, and there have been no determinations of liability.

PHILADELPHIA – AstraZeneca LP has agreed to pay the United States and participating individual states a total of $46.5 million, plus interest, to resolve allegations that it knowingly underpaid rebates owed under the Medicaid Drug Rebate Program, the Justice Department announced today.  Of that amount, AstraZeneca will pay roughly $26.7 million, plus interest, to the United States, and the remainder to states participating in the settlement.

In a separate settlement arising out of the same case, Cephalon Inc. has agreed to pay the United States and participating states a total of $7.5 million, plus interest, to resolve similar allegations.  Of that amount, Cephalon will pay roughly $4.3 million, plus interest, to the United States, and the remainder to states participating in the settlement.

Pursuant to the Medicaid Drug Rebate Program, drug manufacturers are required to pay quarterly rebates to state Medicaid programs in exchange for Medicaid’s coverage of the manufacturers’ drugs.  The quarterly rebates are based, in part, on the average manufacturer prices (AMPs) that the manufacturers report to the government for each of their covered drugs.  Generally, the higher the reported AMP for a drug, the greater the rebate the manufacturer pays to state Medicaid programs for the drug.  These settlements resolve allegations that AstraZeneca and Cephalon underreported AMPs for a number of their drugs by improperly reducing the reported AMPs for service fees they paid to wholesalers.  As a result, the government contends that AstraZeneca and Cephalon underpaid quarterly rebates owed to the states and caused the United States to be overcharged for its payments to the states for the Medicaid program.

The settlements were announced today by First Assistant United States Attorney Louis D. Lappen and the Department of Justice.  “We will continue to police the pharmaceutical industry when the Medicaid program overpays for drugs.  As these settlements demonstrate, it is critical for pharmaceutical manufacturers to comply with requirements of programs such as the Medicaid Drug Rebate Program to ensure that the government and the taxpayers are treated fairly in the reimbursement process,” said Lappen.

The settlements partially resolve a lawsuit filed under the qui tam, or whistleblower, provisions of the False Claims Act, which permit private individuals to sue on behalf of the government for false claims and to share in any recovery.  The amount to be received by the whistleblower in this suit, Ronald J. Streck, a pharmacist, has not yet been determined.

“The Medicaid Drug Rebate Program relies on drug manufacturers reporting accurate pricing information used in the rebate calculations,” said Benjamin C. Mizer, Principal Deputy Assistant Attorney General for the Justice Department’s Civil Division.  “These settlements demonstrate the Department of Justice’s commitment to ensuring that state Medicaid programs receive the full amount of rebates from manufacturers that Congress intended.”

For the United States Attorney’s Office for the Eastern District of Pennsylvania, this investigation and settlements were handled by Assistant United States Attorney Eric D. Gill.  The United States’ investigation and settlements were also conducted by the Justice Department’s Commercial Litigation Branch of the Civil Division.  The claims settled by these agreements are allegations only, and there has been no determination of liability.  The lawsuit is captioned United States ex rel. Streck v. Allergan, Inc., et al., Case No. 08-cv-5135 (E.D. Pa.).

These settlements illustrates the government’s emphasis on combating health care fraud and marks another achievement for the Health Care Fraud Prevention and Enforcement Action Team (HEAT) initiative, which was announced in May 2009 by the Attorney General and the Secretary of Health and Human Services.  The partnership between the two departments has focused efforts to reduce and prevent Medicare and Medicaid financial fraud through enhanced cooperation.  One of the most powerful tools in this effort is the False Claims Act.  Since January 2009, the Justice Department has recovered a total of more than $24 billion through False Claims Act cases, with more than $15.3 billion of that amount recovered in cases involving fraud against federal health care programs.

PHILADELPHIA - Salahudin Shaheed, 34, Khayree Gay, 31, and Basil Buie, 23, all of Philadelphia, PA, were charged today by superseding indictment with conspiracy, kidnapping, and attempted Hobbs Act robbery, announced United States Attorney Zane David Memeger. The superseding indictment adds the conspiracy charge to the existing indictment that charged Gay with attempted Hobbs Act robbery and kidnapping, and adds defendants Shaheed and Buie.

According to the indictment, Shaheed recruited defendants Gay and Buie, a/k/a “Basil Tucker,” to rob National Watch and Diamond Exchange, at 101 S. 8th Street in Philadelphia, to obtain luxury watches, jewelry, and money which Shaheed said could be found there.  It is further alleged that the defendants conducted surveillance of National Watch and its employees from a parking lot at 733 Chestnut Street, to identify and then, in disguise, abduct an employee from whom they would forcibly obtain keys, security codes, and the code to the company’s safe from which the robbers would steal luxury watches, jewelry, and money.

On April 3, 2015, Shaheed identified the employee to target but postponed the robbery when the victim entered the parking lot accompanied by other persons.  The next day, the defendants returned.  Upon seeing the employee enter the garage and approach her car, Shaheed and Buie, wearing masks, gloves, and sunglasses, confronted the victim, Shaheed assaulted her with a Taser, and they kidnapped her.

If convicted, each of the defendants face a maximum possible statutory sentence of life in prison, five years of supervised release, a fine of up to $750,000, and a $300 special assessment.

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

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

PHILADELPHIA – An indictment was filed today charging six people with running a “Jamaican lottery” scam in the United States between January 2012 and March 2015, announced United States Attorney Zane David Memeger and Homeland Security Investigations Special Agent-in-Charge John P. Kelleghan.Maurice Simmonds, were charged with conspiring to commit mail, bank and wire fraud in a scheme that obtained more than $200,000 from mostly elderly victims with diminished mental capacity.Simmonds, the organizer and leader of the conspirators, and some of the other members of the conspiracy were also charged with wire fraud and travel fraud as the result of specifically defrauding an elderly resident of Drexel Hill, Pennsylvania.

According to the indictment, the victims were informed that they had won the “Jamaican lottery” but that in order to claim their winnings they first needed to pay tens of thousands of dollars for certain “fees.” The victims were repeatedly coerced to provide the conspirators with cash, checks, and property but never received any winnings from the purported lottery.

If convicted, each defendant faces a substantial prison term, possible fines, special assessments, and supervised release.

The case was investigated by Homeland Security Investigations, the Delaware County District Attorney's Criminal Investigation Division Senior Exploitation Unit, and the Delaware County Office of Services for the Aging. It is being prosecuted by Assistant United States Attorney Anita Eve.

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

PHILADELPHIA - An indictment was unsealed today charging Malcolm Segal, 69, of Langhorne, PA, with six counts of mail fraud, and three counts of wire fraud, announced United States Attorney Zane David Memeger.  Segal was a financial advisor with Aegis Capital Corporation at the time of the alleged scheme to steal funds from individuals who thought they were investing their money in Certificates of Deposit, and from investors who held funds in brokerage accounts at Aegis.

According to the indictment, between July 2011 and July 2014, Segal told client B.P. that Mercantile Bank and Bear Stearns were offering Certificates of Deposit (CDs) that were paying an annual interest rate of up to 12% with a minimum two-year investment of $100,000.  Segal allegedly told individuals that he could sell them these CDs through Aegis.  The indictment alleges that Segal accepted at least $100,000 from each of six victims, represented that he had purchased CDs on their behalf when he had not, mailed fraudulent deposit confirmations from National CD Sales Inc. to the victims, and mailed the victims checks which he represented as interest payments.  According to the indictment, Segal used his victims’ money to pay personal expenses and to pay off other investors instead of purchasing CDs on behalf of the victims as promised.  Segal allegedly stole an aggregate total of approximately $1,885,067.10 from the victims, representing the purchase price of the CDs less the purported interest payments.  The indictment also alleges that Segal stole approximately $1,218,183.60 from the brokerage accounts of three of his clients at Aegis by making unauthorized wire transfers of funds from those brokerage accounts to a bank account controlled by Segal.

If convicted of all charges, Segal faces a potential advisory guideline sentencing range of 57 to 71 months in prison with a statutory maximum sentence of 180 years in prison.

The case was investigated by FBI and the United States Postal Inspection Service, and is being prosecuted by Assistant United States Attorney Joel D. Goldstein.

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

PHILADELPHIA – Three people were charged by information, filed or unsealed today, in a conspiracy to import and sell counterfeit goods, announced United States Attorney Zane David Memeger. Stephen Voudouris, Sr., 59, of Newtown Square, PA, Yung Chung, 31, of West Chester, PA, and Jaimmy Chun, 30, of Philadelphia, PA, are charged with conspiracy, trafficking in counterfeit goods and wire fraud. Voudouris, Sr. is also charged with smuggling counterfeit goods into the United States.

Stephen Voudouris, Sr. and Yung Chung were partners and owners of Misikko.com, headquartered in Newtown Square, Pennsylvania, an online retailer of luxury hair care appliances, including flat irons and blow dryers.  Misikko.com was not an authorized dealer of brands such as CHI, T3 and Babyliss.  According to the charging documents, in an effort to maximize profits, Voudouris, Sr., Chung and an employee, Chun, sought out Chinese manufacturing companies from which they could purchase cheap goods bearing counterfeit trademarks of CHI, T3 and Babyliss.  It is further alleged that the defendants then resold the counterfeit goods as authentic, for top dollar, to the American public.

Allegedly at the direction of Voudouris, Sr., in a scheme to drive consumers to their website and maximize profits, Misikko.com also purported to sell "Breast Cancer Awareness" products.  The Misikko.com website was designed to make consumers believe that breast cancer charities would benefit from the purchase of certain pink products. For some products, Misikko.com represented that $25 from every purchase would benefit a prominent breast cancer foundation.  It is alleged, however, that no donations were ever made to a breast cancer charity.

If convicted of all charges, Stephen Voudouris, Sr. faces a potential advisory guideline sentencing range of 33 to 41 months in prison, a three-year period of supervised release, a fine of up to $1 million, and a $400 special assessment; Yung Chung and Jaimmy Chun each face a potential advisory sentencing guideline range of 24 to 30 months in prison, a three-year period of supervised release, a fine of up to $750,000, and a $300 special assessment.  Each defendant is also responsible jointly and severally for full restitution of approximately $150,346.

The case was investigated by Homeland Security Investigations with the assistance of the Federal Reserve Board Office of the Inspector General.  It is being prosecuted by Assistant United States Attorneys Alicia M. Freind and Mary E. Crawley.

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

PHILADELPHIA – Fritzroy Brown, 38, of Philadelphia, PA, pleaded guilty today to conspiracy to commit health care fraud, false statements in a health care matter, and theft of government property.  He faces a maximum possible statutory sentence of 25 years in prison, three years of supervised release, a $750,000 fine, and a $300 special assessment.  U.S. District Court Judge William H. Yohn, Jr. scheduled a sentencing hearing for September 10, 2015.   

In July 2010, Feda Kuran, charged elsewhere, began operating Brotherly Love Ambulance, Inc. with a co-schemer.  From approximately October 2010 through approximately October 2011, Fritzroy Brown, a licensed Emergency Medical Technician (EMT), transported patients for Brotherly Love even though those patients could walk and could have been transported safely by means other than ambulance and were, therefore, not eligible for ambulance service under Medicare and Medicaid requirements.  Brown also transported patients in his personal vehicles and in a minivan owned by Brotherly Love, both of which lacked the lifesaving equipment found in an ambulance.  Even when he transported patients in his personal vehicle, Brown completed ambulance “run sheets” for the trips and certified those sheets with his signature and EMT identification number. In order to make the transport appear as though it had been conducted by ambulance, those run sheets misstated the medical condition of the patient and the care provided to the patient during the transport.  In addition, for a period of nearly six months during which he was working full time at Brotherly Love, Fritzroy Brown applied for and received unemployment benefits, repeatedly lying to the Pennsylvania Department of Labor by claiming that he was not working.

As a result of the overall scheme at Brotherly Love, the Medicare program was billed for more than $4.9 million and paid more than $2 million in inappropriate bills.  As a result of Fritzroy Brown’s theft from the unemployment insurance program, the Commonwealth of Pennsylvania paid over $14,000 in improper benefits to him.  Feda Kuran was sentenced in November 2014 to 64 months in prison.

The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General, the Federal Bureau of Investigation, and the U.S. Department of Labor Office of the Inspector General.  It is being prosecuted by Assistant United States Attorneys Mary E. Crawley and Paul W. Kaufman.

PHILADELPHIA - Michael Hoffner, Sr., 50, of Voorhees, New Jersey was charged by indictment, unsealed today, with 23 counts of wire fraud in connection with a scheme to defraud Navy Federal Credit Union and American Express, announced United States Attorney Zane David Memeger.

According to the indictment, Hoffner owned the Brown Street Pub in Philadelphia, Pennsylvania.  The indictment alleges that on 23 occasions, between September and November 2012, Hoffner used a stolen credit number to make charges to either Visa or American Express.  The cardholders were not aware of and did not authorize these transactions.  The proceeds of these transactions went into accounts that Hoffner controlled.

If convicted the defendant faces a potential advisory sentencing guideline range of at least 18 to 24 months in prison, a $5.75 million fine, and three years of supervised release. The indictment also seeks forfeiture in the amount of $47,209.

The case was investigated by United States Secret Service and is being prosecuted by Assistant United States Attorney David J. Ignall.

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

PHILADELPHIA – The Justice Department announced today that the owner and operator of a payment processing company that was involved in the unauthorized withdrawal of millions of dollars from consumers’ bank accounts was charged with fraud.  Neil Godfrey, 76, of Santa Ana, California, was charged, by information, with one count of wire fraud. Godfrey owned and operated Check Site Inc., based in Santa Ana, CA.

According to the information, between 2006 and 2010, Check Site enabled fraudulent merchants to withdraw money from consumers’ bank accounts without the consumers’ knowledge or consent.  Godfrey allegedly worked with at least two fraudulent merchants who operated websites that purportedly offered payday loans.  It is alleged that the websites were simply a ruse to harvest consumers’ bank account information.  Instead of providing consumers with payday loans, the merchants operating the websites used the information provided by the consumers in loan applications to withdraw money from the consumers’ bank accounts.  It is alleged that using Check Site, Godfrey knowingly processed the merchants’ fraudulent withdrawals and provided the merchants access to the banking system.

“The defendant in this case exploited his knowledge of the banking system and exposed hundreds of consumers to fraud,” said Memeger. “Those who circumvent our banking laws in order to enrich themselves by preying on unsuspecting consumers need to be investigated and vigorously prosecuted.”

The information alleged that once the fraudulent merchant had obtained the consumer’s name and bank account information, the merchants involved in the scheme created a demand draft, also known as a remotely controlled check (RCC).  Unlike an ordinary check, an RCC is generally honored without the signature of the account holder.  Check Site submitted the RCC to the consumer’s bank.  When the RCC was processed, Check Site kept a fee and transferred the remainder of the withdrawal to the merchant.

It is further alleged that Godfrey was an expert in finding banks that were willing to facilitate these transactions and ignore the red flags raised by these transactions.  Such banks included one located in Irvine, California, and one located in Philadelphia.  Godfrey allegedly helped the fraudulent merchants stay off the radar of other banks and regulators so that the fraud could continue.  For example, Godfrey allegedly advised merchants how to change the names of their companies and set up the facade of a legitimate company to defeat banks’ attempts at due diligence.

In an email message quoted in the information, Godfrey advised a fraudulent merchant that “the lesson we have learned is that we must trick the [bank] folk.  It means you need to set up some type of web site front.  What we need to do is set up a legitimate website selling anything you can think of – that is what you get approved on.  It is irrelevant if anything is ever sold there – just so it exists. . . .  In the mean time we set up false credit card approval etcetera.  It is this we use to run the transactions.  Yes, there will be a lot of returns, but what we do is send through transactions over the next few weeks that don’t have high returns.  They stop looking and then we can run the regular stuff. . . .  [A]fter several months we junk that company and go to another company.”

Principal Deputy Assistant Attorney General Benjamin C. Mizer of the Justice Department’s Civil Division said, “Neil Godfrey used his understanding of the banking system to help his partners in crime steal money from hard-working, often low-income Americans. The amounts that were illegally withdrawn generally did not exceed a few hundred dollars per victim, but the scheme was so massive and went on so long that altogether it added up to millions of dollars in fraudulent withdrawals.  As this prosecution demonstrates, the Department of Justice will continue to prosecute individuals and corporations involved in this kind of fraud.”

The case was investigated by the FBI.  It is being prosecuted by Assistant U.S. Attorney Patrick J. Murray of the Eastern District of Pennsylvania and Trial Attorney Patrick Jasperse of the Civil Division’s Consumer Protection Branch with assistance from Special Assistant U.S. Attorney Michelle Chua with the Federal Trade Commission.

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

PHILADELPHIA – Edgar Rolando Lopez, 45, a native of Guatemala, was charged today by indictment with reentry after deportation.  According to the indictment, on or about January 20, 2011, Lopez, an alien and native and citizen of Guatemala, was deported and removed from the United States.  On June 2, 2015, Lopez was found in the United States, having knowingly and unlawfully reentered without first applying to the Attorney General of the United States or his successor, the Secretary for Homeland Security for permission to reapply for admission, and without receiving in response the express consent of the Attorney General or his successor to reapply for admission.

If convicted, the defendant faces a maximum possible statutory sentence of 20 years in prison, a three year period of supervised release, a fine of up to $250,000 and a $100 special assessment.

The case was investigated by U.S. Immigration and Customs Enforcement and is being prosecuted by Assistant United States Attorney Joel Goldstein.

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

PHILADELPHIA - Shawn Robinson, 31, of Enola, Pennsylvania, was sentenced today to 12 months and one day in prison for a counterfeiting scheme involving sports jerseys.  Robinson and his father, Neil Robinson, of Bensalem, PA, conspired to traffic in and illegally import counterfeit sports jerseys.  Both pleaded guilty. In addition to the prison term, U.S. District Court Judge Eduardo Robreno ordered restitution in the amount of $30,000, forfeiture of $89,895.57 and all seized jerseys, three years of supervised release, and a $100 special assessment.

Between July of 2007 and March of 2012, Robinson imported and sold counterfeit sports jerseys that he bought from unauthorized manufacturers in China.  These included baseball, football, hockey, and basketball jerseys, and each had a counterfeit trademark of the sports league on the jersey.  Robinson imported more than 8,500 counterfeit sports jerseys and grossed an estimated $231,000 in sales for these products.

Shawn Robinson pleaded guilty on January 22, 2015; his father pleaded guilty on November 12, 2014.

The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI).  It is being prosecuted by Assistant United States Attorney Albert S. Glenn.

PHILADELPHIA – Shamarr Pitts, 26, of Lansdowne, PA, was sentenced today to 180 months in prison for assault on a federal agent, using and carrying a firearm during a crime of violence, and being a convicted felon in possession of a firearm and ammunition.  In addition to the prison term, U.S. District Court Judge Joel H. Slomsky ordered a $1,000 fine, three years of supervised release, and a $300 special assessment.

On June 4, 2013, the FBI Violent Crimes Task Force arrived at 43 Schappet Terrace in Lansdowne, PA, to arrest Pitts on charges related to a shooting at the Purple Orchid nightclub in Southwest Philadelphia that had occurred weeks earlier.  Uniformed Lansdowne Police had the residence surrounded when the Task Force arrived.  Task Force agents and officers initially knocked on the front door of the house and announced their presence.  When no one answered, agents and officers breached the back door, and entered the house.  A Philadelphia Police detective discovered Pitts hiding behind a closed bedroom door.  When the detective pushed the door open, Pitts pointed a silver pistol directly at the detective’s head, pulled the trigger twice generating a clicking sound, but his gun did not discharge.  Pitts also attempted to clear and shoot the weapon again, by pulling the slide back, thus generating more noise.

After being ordered to surrender for several minutes, Pitts eventually complied. On February 3, 2015, a federal jury found Pitts guilty of all three counts of the indictment.

The case was investigated by the FBI Violent Crimes Task Force, the Darby Borough Police Department, the Lansdowne Police Department, and the Delaware County District Attorney’s Office, and was prosecuted by Assistant United States Attorney Thomas Zaleski.          

PHILADELPHIA - An Indictment was filed today charging Tellas Kenyatta Dockery, 40, of Philadelphia, PA, with possession with intent to distribute cocaine, possession of a firearm in furtherance of a drug trafficking crime, and possession of a firearm by a convicted felon, announced United States Attorney Zane David Memeger.

If convicted of all charges, the defendant faces a mandatory minimum sentence of 20 years in prison up to life, at least six years of supervised release, a possible fine of up to $2.5 million, and a $300 special assessment.

The case was investigated by the Federal Bureau of Investigation, and the Bensalem Township Police Department, and is being prosecuted by Assistant United States Attorney Salvatore L. Astolfi.

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

Edward Dollson, 27, of Philadelphia, Pennsylvania was charged today by indictment with possession of a firearm by a convicted felon, announced United States Attorney Zane David Memeger.

If convicted, the defendant faces a maximum possible sentence of 10 years in prison, up to three years of supervised release, a fine of up to $250,000, and a $100 special assessment.

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

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

PHILADELPHIA - Adrian Rubin, 58, of Jenkintown, PA, has been charged with participation in a racketeering conspiracy for the operation of a “payday lending” business that allegedly violated the usury laws of Pennsylvania and other states, announced United States Attorney Zane David Memeger.  Rubin is charged with one count of conspiracy to violate the Racketeer Influenced and Corrupt Organizations Act (“RICO”), one count of conspiracy to commit mail fraud and wire fraud, and two counts of mail fraud and aiding and abetting mail fraud.  It was investigated by the FBI, the United States Postal Inspection Service, and IRS Criminal Investigations.

According to the information unsealed today, between 1998 and 2012, Rubin owned, controlled, financed, and/or worked for multiple businesses that issued short-term loans, commonly known as “payday loans.”  Rubin allegedly conspired with other people to evade state usury laws and other restrictions on payday loans by engaging in a series of deceptive business practices that included: (a) paying a federally-insured bank, which was not subject to state laws, to pretend that it was the payday lender; (b) relocating his operations to a state considered “usury friendly;” and (c) paying an Indian tribe to pretend that it was the actual payday lender as part of a scheme to have the tribe claim that “sovereign immunity” prevent application of state usury laws and other regulations.

Rubin and his co-conspirators also allegedly went to great lengths to hide Rubin’s personal involvement in the payday lending business because he had a criminal record.  It is further alleged that Rubin, with the knowledge of his co-conspirators, incorporated his payday businesses in the names of his father-in-law and a family friend and then forged the signatures of those people on company documents.  In total, it is alleged that Rubin and his co-conspirators reaped tens of millions of dollars from the defendant’s payday lending activities, much of which stemmed from the collection of fees that were usurious in Pennsylvania and elsewhere.

Pennsylvania law makes it a crime to collect interest, fees, and other charges associated with a loan at a rate in excess of 36 percent per year.  Payday loans are short-term loans of relatively small amounts of money, usually a few hundred dollars, which borrowers promise to repay out of their next paycheck or regular income payment, such as a social security check.  Some loans have finance charges or fees of between 10 and 30 percent of the amount borrowed.  Given the short-term nature of these loans, those charges can translate to annual percentage rates of interest (“APR”s) of 260 to 780 percent.

Rubin also was charged with helping his two sons with their own multi-million-dollar telemarketing scam that duped more than 70,000 people into buying a credit card http:/www.justice.gov/usao-edpa/pr/trio-charged-selling-worthless-credit-cards.  The Platinum Trust card was falsely marketed as a general-purpose credit card that customers could use to buy merchandise over the Internet and improve their credit.  Blake and Chase Rubin pleaded guilty and are awaiting sentencing.

If convicted of all charges, Adrian Rubin faces a possible advisory sentencing guideline range of at least 10 years in prison with a statutory maximum sentence of 65 years in prison, three years of supervised release, a fine of up to $1 million, and a $400 special assessment.

The case is being prosecuted by Assistant United States Attorneys Mark B. Dubnoff and Joel M. Sweet.

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

TWO MORE SENTENCED FOR RACKETEERING IN CASE INVOLVING IRONWORKERS LOCAL 401

PHILADELPHIA- Christopher Prophet, 44, of Richboro, PA, was sentenced today to 63 months in prison for his role in the corruption case involving Ironworkers Local 401.  In addition to the prison term, U.S. District Court Judge Michael Baylson ordered three years of supervised release, $138,000 restitution, and a $200 special assessment.  In December 2014, Prophet pleaded guilty to RICO conspiracy and attempted extortion which interferes with interstate commerce.  Co-defendant Richard Ritchie, 45, of Philadelphia, was sentenced yesterday to four years in prison, three years of supervised release, $25,000 restitution, and a $300 special assessment.

During the offense conduct, Prophet acted as a business agent for the Ironworkers Local 401 and participated in more than five extortions or attempted extortions with the intent to force non-union contractors to hire union labor.  Prophet recruited other members of the Ironworkers Local 401, whom he called his “Shadow Gang,” to assist him in these crimes.  If a contractor refused to hire union labor, Prophet and the “Shadow Gang” typically would enter a non-union construction site at night, use sledgehammers to destroy anchor bolts, and cause tens of thousands of dollars in damage.

Ritchie, 45, of Philadelphia, pleaded guilty in December 2014 to RICO conspiracy, attempted extortion which interferes with interstate commerce and violent crime in aid of racketeering.  The 12 defendants in the case were charged with conspiring to use violence and intimidation to get union members assigned to jobs on non-union worksites.

The case was investigated jointly by the Federal Bureau of Investigation and Department of Labor Office of Inspector General, with assistance provided by the Philadelphia Police Department Corruption Task Force, Upper Merion Township Police, East Whiteland Township Police Department, the Bureau of Alcohol, Tobacco, Firearms, and Explosives, and the Employee Benefit Security Administration.  It is being prosecuted by Assistant United States Attorney Robert Livermore with legal assistance provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

PHILADELPHIA - Delores Turner, 62, of Philadelphia, PA, was charged today by information with one count of theft of government funds, announced United States Attorney Zane David Memeger.  According to the information, the defendant received retirement benefits intended for her mother, after her mother’s death in June 2012 until September 2014.  The defendant’s alleged actions resulted in a loss to the government of approximately $30,159.         

If convicted, the defendant faces a maximum possible sentence of 10 years imprisonment, a three‑year period of supervised release, restitution to the government of $30,159, a $250,000 fine, and a $100 special assessment.

The case was investigated by the Social Security Administration, Office of Inspector General, and is being prosecuted by Special Assistant United States Attorney Christopher E. Parisi.

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

PHILADELPHIA - Jermaine Hairston, 40, of Philadelphia, PA, was sentenced today to 38 months in prison and three years of supervised release, for health care fraud and aggravated identity theft.  Hairston stole the personal identifying information of an emergency room physician and used it to call in fake prescriptions for expensive medications in the names of individuals on medical assistance. Hairston, and others, would pick up the prescription medication, generating a claim to the patient's health insurance, and then sell the medication for cash.

In addition to the prison term, U.S. District Court Judge John R. Padova ordered Hairston to pay restitution in the amount of $13,386.63.

The case was investigated by the Food and Drug Administration's Office of Criminal Investigations, the Federal Bureau of Investigation, and the Department of Health and Human Services Office of Inspector General.  It was prosecuted by Assistant United States Attorney Elizabeth Abrams.

PHILADELPHIA - Tyreek Styles, 27, of Philadelphia, PA, was sentenced today to 20 years in prison for his role in a conspiracy to commit home invasion robberies.  At the time of the crimes, Styles was working as a correctional officer at Curran Fromhold Prison.  On September 26, 2014, a federal jury found Styles guilty of conspiracy, Hobbs Acts robbery, and using and carrying a firearm during a crime of violence.

On December 3, 2011, Styles and his co-defendants, Tyrone Styles and Jeramiah Stokes, committed the violent home invasion robbery of the owner of an Upper Darby business.  The defendants waited for the owner home to come home and brutally assaulted him in the front yard.  They made their way into the home at gunpoint, and forced the business owner=s family to give them money, some of which were business proceeds.  Defendant Tyrone Styles fired the gun as the three defendants fled the scene. 

In addition to the prison term, U.S. District Court Judge Petrese Tucker ordered three years of supervised release and a $300 special assessment.

The case was investigated by the Federal Bureau of Investigation and the Upper Darby  Police Department.  It is being prosecuted by Assistant United States Attorney Jennifer Chun Barry and Thomas Zaleski.

PHILADELPHIA - Joan Baranek, 57, of Yardley, PA, was sentenced today to two years in prison for embezzling $830,504 from her employer, between 2006 and 2012, and not reporting that income on her tax return.  Baranek was a vice president for sales at Airgas Safety, Inc., a subsidiary of Airgas, Inc., based in Levittown, Pennsylvania.  She pleaded guilty on October 8, 2014 to mail fraud and filing a false income tax return. 

Baranek was responsible for designing and managing a sales incentive program for telesales centers (call centers).  She purchased gift cards and other award prizes with her personal American Express card, and then submitted expense reports to Airgas for reimbursement.  In support of her expense reports, she attached invoices for the gift cards and award prizes to the expense reports.  Between May 2006 and December 2012, Baranek altered invoices or even created fictitious invoices, which she attached to her expense reports so as to obtain reimbursement for alleged promotional expenses that she never incurred.  Baranek submitted approximately 200 expense reports claiming a total of $1.8 million in promotional expenses; of these, approximately 121 of the reports contained altered, fictitious, or duplicate invoices in support of the expensed promotional items, for a total of approximately $830,504 of fraudulent expenses.  Baranek filed a United States income tax return for calendar year 2008, that reported her taxable income as $155,419, when her actual taxable income approximately $360,944.

In addition to the prison term, U.S. District Court Judge Gene E.K. Pratter ordered restitution to Airgas, Inc. in the amount of $567,504, restitution to the IRS of $304,003 in principle and interest, three years of supervised release which includes 50 hours of community service, and a $200 special assessment.

The case was investigated by the FBI and IRS Criminal Investigations. It was prosecuted by Assistant United States Attorney Karen L. Grigsby.

PHILADELPHIA - Paul Sewell, 49, of Reading, PA, was sentenced yesterday to 23 years in prison for sex trafficking of minors or of adults by force, and production of child pornography. Sewell pleaded guilty, on September 21, 2011, to four counts of sex trafficking and three counts of production.  In addition to the prison term, U.S. District Court Judge C. Darnell Jones, II, ordered five years of supervised release and ordered Sewell to pay $52,000 in restitution.

Sewell ran a prostitution ring in the Reading area through which he hired females, including minors, to work for him.  Sewell, who called himself "God," insisted that the girls who worked for him be tattooed with "God" and a nickname he gave them as a "working name."  He also photographed the girls so that he could feature them on a website called "cashmoneybrothersescorts.com," on which he advertised them as escorts.  Sewell took sexually explicit pictures of the girls to email to potential clients.  Sewell also subjected some females to physical violence to force them to continue working for the venture. 

The case was investigated by the Federal Bureau of Investigation and Berks County Detectives with the assistance of the Berks County District Attorney's Office.  It was prosecuted by Assistant United States Attorney Michelle Morgan.

Lee Michael Harrison, 39, of Oklahoma City, Oklahoma, was charged by indictment, unsealed today, with three counts of wire fraud.  In 2010 and 2011, Harrison was attempting to establish restaurants and clubs in North Carolina, and to sell a reality television show to the Food Network.  He convinced two investors to each invest $20,000 with him by falsely representing that they were investing in a fictitious technology called “Capture” that prevented cell phones from dropping calls and that he allegedly had sold to a prominent New York financier for over six billion dollars.

If convicted, the defendant faces a maximum possible sentence of 60 years of in prison, three years of supervised release, a $750,000 fine, and a $300 special assessment.

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

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

PHILADELPHIA - Judy Noll, 52, of Mertztown, PA, was charged today by Information with one count of conspiracy to commit wire fraud, announced United States Attorney Zane David Memeger.  Noll, President of Karen Construction Company, Inc. (Karen Construction) engaged in a scheme to defraud the United States Department of Transportation through the Disadvantaged Business Enterprise program (DBE) by posing as a DBE, when in fact it was not, in order to secure contracts on federally funded highway projects under the DBE program.  From approximately January 2002 through October 2011, Noll, as President of Karen Construction, wrongfully obtained DBE subcontracts totaling an estimated $11.9 million involving approximately 133 federally funded projects.

If convicted, the defendant faces a maximum sentence of five years in prison, two years of supervised release, a fine of up to $250,000, and a $100 special assessment.

The case was investigated by the United States Department of Transportation Office of Inspector General, the Federal Bureau of Investigation, and the Department of Labor Office of Inspector General/Office of Labor Racketeering and Fraud Investigations.  It is being prosecuted by Assistant United States Attorney Mary Kay Costello.

PHILADELPHIA - Dennis Weber, 66, Dale Weber, 51, and Carl M. Weber Steel Service, Inc. (Weber Steel), all of Kutztown, PA, were charged today by Information with one count of conspiracy to commit wire fraud, announced United States Attorney Zane David Memeger.  Dennis Weber, President of Weber Steel, and Dale Weber, Vice President, engaged in a scheme to defraud the United States Department of Transportation through the Disadvantaged Business Enterprise program (DBE). Weber Steel, a bridge and highway construction contractor located in Kutztown, PA was not a certified DBE, but set up and utilized a sham DBE called Karen Construction Co., Inc. (Karen Construction) to obtain DBE subcontracts for bridge and highway construction.  From approximately April 1995 through November 2011, Karen Construction, posing as a DBE, obtained an estimated $18.7 million from approximately 224 federally funded projects, when, in reality, it was controlled by Weber Steel, a non-DBE.    

If convicted, defendants Dennis and Dale Weber each face a maximum sentence of five years in prison, two years of supervised release, a fine of up to $250,000, and a $100 special assessment.  Defendant Weber Steel faces a maximum sentence of five years of probation, a fine of up to $500,000, and a $100 special assessment.

The case was investigated by the United States Department of Transportation Office of Inspector General, the Federal Bureau of Investigation, and the Department of Labor Office of Inspector General/Office of Labor Racketeering and Fraud Investigations. It is being prosecuted by Assistant United States Attorney Mary Kay Costello.

PHILADELPHIA – Higinio Castillo, 25, residing in Philadelphia, was sentenced today to 20 years in prison for running a large-scale drug smuggling operation, known as the Castillo Drug Smuggling Organization (CDSO). Castillo and the members of the CDSO recruited couriers who secreted packets of heroin inside their bodies in order to smuggle the drugs into the United States from the Dominican Republic. Between November 2010 and March 2012, Castillo imported more than eight kilograms of heroin and more than one kilogram of cocaine. He pleaded guilty on April 29, 2014 to 13 counts including conspiracy, kidnapping, and numerous drug charges.

Castillo lured people into acting as mules with promises of money and free vacations. He personally participated in the kidnapping of one drug courier whom he accused of absconding with about a pound of heroin, and he unsuccessfully attempted to obtain the children of another courier who had not returned the heroin that she had imported. Castillo’s drug supplier was a relative in the Domincan Republic.

Castillo ran the CDSO with co-defendant Michael Nunez-Rodriguez.  Rodriguez and the nine remaining defendants have pleaded guilty and are awaiting sentencing. After recruiting the couriers, members of the CDSO would drive them to airports and pick them up upon their return.  After the couriers cleared U.S. Customs, they were taken to an apartment controlled by the CDSO where they would expel the drug pellets.  The CDSO would then repackage the drugs for sale.  When a courier was suspecting of stealing the smuggled drugs, the members would intimidate and threaten the courier.

In addition to the prison term, U.S. District Court Judge Legrome D. Davis ordered 10 years of supervised release, a $5,000 fine, and a $1,300 special assessment. The government is also seeking forfeiture of all assets derived from any criminal activity.

The case was investigated by Homeland Security Investigations (HSI) with assistance from U.S. Customs and Border Protection, Philadelphia Police, Pennsylvania State Police, and the Philadelphia District Attorney=s Office.  It is being prosecuted by Assistant United States Attorney Nancy Rue.

PHILADELPHIA – The leaders of a violent loan sharking and illegal gambling ring that operated out of several Philadelphia businesses were sentenced today by U.S. District Court Judge William Yohn in Philadelphia, PA.  Ylli Gjeli, 49, of Philadelphia, was sentenced today to 168 months in prison. Fatimir Mustafaraj, 42, also of Philadelphia, was sentenced to 147 months in prison.  The defendants generated money by making and collecting on loans with usurious rates of interest; using intimidation, threats, and violence to make and collect on loans; and making loans to betting customers whose debts were incurred through the enterprise’s illegal gambling business.

On December 15, 2014, a federal jury returned guilty verdicts against Gjeli, Mustafaraj and their co-defendants, Gezim Asllani and Rezart Rahmi Telushi, on charges of racketeering conspiracy, racketeering collection of unlawful debt, and collections of extensions of credit by extortionate means.  Gjeli, Mustafaraj, and Asllani were also convicted of making extortionate extensions of credit; and Gjeli and Mustafaraj were also convicted of operating an illegal gambling business.  Evidence presented at trial established that from October 2011 to 2013, the enterprise extended 125 usurious loans totaling $1.78 million with annual interest rates ranging from 104 percent to 395 percent. And, from February 2007 to August 2013, the organization’s online sports betting website contributed more than $2.9 million in gross profits.  The Lion Bar & Grill in Philadelphia was used as a front for the enterprise. The enterprise also used Blackbird Café and “Ylli’s 2 Brothers” to conduct illegal loan sharking and gambling activities.

Gjeli was a leader and “boss” of the multi-million dollar criminal organization; Mustafaraj, a/k/a “Tony,” was a leader and “muscle.”  Both directed other members in the loan sharking activities and illegal gambling business, approved loans, used intimidation and threats of violence against customers, collected weekly loan payments, physically assaulted subordinate members and associates, supervised the illegal gambling business, provided cash to pay customer’s gambling wins and otherwise financed the gambling business, collected gambling debts, and made loans to customers whose debts were incurred through the illegal gambling business.  Asllani and Telushi were debt collectors who assisted Gjeli and Mustafaraj in making loans and regularly collected weekly loan payments from customers.      

Members and associates of the enterprise cultivated their reputation for violence by threatening customers with dangerous weapons such as a firearm and hatchet; using implied threats and intimidation; telling customers that if they did not pay their debts someone would kill them, “break your legs,” or physically harm them or their family members in some other way; and physically assaulting subordinate members and associates.

The defendants attempted to conceal the existence and operations of the enterprise from law enforcement by: limiting their discussions of criminal activities when on the phone using cryptic and coded language to describe criminal activities; conducting pat-downs and body searches of customers to check for weapons and recording devices; and conducting the enterprise’s transactions primarily in cash.

A sentencing hearing is scheduled for June 15, 2015 for Telushi and for September 3, 2015 for Asllani.  Five co-defendants who pleaded guilty are also awaiting sentencing.

The case was investigated by the Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, Pennsylvania State Police, Montgomery County Detectives, and the New Jersey State Police.  It is being prosecuted by Assistant United States Attorneys Salvatore L. Astolfi and Jerome Maiatico and Trial Attorney Margaret Vierbuchen from the Department of Justice Organized Crime & Gang Section.

PHILADELPHIA - James J. McCullagh, 60, of Meadowbrook, PA, was charged by indictment, unsealed today, in connection with the fatal fall of an employee, announced United States Attorney Zane David Memeger.  McCullagh, who owns James J. McCullagh Roofing, is charged with with four counts of making false statements, one count of obstruction of justice, and one count of willfully violating an Occupational Safety and Health Administration (OSHA) regulation causing death to an employee.

According to the indictment, McCullagh failed to provide fall protection equipment to his employees. On June 21, 2013, one of McCullagh’s employees was killed after falling approximately 45 feet from a roof bracket scaffold while performing roofing work for McCullagh.  In connection with the OSHA investigation of the fatality, McCullagh attempted to cover up his failure to provide fall protection by falsely stating, on four occasions, that he had provided fall protection equipment, including safety harnesses, to his employees.  McCullagh told an OSHA Compliance Safety and Health Officer that his employees had been wearing safety harnesses tied off to an anchor point when he saw them earlier in the day prior to the fall. The indictment alleges that McCullagh knew that he had not provided fall protection to his employees and none of his employees had safety harnesses or any other form of fall protection. It is further alleged that McCullagh directed other employees to falsely state that they had fall protection, including safety harnesses, on the day of the fall.

If convicted, the defendant faces a maximum sentence of 25 years in prison, three years of supervised release, $1.5 million in fines, and a $510 special assessment. 

The case was investigated by the United States Department of Labor, Office of Inspector General Labor Racketeering and Fraud Investigations and the Occupational Safety and Health Administration and is being prosecuted by Assistant United States Attorney Mary Kay Costello.

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