Eastern District of Pennsylvania

PHILADELPHIA – Life Support Corporation, formerly located in Feasterville-Trevose, PA, pleaded guilty today to one count of conspiracy to commit health care fraud.  In separate hearings, the company owners, Nazariy Kmet, 35, of Jamison, PA, and Bogdan Kmet, 30, Warminster, PA and a company manager, Rostislav Kmet, 26, of Philadelphia, PA, also pleaded guilty to conspiracy to commit health care fraud and to violating the federal anti-kickback statute.  Sentencing hearings are scheduled for all parties on February 11, 2015.

Defendant Life Support and its owners and a manager operated an ambulance company that transported patients who were able to walk and could travel safely by means other than ambulance and who therefore were not eligible for ambulance transportation under Medicare requirements.  The defendants or others acting on their behalf falsified reports to make it appear that the patients needed to be transported by ambulance when the defendants and their employees knew that the patients could be transported safely by other means and that many of them were able to walk.  Some patients were transported in personal vehicles rather than ambulances and those trips were billed to Medicare as if ambulance services had been provided.  The defendants were also involved in paying kickbacks to patients so that the patients would continue to be transported by Life Support ambulances rather than switching to another fraudulent ambulance company.  The defendants billed for the ambulance services as if those services were medically necessary and, as a result of the fraudulent scheme, the Medicare program paid more than $1.9 million for this inappropriate method of transportation.

Nazariy Kmet, Bogdan Kmet, and Rostislav Kmet each face substantial terms of imprisonment, three years of supervised release, a fine in excess of $3.8 million, mandatory restitution estimated at over $1.9 million, forfeiture of assets, and a special assessment.  Life Support Corporation will also have restitution and forfeiture obligations.  All defendants could be excluded from participating in federal health care programs.

The case was investigated by the U.S. Department of Health and Human Services Office of the Inspector General and the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorney Matthew J.D. Hogan.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Political consultant Thomas Lindenfeld, 59, of Washington D.C., pleaded guilty today to an information charging him with one count of conspiring to commit honest services wire fraud.  U.S. District Court Judge Harvey Bartle III scheduled a sentencing hearing for March 25, 2015. Lindenfeld faces a maximum possible statutory sentence of 20 years in prison, a fine of up to $250,000, and up to five years of supervised release. 

The charges were announced today by United States Attorney Zane David Memeger, Assistant Attorney General Leslie R. Caldwell of the Department of Justice’s Criminal Division, FBI Special Agent-in-Charge Edward J. Hanko, and IRS Criminal Investigation Acting Special Agent-in-Charge Richard Gross. 

The charges stem from Lindenfeld’s participation in a wire fraud scheme initiated by his former employer, “Elected Official A,” which was disclosed in court proceedings today.  According to the information, Lindenfeld, Elected Official A, and their associates, violated local campaign finance laws during Elected Official A’s 2007 race for Mayor of the City of Philadelphia by arranging for an illegal campaign contribution in the form of a $1 million loan from Person D.  Lindenfeld and his confederates routed the money from Person D through Lindenfeld’s political consulting firm, LSG Strategies Services Corporation (“LSG”), which was working on Elected Official A’s campaign.  LSG executed a promissory note with Person D and used the money - received via wire transfer - to pay various expenses of Elected Official A’s campaign.  Of those funds, $400,000 went unspent and was returned to Person D by LSG. 

In late 2007, Person D experienced acute financial difficulty and contacted Lindenfeld at LSG to call in the $600,000 remaining debt.  That debt was subsequently repaid with stolen charitable funds and federal grant money routed through several entities, including LSG, under the guise of sham contracts for services that were never rendered.  To repay the debt, Elected Official A arranged for Nonprofit 1, an entity founded by Elected Official A, to route a total of $600,000 received from Sallie Mae’s charitable arm, as well as federal grant money, to Company 2, under the guise of a false contract for services.  Company 2 was run by Person C, an ally of Elected Official A.  Person C’s for-profit company executed a fake contract to disguise the movement of money from Nonprofit 1 to Company 2.  Person C and Lindenfeld’s LSG also  executed a fake contract to disguise the movement of money from Company 2 to LSG, after which Lindenfeld used the funds to repay Person D. 

To resolve Elected Official A’s 2007 mayoral campaign debt to Lindenfeld and LSG, and to compensate them for participating in hiding the $1 million campaign contribution, Lindenfeld and Elected Official A and others agreed to use Elected Official A’s official position to steer federal funding to Lindenfeld’s proposed environmental advocacy group, “Blue Guardians,” which was created by Lindenfeld for the purpose of receiving federal funds.  In 2009, during the appropriations process, Elected Official A asked for $15 million in federal funding for “Blue Guardians," which Elected Official A associated with a Philadelphia address belonging to Person C’s Company 1.  In December of 2009, Elected Official A’s office notified Lindenfeld that “Blue Guardians” had received $500,000 (not the entire $15 million that had been requested) in federal funding as an earmark through the National Oceanic and Atmospheric Administration (“NOAA”).  Approximately one month later, Elected Official A’s campaign began writing down the debt the campaign owed to LSG on its disclosure forms.  Specifically, Elected Official A reduced the amount his campaign owed to LSG in the amount of $20,000, a transaction falsely labeled as a “contribution in kind.” 

NOAA received no information regarding “Blue Guardians” until the earmark showed up in the final bill.  NOAA learned that “Blue Guardians”  did not have a website, and only identified a point of contact for “Blue Guardians” by calling Elected Official A’s office, which advised NOAA to contact Lindenfeld.  NOAA learned that Lindenfeld was a political operative who had worked for Elected Official A.  NOAA was suspicious that the earmark was a “political payoff,” and documented all of its interactions with Lindenfeld and informed its legal counsel of what it had learned.  When NOAA reached Lindenfeld in approximately March 2010, it requested, among other things, the articles of incorporation for “Blue Guardians,” its physical address, its lists of Board of Directors or officers, and its tax status.  Lindenfeld told NOAA that he would “speak with [Elected Official A] and get everything straightened out.”  In fact, prior to April of 2010, “Blue Guardians” did not exist.  Lindenfeld only obtained an email address, articles of incorporation, and a tax identification number for “Blue Guardians” in April 2010.  Even after receiving those documents, Lindenfeld never forwarded them to NOAA.  Eventually, Lindenfeld told NOAA that he “had spoken with [Elected Official A]” and that they decided the money could be better spent on the oil spill in the Gulf of Mexico.  After Lindenfeld declined to accept the funding, NOAA never disbursed the $500,000 to Lindenfeld or his “Blue Guardians.”

Additional criminal activities undertaken during the schemes included (1) creating false contracts between the parties to justify the interstate transfer of the funds stolen to repay the illegal campaign loan, and (2) filing false campaign reports which concealed the illegal campaign debt, among other things. 

The case is being investigated by the Federal Bureau of Investigation and Internal Revenue Service Criminal Investigations with assistance provided by the NASA Office of Inspector General and the Department of Commerce Office of Inspector General.  It is being prosecuted by Assistant United States Attorney Paul L. Gray, and Trial Attorney Eric L. Gibson of the Criminal Division’s Public Integrity Section.                               

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

Click here to read the information.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Lamont Lewis, 38, of Philadelphia, was sentenced today to 40 years in prison for his role in the Oct. 9, 2004 retaliatory firebombing that killed six members of a federal witness’s family, including four children.  Lewis pleaded guilty in 2011 and testified against Kaboni Savage, who ordered the firebombing, and three others co-conspirators.   

As part of his 2011 plea agreement, Lewis pleaded guilty to an additional five murders, and agreed to testify against Savage, Robert Merritt, who assisted Lewis in carrying out the firebombing murders, Steven Northington, and Savage’s sister, Kidada.  The murder plot targeted the family of Eugene Coleman who was cooperating in the drug trafficking case against Savage.  U.S. District Judge R. Barclay Surrick also ordered 10 years of supervised release and a $2,000 special assessment.

During his testimony at Savage’s trial, Lewis admitted that he spoke to Savage in the evening hours of October 8, 2004, at which time Savage told Lewis that Savage needed Lewis to carry out a favor for him.  Savage told Lewis that his sister, Kidada Savage, would explain the plan after the phone call.  Shortly after that, Kidada Savage advised Lewis of the plan to firebomb the Coleman residence and drove Lewis to the location to identify the Coleman house for Lewis.  In the early morning hours of October 9, 2004, Lewis contacted Merritt and explained the plan to him.  Lewis and Merritt filled up two gas cans while en route to the Coleman residence and, while Lewis gained entry and fired warning shots into the residence, Merritt threw a gas can with a lit cloth fuse, and then a second gas can, into the occupied Philadelphia row house in the predawn hours on Oct. 9, 2004.  Six people, including four children ranging in age from 15 months to 15 years, were killed in the fire.

Kaboni Savage was sentenced to death for 12 counts of murder in aid of racketeering.  Co-defendants Kidada Savage, Robert Merritt, and Steven Northington were all sentenced to life imprisonment.

The case was investigated by the FBI, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, the Internal Revenue Service Criminal Investigations, and the Maple Shade, New Jersey Police Department.  The United States Bureau of Prisons, the United States Marshals Service, and the Philadelphia / Camden High Intensity Drug Trafficking Area Task Force also assisted in the investigation.  The case was prosecuted by Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section and Assistant U.S. Attorneys David E. Troyer and John M. Gallagher of the Eastern District of Pennsylvania.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Feda Kuran, 39, of Philadelphia, PA, was sentenced today to 64 months in prison for a healthcare fraud scheme involving Brotherly Love Ambulance, Inc.   Kuran founded Brotherly Love Ambulance, Inc. and was its president.  The defendant pleaded guilty April 17, 2014 to healthcare fraud and paying kickbacks in violation of the federal Anti-Kickback Act.

Through Brotherly Love, Kuran transported patients who were able to walk and could travel safely by means other than ambulance and who, therefore, were not eligible for ambulance transportation under Medicare requirements.  Kuran, and others acting on her behalf, falsified reports to make it appear that the patients needed to be transported by ambulance when she knew that the patients could be transported safely by other means and, in fact, many of them could walk.  The defendant billed Medicare for those ambulance services as if they were medically necessary when she knew that they were not.  In addition, Kuran, and others acting at her direction, paid kickbacks to patients to ensure that they would use Brotherly Love Ambulance for services which were not medically necessary.  Under Kuran’s direction, the company also submitted claims to Medicare for ambulance services for patients who were not transported by ambulance, but instead were transported in private vehicles or drove themselves to their destinations.  After becoming aware of the investigation of her company, Kuran also sold patient lists to other ambulance companies so that those companies could continue the fraud.  As a result of the fraudulent billing orchestrated by Kuran, the Medicare program paid more than $2 million for fraudulent claims from Brotherly Love.

In addition to the prison term, U.S. District Judge William H. Yohn, Jr. ordered Kuran to pay $2,015,712.52 in restitution to Medicare and a special assessment of $200.  He also ordered three years of supervised release.  The Court also entered a money judgment against the defendant for $2,015,712.52. 

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 Matthew J.D. Hogan and Paul W. Kaufman.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Frances Riley, 78, of Bath, Pennsylvania, 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 February 1994 until the defendant’s fraud was discovered in 2011.  The defendant’s alleged actions resulted in a loss to the government of approximately $152,600.90.          

If convicted, the defendant faces a maximum possible sentence of 10 years imprisonment, a 3-year period of supervised release, restitution to the government of $152,600.90, 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 Amanda R. Reinitz.

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

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Frances Riley, 78, of Bath, Pennsylvania, 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 February 1994 until the defendant’s fraud was discovered in 2011.  The defendant’s alleged actions resulted in a loss to the government of approximately $152,600.90.          

If convicted, the defendant faces a maximum possible sentence of 10 years imprisonment, a 3-year period of supervised release, restitution to the government of $152,600.90, 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 Amanda R. Reinitz.

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

Click here to read the information.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Burton Gersh, 68, and Les Sidweber, 73, both of Cherry Hill, NJ, were charged today by indictment with two counts each of production of child pornography, announced United States Attorney Zane David Memeger.

According to court documents, Gersh and Sidweber transported two minors, ages 16 and 17, from the Philadelphia area, on multiple occasions, to their homes in Cherry Hill, where Sidweber photographed the juveniles engaging in sexually explicit conduct at Gersh's behest.

If convicted the defendants face a mandatory minimum term of 15 years in prison, with a maximum possible sentence of 60 years in prison, a $500,000 fine, a period of supervised release of five years to life, and a $200 special assessment. 

The case was investigated by the Federal Bureau of Investigation with assistance from the Cherry Hill, New Jersey Police Department and is being prosecuted by Assistant United States Attorney Michelle Morgan.

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

Click here to read the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Ishmael Shah, 20, of Darby, PA, was charged today by indictment with seven robberies which interfered with interstate commerce and related firearm charges, announced United States Attorney Zane David Memeger. According to the indictment, Shah committed the following armed robberies: on June 15, 2013, the Metro Self Storage at 2240 Island Avenue, Philadelphia; on June 17, 2013, Gulla’s Auto Tag & Insurance located at 6301 Buist Avenue, Philadelphia; on June 21, 2013, the Sunoco gas station located at 2500 Island Avenue, Philadelphia; on June 22, 2013, the Kerrs Building Materials, Inc. located at 1528 Washington Avenue, Philadelphia; the attempted armed robbery, on June 26, 2013, of the 7-Eleven located at 501 Church Lane, Yeadon, PA; the armed robbery, on June 28, 2013, of the 7-Eleven located at 1028 Garrett Road, Upper Darby, PA; and the attempted armed robbery, on July 11, 2013, of Kicks USA located at 1575 N. 52nd Street, Philadelphia. 
           
If convicted of the charges,thedefendant faces a maximum sentence of life imprisonment and a mandatory minimum of 107 years imprisonment. He also faces a maximum period of supervised release of five years, a substantial fine, a special assessment, and restitution.

This case was investigated by the Federal Bureau of Investigation, Philadelphia Police Department, Colwyn Police Department, Yeadon Police Department, Upper Darby Police Department, the Philadelphia District Attorney=s Office, and the Delaware County District Attorney’s Office, and is being prosecuted by Assistant United States Attorney Ewald Zittlau.

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

Click here to read the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Jay Stout, 55, of Harrisburg, PA, was sentenced today to five years in prison for a fraud scheme that involved falsifying the inspection records of aircraft at his company, Flying Tigers, Inc.  In April 2014, a jury found Stout guilty of conspiracy, fraud involving aircraft parts, mail fraud, and obstruction of justice.   He was president of Flying Tigers, located in Marietta, PA.  U.S. District Court Judge Harvey R. Bartle, III, also ordered Stout to pay restitution in the amount of $503,340, a special assessment of $800, and serve three years of supervised release.  Stout must report to prison by December 29, 2014.  The company was sentenced to one year of probation and a $5,600 special assessment. 

            Between October 2003 and January 2010, Stout conspired with others to commit fraud in aircraft parts, mail fraud, and wire fraud, by charging customers for the annual inspections of their aircraft, despite the absence of a certified mechanic with inspection authority, a certification given by the FAA. In order to conceal the absence of an authorized certification, Stout and Flying Tigers prepared fraudulent certifications of annual inspections for the airplane and engine log books or, on other occasions, failed to create the necessary certification at all. Some customers who brought their airplanes into Flying Tigers for annual inspections were charged for the inspection, but Flying Tigers never provided a signed certification in the airplane or engine log books recording the annual inspection. By this method, the absence of the valid signature of a certified mechanic was not evident to the Flying Tigers customers. Other annual inspections were certified in the log books by Stout, even though Stout was no longer authorized to certify annual inspections. In other annual inspections, the signatures of certified mechanics with inspection authority were forged in the log books. Such was the case with one former Flying Tigers employee who left Flying Tigers in late 2006/early 2007, but whose forged or fraudulent signatures appear on certified annual inspections, both before the period that the former employee had his certification, and through October 2007, long after he stopped working for Flying Tigers. In addition, the fraudulent signature of Gilbert Stout, Jay Stout’s father, appeared on annual inspections many years after Gilbert Stout stopped working on aircraft, and the forged and fraudulent signature of Joel Stout, a Flying Tiger, Inc. employee and Jay Stout’s son, appeared on annual inspections that Joel Stout did not perform. Many airframe and engine log books, containing these and other entries, were shown to the jury during the trial. 

The case was investigated by the United States Department of Transportation Office of Inspector General and was prosecuted by Assistant United States Attorney Arlene Fisk.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Edward J. Rorie, 50, of Philadelphia, PA, a tax return preparer, pleaded guilty today to multiple counts of criminal tax fraud.  For tax years 2009 through 2011, Rorie prepared 968 federal income tax returns which sought refunds of $3.85 million.  The bogus refund claims were based on various tax credits which were part of the 2009 American Reinvestment Act, in addition to inflated and fictitious medical, dental and miscellaneous expenses.  Rorie faces a maximum sentence of 75 years in prison, a $2,500 special assessment, and a fine of up to $6.25 million dollars.  U.S. District Court Judge Anita B. Brody scheduled a sentencing hearing for February 11, 2015. 

In preparing the fraudulent returns, Rorie variously claimed expense deductions and tax credits to which the filers not entitled to receive. The tax credits included the First Time Home Buyer Tax Credit, The Hope Tax Credit, The Earned Income Tax Credit, Education Credits, The Child Care Tax Credits and The Recovery Act’s Additional Child care Credit. The alleged loss to the Internal Revenue Service was at least $100,000.

The case was investigated by Internal Revenue Service Criminal Investigations and is being prosecuted by Assistant United States Attorney Floyd J. Miller.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Devos Ltd., doing business as Guaranteed Returns (“Guaranteed Returns”), in Holbrook, NY, its Chief Executive Officer, Dean Volkes, and two others were charged by indictment, unsealed today, in a multi-million dollar scheme to defraud customers, including the government.  Volkes, 51, of Port Jefferson, NY, Donna Fallon, 50, of Miller Place, NY, and Ronald Carlino, 66, of Deer Park, NY, are all charged in a conspiracy to obstruct justice and were arrested this morning, announced United States Attorney Zane David Memeger. 

The indictment alleges that more than $116 million worth of drug products had been returned for refund and more than $14 million of those drugs belonged to federal government agencies, including the Department of Defense and the Veterans Administration.  Other victims include numerous hospitals, pharmacies, and long-term care facilities.

Fallon serves as Chief Financial Officer for Guaranteed Returns and Carlino is an Information Technology employee.  All four defendants are charged with conspiring to obstruct justice by concealing and destroying records involved in a Defense Department investigation, six counts of obstruction of justice, and three counts of lying to federal agents about those records.  Volkes, Guaranteed Returns, and Fallon are also charged with money laundering conspiracy.  Volkes and Guaranteed Returns are charged in 18 counts of wire fraud, 14 counts of mail fraud and one count of conversion of government property.

According to the indictment, Guaranteed Returns was in the business of managing the returns of pharmaceutical products for healthcare providers, including the Department of Defense (DoD) and the Veterans Administration.  Manufacturers of pharmaceutical products frequently allow expired drugs to be returned for a refund.  Guaranteed Returns handled this process for healthcare provider clients in exchange for a fee based on a percentage of the return value.  

The indictment charges that Guaranteed Returns promised its clients that it would hold the clients’ “indate” (not yet expired) drug products until they expired, and then return them on the clients’ behalf, in exchange for a fee.  Instead, according to the indictment, Guaranteed Returns, at the direction of CEO Dean Volkes, stole a significant portion of the “indate” drug products that it received from its clients; returned the drugs to the manufacturers; and kept the resulting refund money for itself and Dean Volkes.

The indictment further alleges that during the course of the scheme, a federal grand jury sitting in this district began investigating the diversion of funds under a contract with the DoD.  During that investigation, an agent from the Defense Criminal Investigative Service met with Dean Volkes and served him with a grand jury subpoena requiring Guaranteed Returns to turn over records related to the DoD contract.  Volkes and other Guaranteed Returns employees stated that they would comply with the subpoena.  Instead, it is charged that with the help of Donna Fallon and Ronald Carlino, they destroyed some records and concealed others, and then lied to the investigating agents about why the records were not produced.  

“The defendants in this case found a way to defraud the government, hospitals, pharmacies, and long-term care facilities by exploiting the system for returning expired drugs to pharmaceutical companies,” said Memeger.  “My office will continue to aggressively prosecute and seek to recover illegal proceeds from those who use our precious health care dollars to enrich themselves at the expense of everyone else.”

“Fraud against the government amounts to stealing from American taxpayers, in service of pure greed,” said FBI Special Agent-in-Charge Edward J. Hanko said. “The FBI takes that very seriously, and we’re committed to tracking and shutting down financial fraud schemes.” 

If convicted of all charges, defendant Guaranteed Returns faces a possible fine of over $200 million along with a $4,400 special assessment; Volkes faces a maximum possible statutory sentence of 810 years in prison, a fine of over $200 million, three years of supervised release, and a $4,400 special assessment; Fallon faces a maximum possible statutory sentence of 160 years in prison, a fine of over $200 million, three years of supervised release, and a $1,100 special assessment; and Carlino faces a maximum possible statutory sentence of 140 years in prison, a $2.5 million fine, three years of supervised release, and a $1,000 special assessment. 

This case was investigated by the Defense Criminal Investigative Service and the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorneys Nancy Rue and Paul Shapiro. 

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Defendants in a mortgage fraud conspiracy involving KREW Settlement Services were sentenced today by U.S. District Court Judge Berle M. Schiller for their roles in the multi-million dollar scheme involving more than 100 fraudulent mortgage loans.  Eric Sijohn Brown, 46, of Philadelphia, was sentenced to 180 months in prison and was ordered to pay $10,849,873 in restitution to the lenders; Kevin Joseph Franklin, 51, of Albany, Georgia, was sentenced to 139 months in prison and was ordered to pay $9,454,607 in restitution to the lenders; Roderick L. Foxworth, Sr., 57, of Philadelphia, was sentenced to 84 months in prison and was ordered to pay $2,701,868 in restitution to the lenders. For false filing of tax returns, Brown was also ordered to pay restitution to the IRS in the amount of $209,777, plus interest and penalties; Franklin was ordered to pay restitution to the IRS in the amount of $51,622, plus interest and penalties; and Foxworth was ordered to pay restitution to the IRS in the amount of $140,305, plus interest and penalties.  All three defendants pleaded guilty to conspiracy to commit loan fraud, wire fraud, and making false statements.  Co-conspirators Walter Brown and Cynthia Brown were convicted at trial. The fraud scheme resulted in more than $20 million in fraudulent loan proceeds.

Eric Sijohn Brown - a general contractor - worked with other co-conspirators to identify distressed properties to purchase, typically in the West Philadelphia area.  The scheme involved recruiting “straw buyers” whose credit history and personal information was used to purchase the properties, obtain mortgage loans, and take title to the properties, when, in reality, the properties were owned and controlled by the defendants.  Mortgage loan applications were then prepared in the names of the straw buyers containing a host of false information, including false purchase prices, false employment and income information, and false statements about the straw buyers living in the properties.  Mortgage brokers - including Roderick Foxworth and Walter Brown - submitted the fraudulent loan applications to lenders to secure the loans for the buyers, knowing that the information was false.  Cynthia Evette Brown falsely verified that many of the straw buyers worked for her employer, Unicco Service Company, when they did not.  Kevin Joseph Franklin, a title agent, falsely prepared two deeds and settlement statements (referred to as "Form HUD-1") – one for the seller that showed the actual agreed-upon purchase price and a false one for the lender that showed the grossly inflated purchase price.  Franklin also created false title insurance policies for the lenders. 

After the loans funded, the seller was paid the agreed-upon purchase price, and the difference between the actual purchase price and the false purchase price quoted to the lender was shared with and distributed by Franklin to Eric Brown, Foxworth, Walter Brown, and Cynthia Brown, and many of these payments were not reflected on the HUD-1 forms.

Eric Brown pleaded guilty on April 8, 2014; Franklin and Foxworth pleaded guilty on April 9, 2014.

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

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Rashidah Brice, a/k/a “Camille,” a/k/a “Milly,” 25, of Chester, PA, was sentenced today to 185 months in prison for sex trafficking females for prostitution.  Brice pleaded guilty on August 20, 2013, to sex trafficking of a minor by force and two counts of sex trafficking by force.  She, along with co-defendant Christian Dior Womack, operated a prostitution venture in Philadelphia, Pennsylvania, and elsewhere, that recruited young females, one of whom was a minor, to work as prostitutes for them between May 25, 2012 through February 3, 2013.  The defendants engaged in acts of physical violence and threats of physical harm to maintain the participation of females in their prostitution business. 

As part of their venture, Womack and Brice also created internet advertisements in which they advertised these females as available for purchase for purposes of prostitution.  The advertisements featured pictures of the females scantily clad, and provided a phone number to call to arrange a meeting with the females.

In addition to the prison term, U.S. District Court Judge Mitchell S. Goldberg ordered 10 years of supervised release, $35,700 in restitution, and a $300 special assessment.  A sentencing hearing for Womack is scheduled for November 12, 2014.

The case was investigated by the FBI and the Philadelphia Police Department Special Victim’s Unit is being prosecuted by Assistant United States Attorney Michelle Morgan.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Dorian Parsley, 44, of Philadelphia, formerly a dispatcher with the Philadelphia Police Department (PPD), was sentenced today to 14 months in prison for conspiracy, solicitation of a bribe, and honest services fraud in connection with a scheme by which she gave an unfair advantage to certain tow truck operators in exchange for cash bribes. Parsley pleaded guilty to the charges on July 21, 2014.  In addition to the prison term, U.S. District Court Judge Eduardo C. Robreno ordered a $1,000 fine, one year of supervised release, and a $300 special assessment.

Between February 2011 and December 2013, Parsley operated a bribery scheme through which she collected weekly payments totaling more than $35,000 from three tow truck operators, now her co-defendants, in exchange for providing them with certain confidential information, including accident and disabled vehicle locations, and the personal identifying information of accident victims.  Parsley did this by secretly sending text messages from her personal cellphone, in a purposeful end-run around PPD policies and procedures.  In this way, the defendant provided an unfair economic advantage to her bribers, at the expense of other tow truck operators who relied on the proper functioning of the PPD’s rotational towing program.

The case was investigated by the Federal Bureau of Investigation and the Philadelphia Police Department.  It is being prosecuted by Assistant United States Attorneys Kevin Brenner and Jennifer Chun Barry.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Thermacore, Inc. (“Thermacore”) has agreed to a $965,000.00 settlement to resolve allegations of fraud arising as part of the Federal government’s Small Business Innovation Research (“SBIR”) program.  According to the United States, Thermacore is responsible for duplicate SBIR awards submissions.  The United States contends that these submissions, and the attendant certifications, constituted false statements to the Federal government.  The settlement was announced today by First Assistant United States Attorney Louis Lappen.  Thermacore denies the allegations. 

Thermacore acquired k Technology Corporation (“kTC”) on August 7, 2009.  Through the SBIR program, kTC had submitted a project proposal to the National Aeronautics and Space Administration (“NASA”), on September 4, 2008, and submitted a duplicate proposal to the United States Air Force (“Air Force”) on September 24, 2008.   Through the SBIR program, the agencies provide small businesses with incentives to profit from the commercialization of technology that would benefit the Federal government.   

The SBIR program has requirements aimed to combat fraud, waste, and abuse.  As part of these requirements, both NASA and the Air Force mandate that the same or essentially equivalent research may not be funded by more than one agency and that submissions under the SBIR Program must be certified as being non-duplicative.  Under the SBIR Program, therefore, it is unlawful to receive funding for essentially equivalent work already funded under any government program or to falsely certify that work is non-duplicative.   

The investigation was prompted by NASA’s proactive initiative to identify potential fraud in its SBIR contracts.  “The proactive efforts of agencies like NASA are critical to identifying potential fraud and safeguarding limited government resources,” said Lappen. 

Since its enactment in 1982, as part of the Small Business Innovation Development Act, SBIR has helped thousands of small businesses to compete for federal research and development awards which have enhanced the nation’s defense.

Under the parties’ settlement agreement, Thermacore will pay $500,000 to the United States.  An additional $465,000.00 will be allocated and used for ongoing compliance efforts by Thermacore.  Thermacore has already initiated an upgrade to its Ethics and Compliance Program which efforts are continuing. 

The investigation was conducted by NASA, the Air Force, and the Department of Defense.  The case is being handled by Assistant U.S. Attorney Veronica J. Finkelstein and auditor Lawrence M. Kutys. 

Click here to view the settlement agreement.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA- Thinh Hung Le, 53, of Toronto Canada, was sentenced to 252 months in prison by the Honorable Juan R. Sanchez.  On June 17, 2014, a jury found Le guilty of a variety of drug importation and distribution charges.  The evidence at trial proved that Le smuggled large quantities of ecstasy pills and marijuana from Canada to Philadelphia in 2006.  Le was subsequently indicted and extradited from Canada.

Specifically, investigators with the Department of Homeland Security (HSI) seized three shipments of drugs which Le sent to his customer in Philadelphia.  On April 4, 2006, the HSI investigators seized approximately 105 pounds of marijuana.  On July 30, 2006, the HSI investigators seized approximately 26,000 ecstasy pills containing both methamphetamine and MDMA.  On October 23, 2006, the HSI investigators seized approximately 10,000 ecstasy pills.  In order to determine Le’s identity, the HSI investigators requested assistance from the Toronto Police Service.  Thereafter, two undercover Toronto police law enforcement officers met with Le pretending to be drug dealers from Philadelphia.  Le explained to the undercover officers that he could supply them with 100,000 ecstasy pills within three days and provide a custom “brand” for the pill.  Le further explained that he could manufacture the pills so that the high would last either 4 hours or 6 hours.

The case was investigated by U.S. Immigration and Customs Enforcement Homeland Security Investigations in conjunction with the Toronto Police Service.  Additional assistance was provided by the DEA, the Philadelphia Police Department, the Pennsylvania State Police, the Royal Canadian Mounted Police, and the York (Canada) Regional Police Department.

The case was prosecuted by Assistant United States Attorney Robert Livermore.  Extradition assistance was provided by the United States Department of Justice, Office of International Affairs.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - David Barnhouse, 24, of Horsham, PA, was sentenced, on October 16, 2014, to 18 months in prison for hacking into his neighbor’s wireless router and using it to post a bomb threat on the website of the Willow Grove Park Mall.  As a result of Barnhouse’s actions, the mall paid for increased security and the FBI, after tracing the threat to the neighbor’s router, executed a search warrant on the neighbor’s home. (The practice of making such false reports to bring police action against someone’s house is colloquially known as “swatting” – after the SWAT teams that law enforcement often uses to deal with such situations.)  

On June 20, 2013, Barnhouse hacked into the Verizon FiOS router of his neighbor and, using their Internet service, posted the following message:

“We have planted an explosive device somewhere in the mall, and will detonate it unless all members of the Islamic faith imprisoned in the United States are freed by 7pm on June 23.  Even if you search the mall for 72 consecutive hours, you will NEVER find it.”

In addition to the prison term, U.S. District Court Judge C. Darnell Jones, II ordered three years of supervised release and restitution to the mall for the costs of the increased security.

The case was investigated by the Federal Bureau of Investigation and was prosecuted by Assistant United States Attorneys Jeanine Linehan and Michael L. Levy. 

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Marie Mikesche Bontigao, 43, of West Chester, PA, was charged by indictment, unsealed yesterday, in a fraud scheme involving more than $2 million, announced United States Attorney Zane David Memeger.  She is charged with wire and mail fraud.   

Bontigao was a licensed real estate broker who operated a franchise location of EXIT Realty in Philadelphia, New Jersey and Delaware and was the founder of the EXIT Realty “Tri-State Group: and “Tri-State Investment Holdings, Inc.” (T.R.I.H.I.). According to the indictment, between 2007 and 2013, Bontigao solicited individuals to invest in her real estate projects but, instead of investing the lenders’ money in real estate used the funds to operate her business and to pay personal expenses.  Bontigao allegedly bilked these lenders out of more than $2 million.

If convicted, the defendant faces a maximum possible sentence of 80 years in prison, a three-year period of supervised release, and a $1 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 or Information is an accusation.  A defendant is presumed innocent unless and until proven guilty.

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Felix Zeferino-Carranza, a/k/a “Felix Lopez Carranza,” 33, of Norristown, PA, was charged today by Indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger.  The indictment alleges that on or about August 23, 2014, Zeferino-Carranza, an alien, and native and citizen of Mexico, was found in the United States after having been deported from the United States on or about April 18, 2009, July 3, 2009, and July 5, 2009.

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

The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Frank R. Costello, Jr.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Aurelio Rafael Martinez, 38, of Essex, MD, was charged today by indictment with fraudulent use of a social security number and false statements in a matter within the jurisdiction of a federal agency announced United States Attorney Zane David Memeger.  In particular, the indictment charges the defendant with using a social security number that did not belong to him, and falsely claiming United States citizenship on an I-9 Form in order to obtain and retain employment in connection with his work on the federally funded Girard Point bridge reconstruction project in Philadelphia between 2010 and 2012.

If convicted Martinez faces a maximum possible sentence of 10 years’ imprisonment.   

The case was investigated by the United States Department of Labor, Office of Inspector General, the Office of Inspector General of the Department of Transportation; the Environmental Protection Agency Criminal Investigation Division, the Office of Inspector General of the Social Security Administration; Amtrak Office of Inspector General, Homeland Security Investigations, and the Federal Bureau of Investigation.  It is being prosecuted by Assistant United States Attorneys Paul G. Shapiro and Nancy E. Potts.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Baltazar Lopez-Zamudio, a/k/a “Baltazar Lopez,” a/k/a “Jorge Sanchez-Rodriguez,” 28, of Kennett Square, PA, was charged today by indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger.  The indictment alleges that on or about September 17, 2014, Lopez-Zamudio, an alien, and native and citizen of Mexico, was found in the United States after having been deported from the United States on or about March 5, 2010.

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

The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Terri Marinari.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Alexander Burke, 58, of Bristol, England, and formerly of Upper Montclair, New Jersey, was charged today by Indictment with conspiring to commit wire fraud and money laundering, and with substantive wire fraud and money laundering violations, announced United States Attorney Zane David Memeger.

The Indictment alleges that Burke and another attorney engaged in a scheme to defraud Company A, a company in Malvern, Pennsylvania, by billing the company for legal work not done and splitting the resulting payments from Company A.  Burke was a patent attorney for Company A, and as part of his job he was permitted to hire outside counsel to draft patents, respond to patent office actions, and to write appeals in patent cases.  Beginning in the summer of 2008, he and another attorney, an outside patent counsel, agreed that Burke would assign patent-related projects to the attorney, the attorney would do no work on the projects, and the attorney would bill Company A for the work assigned but not done.  Burke himself, although he received salary from Company A to do patent work, did the patent work.  When the outside attorney billed Company A, Burke approved the invoices for payment.  Company A then paid the outside attorney and the outside attorney sent most of the money to Burke.

This fraudulent scheme continued until approximately June of 2013.  Over the course of the scheme, Burke approved invoices from the outside attorney for work not done in the amount of approximately $2,481,020.  Although Company A discovered the scheme and did not pay some of the final invoices, over the five years that Burke continued the scheme Company A paid out approximately $2,417,665 for work billed for, but not done, by the outside counsel in approximately 588 fraudulent invoices.

The indictment further alleges that Burke and the outside counsel conspired to commit money laundering by agreeing to send Burke’s share of the money from the counsel’s account, where Company A had paid it, to Burke’s account at NJM Bank in New Jersey which he had set up in the name of a company called Electrical Services & Networks.  These transactions totaled $2,098,977.  Burke further committed twelve acts of money laundering by causing wire transfers from this account to an additional bank account he had set up with another person at a Barclay’s Bank in the Isle of Man in the name of a different company.  The charged transactions to the bank in the Isle of Man totaled $1,318,171.

If convicted the defendant faces a maximum possible sentence of 340 years imprisonment, $6,000,000 fine or twice the amounts of gross gain and property involved in the counts, whichever is more, restitution, forfeiture, and a $2300 special assessment.

The case was investigated by the Federal Bureau of Investigation.  This case is being prosecuted by Assistant United States Attorney Albert S. Glenn.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Rochelle Biesenthal, 64, of Brigantine, New Jersey, was sentenced today to 12 months and a day in prison.  On May 28, 2014, Ms. Biesenthal pleaded guilty to one count of wire fraud and three counts of tax evasion.

As part of her wire fraud charge, Ms. Biesenthal engaged in a scheme to defraud the Jewish Heritage Programs (“JHP”).  JHP is a non-profit organization in Philadelphia that provides opportunities for Jewish college students (at the University of Pennsylvania, Temple University and other universities), as well as young professionals, and other persons to engage with their Jewish heritage and reaffirm their Jewish identity.  Ms. Biesenthal was carried out the scheme between 2002 and April 2009, while she was employed as a bookkeeper at JHP.  She fraudulently prepared and issued checks drawn on JHP’s bank accounts and rather than use them for the non-profit’s mission, she made those unauthorized checks payable to her.  

Ms. Biesenthal also fraudulently authorized electronic debits from JHP’s bank accounts to pay for her personal credit cards and her family’s personal credit cards.  As part of the scheme, she defrauded JHP of a total of well over $400,000.  In addition, she never reported her unauthorized income in her tax returns in tax years 2007 through 2009 and concealed the true sources of her income.

In addition to the prison term, Chief U.S. District Court Judge Petrese Tucker ordered Biesenthal to pay restitution in the amount of $171,187.04 to JHP and $61,637 to the Internal Revenue Service.  The Court also imposed three years of supervised release, and a $400 special assessment.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations and was prosecuted by Assistant United States Attorney Sozi Pedro Tulante.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Francis J. Cinelli, Sr., M.D., 87, and Francis J. Cinelli, Jr.,49, of Wind Gap, PA were each charged separately, by information,  with one count of tax fraud stemming from false tax returns filed by Cinelli Jr., announced United States Attorney Zane David Memeger.

​Cinelli Jr. is charged with filing a false tax return, stemming from his alleged filing of a 2007 false tax return with the IRS on which he failed to declare approximately $163,000 in income he had earned during that year.  

Cinelli Sr. is charged with aiding and abetting Cinelli Jr.’s filing of a false tax return. According to the information, Cinelli Jr. filed a 2008 false tax return with the IRS on which Cinelli Jr. failed to declare approximately $109,000 in income that Cinelli Sr. had paid to Cinelli Jr. during that year.

Each of the defendants faces a maximum sentence of three years in prison, a one year term of supervised release, a $100,000 fine, and a $100 special assessment.

The cases were investigated by the Internal Revenue Service Criminal Investigation Division and the Federal Bureau of Investigation and are being prosecuted by Assistant United States Attorney Michael S. Lowe.

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

Click here to view the information for Cinelli, Sr.

Click here to view the information for Cinelli, Jr.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – An indictment was unsealed today in federal court charging Eric C. Opitz, 45, of Phillipsburg, New Jersey with health care fraud, mail fraud, and the illegal distribution human growth hormones (“HGH”) and anabolic steroids, announced United States Attorney Zane David Memeger.  

The indictment alleges that the defendant used Medicare Part D benefits to obtain HGH and anabolic steroids, which he then sold by advertising on the internet. HGH and anabolic steroids are frequently used by athletes and body builders for unapproved purposes such as enhancing performance and building muscle mass. These drugs can present serious health risks when not properly administered under the supervision of a licensed physician. It is alleged that the defendant typically sold human growth hormone, for approximately $450 per 5 mg kit, to any interested buyer. The defendant was not a licensed physician, nor did he have any medical training.  

If convicted, the defendant faces a substantial term of imprisonment and is subject to criminal forfeiture proceedings.

The case was investigated by Immigration and Customs Enforcement - Homeland Security Investigations, the FDA 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 M. Beth Leahy.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Matthew McManus, 46, of Glenside, Pennsylvania, was sentenced today to 16 years in prison for his role in an advance fee fraud scheme that defrauded hundreds of victims searching for commercial financing from Remington Financial Group.  McManus was one of six people charged in the scheme.  He was convicted at trial on February 19, 2014.  His co-defendants all pleaded guilty.  The scheme defrauded more than 1,900 victims out of more than $26 million. In addition to the prison term, U.S. District Court Judge William Yohn ordered restitution of  $17,774,174, three years of supervised release, and an $800 special assessment.

Andrew Bogdanoff, of Scottsdale, Arizona, was the founder and chairman of Remington Financial Group (later renamed Remington Capital) and ran the company with McManus until 2008 in Arizona and Pennsylvania.  After McManus left the company in 2008, defendant Shayne Fowler, also of Scottsdale, replaced McManus as Bogdanoff=s right-hand man.  Defendant Joel Nathanson, of San Diego, California, was one of Remington=s most proficient employees and helped Remington defraud many victims.  Defendant Frank Vogel, of Rochester Hills, Michigan, was a Michigan‑based broker who referred numerous victims to Remington in exchange for large kickbacks. Aaron Bogdanoff, also of Scottsdale, was also charged in the conspiracy. 

Between 2005 and 2011, the defendants fraudulently induced hundreds of people to pay Remington fees in excess of $10,000 a piece, based on false representations that Remington had lenders and/or investors ready to provide financing for the victims= projects.  To facilitate this fraud, the defendants issued each victim a Aletter of interest,@ commonly referred to as an LOI.  Almost every LOI Remington issued stated that Remington had a lender or investor interested in financing the victim=s project.  Remington issued an LOI to every victim even though no Remington employee had spoken to any funding source and Remington knew that it was unlikely to find funding for the project.

The LOI was written to fraudulently lead victims to believe that Remington either was an actual lender or had spoken to lenders that had already expressed interest in the customer's project. Neither was true.  Additionally, the financing terms Remington included in the LOI were unrealistic and were used solely to induce customers to pay Remington's advance fees.  In addition to the false representations in the LOI, the defendants and other Remington employees also told victims the following lies to further induce victims to pay Remington=s fees:  a) Remington had five investors or lenders interested in their project; b) Remington was the actual lender for the project; c) Remington funded or Aclosed@ 80 percent of its deals; d) the victim would get funding for the project once the advance fee was paid and/or;  e) Remington would provide funding through its funding source Northbridge.  After a customer paid Remington=s fee, McManus and Andrew Bogdanoff instructed Remington employees to find problems with the projects so that Remington could blame its failure to provide financing on the victim.  The defendants did this to help protect Remington from civil and criminal complaints. 

After the FBI and IRS conducted search warrants in Arizona and Colorado in March 2011, defendant Matthew McManus attempted to distance himself from the fraudulent scheme by obstructing justice and lying to federal agents.  He was convicted of these charges, as well.

Some of the defendants used sophisticated means to perpetuate the fraud.  For instance, in 2010, defendants Fowler and Andrew Bogdanoff used Remington's website to advertise an anti‑fraud policy and stated falsely that Remington had recently provided information to the Federal Bureau of Investigation and local law enforcement authorities about a suspected email scam.  Remington posted this information to ensure that if potential customers used an internet search engine to search for allegations about Remington's fraud, they would be directed to Remington's website rather than third‑party internet sources that contained negative information about Remington.

            Andrew Bogdanoff is serving a 220 month prison sentence; Shane Fowler was sentenced to 21 months in prison; Joel Nathanson was sentenced to 12 months and one day in prison; Aaron Bogdanoff was sentenced to two years of probation; Frank Vogel will be sentenced in the Eastern District of Michigan on December 3, 2014.

The case was investigated by the Federal Bureau of Investigation and the Internal Revenue Service Criminal Investigations with assistance from the Pennsylvania Securities Commission.  It was prosecuted by Assistant United States Attorney David Axelrod.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Aileen Gong, D.P.M., 55, of King of Prussia, Pennsylvania, was charged by indictment, on October 3, 2014, with health care fraud, wire fraud, and aggravated identity theft, announced United States Attorney Zane David Memeger.  The indictment charges that between 2009 and February 2014, Gong, a podiatrist, submitted at least $480,000 in fraudulent claims to Medicare.

According to the indictment, Gong submitted claims for patient visits that never occurred -- including visits that she claimed took place while she was outside of the United States -- and submitted claims for procedures that she did not perform on patients who did visit her office in Philadelphia.  It is further alleged that as part of the scheme she knowingly used, without lawful authority, a means of identification of another person, that is, the unique Medicare Beneficiary Number of patients.

If convicted the defendant faces a maximum possible sentence of 184 years in prison and a fine of $3.5 million.

The case was investigated by the Federal Bureau of Investigation and the U.S. Department of Health and Human Services – Office of Inspector General.  It is being prosecuted by Assistant United States Attorney Laurie Magid.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Istvan Merchenthaler, 44, of Downingtown, Pennsylvania, pleaded guilty today to all counts in four pending indictments charging him with wire fraud, possession of destructive devices, and related offenses, announced United States Attorney Zane David Memeger. Merchenthaler has been in federal custody since February 16, 2013. All of the indictments have been consolidated before United States District Judge Robert F. Kelly. A sentencing hearing is expected to be scheduled for January 2015.   

Merchenthaler pleaded guilty to four counts of wire fraud, two counts of aggravated identity theft, four counts of money laundering, two counts of filing false tax returns, and two  counts of interstate transportation of stolen goods, as charged by the federal grand jury in this District.  Specifically, from about May 2006 to February 2013, Merchenthaler claimed to be the founder of PhoneCard USA, a company that was purportedly a “premier distribution source” for prepaid phone cards and cell phones.  In reality, Merchenthaler operated a “Ponzi” scheme, stealing over $2 million from over 200 investors and using much of these funds for his own benefit and to perpetuate his scheme.  In his scheme, Merchenthaler falsely claimed that PhoneCard USA had “lucrative contracts” with major retail chain stores including Walmart, 7-Eleven, and BJ’s Wholesale Club.  Further, Merchenthaler falsely claimed to have friendships with executives at Walmart and 7-Eleven and used their names in a fraudulent e-mail address and bogus contracts. 

Merchenthaler also pleaded guilty to one count of possession of unregistered destructive devices and one count of being a fugitive in possession of a firearm and ammunition, as charged by the federal grand jury in this District.  Specifically, while he was a fugitive from justice in this District, Merchenthaler possessed approximately 460 improvised explosive devices (“IEDs”), a firearm, and ammunition. 

In addition, Merchenthaler also pleaded guilty to two counts of being a fugitive in possession of firearms and ammunition and one count of possession of an unregistered destructive device, as charged by the federal grand jury in the Eastern District of North Carolina. Specifically, while he was a fugitive from justice, Merchenthaler possessed approximately 39 IEDs, a firearm, and 580 rounds of ammunition in the Wilmington, North Carolina area. 

Moreover, Merchenthaler pleaded guilty to one count of being a fugitive in possession of firearms and ammunition, one count of possession of an unregistered destructive device, and one  count of possession of an illegally manufactured firearm, as charged by the federal grand jury in the District of Maryland.  Specifically, while he was a fugitive from justice, Merchenthaler possessed approximately 135 IEDs, 15 firearms, and 11,000 rounds of ammunition in the Rising Sun, Maryland area.

At sentencing, Merchnthaler faces a mandatory minimum of two years in prison with a maximum possible statutory sentence of 230 years, a three year period of supervised release, a fine of up to $5.5 million fine, and a $2,200 special assessment.  Restitution and forfeiture may also be ordered. 

The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service Criminal Investigations, the Philadelphia Police Bomb Disposal Unit, the Montgomery County Bomb Squad, the Montgomery County Sheriff’s Office, the East Whiteland Police Department, the East Whiteland Fire Department, the Malvern Fire Department, the Chester County District Attorney’s Office, the Maryland State Police, and the North Carolina State Bureau of Investigation.  The case is being prosecuted by Assistant United States Attorney Vineet Gauri.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – A federal jury, yesterday, returned guilty verdicts, on all three counts, against Christopher Steele, a/k/a/ “Mike Dozor,” 34, of Newark, DE, in a child exploitation case. Steele was indicted on March 6, 2014 for use of an interstate commerce facility to entice a minor to engage in sexual conduct, interstate travel with intent to engage in illicit sexual conduct with a minor, and receipt of child pornography.  He faces a mandatory minimum of 10 years in prison with a maximum sentence of life.  A sentencing date is not yet scheduled.

Steele found his victim, Minor #1, through a social networking cell phone application.  He used that media to entice the victim into having sex.  He then traveled from Delaware to Pennsylvania for the purpose of engaging in illicit sexual conduct with that minor.  Steele also received a visual depiction showing a minor engaged in sexually explicit conduct and participated in a scheme to sexually exploit minor victims.  

“Child sexual exploitation crimes are among HSI’s highest priorities,” said John P. Kelleghan, special agent in charge of HSI Philadelphia. “We will continue to relentlessly pursue predators who sexually abuse children, whether that abuse is physical in nature or if it's accomplished by exploiting their images.”

The case was investigated by U.S. Immigration and Customs Enforcement (ICE) Homeland Security Investigations (HSI), the Montgomery County District Attorney’s Office, and the Limerick Township Police Department.  It is being prosecuted by Assistant United States Attorney Michelle Rotella.

The public is encouraged to report suspected child predators and any suspicious activity by calling 1-866-DHS-2-ICE. Suspected child sexual exploitation or missing children may be reported to the National Center for Missing & Exploited Children, an Operation Predator partner, via its toll-free 24-hour hotline, 1-800-THE-LOST.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA- Two members of the Ironworkers Local 401 pleaded guilty today to their roles in incidents that caused destruction to construction sites. Daniel Hennigar, 54, of Philadelphia, pleaded guilty to maliciously damaging property by means of fire. James Zinn, 28, of Philadelphia, pleaded guilty to conspiracy to commit extortion which interferes with interstate commerce. U.S. District Court Judge Michael Baylson scheduled a sentencing hearing for Hennigar for January 28, 2015 and January 21, 2015, for Zinn.

On December 20, 2012, Hennigar drove two other ironworkers, James Walsh and William Gillin, to the Quaker Meetinghouse under construction.  Walsh and Gillin used an acetylene torch and gasoline to cause significant damage to the construction site in retaliation for the contractor’s failure to hire union ironworkers.

Zinn admitted to his role in a series of incidents during which members of the union damaged non-union construction sites in an attempt to force non-union contractors to hire union ironworkers. Those incidents included $25,000 in damage to the Wallingford Elementary School construction site and $25,000 in damage at a Merion East Golf Course in Ardmore, PA.

Hennigar faces a five year mandatory minimum term of imprisonment.  Each defendant faces a statutory maximum sentence of 20 years in prison, three years of supervised release, a $250,000 fine, a $100 special assessment, and possible restitution. 

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 provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - An indictment was filed yesterday charging six people, including a couple and their daughter, in a wide-reaching mortgage fraud conspiracy in which the defendants allegedly stripped the equity from the homes of desperate homeowners facing foreclosure, announced United States Attorney Zane David Memeger.  The scheme caused losses to mortgage lenders of approximately $3.8 million.  Silver Buckman, 36, of Cherry Hill, NJ, her parents, Vincent Foxworth, 69, and Cynthia Foxworth, 63, of Turnersville, NJ, Danette Thomas, 52, of Pennsauken, NJ, Byron White, 44, of Pennsauken, NJ and Franklin Busi, 46 of Sicklerville, NJ, are charged with conspiracy to commit bank fraud and wire fraud.  Some of the defendants are also charged with bank fraud and wire fraud.

            According to the indictment, the defendants engaged in a scheme in which they offered to help financially-vulnerable individuals save their homes from foreclosure or obtain money from the equity in their homes and, instead, defrauded the homeowners and mortgage lenders. Buckman owned and operated Fresh Start Financial Services (“FSFS”), in Mount Laurel, NJ and was an employee of American Home Lending as well as a mortgage broker for American One Mortgage (“AOM”).  Her father is an experienced Realtor.

            Between October 2006 and November 2009, Buckman and her co-defendants allegedly targeted financially vulnerable homeowners and represented to them that they could improve their credit, save their homes from foreclosure, or provide them with money through Buckman’s lease buyback program.  The homeowners were told that “investors” would be used to temporarily refinance their homes and that they could repurchase the homes in one year, or once they regained their financial footing.  The defendants also allegedly induced the homeowners into signing documents related to the sale and lease of their homes by their representations that the homeowners would remain on the title to their homes, that the equity from their homes would be placed into an individual escrow account in their names, and that new mortgages would be paid from the escrow accounts to establish their timely payment histories. 

            According to the indictment, in order to carry out the scheme, Buckman recruited Vincent Foxworth and Cynthia Foxworth and others to be straw borrowers.  White also recruited a straw borrower.  Ultimately, Buckman and Busi submitted false financial and employment information about the straw borrowers to mortgage lenders.  Once lenders agreed to fund the mortgage loans, Buckman and some of the other defendants allegedly prevented the homeowners from receiving the settlement proceeds and did not put money into escrow accounts for the homeowners.  Instead, the defendants distributed the proceeds amongst themselves.  Buckman used the majority of the proceeds due the homeowners to pay the fees due the straw borrowers, the down payments on behalf of the straw borrowers in subsequent transactions to further the scheme, and her personal expenses.  She used only a fraction of the homeowners’ monies toward the payment of the mortgages obtained by the straw borrowers for the homeowners’ homes and thereby caused the loans to go into default.

            If convicted, the defendants face an advisory sentencing guideline range of at least 87 to 108 months in prison plus restitution.

            The case was investigated by the Federal Bureau of Investigation and the United States Postal Inspection Service and is being prosecuted by Assistant United States Attorney Anita Eve.

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Christopher Saridakis, 45, of Wilmington DE, was sentenced today to 15 months in prison for giving another person confidential information about eBay stock. Saridakis pleaded guilty on May 9, 2014 to securities fraud. He was a senior executive at GSI Commerce, Inc. (“GSIC”), when he provided material, non-public information regarding eBay’s pending acquisition of GSIC.  In addition to the prison term, U.S. District Court Judge Stewart Dalzell ordered one year of supervised release, a $10,000 fine, and a $100 special assessment.

On March 20, 2011, Saridakis, who was privy to discussions of a merger, sent a series of text messages to a Confidential Witness (“CW1”) that began with the defendant asking if CW1 “...own[ed] our [GSIC] shares?”  CW1 replied, “no, but it’s cheap.”  This response led Saridakis to tell CW1 “you should.”  CW1 responded with “ok,” to which Saridakis replied, “soon.”  On March 22, 2011, following the receipt of the text messages, while in possession of the inside information, and knowing defendant Saridakis’ position as a senior executive at GSIC, CW1 purchased and caused to be purchased 25,000 shares of GSIC stock on margin for approximately $470,000.  On June 20, 2011, CW1 received $737,500 in exchange for the 25,000 shares of GSIC, equating to an illicit profit of $260,304, as a result of the text messages.  Saridakis also shared the same material non-public information with other individuals.

The case was investigated by the FBI.  It was prosecuted by Assistant United States Attorney Joel D. Goldstein.  Saridakis and others have been charged in a parallel civil matter by the Securities and Exchange Commission.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA- Two members of the Ironworkers Local 401, Edward Sweeney and Shawn Bailey, pleaded guilty today in United States District Court before the Honorable Michael Baylson. Sentencing hearings have been scheduled for January 27, 2015 and February 2, 2015, respectively.

Edward Sweeney, 53, of Philadelphia, PA pleaded guilty to RICO conspiracy, maliciously damaging property by means of fire, use of fire to commit a felony, maliciously damaging property by means of fire, conspiracy to maliciously damage property by means of fire, and attempted maliciously damaging property by means of fire.  At the time, Sweeney was a business agent for the Ironworkers Local 401 and participated in a series of incidents on behalf of that union as part of the plan by the defendants to force non-union contractors to hire union labor.  Specifically, Sweeney admitted that he participated in 10 incidents of extortion or attempted extortion.  Sweeney further admitted his involvement in the Quaker Meetinghouse arson, an arson on Grays Avenue in Philadelphia, and an attempted arson in Malvern, as well as other episodes, all of which were in retaliation for the contractors’ failure to hire union ironworkers.

Shawn Bailey, 34, of Philadelphia, PA pleaded guilty to Hobbs Act Extortion for his participation in an extortion of a non-union contractor working on a warehouse on Grays Avenue in Philadelphia.

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 provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Joan Baranek, 57, of Yardley, PA, is charged by information, filed yesterday, with embezzling $830,504 from her employer, between 2006 and 2012, and not reporting that income on her tax return, announced United States Attorney Zane David Memeger.  Baranek was a vice president for sales at Airgas Safety, Inc., a subsidiary of Airgas, Inc., based in Levittown, Pennsylvania.  She is charged with 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.  According to the information, 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.  It is alleged that  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.

It is further alleged that Baranek willfully made and subscribed 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.

If convicted the defendant faces a maximum possible sentence of 23 years’ imprisonment, a one-year period of supervised release, a $500,000 fine, and a $200 special assessment.

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

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

Click here to view the information.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Robert G. Wray, 75, of Torrey, Utah, was arrested Friday on charges that he conspired with a Lehigh County doctor of osteopathy to defraud the Department of Health and Human Service and the Internal Revenue Service, announced United States Attorney Zane David Memeger. The indictment alleges that the fraud scheme amounted to hundreds of thousands of dollars.  Wray is charged with one count of conspiracy, thirty counts of wire fraud, and one count of bankruptcy fraud.

According to the indictment, Wray uses many different names for himself in an attempt to evade federal and other laws by arguing that he has not been properly identified in legal documents.  Wray also claims to be a “sovereign” who is not subject to federal laws, including laws regarding personal income taxation.  It is further alleged that Wray conspired with Dr. Dennis Erik Fluck Von Kiel, of Macungie, Pennsylvania, to help Dr. Von Kiel evade a six-figure debt he owed to HHS for unpaid medical school loans and avoid paying personal income taxes to the IRS.  Dr. Von Kiel, charged separately, is scheduled for trial in December 2014.

If convicted of all charges, Wray faces a maximum possible sentence of 610 years’ in prison, three years of supervised release, a fine of up to $8 million, and a $3,200 special assessment.

The case was investigated by the IRS Criminal Investigations and the FBI. It is being prosecuted by Assistant United States Attorney Mark B. Dubnoff.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Eric Mathe 42, of North Bay Village, Florida and Ashif Jiwa 55, of Miami, Florida were charged in by indictment, unsealed today, with wire fraud in an investment scheme, announced United States Attorney Zane David Memeger. The indictment alleges that between February 2009 and February 2010, Mathe and Jiwa defrauded investors located in the Eastern District of Pennsylvania and elsewhere, by making false representations of ownership of Federal Communication Commission (FCC) Low Powered Television (LPTV) construction permits and licenses to induce investments in Mathe’s now defunct Florida based company Vision Broadcast Network (VBN). Mathe and Jiwa are alleged to have defrauded investors out of at least $1,688,150.

If convicted, the defendants face a maximum sentence of 20 years= imprisonment, a three-year term of supervised release, a $250,000 fine, and a $100 special assessment.

The Securities and Exchange Commission has filed a related civil action against Mathe and Jiwa in Miami, Florida.

This case was investigated by the Federal Bureau of Investigation with assistance from the Miami Regional Office of the United States Securities and Exchange Commission. It is being prosecuted by Assistant United States Attorney Melanie Babb Wilmoth.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Felix R. Pinero, 62, of Philadelphia, Pennsylvania, was charged today by Information with one count of theft of Government funds, and one count of social security fraud, announced United States Attorney Zane David Memeger.  The information alleges that from in or about November 1986 to in or about August 2011, Felix R. Pinero implemented a scheme to defraud the Social Security Administration by concealing that he was working and later receiving disability benefits while simultaneously receiving additional disability benefits under a different name and social security number for a period of almost 25 years, resulting in total losses to the government of approximately $117,135.25.

If convicted the defendant faces a maximum possible sentence of fifteen years incarceration, a $500,000 fine, three years supervised release, and restitution of $117,135.25.

The case was investigated by the Social Security Administration’s Office of the Inspector General and is being prosecuted by Special Assistant United States Attorney Thomas Moshang III.

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

Click here to read the information

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICT of PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Drug gang used Chester playground to stash drugs and guns

PHILADELPHIA – Federal, state, and local law enforcement, today, arrested more than 30 people on charges of distributing drugs in and around the city of Chester, PA.  The operation targeted alleged members of the violent Rose and Upland Drug Trafficking Group (“DTG”) and coincided with the unsealing of 14 indictments charging 40 people.  The group is charged with selling drugs, illegally carrying guns and stashing both drugs and guns in a neighborhood playground.

The main indictment is a 261-count superseding indictment that charges 22 of the 40 defendants with operating a drug market within the Rose and Upland neighborhood on the east side of Chester City.  According to the indictment, William Dorsey ran the operation, sold multiple kilograms of cocaine, often in the form of crack, to members of the group and others.  One of the group’s largest alleged cocaine and heroin suppliers, Paris Church, has been charged in five separate indictments alleging that he, along with others, distributed and attempted to obtain approximately 25 kilograms of cocaine for re-distribution.

The charges were announced today by United States Attorney Zane David Memeger, Delaware County District Attorney Jack Whelan, Drug Enforcement Administration Acting Special Agent-in-Charge Robert R. Niczyporowicz, FBI Special Agent-in-Charge Edward J. Hanko, and Chester Police Chief Joseph Bail.

According to the superseding indictment, the DTG was distributing cocaine, crack cocaine, and heroin to customers in their territory and elsewhere between September 2012 and 2014. Charged with Dorsey are: Donald Womack, Sr., Paris Church, Braheem Edwards, Naim Butler, Ronell Whitehead, Michael Lewis, Breon Burton, JaVaughn Anderson, Robert Duson, Spencer Payne, Satchel Johnson, Alonzo Jones, Jamear McGurn, Classie Mae Dorsey, Herman Purnell, Dondre Ellis, Erven Towers-Rolon, John Dennis, Charles Stansbury, Waali Shepherd, and Kareem York.  The defendants are also charged with maintaining a drug house, possessing firearms in furtherance of drug trafficking crimes, and distributing cocaine, crack and heroin within 1,000 feet of area schools and a playground.  Some of the defendants are also charged with being felons in possession of firearms.  During the investigation, 15 firearms were recovered. 

Several other individuals are charged in separate indictments with drug trafficking conspiracies and other drug distribution offenses.  Included in those indictments are: Kareem Bannister, George King, Nathaniel Coles, Lamont Carter, Rafael Hunt-Irving, Michael Pinkney, Solomon Whitaker, Shmeca Melvin, Anthony Floyd (of North Carolina), Steven Miller (of Maryland), and Anthony Potter, Shawn Mills, Tiffany Beauford, Farud Gigetts, Avery Mosley, Al-Ghani Rasheed, Steven Crews, and LaQuan Allen.

According to the superseding indictment, members of the DTG who sold cocaine hid the drugs in various "stash" locations in order to avoid having drugs on them if they were stopped by police.  Those stash locations included playgrounds, abandoned houses, alley ways, trash cans, mailboxes, windowsills, and other locations in the neighborhood.  Members of the RUDTG controlled the drug sales in the Rose and Upland geographic territory and did not permit non-group members to sell drugs in that area.  To protect their territory and drug trafficking activities, members routinely carried, and sometimes used, loaded firearms or had firearms available in hidden locations, including their stash locations.

“The people who live in the city of Chester, particularly in the area surrounding Rose and Upland Streets, deserve a break,” said Memeger. “They deserve better. And we will keep going back there until we release the choke hold these drug organizations have on that community. This is the third major multi–agency law enforcement initiative in that city and we will continue to commit the federal resources necessary to free the many good, hardworking citizens who call Chester home from violent drug traffickers.”

"Today, a major step was taken to make the City of Chester, PA a safer place” said DEA Acting Special Agent-in-Charge Bob R. Niczyporowicz.  “The outstanding cooperation between the local, state and federal partners utilizing their resources led to the infiltration and dismantlement of this violent DTO, which had a stronghold on the streets of Chester. Taking the entire hierarchy of this organization off the streets should have a significant impact and help improve the safety and welfare of the residents of Chester.”

“These arrests dismantle an insidious drug trafficking organization that operated throughout the city for years and will make a significant dent in criminal activity and violence not only in Chester but in surrounding communities,” said District Attorney Jack Whelan. “This is an excellent example of collaboration among law enforcement that sends a clear message that we are continuing to aggressively work together to address the violent gang problems that communities like Chester have faced for too long.”

“Residents of a city blighted by violence often feel like law enforcement has just given up,” said FBI Special Agent-in-Charge Ed J. Hanko. “Well, that’s clearly not the case with the FBI, and all of the partners involved in today’s arrests. We’ll keep working to make Chester’s streets safer -- corner by corner, block by block." 

“In my 43 years of police work, I’m most amazed by the good, old-fashioned, boots-on-the-ground law enforcement effort that achieved today’s result,” said Chester Police Chief Joseph Bail. “Running a close second is the collaborative focus among the local, state, and federal agencies, all in the name of making Chester a safer place.”

For information regarding the defendants, including potential sentences, see attached chart.

The government has given notice of intent to forfeit 15 firearms seized during the investigation, along with approximately $1.8 million proceeds derived from the crimes charged.

The case was investigated by the Delaware County Office of the District Attorney’s Criminal Investigation Division, the Drug Enforcement Administration, the Federal Bureau of Investigation, the Chester Police Department, and the Pennsylvania State Police. Also providing substantial manpower and assistance in the arrests were agents from the United States Marshall Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives. It is being prosecuted by Assistant United States Attorneys Faithe Moore Taylor, Ashley K. Lunkenheimer, and A. Nicole Phillips.

Defendant Information

Click here to see indictments for: Dorsey,etal; Rasheed; Gigetts; Coles; Carter; Womack; Church,etal; Church,Womack; Potter; Mosley; Mills etal; Butler; Bannister; Allen

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Shire Pharmaceuticals LLC to Pay $56.5 Million to Resolve False Claims Act Allegations
Relating to Drug Marketing and Promotion Practices

Pharmaceutical company Shire Pharmaceuticals LLC will pay $56.5 million to resolve allegations that it violated the False Claims Act as a result of its marketing and promotion of several drugs, the Justice Department announced today.  Shire, located in Wayne, Pennsylvania, manufactures and sells pharmaceuticals, including Adderall XR, Vyvanse, and Daytrana, which are approved for the treatment of attention deficit hyperactivity disorder (ADHD), and Pentasa and Lialda, which are approved for the treatment of mild to moderate active ulcerative colitis.

“Marketing efforts that influence a doctor’s independent judgment can undermine the doctor-patient relationship and short-change the patient,” said Zane David Memeger, U.S. Attorney for the Eastern District of Pennsylvania.  “Where children’s medication is concerned, it can interfere with a parent’s right to clear information regarding the risks to the safety and health of their child.  Shire cooperated throughout this investigation and, in advance of this settlement, began to correct its marketing activities.”

“Patients and health care providers must receive accurate information about available prescription drugs so that they can make safe and informed treatment decisions,” said Acting Assistant Attorney General for the Justice Department’s Civil Division Joyce R. Branda.  “The Department of Justice will be vigilant to hold accountable pharmaceutical companies that provide misleading information regarding a drug’s safety or efficacy.”

The settlement resolves allegations that, between January 2004 and December 2007, Shire promoted Adderall XR for certain uses despite a lack of clinical data to support such claims and overstated the efficacy of Adderall XR, particularly relative to other ADHD drugs.  Among the unsupported claims allegedly made by Shire was that Adderall XR was clinically superior to other ADHD drugs because it would “normalize” its recipients, rendering them indistinguishable from their non-ADHD peers.  Shire allegedly stated that its competitors’ products could not achieve similar results, which the Justice Department contended was not shown in the clinical data Shire collected.  Shire also marketed Adderall XR based on claims that Adderall XR would prevent poor academic performance, loss of employment, criminal behavior, traffic accidents, and sexually transmitted disease.  In addition, Shire promoted Adderall XR for the treatment of conduct disorder, an indication not approved by the Food and Drug Administration (FDA).

The settlement further resolves allegations that, between February 2007 and September 2010, Shire sales representatives and other agents also allegedly made false and misleading statements about the efficacy and abuse liability of Vyvanse to state Medicaid formulary committees and to individual physicians.  For example, one Shire medical science liaison allegedly told a state formulary board that Vyvanse “provides less abuse liability” than “every other long-acting release mechanism” on the market.  No study Shire conducted concluded that Vyvanse was not abusable, and, as an amphetamine product, the Vyvanse label included an FDA-mandated black box warning for its potential for misuse and abuse.  Shire also made unsupported claims that treatment with Vyvanse would prevent car accidents, divorce, being arrested, and unemployment. 

Additionally, the settlement resolves allegations that, from April 2006 to September 2010, Shire representatives improperly marketed Daytrana, administered through a patch, as less abusable than traditional, pill-based medications.  The settlement also resolves allegations that, for part of the foregoing periods, Shire representatives improperly made phone calls and drafted letters to state Medicaid authorities to assist physicians with the prior authorization process for prescriptions to induce these physicians to prescribe Daytrana and Vyvanse. 

Finally, the settlement resolves allegations that, between January 2006 and June 2010, Shire sales representatives promoted Lialda and Pentasa for off-label uses not approved by the FDA and not covered by federal healthcare programs.  Specifically, the government alleged that Shire promoted Lialda off-label for the prevention of colorectal cancer.

As a result of today’s $56.5 million settlement, the federal government will receive $35,713,965, and state Medicaid programs will receive $20,786,034.  The Medicaid program is funded jointly by the federal and state governments.  In addition, Shire has separately reached agreement with the U.S. Department of Health and Human Services (HHS) Office of the Inspector General on a Corporate Integrity Agreement, which will address the company’s future marketing efforts.

The allegations resolved by the settlement arose from a lawsuit filed by Dr. Gerardo Torres, a former Shire executive, and a separate lawsuit filed by Anita Hsieh, Kara Harris, and Ian Clark, former Shire sales representatives.  The lawsuits were filed under the False Claims Act’s whistleblower provisions, which permit private parties to sue for false claims on behalf of the government and to share in any recovery.  The relator share payment will be $5.9 million. 

 “Our agency will continue to hold drug companies responsible for seeking to boost profits using false and misleading claims about products, such as the powerful medications prescribed to children and other drugs at issue in this settlement.  We entered into a Corporate Integrity Agreement with Shire that requires comprehensive compliance safeguards, oversight of Shire promotional activities, and compliance certifications from Shire’s Board of Directors and management,” said Chief Counsel to the HHS Inspector General Gregory E. Demske.

This settlement 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 HHS.  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 $20.5 billion through False Claims Act cases, with more than $14.2 billion of that amount recovered in cases involving fraud against federal health care programs.

The case in this district is being handled by Assistant United States Attorneys Paul W. Kaufman and David A. Degnan.  The case was a cooperative effort among the U.S. Attorneys’ Offices for the Eastern District of Pennsylvania and the Northern District of Illinois, the Civil Division of the Department of Justice, the FDA’s Office of Criminal Investigations, and Office of the Inspector General for the Office of Personnel Management.  The HHS Office of Counsel to the Inspector General, the HHS Office of the General Counsel-CMS Division, the FDA’s Office Chief Counsel, and the National Association of Medicaid Fraud Control Units also provided assistance. 

The lawsuits are captioned United States ex rel. Torres v. Shire Specialty Pharmaceuticals, et al., No. 08-4795 (E.D. Pa.) and United States ex rel.  Hsieh, Harris, and Clark v. Shire PLC, et al., No. 09-6994 (N.D. Ill.).  The claims resolved by the settlement are allegations only; there has been no determination of liability.

Click here to read the settlement agreement.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

An indictment was unsealed today charging Eliazar Pineda-Castellano, 32, of Philadelphia, PA, with reentry after deportation and illegal alien in possession of firearm, announced United States Attorney Zane David Memeger.

If convicted, the defendant faces a maximum possible sentence of 12 years imprisonment, a three-year term of supervised release, a $500,000 fine, and a $200 special assessment.

The case was investigated by U.S. Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”) and the Philadelphia Police Department. It is being prosecuted by Assistant United States Attorney Ewald Zittlau.

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

Click here to view the indictment.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Joseph C. Waters, Jr., 61, of Philadelphia, pleaded guilty today to using his judicial position to influence the outcome of two cases in the Philadelphia Municipal Court, announced United States Attorney Zane David Memeger.  Waters, a former Philadelphia Municipal Court Judge, pleaded guilty to an information charging mail fraud and honest services wire fraud.

According to documents filed in the case, on September 30, 2011, Waters was asked by Person #1 – a politically active business owner – to use his judicial office to achieve a favorable outcome in a small claims case filed in Philadelphia Municipal Court against Person #1’s real estate management company.  To that end, Waters called two other Municipal Court judges, assigned to the case on different dates, and asked them to rule in Person #1’s favor.  A Municipal Court Judge identified in the information as Judge #2 ultimately adjudicated the case in favor of Person #1 after Waters told Judge #2 “he’s a friend of mine.”  The information charges that Judge #2’s ruling in favor of Person #1’s company prevented the plaintiff in the small claims case, Company B, from collecting $2733 in unpaid fees owed to it for security services it delivered to Person #1’s company.

Waters admitted today that he gave Person #1 a secret advantage through a series of secret ex parte communications with other Municipal Court judges scheduled to hear the small claims case and used his position to cause favorable rulings for Person #1.

The information outlined a second scheme in which Waters used his position as a judge to facilitate a favorable outcome in a criminal firearms case.  According to the information, Person #1 urged a witness cooperating with the government, “CW#1,” to contribute money to help pay down debts Waters had incurred while campaigning for a position on the Municipal Court.  In January 2010, CW#1, gave Waters $1,000 in cash.  The information charged that, in accepting the money, Waters told CW#1 that he would help CW#1 with future problems that CW#1 or CW#1’s friends may encounter in the court system.  The information further alleged that between 2010 and 2012, CW#1 provided gifts and cash contributions to Waters that were not reported on Waters’ campaign finance reporting forms.

In May 2012, CW#1 asked Waters for his assistance with a firearms prosecution pending in the Municipal Court.  CW#1 introduced Waters to an undercover agent (“UC#1”) as a business associate.  CW#1 and UC#1 asked Waters to help UC #1’s “cousin” who had been arrested for felony possession of a firearm.  On July 23, 2012, Waters called Judge #1 alerting Judge #1 to the preliminary hearing of a “friend” for the firearms charge and asked Judge #1 to “help him.”  According to the information, at a July 24, 2012 preliminary hearing, Judge #1, without proper legal basis, reduced the felony firearms charge to a misdemeanor.

U.S. District Court Judge Juan R. Sanchez scheduled a sentencing hearing for January 22, 2015.  Waters faces a maximum statutory sentence of 40 years in prison, a fine of up to $500,000 and up to three years of supervised release.

The case was investigated by the FBI and is being prosecuted by Chief of the Public Corruption Unit Richard P. Barrett and Assistant United States Attorney Michelle L. Morgan.

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

Click here to read the information.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA- Two members of the Ironworkers Local 401, James Walsh and Greg Sullivan, pleaded guilty today in United States District Court before the Honorable Michael Baylson. 

James Walsh, 49, of Philadelphia, PA, pleaded guilty to RICO conspiracy, two counts of maliciously damaging property by means of fire, conspiracy to maliciously damage property by means of fire, two counts of use of fire to commit a felony, and attempted maliciously damaging property by means of fire.  Walsh participated in a series of incidents on behalf of the Ironworkers Local 401 as part of the plan by the defendants to force non-union contractors to hire union labor.  Specifically, Walsh admitted that he participated in the Quaker Meetinghouse arson, an arson on Grays Avenue in Philadelphia, and an attempted arson in Malvern as well as other episodes – all in retaliation for the contractors failure to hire union ironworkers.  A sentencing hearing is scheduled for January 12, 2015.  Walsh faces a total statutory maximum sentence of 110 years in prison, with a 15 year mandatory term, up to three years of supervised release, a fine of up to $1.5 million, and a $600 special assessment.

Greg Sullivan, 49, of Philadelphia, PA, pleaded guilty to conspiracy to maliciously damage property by means of fire, and Hobbs Act Extortion.  Sullivan participated in the Grays Avenue arson and the attempted arson in Malvern.  A sentencing hearing is scheduled for January 20, 2015.  Sullivan faces a total maximum statutory sentence of 40 years in prison, up to three years of supervised release, a fine of up to $500,000, and a $200 special assessment.    

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 provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Walter P. Lambert, a/k/a “Buddy,” 73, of Pen Argyl, PA, pleaded guilty today to 16 counts of mail fraud, five counts of wire fraud, and one count of interfering with the due administration of the Internal Revenue Service.  A sentencing hearing is scheduled for December 29, 2014.  Lambert was the CEO of Blue Mountain Consumer Discount Company (“BMCDC”), a consumer loan company based in Wind Gap, Pennsylvania.  He defrauded individual lenders into loaning over $5 million to BMCDC by promising them a high rate of return (typically 9% or 10%), which Lambert usually paid to the investors in cash and failed to document with the IRS. 

Lambert told the individual lenders that BMCDC would use the lenders’ funds to issue high-interest loans to consumers (at an interest rate of approximately 23% to 26%), thereby allowing BMCDC to make a profit of approximately 13% to 16% after paying the individual lenders their 10% return.  However, rather than using the individual lenders’ loan principal payments to issue new consumer loans, Lambert used the funds for his own benefit, including: to pay BMCDC’s overhead (including his own salary); to purchase a life insurance policy for himself; to purchase personal items and collectibles for himself and his family members; to pay for gasoline and repairs to personal cars owned and used by himself, his family members, and the owner of BMCDC; and to issue loans to himself, his children, and other  “preferred” consumers at a rate of 6% interest per year or less, rather than the annual interest rate of 23% to 26% that the individual lenders were quoted.  Prior to borrowing the principal from the individual lenders, Lambert failed to disclose that their loan principal would be used as set forth above.  In order to keep the scheme afloat, Lambert continued to borrow money from new individual lenders, lied to them about what he would do with the money, and used the new loans to pay the old lenders their interest, and to pay BMCDC’s salary and overhead expenses.

Lambert doctored the books of BMCDC, submitted false annual reports to the Pennsylvania Department of Banking, and falsified BMCDC’s tax returns.  He withdrew hundreds of thousands of dollars from BMCDC for the benefit of himself that he caused to be recorded as “loans” to himself and his family members.  In falsely issuing these “loans” to his family members, Lambert forged the signatures of his family members on the loan paperwork and the checks issued by BMCDC, and deposited the checks into his personal bank accounts. Lambert documented fictitious payments to deceive the Pennsylvania Department of Banking into believing that BMCDC was financially sound and operating appropriately. 

Lambert also interfered with the due administration of the Internal Revenue Service by, among other things, overstating corporate income, understating BMCDC’s salaries and wages by failing to record cash salary payments to BMCDC employees, understating BMCDC’s interest expenses by failing to record interest payments to individual lenders that were made in cash, and submitting false tax returns for BMCDC.  Lambert is also to have paid a 1% “kickback” to one of the individual lenders, Nicholas R. Sabatine, III, charged separately, a local area attorney who referred clients to Lambert.  While Lambert paid Sabatine’s clients 9% interest by check and provided them and the IRS with accurate annual IRS Forms 1099, Lambert paid Sabatine his promised 1% kickback in the form of cash that neither Lambert nor Sabatine timely declared to the IRS. 

Lambert allegedly caused over 20 individual lenders to sustain losses of approximately $2,269,503, and caused the IRS to sustain a tax loss of at least approximately $252,621 for tax years 2007 through 2009.   

Lambert faces a possible advisory sentencing guideline range of 51 to 63 months in prison, up to a three-year period of supervised release, restitution to the IRS, a fine of up to $5.5 million fine, and a $2,200 special assessment.

The case was investigated by the Internal Revenue Service Criminal Investigations and the FBI. It is being prosecuted by Assistant United States Attorney Michael S. Lowe.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
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PATTY HARTMAN, Media Contact, 215-861-8525

Isaac Bonner, 43, of Darby, Pennsylvania, was charged today by information with theft of public funds from the Department of Veterans Affairs (“VA”), announced United States Attorney Zane David Memeger.  It is alleged that the defendant submitted fraudulent time sheets while he was assigned to the VA Medical Center in Philadelphia, and took compensation for nursing aide services that he had not rendered.  The VA paid approximately $64,377 for such services that it never received. 

If convicted, the defendant faces a maximum 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 VA Office of Inspector General and is being prosecuted by Assistant United States Attorney M. Beth Leahy.

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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA- Two members of the Ironworkers Local 401, Francis Sean O’Donnell and William Gillin pleaded guilty today to RICO conspiracy, arson, and related charges in United States District Court before the Honorable Michael Baylson. Sentencing hearings are scheduled for January 13, 2015 for Francis Sean O’Donnell and for January 14, 2015 for William Gillin.

Francis Sean O’Donnell, 43, of Warminster, PA pleaded guilty to RICO conspiracy, conspiracy to maliciously damage property by means of fire, and attempted maliciously damaging property by means of fire.  During the offense conduct, O’Donnell acted as a business agent for the Ironworkers Local 401 and participated in more than 10 extortions or attempted extortions with the intent to force non-union contractors to hire union labor.  O’Donnell 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, O’Donnell 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.

William Gillin, 43, of Philadelphia, PA pleaded guilty to RICO conspiracy, maliciously damaging property by means of fire, use of fire to commit a felony, maliciously damaging property by means of fire, conspiracy to maliciously damage property by means of fire, and attempted maliciously damaging property by means of fire.  Gillin participated in a series of incidents on behalf of the Ironworkers Local 401 as part of the plan by the defendants to force non-union contractors to hire union labor.  Specifically, Gillin admitted that he participated in the Quaker Meetinghouse arson, an arson on Grays Avenue in Philadelphia, and an attempted arson in Malvern as well as other episodes – all in retaliation for the contractors failure to hire union ironworkers.

O’Donnell faces a statutory maximum sentence of 60 years in prison, with a five year mandatory minimum sentence, three years of supervised release, a $750,000 fine, and a $300 special assessment; Gillin faces a statutory maximum sentence of 110 years in prison, with a 15 year mandatory minimum sentence, three years of supervised release, a $1.5 million fine, and a $600 special assessment.

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 provided by Gerald Toner, Acting Deputy Chief for Labor-Management Racketeering, Organized Crime and Gang Section at the Department of Justice.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Robert Merritt, 34, of Philadelphia, was sentenced today to life in prison for his role in the October 2004 firebombing that killed members of a federal witness’s family on the orders of drug kingpin Kaboni Savage.  On May 13, 2013, a federal jury found Merritt guilty of conspiracy to participate in a long-term, large-scale violent drug trafficking enterprise (RICO conspiracy) and the murders of family members of a federal witness, Eugene Coleman.  Six people, including four children, were killed in the arson on Oct. 9, 2004.

Merritt participated in the firebombing with his cousin, Lamont Lewis, who pleaded guilty for his role in the murders.  They were members of Kaboni Savage’s drug trafficking organization.  Savage was also convicted at the May 2013 trial and sentenced to death for 12 counts of murder in aid of racketeering.  Co-defendants Kidada Savage and Steven Northington were also convicted at trial and sentenced to life in prison.

U.S. District Judge R. Barclay Surrick also ordered five years of supervised release and a $100 special assessment.

The case was investigated by the FBI, the Internal Revenue Service – Criminal Investigation Division, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department.  The United States Bureau of Prisons, the United States Marshals Service, and HIDTA (High Intensity Drug Trafficking Area) also assisted in the investigation

It is being prosecuted by Assistant U.S. Attorneys David E. Troyer and John M. Gallagher and Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA – Robert Merritt, 34, of Philadelphia, was sentenced today to life in prison for his role in the October 2004 firebombing that killed members of a federal witness’s family on the orders of drug kingpin Kaboni Savage.  On May 13, 2013, a federal jury found Merritt guilty of conspiracy to participate in a long-term, large-scale violent drug trafficking enterprise (RICO conspiracy) and the murders of family members of a federal witness, Eugene Coleman.  Six people, including four children, were killed in the arson on Oct. 9, 2004.

Merritt participated in the firebombing with his cousin, Lamont Lewis, who pleaded guilty for his role in the murders.  They were members of Kaboni Savage’s drug trafficking organization.  Savage was also convicted at the May 2013 trial and sentenced to death for 12 counts of murder in aid of racketeering.  Co-defendants Kidada Savage and Steven Northington were also convicted at trial and sentenced to life in prison.

U.S. District Judge R. Barclay Surrick also ordered five years of supervised release and a $100 special assessment.

The case was investigated by the FBI, the Internal Revenue Service – Criminal Investigation Division, the Philadelphia Police Department, the Philadelphia District Attorney’s Office, and the Maple Shade, New Jersey Police Department.  The United States Bureau of Prisons, the United States Marshals Service, and HIDTA (High Intensity Drug Trafficking Area) also assisted in the investigation

It is being prosecuted by Assistant U.S. Attorneys David E. Troyer and John M. Gallagher and Trial Attorney Steve Mellin of the Criminal Division’s Capital Case Section.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Kyle Jones, 25, in federal custody in Philadelphia was charged today by Information with conspiracy, bank fraud, and aggravated identity theft, announced United States Attorney Zane David Memeger.  Jones was allegedly part of an illegal check cashing ring which stole identifications and checks from purses and wallets left in parked cars, often outside of gyms, parks, or athletic fields.  According to the information, the thieves then impersonated the victims and cashed stolen fraudulent checks at banks using the drive-through teller lane and presented stolen identification.  The ring stole more than $120,000. 

If convicted, the defendant faces a maximum possible sentence of 37 years of in prison, five years of supervised release, a fine of up to $1.5 million, 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, Information or Criminal Complaint is an accusation.  A defendant is presumed innocent unless and until proven guilty.

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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

PHILADELPHIA - Hayatullah Dawari, 62, of Philadelphia, PA, pleaded guilty today to two counts of immigration fraud and was sentenced to two years in prison, which U.S. District Court Judge Stewart Dalzell suspended for immediate deportation.

Dawari is an Afghanistan citizen who became a lawful permanent resident of the United States on or about November 11, 2008, and who applied for U.S. citizenship in November 2013.  In his application for U.S. citizenship, Dawari answered “No” to question 8a:   “Have you ever been a member of or associated with any organization, association, fund, foundation, party, club, society, or similar group in the United States or in any other place?”  Dawari admitted today in court that his answer to question 8a was false, in that it failed to disclose his prior relationship with Hezb-e-Islami Gulbuddin (“HIG”), an anti-western insurgent group active in Afghanistan and Pakistan.  

As part of Dawari’s guilty plea, the parties stipulated that he would be sentenced to a two-year sentence of imprisonment, suspended, accompanied by an order requiring the defendant’s transfer without undue delay into immigration custody for uncontested removal from the United States.  The defendant also agreed to relinquish his status as a lawful permanent resident, and he is now rendered permanently inadmissible to the United States.

The case was investigated by Federal Bureau of Investigation’s Joint Terrorism Task Force, U.S. Immigration and Customs Enforcement Homeland Security Investigations (HSI), and the Philadelphia Police Department. It was prosecuted by Assistant United States Attorney Jennifer Arbittier Williams.

UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525

Fabio Rondon-Jose, a/k/a “Cesar Rodriguez,” a/k/a “Noel Rodriguez Mendoza,” 46, of Philadelphia, PA, was charged today by indictment with illegal reentry after deportation, announced United States Attorney Zane David Memeger.  The indictment alleges that on or about August 21, 2014, Rondon-Jose, an alien, and native and citizen of the Dominican Republic, was found in the United States after having been deported from the United States on or about November 30, 2005.

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

The case was investigated by Immigration and Customs Enforcement, Enforcement and Removal Operations (“ERO”), and is being prosecuted by Assistant United States Attorney Matthew J.D. Hogan.

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

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UNITED STATES ATTORNEY'S OFFICE, EASTERN DISTRICTof PENNSYLVANIA
Suite 1250, 615 Chestnut Street, Philadelphia, PA 19106
PATTY HARTMAN, Media Contact, 215-861-8525