PHILADELPHIA – On December 19, 2019, United States Attorney William M. McSwain addressed the Board Meeting of the Philadelphia Chamber of Commerce. He discussed the priorities that he has set for the U.S. Attorney’s Office during his tenure, including those with a direct impact on the Philadelphia business community, such as anti-corruption and anti-violent crime efforts. He also detailed some of his corresponding outreach to different communities in the Eastern District of Pennsylvania. Finally, he shared his hopes for the City’s future. U.S. Attorney McSwain was introduced by the Chamber President, Independence Blue Cross CEO Daniel J. Hilferty. U.S. Attorney McSwain’s remarks as prepared for delivery are below.

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Thank you, Dan, for that kind introduction and for the invitation to be here today. I would also like to thank Rob Wonderling for extending the invitation. There are two senior members of my executive team here this morning that I wanted to acknowledge – Clare Putnam Pozos and Alison Kehner. Thank you both for your outstanding leadership and for joining me today.

First, I wanted to give you a bit of background. The United States Attorney’s Office for the Eastern District of Pennsylvania is one of 94 field offices of the United States Department of Justice. Each field office has a presidentially appointed United States Attorney who serves as the chief federal law enforcement officer for the District. I was nominated by the President in December 2017, confirmed by the Senate in March 2018, and sworn into office on April 6, 2018. My Office is one of the largest U.S. Attorney’s Offices in the country, with about 140 Assistant U.S. Attorneys (100+ in Criminal Division, 30+ in Civil Division). We serve a population of over 5 million and cover a geographic area of roughly 4,700 square miles across nine counties in southeastern Pennsylvania – Berks, Bucks, Chester, Delaware, Lancaster, Lehigh, Montgomery, Northampton, and Philadelphia counties. 

When I first became U.S. Attorney, I set two strategic goals for the Office: (1) to increase productivity within the Office and (2) to increase transparency with the community. Over the previous decade, productivity had been in a steady decline in terms of the number of criminal prosecutions pursued and the number of defendants charged. I pledged to reverse that trend and to aggressively prosecute those who violate federal law in this District, no matter who those offenders are. I am pleased to announce that our efforts have been successful: our Criminal Division logged 669 prosecutions in fiscal year 2019 (ending on September 30, 2019), up from 478 in the previous fiscal year. That is a 40 percent increase in the number of criminal cases filed in this District and represents the highest number of cases charged by the Office in the last nine years. Similarly, the number of defendants indicted in fiscal 2019 – another measure of Office productivity and case complexity – has seen a significant increase. We charged 894 defendants this past year, up from only 599 in fiscal year 2018, which is a 49 percent increase.

Similarly, the Civil Division’s productivity is the highest it has been in years, and the number of civil cases the Office is proactively pursuing is on the rise. In the past year, our Office recovered over $123 million in civil settlements in 50 cases against companies accused of committing fraud, waste, or abuse against the government. And we have the most new case openings and affirmative civil enforcement investigations in our pipeline in the Office’s history.

We have also had success in increasing transparency with the community. I created a new unit, the Office of Public Affairs and External Engagement (OPAEE). The mission of that unit is to promote transparency and information-sharing with the community, foster relationships with law enforcement stakeholders and the public, and work with community groups on deterrence initiatives and crime prevention. Why was this so important to me? It is my firm belief that the citizens of this District have a right to know about the types of cases we bring and how our resources are allocated. One of my core values is accountability, and it is reflected in our increased transparency.

I also want it to be more difficult for criminals to commit crimes. I want to educate the community about how residents can best work with law enforcement and protect themselves. If we prosecute a case and no one ever hears about it, it will only directly affect the defendants and their loved ones, the victims and their loves ones, and those involved in the judicial process. But if prosecuting that same case could serve as a deterrent to others thinking about engaging in similar conduct, or educate law-abiding citizens about best practices, it is all the better to get the message out there.

As federal prosecutors, we spend a lot of time in the office, with defense counsel, and in the courtroom. But I wanted to expand our reach. I see a lot of familiar faces in the room, and there is a good reason for that. As many of you know, my Senior Advisor Clare Pozos and I have visited dozens of organizations over the past six months. We have traveled not only all over Philadelphia, but throughout the nine counties of the Eastern District, to businesses in Allentown and Reading and Malvern, and everywhere in between. We wanted to introduce ourselves to the community and explain our priorities. We wanted to highlight the good work that our Office is doing every day. And, importantly, we wanted to hear what was on your mind. What were your biggest concerns when it comes to the Department of Justice, to law enforcement, and to the safety of both your employees and your organization as a whole? In short, what keeps you up at night?

One such issue is cybersecurity. Everyone we’ve met with has mentioned it as one of their top priorities and concerns. But the response to cybersecurity fears and even incidents seemed to vary.  Some individuals mentioned that they were not sure they’d ever want to call the FBI or the U.S Attorney’s Office about a hack or a ransomware attack because they would never want to go through a public trial, or perhaps they were worried that 50 FBI agents would suddenly show up on their company doorstep in riot gear. When we explained that the overwhelming majority of investigations and cases never go to trial, and that we can work with you to keep things as quiet as possible, many people were ready to reevaluate. Meanwhile, others mentioned that they have always been open to reaching out to us, but were unclear about whom to call, when to call, and what to reasonably expect from the call.

As a result, we acted right away. We want to make it as clear and as easy as possible for you to work on cybersecurity issues with the federal government. Thus, in November, we partnered with the FBI to hold a Federal CyberSecurity Conference at the National Constitution Center and invited everyone we met during our outreach, plus many more. We had over 150 attendees from the greater Philadelphia area, and we were able to explain to people – including employees from your organizations – how we work with individuals and corporations on keeping their data and their computer systems safe from harm. Our hope is that with outreach such as this, we are empowering the community with the knowledge and information to be safer and more secure.

It was satisfying to be able to provide that kind of service and support when we saw a need.  But of course cybersecurity was not the only issue that came up during our meetings. Two additional issues were continually raised at our meetings with Philadelphia-based organizations: (1) the prevalence of violent crime on our City streets, and (2) the continued existence and pervasiveness of public corruption. I would like to address both of these issues.

I am going to tell you something that many of you already know: Philadelphia is not safe. The federal government is working hard to keep you, your families, and your employees safe from harm. But in my view, not everyone in local Philadelphia government shares this goal. In 2018, which was District Attorney Larry Krasner’s first year in office, Philadelphia endured 351 homicides, the most in over a decade, and an 11% increase as compared to 2017. There were 1,365 shooting victims in the City in 2018, the most since 2011, also an 11% increase as compared to 2017. And although this year is not quite over, the situation is no less grim. According to Philadelphia Police Department statistics, as of December 11, 2019, there have been 338 homicides this year to date, which is a 3% increase as compared to the total homicide rate on that same date last year. The Philadelphia Inquirer recently wrote about the murder of a 16-year old girl, Ceani Smalls, who was simply getting off the bus in North Philadelphia earlier this month, noting that she was the 106th child to be shot in Philadelphia in 2019 alone.

As many of you in this room may remember, Philadelphia in the 1970s and 1980s was not safe. For example, leaders of organized crime families including Nicodermo “Little Nicky” Scarfo, Giovanni Stanfa, and Joseph “Skinny Joey” Merlino had a penchant for violence, taking over parts of the City block by block with extortion, racketeering, narcotics trafficking, and murder. Manufacturing was collapsing and the population was falling. Many were moving out of the City to the suburbs and beyond. Crime spiked. Abandoned buildings, empty lots, and graffiti proliferated. You could not walk down the street without being confronted with trash-strewn sidewalks. As I was growing up in Chester County, Philadelphia sometimes seemed to me less like a destination and more like a place to avoid if you could.

The Philadelphia of today looks different from that, thanks in part to strong leadership from the Mayor’s Office during the 1990s and early 2000s. From 1992 until 2000, Ed Rendell, to his credit, changed the future of the City, with The New York Times labeling his work “the most stunning turnaround in recent urban history.” Mayors Street and Nutter oversaw Philadelphia in its new prime. By 2011, census data revealed that Philadelphia had achieved its first confirmed population growth in 60 years. And growth continues. Developers are breaking ground on skyscrapers, and economic development is something that is a reality instead of a pipedream. National retailers, restaurants, and other businesses have populated streets that used to be overrun by crime. People are flocking to our world class institutions of higher learning – Penn, Temple, Drexel, and more – and importantly, they are choosing to stay here, find jobs, and raise a family. This is the Philadelphia of tomorrow that we want to create: one of economic growth and prosperity, safe from violence and corruption.

This change did not happen overnight, and it did not happen by accident. The success of this City is powered by individuals like you and by successful and growing businesses. And Philadelphia will be a world-class city only if everyone in it has an opportunity to thrive. But that kind of growth and success is not possible if our streets are not safe. It is not possible if the City is subjected to the worst excesses of a District Attorney who in fact knows very little about law enforcement – and what’s worse, does not care to know. Here is the clear-eyed truth: the only way to effectively deter homicide and other violent crime is to put fear into the hearts of those who would commit such atrocities – fear of the law enforcement consequences. The Philadelphia District Attorney’s Office isn’t putting fear into the hearts of anybody who is contemplating a life of violent crime.   

Ceani Smalls should never have been in danger of being shot and killed while getting off a bus. She should have been given the opportunity to grow up in an environment that enabled her to flourish and reach her full potential. Every child in Philadelphia should have the opportunity to grow up in a safe neighborhood. I do not believe that that opportunity is being provided under the current City leadership, nor is it a priority. It certainly is not a priority of the District Attorney.

My Office, however, is doing everything that we can to pick up the slack. The Violent Crime unit in my Office charged the largest number of cases last year of all the units in the Office. Of the 669 total cases charged this past year, the Violent Crime unit charged nearly 1/3 of them. It charged a whopping 208 cases as compared to 136 in fiscal year 2018. That is a 53% increase in just one year.

And as part of the U.S. Justice Department’s national reinvigoration of its Project Safe Neighborhoods program, we have put additional resources into the Violent Crime unit to step up enforcement efforts in our PSN target districts, many of which are in Philadelphia. In fiscal year 2019, of the 208 violent crime cases charged, 143 are from PSN districts. And we intend to continue this upward trend in the upcoming year because Philadelphia is counting on us.

Given the circumstances, it must also be part of our strategy that if we believe that the DA’s Office has badly mishandled a major case, we will consider stepping in and righting the wrong if we have federal jurisdiction. For example, when Jovaun Patterson shot Philadelphia shop owner, Li (“Mike”) Poeng, with an assault rifle during an attempted robbery of Mr. Poeng’s convenience store in South Philly on May 5, 2018, the Philadelphia District Attorney’s Office originally charged Patterson with multiple crimes, including attempted murder and aggravated assault, but then dropped the attempted murder charges and agreed to an overly lenient plea deal of 3 ½ to 10 years imprisonment. As a result of this shooting, Mr. Poeng is confined to a wheelchair, and the District Attorney’s Office did not even have the decency (a decency which, by the way, is mandated by state law) to notify Mr. Poeng when they made this outrageously low offer.

This was a case that we could take, and so we did. In February, my Office charged Patterson with one count of attempted robbery which interferes with interstate commerce, and one count of using, carrying and discharging a firearm during and in relation to a crime of violence. On the gun charge alone, Patterson faces a statutory maximum of life imprisonment and a statutory minimum of 10 years’ imprisonment, which must run consecutively to any other sentence imposed on the attempted robbery count. This week, in federal court, Patterson pleaded guilty to all charges and currently is awaiting sentencing in the custody of federal prison.

We will continue to prosecute these kinds of cases whenever possible in order to preserve the promise of Philadelphia’s future. I do not want the Philadelphia of tomorrow to backslide into the Philadelphia of the 1980s, or the Baltimore, MD or Newark, NJ of today. Philadelphia should be a city where an educated workforce want to remain, where businesses open their doors, and where families want to stay and raise their children.

Safe streets alone, however, are not enough for Philadelphia to prosper. Safety from violent crime goes hand-in-hand with ethical and law-abiding public servants leading the City. Citizens will be more likely to live here and start a family if they do not have to worry about their children getting shot on their way to school. But businesses won’t open if, at every turn, the owner has to pay a bribe to get a permit or make a donation to some public official’s phony charity. There should be no corruption tax to live and work in the City of Philadelphia. But too often, there is. Too often in this City, our public officials lack a sense of shame – they believe that their positions exist to enrich themselves rather than to serve the public.

The examples of corruption are, sadly, all around us. Just this month, West Philadelphia State Representative Movita Johnson-Harrell, who was the former head of the Victim Witness Services Unit for District Attorney Krasner, was charged with stealing more than half a million dollars from a nonprofit to fund a lavish lifestyle, including fur coats, family vacations, and designer clothes. Johnson-Harrell, who has now resigned in disgrace, was only elected on March 12th of this year in a special election. And why was there a special election? It was to replace former State Representative Vanessa Lowery Brown, who also had to resign in disgrace after being convicted of accepting $4,000 in cash bribes from an FBI informant. It makes you wonder how long West Philadelphia will have to wait to be represented by someone who is not corrupt.

These problems are not limited to one neighborhood, however; they are citywide. Former District Attorney Seth Williams pleaded guilty in the middle of his federal public corruption trial and received a five year prison sentence. Former Congressman Chaka Fattah is also in federal prison, after being convicted at trial in June 2016 for racketeering, bribery, bank fraud, mail fraud, money laundering, and falsifying records. He will be in federal prison until October 2025.  Mr. Fattah is held at the same prison as his son, Chaka Fattah Jr., who was also prosecuted by my Office for a multitude of fraudulent schemes.

Renee Tartaglione is currently serving her federal sentence for operating a fraudulent addiction and mental health nonprofit from which she skimmed more than $2 million to enrich herself. Let’s not forget former State Senator Vince Fumo, who finished his four years in federal prison after having been convicted of a staggering 137 counts of corruption, conspiracy, and fraud.

Then there’s former Philadelphia Sheriff John Green, the City’s longest-serving sheriff, who is serving a five year prison sentence for accepting hundreds of thousands of dollars in bribes for awarding millions of dollars of city work to a friend.

And then there is the biggest case of them all. Earlier this year, my Office charged union leader John Dougherty, current Philadelphia City Councilman and Democratic Majority Leader Robert Henon, and six other individuals in a 116-count Indictment involving a multitude of federal crimes, including embezzlement, wire fraud, and public corruption. As a reminder, an indictment is only an accusation, and every defendant is presumed innocent unless and until proven guilty. But the allegations here are stunning. The Indictment alleges that Dougherty and others used many thousands of Local 98 dollars that were recorded as scholarships and charity donations meant for many, and instead spent that money on providing a lavish lifestyle for a select few. For example, according to the Indictment, thousands of dollars in Boyd’s gift cards were falsely reported to the union as a purchase for “Gift cards for Scholarship Banquet.” Thousands of dollars spent on meals for Dougherty and his friends and family became attributed instead to things like a “rehabilitative Local 98 member assistance program” and “Toys and Turkeys (for food baskets).” Dougherty allegedly placed family members on the payroll and paid them thousands of dollars for union work, even when these family members were in fact on vacation, attending school full-time, or otherwise not engaged in work for Local 98.

The Indictment goes on to allege that Dougherty and Councilman Henon had an illegal quid pro quo relationship, with Henon stating to Dougherty at one point that “I don’t give a f*** about anybody, all right, but f***ing you and us, and you know that.” Yes, those are the words of your City Council majority leader. The case is set for trial in September 2020. If you haven’t read the Indictment, I invite you to check it out, assuming you have a strong stomach.

It should go without saying, but I want to say it, anyway, because unfortunately we need to be reminded of this: not every major American City is like this. Most cities do not have their leaders – their Congressmen, their district attorneys, their sheriffs, their council members, their state reps, their union leaders and more – indicted and convicted of corruption, bribery, and embezzlement. And certainly if it happens elsewhere, it does not happen to a degree of this magnitude.

When I became the U.S. Attorney, public corruption was one of my top priorities and will remain so. No one should have to pay a corruption tax to do business in the City of Philadelphia. I deliberately talk about the time that these former public officials are serving in federal prison because it is our job at the U.S. Attorney’s Office to make sure that our public officials understand that there will be severe consequences if they cross the line. And we are going to be loud about it because we want our public officials to come nowhere near the line, but instead focus on serving the public interest. Public service, after all, is what they signed up for and what they were elected to do. And if they do what they are supposed to do because I do what I’m supposed to do, then you will all have the freedom and the opportunity to help your employees, your families, and the rest of our community better prepare for the Philadelphia of tomorrow – one with a bright and optimistic future.

The year 2019 marked tremendous accomplishments by the men and women in my Office. I am very proud to serve in an Office comprised of individuals who have chosen to dedicate their lives to the cause of justice. I look forward to what lies ahead in 2020 knowing that together, with everyone in this room, we will continue to enhance the lives of the people of Philadelphia.

I very much appreciate the opportunity to be with you today. God Bless you, and God Bless our wonderful City. Thank you.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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