In the first criminal counts from a slowly unfolding scandal in the Philadelphia Sheriff's Office, federal prosecutors filed fraud and tax-evasion charges Wednesday against one of the sheriff's internal auditors, accusing him of writing more than $400,000 in fraudulent checks and arranging massive discounts for an unidentified person who bought various properties at sheriff's sales.
Richard Bell, 36, an employee of the sheriff's accounting department the last six years, was terminated Wednesday from his $42,000-a-year job after the acting sheriff, Barbara Deeley, learned of the charges.
Three others - not employees of the Sheriff's Office - were accused of participating in the scheme. The three allegedly received unauthorized checks from the sheriff's accounts, deposited the money in their own accounts, and then shared the proceeds with Bell.
The others were identified as Robert Rogers, 44; Jackiem Wright, 29; and Reginald Berry, 29, all city residents.
All four, including Bell, were accused in criminal "informations" released by U.S. Attorney Zane David Memeger. The U.S. attorney issues informations, rather than indictments, when the accused waive their right to have criminal charges heard by a grand jury.
That is often a sign that the defendants have agreed to a plea and plan to cooperate with federal authorities, said Richard J. Zack, former deputy chief of the criminal division at the U.S. Attorney's Office in Philadelphia and now a partner at Pepper Hamilton L.L.P.
Telephone calls to attorneys for Bell and the other defendants were not returned.
The prosecutors also implicated a fifth, unidentified individual, saying Bell helped him buy various properties at sheriff's sale for only the 10 percent down payment required on the day of the sale.
The unidentified buyer subsequently provided the Sheriff's Office with checks for the remaining 90 percent of his bid amounts. But before the checks were deposited in the sheriff's accounts, Bell intercepted and destroyed them, receiving a fee for his services, the prosecutors alleged.
"We have a lot of sheriff sales where the down payment is made and the sale is not fully executed," said Ken Smukler, a spokesman for the Sheriff's Office. "But those properties are not supposed to change hands."
The U.S. Attorney's Office credited the FBI, the IRS, the Philadelphia District Attorney's Office and the city inspector general with conducting the investigation, with assistance from the City Controller's Office.
Reports from City Controller Alan Butkovitz this year and last documented a lack of internal controls under former Sheriff John Green that left the Sheriff's Office susceptible to fraud. A wider U.S. attorney's investigation was launched last year.
"We believe that we were substantial factors in triggering the federal investigation," Butkovitz said.
Butkovitz secured funding for an eight-month, $642,000 investigation by Deloitte Financial Advisory Services L.L.P. that was issued two weeks ago and that shed additional light on some of the federal charges.
At his direction, Butkovitz said, Deloitte's lead investigator, Louis Pichini, has been briefing federal authorities for months on his findings.
The controller's investigative report had questioned $389,742 in "suspicious checks" issued by the Sheriff's Office without any documentation for their purpose.
Two of the checks, totaling $147,555, surfaced again Wednesday in the federal charges.
The checks had been issued in November 2009 and February 2010 to a company called 400 PTM L.L.C., owned by Jackiem Wright.
According to its website, the firm provided "a specialized combination of sports and entertainment management services designed to cater to the needs of each athlete, entertainer or high-profile individual."
When the Sheriff's Office approached Wright to explain the purpose of the checks written to his company, Wright refused to answer questions, prompting the Sheriff's Office to refer the matter to the Philadelphia district attorney, according to Deloitte's report for Butkovitz.
The same report also noted that Wright had personal business dealings in 2007 with a ranking staff member in the Sheriff's Office, buying a South Philadelphia property from Tyrone Bynum, then the sheriff's director of finance and compliance.
Bynum was one of two people fired last January after Deeley took over the sheriff's duties from Green, who had run the office for 23 years.
The alleged offenses occurred while Green was in charge, before Deeley imposed tighter financial controls in the office, according to her top deputy, Joseph C. Vignola.
"There were no internal controls," Vignola said Wednesday. "Anybody could grab a check. Anybody could grab a receipt. . . . We changed all those procedures."
Although she had been Green's chief of staff for 15 years, Vignola said Deeley had been excluded from the financial side of the office, "so that even when she asked questions, she was told by everybody, including Green, she shouldn't worry about that."
Vignola said that Bell had taken a personal day off on Wednesday, so he wasn't in the office when the U.S. attorney announced the charges against him. A sheriff's deputy delivered notice of his dismissal to Bell's home in West Philadelphia.
The U.S. Attorney's Office said federal sentencing guidelines would suggest a 33- to 41-month sentence for Bell if convicted of the fraud and tax charges against him.
He was accused of failing to report $76,034 in taxable income on his 2009 return.
If convicted, Rogers would face a guideline range of 27 to 33 months in prison, and both Wright and Berry would face 15- to 21-month sentences, the prosecutors said.