oversight

Shamsud-Din Ali, Faridah Ali, and Five Others Charged in Connection with Racketeering Enterprise. Philadelphia, PA September 29, 2004

Published by the Department of Education, Office of Inspector General on 2004-09-29.

Below is a raw (and likely hideous) rendition of the original report.

OIG Investigative Reports, Shamsud-Din Ali, Faridah Ali, and Five Others Charged in Connection With Racketeering Enterprise
Skip to main contentAbout UsContact UsFAQs Language Assistance Englishespañol中文: 繁體版Việt-ngữ한국어TagalogРусский
U.S. Department of Education
Search for:
Toggle navigation
U.S. Department of Education
Student Loans
Grants
Laws
Data
About ED
OFFICES
Home
Reports & Resources
Programs/Initiatives
News
Office Contacts
Investigative Reports
FOR IMMEDIATE RELEASE:
September 29, 2004
U.S. Department of Justice
United States Attorney
Eastern District of Pennsylvania
615 Chestnut Street - Suite 1250
Philadelphia, Pennsylvania 19106-4476
(215) 861-8200
SHAMSUD-DIN ALI, FARIDAH ALI, AND FIVE OTHERS CHARGED IN CONNECTION WITH RACKETEERING ENTERPRISE
Also Charged Are Former Special Assistant to the Chief of Staff For The
Mayor Of Philadelphia and Chief Of Staff For City Councilperson
PHILADELPHIA – United States Attorney Patrick L. Meehan, Special Agent-in-Charge John
Eckenrode, Federal Bureau of Investigation, Special Agent-in-Charge Jerome Lisuzzo, Internal
Revenue Service, and Special Agent-in-Charge William Hamel, Inspector General's Office,
Department of Education, today announced the filing of an Indictment,1 charging defendants
Shamsud-Din Ali, a/k/a "Shamps," "the Imam," and Faridah Ali, a/k/a "Rita Spicer," "Rita Ali,"
with conducting and participating in a racketeering enterprise through a pattern of racketeering
activity involving numerous schemes to obtain money and property by defrauding governmental
entities, financial institutions, businesses and individuals; extortion; and bribery.
"This enterprise used political influence as leverage and access to people in high places as
a hammer," said Meehan. "This organization wrapped its tentacles around individuals, institutions,
government entities or whomever it targeted as a source of profit, and simply applied pressure when
necessary. Taxpayers wound up stuck with the bill for work that was never done. Banks were
defrauded, vendors were extorted, and even contributors to a religious school were duped."
Specifically, the 48-count RICO Indictment alleges that Shamsud-Din Ali and Faridah Ali
exploited their positions of control over various individuals and related legal entities, including
Keystone Information and Financial Services ("KIFS"), located at 7108 Germantown Avenue,
Philadelphia, PA, and the Sister Clara Muhammad School, a private school for grades K-12 located
at 4700 Wyalusing Avenue, Philadelphia, PA, to generate illegal income. The Indictment also
charges five individuals, John Christmas, Steven Vaughn, a/k/a "Wassi," Richard Meehan, John
Johnson and John Salter, with various substantive crimes stemming from their participation in the
affairs of the RICO enterprise directed and controlled by the ALIs, including mail fraud, wire fraud,
interstate travel and use of the mails in aid of racketeering, and extortion. The Indictment charges that at the time of the commission of the offenses John Christmas was the Special Assistant to the
Chief of Staff for the Mayor of Philadelphia and Steven Vaughn was the Chief of Staff for the City
Councilperson elected to represent the Eighth District for the Philadelphia City Council.
The violations charged in the Indictment include the following:
The Scheme to Defraud the City of Philadelphia - KIFS' Collection Contract
with the City of Philadelphia
The Indictment charges that from May 2001 through April 2002, Shamsud-Din Ali, together
with John Christmas and Steven Vaughn, both of whom were employed by the City of Philadelphia,
conducted a scheme to defraud the City of Philadelphia ("COP" or "the City") by falsely representing
to the Law Department for the City of Philadelphia that Shamsud-Din Ali's debt collection company,
KIFS, had identified and collected $658,000 in delinquent real estate taxes owed to the COP, when
in fact KIFS had provided no services. On August 14, 2001, in a telephone conversation with
Christmas, Ali said they should "give me the whole thing." As a result of the false representations
to the COP, the COP paid KIFS a $60,595 commission.
Commercial Bribery and Interstate Travel in Aid of Racketeering - KIFS and
The Airport Contract
The Indictment charges that between July 1999 and October 2003, Shamsud-Din Ali agreed
to pay and paid Richard Meehan, then the National portfolio manager for AAT Communications
Corporation, more than $7,000 in kickbacks for using his position at AAT to ensure that KIFS was
a minority participant on a contract between AAT and the City of Philadelphia to install, lease and
manage cellular antenna sites at the Philadelphia International Airport ("Airport"), thereby ensuring
that KIFS would earn monthly commissions of approximately $1,700 per month from AAT without
having to perform any work on the Airport contract.
The Scheme to Defraud Commerce Bank - KIFS' Line of Credit
The Indictment charges that between Fall 2001 and August 2003, Shamsud-Din Ali and John
Salter, a tax preparer, engaged in an scheme to defraud Commerce Bank by preparing and submitting
false financial documents to Commerce Bank which gave a false picture of KIFS financial condition
so that Commerce Bank would: 1) not foreclose on a $100,000 line of credit that had been extended
to KIFS in 1999 and was guaranteed by the Small Business Administration; and 2) extend the loan
maturity date for the $100,000 line of credit until August 2003.
Extortion of City of Philadelphia Vendors
The Indictment charges that between July 2002 and November 2002, Shamsud-Din
Ali and John Johnson engaged in a scheme to extort $25,000 from Waste Management
& Processors, Inc., a bio-solid waste hauling business which had a contract
with the City of Philadelphia to haul and dispose of biological solids generated
by the Philadelphia sewage treatment system. In a telephone conversation on October
15, 2002 with Ali, Johnson said of his victim, "I think he knows he has to
pay us; he doesn't want me complaining to the City; if he's going to cooperate,
he'll have to keep this group here happy. He sees the power." In another
telephone conversation with Johnson less than a month later, Ali said he was not
"gonna let no coward play with me" and that Ali would "turn on
him ferociously." Additionally, the Indictment charges that Shamsud-Din Ali
and John Johnson attempted to extort another waste hauling company, Waste Management
of Pennsylvania, Inc., between January and February 2003.
The Scheme to Defraud Contributors to the Sister Clara Muhammad School
The Indictment charges that between January 1998 and December 2001, Shamsud-Din Ali
and Faridah Ali engaged in a scheme to defraud contributors to the Sister Clara Muhammad School
by representing that the contributed funds were going to be used for the Sister Clara Muhammad
School, when in fact the funds were used for personal expenses for Shamsud-Din and Faridah Ali.
Through their misrepresentations, the ALIs obtained approximately $75,375 in funds which
contributors believed were going to be used for the school.
The Scheme to Defraud the Community College of Philadelphia (Mail Fraud)
The Indictment charges that between July 1999 and December 2001, Faridah Ali engaged
in a scheme to defraud the Community College of Philadelphia ("CCP") by making false and
fraudulent representations which caused the CCP to pay at least $21,600, to SCMS, as payment of
rent for the use of the SCMS facility to conduct courses on behalf of the CCP, which in fact were
not taught at the SCMS. The rent monies were then diverted to the personal use and benefit of
Shamsud-Din Ali and Faridah Ali.
The Scheme to Defraud Mercedes-Benz
The Indictment charges that between July 2001 and August 2001, Faridah Ali and Shamsud-
Din Ali engaged in a scheme to defraud Cherry Hill Mercedes-Benz and Mercedes-Benz Credit
Corporation by submitting false and fraudulent financial information to obtain approval for an
automobile loan in the amount $87,078.50 to pay for the purchase of a new 2002 Mercedes Benz
S500V sedan for Shamsud-Din Ali. In a telphone conversation during which Faridah Ali told a
relative she was buying the Mercedes, Ali said that Shamsud-Din Ali "can't make a statement in a
seven-year-old car....A world leader can't be driving around in an old car."
Tax Violations
With regard to the monies generated by the Shamsud-Din Ali and Faridah Ali through their
illegal activities, the Indictment also charges both Shamsud-Din Ali and Faridah Ali with tax evasion
during the period from 1998 through 2001, and charges Faridah Ali with filing false tax returns
which failed to disclose her illegal income.
Perjury/False Statements
Finally, the Indictment charges John Christmas with perjury before the grand jury and with
making false statements to the FBI regarding his involvement in the scheme in which KIFS' secured
a contract with the COP to collect real estate taxes from Bowman Properties, Ltd. and RS and
received a $60,595 commission for performing no work related to the contract.
The defendants in this case are charged as follows:
Shamsud-Din Ali is charged which RICO, RICO conspiracy, 9 counts of mail fraud
and mail fraud conspiracy, 8 counts of wire fraud and wire fraud conspiracy, 11 counts of interstate
travel and use of a facility in aid of racketeering, 1 count of bank fraud, 3 counts of extortion,
extortion conspiracy and attempted extortion, and 4 counts of tax evasion. He faces a maximum
sentence of 290 years imprisonment.
Faridah Ali is charged with RICO, RICO conspiracy, 5 counts of mail fraud and mail
fraud conspiracy, 8 counts of wire fraud and wire fraud conspiracy, 4 counts of tax evasion and 3
counts of filing false tax returns. She faces a maximum sentence of 134 years imprisonment.
John Christmas is charged with 4 counts of mail fraud and mail fraud conspiracy,
2 counts of perjury and 1 count of making false statements to the FBI. He faces a maximum
sentence of 35 years imprisonment.
Steven Vaughn is charged with 4 counts of mail fraud and mail fraud conspiracy.
He faces a maximum sentence of 20 years imprisonment.
Richard Meehan is charged with 11 counts of interstate travel and use of a facility
in aid of racketeering. He faces a maximum sentence of 55 years imprisonment.
John Johnson is charged with 3 counts of extortion, extortion conspiracy and
attempted extortion. He faces a maximum sentence of 60 years imprisonment.
John Salter is charged with 1 count of bank fraud. He faces a maximum sentence
of 30 years imprisonment.
INFORMATION REGARDING THE DEFENDANTS
NAME
ADDRESS
AGE
Shamsud-Din Ali, a/k/a "Shamps," "the Imam"
Elkins Park, PA
66 years old
Faridah Ali, a/k/a "Rita
Spicer," "Rita Ali"
Elkins Park, PA
55 years old
John Christmas
Philadelphia, PA
40 years old
Steven Vaughn, a/k/a "Wassi"
Philadelphia, PA
54 years old
John Salter
Elkins Park, PA
53 years old
Richard Meehan
Forrest Hill, NY
57 years old
John Johnson
Philadelphia, PA
58 years old
The case was investigated by the Federal Bureau of Investigation, the Internal Revenue Service and
the Department of Education, with the assistance of the Office of Inspector General of the
Department of Transportation in Philadelphia, and has been assigned to Assistant United States
Attorney's Frank A. Labor, III, Zane D. Memeger and Anthony J. Wzorek.
UNITED STATES ATTORNEY'S OFFICE
EASTERN DISTRICT, PENNSYLVANIA
Suite 1250, 615 Chestnut Street
Philadelphia, PA 19106
Contact: RICH MANIERI
Media Contact215-861-8525
COPIES OF NEWS MEMOS AND RELATED DOCUMENTS CAN ALSO BE FOUND
AT http://www.usdoj.gov/usao/pae/
Top
Printable view
Share this page
Last Modified: 03/03/2005
How Do I Find...
Student loans, forgiveness
College accreditation
No Child Left Behind
FERPA
FAFSA
1098-E Tax Form
2015 Budget Proposal
More >
Information About...
Transforming Teaching
Family and Community Engagement
Early Learning
K-12 Reforms
More >
Connect
Facebook
Twitter
YouTube
Email
RSS
Google+
More >
MISUSED
FOIA
OIG Fraud Hotline
Our mission is to promote student achievement and preparation for global competitiveness by fostering educational excellence and ensuring equal access.
Student Loans
Repaying Loans
Defaulted Loans
Loan Forgiveness
Loan Servicers
Grants & Programs
Apply for Pell Grants
Grants Forecast
Open Grant Competitions
Find Grant Programs by Eligibility
Laws & Guidance
No Child Left Behind
FERPA
Civil Rights
Data & Research
Education Statistics
Postsecondary Education Data
State Education Data
Nation's Report Card
What Works Clearinghouse
About Us
Contact Us
ED Offices
Jobs
News
FAQs
Budget, Performance
Notices FOIAPrivacySecurityInformation qualityInspector GeneralWhitehouse.govUSA.govBenefits.govRegulations.gov