Federal prosecutors late Wednesday filed a superceding indictment against a prominent Philadelphia bond attorney, the former city treasurer, and eight others seeking work or involved in the issuance of bonds for city projects and projects in the region.
Attorney Ronald A. White, former Treasurer Corey Kemp, and eight others, who were first charged in June, were named in this latest indictment that was filed with the U.S. District Court for the Eastern District of Pennsylvania. White was charged with four new counts of making false statements to Commerce Bank officials so he could obtain a loan to buy a $1.3 million home in Florida. Kemp faces three additional charges of filing false tax returns for 2000, 2001, and 2003.
If convicted and sentenced to the maximum, White faces 710 years in jail, while Kemp faces 822 years. Also charged in May and included in this latest indictment were two Commerce Bank/Pennsylvania executives, Glenn K. Holck and Stephen M. Umbrell; two former executives with J.P. Morgan, Charles LeCroy and Anthony C. Snell; and a former director at Janney Montgomery Scott Inc., Denis Carlson. All of the defendants have pleaded not guilty, and a trial date has been set for mid-January 2005.
Lawrence S. Lustberg, lawyer for Umbrell, yesterday responded to the new indictment, saying, My client was lied to. Holck and Umbrell were lied to.
Holck and Umbrell remain on paid leave from Commerce.
Holcks lawyer, Kevin H. Marino, yesterday said, I look forward to it going to trial and I expect Mr. Holck to be fully vindicated at trial.
Lawyers for White, Kemp, and LeCroy could not be reached for comment. Snells attorney, Thomas Suddath Jr., said his client will plead not guilty.
Walter Westhead Jr., spokesman for Janney Montgomery, said of Carlson, Janney Montgomery Scott is not a party to this proceeding. We have fully cooperated with the authorities during their investigation. Mr. Carlsons employment with the firm has been terminated.
J.P. Morgan said in June that it was cooperating with authorities.
The original indictment was released in June and grew out of an ongoing investigation in Philadelphia into municipal corruption. A superceding indictment, such as the one filed this week, generally goes into greater detail on the evidence against defendants in a criminal case, and can include new charges or additional defendants in a case.
Under both the latest and the initial indictment, White faces multiple charges including conspiracy to commit honest services fraud, and multiple counts of wire fraud, mail fraud, extortion, and making false statements to the Federal Bureau of Investigations.
Kemp is also charged with conspiracy to commit honest securities fraud, and faces other charges including multiple counts of wire fraud, mail fraud, extortion, and money laundering.
The 174-page indictment filed by prosecutors this week includes numerous portions of conversation between Kemp, White, and other defendants that were apparently obtained through telephone wiretaps and surveillance.
Prosecutors allege that Kemp was the city treasurer in name only, and that White had complete control over who did, and in some cases did not, receive city business.
Kemp permitted White to direct Kemps official actions in a manner which Kemp knew not only directly benefited White and Whites interests, according to the indictment, but also the political candidates White supported, including the mayor of Philadelphia [John Street] who employed Kemp.
In exchange Kemp received a windfall of free gifts, including home improvements and tickets to sporting events like the Super Bowl and NBA All-Star Game weekend, limousine trips, meals, and flights in exchange for turning over control of his office to White.
The indictment paints a portrait of Kemp as a public official who has been thoroughly and willingly compromised by White.
In one instance, the city received a line of creditand Kemp arranged for White to receive $35,000 to $40,000 in connection with the deal even though White did no work on the transaction, indictment states.
According to the indictment, a surprised White was pleased to learn that he would be receiving payment for a deal he did not work on.
Man, you got your boy sitting in, in, the treasurers seat, man! Kemp told White, according to a quote in the indictment this week. During the same conversation Kemp later told White, Thats what we do, man, take care of each other.
In fact, the indictment indicates that White may have received $70,000 for the deal.
The indictment also references the fact that some of the gifts to Kemp were given to White by companies seeking to do business with the city. One company, not identified by name in the documents, that sought to be retained by the city for the reinvestment of bond proceeds provided the NBA All-Star tickets to White, one of which was given to Kemp at no charge, the document states.
Another company, identified only as a financial services firm, supplied White and Kemp with tickets to the Super Bowl in San Diego in 2003. Shortly after the Super Bowl trip, Kemp successfully advocated a $150,000 contract for [the company] to manage the citys interest rate swap transactions, the indictment states.
According to the indictment, Kemp recommended that White serve as bond counsel or underwriters counsel on nearly every deal that occurred while Kemp was city treasurer. From May 2002 to December 2003, White worked on 13 deals for the city earning nearly $634,000.
Whites clients and a woman described as his paramour also benefited from this control of Kemp. The indictment states that RPC Unlimited Inc., a financial printing company nominally operated by the woman, Janice Renee Knight, handled the printing for the city on 12 bond deals and earned nearly $309,000 in fees over 19 months.
The indictment also lays out just how far some market industry executives were willing to go to get city business.
Commerce Bank paid White $10,000 per month in consulting fees in 2000, and increased that to $15,000 per month in 2001, according the indictment. White was appointed to the banks board in 2002, and in 2003 the bank paid White at least $182,000 for his work, the document states.
White, in turn, delivered, repeatedly promoting Commerce to defendant [Kemp], the indictment states. Of 40 investment banks used by the city in bond deals during the three fiscal years beginning July 1, 2000, according to the indictment, Commerce Capital Markets earned more in fees $1,553,131 than all but two.
In at least one instance Commerces actions on a deal may have cost the city money. In 2001, the city tapped Commerce to lead manage a $295 million general obligation issue. According to the indictment, it was a transaction in which Commerce Capital Markets disseminated an erroneous call date, potentially costing the city approximately $200,000.
However, that did not keep the city from continuing to use the firm. In May 2003, according to the indictment, White and Kemp talked about an upcoming deal to issue tax revenue anticipation notes.
I told you I want Commerce to lead it, White told Kemp, the indictment states.
The next day, Kemp told White that he had recommended that Commerce work on the TRAN deal.
Commerce Bank became the lead for the deal earning a management fee of $60,000, as well as a takedown of $119,735 (more than double the receipt of any other underwriter on the deal), according to the indictment.
Another firm that sought Whites assistance in getting bond work from the city was J.P. Morgan. In February 2002, the firm donated $20,000 to the Ronald A. White Scholarship at Whites alma mater, Wesleyan University. Later that year the firm made two payments totaling $70,000 to the Youth League Found, a charitable organization White established.
That may not have been enough to put the firm in White and Kemps good graces. In April 2003 Snell, a vice president in the southeast region office of J.P. Morgans public finance department, saw White at the Philadelphia Four Seasons Hotel and asked him if he had submitted an invoice for work on a deal the firm was doing. According to the indictment, White, sounding confused, later called his office and asked, Were we the underwriter or something for the School District of Mobile, Alabama, for J.P. Morgan?
Later that month, Snell called White to explain the Mobile transaction, the indictment states.
Thats just a deal that we were trying to get you guys in as underwriter counsel, and we were not able to get you in as underwriter counsel, so we just decided to have you guys as counsel to the underwriter, and the deal is done, and we just need an invoice from you, Snell said. In late May, White received a $50,000 check from J.P. Morgan.
The true purpose of the $50,000 payment to White was to secure his assistance as a consultant in obtaining business for J.P. Morgan in Philadelphia, prosecutors said in the indictment.
Prosecutors allege that J.P. Morgan received scant business from the city before the firm developed a relationship with White and Kemp. In December 2003, the firm earned nearly $424,000 as senior manager on a bond deal for the Philadelphia Municipal Authority. According to the indictment, Kemp awarded J.P. Morgan the deal, and did so at Whites direction.
Elizabeth OBrien contributed to this story.
