Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 1 of 43 IN THE TINITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA UNITED STATES OF ANIERICA CRIMINAL NO.20Date Filed: I' ABDUR RAIIIM ISLAM SHAHIED DAWAN KENYATTA JOI{NSON DAWN CIIAVOUS ,2020 VIOLATIONS: l8 U.S.C. S 1962(d) (RICO conspiracy -I count) 18 U.S.C. $S 1343, 1346 (honest services wirefraud-8counts) l8 U.S.C. $ 1952(a)(3) (use of interstate facility to further racketeering - I count) 18 U.S.C. $ 1343 (wire fraud - 6 counts) 26 U.S.C. S 7206(2) (false tax returns - 6 counts) 18 U.S.C. $ 2 (aiding and abetting) Notices of Forfeiture INDICTMENT COUNT ONE CONSPIRACY TO COMMIT RACKETEERING 18 U.S.C. $ 1962(d) THE GRAND JURY CHARGES TIIAT: All dates and times in this Indictment are alleged to be "on or about" the specific date stated The Enterprise I . Universal Community Homes (UCH), founded in 1993, was an organization that redeveloped residential and commercial properties into affordable housing in South Philadelphia neighborhoods. Universal Education Companies (UEC), founded in 2002, provided academic services and operations management for primary and secondary charter schools. UCH and UEC Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 2 of 43 (collectively referred to as "Universal Companies") were headquartered in Philadelphia's 2"d City Council District. 2. Between 2012 and20l7, UEC maintained management agreements with multiple schools operating in Philadelphia Pennsylvani4 and Milwaukee, Wisconsin, to manage the schools' leadership teams, create the schools' budgets and administer the payroll process, and ensure financial reporting was in compliance with the requirements of various govemment entities. UCH (the real estate development component) provided management and administrative support for UEC (the education arm). For example, UCH administered the payroll and provided procurement functions for UEC. 3. Universal Companies constituted an Enterprise as defined in Title 18, United fact. States Code, Section 196l(4), namely, a group of individuals and entities associated in The Enterprise constituted an ongoing organization whose members functioned as a continuing unit for a common purpose of achieving the objectives of the Enterprise. The Enterprise was engaged in, and its activities affected, interstate and foreign commerce. Relevant Entity 4. Universal Real Estate Development Corporation (URED) was a for-profit entity described as a vehicle to develop low-income housing projects. According to its articles of incorporation, the entity's sole shareholder was Person l, another founder of Universal Companies. ln actual operation, the entity was a partnership with the profits split among Person I, ABDURRAHIM ISLAM, ANd SHAHIED DAWAN. Roles of th e Conspirators 5. Defendant ABDUR RAHIM ISLAM, a resident of the Eastem District of Pennsylvania, was a founding member ofUCH and served on its Board of Directors and as the a Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 3 of 43 President and ChiefExecutive Offrcer since the organization's inception. Defendant ISLAM also led UEC and served as its President and Chief Executive Officer. As the Chief Executive Officer, defendant ISLAM was primarily responsible for the day-to-day operations and oversaw UCH and UCE, the real estate development and education arms of Universal Companies, respectively. Defendant ISLAM eamed dual degrees from LaSalle University in accounting and finance and was a Certified Public Accountant. ISLAM received a salary of approximately $170,000 annually, in addition to yearly bonuses ranging from $35,000 to $45,000 per year. 6. Defendant SHAHIED DAWAN, a resident of the Eastem District of Pennsylvania, was a former Auditor and Regional Assignment Manager with the federal govemment. ln 1994, Defendant DAWAN transitioned to UCH Financial Officer. He also served on the Board of Directors for as its Philadelphia-based UCH. Chief Defendant DAWAN was responsible for Universal Companies' overall financial and contract management. DAWAN received a salary of approximately $160,000 annually and also received $20,000 bonuses in 2014,2015,2016, and20l7 . Associates of the C onsoirators 7 . KENYATTA JOHNSON, charged elsewhere in this lndictment, was a resident of the Eastem District ofPennsylvania, and formerly served as a State Representative for the 186th Legislative District in the Pennsylvania House of Representatives. In 2011, defendant JOHNSON was first elected to represent the 2nd District in the Philadelphia City Council. JOHNSON has maintained his City Council seat by wirning re-election in every election cycle since. Throughout his tenure as a Councilman, JOHNSON has utlilized "Councilmanic Prerogative," to effect zoning changes and impact the acquisition or transfer of real estate within the 2nd District. In Philadelphia, "Councilmanic Prerogative" was a legislative practice through -3- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 4 of 43 which individual City Councilpersons influence nearly all ofthe land use decisions in their district. When invoked by a Councilperson to support or reject a development proposal, the use ofthe prerogative is almost always honored by the rest of the Council. On multiple occasions, defendant JOHNSON exercised "Councilmanic Prerogative" to benefit Universal Companies, which was headquartered in his district. Since December 2011, JOHNSON has been married to defendant DAWN CHAVOUS, who also served in various roles on JOHNSON's political campaigns and as a consultant to Universal Companies. 8. DAWN CHAVOUS, charged elsewhere in this Indictment, Eastem District of Pennsylvani4 was a former Chiefof Staff for a resident of the a Pennsylvania state senator and Executive Director of a pro-charter school advocacy group. In 201 0, defendant CHAVOUS formed Chavous Consulting, LLC. Chavous Consulting purportedly provided a variety of services including issue advocacy, fundraising for political campaigns or non-profits, planning events, and developing strategic plans and objectives for organizations. In 2014, approximately 3l% of Chavous Consulting's revenue received in the business account was derived directly from Universal Companies. CHAVOUS's consulting business provided the vehicle to disguise bribe payments to her husband JOHNSON from ISLAM and DAWAN, using funds obtained from Universal Companies. 9. Michael Bonds, charged elsewhere, was elected by the citizens of District 3 in Milwaukee, Wisconsin to serve on the Milwaukee Board of School Directors (MPS Board). Between April 2009 and April 2016, Bonds served as the Board's president- Bonds operated Afiican-American Books and Gifts and used the entity as a vehicle to disguise bribe payments from ISLAM and DAWAN, using funds obtained from Universal Companies. -4- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 5 of 43 Racketeerin g Conspiracv 10. From at least in or around 2013 to on or about the date of this Indictment, in the Eastem District of Pennsylvania and elsewhere, defendants ABDUR RAHIM ISLAM SHAHIED DAWAII, ANd along with others, known and unknown by the grand jury, being persons employed by and associated with the Enterprise, which engaged in, and the activities of which affected, interstate and foreign commerce, knowingly and intentionally conspired to violate Title 18, United States Code, Section 1962(c), that is, to conduct and participate, directly and indirectly, in the conduct of the affairs ofthe Enterprise, through a pattem of racketeering activity, as defined in Title 18, United States Code, Sections l96l(l) and l96l(5), consisting of multiple acts indictable under the following statutes: a. Title 18, United States Code, Sections b. Title 18, United States Code, Sections 1341,1346 (relating to honest l34l (relating to mail fraud); services mail fraud); c. Title 18, United States Code, Sections 1343,1346 (relating to honest services wire fraud); d. e. Iiaud); Title 18, United States Code, Section 1343 (relating to wire Title 18, United States Code, Section 1512 (relating to obstruction of justice); f. Title 18, United States Code, Section 1952 (relating to use ofan interstate facility in aid of racketeering); and Multiple acts involving acts involving: g. h. Bribery in violation of Wis. Stat. $ 946.10; and Bribery in violation of 1 8 Pa. Cons. Stat. $ 4701. -5- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 6 of 43 I l. It was part of the conspiracy that each defendant agreed that a conspirator would commit at least two acts of racketeering in the conduct of the affairs ofthe Enterprise. NIanne r and Means of the Conspiracv 12. The manner and means by which the defendants ABDUR RAHIM ISLAM and SIIAHEID DAWAN, agreed to conduct the affairs of the Enterprise included the following, among others: a. b c d engaging in a corrupt scheme in which JOHNSON and CTIAVOUS received payments and things ofvalue in exchange for JOHNSON using his position as a Philadelphia City Councilman to take official actions to benefit ISLAM, DAWAN, and Universal Companies, including but not limited to, introducing and voting upon spot zoning legislation related to a property held by Universal Companies, and blocking reversion to the City of Philadelphia ofanother property held by Universal Companies after it failed to develop the property pursuant to its ageement with the City; engaging in a corrupt scheme in which Bonds received payments and things of value in exchange for Bonds using his position as President of the MPS board to take a series of official actions advantageous to ISLAM, DAWAN, and Universal Companies, including but not limited to, advocating for and voting in favor of Universal's expansion of charter school operations in Milwaukee, motioning the MPS Board to lease Milwaukee Public School (MPS) property to ISLAM, DAWAN, and Universal Companies, motioning the MPS Board to approve more favorable lease terms to the benefit of ISLAM, DAWAN, and Universal Companies, and voting in favor of the more favorable lease terms; stealing funds in the custody of Universal Companies in order to support ISLAM's extravagant lifestyle; stealing funds from Universal Companies to pay "bonuses" to ISLAM and DAWAN, pay bribes to JOHNSON, CHAVOUS, and Bonds, and make political contributions in the name of ISLAM to candidates for federal and local political ofFrces; e hiding the thefts and bribe payments by creating sham contracts, invoices, and false entries in books and records; and f. obstructing justice by withholding records and documents subject to legal process. -6- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 7 of 43 Milwaukee Board of School Directors 13. In20l2, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN began negotiating with the MPS Board to expand UEC's charter school operations to Milwaukee, Wisconsin. Despite concems expressed by members of UEC's Board of Directors regarding the financial viability ofsuch an expansion, defendant ISLAM made the decision to expand charter school operations into Milwaukee anyway. 14. On or about Augu s123,2012, the MPS Board approved consideration school proposal by defendants ABDIIR RAHIM ISLAM and SHAHIED DAWAN ofa charter . On or about August 30, 2012, the MPS Board approved the start ofnegotiations formalizing a contract for Universal Companies to operate charter schools in Milwaukee. On or about July 30,2013, the MPS Board approved a five-year contract for Universal Companies' new entity in Milwaukee to operate two charter schools, the Millennium and the Renaissance Campus, beginning in the 2013'2014 school year. Universal Companies' Milwaukee entity received over $11,000,000.00 from the MPS to operate the Millennium and the Renaissance Campus. 15. On January 28,2013, defendant SHAHIED DAWAN advised defendant ABDUR RAHIM ISLAM that it would cost at least 2.5 million dollars to get the Milwaukee-based schools operational for the first academic year contemplated by its arrangement with MPS. 16. On February 4, 2013, defendant SHAHIED DAWAN advised defendant ABDUR RAHIM ISLAM via email Universal Companies would need to cut consultants out of its operational budget in order to fund the expansion into Milwaukee. Eight days later, defendant DAWAN informed defendant ISLAM that Universal Companies was running a substantial deficit and that additional staffreductions would be necessary to move forward with the Milwaukee schools. -7 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 8 of 43 17. OnFebnnry 22,2013, defendant SHAHIED DAWAN advised defendant ABDUR RAHIM ISLAM in an email that UCH was projecting a year end loss of approximately $200,000. In other words, capital from the real estate-side would not be available to support the education-side expansion. In that same email, defendant DAWAN suggested that a sale of the Royal Theater could close the gap. 18. Universal Companies' operation in Milwaukee lost money almost immediately. Universal Companies' new entity did not have nearly enough revenue to cover the costs associated with operating its Milwaukee charter schools. On September 16,2014, MPS requested that defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN explain the operational deficit to MPS in order to remain in compliance with the July 2013 charter school contract. On September 22, 2014, defendant DAWAN responded in writing to MPS that poor student enrollment was to blame. 19. Despite the financial issues, in the fall and winter of 2014, defendant ABDIIR RAHM ISLAM continued to push for an expansion of the Milwaukee charter school program operated by Universal Companies. In December 2014, defendants DAWAN sought to open 20, a ISLAM and SIIAHIEI) third charter school in Milwaukee. In December 2014, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN began paying bribes to Michael Bonds, charged elsewhere, then President of the MPS Board, using funds from Universal Companies. ISLAM, DAWAN, and Bonds disguised these bribes as payments to Bonds' entity "African American Books and Gifts" for books, art work, and media. Bonds did not disclose to the MPS Board these payments nor his relationship with defendants ISLAM, DAWAN, and Universal Companies. 8- arrangements and Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 9 of 43 21. In exchange for the payments and things of value, Bonds attended committee meetings of the MPS and advocated on behalf of defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN and Universal Companies' Milwaukee-based education entity. When Universal Companies' proposal to open an additional school was heard by the MPS committee, Bonds personally advocated in support of it. After Bonds made his statement in support of Universal Companies, the MPS committee approved the proposal by ISLAM and DAWAN to open the additional school, and a recommendation was made to the full MPS Board to vote in favor ofthe expansion. 22. In addition to supporting Universal Companies' proposal to open an additional campus, Bonds helped defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN and Universal Companies with the passage of their lease a$eement with the MPS Board. In December 2014, Bonds sat as a member of the MPS Board committee with jurisdiction over the lease. As a member of this committee, Bonds had the authority to bring motions and vote on the various items heard by the committee. On December 11,2014, Bonds brought a motion to support Universal Companies' lease ofan MPS facility to house the additional campus. Once the motion was brought to the committee, Bonds voted in favor of the motion. 23. On or about April 19,2016, at a time when Universal Companies was experiencing severe financial distress, Bonds motioned the MPS Board for approval to defer lease payments of approximately $1,000,000 owed to MPS by Universal Companies' charter school operation. The Royal Theater in Philadelphia 24. In 2000, UCH acquired the Royal Theater, located at 1524-34 South Street, Philadelphia, Pennsylvania, which is in KENYATTA JOHNSON's City Council district, from -9 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 10 of 43 the Preservation Alliance for Greater Philadelphi4 for approximately $286,252.00. At that time, UCH planned to stabilize the building and then develop the property as an anchor building in that Cultural 25. District. Between 2000 and 2008, UCH was unable to develop the Theater. In 2008, UCH began exploring altemative uses for the property, specifically examining a residential and commercial mixed-use proposal for the property. Three years later, UCH presented a proposed mixed-use development to South Street West Business Association, which is a civic organization that describes itselfas a partnership between long-standing and new businesses, professionals, and community organizations based on South Street west Street in Philadelphia. This proposal went ofBroad nowhere. ln early 2012, the City ofPhiladelphia Department of License and lnspections determined that UCH was in violation of a number of city ordinances due to the dilapidated state ofthe building and the property and issued citations to UCH for the violations. 26. In the summer of 2012, UCH listed the Royal Theater for sale but was unable to secure an agreement 27. with any potential buye6. In April 2013, UCH filed an application with Philadelphia's Historical Commission that proposed demolition of the Royal Theater and new construction on the lot. As part ofthe application, UCH described the frnancial hardship the Royal Theater created for IICH and represented that prior attempts to sell the property in 2012 failed because potential pwchasers were unable to find an economically feasible use for the building as it was then zoned. In connection with the proposal, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN enlisted the aid ofa successful Philadelphia-based developer ("Person 2") to support the development proposal and thereby provide credibility for their development - l0- plans. The Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 11 of 43 development plan for the Royal Theater envisioned by ISLAM, DAWAN, and Person # 2 required zoning changes to implement. 28. In April 2013, many residents ofthe neighborhood surrounding the Royal Theater opposed the proposal and began taking legal actions that could have stripped UCH of its ownership and,/or control of the property under an anti-blight program. 29. In May 2013, a neighbor ofthe Royal Theater filed an action under Pennsylvania's Blighted and Abandoned Properties Conservatorship Law of2008 ("Act 135") to award conservatorship of the property to another local developer. According to Act 135, a .,Party in Interest," defined as an owner, lien holder, a resident, or business owner within 500 feet of a property who has met certain criteria regarding neglect and detrimental conditions, may petition the Pennsylvania Court of Common Pleas to appoint a conservator to take possession and effectuate the necessary rehabilitation and management ofthe property. An Act 135 action may result in a property owner losing control and ownership rights ofa property with little to no compensation if the owner does not act promptly to save the property from Conservatorship. 30. There are two methods to receive a zoning variance in the City of Philadelphia: a. The first and more traditional method is for the Zoning Board to hold a hearing and rule upon a proposed zoning variance. The Zoning Board variance process is a lengthy one and provides the local community with the opportunity to inlluence the ultimate decision. If a zoning variance does not receive local community support, the Zoning Board may reject the proposed variance. Further, ifthe Board passes a variance, members ofthe local community could appeal the decision. The appeals process is time-consuming, costly, and could be detrimental to a proposed sale or development. - ll - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 12 of 43 b. The second method is for a Cily Councilperson to obtain a spot-zoning ordinance proposed via legislative act. A proposal for spot-zoning legislation is typically conveyed by a Councilperson to the City ofPhiladelphia Law Department and Planning Commission which then drafts legislation that reflects the Councilperson's intent and support. Spot-zoning ordinances are a way to circumvenl the lengthier process before the Zoning Board. Historically, the process involving the Zoning Board could delay a development project for years because local residents could easily pursue an appeal ofthe Zoning Board's determination. 31. The same month the Act 135 action was filed, "Universal Companies" entered into a conhactual agreement with DAWN CHAVOUS, operating as Chavous Consulting. Originally, CHAVOUS' agreement was a three-month contractual commitment. After the three months, defendants ABDUR RAHIM ISLAM, SHAHIED DAWAN, and CHAVOUS agreed to extend her contract, so that in total it lasted from in or around May 2013 until in or around October 2014. 32. DAWN CHAVOUS electronically submitted defendant ABDUR a total of five invoices via e-mail to RAHIM ISLAM or to defendant SHAHIED DAWAN, requesting payment under her contract with "Universal Companies." CIIAVOUS received five corresponding checks authorized by ISLAM and DAWAN that matched to her invoices, totaling $66,750. The payments were drawn on the operating account of UCH at Wells Fargo Bank. 33. DAWN CHAVOUS provided Universal Companies with very little work, generated minimal work product, and incurred minimal, if any, expenses on behalf of Universal Companies in retum for the $66,750 in consulting fees her consulting firm received from UCH. 34. After DAWN CHAVOUS received a check fiom UCH, she deposited it into a bank account in the name of Chavous Consulting and then immediately transferred large portions -12- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 13 of 43 ofthe funds to a personal bank account from which she made mortgage, loan, and credit card payments on behalf of herself and KENYATTA JOHNSON. 35. In or around May 2013, defendant ABDUR RAHIM ISLAM arranged for a political fundraiser, to be co-hosted by Person 2, for KENYATTA JOHNSON's re-election campaign. The fturdraiser occurred on June 4, 2013. Defendants ISLAM, SHAHIED DAWAN, and Person 2 planned for a meeting at the site of the fundraising event immediately before the fundraiser to discuss the Royal Theater. 36. Neither defendant ABDUR RAHIM ISLAM nor defendant SHAHIED DAWAN disclosed to Person 2, the fundraiser's co-host and potential partner in the re-development ofthe Royal Theater, about the contractual arrangement between Universal Companies and KENYATTA JOHNSON's spouse, DAWN CHAVOUS. 37. On or about July 10, 2013, defendant ABDUR RAHIM ISLAM met with KENYATTA JOHNSON to discuss the "preliminary plans" for the Royal Theater. Afterwards, defendant ISLAM notified Person 2 via email that JOHNSON agreed to "take the lead with the Mayor" and work on the zoning change pursued by defendants ISLAM and SHAHIED DAWAN. 38. On or about October 22,2014, DAWN CHAVOUS deposited a check from Universal Companies for $ 17,250.00. 39. On or about October 23, 2014, KENYATTA JOHNSON attended a refresher course on Ethics Training for members of Philadelphia City Council, which specifically addressed conflicts of interest. 40. On or about October 30, 2014, KENYATTA JOHNSON, despite the vocal opposition ofa number of residents who lived near the Royal Theater, introduced City - 13 - of Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 14 of 43 Philadelphia Bill Number 140857 that specifically benefitted a zoning variance UCH. JOHNSON's bill proposed for the Royal Theater from Commercial Mixed Use 2 (CMX-2), which is designated for small-scale neighborhood storefront retail and oflice uses, to Commercial Mixed Used 3 (CIvD(-3), which is considered to be for a community- or region-serving commercial use. Further, CMX-3 zoning altered the parking requirements and height maximums of the buildings permitted to be constructed on the property. 41. KENYATTA JOHNSON did not disclose the financial and contractual relationship between his spouse, DAWN CHAVOUS, and defendants ABDUR RAHIM ISLAM and STIAHIED DAWAN and Universal Companies, to members of City Council, his staff, or other officials with the City of Philadelphia. 42. KENYATTA JOHNSON did not recuse himself fiom participation in the zoning legislation sought by defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN and Universal Companies. 43. By December 2014, KENYATTA JOHNSON's bill passed through City Council and was sigred into legislation by the Mayor of Philadelphia. The passage of the bill forced the withdrawal of the Act 135 suit that threatened Universal Companies' control of the Royal Theater. 44. Despite the successful efforts of KENYATTA JOHNSON, DAWN CHAVOUS, and defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN, to ease the zoning restrictions over development ofthe Royal Theater, Person 2 withdrew from the development project. 45. After struggling with the property for nearly 14 years, and less than two years after the passage ofPhiladelphia Bill Number 140857 and removal of the zoning impediments, -t4- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 15 of 43 Universal Companies' real estate arm UCH sold the Royal Theater for approximately $3,700,000.00. Universal Companies received over $2,700,000.00 in net profit from the sale, after the payment of settlement and closing costs, real estate taxes, and consulting fees. 46. Prior to the sale ofthe Royal Theater, Universal Companies experienced financial difficulties related to the operations of its charter schools, particularly its Milwaukee operations. In the months prior to the Royal Theater sale, UCH loaned significant amounts of money to Universal Companies' individual charter schools to supplement their cash flow. According to UCH' accounting firm, UCH often deferred collection of management fees due from individual charter schools in order to allow the charter schools to meet cash flow and operational needs. The sale of the Royal Theater infused significant cash proceeds into Universal Companies to offset the cash flow shortage. The Properties at 1309-1313 Bainbridge Street 47 . The properties located at 1309- 13 13 Bainbridge Street in Philadelphia are located in KENYATTA JOHNSON's district. 48. Universal Companies' real estate arm, UCH, partnered with the Pennsylvania Housing Authority ("P}IA) to create Uni-Penn, LLC. Uni-Penn, LLC, in tum, owned Uni- Penn Homeownership Inc. ('Uni-Penn"). 49. On or about January 27,2005, the Philadelphia Redevelopment Authority C'PRA) signed a contract conveying the 1309-1313 Bainbridge Street parcels to Uni-Penn for a nominal fee of $3.00, for the purpose of building 109 single-family units on the land. Under the arrangement, Uni-Penn was supposed to begin construction in April 2005. As part of the deal, the parties also executed a Redevelopment Agreement which required Uni-Penn to complete -15- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 16 of 43 construction within 1 8 months, or by October 2006, or face the prospect of "reversion," whereby the PRA could re-claim ownership ofthe parcels. 50. As of2013, the 1309-1313 Bainbridge Street parcels remained undeveloped. The property also was strewn with trash and the subject ofneighbors' complaints. 5l. In early 2014, PRA decided to begin the process ofreversion, and an official from PRA telephoned KENYATTA JOHNSON to seek his support. Although JOHNSON's support of reversion was not legally required, JOHNSON'S support was needed as a practical matter because the Philadelphia City Council rypically defers to the wishes ofthe Councilperson whose district contains a padcular property. 52. On January 14,2014, DAWN CHAVOUS contacted defendant ABDUR RAHIM ISLAM, the person to whom CHAVOUS reported and who authorized all of UCH's payments to Chavous Consulting, via email to wam him that the City ofPhiladelphia intended to revert the 1309-1313 Bainbridge Street parcels owned by UCH's partnership. 53. Shortly thereafter, I(ENYATTA JOHNSON advised the PRA that he would not support the reversion, which had a "chilling effect" and halted the reversion process. As of 2015, the 1309-1313 Bainbridge Street parcels were valued between $2,600,000 and $3,500,000. Fraud, Hidden Income and Tax Evasion 54. Between 2010 and 2016, defendant ABDUR RAHIM ISLAM drew significant sums of money from UCH in the form of bonuses and travel or expense reimbursements, in addition to his annual salary. Although UCH's Board of Directors (the Board) was charged with reviewing and approving UCH's financials and major initiatives on a quarterly or annual basis, defendants ISLAM and SIIAHIED DAWAN used their positions as CEO and CFO respectively to pay themselves bonuses without the approval or knowledge ofthe UCH Board. Defendants -16- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 17 of 43 ISLAM and DAWAN paid themselves bonuses even while Universal Companies was hemorrhaging money due to the failed charter school expansion in Milwaukee. Fake Consulting Business and Deductions 55. Defendant ABDUR RAHIM ISLAM controlled the finances of both URED and ORED. Between2011and2016,defendantISLAMreceivedsignificantdistributionsand "expense reimbursement" payments from ORED (another entity) and URED, despite the fact that neither entity had any meaningfr business activity supporting or justifring the payments. Despite this lack of demonstrable business activity, both entities "reimbursed" ISLAM for "business expenses" in excess of$140,000 from ORED, and $88,000 from URED which included approximately $3,000 in bribe payments made to Michael Bonds. ISLAM "reimbursed" himself for "business expenses" without the knowledge ofPerson 1, his putalive partner in the entities. Embezzled Income from Universal Companies 56. Defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN ananged for UEC and its charter schools to pay management fees to UCH. Part ofthese fees were then used by UCH to reimburse expenses incurred by Universal Companies' executive management team to support and oversee the management and operations ofthe charter schools. Defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN used UCH's tunds to pay ISLAM excessive, inflated, or outright fraudulent reimbursements for "travel" or other purported "business expenses." Defendant ISLAM would pad his "expenses" related to the operation ofUniversal Companies, including the charter schools, with a variety ofpersonal expenses that should not have been reimbursed. For example, defendant ISLAM submitted his personal car insurance, political contributions, personal vacations, and gym memberships _17_ as "business expenses" which Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 18 of 43 were reimbursed by UCH and also not included as income on his IRS Forms 1040. ISLAM's "reimbursements" were reviewed and approved by defendant DAWAN outside the standard procedures for Universal Companies and without proper and detailed supporting documentation. 57. Defendants ABDUR RAHIM ISLAM and SIIAHIED DAWAN, as the chief executives ofUCH, and without notice to the Board, also authorized defendant ISLAM to receive large sums of"pocket money'' or per diem from UCH. Between in or about January 2014 and in or about June 2016, UCH "reimbursed" ISLAM approximately $108,000 for expenses over and above his "documented" expenses. ISLAM also received $50.00 per week in miscellaneous cash fiom UCH up until July 2014. After July 2014, ISLAM received miscellaneous cash from UCH in the amount of $ 1 00.00 per week. In addition to the weekly miscellaneous cash payments, ISLAM received an additional $100.00 cash per day when he travelled for Universal Companies even though UCH also reimbursed him for any "documented" expenses, such as meals, on those same trips. 58. \n early 2017, as Universal Companies's frnancial disaster in Milwaukee was coming to a head, defendant ABDIJR RAHIM ISLAM explored a new method to obtain Universal Companies' funds. In a text message to defendant SHAHIED DAWAN on February 24,2017, defendant ISLAM followed up on a proposed personal "loan" from Universal Companies to ISLAM in the amount of $50,000. ISLAM wrote to DAWAN, "Here's how the $50K loan could work. Paid back by taking next year bonus for 2years ($ l00K) deducted by $50k loan and process $50k normally. What do you think?" 59. through Defendant SHAHIED DAWAN responded via text, *l still don,t see how this gets audit." Defendant DAWAN explained via text, ". - 18 - . . [the auditors] will be looking for Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 19 of 43 board approval. every [sic] since those donations tiom those schools." By March9,201,7, Universal Companies pulled out of Milwaukee before the end ofthe school year Ovcrt Acts ln furtherance ofthe conspiracy and to affect the object thereof, the defendants and or other co-conspirators known and unknown committed the following overt acts, among others, in the Eastem District of Pennsylvania, the Eastem District of Wisconsin, and elsewhere: 1. I. Ollicial Acts in Milwaukee Obtained Through Bribery A. Expanding Universal's Charter School Operations On or about December 9, 2014, Michael Bonds, charged elsewhere, appeared at a subcommittee meeting of the MPS Board and personally advocated in support of the expansion sought by defendants ABDUR RAHIM ISLAM and SI{AHIED DAWAN, to include the opening ol-an additional campus by the charter school entity operated by Universal Companies in Milwaukee, Wisconsin. 2. On or about December 11, 2014, Michael Bonds brought a motion before a subcommittee of the MPS Board supporting the lease of an MPS building sought by defendants ABDUR RAHIM ISLAM and SIIAHIED DAWAN to house the additional Milwaukee school campus awarded in the expansion. 3. On or about December 11, 2014, Michael Bonds voted in favor ofthe motion he introduced before the subcommittee supporting the lease ofan MPS building to the additional charter school campus awarded in the expansion. 4. On or about December 18, 2014, Michael Bonds presided over a meeting ofthe full MPS Board at which the expansion ofthe charter school operations sought by defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN was approved by the full MPS Board. -19- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 20 of 43 B. 5. Securing Revised Lease Terms Favorable to Universal Companies On or about September 26,2015, defendant ABDUR RAHIM ISLAM and Michael Bonds corresponded via email, and in that exchange, defendant ISLAM relayed instructions for Bonds, crafted by ISLAM and defendant SHAHIED DAWAN, which included detailed figures and amounts for Bonds to put before the MPS Board regarding lease deferments favorable to Universal Companies and its Milwaukee operation. 6. On or about April 19,2016, at a subcommittee meeting of the MPS Board, Michael Bonds motioned the Board for approval ofnew lease terms favorable to defendants ABDUR RAHIM ISLAM, SHAHIED DAWAN, and Universal Companies' charter school operation in Milwaukee, Wisconsin. 7. On or about April19,2016, Michael Bonds voted in favor of the new lease terms - which deferred lease payments of approximately $1,000,000 owed by the charter school operations of Universal Companies - that Bonds had introduced before the subcommittee ofthe MPS Board, which were then, in tum, recommended to the full MPS Board and ultimately approved. I The Creation of False Documents to Disguise the Bribe Payments to Bonds 8. On or about December 19,2014, Bonds and others known to the grand jury created a false invoice, which was then transmitted via email from Milwaukee, Wisconsin to Philadelphia Pennsylvania, that sought installment payments from Universal Companies to Michael Bonds' company "Afiican American Books and Gifts." 9. On or about April 21,2016, defendants ABDUR RAHIM ISLAM, SHAHIED DAWAN, and Bonds caused an email to be sent from Milwaukee, Wisconsin, to ISLAM and SHAHIED DAWAN in Philadelphia, Pennsylvania. The email contained another fake invoice -20 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 21 of 43 and a subject line "BondsBooksl0.pdf," and it sought payment to be transmitted via Federal Express. ilI. 10. The Corrupt Payments from Islam and Dawan to Bonds In furtherance of their criminal schemes, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN paid approximately the dates set forth below, $ 18,000 in bribes to Michael Bonds. On or about ISLAM and DAWAN caused the following payments to be issued to Bonds' African American Books and Gifts fiom accounts controlled by defendant ISLAM and/or Universal Companies: Check No. Date Issued Amount 0(a) #1962 December 24, 2014 $ 2,000 100) #170 Jamtary 21,2015 $ 3,000 l0(c) # 1053 February 18, 2015 $ 2,000 l0(d) #1110 March 6,2015 s l,000 l0(e) #fi49 April 1,2015 $ 1,000 l0(0 #t639 June 29, 2015 $ 1,000 lo(e) #1847 September 28, 2015 $ 2,500 r0(h) #1925 November 4, 2015 $ 1,s00 'oro #1062 November 30, 2015 $r,500 Overl Act I I I I I ttt I I I l0(i) #1066 January 4,2016 l0(k) #2212 Apil22.20l6 $ 1,500 I -21 - $ 1.000 I Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 22 of 43 I 1. Defendant SHAHIED DAWAN caused check #1 962 to be shipped via Federal Express from Philadelphia, Pennsylvania to Milwaukee, Wisconsin, where it was ultimately received by Michael Bonds. 12. On or about January 21,2015, for the second installment payment, defendant ABDUR RAHIM ISLAM hand-delivered the $3,000 payment to Michael Bonds in Milwaukee, Wisconsin. 13. On or about Apri122,2016, defendant SHAHIED DAWAN caused check # 2212 to Michael Bonds' company to be shipped via Federal Express from Philadelphi4 Pennsylvani4 to Milwaukee, Wisconsin. W. Ollicial Acts in Philadelphia Obtained Through Bribery A. 14. The Royal Theater On or about October 16,2014, defendant SHAHIED DAWAN transmitted to defendant ABDUR RAHIM ISLAM via email a draft of the rezoning ordinance for the Royal Theater that became Philadelphia Bill Number 140857 in advance of a meeting that same day between defendant ISLAM and KENYATTA JOHNSON to discuss the Royal Theater property. 15. On or about October 30, 2014, KENYATTA JOHNSON introduced City of Philadelphia Bill Number 140857 that specifically benefitted Universal Companies. JOHNSON's bill proposed a zoning variance allowing for expanded commercial use of the property occupied by the Royal Theater and also altering the parking requirements and height maximums for buildings constructed on the property. 16. On or about December 11, 2014, KENYATTA JOHNSON voted in support City of Philadelphia Bill Number 140857, and the bill was passed by City Council. of Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 23 of 43 B. 17. The Properties at 1309-1313 Bainbridge Street On or about January 16,2014, DAWN CHAVOUS sent an email to defendant ABDUR RAHIM ISLAM, waming him about the "[p]roperties the City [of Philadelphia] wants to take from [UCH] located at l3th and Bainbridge." 18. Shortly thereafter, KENYATTA JOHNSON advised the PRA that he would not support the City of Philadelphia's attempt to revert the properties at 13th and Bainbridge owned by UCH's partnership, effectively halting the reversion process and allowing the UCH partnership to retain the properties. V. The Creation of False Documents to Disguise Bribe Payments to Kenyatta Johnson 19. On or about June 10,2013, defendant SHAHIED DAWAN transmitted by email to defendant ABDIIR RAHIM ISLAM and DAWN CHAVOUS the bxecuted contract between Chavous Consulting and Universal Companies, specifuing a start date of May 1, 2013, and a $4,500.00 monthly consulting fee to be paid to Chavous Consulting. 20. In furtherance of their criminal schemes, on or about the dates set forth below, DAWN CHAVOUS created and caused to be transmitted by email to defendants ABDUR RAHIM ISLAM and SIIAHIED DAWAN invoices purportedly justifring the payments from Universal Companies to Chavous Consulting from an account controlled by UCH: -23 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 24 of 43 Overt Act Date Transmitted Amount 20(a) August l, 2013 $13,500.00 20(b) September 24,2013 $4,500.00 20(c) December 31,2013 $l 8.000.00 20(d) April28,2014 $l 3,500.00 20(e) September 21, 2014 I $17,2s0.00 VI. The Corrupt Payments from Islam and Dawan 21. In furtherance oftheir criminal schemes, on or about the dates set forth below, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN caused the following payments to be issued to Chavous Consulting from an account controlled by Universal Companies: Overt Act Check No. I Amount Date Issued I I 2l(a) 17271 August 2, 2013 21(b) 17479 October 8, 2013 17713 Jaruary 2,2014 $r 8,000.00 8159 May 12,2014 $l 3,s00.00 $I 3,500.00 I 21(c) I $4,500.00 I 2r (d) r 21(e) t 8631 22. October 10,2014 On or about September 27, 2016, defendants ABDUR I s17,250.00 RAHIM ISLAM and SHAHIED DAWAN, and Universal Companies, sold the Royal Theater for approximately $3,700,000.00. -24 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 25 of 43 VII. 23. Fraud and Embezzlement Between 2012 and 2016, defendant ABDUR RAHIM ISLAM received the following payments from Universal Companies, which defendants ISLAM and SHAHIED DAWAN authorized and characterized as "bonuses" or "pay increase differential:" Overt Act I)atc Amount Memo Line of Check I 23(a) $35,000 June20,2012 "Bonus" 23(b) $35,000 June 20. 201 3 "Bonus" 23(c) $ February 8,2014 "Pay Increase Differential' 23(d) $3s,000 June 4,2014 "2013-2014 Bonus" 23(e) $ February 2,2015 "Bonus" 23(f) $30,000 23(e) $35,000 15,000 I 1s,000 April 9, 20t "Bonus 2014-2015" 5 August 26, 2016 Payment Issued through Payroll I 24. Between 2014 and 2016, defendant SHAHIED DAWAN received the following payments from UCH, which defendants ABDUR RAHIM ISLAM and DAWAN authorized and characterized as "bonuses": Memo Line of Check Overt Act Amount Date 24(a) $20,000 June 12,2014 2013-2014 FY Bonus 24(b) $20,000 February 25, 20 t 5 2014-2015 FY Bonus I I I 24(c) $20,000 June 17,2016 Payment Issued through Payroll 24(d) $20,000 February 10, 201 7 Payment Issued through Papoll -25 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 26 of 43 25. On or about January 22,2015, defendant ABDUR RAHIM ISLAM notified defendant SHAHIED DAWAN via text message that he "had to write the [$3,000] check to Bonds (emergency)." Subsequently, on or about July 16, 2015, defendant ISLAM submifted a written reimbursement request to defendant DAWAN, for payment by UCH, and listed in the "supporting documentation" the $3,000 bribe payment to Bonds as a business expense described as "Purchase of African American Books." All in violation of Title 18 United States Code, Section 1962(d). -26 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 27 of 43 COUn-TS TwO THROUGH SEVEN HONEST SERVICES WIRE FRAUD l8 u.s.c. $$ 1343, 1346 THE GRAND JURY FURTHER CHARGES TTIAT: l. Paragraphsl,2,4,5,6,9,8, 12(b), l2(e)through l2(f1, 13through23,and55, and Overt Acts 1 through 13 ofCount One are incorporated herein by reference. 2. Michael Bonds, charged elsewhere, as a member of the MPS Board, owed the City of Milwaukee and its citizens a duty of honest services in the performance of his official position. 3. From in or about December of20l4 to in or about February of20l8, in the Eastern District of Pennsylvani4 and elsewhere, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN knowingly devised and participated in a scheme and artifice to defraud and to deprive the citizens of Milwaukee, Wisconsin of their right to the honest services of MPS Board President Michael Bonds through bribery. Manner and Means Payments to Michael Bonds 4. Beginning in December 2014, and continuing dates and in the amounts set forth throqh Apil22,2016, on the in Overt Acts l0(a) through l0(k) of Count One, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN paid approximately $18,000 and other things of value in bribes to Michael Bonds using Universal Companies' funds. -27 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 28 of 43 Official Acts 5. In exchange for the payments and the things ofvalue given by defendants ABDUR RAHM ISLAM and SHAHIED DAWAN, Michael Bonds performed the official acts set forth in Overt Acts 1 through 7 of Count One. Concealing the Bribes 6. Defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN and Michael Bonds created or caused others to create false documents as set forth in Overt Acts 8 through 9 ofCount One to disguise the bribe payments. Execution of the Scheme 7. For the purpose ofexecuting and attempting to execute the scheme and artifice to defraud and deprive the citizens of Milwaukee of the honest services of a member of the MPS Board, on or about the dates below in the Eastern District of Pennsylvania and elsewhere, defendants ABDUR RAHM ISLAM and SHAHIED DAWAN, and others, knowingly caused to be transmitted, and aided and abetted the transmission of, by means of wire communication interstate commerce, signals and sounds, that is, the below electronic mail messages, each transmission constituting a separate count: -28 - in Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 29 of 43 Count ) J 4 5 6 I Interstate Wire Communication (Electronic Communications) Approximate Email communication from ISLAM in Pennsylvania to Bonds in Wisconsin, relaying instructions from Defendant SHAHIED DAWAN. including detailed figures and amounts related to the lease deferments sought fiom MPS. Email from Universal Companies' office in Wisconsin to Defendant SHAHEID DAWAN and Defendant ABDUR RAHIM ISLAM in Pennsylvania, transmitting invoice from African American Books and Gifts in the amount of $2,500 Email from Universal Companies' oIfice in Wisconsin to Defendant SHAHEID DAWAN and Defendant ABDUR RAHIM ISLAM in Pennsylvania, transmitting invoice from Afiican American Books and Gifts in the amount of $1,500 Email from Universal Companies' office in Wisconsin to Defendant SHAHEID DAWAN and Defendant ABDUR RAHIM ISLAM in Pennsylvania, transmitting invoice from African American Books and Gifts in the amount of $1,500 Email fiom Universal Companies' office in Wisconsin to Defendant SHAHEID DAWAN and Defendant ABDUR RAHIM ISLAM in Pennsylvania transmitting invoice from Afiican American Books and Gifts in the amount of Sept. 26, 2015 $ 7 I Date Sept. 28, 2015 Oct.20,2015 Nov.26,2015 Dec. 30. 2015 I 1,000 Email from Universal Companies' office in Wisconsin to Defendant SHAHEID DAWAN and Defendant ABDUR RAHIM ISLAM in Pennsylvania transmitting invoice fiom African American Books and Gifts in the amount of $ l ,500 All in violation of Title April 21, 2016 18. United States Code, Sections 1343 and 1346. -29 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 30 of 43 COUNT EIGHT USE OF INTERSTATE FACILITY TO FURTHER RACKETEERING l8 U.s.C. $ 19s2(a)(3) THE GRAND JURY FURTHER CHARGES THAT: l. Paragraphsl,2,4,5,6,9,8, l2(b), l2(e)through l2(f), l3through23,and55, and Overt Acts 2. I through 13 ofCount One are incorporated herein by reference. The laws of the State of Wisconsin, specif,rcally Wis. Stat. $ 946.10, provide that bribery is a violation of the laws of the State of Wisconsin. 3. On or about Septemhr 26, 2016, in the Eastem District of Pennsylvania and elsewhere, defendants ABDURRAHIM ISLAM SHAHIED DAWAN, ANd aided and abetted by Michael Bonds, charged elsewhere, and others, known and unlnown to the grand jury, used a facility in interstate/foreign commerce, namely an email server, with the intent to further an unlawfi.rl activity, that is, bribery and extortion in violation of Wis. Stat. $ 946.10 and l8 U.S.C. $ 1951, and thereafter committed and attempted to commit the crimes of bribery and extortion to further such unlaufirl activity. All in violation of Title 18, United States Code, Section 1952(a)(3) -30- xd2. Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 31 of 43 COUNTS NINE THROUGH TEN HONEST SERVICES WIRE FRAUD r8 u.s.c. ss 1343, 1346 THE GRAND JURY FURTHER CHARGES THAT: 1. Paragraphs 1,2, 5 through 8, 12(a), 12(e) through 12(f), 15 through 17, 24 through 53 and Overt Acts 14 through 22 of Count One are incorporated herein by reference. 2. Defendant KENYATTA JOFINSON, as an elected member of Philadelphia City Council, representing citizens ofthe 2nd District, owed the citizens of the 2nd District and the citizens of Philadelphia a duty ofhonest services in the performance of his official position. 3. From in or about 2013 to on or about the date ofthis Indictment, in the City of Philadelphia, in the Eastem District ofPennsylvania, and elsewhere, defendants ABDURRAHIM ISLAM, SHAHIED DAWAN, KENYATTA JOHNSON, and DAWN CHAVOUS knowingly devised and participated in a scheme and artifice to defraud and to deprive the citizens ofthe 2nd District and the citizens of Philadelphia of their right to the honest services defendant KENYATTA JOHNSON through bribery. Purposes of the Scheme 4. It was a purpose of the scheme for defendants KENYATTA JOHNSON and DAWN CHAVOUS to receive payments and things of value in exchange for defendant JOHNSON using his position as a Philadelphia City Councilman to take official actions to benefit defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN, and Universal Companies, including but not limited to, introducing and voting upon spot zoning legislation related to a property held by Universal Companies and blocking reversion to the City - 3l - of of Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 32 of 43 Philadelphia of another property held by Universal Companies after it failed to develop the property pusuant to its agreement with the City. 5. It was a further purpose ofthe scheme to conceal and protect the activities ofthe co-schemers from detection and prosecution by law enforcement officials as well as from exposure by the news media, through means that included, but are not limited to, the falsification ofdocuments. Manner and Means 6. From May 2013 through October 2014, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN caused Universal Companies to enter into an original and series of renewal contracts with defendant DAWN CHAVOUS who operated as Chavous Consulting. 7. In order to be paid under these contracts and renewal contracts, defendant DAWN CHAVOUS electronically submitted a total of five invoices via e-mail to defendant ABDUR RAHIM ISLAM or defendant SHAHIED DAWAN. Cormpt Payments to l)efendants Kenyatta Johnson and Dawn Chavous 8. Beginning in or around August 2013 and continuing through in or around October 2014, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN caused Universal Companies to send defendant DAWN CFIAVOUS a series of five checks totaling approximately $66,750, as set forth in Overt Acts 21(a) through 21(e) ofCount One. Ofiicial Acts by Kenyatta Johnson 9. In exchange for the payments given by defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN to defendant DAWN CHAVOUS, defendant KENYATTA JOHNSON performed the official acts set forth in Overt Acts 14 through l8 of Count One related to The Royal Theater and the properties at 1309- 1313 Bainbridge Street, Philadelphia. -32 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 33 of 43 . 10. Concealing the Bribes In order to conceal the link betrveen the payments and official acts of defendant KENYATTA JOHNSON, defendants ABDUR RAHIM ISLAM, SHAHIED DAWAN, DAWN a bogus consultant relationship between CHAVOUS, and JOHNSON created UCH and Chavous Consulting and prepared a series of contracts. Execution of the S I l. For the purpose ofexecuting and attempting to execute the scheme and artifice to defraud and deprive the citizens of the 2nd District and ofPhiladelphia ofthe honest services Corurcilman KENYATTA JOHNSON, on or about the dates below, in the Eastern District of of Pennsylvania and elsewhere, defendants ABDUR RAHIM ISLAM, SHAHIED DAWAN, DAWN CHAVOUS, and JOHNSON and others, knowingly caused to be transmitted, and aided and abetted the transmission of, by means of wire communication in interstate cornmerce, signals, that is, the below electronic mail messages, each transmission constituting a separate count: Count 9 Description Date October 16,2014 Email forwarding draft zoning ordinance from defendant SHAHIED DAWAN to defendant ABDUR RAHIM ISLAM in advance of defendant ISLAM's meeting with defendant KENYATTA JOHNSON October 22,2014 Electronic image transmitted by Wells Fargo Bank from a branch in Philadelphia, PA to an out-of-state server, resulting from the withdrawal of $ I 7,250.00 from Universal Companies' account ending in 9642 l0 All in violation of Title 18, United States Code, Sections 1343 and 1346. -33- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 34 of 43 COUNTS ELEVEN THROUGH SIXTEEN WIRE FRAUD 18 U.S.C. S 1343 THE GRAND JURY FURTHER CHARGES THAT: l. Paragraphs 1,2,4 through 6, l2(a) through l2(f), 54 through 59, and Overt Acts 23 through 25 of Count One are incorporated herein by reference. The Scheme to Defraud 2. From in or around 201 I and continuing through in or around the date ofthis Indictment, in the City ofPhiladelphia in the Eastern District of Pennsylvania, and elsewhere, defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN knowingly devised and intended to devise a scheme and artifice to defraud, and to obtain money and property by means of materially false and fraudulent pretenses, representations, and promises. 3. It was the object ofthe scheme described in paragraph 2 for defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN to use the resources of Universal Companies in various ways to enrich themselves. Manner and Means 4. The means and methods by which defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN carried out the scheme are described in paragraphs 13(a) through l3(f), and l4 through 58 ofCount One ofthis indictment. -34 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 35 of 43 Acts in Furtherance ofthe Scheme 5. Defendants ABDUR RAHIM ISLAM and SHAHIED DAWAN executed and attempted to execute the scheme and artifice to defraud, and in futherance ofthe scheme transmitted and caused to be transmitted, in interstate corrmerce, the following wire communications in the form of writings, signs, signals, pictures, and sound as set forth, each transmission constituting a separate count: Count Date Description Conspirators' Characterization ll July 16,2015 Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphia, PA to an out-of-state server, resulting from the withdrawal of 57 0,47 2.7 2 fr om Universal Companies' account ending in 9642 Islam Expense Reimbursement 12 October I 0, 2015 Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphi4 PA to an out-of-state server, resulting fiom the withdrawal of $35,000 fiom Universal Companies' account ending in 9642 Islam Expense Reimbursement l3 January 16, Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphia, PA to an out-of-state server. resulting from the withdrawal of $30,000 from Universal Companies' account ending in 9642 Islam Expense Reimbursement 20t6 -35- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 36 of 43 14 April 28, 2016 Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphia, PA to an out-of-state server resulting from the withdrawal of $30,000 from Universal Companies' account ending in 9642 Islam Expense Reimbursement l5 June 14, 2016 Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphia, PA to an out-of-state server, resulting from the withdrawal of $30,000 from Universal Companies' account ending in 9642 Islam Expense Reimbursement l6 June 30,2016 Electronic image transmitted by Wells Fargo Bank, from a branch in Philadelphia, PA to an out-of-state server. resulting from the withdrawal of $30,000 from Universal Companies' account ending in 9642 Islam Expense Reimbursement All in violation of Title 18, United States Code, Section 1343. -36- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 37 of 43 COUNTS SE VENTEEN THROUGH TWENTY-TWO FALSE TAX RETURNS 26 U.s.c. $ 7206(2) THE GRAND JURY FURTHER CIIARGES THAT: l. Paragraphs 1,2, 4 through 6, 12(a) through l2(f), 54 through 59, and Overt Acts 23 through 25 ofCount One are incorporated herein by reference 2. The Intemal Revenue Service (lRS) was an administrative agency of the United States Department of Treasury responsible for administering and enforcing the tax laws of the United States, including the assessment and collection of federal income taxes. 3. Over a six-year period, defendant ABDUR RAHIM ISLAM, a certif,red public accountant, prepared fiaudulent joint federal income tax retums for himself and his spouse. From 2011 through 2016, in the aggregate, defendant ISLAM underreported his taxable income by approximately $551,202, resulting in a tax loss to the govemment totaling approximately $ 188,764.00. 4. Defendant ABDUR RAHIM ISLAM hid and underreported his income in a variety of ways, including the following: a. Through his control of Universal Companies, defendant ABDUR RAHIM ISLAM ananged for "bonus" payments to be generated to him outside of Universal Companies' established payroll accounting system, ensuring the payments would not appear on his W-2s. Defendant ISLAM then treated the "bonus" payments and income from URED as "Gross Receipts" from his Schedule C consulting business. Defendant ISLAM then fiaudulently reduced the income attributable to his Schedule C business by inllating or creating false and -37 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 38 of 43 fictitious business expenses to offset against his "Gross Receipts," thereby reducing any taxable rncome b. As CEO of Universal Companies, defendant ABDIJR RAHIM ISLAM was reimbursed for travel and business-related expenses. Defendant ISLAM padded any legitimate business expenses he submitted with a variety ofpersonal expenses which should not have been reimbursed by Universal Companies. For example, ISLAM was reimbursed for his personal car insurance, political contributions, personal vacations for himself and others, multiple gym memberships, and personal meals, including family celebrations. ISLAM did not include these personal expense reimbursements as income on his IRS Forms 1040. 5. On or about the dates listed in the chart below, in Philadelphia in the Eastem District of Pennsylvania, and elsewhere, defendant ABDURRAHIMISLAM willfully aided, assisted, procured, counseled, and advised the preparation and presentation to the Intemal Revenue Service, of U.S. Individual Income Tax Retums, Forms 1040 for defendant ISLAM and his spouse, when the defendant ISLAM knew and believed that the individual retums were materially false for each of the following years: -38- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 39 of 43 Count Tax Year Retum Type 17 l8 t9 20 I 2t I 22 Form 1040, Individual Income Tax Retum Form I 040, Individual Income Tax Retum Form 1040, Individual Income Tax Retum Form 1040, Individual Income Tax Retum Form 1040, Individual Income Tax Retum Form 1040, Individual Income Tax Retum Dale Filed Method Filed I I 2011 Electronically Filed Oct. 15.2012 2012 Paper Filed Oct.22,2013 2013 Electronically Filed ttOct. 15,2014 False Line Items Line 22 Total Income Line 22 Total Income Line 22 Total Income I 2014 Electronically Filed Oct. 14,2015 I Line 22 Total Income I 2015 Electronically Filed Oct. 16,2016 Line 22 Total Income Electronically Filed Oct. 16,2017 Line 22 Total Income I I 2016 In violation of Title 26, United States Code, Section 7206(2). -39 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 40 of 43 FIRST NOTICE OF FORFEITURE THE GRAND JURY FURTHER CHARGES TTIAT: 1. As a result ofthe violation(s) ofTitle 18, United States Code, Sections 1343 and 1346, set forth in this indictment, defendants ABDUR RAHIM ISLAM, SHAIIIED DAWAN, KENYATTA JOHNSON, and DAWNCHAVOUS shall forfeit to the United States of America any property, real or personal, that constitutes or is derived fiom proceeds traceable to such property, including, but not limited to, the srrm of $463,000. 2. If any of the property subject to forfeiture, as a result of any act or omission of the defendant(s): (a) cannot be located upon the exercise of due diligence; (b) has been transferred or sold to, or deposited (c) has been placed beyond the (d) has been substantially diminished in value; or (e) has been commingled with, a thfud party; jurisdiction ofthe Court; with other property which cannot be divided without difiiculty; it is the intent of the United States, pursuant to Title 18, United States Code, Section 982(b), incorporating Title 21, United States Code, Section 853(p), to seek forfeiture of any other property ofthe defendant(s) up to the value ofthe property subject to forfeiture. All pursuant to Title 28, United States Code, Section 2461(c) and Code, Section 981(a(1)(C). -40- Title I 8, United States Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 41 of 43 SECOND NOTICE OF FORFEITURE (RICO FORFEITURE) As a result ofthe violation of Title 18, United States Code, Section 1962(d) set forth in this Indictrnent, the defendants, ABDUR RAHIM ISLAM, and SHAHIED DAWAN, shall forfeit to the United States of America: (a) any interest acquired and maintained in violation ofTitle 18, United States Code, Section 1962; (b) any interest in, security of, claims against, or property or contractual rights ofany kind, which afford a source of influence over, any enterprise established, operated, controlled, conducted, and participated in the conduct of such violation ofTitle (c) 18, United States Code, Section 1962(d), and any property constituting or derived from proceeds obtained, directly and indirectly, from racketeering activity, in violation of Title 18, United States Code, Section 1962, which property is subject to forfeiture to the United States pursuant to Title 18, United States Code, Section 1963(a)(3). 2. Ifany ofthe property subject to forfeiture, as a result of any act or omission of the defendant(s): (a) cannot be located upon the exercise ofdue diligence; (b) has been transferred or sold to, or deposited (c) has been placed beyond the (d) has been substantially diminished in value; or with, a third party; jurisdiction ofthe Court; -41 - Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 42 of 43 (e) has been commingled with other property which cannot be divided without difficulty; it is the intent ofthe United States, pursuant to Title seek 18, United States Code, Section 1963(m), to forftiture ofany other prop€rty of the defendant(s) up to the value ofthe property subject to forfeiture. All punuant to Title I 8, United States Code. Section 1963. A TRIjE BILL: FOREPERSON I I ARBITTIER \\ILLIAMS Anomey for the United States. Acting Under Authoritl' Confened by 28 U.S.C. $ 515. -42- Case 2:20-cr-00045-GAM Document 1 Filed 01/28/20 Page 43 of 43 No. UNITED STATES DISTRICT COURT Eastenr District ol' Pcnnsylvania elrunal-o-rvs jsl THE UNITED STATES OF AMERICA vs- ABDUR RAHIM ISLAM SHAHIED DAWAN KENYATTA.'OHNSON DAWN CHAVOUS IN DIC'I'M T]NT Cotlnts (RICO 1962(d) conspirncy - I count) 18 U.S.C. $ (honest l8 U.S,C. $$ 1343, I346 scrviccs wirc fraud - 8 counts) 18 U.S.C. $ 1952(a)(3) (use of interststc fscility to furthcr racketcering l8 U.S.C. $ 1343 (wire freud - 6 counts) 26 U.S.C. $ 7206(2) (falsc tox returns - 6 counts) 18 U.S.C. $ 2 (aiding and abetting) Notices of Forfeiturc A truc hill Ibrcmnn dly. Filcd in opcn coun Ihis of A.t).20 ( lcrl llnil. $ t count)