IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES of AMERICA, : CRIMINAL ACTION

Plaintiff, :

:

v. : NO. 05-614

:

RICHARD MARIANO, :

PHILIP CHARTOCK, :

LOUIS CHARTOCK, :

JOSEPH PELLECCHIA, :

VINCENT DIPENTINO, :

REINALDO PASTRANA, :

Defendants. :

:

M E M O R A N D U M

STENGEL, J. February 27, 2006

Philip Chartock’s first motion to dismiss challenges the constitutionality of the

honest services fraud charges in his indictment. His second motion contends the money

laundering charges in his indictment do not involve “proceeds of unlawful activity.” 

Louis Chartock filed a petition to join Philip Chartock’s motions. For the reasons stated

below, I will deny both motions for both defendants. 

I. BACKGROUND

The facts relevant to this discussion are viewed in the light most favorable to the

Government as the non-moving party. 

On October 25, 2005, defendants Philip and Louis Chartock were indicted for,

inter alia, bribing Philadelphia City Councilman Richard Mariano. As it relates to Philip 

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and Louis Chartock, the indictment concerns repeated efforts by Erie Steel, Ltd., (“Erie

Steel”) President Philip Chartock, and his father Louis, to obtain tax breaks and other

more favorable treatment for his company from various agencies of the City of

Philadelphia from at least 2002 to 2005. The indictment alleges the Chartocks acted

illegally to secure such benefits. In particular, the Chartocks paid more that $23,000 in

bribes and, along with others who assisted in making the bribe payments, corrupted

Philadelphia City Councilman Richard Mariano. Mariano accepted the stream of

payments with the understanding that the payments were meant to influence his official

actions. He then failed to disclose these payments as he was required by law to do. 

According to the indictment, Philip Chartock paid three bribes to Mariano during 2002 in

the form of checks made payable to Mariano’s credit card companies to pay off personal

debts. 

The first bribe payment occurred on May 10, 2002. Chartock gave Mariano an

Erie Steel check in the amount of $5,873.75 payable to Fleet Credit Card Service so that

Mariano could pay his personal credit card bill. Four days prior to this bribe payment,

officials of the Air Management Services Division of the City of Philadelphia Department

of Public Health sought to inspect Erie Steel to determine whether it was in compliance

with the City’s air pollution standards. Instead of consenting to the inspection that day,

Philip Chartock sought Mariano’s assistance and intervention. Mariano immediately

called Department of Public Health officials to intervene on behalf of Erie Steel. After 

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Public Health officials determined that Erie Steel was in violation of a number of air

pollution regulations, Philip Chartock used Mariano’s influence to postpone for more

than three years what Chartock believed would be costly corrective actions that were

necessary to come into compliance with these regulations. 

The second bribe payment occurred on August 26, 2002. This time, Philip

Chartock was unable to give Mariano an Erie Steel check like he had before because Erie

Steel’s outside accountants had recently noticed and questioned the propriety of the May

10, 2002 check. In an attempt to avoid further scrutiny, Philip Chartock changed the

method in which he made the bribe payments to Mariano. This time Chartock classified

the check as a repair and maintenance expense. A third party then deposited the Erie

Steel check into her account and laundered the bribe payment by obtaining a bank check

in the amount of $6,772, made payable to AT&T Universal Card, so that Mariano could

pay another personal credit card bill. At the time of the second bribe payment, defendant

Philip Chartock was actively seeking Mariano’s assistance in obtaining tax relief for his

business. On November 13, 2002, Mariano met with Chartock and a City official to

discuss tax breaks for Erie Steel. Even though the City official explained that Erie Steel

did not meet the criteria for the tax relief, Philip Chartock and his father, Louis, continued

to seek Mariano’s assistance. 

On November 25, 2002, Louis Chartock asked Mariano to introduce legislation

making Erie Steel eligible for tax relief. Eleven days later, on December 6, 2002, Philip

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Chartock made a third bribe payment. In an attempt to avoid scrutiny, Philip Chartock

wrote an Erie Steel check to a different third party, co-defendant Vincent DiPentino’s

company, and disguised the payment by falsely classifying it as a freight, equipment, and

rental expense. DiPentino deposited the Erie Steel check into his bank account and

laundered the bribe payment by writing a personal check in the amount of $10,900 made

payable to Capital One so that Mariano could pay another one of his personal credit card

bills. After having received the stream of $23,000 in payments from Philip Chartock,

Mariano introduced legislation to make Erie Steel eligible for the tax relief that Philip

Chartock had sought. In January/February 2003, Mariano recommended to the City that

Erie Steel be included in the tax relief legislation, which was known as the Keystone

Opportunity Zone program. The City accepted Mariano’s recommendation and included

Erie Steel in a proposed tax relief bill that was introduced before City Council in April

2003. In May 2003, Mariano twice voted in favor of the tax relief legislation, and in

doing so failed to disclose his financial relationship with Erie Steel and/or recuse himself

as he was required by law to do. 

After the tax relief legislation became law, Philip Chartock and his father sought

additional favors from Mariano. From November 2003 to January 2005, Philip and Louis 

Chartock repeatedly sought to take advantage of their relationship with Mariano by

seeking his assistance with, inter alia, energy rate reductions from PECO, resolution of 

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outstanding tax issues, removal of a judgment against Erie Steel, and rate reductions from

Pennsylvania Workers’ Compensation Rating Bureau. In March 2004, Louis Chartock

even offered a Mariano staffer money and a trip to Florida in exchange for the staffer’s

assistance in obtaining use and occupancy certifications. 

Based upon these allegations set out in the indictment, Philip Chartock was

charged with conspiracy to commit honest services fraud, in violation of 18 U.S.C. § 371;

seven (7) counts of honest services mail fraud and aiding and abetting, in violation of 18

U.S.C. §§ 2, 1341 and 1346; one (1) count of honest services wire fraud and aiding and

abetting, in violation of 18 U.S.C. §§ 2, 1343 and 1346; and two (2) counts of money

laundering and aiding and abetting in violation of 18 U.S.C. §§ 2 and 1956(a)(1)(B)(I). 

Louis Chartock was charged with conspiracy to commit honest services fraud, in violation

of 18 U.S.C. § 371; three (3) counts of honest services mail fraud and aiding and abetting,

in violation of 18 U.S.C. §§ 2, 1341 and 1346; eight (8) counts of honest services wire

fraud and aiding and abetting, in violation of 18 U.S.C. §§ 2, 1343 and 1346; and one (1)

count of money laundering and aiding and abetting in violation of 18 U.S.C. §§ 2 and

1956(a)(1)(B)(I). 

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Frauds and Swindles

Whoever, having devised or intending to devise any scheme or artifice to

defraud, or for obtaining money or property by means of false or fraudulent

pretenses, representations, or promises, or to sell, dispose of, loan, exchange,

alter, give away, distribute, supply, or furnish or procure for unlawful use any

counterfeit or spurious coin, obligation, security, or other article, or anything

represented to be or intimated or held out to be such counterfeit or spurious

article, for the purpose of executing such scheme or artifice or attempting so to

do, places in any post office or authorized depository for mail matter, any matter

or thing whatever to be sent or delivered by the Postal Service, or deposits or

causes to be deposited any matter or thing whatever to be sent or delivered by

any private or commercial interstate carrier, or takes or receives therefrom, any

such matter or thing, or knowingly causes to be delivered by mail or such carrier

according to the direction thereon, or at the place at which it is directed to be

delivered by the person to whom it is addressed, any such matter or thing, shall

be fined under this title or imprisoned not more than 20 years, or both. If the

violation affects a financial institution, such person shall be fined not more than

$1,000,000 or imprisoned not more than 30 years, or both.

18 U.S.C. § 1341 (2005). 

2Definition of “Scheme or Artifice to Defraud”

For the purposes of this chapter, the term “scheme or artifice to defraud”

includes a scheme or artifice to deprive another of the intangible right of honest

services.

18 U.S.C. § 1346 (2005).

6

II. DISCUSSION

A. The Chartocks’ Motion to Dismiss the Mail Fraud Claims As

Unconstitutional

Philip and Louis Chartock are charged with fraud under 18 U.S.C. § 13411 and 18

U.S.C. § 1346.2 The Chartocks argue that as applied to them, 18 U.S.C. §§ 1341 and

1346 are unconstitutionally vague and overly broad. Specifically they contend: (1) that

the statutes do not sufficiently warn Pennsylvania citizens that they could be in violation

for simply helping a councilman pay his debts; and (2) that the statutes may not impose

liability on a citizen solely because an elected official failed to report certain gifts and

donations. 

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7

Vagueness may invalidate a criminal statute only in two narrow circumstances: (1)

if the statute as interpreted by the courts fails to provide proper notice to a person of

ordinary intelligence that certain conduct is illegal; or (2) if it encourages arbitrary and

discriminatory enforcement. City of Chicago v. Morales, 527 U.S. 41, 56 (1999). 

In this case, the Chartocks aver that the charging statutes would not even apply to

them had Mariano properly disclosed his gifts and payments. This assertion is incorrect

and ignores much of the behavior described in the indictment. The Chartocks are being

charged because they, through their business, allegedly paid Mariano in a quid pro quo

exchange of official favors for cash. The conduct alleged in the indictment is bribery. 

That alleged bribery was conducted through the U.S. Mail and deprived Philadelphia

citizens of the honest services of their elected councilman. A person of ordinary

intelligence should know that bribery, conducted through the U.S. Mail or otherwise, is

illegal. See United States v. Tutein, 122 F. Supp. 2d 575, 579 (D. V.I. 2000). 

The Chartocks attempt to distinguish this case from United States v. Antico, 275

F.3d 245 (3d Cir. 2001), and United States v. Panarella, 277 F.3d 678 (3d Cir. 2002) by

arguing that only the public officials were charged in those cases. In Antico, the

defendant was charged under 18 U.S.C. §§ 1341 and 1346 for, inter alia, honest services

fraud relating to the nepotism shown to his girlfriend in lieu of child support payments. 

Antico 275 F.3d at 253-54. The defendant, Frank Antico, worked in the City of

Philadelphia’s Department of Licenses and Inspections for thirteen (13) years. Id. at 249. 

Case 2:05-cr-00614-LS Document 84 Filed 02/28/06 Page 7 of 14
3

“Expediters are independent contractors who, in exchange for a fee, represent individuals and businesses

before the [Department of Licenses and Inspections] and the [Zoning Board of Adjustment]. Expediters typically

prepare the paperwork required to obtain permits, licenses, or variances by [the Department of Licenses and

Inspections and the Zoning Board of Adjustment].” Antico, 275 F.3d at 252 n.4.

8

During that time, Antico extorted various businesses subject to his inspections and set his

girlfriend up in a lucrative position as a private expediter3 while he personally approved

most of her clients’ filings. In upholding part of the defendant’s conviction, the Third

Circuit stated that for public officials, honest services frauds are generally divided into

two categories: “(1) bribery, where a legislator was paid for a particular decision or

action; or (2) failure to disclose a conflict of interest resulting in personal gain.” Id. at

262. 

In this case, the government alleges that both types of conduct occurred. Although

in Antico the defendant was a public servant charged under the second theory of honest

services fraud, the Chartocks’ argument that only public officials can be charged with the

failure to disclose a conflict of interest is misguided. The import of Antico in this case is

that it demonstrates 18 U.S.C. §§ 1341 and 1346 criminalize bribing public servants and

shows the statutes are not unconstitutionally vague or overly broad as they relate to

bribery and honest services fraud. 

With respect to the second type of honest services fraud noted in Antico, the Third

Circuit has held that an indictment does not have to allege that the benefit which the

official failed to disclose be directly linked to a decision which the benefit aimed to

provoke. In Panarella, the Panarella operated a tax collection business that paid $330,000

Case 2:05-cr-00614-LS Document 84 Filed 02/28/06 Page 8 of 14
9

in consulting fees to Senator Loeper, a state legislator. Senator Loeper then advocated on

the Panarella’s behalf before governmental bodies and opposed legislation which would

have been detrimental to Panarella. Panarella, 277 F.3d at 681. Panarella was indicted

for being an accessory after the fact to a wire fraud scheme. Id. After entering a guilty

plea, Panarella challenged the sufficiency of the charge on the grounds that it failed to

allege that the payments were bribes or that the legislator’s actions were improperly

influenced by them. Id. at 682. The Third Circuit, however, found that no such

allegation of proof is required and the mere fact that the legislator received the payments

while failing, in violation of state law, to disclose them before partaking in a discretionary

action that benefitted the payor sufficiently set forth a charge of honest services fraud. Id.

at 697. In particular, the Third Circuit found the indictment and guilty plea resting solely

on the “failure to disclose” type of honest services fraud to be valid and further held “that

if a public official fails to disclose a financial interest in violation of state criminal law

and takes discretionary action that the official knows will directly benefit that interest,

then that public official has committed honest services fraud.” Panarella, 277 F.3d at

697. 

In this case, the charging theory of the indictment is that a conspiracy existed to

deprive the citizens of Philadelphia of the honest services of Richard Mariano. The

principle offense of honest services fraud is committed by the public official, and

therefore the appropriate focus in determining the legal validity of the charge is on his

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4

See also U.S. v. White, 2004 WL 2612017 (E.D. Pa. Oct. 29, 2004) (Baylson, J.) (holding the indictment

properly pled “honest services” mail or wire fraud charges as to defendant bankers, after discussing Panarella and

Antico).

10

conduct. Nevertheless, the indictment in this case also alleges that the other conspirators

who were not public officials, namely Philip and Louis Chartock, aided and abetted and

conspired with Mariano in the violation. See United States v. Murphy, 323 F.3d 102, 109

(3d Cir. 2003) (while a party boss does not owe the citizens a duty of honest services, he

could aid and abet a public official’s violation of the official’s own duty to provide honest

services). In this case, the facts pled in the Chartocks’ indictment support the

prosecution’s charges that an honest services fraud has occurred and that the Chartocks

conspired and aided and abetted in that offense.4 

B. The Chartocks’ Motion to Dismiss the Money Laundering Charges

To establish a money laundering offense under 18 U.S.C. § 1956(a)(1), the

government must prove the following four elements: 

(1) an actual or attempted financial transaction; (2) involving

the proceeds of specified unlawful activity; (3) knowledge

that the transaction involves the proceeds of some unlawful

activity; and (4) . . . knowledge that the transactions were

designed in whole or in part to conceal the nature, location,

source, ownership, or control of the proceeds of specified

unlawful activity.

United States v. Omoruyi, 260 F.3d 291, 294-95 (3d Cir. 2001). 

In this case, the Chartocks argue counts 18 and 19 of the indictment, money

laundering pursuant to 18 U.S.C. § 1956(a)(1)(B)(I), should be dismissed because the

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money used in the Erie Steel checks sent to pay Mariano’s debts was not “proceeds of

some form of unlawful activity,” but rather came from legitimate business revenue. 

Contrary to the Chartocks’ claims, however, the indictment does not charge the

Chartocks’ act of providing Mariano with the Erie Steel checks was money laundering. 

Rather, the initial alleged act of giving the bribe to Mariano on May 10, 2002, is the basis

of the honest services charges. The basis for each money laundering charge is the alleged

subsequent act of depositing the bribe money into third party bank accounts and then

causing the third parties to write a new check or obtain a bank check made payable to

Mariano’s credit card companies. See Indictment, Count 18. 

In United States v. Conley, 37 F.3d 970 (3d Cir. 1994), the Third Circuit

considered a similar challenge to the appropriateness of a money laundering charge and

reversed the district court’s dismissal “of a money laundering object of the conspiracy

alleged in Count One of the indictment due to the district court’s [double jeopardy

concerns.]” Id. at 971. In Conley, the defendant was charged with both conducting an

illegal gambling business and money laundering. He moved to dismiss contending that

“a wide variety of transactions involving the money placed into the video poker machines

is necessarily part of the illegal gambling business, including collecting and counting

money, dividing up money, transferring and transporting money, depositing money into

banks and withdrawing money from banks.” Id. at 977. The Third Circuit determined

that the money laundering charges were valid because at the time of the alleged money

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12

laundering, the underlying offense was “legally completed” or at a “completed phase of

an ongoing offense” and, therefore, the subsequent financial transactions, performed with

the knowledge to conceal, were appropriately charged as money laundering offenses. See

id. at 980 n.13. 

Simply stated, the act of placing “innocent” money into an account with the intent

to bribe Mariano makes the money “illegal.” That first deposit, and all subsequent

transactions, are “illegal proceeds” for purposes of the money laundering statutes. 

In this case, the honest services fraud offenses were legally completed or at a

completed phase of an ongoing offense when the Chartocks offered a bribe to Mariano

with the intent to influence his official actions. The first alleged bribe involving the Erie

Steel check made payable to Mariano’s credit card company is not a basis for the money

laundering charges. According to the indictment, it is the second and third alleged bribes

in which the Chartocks gave Mariano Erie Steel checks made payable to third parties that

establish a money laundering violation. The indictment charges that the Chartocks and

Mariano caused the third parties to deposit the Erie Steel checks, or bribe proceeds, into

their bank accounts and then to write a personal check in order to obtain a bank check

made payable to Mariano’s credit card companies “with knowledge that the transaction

was designed, in whole or in part, to conceal and disguise the nature, source, ownership,

and control of the proceeds of the specified unlawful activity.” Indictment, Counts 18

and 19, ¶ 5. For purposes of this motion to dismiss, I find the indictment has validly

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13

charged the defendants with money laundering because the transactions complained of

involve the concealment of proceeds allegedly used to bribe Mariano. See also United

States v. Montoya, 945 F.2d 1068, 1076 (9th Cir. 1991) (state legislator properly

convicted of money laundering after receiving a bribe payment by check and then

deposited it; the court stated “depositing the check provided an opportunity for Montoya

to carry out the illegal bribery by characterizing the funds as a legitimate honorarium”)

(cited approvingly by United States v. Paramo, 99 F.2d 1212, 1217-18 (3d Cir. 1993)). 

III. CONCLUSION

For the reasons listed above, I find the indictment properly states violations of 18

U.S.C. §§ 1341, 1346 and 1956(a)(1)(B)(I). The Chartocks’ motions to dismiss are

denied. An appropriate Order follows. 

Case 2:05-cr-00614-LS Document 84 Filed 02/28/06 Page 13 of 14
IN THE UNITED STATES DISTRICT COURT

 FOR THE EASTERN DISTRICT OF PENNSYLVANIA

UNITED STATES of AMERICA, : CRIMINAL ACTION

Plaintiff, :

:

v. : NO. 05-614

:

RICHARD MARIANO, :

PHILIP CHARTOCK, :

LOUIS CHARTOCK, :

JOSEPH PELLECCHIA, :

VINCENT DIPENTINO, :

REINALDO PASTRANA, :

Defendants. :

:

ORDER

AND NOW, this 27th day of February, 2006, upon consideration of the defendant

Philip Chartock’s Motions to Dismiss (Docket #’s 61 and 62), and defendant Louis

Chartock’s petition to join in the Motions to Dismiss (Docket # 63), and after a review of

the Government’s response and after oral argument, it is hereby ORDERED:

1) Philip Chartock’s Motion to Dismiss counts one (1) through eight (8) of the

indictment (Docket # 61) is DENIED as to both Philip and Louis Chartock.

2) Philip Chartock’s Motion to Dismiss counts eighteen (18) and nineteen (19)

of the indictment (Docket # 62) is DENIED as to both Philip and Louis Chartock.

BY THE COURT:

 /s/ Lawrence F. Stengel 

LAWRENCE F. STENGEL, J. 

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