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Twelve indicted in Philadelphia corruption probe

Investigation made public when FBI bug found in mayor's office

From Jonathan Wald

Indictment  (FindLaw)external link
Federal Bureau of Investigation (FBI)
Philadelphia (Pennsylvania)

(CNN) -- Federal prosecutors indicted 12 people Tuesday in a wide-ranging investigation into municipal corruption made public last year when police found an FBI bug in Philadelphia Mayor John Street's office.

A former city treasurer, an influential lawyer, two Commerce Bank executives and eight others face charges of fraud and extortion after the federal probe into whether political supporters were favored in awarding contracts for city business.

Street has not been charged with any wrongdoing.

Philadelphia police were conducting a routine security sweep October 7 when they discovered the FBI bug in the ceiling of Street's office.

The discovery drew national attention last year because it coincided with the last month of Street's campaign for re-election.

Street, a Democrat, eventually won a closely contested race over his Republican challenger, Sam Katz, by a ratio of about 3-2.

Government sources described Street as a "subject" of the investigation but not a "target," meaning Street fell within the scope of the investigation and was not necessarily likely to be indicted.

An FBI spokesperson told CNN at the time that investigators didn't believe the bug had "anything to do with the election."

After the bug was discovered, the FBI subpoenaed Street's bank records, seized his three e-mail devices, raided the offices of several of his political supporters and subpoenaed thousands of documents from city agencies.

The indictment alleges that in 2002 and 2003, attorney Ronald A. White "showered" then-Treasurer Corey Kemp with payments and gifts worth thousands of dollars to influence which financial-services companies were selected to handle bond transactions for the city.

Among those alleged gifts were a trip to the 2003 Super Bowl in San Diego, California -- including transportation by private jet and limousine -- and a deck for Kemp's house worth $10,350, prosecutors said.

In exchange, the indictment states, White received $633,594 from legal fees in city bond deals during Kemp's tenure.

"The nameplate on the desk of the city treasurer may have read Corey Kemp, but Ron White was calling the shots," said U.S. Attorney Patrick Meehan. "This is an indictment not only of the defendants but of a 'pay to play' culture that can only breed corruption."

The charges rely heavily on electronic surveillance by the FBI of both White and Kemp.

Though not charged, Street is mentioned several times in the indictment.

The mayor instructed his staff that if White or companies he proposed appeared qualified for city work, "the staff members should award the city business White sought and provide White with inside information .... regarding the operations of city agencies otherwise unavailable to the public," the indictment said.

Rich Manieri, a spokesman for Meehan, told CNN "the investigation is ongoing, and more indictments are a possibility."

The indictment is the second to arise from the federal investigation. On June 2, a federal grand jury charged five people, including the wife of a politically connected Muslim cleric, with fraud.

Prosecutors allege they stole about $224,000 through a fraudulent adult-education program.

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