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South Jersey Brother And Sister Admit Kickback Conspiracy

 Involving Military Parts For The U.S. Navy

NEWARK, N.J. – The president and secretary of a Cherry Hill, New Jersey, machine shop today admitted paying kickbacks in return for subcontract work from a Philadelphia company that manufactured military parts for the U.S. Navy, Acting U.S. Attorney William E. Fitzpatrick announced.

John Schallenhammer, 57, of Atco, New Jersey, and his sister, Theresa Schallenhammer, 53, of Cherry Hill, pleaded guilty before U.S. District Judge William J. Martini in Newark federal court to separate informations charging them with conspiracy to violate the federal anti-kickback act. They were both released on $50,000 unsecured bond.

According to documents filed in this case and statements made in court:

Christopher Sanchirico, 55, of King of Prussia, Pennsylvania, was the assistant purchasing manager for an entity identified in the information as “Subcontractor 1,” which was located in Philadelphia and manufactured shock-hardened circuit breakers and switchgears for installation on U.S. Navy surface ships, submarines, and aircraft carriers. Subcontractor 1 performed work on multiple U.S. Navy and Defense Logistics Agency maritime contracts as a first-tier subcontractor to a prime contractor working for the United States.

In July 2013, John Schallenhammer, the president of a machine shop identified in the information as “Subcontractor 2,” made an agreement with Sanchirico. In return for Sanchirico’s assistance in securing a manufacturing contract between Subcontractor 1 and Subcontractor 2, John Schallenhammer paid Sanchirico between five and 10 percent of the gross revenue from circuit breaker and switchgear components that Subcontractor 2 provided to Subcontractor 1.  Theresa Schallenhammer, Subcontractor 2’s secretary, maintained records of the payments and sometimes made bank withdrawals for the kickbacks when John Schallenhammer was unable to do so.

From 2013 to 2016, the Schallenhammers paid Sanchirico approximately $150,000 in cash kickbacks.

John and Theresa Schallenhammer both face a maximum potential penalty of five years in prison and a $250,000 fine, or twice the gain or loss from the offense. Sentencing for both defendants is scheduled for Feb. 6, 2018.

Sanchirico pleaded guilty to a related charge on Oct. 10, 2017 and awaits sentencing.

Acting U.S. Attorney Fitzpatrick credited agents of the Naval Criminal Investigative Service, Northeast Field Office, under the direction of Special Agent in Charge Leo S. Lamont in Newport, Rhode Island, and agents of the U.S. Department of Defense, Office of the Inspector General, Defense Criminal Investigative Service, under the direction of Special Agent in Charge Leigh-Alistair Barzey, with the investigation leading to the guilty pleas. He also thanked the U.S. Attorney’s Office for the Eastern District of Pennsylvania, under the direction of Acting U.S. Attorney Louis D. Lappen, for its assistance.

The government is represented by Assistant U.S. Attorney Joyce M. Malliet of the U.S. Attorney’s Office’s National Security Unit in Newark.

Defense counsel:

John Schallenhammer: Blair R. Zwillman Esq., Millburn, New Jersey

Theresa Schallenhammer: Henry E. Klingeman Esq., and Ernesto Cerimele Esq., Newark

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