Philadelphia Contractor Indicted for Bribery, Theft from Union

ibewlogoDonald “Gus” Dougherty, Jr. and John J. Dougherty aren’t related, but they’ve been friends since childhood.  This ongoing relationship lies at the heart of a scandal that’s been rocking the Philadelphia area for the past half-year.  This past June a federal grand jury indicted Gus Dougherty for diverting nearly $870,000 in union benefit plan contributions toward his own use and evading taxes as part of an off-the-books payroll scheme that lasted four years.  The sweeping 33-page, 100-count indictment, handed down after a joint investigation by the FBI, the IRS and the Labor Department, also accuses the Philadelphia electrical contractor of evading more than $1.6 million in taxes.  His lawyer, Nicholas Nastasi, would not comment on the case directly, but added that his client would cooperate with the courts. 


Donald Dougherty runs Dougherty Electric, on the South Side of Philadelphia.  Over the years, he’s hired a lot of workers belonging to Local 98 of the International Brotherhood of Electrical Workers. The union is a powerful force in local politics, contributing nearly $500,000 to various candidates and PACs during 2007 alone.  That might have something to do with the fact that its business manager is John Dougherty.  The latter individual wasn’t named in the indictment, and has denied all wrongdoing.  But U.S. Attorney Patrick J. Meehan says the case remains open, and that certain transactions “are still of great interest to investigators.”  Donald Dougherty, among other things, was charged with performing certain illegal favors for the labor leader.  Specifically, he sold John Dougherty a Wildwood, N.J. beach condo for $206,000, or a reported $24,000 below a bank-appraised figure, which does not include $20,000 to $30,000 in free renovations.  He also performed $115,600 in free renovations to his friend’s main residence in Philadelphia.  The Taft-Hartley Act explicitly bans an employer from offering things of value to an officer of a labor organization that represents the employer’s workers.


The evidence suggests these favors were reciprocated in a classic sweetheart deal.  During 2001-05, prosecutors allege, Donald Dougherty maintained a secret cash payroll to benefit himself and certain employees, with John Dougherty’s full knowledge.  By using cash, he managed to avoid more than $1.6 million in federal, state and local taxes and $869,000 in required contributions to the benefit plans of Local 98.  The indictment makes a reference to “IBEW Local 98 Official No. 1.”  While neither the FBI nor the U.S. Attorney’s Office would confirm the person’s identity, speculation has run rampant that it’s John Dougherty.  Indeed, the online publication,, reported, “Sources confirmed that ‘Official #1’ is John Dougherty.”


Donald Dougherty’s travails, meanwhile, have a connection to dealings across the Delaware River.  His June indictment included an allegation that he’d bribed a banker whose identity was not made available until several months later.  On Tuesday, November 13, a federal grand jury charged Craig J. Scher, a Voorhees, N.J. banker, with accepting a bribe from Dougherty and conspiring with two other persons in an unrelated scheme.  Scher, 45, regional president of Nova Savings Bank, allegedly approved roughly $5.3 million in loans to the contractor, one of which went toward the purchase of his home in Sea Isle City, N.J.  Dougherty, who had high debts and a low credit score, allegedly bribed Scher with $9,400 in free home improvements and four Super Bowl tickets.  Scher also conspired with a South Jersey lawyer and developer, respectively, Michael Sinko and James Bell, Jr., to launder $100,000 through the sale of a Jersey shore condo.  The three men unknowingly had made their deal in the presence of an FBI undercover agent.  “The fewer people that know, the less chance that we’ll have problems with this,” Scher reportedly said on one taped recording.

It’s not clear how all of this will affect John Dougherty.  His lawyer, Henry E. Hockmeier Jr., has declined to comment.  But Dougherty appears unfazed.  “Look, I’m very comfortable with all the transactions that have occurred,” he said.  “The government’s got a job to do.”  As for that seaside condo in Wildwood, he remarked, “I had appraisals by two separate entities.  It was the highest paying condo in the area.”  If he does wind up being indicted, he might have to withstand testimony from an old friend with the same last name.  (U.S. Attorney’s Office, 6/26/07; Philadelphia Evening Bulletin, 6/27/07;, 6/26/07; Philadelphia Inquirer, 11/14/07).