IBEW Business Manager in Philadelphia, Seven Others Indicted

International Brotherhood of Electrical Workers Local 98 in Philadelphia used to be an open cash register for certain members and outside persons. Now the register has been closed. Last Wednesday, January 30, local Business Manager John Dougherty and seven other persons, including a Philadelphia city councilman, were charged in U.S. District Court for the Eastern District of Pennsylvania in a 116-count indictment alleging a wide range of offenses including embezzlement, wire fraud and bribery. The defendants, all of whom have pleaded not guilty, during April 2010-August 2016 allegedly used union funds for unauthorized uses. It was in August 2016 that FBI agents raided over a dozen union construction sites, homes and offices following a joint probe by the FBI, the IRS, several agencies within the Department of Labor, and Pennsylvania State Police.

Electrical Workers Local 98 is no stranger to Union Corruption Update. More than a decade ago, a unionized Philadelphia contractor, Donald “Gus” Dougherty pleaded guilty to bribery after providing John “Johnny Doc” Dougherty, an old friend though not a close relative, with in-kind services in return for the latter looking the other way so that [Gus] Dougherty could avoid paying wages and benefits stipulated in a collective bargaining agreement. Gus Dougherty also evaded a combined more than $1.6 million in federal, state and local taxes. This sort of off-the-books quid pro quo is illegal under the Taft-Hartley Act. In May 2008, Gus Dougherty pleaded guilty to bribery, and was sentenced that December to two years in prison. John Dougherty was not charged with any offense, though his home had been searched. That might have been due to his political connections. He ran for Pennsylvania state senator in 2008, though he lost in the Democratic primary by a wide margin. Seven years later, his brother, Kevin Dougherty, was elected to the Pennsylvania Supreme Court, where he now sits.

The fortunes of John Dougherty, now 58, business manager for Electrical Workers Local 98 for about 25 years, took a severe hit last week. On January 30, the U.S. Attorney’s Office announced his indictment by a grand jury on several dozen counts. Here’s the breakdown: one count of conspiracy to embezzle from a union and employee benefit plan; 34 counts of embezzlement of union assets; 23 counts of wire fraud thefts from a union; two counts of wire fraud thefts from a political action committee; two counts of falsification of annual union financial reports; two counts of falsification of union financial records; five counts of filing a false federal income tax return; one count of conspiracy to accept unlawful payments from an employer; eight counts of accepting unlawful payments from a contractor; one count of conspiracy to commit honest services fraud and bribery; 11 counts of honest services wire fraud; and one count of honest services mail fraud. Got all that? Dougherty, the indictment read, used union funds as his “personal bank account and as a means to obtain employment for himself, his family, and his friends.”

Apparently, he had help from his union. Most important among the enablers was former IBEW Local 98 President Brian Burrows, indicted for conspiracy to embezzle from a union and an employee benefit plan; 14 counts of embezzlement and theft of union assets; two counts of falsification of union financial reports; two counts of falsification of union financial records; and five counts of filing a false federal income tax return. Marita Crawford, a former Local 98 business agent and political director, was charged with one count of conspiracy to embezzle from a union and a benefit plan; four counts of embezzlement of union assets; three counts of wire fraud from a union; two counts of wire fraud against a political action committee; one count of falsification of a union annual financial report; and one count of falsification of union records. Michael Neill, former director of the union’s apprenticeship training fund, was indicted for embezzlement, theft and tax evasion. Niko Rodriguez, a former employee of the union and the training fund, was indicted on a variety of counts for embezzlement and wire fraud. And Brian Fiocca, a former union employee, likewise was charged with several counts of embezzlement and wire fraud.

Two persons outside the union, a contractor and a politician, also were indicted. The contractor was Anthony Massa, owner-operator of the Philadelphia-based Massa Construction Corp. He was charged with embezzlement and theft from the union and a benefit plan, plus one count of making false statements to the FBI. The politician, and the most central figure in this case aside from John Dougherty, was Philadelphia City Councilman Robert Henon. Now 50, Henon was charged with one count of conspiracy to commit honest services fraud and federal program bribery; 14 counts of honest services wire fraud; one count of honest services mail fraud; and four counts of federal program bribery. His office issued the following statement: “He (Henon) is confident that his colleagues will respect any possible upcoming legal process and support him. Councilman Henon is a dedicated public servant and will continue to serve as councilman.”

Two other persons have been charged in this scandal, though not as part of the 116-count indictment. One of them, George Peltz, a New Jersey-based electrical contractor and childhood friend of John Dougherty, pleaded guilty last Monday, January 28, to bribery. Peltz admitted to providing over $57,000 in home and office improvements, including TV and security system installations, to an unnamed union official at no charge. The other individual, James Moylan, Dougherty’s chiropractor, was charged on January 29 with stealing funds from a union-sponsored nonprofit group and another nonprofit he founded known as Neighborhoods for Fair Taxes. The latter organization had received $50,000 in donations from IBEW Local 98 in 2013 after Moylan had written Dougherty requesting funds. According to prosecutors, Moylan spent more than $45,000 of that sum on personal expenses such as credit card bills and a home mortgage. Significantly, he was Philadelphia Mayor Jim Kenney’s appointee to head the City’s Zoning Board of Adjustments until his resignation in 2016 after his home and office were raided by the FBI.

All of this has put Mayor Kenney in the spotlight, especially in light of his close relationship with Electrical Workers Local 98. The union provided a crucial early endorsement of Kenney in his successful run for City Hall in 2015. In an appearance at a local elementary school, the mayor stated that he could not comment on the indictment, since he had not read it. He added that he had been in contact with the U.S. Attorney Office, and was informed that neither he nor anyone else in his administration would be indicted. “It’s certainly sad and disappointing that this is happening,” he remarked. “The process will play itself out.”

Another, more intimate supporter of Doc Dougherty is in the public glare as a result of last Wednesday’s indictments: his brother, Pennsylvania Supreme Court Justice Kevin Dougherty. According to an article published yesterday in the Philadelphia Inquirer, Justice Dougherty broke public disclosure laws by not reporting repairs to his home back in 2011 that had been paid for by Local 98 in cash and benefits in-kind. The Inquirer cited five unnamed sources saying that one recipient of such unreported union gifts, described in the indictment as “Family Member No. 4,” was Kevin Dougherty. Pennsylvania law requires that judges in the commonwealth report gifts from outside entities (such as a union) amounting to at least $250 on annual disclosure forms. Kevin Dougherty’s attorney, Courtney Saleski, said in an email that her client “always paid [the contractor] for its services at his home” and that he has “always properly disclosed gifts of which he was aware.” Pennsylvania Republican Party Chairman Val DiGiorgio sees the issue differently. He wants federal and state investigations. “The fact that Justice Kevin Dougherty, a sitting Pennsylvania Supreme Court Justice, received the same union-paid benefits his brother has been indicted for is a serious matter that raises a number of questions,” said DiGiorgio.

Whatever the outcome of all this, federal officials are confident in their view that IBEW Local 98 is a union permeated with corruption. “Union leaders and public officials have similar duties in our society,” said First Assistant U.S. Attorney Jennifer Williams, announcing the indictments. “Whether it is a fiduciary duty to a union’s membership to spend union funds on union business, or a public official’s duty to provide honest services to his constituents, leaders in these kinds of roles must act in the best interests of others.” Andriana Vamvakas, Northeastern Regional Director of the Labor Department’s Office of Labor-Management Standards, said, “We will continue to work with our investigative partners to ensure that those who are affiliated with labor organizations adhere to the highest standards of conduct to protect the assets of union members.”