Being a union contractor can be risky, even if the labor boss with whom he does shady business has the same last name and is a lifelong friend. Such was the case for Donald “Gus” Dougherty, president of Dougherty Electric, Inc., in Philadelphia. On Monday, May 19, Dougherty pleaded guilty in federal court to bribing a business manager of International Brotherhood of Electrical Workers Local 98 to facilitate an off-the-books payroll scheme. He’d been charged last June in a 100-count indictment handed down following a joint investigation by the FBI, the IRS and the Department of Labor. The guilty plea comes on the heels of another guilty plea by him on April 15 to 98 counts that included operating an illegal cash payroll, stealing from a union benefit plan, and bribing a bank official.
For four years, said federal prosecutors, Donald Dougherty paid off the business manager of the 4,000-member IBEW Local 98, John Dougherty, an old friend from his South Philadelphia days. He performed $115,600 worth of renovations on the latter’s city residence, and secured a $24,000 price discount on his North Wildwood, N.J. beach condo. In return, John Dougherty looked the other way, allowing Donald Dougherty to pay workers in cash, thus avoiding more than $1.6 million in federal, state and local taxes and another $869,000 in required contributions to union benefit plans. The Taft-Hartley Act prohibits an employer from offering cash or other things of value to an officer of a labor organization that represents the employer’s workers. The employer may engage in financial transactions with such persons only if the transaction is “at prevailing market price in the regular course of business.” Any number of local members in fact did work for Dougherty Electric.
Gus Dougherty faces a prison sentence of 41 to 51 months. His friend thus far has been luckier. Though federal agents searched his house and continue to hold him under suspicion, he has not been charged with any offense. John Dougherty has more than a union officer’s job at stake. He’s running for the Pennsylvania State Senate, and according to recent polls, he’s the favorite to replace the retiring Democratic incumbent, Vince Fumo, himself indicted by a federal grand jury in February 2007 on unrelated charges. Dougherty insists he was unaware of his contractor friend’s intentions. “I wasn’t paying attention to what he was doing. It wasn’t my position to pay attention,” he remarked. George Bochetto, a lawyer for Local 98, notes that the union’s health and welfare fund is a “completely separate entity” from the union itself. That’s true. of course, but the feds are prepared to win, and they’ve got witnesses, wiretaps and an undercover agent to back them up. (Philly.com, 4/2/08; US Fed News, 5/19/08).