Philadelphia IBEW Contractor Pleads Guilty to Tax Fraud, Theft

For Donald Dougherty, the old habits wouldn’t go away. That’s why he’s likely to go to prison. On January 21, Dougherty, a Philadelphia-based electrical contractor, pleaded guilty in U.S. District Court for the Eastern District of Pennsylvania to one count each of tax fraud and theft related to his work with International Brotherhood of Electrical Workers Local 98. Several members of that Philadelphia union were indicted by a grand jury two years ago. Dougherty and an accountant for his firm, Michael McKale, were indicted separately this past November 25 on multiple fraud and theft charges. The actions follow a joint probe by the FBI, the IRS and the U.S. Labor Department’s Office of Labor-Management Standards, Employee Benefits Security Administration, and Office of Inspector General.

Donald “Gus” Dougherty, now 54, a resident of Philadelphia, no relation to indicted IBEW Local 98 Business Manager John Dougherty, is the longtime owner-operator of Dougherty Electric Inc., a union contractor. He was not among the eight persons indicted by a federal grand jury in January 2019 on a combined 116 counts; six of those persons were union officials or members. But his time would come. On November 25, 2020, he was charged with six counts of filing false tax returns, one count of making a false statement to a bank, 10 counts of filing false union financial reports and 18 counts of failing to make scheduled contributions to Local 98 benefit plans. He was no stranger to such trouble. Back in 2007 he had pleaded guilty to filing false tax returns, tax evasion, making an unlawful payment to a union official, and theft of union benefit funds. At his plea hearing last week, Dougherty agreed to pay all residual restitution owed in that case.

He’ll owe substantial restitution in this case as well. Under the agreement, Dougherty will pay $92,913 in back taxes to the IRS related to deductions he took for union-related expenses that were actually personal expenses. He also will pay $266,000 to International Brotherhood of Electrical Workers Local 5 in Pittsburgh in connection with his avoidance of contributions to its benefit funds as required by a collective bargaining agreement. “Engaging in an elaborate scheme to willfully underreport taxable income is a felony,” said IRS Special Agent in Charge Thomas Fattorusso following the plea hearing. “Today, Donald Dougherty admitted he broke the law by cheating on his taxes.”