Lehigh Valley

Allentown Mayor Ed Pawlowski indicted in connection to FBI probe

ALLENTOWN, Pa. - Federal prosecutors have indicted Mayor Ed Pawlowski in connection to the ongoing pay-to-play investigation of Allentown City Hall, a source tells 69 News.

The indictment is still under seal, but will likely be unsealed Wednesday, the source said. Press conferences are scheduled for Wednesday and Thursday.

Pawlowski's attorney Jack McMahon told 69 News it would be "inappropriate" for him to comment on charges he hasn't seen.

The mayor becomes the highest ranking city official to become ensnared in a plot to exchange city contracts for campaign contributions.

The nine others who faced charges have all pleaded guilty.

The three-term Democrat announced via social media in January that he would seek a fourth term despite the ongoing FBI probe.

The FBI’s investigation into City Hall first became public in July 2015, when agents served a subpoena and searched the controller’s office, mayor’s office, information technology department and other city offices. The city solicitor’s office issued a statement at the time indicating officials were unaware of the reasons behind the search, but believed it may have been linked to Allentown’s contracting process.

Bethlehem businessman Ramzi Haddad was the first domino to fall, when he pleaded guilty to bribery only about two months after the raid. He was also the first person to link Pawlowski to the investigation.

Although the mayor had never been named publicly or charged in connection with the investigation until now, prosecutors repeatedly cited “Public Official #3” in court records, and Pawlowski was the only person to match the description.

Haddad admitted in court to donating food, drinks and money to the campaigns of Public Official #3 in an effort to get a “fair shake” on his building projects in Allentown. He told federal investigators he feared the official would interfere or block his projects, a claim Pawlowski’s lawyer vehemently denied at the time.

The first city official to fall was former assistant city Solicitor Dale Wiles, who pleaded guilty in November 2015 to rigging the bidding process in favor of a Pawlowski campaign donor. Prosecutors alleged that Wiles formed a review committee that included two other city officials to evaluate proposals to collect Allentown’s delinquent real estate taxes.

Despite the winning law firm initially submitting what was considered the weakest proposal, investigators said the committee manipulated the process, so that the firm which also happened to be a Pawlowski campaign donor received the contract.

In January 2016, Garret Strathearn, Allentown’s former finance director, also pleaded guilty to conspiracy in connection with the alleged bid rigging of the delinquent real estate tax collection contract. He resigned from his post less than two months before the FBI raid of City Hall.

Prosecutors said Strathearn stepped in to replace a committee member, who gave the eventual winning bidder the lowest score. He allegedly told Wiles that the bidding process was being rigged under the direction of Public Official #3, who was dissatisfied with the campaign contributions coming in from the city’s then delinquent tax collector.

The principals in the partnership set to receive the contract, despite its weak proposal, “were more promising sources of campaign contributions,” according to court papers. Federal authorities said Strathearn and Wiles falsified bidding records to make it appear the firm won the contract based on its merits.

Mary Ellen Koval in January 2016 resigned her post as Allentown’s elected controller about two months after winning her second term in office. Then she appeared in federal court days after Strathearn and pleaded guilty to her role in the FBI probe.

Koval pleaded guilty to conspiracy for agreeing in her official capacity as an elected official to take actions that would benefit campaign donors of Public Official #3.

Pawlowski was dealt a major blow in April 2016 when campaign manager and long-time confidant Michael Fleck pleaded guilty to conspiracy to commit extortion and bribery. Fleck, a former Easton city councilman, reportedly wore a wire during the FBI’s investigation and moved out of the Lehigh Valley days after agents searched City Hall.

Along with the Allentown investigation, Fleck is also linked to a probe into former Reading Mayor Vaughn Spencer for whom he also served as a campaign manager. Like Pawlowski, Spencer has never been formally charged.

Prosecutors allege Fleck worked in concert with others to extort campaign contributions for Pawlowski’s aborted U.S. Senate run. The mayor dropped out of the race for the seat held by Republican Sen. Pat Toomey shortly after the FBI raid.

Fleck reportedly leaned on the law firm awarded the delinquent tax collection contract to donate toward Pawlowski’s campaign and assure that associates did the same. Prosecutors said he made it clear that the firm’s ability to land future contracts was in peril.

The president of a major engineering firm that relies heavily on municipal contracts in the state pleaded guilty about a month after Fleck.

Matthew McTish pleaded to conspiracy to commit bribery after prosecutors accused him of funneling thousands in campaign contributions in order for his firm, McTish, Kunkel & Associates, to be considered for municipal contracts in Allentown and Reading.

Prosecutors allege Pawlowski and Spencer identified certain engineering firms, including McTish’s, that would rather spend thousands in campaign contributions than risk losing millions in government contracts.

In March, former city Managing Director Francis Dougherty pleaded guilty to one count to commit mail/wire fraud. Dougherty resigned without explanation in April 2016. He was the city’s highest ranking appointed official.

Like the other indictments, Dougherty is accused of manipulating the bidding process to steer city contracts toward companies willing to donate to Pawlowski’s state and federal campaigns. As part of his plea deal, Dougherty has agreed to serve as a prosecution witness.

Mere hours after Dougherty pleaded guilty in Philadelphia, Pawlowski found himself before an audience in Allentown as part of a Democratic mayoral candidates’ forum. As he’s done since the first guilty plea was entered, the mayor continued to profess his innocence.

"I still say I did nothing wrong," Pawlowski said before the forum. "And if I did anything or felt I wronged the city in any way, I wouldn't be running for office."

The most recent suspects to plead guilty in the FBI probe are Mark Neisser and Patrick Regan.

Neisser is a former business development executive at T&M Associates and pleaded guilty to conspiracy to commit bribery. T&M Associates is a New Jersey-based engineering firm that had several contracts with the city of Allentown.

According to court documents, T&M created a political action committee to make campaign donations to elected officials. Court records state some of that money was given to Public Official #3, whose description fits only Mayor Pawlowski, in exchange for city contracts.

Records show T&M Associates also did work in Reading, where the FBI investigated a similar pay-to-play scheme.

Neisser was named in a previous guilty plea entered by Fleck, Pawlowski's former campaign manager.

Patrick Regan worked for The Efficiency Network and was charged with conspiracy to commit mail and wire fraud.

Regan's company was hired to upgrade Allentown's streetlights. According to court documents, he conspired with Dougherty, former Allentown Managing Director, to give The Efficiency Network those contracts.

Both Neisser and Regan pleaded guilty during unannounced hearings earlier this year.

Since the specter of the FBI probe settled over City Hall, city council has publicly lost confidence in the mayor. Council members in January 2016 unanimously passed a formal declaration of no confidence in Pawlowski.

The vote was largely ceremonial, but it showed the rift forming between Pawlowski and some of the council members for whom he campaigned. After the vote, the mayor called the measure a “political stunt.”

In July, city council passed another resolution that asks federal investigators to quickly move on either indicting or exonerating the mayor.

City council President Ray O’Connell, one of seven Democratic candidates for mayor along with Pawlowski, alluded to the FBI probe and the need for new leadership from the outset of the candidates’ forum in March hosted by the Greater Lehigh Valley Chamber of Commerce.

O’Connell said during the forum that the investigation would reflect poorly on the mayor even if he had been vindicated.

“Even if there’s evidence he’s done nothing wrong and nothing illegal, it’s been under his watch,” O’Connell said. “As far as being under his watch, he was not being a good leader because he must have had his head in the sand to not know what’s happening.”

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