Lehigh Valley

Feds charge Allentown, Reading mayors' former campaign manager

Michael Fleck pleads guilty to tax evasion, conspiracy to commit extortion, bribery

Allentown, Reading mayors' former campaign manager charged

PHILADELPHIA - The former campaign manager for the mayors of both Allentown and Reading has pleaded guilty to a pair of federal charges that stem from the FBI investigation of both cities.

Michael Fleck, a former Allentown resident and a onetime member of Easton City Council, appeared Thursday morning in federal court in Philadelphia, where he entered the plea to one count of conspiracy to commit extortion and bribery offenses and one count of tax evasion in connection with the ongoing investigation.

"I always thought this guy was questionable, when I would see him, his interactions with people. He was extremely, I think, arrogant and difficult," said Reading Councilwoman Donna Reed.

Fleck faces up to 10 years in prison, a possible fine and supervised release.

The probe was started by the FBI last summer, when agents raided city halls in both Allentown and Reading, as well as the homes of Allentown Mayor Ed Pawlowski and then-Reading Mayor Vaughn Spencer.

The wide-ranging investigation centers on public officials demanding campaign contributions from vendors in exchange for city business.

"I really feel he was the ringleader between Reading and Allentown in persuading a lot of this behavior across the board," Jeff Waltman, president, Reading City Council, told WFMZ's Ryan Hughes.

Court documents released Thursday again implicated both mayors, with Pawlowski continuing to be identified as "public official #3" and Spencer as "public official #1"

Both public officials, according to the documents, directed their respective city officials "to give preferential treatment to certain of his past and potential political donors."

Several of those officials, including Allentown Controller Mary Ellen Koval and Spencer aide Eron Lloyd, have since resigned from their positions and pleaded guilty to federal conspiracy charges.

Fleck also served as the manager of Koval's 2015 re-election campaign.

From at least on or about Oct. 23, 2013, until on or about March, 13, 2015, Fleck, along with public officials #1 and #3, as well as Lloyd and Koval, conspired to commit extortion and bribery, officials said.

The "manner and means" were outlined by the feds in the court documents as follows:

"Concerned about well-funded rivals, public official #1 instructed defendant Michael Fleck, Eron Lloyd and others that his best chance at winning the 2015 Democratic primary was to maximize contribution prior to May 19, 2015, even if the contributions would be in violation of Reading's code of ethics."

Spencer would lose the primary election to current Mayor Wally Scott.

"Disappointed by his poor fundraising in his earlier campaign for statewide office, public official #3 instructed defendant Michael Fleck, Donor #1, Donor #2, Donor #4, Donor #5, Ramzi Haddad, and others that his best chance at winning his party's support as a candidate for the federal office was to maximize the campaign contributions that he received on or before a federal campaign reporting deadline of June 30, 2015."

At the time, Pawlowski, having failed in his earlier bid for Pennsylvania governor, was running for the Democratic nomination in the U.S. Senate race, but he dropped that bid following the FBI raid in July.

The two public officials, as well as Koval, directly and through Fleck and others "communicated to certain donors that they were expected to provide items of value, including campaign contributions, in return for certain past of prospective official actions in Reading and Allentown."

Also pleading guilty in the case have been Haddad, a Bethlehem entrepreneur who admitted to paying bribes to an Allentown official; Garret Strathearn, Allentown's former finance director; and Dale Wiles, a former Allentown assistant solicitor.

To conceal and continue the conspiracy, public official #1, Lloyd, public official #3, Koval, Strathearn, Wiles and Fleck "employed counter-surveillance maneuvers and obstructed justice by, among other things, making false statements to FBI agents," and "to conceal their respective roles in the conspiracy, public official #1 and public official #3 limited their direct interactions with certain donors."

Federal authorities, in their court paperwork, also outlined the bribery, extortion and contract rigging process that was part of the conspiracy as follows:

Donor #1: Between approximately Jan. 6, 2014 and May, 26, 2015, public official #3, Koval, Fleck and others met for the purpose of helping donor #1's company receive a "no-bid" contract from Allentown as a reward for donor #1's agreement to raise money for public official #3's campaign.

Donor #1 is described by the feds as principal of a company that sought contracts with governments in Allentown and elsewhere.

Donor #2: Between approximately April 14, 2014, and June 11, 2015, public official #1, Lloyd, Fleck and others met for the purpose of helping donor #2's company receive a contract from Reading in exchange for donor #2's agreement to raise money for public official #1's campaign.

On or about Aug. 8, 2014, public official #3 agreed to help donor #2's company receive a contract from Allentown as a reward for donor #2's agreement to raise money for public official #3's campaign.

On or about Dec. 4, 2014, Koval sent an email to donor #2 requesting a campaign contribution as consideration for efforts by public official #3 and Koval to award an Allentown contract to donor #2's company.

Donor #2, according to the feds, represented a company that heavily relied on contracts with governments in Pennsylvania, including Allentown and Reading.

Donor #3: Between approximately April 14, 2014, and May 8, 2015, donor #3 met with public official #1, public official #3, Fleck, and others to discuss multiple contracts in Allentown and Reading for campaign contributions from a political action committee over which donor #3's company had influence and control.

On or about April 25, 2014, public official #1 directed one of Fleck's employees to solicit a campaign contribution from donor #3's company as a reward for public official #1's efforts to convince Reading officials to award a competitively bid contract to donor #3's company instead of a competitor.

Donor #3 is described by the feds as representing a company that heavily relied on contracts with governments in Pennsylvania, including Allentown and Reading.

Donor #4: On or about Jan. 30, 2015, public official #3, Fleck and others met to design a plan for extorting campaign contributions from law firm #4.

Upon hearing that donor #4 had expressed doubt about law firm #4's willingness to make future contributions, public official #3 complained, "Really! I've given him millions of dollars... Relatively, compared to other law firms, they've given nothing. [Donor #4] for sure will get nothing now... You know, f--- them! And I'm not gonna [award work to donor #4's law partner] or anything. Screw it all!"

Fleck told public official #3 that he would "beat the crap out of" donor #4 by making clear that law firm #4's ability to receive future legal contracts would be imperiled if the firm did not kick back adequate campaign contributions to public official #3

On or about Feb. 3, 2015, donor #4 agreed that, in exchange for public official #3's agreement to steer legal contracts to law firm #4, donor #4 would solicit attorneys at the firm to contribute to public official #3's campaign.

Donor #4 is described by authorities as principal of a law firm that sought and received contracts to perform legal work on behalf of governments in Allentown and elsewhere.

Donor #5: Between approximately April 14, 2014, and May 8, 2015, in order to receive favorable official action in Allentown and Reading, donor #5 met with public official #3, Fleck and others to discuss contributing to public official #1 and public official #3's campaigns.

In or about February 2015, public official #1, acting in his official capacity as an elected official in Reading, sent a letter of support for a proposal in which donor #5 had a business interest, in consideration for donor #5's contribution to public official #1's 2015 re-election campaign.

Donor #5 is described as an entrepreneur who had business and property interests in Allentown and Reading, including actual and potential municipal contracts and projects that required approval by governmental organizations.

Ramzi Haddad: On or about Dec. 19, 2014, at the direction of public official #3, forwarded an email about Haddad's zoning application to his own personal email account. From that same account, public official #3 then forwarded the email chain to one of Fleck's employees, along with guidance for Haddad.

On or about April 21, 2015, public official #3, acting in his official capacity as an elected official in Allentown, sent a letter of support for a proposal in which Haddad had a business interest, in consideration for Haddad's agreement to raise money for public official #3.

Haddad, a Bethlehem entrepreneur, admitted in federal court in September to paying bribes to public official #3.

Between approximately Nov. 5, 2014, and May 15, 2015, in consideration for official action in Reading, donors #2, #3, and #5 caused thousands of dollars' worth of contributions to be delivered to various campaign funds supporting and benefiting public official #1, officials said.

Between approximately Oct. 23, 2013, and July 1, 2015, donors #1, #2, #4, #5, Haddad and certain others collectively donated, bundled and solicited others to donate tens of thousands of dollars to various campaign funds supporting and benefiting public official #3.

Haddad, Koval, Lloyd, Strathearn and Wiles await sentencing.

Neither Pawlowski nor Spencer has been charged in connection with the investigation. Both have denied any wrongdoing.

"When you read these documents through, and he is clearly public official #1, and you read everything through, you see that a followup is imminent," said Reed, the Reading councilwoman, referring to Spencer.

The tax evasion charge against Fleck is the result of him filing false and fraudulent income tax returns for tax years 2011, 2012 and 2013, in which he concealed approximately $130.897 in income from his consulting company, overstated certain deductions, and failed to remit approximately $43,467 in payroll taxes, officials said.

Allentown & Reading FBI probe: Timeline


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