United States v. Dougherty, CRIMINAL ACTION No. 19-64

UNITED STATES OF AMERICA, v. JOHN DOUGHERTY, et al.

CRIMINAL ACTION No. 19-64

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SEPTEMBER 1, 2020

MEMORANDUM

SCHMEHL, J. /s/ JLS

On January 29, 2019, a grand jury issued a 116-count indictment as to eight defendants, all allegedly entangled in a vast conspiracy to misuse and misappropriate the assets of a labor union. (ECF No. 1.) The indictment alleges a wide-ranging scheme led by Defendant John Dougherty, the Business Manager of Local 98 of the International Brotherhood of Electrical Workers (hereinafter "Local 98"), whereby Dougherty "used this control, and a variety of methods, to repeatedly and persistently steal from Local 98 and put his own self-interests over that of the membership of the union." (Id. at 1.) These alleged misappropriations include Dougherty using Local 98 "as his personal bank account and as a means to obtain employment for himself, his family, and his friends." (Id.) The indictment further contends that these acts were not authorized by the constitution or by-laws of Local 98, and that they "unlawfully deprived the union and its members of funds and assets." (Id. at 2.)

Now, this matter is before the Court on Defendant John Dougherty's Motion to Dismiss Counts 97-109 of the Indictment, pursuant to Federal Rule of Criminal Procedure 12(b)(3)(B). (See ECF No. 65.)¹ The counts that Dougherty seeks to dismiss charge him and co-defendant Robert Henon—a Philadelphia City Councilmember—with conspiring to commit, and committing, honest services fraud under 18 U.S.C. § 666. (ECF No. 1 at 108-33.) He alleges that despite the Government's allegations, "the facts, in [reality], reveal the normal and lawful lobbying of a City Councilmember to advance the interests of a labor union. And a Councilmember acting in response to such efforts and in order to advance the interests of his constituents is not a fraud." (ECF No. 65 at 1.)

In so arguing, Dougherty emphasizes three arguments. First, he asserts that the honest services fraud statute's application here is unconstitutionally vague. (Id. at 9.) Second, Dougherty argues that the Government's bribery allegations are insufficient as the pleadings do not allege that Dougherty himself "gave or offered Mr. Henon anything at all within the meaning of the federal bribery statutes." (Id. at 2.) Third, he claims that the Government cannot establish a quid pro quo, as Mr. Henon was given the alleged quid—a Local 98 salary that he received while a Philadelphia City Councilmember—starting at least as early as 2003, twelve years before the alleged quid pro quo at issue. (Id. at 3.) Thus, Dougherty asserts that the Government has not alleged that Dougherty possessed the specific intent to influence official action at the time Mr. Henon was offered the salary. (Id. at 16.)

In the alternative, Dougherty has also moved to strike, pursuant to Federal Rule of Criminal Procedure 7(d), the allegations contained in the following paragraphs of the indictment: pg. 111, ¶ 14(a); pg. 112, ¶ 14(c); pgs. 112-119, ¶¶ 1-27; and pgs. 121-126, ¶¶ 41-60. (Id.) He claims that of the six categories of "official acts" listed in the indictment, five are "permissible actions theSupreme Court has definitively stated do not constitute 'official acts' as a matter of law." (ECF No. 65 at 19.) As such, Dougherty asserts that these five categories are surplusage and must be stricken from the indictment as irrelevant and prejudicial. (Id. (citing United States v. Hedgepeth, 434 F.3d 609, 612 (3d Cir. 2006).)

For the reasons elaborated below, we deny both Dougherty's Motion to Dismiss and his Motion, in the alternative, to Strike.

I. RELEVANT FACTUAL BACKGROUND²

In November 2011, defendant Robert Henon was elected to serve as a Philadelphia City Councilmember representing the Sixth Council District of Philadelphia. (ECF No. 1 at 108, ¶ 2.) He was sworn in on January 3, 2012. (Id.) When he took office, Henon became the Chair of the Committee on Public Property and Public Works, which is responsible for all matters relating to City property and buildings. (Id.) Comcast of Philadelphia (hereafter "Comcast"), a cable service provider, had entered into a 15-year franchise agreement with the City of Philadelphia to provide cable service within the City's limits in accordance with the terms of an agreement. (Id. at 109, ¶ 9.) During 2015, Comcast was negotiating the terms of the renewal of this franchise agreement with the Mayor's Office and the Public Property Committee of City Council, which was chaired by defendant Henon. (Id. at 109, ¶ 9.)

Henon's office also imbued him with the "actual and perceived authority over certain other public officials," including employees of the Philadelphia Department of Licenses and Inspections ("L&I"). (Id. at 108, ¶ 4.) L&I administers and enforces Philadelphia's code requirements, including building, electrical, fire, health, housing, business, and zoning regulations. (Id.) Inspectors employed by L&I were empowered to issue cease and desist orders for violations of the City codes. (Id.) The Philadelphia Parking Authority (PPA)—another Philadelphia agency referenced later in this Opinion—was created by a Philadelphia City ordinance to provide parking services for residents, businesses, and visitors in Philadelphia. (Id.) PPA Official No. 1 and PPA Official No. 2—also referenced later in this Opinion—were officials of PPA. (Id. at 108, ¶ 5.)

Prior to being elected as a City Councilman, defendant Henon had served as the Political Director of Local 98 since 2003. (Id. at 109, ¶ 7.) It is alleged that Defendant John Dougherty, through Local 98, provided defendant Henon with a stream of personal benefits during the time that Henon was a member of Philadelphia City Council. (Id. at 110, ¶ 11.) The benefits given to Henon by Dougherty included a salary from Local 98 and tickets to sporting events. (Id.) Specifically, Local 98 paid Henon a salary during the time he served as a City Councilman, totaling $70,649 in 2015 and $73,131 in 2016. Additionally, during 2015 and 2016, Defendant Dougherty gave Defendant Henon tickets to sporting events with a value of approximately $11,807. (Id. at 110, ¶ 11(b).) These tickets were paid for by Local 98. (Id. at 110, ¶ 11(b).)

On Local 98's annual LM-2 reports filed with the United States Department of Labor, Local 98 described Henon's position as "office staff." (Id. at 110, ¶ 11(a).) On annual financial disclosure forms that Henon was required to file with the City Board of Ethics in 2015 and 2016, specifying the source, but not the amount, of income over $500 and gifts over $200 (in the aggregate), Henon disclosed Local 98 as a source of income, describing his position as"electrician," while not disclosing any gifts. (Id.) In fact, throughout the period of the alleged conspiracy, the Government alleges that Henon did not work as "office staff" nor as an electrician for Local 98, and Henon did not perform any significant work of any kind for Local 98 apart from his efforts as a member of the Philadelphia City Council to act as directed by and to benefit Defendant Dougherty. (Id.)

Defendant Dougherty allegedly gave these things of value to Defendant Henon with the intent to: (1) influence Henon in his capacity as a member of Philadelphia City Council and Chair of the Committee on Public Property; (2) in exchange for Henon acting on behalf of Dougherty in his capacity as a member of Philadelphia City Council; and (3) in exchange for performing official acts as directed by, and on behalf of, Dougherty. (Id. at 110, ¶ 12.) Defendant Henon is alleged to have accepted the stream of personal benefits from Defendant Dougherty, knowing that the benefits were given in exchange for Henon's performance of official acts at the direction of and on behalf of defendant Dougherty. (Id. at 110, ¶ 13.) Furthermore, defendants Dougherty and Henon allegedly attempted to hide the true nature of their illegal relationship from the public. (Id. at 110, ¶ 13.)

The Government alleges that the official act that Defendant Henon took, attempted to take, or caused as part of this relationship included the following. (Id. at 110, ¶ 14.) At Defendant Dougherty's direction, defendant Henon caused L&I to inspect, and in some instances shut down, operations or construction work, at locations outside of his district, where non-union laborers were involved in electrical work construction activity. (Id. at 110, ¶ 14(a).) At Defendant Dougherty's direction, defendant Henon drafted, supported, advocated, and sponsored Philadelphia City Council legislation, resolutions, and other Council legislative activities that were favorable to defendant Dougherty's personal, professional, or financial interests. (Id. at 110, ¶ 14(b).) Atdefendant Dougherty's direction, defendant Henon allowed Dougherty to demand concessions by Comcast during the franchise contract negotiations between the City of Philadelphia and Comcast, which ultimately resulted in Comcast hiring MJK Electric, a union electrical contractor defendant that Dougherty favored, for electrical contracting work. (Id. at 110, ¶ 14(c).)

II. MOTION TO DISMISS

a. LEGAL STANDARD

Pursuant to Federal Rule of Criminal Procedure 12(b)(3)(B)(v), a defendant may file a motion to dismiss for failure to state an offense. FED. R. CRIM. P. 12(b)(3)(B)(v). In assessing a motion under this Rule, ". . . a district court must accept as true the factual allegations set forth in the indictment." United States v. Huet, 665 F.3d 588, 595 (3d Cir. 2012). As factual questions are left to the jury, "a pretrial motion to dismiss an indictment is not a permissible vehicle for addressing the sufficiency of the government's evidence." United States v. DeLaurentis, 230 F.3d 659, 660 (3d Cir. 2000). As such, challenges "to the sufficiency of the indictment should be decided based on the facts alleged within the four corners of the indictment, not the evidence outside of it." United...